With major Singapore developers like CapitaLand and City Development warning that the Singapore’s real estate market will face headwinds in the near term, many of Singapore’s small and medium-sized developers are looking overseas for new growth frontiers.
Developer TEE Land recently announced new developments in Malaysia, Thailand and New Zealand. It attributes 25 per cent of the company’s revenue currently to overseas projects. The firm aims to raise that to 50 per cent in the next four to five years.
Jonathan Phua, CEO and executive director of TEE Land, said: “The window of opportunity here is getting smaller, the market is getting more competitive. With foreign investors developers coming into Singapore, it’s time also that we venture overseas… We feel that the region should give us more opportunities.”
TEE Land is not alone in pursuing opportunities overseas. Local developer Oxley has amassed five acquisitions across Malaysia, China and Cambodia.in the past three months, and market watchers expect this trend to continue.
Ng Kian Teck, lead analyst at SIAS Research, said: “You are looking for growth potential, higher earnings and probably better still, higher dividend payouts.
“If you want this kind of growth, then there is the need for most of the companies to actually explore other markets. To take on slightly more risk, but hopefully more profit at the end of the day.”
However, going overseas comes hand in hand with more risk, and a greater potential for complications.
Compared to their cashed-up competitors, many of Singapore’s smaller players have less appetite and tolerance for risk. Particularly the kind of risk thrown up by underdeveloped, unfamiliar emerging markets.
Mr Phua said finding the right local partner is essential, as well as choosing a market that is ready for foreign investment — that means scrutinising both the government and the consumer.
Source : Channel NewsAsia – 12 Aug 2013