From wet markets to prime homes

		Thu, Feb 25, 2010 The Straits Times
By Joyce Teo, Property Correspondent IT WOULD take a huge leap of imagination to come up with a more incompatible business mix than the one Heeton Holdings had been wrestling with since 2003. The firm's chalk and cheese make-up had the glamour, prestige - and risk - of prime property development on one hand and oh-so-last-century but oh-so-safe heartland wet markets on the other. Related link: » From story plots to plots of land » From Sentosa Cove to China" » Quick on the draw » Year of living dangerously Irreconcilable business differences of that magnitude led to the inevitable divorce last year when Heeton sold off the wet markets. The move also marked the completion of the firm's makeover from old school market landlord to real estate player. It has been a long time coming. Heeton listed in September 2003, branding itself largely as the first wet market operator on the Singapore Exchange. Its property business was seen as a side line. While the wet markets contributed just 10 per cent of annual revenue, that became the firm's defining characteristic. 'Analysts always asked us about our wet market business,' said chief operating officer Danny Low. That distraction was removed last year when the firm sold its five wet markets to supermarket chain Sheng Siong, leaving it free to focus on its growing property business. 'We knew it (wet markets) was a sunset industry. Our store operators are old. When they retire or pass away, our stores will be empty,' said Mr Low. He said Heeton intended to sell the markets as early as two years ago and there were offers but it was all or nothing. 'There is no point selling one market. If we sell one, we'll still be a wet market operator.' Heeton chairman and founder Toh Khai Cheng, who led the firm into the wet market business in the 1990s, said Sheng Siong came knocking last year and they decided to sell. 'The wet markets offer us a stable yield but they can never take the firm to a new high the way property development can,' he told The Straits Times in Mandarin. Mr Toh started out in property development more than 30 years ago and earned the nickname the 'Sembawang King' as he was behind numerous projects in that area, including Hong Lim Mansions and Hong Heng Garden. Heeton's focus now is mostly on prime, boutique projects. Its latest launch was the 175-unit Lincoln Suites near the Novena MRT station which it is developing with three other developers. It bought the former Mitre Hotel site in Killiney Road late last year and is preparing to launch a Grange Road project. 'In prime areas, you can try out new ideas,' said Mr Low. 'Otherwise, we'll end up doing just run-of-the-mill projects. Nobody will remember us.' Until three years ago, its aim was to focus on just selling. Little thought was put into product differentiation, branding and so on. But now it is thinking long term, acknowledging that to be a trusted developer you need to show the buyers that you intend to be around for a while. 'You want your project to not only be able to sell, but also at a premium,' Mr Low said. This is why it roped in an Italian architect as well as yoo, the design firm co-founded by popular designer Philippe Starck and developer John Hitchcock, to design its 29-unit Grange Road project. 'You have to differentiate yourself when you build a brand. For instance, developers used to dangle branded appliances as carrots, but that's now outdated,' said Mr Low. Grappling with changing tastes is one thing, coping with the financial crisis is another. The downturn made it clear that there was no sure way to the bank, although Heeton had recurring income from its investment properties and wet markets to fall back on. Its Grange Road project has been one victim. The launch has been delayed for more than a year and Heeton may have to lower its price expectations slightly when it finally does hit the market sometime in April to June if the high-end market has yet to truly pick up. Heeton and its partners also had to delay the launch of Lincoln Suites. They bought the site during the 2007 boom at a record price of $1,449 per sq ft of potential gross floor area for the Newton area. The downturn forced them to alter their plans for the prime project, including ensuring there were several small units - they comprise 75 per cent of the block - to keep the price quantum low. Heeton also plans to build mostly small units on the old Mitre Hotel site. 'These few years, the risks in the market have increased,' said founder Toh. 'Land is so expensive now.' To mitigate the risks, they will continue to venture into the region where markets require a 'lower investment' and yet come with 'lower risk and greater potential,' said Mr Toh. Heeton is also building a hospitality arm to give it a new stream of recurring income. It is starting by converting its 39-unit El Centro project in Tanjong Pagar into high-end serviced apartments or a boutique hotel. Whatever the project, Heeton acknowledges that it needs to provide an edge. If it is building suburban projects, then it wants to offer good quality. Prime projects mean giving buyers 'something different', said Mr Low. 'I didn't say I will give you a Porsche but I will give you a Mercedes, as we don't want to shortchange people.' This article was first published in The Straits Times.