Chip Eng Seng’s deft manoeuvres amid Covid
In the current Covid era, which is fraught with uncertainty, business dexterity is key. “We cannot just sit around keeping our fingers crossed and waiting for things to happen,” says Raymond Chia, group CEO of Singapore-listed conglomerate Chip Eng Seng Corp. “We have to be proactive and act swiftly.” The latest acquisition by Chip Eng Seng for its property business is Maxwell House, which the group acquired this May for $276.8 million. The collective sale purchase saw Chip Eng Seng joining forces with Singapore-listed SingHaiyi Group for the first time. SingHaiyi’s managing director Celine Tang is the non-executive chairman of Chip Eng Seng, as she and her husband, billionaire Gordon Tang, have a controlling stake in both listed entities.
Another joint-venture partner in the Maxwell House acquisition is Chuan Investments, an entity linked to Singapore-listed investment company, Chuan Hup Holdings. Chip Eng Seng is taking a 40% stake in the joint venture, with SingHaiyi and Chuan Investments holding a 30% stake each.
Maxwell House marks Chip Eng Seng’s maiden foray into the CBD. “I was interested in Maxwell House because it gives me an opportunity to come up with a new concept for live, work and play right smack in the middle of the business district,” says Chia. In fact, a design competition is going to be held to select the architect with the most interesting concept in terms of design and lifestyle offerings.
The existing Maxwell House is a 99-year leasehold, 13-storey commercial building that was completed in 1971. It is expected to be redeveloped into a new mixed-use development where 80% of the gross floor area will be for residential use, and 20% for commercial. Chia estimates that the new development could see about 330 residential units with a retail podium of more than 46,000 sq ft.
Work from home in the CBD
The development could be a mix of residences, serviced apartments and amenities such as F&B. “Covid gives us an opportunity to think of a concept that is different from the norm,” says Chia. “When it comes to launching a residential project in the CBD, it all boils down to lifestyle.”
Like the rest of the Central Area, there is no minimum dwelling unit size for non-landed residential projects in the CBD. Chia points to recent launches in the Core Central Region where the units that were taken up were primarily one- and two-bedroom units. “It shows that affordability is very important,” he says. “But creating a great concept and a conducive environment for working from home (WFH) is equally important.”
Chia elaborates: “Imagine when you wake up in the morning, you can take your laptop to a roof terrace surrounded by a landscaped garden with plenty of greenery and water features, high ceilings with ceiling fans and a natural setting. All you need to do is plug in your laptop and start working. And when you feel like having a coffee and croissant, you can just place an order using an app, and your breakfast will be delivered to you. This way, you wouldn’t mind WFH because you’re not just working within the confines of your apartment.”
Changing tack at Parc Komo
Covid has also led to a change in strategy for CEL Development, the property company of Chip Eng Seng. It had launched Parc Komo in May 2019, a year before the Covid-19 pandemic. “My strategy then was to sell the remaining units after obtaining TOP [temporary occupation permit],” relates Chia. “I wanted home buyers to be convinced by the actual project.”
Parc Komo is a low-rise development with seven 5-storey condominium blocks containing 276 units, and a two-storey retail podium with 27,000 sq ft of net lettable area, called Komo Shoppes. In 2019, Chia had estimated that construction could be completed in 3–3½ years, and that means the developer would still have a runway of 1½–2 years to sell out the remaining units in the project before the five-year mark for the additional buyer’s stamp duty (ABSD) remission is reached.
However, Covid has disrupted the construction sector in Singapore and most property developers’ plans. The government has extended the project completion period three times, with the latest extension on June 28. Hence, the project completion period has been extended by 18 months to date.
When it comes to the five-year sales period for ABSD remission on the other hand, no further extension has been given beyond a six-month extension announced on May 6, 2020. Listed and foreign companies affected by the Qualifying Certificate (QC) regime likewise did not receive any further relief beyond the sixmonth extension given in the May 6 announcement last year.
Most projects have seen their completion period delayed by six to 12 months. Parc Komo’s completion, which was originally scheduled for 2H2022, has now been delayed to 1H2023. “If the government doesn’t extend the ABSD and QC sales period, and if I still maintain the same strategy, I may not have enough runway to complete and sell out the whole project to meet the ABSD deadline,” explains Chia. “Then, of course, I would get caught.”
He has changed tack. CEL Development started pre-leasing activity at Komo Shoppes from 2H2020, focusing on securing a supermarket, childcare centre and an F&B outlet for a start. The project show gallery was revamped and reopened on May 1 this year. Since then, sales for Parc Komo have progressed steadily. As at June 27, a total of 155 units have been sold, based on options to purchase issued. This means that 56% of the residential project has been taken up. Average selling price has edged up slightly from $1,450 psf at its launch two years ago, to $1,510 psf to date.
Pre-leasing retail space at Komo Shoppes
On June 30, CEL Development also announced that it has preleased 60% of its retail space. Anchor tenants include FairPrice Finest supermarket, which will take up 40% of the retail space on the first level; and White Lodge International pre-school and childcare centre, which will occupy about 500 sq m (5,382 sq ft) on the second level. Coffee Bean & Tea Leaf will be taking up one of the five F&B units on the first level, while Pinnacle Family Clinic will be occupying a unit on the second level. “Our objective is to make sure that the retail component serves the residents of Parc Komo as well as those in the neighbourhood,” says Chia.
Besides the childcare centre and family clinic, there is room for a co-working space on the second level too, he notes. “If we can secure a co-working operator, it will be convenient for our residents as well as those living in the vicinity,” he adds. “WFH is now the norm, but people want a change of environment now and then, and to get out of the house for a few hours a day. So having a co-working space is ideal.”
Incidentally, White Lodge Preschool Group is one of the schools within Chip Eng Seng’s education business. As part of its diversification strategy, Chip Eng Seng had entered the education business in 2018 through its wholly-owned subsidiary, Sing-Ed Global Schoolhouse. Apart from White Lodge, other school groups within Chip Eng Seng’s education business include Repton Schoolhouse Singapore and Invictus International School.
Chia remains confident in Parc Komo, despite the uncertainty due to Covid. Its average selling price of $1,510 psf is attractive in the current market environment, notes Chia. “Where can you find a freehold project in a tranquil setting in the east at such a price?” he says.
Recent government land sales (GLS) have seen strong bids, with 15 bidders for the 99-year leasehold site at Ang Mo Kio Avenue 1, which was purchased for $1,118 psf per plot ratio (ppr) in May. At Northumberland Road near Farrer Park MRT Station, 10 bids were received, and the GLS site was purchased for $1,129 psf ppr in April. This means that the new projects are likely to be launched a year from now at prices from $2,000 psf, reckons Ismail Gafoor, CEO of PropNex.
Concepts and lifestyle offerings
Besides Parc Komo, another project recently launched by CEL Development is Park Colonial at Woodleigh Lane. The 805-unit, 99-year leasehold condo, located opposite the upcoming The Woodleigh Mall, was launched on July 5, 2018. It was fully sold as at May 2021. Based on caveats lodged to date, average price of units sold was $1,758 psf.
The 378-unit Kopar at Newton previewed in March last year, and was launched for sale the weekend before the twomonth “circuit breaker” kicked in on April 7, 2020. The highend private condo is located across the road from Newton Circus hawker centre and Newton MRT Station. To date, 193 units have been sold, translating to a take-up of 51%. Average selling price achieved is $2,310 psf.
Chia believes it is important to come up with an interesting concept for each project. At Park Colonial, it was the colonial-style architecture that held sway, while Parc Komo capitalised on its resort theme. At Kopar, the piece de resistance is the 2,045 sq ft clubhouse with a 38m frontage. Chia sees it as an extension of residents’ homes. “The idea of creating a posh clubhouse is to allow residents to entertain friends and family there, especially these days, when residential units are getting smaller,” he says.
Chia believes the residential sector in Singapore will remain strong as the rich — both locals and foreigners — continue to buy homes. “So we are still hungry for land,” he says.