This is not an online get-rich-quick scam to invest in commercial property

It seems like the commercial property segment in Singapore is heating up.

Last week, GAW capital snapped up PoMo, a nine-storey office and retail development in Selegie Road with remaining leasehold of 64 years, for S$342 mil or S$1,900 psf NLA from Enviro-Hub and BS Capital. Oxley also confirmed its interest in buying Chevron House at a reported price of S$660 mil or S$2,526 psf NLA from Deka Immobilien and Oxley is currently doing due diligence on the property.

Today, it was reported that Nadathur Group, one of the co-founders of Infosys, is buying New Cape Inn, a 76-room freehold hotel in Tiong Bahru, for S$67 mil or S$881,579 per key. The price reflects about 2% gross yield.

Is the commercial property sector entering a new upcycle? How can I gain exposure to the multi-million commercial property sector? This are some questions that you might be thinking right now.

SPK is going to sell you an online get-rich-quick scam?

What if SPK tells you that there is an opportunity to:

  • Invest in a 929-year leasehold mixed-use development in River Valley at below S$1,500 psf?
  • Invest in a leasehold serviced apartment in River Valley at below S$1,200 psf?
  • Invest in a freehold office building in Tanjong Pagar at below S$2,200 psf?
  • Have some of the shrewdest businessmen in the property sector to take care of your investments?

Don’t worry. SPK is not running an online get-rich-quick scam.

If you think that the above opportunities are good enough to get you excited over, then you should look at investing in United Engineers Ltd.

16_UE_sq_04

Diversified exposure to commercial, retail and hospitality segments

United Engineers owns a diversified portfolio of prime commercial properties in Singapore. Most of its assets are either freehold or have long leasehold tenures, and they are strategically located either in prime districts or near transportation hubs or major thoroughfare. The flagship property of the group – UE Square is a familiar name among Singaporeans and you might be surprised to know that this property is valued at just S$1,482 psf NLA! Where can you find a commercial property at such price today?

UE also owns the freehold office building at 79 Anson Road, and the freehold office/industrial building at 450/452 Alexandra Road. It also operates the Park Avenue Rochester, a 351-room hotel and Rochester Mall in the One-North. Other smaller assets include Park Avenue Robertson (a 36-room serviced apartment in River Valley) and UE Bizhub Central at Ang Mo Kio (corporate HQ).

UEL

Valuation of these other assets is also undemanding. Just look at Park Avenue Robertson. It is valued at S$1,198 psf, almost half the price of what nearby new launch – Martin Modern is selling. Even though Park Avenue is an older property, such a big price gap might still be difficult to justify. The valuation of Park Avenue Robertson is probably the transaction price of a resale OCR condominium in today’s market.

Leave your investments in the good hands of Mr Zhong Sheng Jian and Mr Pua Seck Guan

With the recent change in controlling ownership at UE, the company is now being led by a consortium of experienced property developers – Yanlord and Perennial Real Estate. Yanlord is a very successful developer in China led by Mr Zhong Sheng Jian and Perennial Real Estate was established by Mr Pua Seck Guan and backed by Wilmar International.

With a strong team of businessmen behind UE, it will probably give you more confidence that your investments is being well-taken of!

So what do you get when you invest in United Engineers?

These are probably what you will get when you invest in United Engineers:

  • Diversified portfolio of commercial and hospitality assets in Singapore
  • Attractive property valuations that are probably below market transaction prices today
  • A hospitality business under Park Avenue Brand
  • A strong management team to manage your investments

Sounds like a good deal, isn’t it?

But readers should take note that investing in shares can be very different from investing in properties. Share price fluctuates daily and price movement could be a function of the general market sentiments or broad-based market movements that may not have anything to do with the fundamentals of the company, and it may take time for a company to realise its full value. Readers should consider their risk appetite, investment horizon, overall portfolio exposure before making an investment.

Happy investing!   

 

IMPORTANT NOTICE

The information and opinion contained in this blog posting above is based solely on the personal analysis of Singapore Property Kaki (“SPK”) and is for general information purposes only. SPK assumes no responsibility for errors or omissions in the contents of this blog posting. In no event shall SPK be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with the use of the content in this blog posting. SPK reserves the right to make additions, deletions, or modification to the contents at any time without prior notice.

Happy reading!

 

 

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The Curious Case of Sing Holdings: A classic case of “Buy the Rumor, Sell the News”?

Sunday evening – Sing Holdings and Wee Hur announced that Parc Botannia sold 230 units on the first weekend of launch

Monday evening – Sing Holdings’ share price surprisingly fell by 4% whilst Wee Hur’s share price rose almost 2%

The Curious Case of Sing Holdings?

Well, probably not. It seems more likely to be a classic case of “Buy the Rumor, Sell the News”. Let’s take a look at Sing Holdings’ share price movement. Prior to the recent run-up in Sing Holding’s share price since July, its share price was hovering around S$0.35 and for the past 4 months, its share price shot up by over 40% to close at S$0.495 last Friday.

 

Sing Holdings
Sing Holdings 1-year share price chart

 

It is likely that investors had already priced in a strong sales performance at Parc Botannia prior to the actual launch. The eventual announcement on Sunday probably brings little surprises to the investors and was probably just to validate the guided sales price given by Sing Holdings and the confirming the strong buying interests at Parc Botannia (which was probably expected). Without many positive surprises to push the share price further up, investors might have taken this opportunity to take profit, in particular for those investors who bought the shares in July at S$0.35 per share.

Then why did Wee Hur’s share price increase?

Let us take a look at Wee Hur’s share price chart below.

Wee Hur
Wee Hur 1-year share price chart

Wee Hur’s share price had remained pretty stagnant at around S$0.24 for most of the year and it was only recently, in October, that Wee Hur’s share price started to trend higher. As at last Friday, Wee Hur’s share price closed at S$0.28, gaining around 17% since the run-up in October. In comparison to Sing Holding’s share price performance, Wee Hur’s shares would not be as overbought as Sing Holdings and it probably means that investors might not have priced in the full impact of Parc Botannia’s launch as optimistically as they had done so on Sing Holdings’ shares. This is probably why Wee Hur’s shares manage to see some gains today.

As a value investor, SPK tends to ignore the short-term noise in the market and focus on the long-term value of a company. From this perspective, SPK still believes in the long-term value of Sing Holdings base on his earlier analysis of the company. There might be a possibility of profit taking to continue for the next few days, but for those believers in Sing Holdings’ value, this might be a good chance to accumulate! But, DYODD please! (DO YOUR OWN DUE DILIGENCE)

Keep Calm and Carry On Investing!