SC Global withholds sale of properties

SC Global has a substantial inventory of approximately one million square feet gross of saleable floor area in different luxury housing projects in Singapore.

However, Chairman and CEO Simon Cheong was in no rush to sell off the properties, as he is aware of the difficulty of finding replacement landbank in the country’s top-end segment.

He believed that replenishing the landbank will be the luxury housing market’s toughest challenge this year.

The one million sq ft gross floor area (GFA) of space available for sale includes units which have yet to be sold in current projects such as Martin No 38, Hilltops, The Marq on Paterson Hill and Seven Palms @ Sentosa Cove, as well as a project that will be developed on the site of The Ardmore.

“For SC Global, we decided that we shouldn’t sell ourselves short by selling out too early, prematurely, when to replace our kind of high-end landbank literally a few minutes away from the Orchard Road area is going to be tough,” said Mr. Cheong.

“So normally we don’t price our projects to sell ourselves short. The way we price is (based on) my replacement cost. I have to make a qualification because I have to be very careful here not to go into other people’s turf because we’re just high-end players. We play in the 9, 10 and 11 districts.”

The situation is very different from the mass-market, where the government is always ready to supply land, he continued.

In five to 10 years’ time, finding land in the country’s prime districts near Orchard Road could become as hard as finding development land today in London’s Hyde Park and New York’s Central Park, suggested Mr. Cheong.

He also emphasised that SC Global’s concept of launching a project is not a run-of-the-mill event.

“We do put limited units for sale but we don’t have launches with big fanfare, balloons outside, like a carnival. It is very different, because this is high end. And the ticket item we are talking about is huge. So we have to adapt the whole marketing.”

According to Nomura Singapore’s calculation, SC Global’s gearing (net debt to equity), excluding AVJennings’ borrowings and cash, has decreased to 2.2 times in 2010 from 2.7 times in 2009.

At end-2010, SC Global’s current financial liability was S$831.8 million, comprised mostly of land loans related to its development projects like Hilltops, The Marq and Martin No 38.

Hilltops will likely be completed soon and The Marq obtained Temporary Occupation Permit (TOP) in January 2011, while Martin No 38’s housing component will also receive TOP later this year.

Sai Min Chow, a Nomura analyst, expects the company to secure the debt against unsold completed units in the development.

“Because the banks typically give a higher loan-to-value for completed units and for SC Global the value is typically quite high, I don’t think they will have an issue getting the debt rolled over. Moreover, it is clear the banks have been very supportive of the company so far,” said Mr. Sai.

Source : PropertyGuru – 12 Apr 2011

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