Once famous for its food stalls selling goreng pisang, duck rice with thick sauce and prawn noodles, Long House Food Centre closed at end-April 2014. Rising in its place is the upcoming 183 Longhaus, a mixed-use development with 10 strata commercial units and 40 apartments. “Long House was such an icon on Thomson Road and synonymous with good food that we felt it was important to retain the flavour,” says Jonathan Phua, CEO of listed property developer TEE Land.
Phua: The market is challenging, but we have spread out to Australia, New Zealand, Malaysia, Thailand and Vietnam.
So, this may help the group’s turnover
The new F&B outlets will not be offering the hawker fare of old, but will instead be a new generation of eateries including hipster cafés, fusion restaurants and fast food outlets. Five commercial units will be designated for F&B, and another five for retail and lifestyle services. “There has been keen interest from buyers for the commercial units, some of whom are end-users,” says Phua.
TEE Land will select the businesses that will take up space in the commercial units to ensure a good variety of eateries and retail offerings such as an upmarket grocer, a wine shop, hair salon and beauty spa as well as medical services. Talks are underway with candidates such as McDonald’s, Huber’s Swiss Butchery, NTUC Finest and Q&M Dental Group. “It’s important to ensure a good mix of businesses and a certain level of class,” adds Phua, 41. He is considering the possibility of selling the commercial units with tenants in place.
While the commercial units are located at the first and basement levels, the residential units will span the second to fourth levels of the four-storey block. Slightly more than half (22 units) are two-bedroom apartments measuring 529 to 811 sq ft, with another 14 comprising three-bedroom penthouses measuring 946 to 1,238 sq ft. Of the remaining four units, two are three-bedroom apartments sized at 787 sq ft and the other two are four-bedroom apartments of 1,077 sq ft.
Priced to sell
The units are designed to be compact to keep absolute prices affordable. For instance, some of the two-bedroom units will not have an en suite bathroom to the master bedroom. Having just one common bathroom will free up more space for the living and dining area. “Some people prize a bigger living room above an attached bathroom,” points out Phua. The project is scheduled for completion in 2018.
The residential units will appeal to singles, young couples, small families as well as empty nesters who are considering downsizing from their landed homes in the Thomson area, reckons Phua. The project is located within walking distance of two MRT stations: the Marymount station on the Circle Line and the upcoming Upper Thomson station on the Thomson-East Coast Line. It is a 10-minute walk to top schools such as Raffles Institution and Koh Chuan Presbyterian in Bishan, as well as within a 1km radius of other sought-after schools such as Ai Tong School and St Nicholas Girls’ School in Ang Mo Kio.
Phua expects the freehold residential units at 183 Longhaus to attract investor interest as well. The units are expected to be priced at an average of $1,500 to $1,600 psf, with two-bedroom units starting from $800,000 and three-bedroom units starting from above $1 million. The indicative price for the freehold commercial units will range from $3,000 to $4,000 psf. “Buyers today are looking for value for money, and that’s why we are focusing on reasonable pricing and designing a property suited to end-users,” says Phua.
According to property agents, the prices of the commercial units at 183 Longhaus are “competitive”. At the nearby Thomson Plaza, two adjoining strata shop units on the first level with a total floor area of 721 sq ft were sold for $3.3 million ($4,567 psf) last August, according to URA Realis. However, Thomson Plaza on Upper Thomson Road is already 40 years old, with a 99-year lease dating back to 1976. At Novena Regency, a newly completed freehold mixed-use development at the other end of Thomson Road in prime District 11, two adjacent shop units of 657 sq ft each were sold in April 2015 for $4.25 million ($6,473 psf) apiece.
The showflat at 183 Longhaus
‘Thomson appeal’
“The Thomson area is traditionally an old-rich enclave and is therefore a sought-after neighbourhood,” says Phua. This is seen in the response to two recent project launches in the Upper Thomson area. For example, Adana @ Thomson, a 74-unit freehold project by niche developer Fortune Development previewed last August. More than half the units have been sold at an average price of $1,610 psf, according to URA Realis. Thomson Impressions, by Nanshan Group and Vico Construction, was launched last October. As at end-2015, more than 40% of the 288 units in the 99-year leasehold project were taken up, with prices hovering at an average of $1,400 psf.
“The [Thomson] location speaks for itself,” adds Phua. That explains his purchase of the Long House Food Centre for $45.2 million in January 2014, which translated into $888 psf per plot ratio (psf ppr). The seller was the Ng family of privately held Sin Hin Lee Investment, who purchased the site in 1980 for just $678,000.
The site of 183 Longhaus has a rich history It was said to be owned by oil giant Shell since 1961 with a petrol station operated by Sin Hin Lee’s Ng family for 20 years. After the Ng family purchased the land, Shell continued to maintain a petrol kiosk on the adjacent site at 183A Upper Thomson Road. The Ng family’s site was leased to A&W for eight years and Kopitiam Group for the next two years. Long House relocated to the premises from Jalan Besar and occupied the space for 12 years until the closure of the food court two years ago when the property was sold to TEE Land.
Scheduled for launch in early February, 183 Longhaus is one of the first new launches in 2016. The project is marketed by Huttons Asia.
Landed housing, boutique condos
In the pipeline for launch toward the middle of this year is TEE Land’s next project: a pair of detached houses on Harvey Avenue in Simei in the east. It is a redevelopment of a pair of semi-detached houses at 31 and 31A Harvey Avenue, which TEE Land purchased for $4.225 million each last October. As each semi-detached house is located on a freehold site of 513 sq m (larger than the minimum requirement of 400 sq m for a detached house under URA guidelines), the site can be redeveloped into two bungalows.
The construction cost of each of the detached houses is estimated at $1.5 million, which means a price tag of about $7 million. “There are many high-net-worth individuals who are looking for opportunities in the landed housing segment in Bukit Timah, Thomson area and in the east,” says Phua.
In Singapore, TEE Land will focus on what it does best: boutique freehold residential developments of 40 to 50 units. An example is Hilbre28, a boutique condominium block with 28 units on Hillside Drive in Serangoon. About half of the units in the 999-year leasehold project have been snapped up at an average price of $1,219 psf.
For larger site acquisitions, TEE Land typically forms joint ventures with other niche developers and construction companies. For instance, the 176-unit freehold Sky Green at MacPherson is a joint development with Heeton Holdings, KSH Holdings and Zap Piling. Launched in late 2012, only four units remained unsold as at end-November. Rezi 3Two on Lorong 32 Geylang is another joint venture with KSH Holdings and Heeton Holdings. Launched last year, the 65-unit Rezi 3Two is already 68% sold at an average price of $1,475 psf.
TEE Land has refrained from participating in purchases of government land sales (GLS) because of the large capital outlay needed. In the current market of weak home sales, developers are worried about the fiveyear timeframe to complete construction and sell all the residential units on the GLS site to qualify for a remission on the additional buyer’s stamp duty (ABSD) on the land cost. “If a GLS site costs $200 million, a 15% ABSD amounts to $30 million,” laments Phua. “So, we have to be prudent.”
After all, TEE Land’s market capitalisation is $91.6 million and its share price was 20.5 cents on Jan 14. Listed on the Singapore Exchange in June 2013, TEE Land is 54.23%-owned by engineering and infrastructure group Tee International, headed by Phua’s uncle Phua Chian Kin. Other substantial shareholders of TEE Land include property magnate Koh Wee Meng, chairman and CEO of Fragrance Group, and his family members. Koh holds 17.5 million shares (3.92%), and his sister Ko Lee Meng owns three million shares (0.67%). Koh’s mother Tan Su Lan has 2.3 million shares (0.52%) and his aunt Tan Su Kiok, 1.25 million shares (0.28%).
Thai-Viet play
TEE Land ventured beyond Singapore in 2007, starting with Thailand when it formed Chewathai Public Co, a joint venture company with the Panichewa family, whose sprawling businesses include industrial estates, toll ways, property development and car rental.
Last November, the Securities and Exchange Commission of Thailand approved Chewathai’s listing on the Stock Exchange of Thailand in 1H2016. TEE Land owns a 49% stake in Chewathai.
Chewathai currently has eight projects at various stages of development, many of which are located on the outskirts of Bangkok and near BTS stations. “Our projects in Bangkok cater mostly to the Thai middle class,” says Phua.
A new series of homes under the “Hallmark” brand has also been launched. The brand will feature low-rise condominium blocks of five to eight storeys and target the lower-middle-income group. Phua sees potential at the top end of the Bangkok housing segment as well and plans to create a “luxury brand” to cater to the upper crust.
TEE Land ventured into Vietnam in 2010, forming a joint venture with Khang Viet Real Estate Investment Joint Venture Co to acquire a 6,028 sq m (64,885 sq ft) site in District 9 in Ho Chi Minh City. The site is being developed into Peach Garden, a 37-unit landed housing project with a mix of three-storey semi-detached and terraced houses designed by RSP Architects. The project saw strong sales over the past few months, and only one unit remains unsold, says Phua.
The joint venture partners are actively seeking more development opportunities in Ho Chi Minh City, given the strong recovery in the housing market, especially since the relaxation of foreign ownership laws last August.
Hotel ventures
TEE Land has adopted a conservative approach in Sydney, focusing initially on investing in hotels to generate recurring income. Its maiden acquisition in Australia was in August 2014, when it purchased a hotel located less just 0.7km from the Sydney International Airport.
The 120-room three-star hotel at 33 Levey Street cost A$23.88 million, and was purchased in a joint venture comprising TEE Hospitality (a unit of TEE Land), Peter & Jan Clark (Levey Street) and Kenmooreland in a 55:10:35 split. The Clarks founded Lancemore Group, an Australian- based hospitality and lifestyle company for the past 25 years.
The partners spent A$2.5 million retrofitting the old property and refurnishing the hotel rooms in phases. Refurbishment works were completed last April. “When we bought the property, it was the hotel with the cheapest rates in the area, and generated some of the most colourful TripAdvisor comments,” says TEE Land’s chief operating officer Yap Shih Chia. “Room rates were less than A$100 a night and the occupancy rate hovered around 70%.
After we repositioned it, room rates are at A$120 to A$140 a night, and our occupancy rates are now in the 80%-to-90% range.” The hotel is now operated as Quality Hotel CKS Sydney Airport.
The joint-venture partners purchased the former Diamant Hotel — its second property in Sydney — in December 2014 for A$23.2 million. The hotel, located on Kings Cross Road, has since been rebranded Larmont Sydney by Lancemore.
Larmont Sydney is a four-star, 76-room hotel occupying the second to sixth floors of a 12-storey commercial building. TEE Land acquired some commercial suites on the seventh and 10th floors in October with the intention of converting the space into back-of-house operations such as housekeeping, maintenance and engineering. The two penthouses on the 11th and 12th floors have also been acquired and will be converted into 24 additional hotel rooms. Meeting rooms on the second level are also being converted into four rooms, which will bring the property’s total room count to 104, says Phua.
While TEE Land will continue to pursue further acquisitions in the hospitality sector in Sydney, “if the opportunity arises, I will consider residential development”, he adds.
In New Zealand, TEE Land owns the Thistle Guesthouse in Christchurch. It is positioned as a “workotel” offering one- to three-room container-style accommodation on a fouracre site located just a 10-minute drive from the city centre. It was created to provide flexible accommodation for personnel working on Christchurch’s rebuilding programme, following the massive earthquake in 2011.
Malaysia
Two years ago, TEE Land showcased its mixeduse development in Malaysia’s Cyberjaya called Third Avenue. The development has a gross floor area of more than 777,774 sq ft and contains two residential towers and an office block connected by sky bridges that form part of an 800m jogging track. There is also a retail podium on the first two levels of the development. It marked TEE Land’s maiden foray into Malaysia, and its largest overseas investment so far.
Launched in early 2015, it has sold 95% of the commercial retail units at more than RM1,000 psf. More than 70% of the 701 residential SOHO units have also been taken up, says Phua. The residential SOHO units are priced at an average of RM700 psf, with absolute prices starting from RM400,000 for a freehold one-bedroom unit.
‘Challenging times’
TEE Land announced its 2QFY2016 results (ended November 2015) on Jan 12, which saw revenue drop 34.9% to $9.8 million from $15.1 million a year ago. Earnings plunged 39% to $1.55 million from $2.47 million over the same period.
The company is holding its inaugural shareholders’ forum on Jan 20. “We want to engage our shareholders and let them know what the upcoming developments are,” says Phua. “The market is challenging, but we have spread out to Australia, New Zealand, Malaysia, Thailand and Vietnam. So, this may help the group’s turnover.”
Singapore will continue to be the company’s mainstay, though. “Singapore is still a bright spot in the region, and we will continue to source for good sites here,” he adds.
Click here to learn more about 183 Longhaus
This article appeared in the City & Country of Issue 711 (Jan 18, 2016) of The Edge Singapore.