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UOL Group to launch Meyer Road

cecilia.chow@bizedge.com

The Singapore-listed group will focus on selling down inventory of its residential projects and will be selective in its land banking strategy

Singapore-listed property firm, UOL Group, which has a market capitalisation of $5.7 billion, recorded a 13% increase in revenue to $2.4 billion in FY2018. Earnings however, were down 51% to $433.72 million, mainly due to the $535.6 million gain recognised upon the consolidation of United Industrial Corp (UIC) group in FY2017.


Redevelopment of the Pan Pacific Orchard, which will have 350 keys and sky gardens when completed in 2021 (Credit: UOL Group)

Gearing ratio increased y-o-y from 0.21 to 0.28 as at Dec 31, 2018, due mainly to higher borrowings for the acquisitions of the government land site at Silat Avenue for $1.035 billion ($1,138 psf per plot ratio) last April; and the eight-storey office building at 72 Christie Street in Sydney for A$154.52 million in December.

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The gearing ratio of 0.28 “is still considered quite low”, says Liam Wee Sin, UOL Group chief executive at a press conference on Feb 26. “And it gives us the debt headroom for future acquisitions.”

Property development contributed to 41% of revenue and 26% of operating profit in FY2018. Property investments, on the other hand, accounted for 23% of revenue but 56% of operating profit in FY2018.

Property investments

The increase in profit contribution from property investments was owing to the consolidation with UIC, which became a wholly-owned subsidiary in August 2017. This was after UOL purchased 60 million shares of the listed entity, which brought its stake to more than 50%.


Novena Square is one of the office buildings within the property investment portfolio of UOL Group (Credit: Samuel Isaac Chua/EdgeProp Singapore)

UIC has a portfolio of office and retail properties totalling 3.42 million sq ft in net floor area. Office buildings include Singapore Land Tower, Clifford Centre and The Gateway, while retail properties are West Mall and Marina Square shopping mall.

UOL’s property investments include office complexes such as Novena Square, United Square, Odeon Towers as well as shopping malls such as Velocity@Novena Square, United Square and Kinex. Formerly known as One KM, the mall has been rebranded Kinex to focus on “experiential retail”. UOL’s hotel portfolio includes Parkroyal on Pickering in Singapore, the Pan Pacific Orchard which is being redeveloped, the newly refurbished Parkroyal Penang Resort and Pan Pacific Melbourne.

‘Singapore-centric’

According to UOL, the company continues to be “Singapore-centric” as 81% of its revenue contribution came from its home market. The rest were from Australia, China, Malaysia and the UK. As at end-FY2018, UOL has total assets valued at $20.66 billion, of which Singapore accounts for 84%.


The 729-unit The Tre Ver was launched last Aug, and is 40% sold to date (Credit: UOL Group)

Last year, UOL launched two projects. The first was Amber 45, which was launched in May. The 139-unit, freehold development on Amber Road is 71% sold to date at an average price of $2,344 psf, says Liam. The other project was the 729-unit The Tre Ver, launched in August 2018. The Tre Ver is a redevelopment of the former Raintree Gardens en bloc site in Potong Pasir, which UOL purchased for $334.2 million in October 2016. To date, the project is 40% sold with an average price of $1,558 psf.

Liam points out that Amber 45 was launched before the property cooling measures took effect  on July 6, while The Tre Ver was launched after that. Despite competition from other new launches in the neighbourhood, “sales have been healthy”, he notes. “We have continued to see steady sales, and we want to hold our selling prices.” In fact, Amber 45 has set a new benchmark in terms of prices in the Amber area, he points out.

Projects fully sold, completed ahead of schedule

The 663-unit Principal Garden on Prince Charles Crescent, off Alexandra Road, was launched in October 2015 and fully sold last year at an average price of $1,656 psf. The project was developed by a joint venture between UOL and privately held Kheng Leong Co, controlled by the family of banking mogul and former chairman of UOB Bank, Wee Cho Yaw. It was completed in December 2018 – one year ahead of schedule.


The 663-unit Principal Garden is fully sold and completed in Dec 2018, one year ahead of the estimated completion date of 4Q2019 (Credit: Samuel Isaac Chua/EdgeProp Singapore)

The other project, a joint venture between UOL and Singapore Land, is the 505-unit The Clement Canopy located on Clementi Avenue 1. Launched in February 2017, it was fully sold last year. Average price achieved for the project was $1,374 psf. The project is scheduled to complete by 1Q2019 – well ahead of the original estimated completion date of 4Q2020.

With two 40-storey blocks, The Clement Canopy was also considered the tallest residential towers to be constructed using prefabricated prefinished volumetric construction (PPVC). According to Liam, the project set “a new benchmark” in terms of construction productivity.

PPVC is now a requirement in the tender for all government land sale (GLS) sites. However, it is not a requirement for redevelopment of sites purchased en bloc as yet. The construction method using PPVC costs more than the conventional construction method, concedes Liam. However, for PPVC, most of the work is done at a factory, which ensures smoother work flow, better quality assurance and is environmentally more sustainable, he adds.

Another residential project by UOL that is completing in 1Q2019 is the 797-unit Botanique at Bartley, which is also fully sold.


The 505-unit The Clement Canopy is fully sold and will be completing in 1Q2019, more than a year ahead of the estimated completion of 4Q2020 (Credit: Samuel Isaac Chua/EdgeProp Singapore)

New luxury project to set benchmark

UOL is readying two projects for launch in 2Q2019 – MeyerHouse and Avenue South Residence.

MeyerHouse will be a redevelopment of the former Nanak Mansion, which UOL purchased en bloc in September 2017 for $201.08 million ($1,429 psf ppr).

Bounded by Meyer Road and Jalan Nuri, MeyerHouse is adjacent to a public playground. “It’s an island site,” says Liam. The project is a 50:50 joint venture between UOL and Kheng Leong.

Liam likens it to Nassim Park Residences, UOL’s 100-unit luxury project on Nassim Road, which was developed jointly with Kheng Leong and Orix Capital. The project also features three “master designers” – Chan Soo Khian of SCDA Architects, Japanese landscape architect Shunmyo Masuno and French interior designer Christian Liaigre. When Nassim Park Residences was launched in 2008, units were priced from $10 million. Typical units were three-bedroom apartments starting from 3,175 sq ft to penthouses from 6.867 sq ft. The largest penthouse of 8,073 sq ft at Nassim Park Residences fetched $26 million ($3,221 psf) in Aug 2008.


Units at The Nassim Park Residences were priced from $10 million apiece when the luxury project was launched in 2008 (Credit: Samuel Isaac Chua/EdgeProp Singapore) 

For the MeyerHouse project, UOL has engaged WOHA Architects (the same architectural firm which designed The Tre Ver and UOL’s redevelopment of the Pan Pacific Orchard); leading German landscape architectural firm Ramboll Studio Dreisetl (the landscape architect for the Bishan-Ang Mo Kio Park); and Toronto-founded international design firm Yabu Pushelberg (which designed the interiors of the Four Seasons and Moxy Times Square in New York, a penthouse at Opus, the most luxurious residential project in Hong Kong by the Swire Group, and UOL’s One Bishopsgate Plaza project in London).

According to Liam, each of the 56 units at MeyerHouse will have its own dedicated lobby and lift leading from the basement carpark directly to the unit. “You own the lobby and the lift as well as the apartment,” he says.

The majority of the typical units within MeyerHouse are four-bedroom apartments with sizes from 3,000 sq ft. Three-bedroom units are from 1,850 sq ft and there are relatively fewer such units in the development. There will be six penthouses sized from 5,200 sq ft. The apartments at MeyerHouse are therefore “large format”, says Liam, which differentiates the project from other new launches in the area, which tend to feature compact apartments.

“MeyerHouse will appeal to those who appreciate the luxury of space, and those who can afford it and can’t find something similar in the location,” Liam says. Given the exclusivity of the project, it will open for preview “by invitation only”, he adds. The project is located in prime District 15 in the east, which is considered a prestigious address outside the traditional prime Districts of 9, 10 and 11.


The exclusive 56-unit MeyerHouse is positioned as "the Nassim Park Residences" of the East (Credit: UOL Group)

Mega-project in Kampong Bahru

While MeyerHouse is an exclusive boutique development, the second project, Avenue South Residence, is considered “a mega project” with 1,074 residential units and 13,993 sq ft commercial space. The project on Silat Avenue will have twin 56-storey towers, which are regarded as some of the tallest condominium projects in Singapore. And it will also be using PPVC in construction. The project will be developed jointly by UOL, UIC and Kheng Leong in a 50:30:20 split.

Located off Kampong Bahru Road, the project will capitalise on its proximity to the 24km long Rail Corridor and the Greater Southern Waterfront –  a 1,000ha site three times the size of Marina Bay – which is the area freed up by the relocation of the Tanjong Pagar, Pulau Brani and Pasir Panjang terminals.

The area is zoned by URA in its 2013 Master Plan for long-term redevelopment into commercial and residential projects with work-live-play components. It will offer opportunities for new waterfront developments in the future.

UOL is expected to launch the Avenue South Residence sometime towards the end of 2Q2019. The project will feature 16 sky gardens and offer uninterrupted views as the development “stands head and shoulders” above the other 36-storey condos in the area, adds Liam.


At 56-storeys, One South Avenue Residence will be one of the tallest residential towers in Singapore (Credit: UOL Group)

Maintaining sales momentum beyond launch weekend

The three new projects launched in January this year clocked an average sales rate of about 15%. The weekend of March 2 and 3 will see three more new project launches, including the first of half a dozen “mega projects” with at least 1,000 units - the 1,410-unit The Florence Residences by Logan Property.

“Sales rates have definitely been more muted given the property cooling measures introduced last July,” acknowledges Liam. “But different projects have different attributes, and every developer has its own strategy.”

In the current market, what’s more important is not just the initial burst on launch weekend, but sales momentum “post-launch weekend”, notes Liam. “Developers must have the right strategy to gain continued sales traction. It’s important to have a product that stands out in terms of design, quality and finishes.” According to Liam, in acquiring sites ahead of the peak of the collective sale fever, the group is therefore able to enjoy “land cost advantage”.

Property consultants are anticipating anywhere between 50 and 60 new projects to be launched this year. Given the challenging market environment, UOL will focus on “selling down” its inventory of residential units, he adds.


Liam: Developers must have the right strategy to gain continued sales traction. It’s important to have a product that stands out in terms of design, quality and finishes as well as land cost advantage (Credit: Samuel Isaac Chua/EdgeProp Singapore)

Moderation in land prices

Land prices are expected to moderate in the wake of the property cooling measures introduced last July and also URA’s requirement for average unit sizes of residential projects outside the Central Area to be at least 85 sq m. This took effect from Jan 19.

With the higher additional buyer’s stamp duty (ABSD) that developers are subjected to, and the larger unit sizes, Liam says, “I expect limited success in en bloc sales and this will help mitigate supply in the longer term.”

As such, UOL will be “very selective” in its land banking strategy.

The property cooling measures notwithstanding, Singapore remains “an attractive market” and is still attractive to foreign buyers as it presents “a safe haven” for investment, adds Liam.

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