Ho Bee Land’s stellar performance on the mainboard of the Singapore Exchange over the last few years underscores its position as a leading property investment and development group, and a bellwether for the real estate sector.
The company has been listed since 1999 and its global portfolio is geographically diverse, including resilient investment properties in Singapore and London, and development projects in Singapore and Australia that have given a boost to the company’s recent profits.
As a recognition of the strength of its stock’s performance, the company won the Best Returns to Shareholders in the real estate sector at this year’s Billion Dollar Club awards organised by The Edge Singapore.
Ho Bee Land came out tops among its mainboard-listed peers in the real estate sector, clocking in strong returns to shareholders, PAT, CAGR, ROE, and other quantitative metrics.
Twin engines of growth
Ho Bee Land has been able to record a strong set of financial results, thanks to its proven strategy of tapping onto its twin engines of growth — a resilient recurring income base and a keen eye on property development opportunities in Singapore and abroad.
During its latest earnings report in August this year, the company reported a 42% y-o-y jump in its 1HFY2022 earnings, and its revenue was up 13.3% y-o-y over the same period. For the six months to June 30 this year, the company’s earnings increased to $149.9 million, which includes a $16 million net fair value gain on its investment properties and a $30.8 million realised gain on financial investments.
Its investment income is primarily derived from its portfolio of investment properties in Singapore and London. In total, the assets in this category, including the Scalpel, account for about 77% of the group’s total assets.
Meanwhile, steady sales at its various development projects in Singapore, Australia, and China have proven to be successful boosters to Ho Bee Land’s profits. In particular, the company cited the strong sales at its Sentosa Cove properties in Singapore — Turquoise and Seascape.
Resilient rental income base
The resilience of Ho Bee Land’s portfolio of investment properties, and the strength of the recurring income base it generates, has been a bulwark for the company through the last three years.
The company attributes the returns from its investment properties as key in helping it weather the disruptive economic effects of the Covid-19 pandemic, calling the recurring income generated as “resilient and sustainable”.
In March this year, the group’s investment portfolio was significantly enlarged after it acquired The Scalpel, a Grade-A office tower in central London, for GBP718 million ($1.3 billion). This deal bumped up the company’s total investment in London properties to more than GBP2 billion.
According to Ho Bee Land, revenue from its investment property portfolio in London accounted for about 55% of its total rental income in FY2021. It expects rental returns from its London properties to increase further this year as it realises the full-year contribution from The Scalpel.
Likewise, Ho Bee Land is sanguine on the rental returns generated from its London investment assets. It cites the relatively tight prime office market for high-quality office developments in central London. “We expect revenue from London to continue underpinning our profitability because of its long weighted average lease expiry (WALE) and good tenant profile.”
Singapore is still a key focus for Ho Bee Land, and the company has benefitted from several of its investment properties here. In total, the group recorded a total rental income of $99.7 million in FY2021, and $100.9 million in FY2020.
The key local rental contributor was The Metropolis, a commercial development along North Buona Vista Drive. This property continues to clock in an occupancy rate of more than 95%.
Going forward, the company expects its maiden biomedical sciences facility, Elementum, to strengthen its recurring income base when the development is completed in 2H2023. The 12-storey development will consist of nearly 313,000 sq ft of business park space for biomedical science research and supporting activities. The Green Mark Platinum development will also house about 61,000 sq ft of office and retail spaces, and the design incorporates key biophilic design elements and considerations.
Spatially, Elementum ties in with the neighbouring Metropolis by Ho Bee Land, creating a more open and community-focused area. “We are currently in advanced negotiations with a few tenants and are well-positioned to leverage on the positive sector outlook for this growing biomedical science sector in Singapore,” says Nicholas Chua, CEO of Ho Bee Land.
Project sales boost profits
Property development remains a core business focus for Ho Bee Land. Capitalising on the surge in interest for prime Sentosa Cove properties over the past year or so, the group has released selected units at its luxury Sentosa Cove condos, namely Turquoise and Cape Royale.
Last April, the company released 16 units at Turquoise for sale. According to a report by EdgeProp Singapore, the units were put on the market with a promotional discount ranging from $500,000 to $750,000 per unit, and at the time prices ranged from $1,290 to $1,536 psf.
According to the company, the entire 91-unit development is 90% sold and there remains a limited number of units for sale.
Ho Bee Land also released about 80 units at Cape Royale in July this year. Fifty units were put up for sale as part of an initial sales phase and all units were snapped up. This encouraged the developer to push out another 30 units for sale.
“We remain confident of our sale progress as these properties are true waterfront homes. There is also a limited number of units in Sentosa Cove, which is touted as a prestigious and globally sought-after address in Singapore,” says Chua.
Apart from interests from Singaporeans and permanent residents, the company is also confident of a returning influx of foreign buyers as international borders reopen amid Singapore’s strong handling of the pandemic so far.
In Australia, the group’s current focus is on master-planned residential communities. Ho Bee Land now has has a pipeline of close to 5,000 land lots in Queensland and Victoria. “We expect these projects to contribute positively to our bottomline in the next few years,” the company says.
It adds that the group is committed to delivering high-quality housing estates for local buyers.
Billion Dollar Club
Ho Bee Land’s entry into The Edge Singapore’s Billion Dollar Club this year is a culmination of the twin growth drivers the company has focused on over the past decade or so.
“We are honoured to be recognised at this year’s Billion Dollar Club. Looking ahead, the group will continue to look for investment opportunities to diversify geographically and across asset classes. We remain highly cognisant of the current challenging market conditions. However, our strong and robust recurring income stream allows us to navigate these uncertainties from a position of strength,” says Chua.