[UPDATE] Roxy-Pacific goes shopping
By Charlene Chin
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - While most businesses tightened their belts this year, Roxy-Pacific Holdings went on a shopping spree. Most recently in November, the Singapore-listed property developer acquired a residential development site in the Guillemard neighbourhood for $93 million. Occupying a land area of 37,131 sq ft, the developer intends to build a 137-unit residential project and launch it by 3Q next year.
The developer acquired a residential development site in the Guillemard neighbourhood for $93 million (Credit: Cushman & Wakefield)
“The area is a bit underrated and under-appreciated,” says Teo Hong Lim, executive chairman and CEO of Roxy-Pacific. “Although there is still a stigma to it, a lot of F&B shops have set up there, further revitalising the neighbourhood,” he says, referring to the Geylang estate, more infamously known as Singapore’s red-light district.
The developer was on a hunt for new sites to build on. Likening the business to a “manufacturer”, Teo tells EdgeProp Singapore that they try to cater to different segments of the market. “Our mass-market stock is actually running low, so we felt that it was probably high time that we acquire new supply,” he says.
Projects that cater to the wider segment of the market are now priced on average at between $1,800 psf and $1,900 psf, although in the past, that used to mean property prices ranging between $1,300 psf to $1,400 psf, says Teo.
The office building at 350 Queen Street in Melbourne CBD (Credit: TE Capital)
Healthy market sentiment spurs sales
The decision to purchase the Guillemard site was also partly due to the healthy residential market sentiment in Singapore. “Despite Covid-19, the property market, somehow or another, seems to be moving,” says Teo. Although sales were sluggish at the start of “circuit breaker”, momentum started to pick up towards the end of the lockdown and as measures were eased, says Teo. As at November, developers in Singapore have already sold 8,791 private new homes, although this is still 8.1% lower than the 9,566 units sold in the same period of 2019.
Among Roxy-Pacific’s fast-moving projects are View at Kismis, a 186-unit project spread across six blocks of five storeys each in the Beauty World neighbourhood. The public reception of the project “took us by surprise”, says Teo. Despite having to tear down the project showflat to make way for on-site construction, View at Kismis is now 86% sold. Designed to emulate vineyard living, View at Kismis is set to occupy an undulating plot of 100,337 sq ft, with greenery covering 40% of the surface area.
The kitchens in View at Kismis come with wood laminate cabinets, paired with charcoal quartz countertops (Credit: Samuel Isaac Chua/ The Edge Singapore)
Meanwhile, NEU at Novena, jointly developed by Roxy-Pacific and Macly Group, comprises 87 apartments in a 17-storey tower. Riding on its “unique” locality, sales moved fast and 86% of units are already sold, says Teo. The neighbourhood is adjacent to Singapore’s upcoming largest healthcare complex in Novena, which spans 17ha and is slated for completion by 2030. The healthcare hub is expected to grow its workforce to some 30,000 healthcare professionals by this year, which provides an ideal tenant pool to homeowners at the project.
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In Singapore’s Central Core Region, the developer is also building RV Altitude, with a total of 140 units of two-bedroom selections from 441 sq ft to 624 sq ft, and dual-key offerings from 624 sq ft. Part of its strategy is to build smaller sized units to ensure that the quantum prices of the units are more affordable, says Teo. This is in contrast to planning for larger units that would fetch more premium prices in the city centre. So far, 40% of its units have been sold.
Show unit of RV Altitude. The development offers 140-units of two-bedroom selections in the River Valley enclave (Credit: Samuel Isaac Chua/ The Edge Singapore)
‘A flight to quality offices’
Elsewhere in Australia, Roxy-Pacific has also acquired an office building at 350 Queen Street, in Melbourne CBD for A$145 million ($145.8 million). The purchase was made via a joint venture partnership with TE Capital Partners, a Singapore investment management firm set up by family members of Tong Eng Group. “We were not able to fly down, but we are familiar [with the place] and actually already evaluated the property last year,” says Teo.
In a time when companies are still trying to figure out their real estate footprint, Teo admits that purchasing an office in times like these still brings “some worries”. But “as developers or business people, we are also risk-takers, and you have to take some independent views, and until today I think there is no clear view whether work-from-home will effectively cut down office demand,” he says.
To hedge against the uncertainty, Teo’s principle is to stick to key cities. “These places have been around for decades, and demand for office spaces here are not going to shrink to zero,” he says. “What could happen, the way I see it, is that there will be a flight to quality,” Teo explains.
Large companies would still require a physical office, and typically flock to central locations because it is a converging point. “My view is that offices in the outskirts may actually, after a while, start to drop in demand further.”
Show unit of NEU at Novena. Owing to its proximity to Singapore’s upcoming healthcare hub, sales at NEU at Novena moved fast and 86% of units are already sold (Credit: Samuel Isaac Chua/ The Edge Singapore)
Teo believes that once restrictions are lifted for people to go back to the office, crowds will start trickling in. “At least from the bosses thinking, we want staff to be back. Of course, all these Zoom meetings help — we don’t need to wait for people and there isn’t a valid reason to be late now. But at the end of the day, it’s still different.” Teo himself, who has already returned to the office, finds it “demoralising” when having to work in a largely empty office.
What helps balance out the risk of the future for offices is also longer leases. With multiple office buildings in Auckland, in New Zealand, and Melbourne and Parramatta in Australia, Teo shares that leases there run an average of two to three years. “So in a way, for the next two to three years, we are not going to face a complete collapse of our income.”
Roxy-Pacific’s joint-venture project along Grange Road, 120 Grange, comprises 56 units of one- and two-bedders and is now fully sold (Credit: Roxy-Pacific)
Spreading the bet
Beyond just residential and office, Roxy-Pacific also owns hospitality and retail properties. Its main strategy overseas is to acquire buildings that have already been built, which it can take over immediately. “We are quite yield-based, and hope to find something that we can buy and straight away — through financing — make a certain net yield,” he says.
This strategy paid off for one of its acquisitions of a retail building in Ginza, Japan, which it acquired for JPY6 billion ($76.95 million) in June 2019, and subsequently sold this March for JPY8.7 billion.
Roxy-Pacific also owns a 40% interest at 33 Argyle Street, in Parramatta, Sydney, which is a B-grade office building comprising a quasi-retail ground floor suite and café, three levels of above-ground parking providing 138 car spaces, six upper office levels and rooftop plant rooms (Credit: TE Capital)
In Dec 2017, the developer also acquired a commercial building, Melbourne House, along Little Bourke Street, which it had intended to redevelop into a hotel. But due to the havoc that the pandemic caused to the hospitality industry, the property player is revisiting its decision.
“Very likely it may become an office building”, he says, restoring the property to its former glory. Prior to the acquisition, the building used to house office tenants.
“We typically run a strategy that, while we are doing the plans for the property, we don’t demolish the building,” says Teo. Now, the developer is evaluating whether or not to top up another seven to eight storeys to create a “brand new office building”, which would “save us quite a bit of construction cost”, he says.
Besides these, the developer also owns hotel properties in Kyoto and Osaka in Japan, and the Maldives, which it recently opened this year. Construction is also underway for a 91-key boutique resort in Phuket, which Teo estimates would be ready by 3Q or 4Q of next year. However, “we may not be opening it yet, depending on whether Covid-19 is still ongoing,” he says.
Dunearn 386, another of the developer’s projects, comprise 35 units in a five-storey block along Dunearn Road (Credit: Roxy-Pacific)
Looking ahead, Roxy-Pacific’s guiding mantra to the unpredictability of it all is to stay cautious. “Because hospitality will take a while, that’s one of our segments. For office, we can do our investment and manage our current buildings, but we also have to watch how the work-from-home impact will unfold,” says Teo.
“We will work hard to try to look for opportunities, but carefully. We have a certain budget to run, but we also don’t want to drain down our ideal liquidity position, to put ourselves in danger. it’s not a time to be overly aggressive.”
For price trends, recent transactions, other project info, check out these projects' research page: View at Kismis, NEU at Novena, RV Altitude
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