Singapore-based Aspial eyes local apartment pipeline | The Australian

Singapore-based Aspial eyes local apartment pipeline | The Australian:

SINGAPORE-based Aspial Corporation, headed by billionaire businessman Koh Wee Seng, has amassed six sites in Australia since January, delivering a development pipeline of 5200 apartments, it has revealed in an investor briefing.



The secretive developer has bought a number of sites along the eastern seaboard, but has made few public comments about its development intentions.



But the presentation to Singaporean investors included details for several projects, including the well-known 99-storey Australia 108 skyscraper in Southbank, Melbourne, that will have a gross floor area of 140,000sq m and more than 1105 apartments.



Other Melbourne projects will include the 750-unit 82-storey apartment building on A’beckett Street, with 55,000sq m of floor space, and a 50,000sq m mixed-use development on King Street, with 634 units.



In Cairns, the Singapore-listed Aspial will build a 1250-apartment mixed-use site with one commercial tower and six residential blocks. The $200 million project, with 120,000sq m of floor space, is scheduled to be launched in early 2015. Aspial bought the site in February for $18.9m.



There are a further two projects in Brisbane, including an 820-apartment mixed-use development on Albert Street and a 700-unit project in nearby Margaret Street. Both Brisbane projects will be delivered next year. Aspial bought the Albert Street site in August, paying Cornerstone Properties about $36m.



Tough regulations and intensifying competition with Chinese players is driving Singaporean developers, long content with building largely within the city-state, to look abroad.



The $S61 billion ($55bn) listed property trust sector is also taking greater interest in Australia, and Britain, says analysts at Kuala Lumpur-based CIMB. With several listings on Singapore’s securities exchange this year, and a possible easing of strict leverage limits, many real estate investment trusts are flush with cash.



Shaw Lay See, director of the property sales group for local developer Far East Organization, said nearly all land sales in Singapore were through government tenders, which had become increasingly competitive, with prices rising higher than expected. “We have to be a lot more focused on the properties we are tendering for than before,” she said.



Earlier this month there were 18 bidders on a single block. This was the highest number she had seen in two years, she noted. The tender was eventually won by a Chinese developer.



The last twelve months has seen a number of Singaporean developers and investment trusts enter the Australian market, including Frasers Commercial, Suntec REIT, Keppel REIT, Starhill Global REIT, CDL Hospitality, Ascott Residence Trust, UOL Group, Hiap Hoe, Aspial, Sim Lian, Fraser Centrepoint, Chip Eng Seng, Ho Bee Land and Far East Organization.



“The key attractions for Singapore developers to venture into Australia have been the twin drivers of being in the right part of the property cycle compared to the local Singapore market as well as the ability to generate better returns from non-Singapore development projects,” the CIMB report said. While developments in Singapore have an average profit margin of 10 per cent, most Singaporean developers in Australia say they can achieve 15 to 20 per cent.



Keppel REIT, a Singaporean investment vehicle, reported yields in Australia of 8.1 per cent on its Australian commercial property holdings, against an average of 4 per cent in Singapore. Australian REITs and diversified property companies have a cost of debt approaching 6 per cent, according to CIMB, while Singaporean REITs can obtain funding at 3 per cent to 4.5 per cent, providing a competitive advantage.



Mark Wizel, director of CBRE’s Melbourne city sales, who brokered a series of high-profile sales to international groups, estimated there was about $3.5bn worth of development projects in the Melbourne CBD being undertaken by Singaporean developers. “Singaporean developers have been quick to see the insatiable appetite from mainland Chinese buyers of off-the-plan apartments and rather than be reactive to the situation like they have in Singapore, they have seen Australia and Melbourne as an opportunity to get on the offensive and benefit early,” he said

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