Building firm takes on the glitz

YOU could say that the Singapore Flyer sparked KOP Limited's venture into entertainment.

When the $240 million wheel was placed under receivership in May last year, it set KOP's CEO, Ong Chih Ching, hypothesising what she would do to revamp the attraction. The research she embarked on and ideas she brainstormed lured her into that glitzy world. "We wanted the Flyer to become a city amusement park which is common in many places, because it's a small site," she told BT. The developer company eventually submitted, but later withdrew, a bid for the Flyer.

At that time, the company had already been preparing to list for about a year. Ms Ong was also looking at how to transform KOP to take it to the next level, having developed iconic projects such as The Ritz-Carlton Residences at Cairnhill, Hamilton Scotts in Orchard (whose units boast "sky garages"), and 10 Trinity Square, a swanky hotel cum luxury residence in London.

"You've kind of made waves in the marketplace as a newcomer and you have a certain brand identity associated with your name, so the next step is: How do you make yourself better and make more money? So that's like creaming the premium that you've created."

It was also around that time that she was in talks with then-CEO of Scorpio East, Ko Chuan Aun, for the entertainment firm to do movie productions at KOP's Montigo Resorts in Nongsa, Batam. (This didn't materialise in the end.) By then, KOP had already embarked on the Winterland Shanghai project - a $2.8 billion project on 18 hectares of land which will include retail, office, residential and hotel components as well as strong entertainment content - slated for completion in 2018.

"We had actually started talking to people and I thought if we had Scorpio East's track record - it's still a good name in Asia - then it would be easier for us to get content partners. It's very weird for real estate players to sign up with content partners. But if we merged with Scorpio East, we could immediately acquire their entertainment expertise which is precisely what we lack."

Besides film production, Scorpio East also organised concerts and distributed video entertainment. Mr Ko was meanwhile looking for potential business to invest in to rejuvenate the company as certain segments, such as video, were fast phasing out. This potential synergy opened doors for the reverse takeover that eventually occurred and completed in May this year.

Due diligence

Asked if she wasn't wary of taking over a loss-making company fraught with accounting irregularities and with its directors earlier caught in a defamation suit tussle, Ms Ong said: "We did due diligence on the company and realised it's not the company at fault but the directors.

"I always believe that controversy doesn't matter, it's how you deal with it. Sometimes, that creates publicity. I didn't mind. I wasn't averse to that."

With Scorpio East's credentials in its pocket, the company's strategy is now to focus on large entertainment-driven, mixed-use developments in key Chinese cities. Fending off market apprehension over its entry into the untested area of entertainment-centred real estate, Ms Ong explained that in every venture, it looks for strong operators to partner. For instance, it roped in hotel management firms to help with its hospitality projects, and is working with broadway producers for Winterland Shanghai's entertainment component. For the ski park, Unlimited Snow is designing and operating the space, while the Russian Ski Association will bring in competitions and professional skiers as well as conduct classes for visitors.

"We're not saying we will go and operate it ourselves. We won't ever do that, we will always call on third-party expertise," she said. In fact, it is not much different from developers of retail properties, she added. "It's quite the same: For retail, you find retailer tenants; for us, we find entertainment-related tenants. And just like there are developers which own some retailers so that they can become their anchor tenants, there is some intellectual property which we want to own that can become our anchor tenant too."

For KOP, this could be Victory Hill Exhibitions, the creators of interactive exhibitions based on blockbusters such as Star Trek and Marvel's Avengers. KOP acquired a majority stake in the US-based company in April this year.

That said, Ms Ong is not ruling out developing other kinds of properties - not even high-end residential, which is bearing the greatest brunt of cooling measures right now. KOP sold its 36 unsold units at the luxury Hamilton Scotts to privately-held Chinese developer Reignwood in April last year. As at end-May, 33 units remain unsold.

But she feels quite certain that cooling measures will soon be lifted: "These measures are the government's answer to what the people wanted. I think the next voice they are going to hear will come from the 85 per cent who own real estate and are unhappy that their property prices have been depressed. A lot of their wealth is housed in their homes."

Offices remain a good investment, Ms Ong reckoned. In May this year, KOP formed a consortium with Lian Beng Group, KSH Holdings and Centurion Global to buy Keppel Reit's 92.8 per cent stake in Prudential Tower for $512 million. KOP also has plans to expand its Montigo five-star family-friendly resorts brand.

If there is one thing she would like to see in the developer industry here, it is more camaraderie and cohesiveness among women in a field that already is mostly helmed by men at the top. "The men go out and resolve issues together over drinks, but women in the industry tend to be less helpful, more guarded and not band together. Women at the helm especially tend to be less emotional and more factual at work; you can't appeal to them.

"I wish women can drop their guard, relax and be more open. Already, there is the 'what do you know, you're a woman' mentality that we have to contend with in the industry, which we have to counter by constantly proving ourselves to gain others' respect," she said.

leemx@sph.com.sg

@LeeMeixianBT