WEE HUR’S purchase of a boutique developer this week shows just how bullish construction contractors are over the local property market.
Three months after Wee Hur’s executive chairman, Mr Goh Yeow Lian, shared how he viewed property development as being about buying at the right price and timing, the company announced a sale and purchase agreement to pay S$9 million in cash for 70% in a boutique cluster housing development for which it was a contractor.
The local leading main contractor will also assume S$5.1 million of debts owed by the boutique development, known as Villas at Gilstead.
Wee Hur appears to be timing its foray into property development right. Based on URA estimates announced yesterday, private residential property prices rose 15.9% quarter-on-quarter in 3Q09, compared with a 4.7% decline in 2Q09.
A go-ahead to foray into property development had been passed by shareholders in 2Q09, when property transaction volume in Singapore surged two to threefold versus 1Q09.
Villas at Gilstead comprises 10 semi-detached houses, 6 terrace houses and 2 bungalows on Gilstead Road, which is prime residential district near Orchard Road.
The cluster housing development is a marriage between conventional landed housing and condominium housing. All units have ground contact but with shared facilities similar to those found in condominiums.
Recently transacted units went for about S$700+ per square foot.
The boutique residential development is now about 50% sold and its temporary occupation permit (TOP) is expected in 3Q11.
The management expects the remaining units to be sold within 12 months.
Villas at Gilstead made net profits of S$528,849 for the 6 months ended 30 Jun 2009. Its NTA was S$1.6 million as at 30 Jun 2009.
Wee Hur also secured a land parcel at Woodland Industrial Park on 9 July for S$22.9 million, and intends to develop it into industrial property.
Last quarter's surge in property prices prompted the government to abolish interest absorption schemes and interest-only loans offered for uncompleted property developments, reinstate government land sales in early 2010, and not to extend developer-assistance measures beyond Jan 2010.
In a UBS commentary on the measures to cool property speculation, analysts Regina Lim and Michael Lim projected that while new sale volumes in mass market projects will be hit by 20% as small investors retreat, prime home prices could reach 2007 levels by 2010 (rise 18% from Jul 09), as foreign buying increases in 2010.
Related story: WEE HUR eyeing growth via property development
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