Wing Tai’s Cheng: ‘Too big a risk to go into property development now’

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/ EdgeProp Singapore
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August 31, 2018 12:30 PM SGT
Listed property group Wing Tai Holdings reported on Aug 28 total revenue of $373.2 million for FY2018 ended June 30, a 42% increase from $263.2 million the previous year. The increase was largely due to higher contribution from development properties. The group also reported earnings of $218.8 million.
Revenue contribution came from the sale of additional units at the 43-unit Le Nouvel Ardmore in Singapore and BM Mahkota in Penang, which obtained its Temporary Occupation Permit this financial year. A gain was also recorded from the disposal of its Huai Hai project in Shanghai, notes Lim & Tan Securities’ research team in its report.
At The Crest, 147 units were sold in FY2018, bringing the total to 331 units, or 70.6%, of a total of 469 units (Credit: Samuel Isaac Chua/EdgeProp Singapore)
At Le Nouvel Ardmore in Ardmore Park, seven units were sold in FY2018, bringing the total number of units sold so far to 15. Meanwhile, at The Crest, 147 units were sold in FY2018, bringing the total to 331 units, or 70.6%, of a total of 469 units in the condominium located on Prince Charles Crescent, off Alexandra Road.
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Meanwhile at The Garden Residences, a joint-venture project between Keppel Land and Wing Tai Holdings, 68 units have been sold to date, according to caveats lodged with URA Realis. The project has a total of 613 units of which 156 have been launched so far.
Cheng: Property developers would appreciate greater clarity in terms of the government’s long-term policy “so they can have more certainty in planning. (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Weighing in on the property cooling measures, Cheng Wai Keung, chairman of Wing Tai Holdings, says property developers would appreciate greater clarity in terms of the government’s long-term policy “so they can have more certainty in planning”.
According to Cheng, Wing Tai has been cautious these past few years when it comes to tendering for sites in government land sales. “When we tender, it’s at a very reasonable price,” he adds. “Of course, I got caught with one investment — the Serangoon property.” Cheng was referring to The Garden Residences located at Serangoon North Avenue 1, which is being developed on a 99-year leasehold land parcel purchased in a government land tender last year. Wing Tai won the tender in a JV with Keppel Land in July 2017 for $446.28 million ($965 psf per plot ratio).
Even though the group is now sitting on a net cash position of $12.1 million, Cheng says that he will adopt a conservative stance. “It’s too big a risk to go into property development now,” he adds. “If a developer wants to buy a piece of land for development, you have to pay 5% [additional buyer’s stamp duty] upfront, and if you don’t finish selling in five years, there will be a further 25% ABSD on the land cost.”
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At Le Nouvel Ardmore in Ardmore Park, seven units were sold in FY2018, bringing the total number of units sold so far to 15. (Credit: Samuel Isaac Chua/EdgeProp Singapore)
The group will now look overseas. Wing Tai will focus on yield- based commercial assets in Australia, such as offices, data centres and car parks. It is also looking at commercial properties in Japan, such as offices, “but not retail”, says Cheng.
The property cooling measures were supposed to be “temporary”, which means at some point, they would be lifted, he adds. Cheng points out that the first round of property cooling measures was introduced in September 2009 and so far, there have been nine rounds of cooling measures in all. “It’s now 2018. Are we still going to call the measures temporary?”