Tang and Chew

TEAMBUILD Land, the property development arm of Teambuild Construction, has developed 20 residential developments and one mixed-use development totalling 910 units over the last eight years. The company focuses on developing freehold private condominiums of less than 80 units, primarily in the neighbourhood of Geylang. For example, the 58-unit La Fleur, 71-unit D’Weave and 78-unit Casa Aerata.

Typically, Teambuild Land aims to launch a project within six to eight months of acquiring the site and complete construction within 18 months. The company has been able to maintain a tight timeline for construction as it has an in-house construction company, Spazio Construction, which was established in 2009. “We prefer a shorter turn­around time — from land purchase to launching our development projects for sale and construction,” says Teambuild Land executive director Richie Chew.

Teambuild Construction was founded in January 1992. In 2008, it diversified into property development with the creation of Teambuild Land, despite the plunge in residential sales during the global financial crisis. In 2009, Teambuild Land went on a land acquisition spree, snapping up mainly freehold sites in Geylang for redevelopment.

“We went all out to aggressively acquire land because the global financial crisis turned out to be more short-lived than expected,” says Tang Hee Sung, CEO of Teambuild Land. “We saw that the global economy was flushed with cash owing to quantitative easing by developed countries’ central banks and low interest rates. We decided to capitalise on that.”

ABSD, QC dilemma

Teambuild Land has since ventured beyond Geylang. Its recent projects include Spazio @ Kovan, a mixed-use development with 48 residential and 34 commercial units. Launched for sale in 2013, the project is fully sold and scheduled for completion in 3Q2016.

Another project is the 67-unit Suites @ Newton, which was launched for sale in 2011 and completed in March. So far, eight units remain unsold. When the project was first launched, the average price was S$2,000 psf. The last transaction was in November 2014, when a 1,324 sq ft, two-bedroom penthouse unit was sold for S$1.5 million, or S$1,133 psf.

The 58-unit Singa Hills located in Jalan Singa, off Bedok Reservoir Road, was also completed in March. The project was launched in June 2014. So far, about 50% of the units have been sold at an average price of S$1,300 psf. According to caveats lodged with URA Realis, a 463 sq ft, one-bedroom unit was sold in April for S$720,000 (S$1,557 psf).

Suites @ Newton is a redevelopment of the former Maison Royale, which Teambuild Land purchased en bloc in 2011, while Singa Hills is a redevelopment of the former Singa Court, which Teambuild Land acquired in August 2013.

If there are still unsold units at Suites @ Newton by March 2018, Teambuild Land will have to pay extension charges under the conditions of the Qualifying Certificate (QC), which requires all residential property developers with at least one foreign shareholder to sell out all the units within two years of obtaining a Temporary Occupation Permit. Teambuild Land says it is open to selling the eight units to a bulk buyer or individual owners.

On the other hand, Singa Hills is caught in a conundrum. On top of the QC extension charges, which will kick in from March 2018, it will have to pay a 15% additional buyer’s stamp duty (ABSD) on the land acquisition cost, if it does not complete and sell out the project within five years of acquiring the site — that is, by August 2018.

To move the unsold units at Singa Hills, Teambuild Land has offered sporadic star-buy promotions with discounts of up to 10% for selected units. There are also plans to convert two 2-bedroom units into show homes, which will be available for sale. The developer is planning to relaunch the remaining 29 units for sale towards year-end.

Alternative income streams

Once all its unsold stock is cleared, Teambuild Land intends to stay out of the private residential development market for a while. “We don’t want to be saddled with more unsold units,” says Tang. “We will sit out the next two years and see how the market pans out before deciding on our next move.”

After eight rounds of property cooling measures introduced by the government since September 2009, Teambuild Land’s management is reassessing the future direction of the company’s property development business.

Singa Hills

Teambuild Construction started another business in 2006, namely Spazio Concepts. It was originally created to supply interior fittings and finishing such as flooring, kitchen cabinets as well as kitchen and bathroom accessories for the Teambuild group’s projects. Over the years, the business has expanded to include fitting out HDB public housing flats under HDB’s home improvement and built-to-order programmes. So far, Spazio Concepts has secured contracts worth S$20 million over the next two years, says Tang.

About 70% of Teambuild Land’s group revenue comes from property development, with Spazio Concepts contributing 30%. Over the next two years, Tang reckons the proportion of revenue contribution could be reversed as the group pares down its land acquisition and property development activities.

“Spazio Concepts is a self-sustaining entity with its own income stream,” he says. “I wouldn’t be surprised if, in the future, only 10% of its revenue comes from in-house development projects and 90% from external contracts.”

To make Spazio Construction self-sustaining as well, Teambuild Land is working towards securing BCA Grade B1, which will allow it to tender for public sector projects worth up to S$40 million.

The management is not overly concerned that Spazio Construction will compete directly with parent company Teambuild Construction. “The market is large enough to support everyone,” says Tang. “We only need to undertake one or two construction projects to tide us over this current market downturn.”

While Teambuild Land may abstain from developing private condo projects for the time being, the developer is still open to opportunities in the landed housing segment. According to Chew, the developer is looking at acquiring and redeveloping old bungalows in the eastern region (Districts 15 and 16). “There are still buyers wanting to upgrade to landed homes in the east, particularly with the upcoming Thomson-East Coast Line and availability of good schools,” he adds.

Venturing abroad

Teambuild Land is also looking beyond Singapore’s shores. In 2013, it partnered Myanmar company Htet Oo Co to develop 20 shophouses in Pathein, located about 196km west of Yangon. All the shophouses have been sold since the project was launched in February. They are scheduled for completion this month. One reason why the project can be completed in just five months is because Htet Oo has a manpower training centre for construction workers.

Given the success of its maiden project in Myanmar, Teambuild Land is looking at securing larger sites in Pathein with Htet Oo.

Besides Myanmar, Teambuild Land has also zoomed in on Iskandar Malaysia. According to Tang, the company is in the midst of negotiating with a Malaysian company to jointly develop a 100-acre, 99-year leasehold industrial land in Ulu Tiram, about 18km north of Johor Baru, which the latter owns. If successful, Tang hopes to target Singapore-based small and medium enterprises looking to relocate their manufacturing operations to Johor to save costs.

Tang is no stranger to Malaysia. He oversaw the development and construction of two projects in Batu Pahat, Johor, 10 years ago when he was with Teambuild Construction. One was a 350-unit condo called Hill View Loft and the other was a landed housing project under the affordable housing scheme for locals. The projects were jointly developed by Teambuild Construction and a Malaysian partner who owned the land. “Given our limited resources, we will concentrate on Singapore and build our presence in the two new markets — Malaysia and
Myanmar,” he says.

This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on June 27, 2016. Subscribe here for your personal copy.

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