GuocoLand shows its mettle at Lentor
LENTOR Hills estate in District 26 is proving to be fertile ground for Singapore-listed GuocoLand, whose major shareholder is tycoon Quek Leng Chan.
GuocoLand is the predominant developer in the Lentor Hills estate. Its latest project in the area scored, with 400 out of 533 units or 75 per cent of the homes at 99-year leasehold development Lentor Mansion sold at its launch over March 15 and 16.
GuocoLand is the majority partner in the project, which is jointly developed with Hong Leong Holdings.
In terms of price per square foot (psf), units sold at Lentor Mansion ranged from S$2,104 psf to S$2,478 psf.
The project offers two, three, four and five bedroom units. Buyers snapped up all of the two-bedders.
Lentor Mansion’s strong sales will provide a fillip to March’s figures for new private home sales in Singapore.
Challenging market
In February, developers’ sales were tepid amid lack of new condo launches due to the Chinese New Year festivities.
According to data released by the Urban Redevelopment Authority, developers sold 149 private homes in February, 47 per cent fewer than the 281 units moved in January.
Could the strong sales at Lentor Mansion’s launch be an outlier? Another launch in the Lentor Hills estate earlier this month, namely Lentoria, saw a much lower sales take-up rate.
My colleague Ry-Anne Lim reported that Singapore’s inventory of unsold new private homes rose 20 per cent over the last two years and could continue growing in 2024, as more projects come to market.
She noted this may signal trouble for some housing projects that are approaching a critical sales deadline this year or the next – to clear almost all unsold units or stump up a hefty stamp duty payment running into millions of dollars.
Against a tougher backdrop with homebuyers being highly selective on what to buy, GuocoLand’s management can pat itself for a job well done with Lentor Mansion.
The group is executing well in Singapore. Besides developing various award-winning private housing projects here, the group is also behind integrated developments Guoco Tower in Tanjong Pagar and Guoco Midtown in Beach Road.
Still, GuocoLand’s share price trades way below book value. Could its board of directors do more to address this anomaly?
Some companies with undervalued share prices resort to doing share buybacks. Recently, property giant City Developments Limited (CDL) initiated share buybacks for its ordinary shares on the open market, citing its discounted share value as a reason.
My colleague Ben Paul opines that CDL should perhaps offer more information on how the buyback programme will be managed alongside its plans to expand its portfolio of assets and take on more development projects so as to provide a lasting boost to the market valuation of its shares.
Reit woes
I address optimising value for investors in The Level Ground this week.
I have been following developments surrounding the push to internalise the management of Sabana Industrial Real Estate Investment Trust (Sabana Reit). Having a Reit’s trustee own the management instead of an external third party has merit.
Nonetheless, what may best serve the interest of Sabana Reit’s unitholders is for the trust to stop pursuing internalisation of management and, instead, explore either a sale of the trust or all its assets.
While Sabana Reit’s unitholders grapple with what appears to be a fraught journey to internalisation of management, they can take comfort that they are receiving distribution payouts.
My colleague Raphael Lim noted that for the financial period ended Dec 2023, six Reits have partly or fully halted distributions to unitholders, amid worsening balance sheet metrics.
Analysts whom Raphael spoke to are divided over whether more players are at risk of a similar situation in the coming months.
Among the troubled Reits, Manulife US Reit, will see a slew of changes at the top ranks of its manager. The current CEO and other senior executives are leaving at the end of June.
While some Reits struggle, analysts expect hospitality-related trusts to continue their strong run, with global travel continuing to grow and the trusts acquiring new hotels to increase their revenue.
A Reit which is buying assets is Frasers Logistics & Commercial Trust. The trust is acquiring an 89.9 per cent interest in four logistics assets in Germany from its sponsor, Frasers Property. The agreed property purchase price is 129.5 million euros (S$188.9 million).
Overseas markets
Many Singaporeans are outward looking. Some have taken to buying homes overseas, with the UK being a popular market. Those interested in purchasing homes in the UK may wish to speed up their buying decisions.
Property sellers in the UK boosted the prices they are asking for homes at the quickest pace in 10 months in March, indicating the market is strengthening, according to the online sales portal Rightmove.
In Canada, home sales pulled back in February after strong growth in the previous two months, but prices stopped falling in a potential sign that a revival in the market is underway ahead of anticipated interest rate cuts by the Bank of Canada.
Meanwhile, China’s home price declines eased slightly in February after authorities stepped up efforts to salvage the beleaguered market.
New home prices in 70 cities, excluding state-subsidised housing, fell 0.36 per cent month on month in February according to data from the National Bureau of Statistics.
Over in Hong Kong, existing home prices dropped in the first full week after the city scrapped its property curbs according to the Centa-City Leading Index. Values are down over 2 per cent since the beginning of the year.
Moreover, Hong Kong’s home sales rebound could be losing steam if last weekend’s transactions at major estates are any guide.
Back home, my colleague Yong Jun Yuan reported on questions raised by first-time homebuyers over a lack of clarity in government policy on assessments for housing loans and grants given by the Housing and Development Board (HDB).
Some young couples are concerned that their HDB housing loan amounts will be assessed based on the new HDB Flat Eligibility letters, with no reassessments possible in the future.
Finally, a person flushed with cash may fancy buying freehold industrial property Tong Lee Building, near MacPherson Road, which has been put up for collective sale through an open tender. The guide price is S$410 million.
Anyone, including foreigners, can buy Tong Lee Building, without needing to pay Additional Buyer’s Stamp Duty.
