Despite the government’s recent cooling measures, Koh Brothers Group’s managing director and chief executive, Francis Koh, will still tender for one or two more mass market sites in Singapore to balance out his slate of Holland Village projects.
“There may be an opportunity although the market may see it as a negative thing and there’s a knee-jerk reaction,” he says. “But we think we can price in the higher costs and go in conservatively – there may still be a chance.”
The construction-cum-property player already bought Toho Mansions along Holland Road en bloc in March for S$120.4 million. It is also developing Hollandia and The Estoril which it will develop in a 20:80 joint venture with Far East Consortium.
That means Mr Koh is not overly concerned even if he does not win any tenders. He is confident that the “upmarket yet vibrant” feel of Holland Village plus the company’s track record of creative development concepts, such as the cycling-themed Westwood Residences executive condominium (EC), will help sell units quickly.
At Toho Mansions, which Koh Brothers will launch in the first quarter of next year, he plans to complement the weekend markets and outdoor performances being planned at a Holland Road government land sale site with a concept that will “attract foreigners and tourists”.
The homegrown company’s real estate business, which it established in 1993, is also making its largest real estate play in overseas markets in over a decade.
The goal is to eventually increase real estate’s contributions to the topline, which stood at 2 per cent last year, as well as increase overseas contributions to revenue, which stood last financial year at 6 per cent of his topline.
Currently, the company has property projects in Malaysia and South Korea, and is on the hunt for more in South Korea and possibly, Vietnam. Asia’s growth, fuelled by the China Belt and Road Initiative, is attractive, plus spreading out geographically will help minimise risk, Mr Koh says.
The company broke into South Korea last year by buying a plot in Seoul’s upmarket Gangnam district for 95.8 billion Korean won (S$115.7 million) in a joint venture with a local developer to develop the mixed-use development Nonhyeon I’PARK. The project sold 96 per cent of its units within three months of its March 2018 launch.
He is looking to Seoul and Busan for more opportunities, excited by South Korea’s large population and what he calls a vibrant and dynamic economy.
Demand will continue to be robust in the capital, particularly due to the high rental demand from office workers who move from other parts of the country to work there. Another draw will be a 1.3 trillion won project to build an underground public transit terminal in Gangnam slated to be completed by 2023.
In Malaysia, the company entered into a joint venture with local partners in February to buy a plot at RM7.5 million (S$2.5 million) to develop into a mixed-use property. The seller is in the process of transferring the titles to the joint venture company.
In FY2017, 97 per cent of Koh Brothers’ S$369.4 million revenue came from its construction and building materials segment with leisure and hospitality making up one per cent.
That year, net profit rose 49 per cent to S$19.8 million, mostly thanks to the higher share of profit of joint ventures due to earnings recognised on completion of Westwood Residences. Things are looking up in the construction sector as well: its order book also hit a record S$915.9 million, helped by projects such as the Woodlands Health Campus (S$192 million), Deep Tunnel Sewerage System Phase 2 (S$182 million) and Circle Line 6 (S$225.4 million).
Mr Koh believes that the construction is on the upturn already thanks to more building demand in the public infrastructure sector.
Koh Brothers has plans to tender for the Tuas Water Reclamation Plant, Rapid Transit System and logistics and infrastructure at Changi Airport.
Mr Koh also credits his current order book size, which is up from S$600 million in March 2016, to the injection of Koh Brothers’ construction arm into its listed subsidiary Koh Brothers Eco Engineering for some S$19 million.
That put various parts of its business from construction to civil engineering to environmental engineering under one roof, resulting in “greater synergy which helped us get better and bigger projects”, he says.
“Construction is very competitive, but we’re in a leadership position locally,” he says, citing the company’s wide-ranging experience in projects such as desalination plants and tunnelling and high-profile projects like the Marina Barrage.
In the company’s leisure and hospitality segment where it has Oxford Hotel and Alocassia Apartments, Mr Koh says that the team might look further afield from Singapore for expansion, including in Vietnam, where “the land cost is cheaper”.
One of Mr Koh’s sons is working at Koh Brothers – in its construction business. He has two other children. His daughter is a lawyer, and another son is working in the financial industry. All are in their twenties.
Regarding the question of succession – his father is the group’s founding chairman Koh Tiat Meng – Mr Koh says that there was no firm plan in motion yet. “I’m not planning anything as of yet . . . I just want to teach them what I know and the rest depends on their interests.”