Ho
Bee cashes in on Sentosa Cove
Shobha Tsering Bhalla
shobha@newstoday.com.sg
Developer is enjoying the highest rise in capital values in Singapore
CLEARLY Ho Bee Investments hitched its wagon to a "lucky"
star when it decided to focus on Sentosa Cove.
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Its stunning 155 per cent jump in net profit to $31.3 million for the
first nine months of 2005 was likely driven by its Sentosa Cove properties.
Average condo prices in Sentosa Cove rose by about 22 per cent year-on-year
against an industry average of 3.8 per cent, say experts.
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"This is according to caveats lodged for condo units there, including
other developers' properties such as The Azure by Centrepoint Properties,"
said Mr Nicholas Mak, head of research & consultancy at property
consultancy Knight Frank.
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Capital appreciation of Sentosa Cove properties has outpaced that of
other locations on the mainland including the traditional prime districts
9 and 10. Its 99-year leasehold Coral Island bungalows are being marketed
at prices that are higher even than those for freehold Good Class Bungalows
in prime locations in the mainland.
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Ho Bee has been the biggest buyer of land at Sentosa Cove since master
developer and planner Sentosa Cove Pte Ltd began selling residential
plots there in 2003.
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So far Ho Bee has bought four land parcels on the island totalling more
than 600,000 sq ft and is believed to be the highest bidder for a tender,
which closed last month, for a 276,467 sq ft plot called the Baywater
Collection. It also plans to build about about 250 condo units on it
if it wins the bid.
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Going by experts' forecasts, Ho Bee's sterling performance should continue
this year. Property consultancy CB Richard Ellis, which is marketing
all of Ho Bee's properties on Sentosa, expects prices of luxury homes
to go up by as much as 20 per cent. However, a more cautious Knight
Frank predicts prices of luxury homes to increase by 10 to 15 per cent
in 2006.
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And according to Mr Donald Han managing director of property services
firm Cushman & Wakefield, "the high-end market has been the
focus for the last 12 months continue to do so for the next 12 months."
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In such a sunny scenario, Ho Bee expects to launch 450 units this year
in Sentosa Cove, Holland Road, Orange Grove Road and Katong. Its first
condo on Sentosa Cove, The Berth By The Cove, is over 90 per cent sold
and has seen the average rise from $785 psf from late 2004 to $850 psf
by April last year.
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The company is also in the market for more residential sites mainly
in the medium and high-end market.
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But is Ho Bee banking too much on the high-end market? What if the price
rise in the high-end market loses steam this year? According to experts
like Knight Frank's Nicholas Mak the luxury end has had a "good
run so there will be some shifting of attention to the mass market."
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Of course, this does not mean that the luxury end will "drop off"
but sooner or later, said Mr Mak, prices will stabilise. "Prices
of Ho Bee's Sentosa properties may continue to rise till mid-year but
this does not mean the sky is the limit. Prices will reach a plateau,"
he said.
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While Ho Bee has a good strategy at the moment and it's riding on a
"wave of publicity," not all of its success is entirely of
its own making, said Mr Mak.
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"It is also partly due to Sentosa being a brand name. In fact,
the rise of condo prices in Sentosa Cove can be attributed to The Azure
whose launch price in September last year was higher than the average
price of Ho Bee's The Berth by The Cove."
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Still, said Mr Mak, Ho Bee has found a niche and "managed to work
together with Sentosa Cove and Sentosa Corporation and its product is
now quite well received".
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And it will continue to be well received for a long time, said Mr Pratik
Burman Ray, a property analyst at UOB Kay Hian. "If you take into
consideration the limited supply of properties in Sentosa, I don't see
any reason why they will not do well this year. In the longer term,
Sentosa will do very well compared to other top-end places," he
said.
