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Non-property companies drawn by prospect of better investment returns
REAL estate in Singapore has become so hot that a growing number of non-property players have been attracted to a market they believe can offer better investment returns than their core business.
New players are making inroads into almost all segments of the property market - commercial, residential and even the hotel sectors.
For instance, Mr Ron Sim - best known as founder and chief executive of healthy lifestyle product company Osim International, which sells massage chairs - is dabbling in the industry.
Mr Sim, in his personal capacity, recently started muscling in on the commercial property scene, submitting bids for commercially zoned land in Paya Lebar and Punggol.
This includes a joint venture bid with Perennial Real Estate. When contacted, Mr Sim said the partnership draws on his retail strengths and Perennial's operational knowledge and retail understanding.
Other firms The Straits Times spoke to said they were attracted by highly attractive openings they spied in the property market.
JL Asia Resources, which owns karaoke provider K Box Entertainment Group, said the upbeat economy and booming tourist industry in Singapore were the key factors that had attracted them to the real estate sector.
'More than 11 million tourists visited Singapore last year alone, giving us the perfect opportunity to enter the hotel property business. Demand is high due to rising tourism figures,' said the company's managing director, Mr Jason Lee.
He added that investing in property has always been part of the firm's long-term business strategy.
JL Asia recently teamed up with Mary Chia Holdings, a beauty and spa group specialising in slimming programmes, to open Porcelain Hotel in Mosque Street.
The 84-room boutique hotel is spread across three restored shophouse units and includes wellness spa Huang Ah Ma - The Oriental Spa Chamber.
'It was perfect timing. When the property was offered to us, the price, location and timing of the offer all fell into place,' said Ms Wendy Ho, chief executive of Mary Chia Holdings.
'The Mary Chia group already owns a few retail spaces but, for us, the decision on whether to buy a piece of property is part of our efforts to make the business more profitable.'
Meanwhile, Thakral Corp, another new entrant to the property scene, is making waves Down Under.
The Singapore-based firm, which is best known for distributing electronic goods, is acting as a capital partner for developers in Australia. It has stakes in several projects in Sydney and Melbourne.
Analysts said this widespread migration of fresh players to the property sector is not a new trend.
Bigger corporations such as media company Singapore Press Holdings and commodity trader Wilmar International have also ventured into the market in the past.
Some new entrants go all the way, abandoning their former industries to become full-time property players.
Former PC-maker IPC Corp, for instance, exited the technology sector in 2007 and transformed itself into a property investment and development firm the following year.
'The exit was due to industry consolidation and razor-thin margins, as clearly seen from the few remaining brands in that sector like Lenovo, Dell and HP,' said the company's chief executive and chairman, Mr Patrick Ngiam.
IPC Corp started off with a residential and commercial development called Costa del Sol in Zhuhai in the Chinese province of Guangdong. It currently has real estate investments in Japan, the United States and China.
But Mr Ngiam said the focus on property is not opportunistic. Rather, it is part of a long-term strategy to generate a core business that brings in good returns for shareholders.
Cushman & Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng, said property cycles over the last two decades have resulted in success for some who have ventured into the sector with limited real estate know-how.
With the market booming in recent years, even inexperienced players would have benefited from broad-based upswings in real estate prices.
The property market is also increasingly transparent, Mr Ong said, making it easier for new entrants to gain real estate knowledge and investment strategies.
'Also, most participants are able to integrate the best practices from their core businesses. For example, entertainment or wellness companies may find relevance in engaging in lifestyle- or retail-related property businesses,' he said.
Mr Ong also suggested that the possibility of property cooling measures does not mean there will be a dearth of real estate opportunities for property players.
'Price predictability may be more difficult, but the current measures ultimately make the market more sustainable, leading to more lasting growth,' he said.


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