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CHOW PENN NEE speaks to Lippo Group’s Stephen Riady whose business acumen has led the firm make several strategic property investments.

THE Lippo Group should be familiar to Singaporeans by now, with its brand name plastered on more than a dozen property developments across the island, and less obviously, behind the ownership of retailers Robinsons and River Island.

At the helm of Indonesian conglomerate Lippo’s business empire in Singapore is Stephen Riady, whose entrepreneurial spirit is well known.

Mr Riady, executive director of Auric Pacific Group, clinched the Strategic Investment Entrepreneur of the Year award in Ernst & Young’s Entrepreneur of the Year Awards for Singapore this year. Among the criteria for the award are traits like strong financial performance, personal integrity and entrepreneurial spirit.

His group’s move into property has been strategic, given current, sky-high property prices, and the fact that he went into the market much earlier on.

‘We started off with the purchase of Lippo Centre on Shenton Way at the end of 2004,’ Mr Riady told BT in an earlier interview. ‘You think people come to us asking us to buy? No. We went out, and at that time, there were no bidders,’ he recounted.’Wise investors are those who have a vision, they are the ones who see something that other people have not seen … Then they start taking action, instead of just waiting there.’- Stephen Riady, Auric Pacific Group executive director

The building has since been sold for $350 million - or more than double the $151 million purchase price - earlier this year. ‘There were signs that the Singapore economy was in good shape in 2005 and 2006, so we continued buying,’ he said.

Citing the hallmarks of a good entrepreneur, he said one must have the ability to understand timing and be willing to invest and take risks. ‘We should be willing to go outside our comfort zone.’

Recounting how he started investing in Singapore, he said: ‘When the Singapore government talked about plans to remake this place, lots of people heard about it. But we believed in it and took action early.’ And that, he says differentiates the wise investors from the foolish ones.

‘Wise investors are those who have a vision, they are the ones who see something that other people have not seen,’ he says. ‘Then they start taking action, instead of just waiting.’

Foolish investors, on the other hand, wait for opportunities to come but they still don’t take it, he said. ‘The opportunity leaves and then they say they regret not having taken it.’ The Lippo group has so far amassed nine residential developments, five commercial properties and two retail brands, with a total value of $4 billion in Singapore.

The Lippo group has so far amassed nine residential developments, five commercial properties and two retail brands in Singapore, with a total value of $4 billion.

Mr Riady hopes to go further, increasing the value of the group’s portfolio from $7US billion in assets at present to $20US billion within five years.

The group’s retail arm is also expanding aggressively. The business includes Auric Pacific - a distributor of fast-moving consumer food and non-food products, Robinsons, and various clothing stores.

‘The plan for our retailing business is to grow turnover from the present $2US billion to $5US billion in five years’ time,’ said Mr Riady.

His entrepreneurial instincts showed up early. Every school holiday, Mr Riady would return to the family business - set up by his father Mochtar Riady - to learn the ropes. The elder Riady started the Lippo business with a bank and has since built up a vast conglomerate spanning property, banking, and retail.

‘My dad didn’t say that I had to join the business, but since we already had it, somehow in university you just naturally major in business. You don’t think about it.’

He considers working in a family business advantageous as there is a ‘consultative environment in which both timeliness and calculated risk-taking strategies can be explored, discussed and implemented’.

‘To any entrepreneur, these two elements are key to the success of a business,’ he said.

At 46, the businessman is at the top of his game, and continually trying to improve. ‘A lot of people have mid-life crises because they get stuck and they are not inclined to grow or learn anymore,’ he said.

‘I really believe in growing because without growth, we will have crises and problems. We must train ourselves to learn.’

Source : Business Times - 29 Nov 2007

POPULAR Holdings is best known for its bookstores and schoolbooks, but there is now more to it than meets the eye. For the household name has been making big bets on real estate in Singapore, and its fortunes going forward are likely to be driven more by property than by publishing.

It’s a shift that started just last year but has since picked up dramatically enough to alter the complexion of the group.

Last week alone, the group announced two new property investments. It purchased all the strata units at View Point at Jalan Datoh for $16.5 million and at Shiba Apartments at Jalan Raja Udang for $15.5 million.

Earlier in May this year, Popular bought 10 residential units at 18 Shelford Road for $27.2 million for redevelopment.

Its first major property foray was back in May last year, when the group bought eight residential units with a total land area of 15,070 sq ft at Robin Road, at a cost of $12.5 million. The company plans to sell the units once development is completed.

So in just over a year, the group has invested almost $72 million in the property business.

In sharp contrast, Popular’s investments in publishing-related businesses have been less eye-catching. It has made only two recent publishing-related announcements. This month, the group, through its subsidiaries in Hong Kong, raised the paid-up capital of eNet Digital Pacific Ltd from $2HK.00 to $10HK,000. In September, Popular acquired two ordinary shares of RM1 each in the capital of Seashore Publishing (M) Sdn Bhd, which is in the business of publishing and distributing books, articles and other printed materials.

Property, clearly, has become an area of major focus for Popular. In its announcements, the group had tended to characterise its property forays as opportunistic. ‘While retail, distribution and publishing will remain the group’s main business focus, property development will be a potential area of growth that the group is looking into, to capitalise on the potential and promising returns of the current property market,’ it said while making one of its property investments.

But it is clearly more than that. In its latest annual report, chairman Chou Cheng Ngok told shareholders that Popular is entering into a new business segment, property, through a new unit, Popular Land Pte Ltd. And its ambitions span beyond residential property. ‘We are also looking into commercial property business opportunities as well as for potential future self-use,’ Mr Chou said. ‘We will give the same passion for property development as we have shown for our book and publishing businesses. This ‘diversification’ will enhance our shareholders’ value in the long term.’

The question, of course, is whether this will really be the case. While one-off projects could well give a short-term fillip to earnings, going into property on the basis that Popular is thinking of entails more risks. The lessons from the past show clearly that it is very difficult for non-property players to play the real estate game well. Many will recall how many non-property companies all rushed into property during the property bull run in the mid-1990s, and got their fingers burnt when the bubble was pricked in 1996/97. While the current state of the property market is still bullish, several factors, such as overstretched valuations in some segments, the threat of more government intervention to cool prices, and concerns about the impact of a potential US recession on local sentiment, will make it challenging for property players.

So it is by no means certain, despite the company’s optimism, that Popular’s property ventures would achieve the results it is hoping for. It is also debatable if going the property route is the best way for Popular to increase shareholders’ value - it could have invested its surplus cash in its core business, or return it to shareholders if there are no suitable investments. What has clearly changed is that Popular is no longer just the stable, if rather staid, publisher and retailer of education staples. If the potential returns from property development are high, so will be the risks.

Source : Business Times - 29 Nov 2007

OCCASIONALLY, it’s apparent that the economic indicators don’t quite square with the reality on the ground. The Singapore economy’s robust GDP figures do reflect the buoyant conditions at hand, but it’s also one instance when the numbers don’t quite tell the whole story.

With GDP growth expected at between 7.5 and 8 per cent for 2007 - well surpassing early official estimates of 4-6 per cent at the start of the year - it should, by all accounts, go down as another banner year, one more notch in Singapore’s growth record. And indeed, the strong economic performance will translate into a fatter bonus for civil servants at year-end, and presumably for many private sector employees as well, if their companies had a great ride of the economic boom. It’s the fourth year in a row, after all, that the economy has grown above its trend potential.

In any case, sub-8 per cent growth is smashing good growth for an economy that’s no fledgling. But inevitably perhaps, the remarkably charmed co-existence of high growth and low inflation that Singapore has enjoyed in recent years is finally fizzling out. While almost a pedestrian rate by world standards, Singapore’s 3.6 per cent October inflation rate, a 16-year high, amounts to something like a return of inflation with a vengeance, driven by a mix of domestic and imported factors.

The recent spike in inflation has led to calls for measures to - almost ironically, one would think - curtail demand and growth in an over-stretched economy. Much as the government has maintained that the economy is not overheating, it has moved quickly enough to snuff out bubbling price pressures - it scrapped a key deferred payments scheme for property purchases, it postponed several major construction projects, it allowed the Singapore dollar to appreciate by a bit more than usual in a bid to contain imported inflation, and it is now further relaxing the foreign worker quotas.

The question is: Will a further strengthening of the Singapore dollar next April (as is widely expected) suffice to deal with the mounting inflationary pressures, or are additional cooling measures needed? Notably, for all the buzz in the economy, business sentiment has weakened of late, with companies less upbeat about the next six months, and even emerging signs of a slowdown in activity, a BT-UniSIM survey found. Similar official surveys also found cautious optimism among manufacturers, and some dampened spirits in the service sectors.

Among workers, amid a tight labour market and big pay jumps, the problem of a skills mismatch and structural unemployment among older, low-educated Singaporeans hasn’t entirely disappeared overnight. So, are cooling measures in order? A US recession, or even a sharp slowdown, if it happens, will probably take care of any runaway growth in Singapore.

Then again, minus other measures, how far can exporters and the economy stomach a strengthening Singapore dollar, which could erode the economy’s competitive edge? There are quite some policy posers in these seeming rollicking good times.

Source : Business Times - 29 Nov 2007

Over 1,000 flats in 2 projects launched yesterday; 6,000 more to come by next June.

NEWLY-WEDS need not worry about not having a new HDB roof over their heads.

More than 7,000 new Housing Board flats will be offered for sale over the next seven months, as well as seven plots of land which could boast another 3,200 units.

To cater to different income groups, flats on the drawing board range from the humble two-room flat to privately-designed estates and executive condominiums.

This increase in flat supply, the biggest in recent years, is expected to ease the bottleneck that has emerged in recent months as buyers, put off by the high prices of private homes and resale flats, turned to new subsidised HDB flats.

Prices of resale HDB flats grew by 11 per cent in the first nine months of this year, while prices of private homes shot up 22.9 per cent.

An indication of the rush for new flats: the HDB recently received almost 8,000 applications for just 400 flats in Telok Blangah and more than 1,600 applications for 516 homes in Punggol.

National Development Minister Mah Bow Tan yesterday made clear the HDB was stepping up flat building ‘in a very major way’.

At 4,800 units, the number of HDB’s build-to-order flats offered by the end of this year is already more than double the number launched last year.

Property agents say the move will also encourage HDB flat sellers to be more realistic about their asking prices.

Mr Albert Lu, managing director of C&H Realty, thinks that prices may drop. ‘But it’s a good thing, as more people will be able to afford flats,’ he added.

Two build-to-order projects were launched yesterday:

Segar Meadows in Bukit Panjang Ring Road, comprising 412 three- and four-room flats.

Compassvale Beacon in Punggol Road, comprising 750 two-, three-, and four-room flats.

From next month till June, the HDB will also launch for sale another 6,000 new flats under the build-to-order system, where projects are built only if the majority of flats are booked.

It will also launch for sale four plots of land in Bishan, Simei, Toa Payoh and Bedok for flats to be built and sold by private developers. Another three sites - in Yishun, Jurong, and Sengkang - will be made available next year for development of executive condominiums.

Mr Mah reassured homebuyers - especially those buying their first subsidised home - that there were enough flats as well as a variety of properties to meet their needs.

About 80 to 90 per cent of applicants for each build-to-order project are such ‘first-timers’, many of whom are newly-weds. In the two recent balloting sales exercises, 92 per cent of shortlisted buyers fell into that category.

He urged them: ‘Don’t be too choosy…It’s not possible or realistic for the HDB to offer only new flats in mature estates in the heart of the city.’

The boost in supply buoyed buyers like Ms Affizah Aziz, 40, who turned to the HDB resale market after failing to get a new flat in a recent ballot. The housewife said: ‘I still would like to have a new flat. Its surroundings and atmosphere are much better.’

Mr Mah promised that new flats will remain affordable. Their prices, long pegged to the values of resale HDB flats, will not be affected by a rise in building costs.

He also rejected suggestions that the release of the flats was meant to prevent a property bubble from forming. ‘I don’t see any bubble forming,’ he said. Unlike the private property sector, the HDB market is a much bigger and more stable. ‘The growth we are seeing is a healthy one in the resale market,’ he said.

Source : Straits Times - 29 Nov 2007

MARKETING manager Eva Chia accepted her boyfriend’s proposal in the middle of this year, but their joy was short- lived when the hunt for a marital home turned up nothing for months on end.

Their combined income busted the ceiling for subsidised housing but they baulked at the prices of resale Housing Board (HDB) flats and private apartments.

Up until Tuesday, when they finally found a flat, they were prepared to postpone their marriage.

‘What’s the point in getting married when you have to stay in separate homes?’ said Eva, 27, in an e-mail.

The housing crunch has hit operations officer Mohammed Samsudin, 29, and his wife in a different way, but their distress has a similar ring.

They qualify for subsidised housing but fear they will miss out on a new HDB flat because of the immense demand. The couple, who live in a rented room in an HDB flat, are adamant about not having a child until they get a home of their own.

‘Definitely not in a rented room. Only in my own house,’ said Mr Mohammed.

In the minds of these and many other couples, married life - or family life - cannot start without a home of their own.

As the booming market puts some properties out of reach, couples who fail to get new flats in the HDB’s regular ballots argue that the Government is not doing enough to curb speculation.

Some nurse conspiracy theories about rogue housing agents trying to boost the sale of resale flats - and their income - by bumping up demand for new HDB flats with fake applications. Others point the fingers at foreign money, which they say is fuelling runaway home prices.

But others, like Ms Jenny Yap, who wrote to The Straits Times Forum recently charging that these couples are simply being choosy, think otherwise. They want the best home, in the best location, at the best price and gripe when they have to compromise, she said.

Harsher critics label such couples as being spoilt, pointing out that not too long ago, 10-member, three-generation families lived in three-room flats, and were none the worse for it.

While it may be true that some couples are too finicky for their own good, many cannot fathom married life without owning a home simply because they have been conditioned along these lines.

Singapore’s housing policy is overwhelmingly weighted towards home ownership, which in turn is heavily hinged on marriage. Married couples are entitled to subsidised home loans, a new HDB flat or a slew of housing grants, as well as the chance to buy condominium-style housing that could be 30 per cent cheaper than private homes.

Married couples are also encouraged to own, instead of rent, through generous aid schemes that help low-income tenants buy their first flat.

Only about 48,000 - or 5 per cent - of the 880,000 HDB flats islandwide are rental units for low-income families. As at September, about 16,000 HDB flats were rented out on the open market.

An even more striking fact is that nine in 10 Singaporeans own their homes, compared with less than 10 per cent 40 years ago.

Home ownership is so deeply rooted in the national psyche that some propose marriage by way of asking the other party to apply for an HDB flat together.

Along with this comes a deep sense of entitlement that a new HDB flat - and the chance of trading up for a bigger one a few years down the road - should come along with marriage.

It is an entitlement the Government takes seriously, judging by the reassurances given yesterday by National Development Minister Mah Bow Tan, who announced plans for 7,000 new flats to be launched for sale by ballot in the next seven months.

National Institute of Education professor Ooi Giok Ling says that while Asians tend to place relatively more value on home ownership, the link between marriage and home ownership seems even more prevalent in Singapore.

The contrast is more apparent when attitudes here are compared with those in Europe, Australia or North America, where young people commonly leave home when they go to university or start working.

Many get used to the idea of renting early in life while some with higher incomes buy a modest home on their own.

Prof Ooi said: ‘When they decide to get married, homes and home ownership might not be such a major factor to consider.’

But Singaporeans’ love affair with property is so entrenched that many couples feel their life together cannot start without a mortgage.

To be fair, having your own home does have its upside: You do not have to worry about your landlord raising your rent or throwing you out, and it does provide a more stable environment in which to bring up children. It could also work out to be cheaper too, on a monthly basis.

But danger arises when we start hinging major life decisions on the vagaries of the property market. What does it say about us as a society? What does it say about what we value?

Perhaps it is time to take a step back and get a sense of perspective about what really matters to us. Life can go on, with or without a home of our own.

DEEPLY ROOTED

Owning a home is so much a part of the national psyche that some propose marriage by asking to apply for an HDB flat.

Source : Straits Times - 29 Nov 2007