THE market appears indifferent to Wee Hur Holdings' first foray into property development in Australia.
The stock of the Singapore-listed property developer closed flat at S$0.375 in post-holiday trading on Friday, two days after it announced buying a plot in Brisbane with plans to build an iconic high-rise mixed development.
Wee Hur paid an Australian developer A$51.3 million (S$55.1 million) for the plot through its wholly owned Wee Hur (Buranda) Pty Ltd.
Wee Hur's executive chairman Goh Yeow Lian told The Business Times that it was a move to diversify from the "challenging" real estate market in Singapore. But Mr Goh was quick to add: "Singapore is still our main anchor."
The developer has residential and industrial projects in Singapore; both sectors are facing slowdowns. Parc Centros, its Punggol condominium, is already fully sold and expected to complete in early 2016. Wee Hur is also aiming to launch its industrial facility at Woodlands Avenue 12 in the first half of next year.
But the group is not exactly rushing into overseas projects, choosing instead to be prudent and cautious. "We will rest for a while until this (Australian) project is stabilised. This is the project we will focus on for the next 1-2 years," Mr Goh answered, when asked where and when the group will be making its next acquisition.
It had in August signed joint-venture deals with Chinese partners to invest S$24 million for a stake in two mixed-use development projects in Huai'an City, Jiangsu province. Giving an update, Mr Goh said the deal has yet to materialise as "conditions precedent before we can pump in the money to fulfil the agreement haven't been met".
The latest plot acquired is located in Woolloongabba, a suburb about 3km south-east of Brisbane's CBD. It sits at an intersection of major transport arterials beside a transit station. "The land is most suited to be developed into a transit-oriented development with a mix of residential, retail, office and communal components," it said.
The land is 16,946 square metres (sq m). To complete the acquisition, Wee Hur will need to later buy another 2,194 sq m of land from the Department of Transport and Main Roads (DTMR) for A$5.2 million, as part of the intended development under the preliminary development approval.
"It is a must for us to buy and a must for them to sell... It's a three-party arrangement between the Australian developer, DTMR and us, but the state is already allowing us to construct on the land even before we acquire it," said Mr Goh.
The development will be carried out in three phases and construction will start in Q3 2015.
Mr Goh believes Wee Hur is among the early Singapore entrants into the Brisbane property development market. Earlier in August, Lian Beng, Heeton Holdings and KSH Holdings said they will co-develop a A$150 million mixed-use site in Brisbane.
Mr Goh said Wee Hur had explored Sydney as an option initially but found it less attractive due to its higher land prices and saturation with developments. "We see Brisbane as up and coming. We also look at other factors like population growth and the Brisbane City Council's investments in infrastructure," he said.
He expects the eventual property to attract occupiers and investors from other states such as Sydney and Melbourne, rather than foreign investors from Asia. Residential homes in Brisbane have a yield range of about 5-6 per cent.
Separately, Tee Land on Friday also said it is setting up a joint venture in Australia to buy Diamant Hotel in Sydney for A$23.2 million.