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THE developer now has more than 30 units on the market, mainly semi-detached and detached houses on freehold sites and in well-established private estates, and is taking its time selling them
Toh Estate, a private estate located off Upper Changi Road, is undergoing the kind of change many other established estates across Singapore are experiencing: Old bungalows are torn down to make way for semi-detached houses and, in some cases, even three to four terraced houses or strata-titled houses.
Three detached houses at Toh Heights, located on the highest point of Toh Estate, are on the market. The houses enjoy views of the surrounding neighbourhood, says Donald Goh, director of investment sales at Savills Singapore, the exclusive marketing agent for the properties.
Each detached house is designed as a contemporary 2½-storey home with six bedrooms, a study, home lift, basement parking, swimming pool and landscaped garden. Each has a built-up area of 7,670 sq ft and a land area ranging from 5,287 to 5,681 sq ft, and prices are $8.63 million to $8.91 million. The houses are under construction and scheduled for completion by end-2014.
The developer of the three detached houses at Toh Heights is Wah Khiaw Developments, which has quietly emerged as a major player in this space. Wah Khiaw has seven houses in Toh Estate alone, including the three detached ones. The others are a pair of 2½-storey semi-detached houses in Toh Avenue completed last April, and another pair of semi-detached houses in Toh Crescent currently under construction and expected to complete by mid-2014. The semi-detached houses have five bedrooms, a study, swimming pool and roof terrace. Depending on their land sizes, the semi-detached houses in Toh Crescent are priced from $5.28 million.
In the last five years, Wah Khiaw has been quietly buying old bungalow sites in established private estates for redevelopment and, today, the company has a portfolio of more than 30 houses on the market for sale. Of these, two-thirds are located in the eastern region: the prime District 15 neighbourhood of Katong, on Arthur Road, Goodman Road, Roseburn Avenue and Meyer Road; Langsat Road, in the neighbourhood of Joo Chiat Terrace; on Jalan Nipah, off Bedok Road; and in Toh Estate.
Tan Seng Ong, managing director of Wah Khiaw Developments who prefers to be known as just "Mr Tan", points out that the group does not focus exclusively on the eastern region. It has landed housing projects in the prime districts as well. For instance, in prime District 11, on Barker Road, Wah Khiaw has four semi-detached houses under construction and expected to be completed by year-end. In the Dunearn Road area, off Bukit Timah and also in District 11, a pair of seven-bedroom semi-detached houses will be completed by the middle of the year. One has been sold and the other is still available, for $7.38 million.
In the prestigious District 9 estate of One Tree Hill, which is accessible via Paterson Road and Tomlinson Road, Wah Khiaw is developing four semi-detached houses in Jalan Tupai. Construction is underway and the properties are due for completion by end-2014. Incidentally, the four semi-detached houses on Jalan Tupai are a redevelopment of an old detached house sitting on a 10,432 sq ft freehold site, which Wah Khiaw bought last April for $21 million ($2,005 psf) in its latest land acquisition.
Shifting focus
Prior to 2008, Wah Khiaw had ventured into the development of boutique apartments and condominium blocks, typically comprising up to 30 or 40 units. These are also freehold projects in prime, established private residential enclaves. For instance, in the neighbourhood of Haig Road, it has developed Haig Ten in Haigsville Drive, completed 11 years ago, and The Silverton on Haig Lane, completed 14 years ago. On Pasir Panjang Road, it developed the apartment blocks at Parc Regency and Pasi Panjang Lodge. In 2002, it also developed Thomson Regency in the Thomson Road neighbourhood. In the Sophia Road neighbourhood off Selegie Road, it developed three condos: Wilkie 87 and Niven Loft, both completed in 2004, and Mackenzie Regency, in 2007.
Mackenzie Regency was completed at the height of the en-bloc fever and the peak of the previous property boom. Wah Khiaw's Tan decided then that it was time to exit the private-condo segment, as the market had become toppish, and focused on landed housing developments instead. "We went into landed [housing development] while the others were still focused on condos," he says. "A lot of hot money came in. We decided not to [develop] any more condos and just concentrate on landed [homes]."
A practical businessman, Tan explains his strategy simply: "To me, as long as we can make money, we will definitely buy [more land for redevelopment]. The most important thing is the land cost." With listed property giants competing for sites in the condo segment, Tan concluded that it was "very hard to challenge the big guns".
Over the last 28 years, Tan has developed close to 300 private homes, including apartments, condos and houses. He is content with focusing on small-scale developments. "We make money in one project, then roll over, build the next, and then roll over on to the next," he says.
The son of a farmer, Tan grew up in the Tai Seng area, in Upper Paya Lebar. While growing up, he pondered his future and wondered about his career choices. He thought very hard about which industries were the most resilient and concluded that the two things that people will always need are "to eat and to have a roof over their heads", deciding that the F&B and housing sectors were his best bet. "But, of course, you must be very careful," he adds. "Overnight, you can be a millionaire. But overnight, you can also have a nightmare."
Tan started his career at the Public Utilities Board and worked as a property agent in the evenings. "My wife would answer all the phone calls for me and make the appointments, and after I finished work at 5pm, I would bring clients to view the properties," he recalls. It was in 1982, and Tan was in his early 20s.
After a few years as a property agent, Tan realised that property developers made more money. He decided that was what he wanted to be. His maiden development project was his first home, a bungalow in the east, where he still lives with his wife, three sons and a daughter.
A cautious investor, he deems buying en-bloc sites as being "high-risk" and bids selectively for government sites. The most recent government land tender he participated in was in 2009, for the mixed commercial and residential site at the junction of Seletar and Yio Chu Kang Roads. There were 12 bids, with Wah Khiaw ringing in at No 10. The site was won by Far East Organization, which has since developed it into The Greenwich, a 319-unit condo that has been fully sold, and an adjoining 45,000 sq ft retail and F&B podium called Greenwich V.
In 2004, Wah Khiaw won three of seven bungalow plots offered for sale in Sentosa Cove in the second phase of sales. The bungalows have since been completed and leased out. "I paid only $241 psf ppr [per plot ratio] for the land at that time," says Tan. The highest price achieved for a bungalow in Sentosa Cove was in 2010, when a unit on Ocean Drive with views of the sea was sold for $28.2 million, or $2,989 psf.
It was Tan who gave architect Robert Greg Shand his big break in Sentosa Cove. Shand has since designed more than 20 private homes in the exclusive waterfront residential enclave. Tan also engaged Shand to design Wah Khiaw's semi-detached houses in One Tree Hill, as well as the ones on Jalan Nipah. "He's very capable, and very detailed in his design," says Tan.
The developer has also been willing to adapt to changing trends and tastes. "Last time, we built a lot of brick walls," says Tan. "Now, people like a lot of glass, a simple design but deluxe-style. So, for every house we develop now, we must have a swimming pool and a home lift."
Tan is also concerned about replacement costs. To him, the most important thing about investing in bungalows is the ability to rent them out. "The bungalows in Sentosa Cove are all held for rent; I have never sold any of them," he says. Likewise, Tan is also reluctant to part with his freehold bungalows in the prime districts unless they fetch his asking price. These detached houses are generally sitting on smallish freehold land plots of 4,500 to 6,000 sq ft, and usually have at least five bedrooms, a garden and a swimming pool. They can command at least $20,000 in rent a month, says Tan.
For example, his newly completed detached house on Arthur Road was tenanted in December for $24,000 a month. Meanwhile, the neighbouring detached house on Goodman Road was recently leased out at $23,000 a month to a senior executive at a Japanese company. The two bungalows are newly completed, sit on freehold plots of 4,300 to 4,500 sq ft, and are on sale at $9.75 million and $9.96 million respectively.
Landed property 'still the better choice'
"Even today, I think landed property is still the better choice for investment," says Tan. His rationale is that the buyers in this segment are less likely to be hampered by affordability issues. "These are high-net-worth investors. And detached houses are getting rare." The number of detached houses totalled 10,567 units as at end-4Q2012. Meanwhile, there are 21,370 semi-detached houses and 38,451 terraced houses, according to URA 4Q2012 data, versus 71,256 private apartments and 135,967 condos.
Certainly, the recent government measures, especially the higher additional buyer's stamp duty (ABSD), have affected both homebuyers and developers. In the category that Wa Khiaw participates in, which is residential development sites with fewer than five units, developers must complete and sell all the units within three years, if they do not want to be subject to the 15% ABSD, according to the Inland Revenue Authority. For residential development sites with more than five units, developers have to complete and sell all the units within five years, in order for the ABSD to be waived. The 15% ABSD came into effect on Jan 12.
The higher ABSD has also increased the development risk for developers. "I think, for the time being, the landed property market is quite steady, but it will take a bit longer to sell out the houses," notes Tan philosophically. "And now, with the market being relatively quiet, land owners are also more realistic."
In the meantime, Tan believes the best course of action for the group is to continue watching the market and looking out for opportunities to buy more land. Given the scarcity of landed property, he will take his time to sell the properties in his portfolio. "Under the new government regulations, we will buy one, build quickly and sell," he says. "We cannot hold and landbank anymore."
This story first appeared in The Edge Singapore weekly edition of Mar25-31, 2013.
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