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Wee Hur Reaps Rewards From Property Development Foray

Contributed by Shares Investment

By Clement Kan and Daxx Chong  

Singapore’s economy is firmly on course for another strong year of growth after the Trade and Industry Ministry revised upwards its gross domestic product (GDP) forecast by a full percentage point. It is expected that expansion for the year will come in between 5% to 7%, backstopped by a robust first quarter that advanced 8.3% on the back of a continued recovering manufacturing sector.

Noteworthy to investors, the improving manufacturing sector augurs well for industrial property development as higher manufacturing output translates into buoyant demand for factory space. A strong supporting case was last year when manufacturing expanded rapidly by 29.7%, leading occupancy of industrial space to reach 92.5% which in turn drove its prices and rental up by 23.7% and 11.7% respectively.

Sharp-eyed and well-positioned to ride the upswing, Wee Hur Holdings (Wee Hur) will soon be launching another industrial property development project. “In view of the encouraging market demand, our new project Premier@Kaki Bukit is expected to see positive response,” confidently remarked Goh Yeow Lian, Executive Chairman of Wee Hur, during an exclusive interview with Shares Investment (Singapore).

Handsome Dividend From Property Development

With thirty over years of experience, Wee Hur is an established player in the construction industry and counts prominent names including the Ascendas Group, the Ho Bee Group, the CapitaLand Group and HDB as its major clientele. In an effort to broaden its revenue stream and potentially participate in any market upswing, the company secured shareholders’ mandate in May-09 to foray into property development. Over a short pan of the next few months, it decisively purchased land to develop its first industrial development Harvest@Woodlands and further acquired a 70% stake in residential development Villas@Gilstead to ride the brewing property boom.

For the first quarter ended 31 Mar-11, Wee Hur reported a stellar set of results with revenue and profit surging around 89% and 90% respectively. The improvement was driven by its property development segment, which chalked up $29.8 million or about 54% of the total top line. Specifically, this higher contribution came from the robust sale of Harvest@Woodlands. “Since its launch in Jun-10, the 469-unit Harvest@Woodlands has seen strong take-up within a short period of time and is completely sold,” Goh commented. “Such encouraging response has given us confidence to launch our new industrial development at Kaki Bukit Avenue 4 soon.”

Wee Hur’s latest development, named Premier@Kaki Bukit, is located in the mature Kaki Bukit Industrial Estate and easily accessible from the major expressways (PIE and KPE) as well as within close proximity to the upcoming Kaki Bukit MRT Station. The development comprises one block of ramp-up factory and another of flatted factory, with a concept similar to Harvest@Woodlands, it is well-suited for both B1 and B2 industries. With the current positive demand for industrial space, the company is optimistic over the development.

Another of Wee Hur’s project that has recently opened for sale is the residential development named Urban Residences. Located at 10, Lorong Ah Soo, response to its soft launch has been very encouraging with close to half of the total 47 units sold. Reflecting on the slew of residential housing cooling measures by the government, “With only about twenty units left on offer, our exposure to the private residential property market is minimal,” rightly assured by Goh.

Focusing Sturdily On Construction

Indeed, Wee Hur’s decision to venture into the property development segment has been executed in an impeccable fashion. Besides broadening revenue stream and seizing opportunities in the property market, its foray into property development offered a perfect complement to its construction segment as projects undertaken in the former would eventuate into business for the latter. When sharing his experience in the venture, Goh repeatedly emphasized “Timing” as the crucial factor.

Notwithstanding the progress of its property development segment, Wee Hur remains committed to its original core business – construction. Recent announcements on the public housing front have given much to cheer for the company, notably, the total number of “Built To Order” units for the year is slated to increase from 22,000 to 25,000 and the Housing Development Board (HDB) has shifted to an ahead of demand building policy.

Drawing reference to a research note issued by Credit Suisse, Wee Hur was highlighted as one of the frontrunners to benefit from the oncoming wave of heightened public sector construction demand. Already, earlier this month, the company bagged a $109 million public housing project and is upbeat in securing more. “Given our proven track record in public housing construction, we are well-positioned to tender the exciting opportunities that would be rolled out by the HDB,” remarked Goh.

As at 31 Mar-11, Wee Hur’s construction order book stood strongly at $333.6 million covering a wide spectrum of projects such as private residential development Trilight, commercial development JCube, HDB public housing Boon Lay Grove and Vista Spring@Yishun; and HDB Lift Upgrading Project (LUP) as well as its own property developments Villas@Gilstead and Harvest@Woodlands. Coupled with the favorable outlook of its property development segment, Wee Hur is on a steady march towards a bumper future.