The development targets upgraders and first-time homebuyers

 

FRASERS Property : TQ5 +0.6%, together with two Chinese developers, has acquired a prime residential site in Shanghai for 815.2 million yuan (S$151.9 million).

 

The joint venture is looking to develop the new site into a mix of 189 low-rise apartments, townhouses and duplex units, it said on Wednesday (Feb 26). 

 

It partnered Gemdale Corporation and Xiamen ITG Real Estate Group for the project.

 

The bid was a mere 13.98 per cent above the reserve price.

 

Lim Hua Tiong, the group&rsquo s chief executive officer of emerging markets, Asia, said: &ldquo This joint venture not only strengthens our presence in Shanghai but also underscores our commitment to delivering high-quality residential developments that meet the evolving needs of the Chinese community.&rdquo

 

The site, which targets upgraders and first-time homebuyers, is located near two existing projects by joint ventures involving both Frasers Property and Gemdale Corporation &ndash Club Tree and Palace of Yunjian. 

 

The development will incorporate features such as a sponge-city design for flood mitigation, ultra-low energy building designs for efficient thermal insulation, energy-saving door and window systems, reduced thermal bridging and solar photovoltaics, the group said. 

 

Last week, a unit of property developer UOL Group, together with an industry partner, announced it won a nine billion yuan (S$1.7 billion) tender for a residential site in the Hongkou district of Shanghai.

 

CDL announced last November that it acquired a 51 per cent stake in a Shanghai mixed-used site for 4.6 billion yuan   for a mixed-use development site in the Xintiandi area of Shanghai&rsquo s Huangpu district.

 

Frasers Property has acquired a residential property in Shanghai for a total consideration of RMB815.2 million ($150.34 million), together with Xiamen ITG Real Estate Group and Gemdale Corporation in a joint venture tender.

 

The residential site, which is in Fangsong Community, Songjiang District in Shanghai, will be developed into a mix of 189 low-rise apartments, townhouses and duplex units. The total gross floor area amounts to about 31,096 square meters (sqm). 

 

It is located in a residential neighbourhood, near two existing projects by joint ventures involving both Frasers Property and Gemdale Corporation. 

 

&ldquo This joint venture not only strengthens our presence in Shanghai but also underscores our commitment to delivering high-quality residential developments that meet the evolving needs of the Chinese community,&rdquo says Lim Hua Tiong, CEO of Emerging Markets, Asia at Frasers Property.

 

Its net debt rises 2.4% to S$14.9 billion

 

FRASERS Property registered S$1 billion in pre-sold revenue across Singapore, Australia, Thailand and China as at Dec 31, 2024, its business update on Friday (Feb 7) showed.

 

Its net gearing was 86.4 per cent as at end-2024, up from 83.4 per cent as at Sep 30, 2024.

 

This increase was due mainly to capital expenditure, especially for Frasers Logistics and Commercial Trust&rsquo s acquisition of an industrial property in Singapore.

 

The group noted that it is &ldquo well-positioned to repay and/or refinance all debt due over the next 12 months&rdquo , and a high proportion of fixed-rate debt mitigates the effects of high interest rates.

 

Its net debt as at end-2024 was S$14.9 billion, up 2.4 per cent from S$14.6 billion as at Sep 30, 2024.

 

Regarding its Singapore residential portfolio, the group noted that The Orie &ndash its joint development in Toa Payoh &ndash sold 86 per cent of its residential units at an average price of S$2,704 per square foot over its launch weekend in January 2025.

 

The group also plans to launch a new project comprising residential and retail components this year via the redevelopment of Robertson Walk and Fraser Place Robertson Walk, with Frasers Property holding 51 per cent effective interest.

 

&ldquo Singapore&rsquo s residential market remains resilient, driven by strong homeownership and investment appeal, while developers remain cautious on land bids amid increased housing supply to local demand,&rdquo said the group.

 

It also noted that the operating performance of both its retail and commercial portfolios in Singapore remained healthy. As at end-2024, the committed average occupancy rate as a percentage of net leasable area was 98.5 per cent for its retail portfolio, and 89.1 per cent for its commercial portfolio.

 

The group also highlighted a steady development pipeline of industrial and logistics projects in other markets. Slated for completion in FY2025 and FY2026, these projects span some 343,000 square meters (sq m) across Australia and Europe, 118,000 sq m in Thailand, and 158,000 sq m in Vietnam.

 

On the hospitality front, Frasers Hospitality opened Modena by Fraser Vinh Yen in Vietnam and Yotel Tokyo Ginza in Japan in the first quarter of 2025.

 

The group plans to open a sub-cluster office in Bangkok, Thailand, to drive its expansion in South-east Asia, as part of its efforts to enhance its presence in core markets.

It will continue pursuing risk-adjusted returns and divest assets &lsquo at the right time, at the right value&rsquo : group CEO Panote Sirivadhanabhakdi 

 

FRASERS Property is placing a sharper focus on capital efficiency as the group seeks to reduce its gearing to a more comfortable range. 

 

Addressing several questions from shareholders at the annual general meeting (AGM) on Thursday (Jan 16), group chief executive officer Panote Sirivadhanabhakdi said that the group has been aware since Covid-19 of the need to reduce the total amount of debt it has.

 

However, he recognised that real estate was a &ldquo lumpy&rdquo industry and the group &ldquo never expected interest rates to rise significantly in a short period of time&rdquo . 

 

Frasers Property reported a full-year profit for the financial year ended Sep 30, 2024, of S$206.3 million, 19.2 per cent higher from S$173.1 million in the year-ago period. 

 

Net debt to equity stood at 83.4 per cent as at end-September, up 7.6 percentage points from 75.8 per cent in the year before. Net interest cover fell to 2.6 times in FY2024 from 3.1 times in FY2023. 

 

In response to queries filed by the Securities Investors Association (Singapore), Frasers Property said: &ldquo The sharpened focus on capital efficiency, coupled with a strong recurring income base, a structured cash flow funding plan and consistent efforts to evolve Frasers Property&rsquo s operating model to support the strategy of capital efficiency ensures the group is well-positioned to support our business operations, meet our financial commitments, and deliver long-term value to shareholders.&rdquo  

 

Emphasising that the group will not &ldquo grow for the sake of growing&rdquo , Sirivadhanabhakdi said that Frasers Property will continue pursuing risk-adjusted returns and divest assets &ldquo at the right time, at the right value&rdquo . 

 

While the group seeks to increase its development exposure, it is doing so through capital partnerships. 

 

For The Orie, the first private residential launch in Singapore of 2025, Frasers Property took a 25 per cent stake in partnership with City Developments Ltd and Sekisui House. 

 

The group said that the stake reflected its &ldquo strategic focus on partnerships that balance risk with returns while diversifying its residential portfolio&rdquo . 

 

It added: &ldquo Singapore is a key market for Frasers Property where we have established a strong track record in residential and mixed-use developments. We remain committed to this market and we continue to adopt strategies that balance returns with capital efficiency. 

 

&ldquo We will keep reviewing opportunities in both government land sales and private treaty deals, particularly those with positive site attributes. We are optimistic about the resilience of the Singapore residential market, underpinned by healthy fundamentals.&rdquo

 

During the AGM, Sirivadhanabhakdi said that as part of portfolio optimisation efforts, Frasers Property Australia has exited Western Australia. 

 

&ldquo High risk, high return&rdquo

When asked for more details by The Business Times, the group replied: &ldquo Frasers Property Australia has made a considered decision to focus on completing our current developments in Western Australia, while strategically shifting our investment towards large-scale, mixed-use opportunities in our core eastern seaboard markets. This approach allows us to leverage our greater capacity and scale for future growth.&rdquo

 

All existing Western Australia developments by the group will be completed and sold over the next two years. 

 

Shareholders also asked about the group&rsquo s business strategies in emerging markets such as Vietnam, Thailand and China.

 

Vietnam is a &ldquo high risk, high return&rdquo market where developers will have to be &ldquo very cognisant&rdquo of what they do, Sirivadhanabhakdi noted. 

 

The group has focused on residential developments for the right properties and its logistics and industrial portfolio has &ldquo always been viewed as an attractive and lucrative investment for us&rdquo , Sirivadhanabhakdi said.

 

&ldquo As Vietnam&rsquo s economy continues to thrive, with GDP growth of 7.1 per cent in 2024 fuelled by strong exports and robust foreign investment inflows, we remain committed to strategic acquisitions to capitalise on rapid urbanisation and infrastructure improvements,&rdquo the group added. 

 

In Thailand, the industrial and logistics sector continues to attract investment, benefiting from the China+1 strategy and manufacturing relocations amid US-China trade tensions, it said.

 

&ldquo We remain focused on leveraging our competitively positioned Grade A assets in Bangkok against other commercial properties to capture opportunities and higher margins,&rdquo it added.

 

Resilient core Tier-1 cities

While challenges remain in lower-tier cities in China, core Tier-1 cities where Frasers Property is invested, are expected to remain resilient due to broad-based demand and tighter supply. 

 

&ldquo The core Tier-1 cities are key beneficiaries of the recent relaxation in housing purchase restrictions, which have unlocked pent-up demand,&rdquo the group pointed out.

 

Residential sales in China increased by 15 per cent month on month in December 2024 and were up 17 per cent year on year.

 

Land auction activity in Shanghai has also picked up, with more developers submitting bids and premiums exceeding government reserve prices, the group said. 

 

One Bangkok, a decade in the making, the largest development in the city and possibly all of Southeast Asia, opened on Oct 25. Two out of five office towers are operational. Committed occupancies for operational spaces are 55% for both office towers collectively, and 85% collectively for two retail components that opened.

 

Altogether, the development comprises three dynamic retail experiences, five premium office towers, and five luxury and lifestyle hotels, including Bangkok&rsquo s first Ritz-Carlton and Andaz. Additionally, it boasts three upscale residential towers and a vibrant arts and culture scene, all set within 8ha of welcoming, sprawling greenery.

 

The development&rsquo s 17ha site is viewed as the Thai capital&rsquo s newest neighbourhood connecting the business districts of Sathorn and Silom with Rama IV Road. According to Frasers Property TQ5 (FPL), the project&rsquo s investment value is US$3.2 billion ($4.3 billion). FPL holds a 19.9% stake in the development, and its parent and major shareholder, TCC Assets, owns 80% of the project.  

 

The official opening to the public on Oct 25 was largely a celebration of retail offerings on display. The retail area comprises three malls: Parade and THE STOREYS, which opened on Oct 25. POST 1928, comprising 40,000 sq m of upscale stores and fine-dining establishments, will open at a later phase. Parade is the largest of the three, with 85,000 sq m and includes the Japanese supermarket and food hall Mitsukoshi Depachika. Isetan Mitsukoshi, which operates the Japanese supermarket, has also taken a stake in one of the office towers.  

 

According to Forbes, the final completion, initially slated for next year, has been pushed back to 2027 because of the pandemic. Thailand&rsquo s highest skyscraper, at 436m (a reported 92 floors), is scheduled to open in 2027. The signature tower (still officially unnamed) will combine office space with a hotel and is expected to be among the 10 tallest buildings in Southeast Asia &mdash and far higher than the 315m (70 floors) of Bangkok&rsquo s current tallest building. Another six buildings in the complex are said to be 50 floors or higher.

 

The Singapore connection to One Bangkok started when FPL acquired a stake in the development in 2017. The relationship goes back further. In 2013, TCC Assets acquired Fraser & Neave, then the parent of Frasers Centrepoint, which was renamed Frasers Property on Feb 1, 2018. In 2014, Frasers Centrepoint acquired Australand Property Group and renamed it Frasers Property Australia (FPA).

 

In 2016, Panote Sirivadhanabhakdi became the group CEO of FPL. In an exclusive interview with The Edge Singapore on Nov 13, he recalls that discussions started on One Bangkok as far back as 2011.

 

&ldquo We started the project with land consolidation in about 2011,&rdquo Sirivadhanabhakdi remembers. &ldquo The land wasn&rsquo t as large as the current site. We aggregated the different parcels of land by 2014 to the size the site is today.&rdquo

 

Only after aggregating the land parcels did Sirivadhanabhakdi, who led the project for TCC Assets and FPL, start planning the development. &ldquo There are pros and cons of taking on a larger project. Cash flows from the project may be more lumpy. But Bangkok is our home base.&rdquo Sirivadhanabhakdi says.

 

Thailand&rsquo s risk-free rate (10-year government bond yield) is hovering around 2.42%, compared to 2014, when risk-free rates were as high as 4% as TCC Assets started agglomerating the land sites.

 

How Bangkok One fits into FPL&rsquo s plans

 

According to CBRE, in 3Q2024, average rental rates in Thailand for Grade A+ office space increased from 2Q2024, rising by 2.6% q-o-q to THB1,180   ($45.98) psm per month. &ldquo Grade A+ transactions primarily occurred in buildings with rising occupancy, enabling landlords to raise rents,&rdquo CBRE says. As at 3Q2024, 709,312 sq m of office space is under construction, with completion expected between 4Q2024 and 2028.

 

The retail landscape in Bangkok should be more active in 4Q2024, driven by increased domestic and tourist spending during the holiday season, according to CBRE.

 

&ldquo The government&rsquo s economic stimulus measures will further boost domestic spending, contributing to a more vibrant retail market,&rdquo CBRE adds.

 

Although One Bangkok is far from stabilising, it fits in with FPL&rsquo s refreshed strategy, which was announced in May.

 

On Nov 13, when discussing FPL&rsquo s FY2024 ended Sept 30 results, Sirivadhanabhakdi said the group&rsquo s strategy is to increase development exposure, drive higher returns for its investment properties, unlock value and improve capital efficiency.

 

&ldquo Residential and non-residential development will offer us a better risk-adjusted return, aligning with structural trends. The second part is focusing on and leveraging our core capability in asset management to drive returns from an investment property. The third part is to continue ongoing capital recycling through the divestments to our REITs and third parties and collaboration with our strategic capital partners,&rdquo Sirivadhanabhaki recounts.

 

Loo Choo Leong, FPL&rsquo s group CFO, adds that development profit may be from residential development, as well as through FPL&rsquo s industrial and logistics portfolio, which comprises a significant pipeline of 211,700 sq m of development pipeline in Australia, and 160,000 sq m in Netherlands and Germany. FPL has a total landbank of around 2.9 million sq m for development.

 

&ldquo For development, we have primarily industrial and logistics properties which we develop, that creates a development profit,&rdquo Loo says, adding that the gain from One Bangkok is likely to be a fair value gain when the integrated development moves from a project under development to an integrated investment property.

 

One Bangkok fits neatly into all three of FPL&rsquo s refreshed strategy. Units in the three residential towers are likely to be sold and recycled. One office tower is partially divested to Isetan Mitsukoshi, which also operates the speciality supermarket. FPL has a stated strategy of raising capital efficiency by co-investing with capital partners. Its main partner in One Bangkok is TCC Assets. One Bangkok also fits in with FPL&rsquo s property, project and asset management abilities as it is likely the group&rsquo s largest project.    

 

Integrated developments

 

In addition to everything that One Bangkok is to FPL, the integrated development is also Thailand&rsquo s first and largest fully integrated district equipped with state-of-the-art sustainability features and smart-city living.

 

Sirivadhanabhakdi says learning how to develop One Bangkok came from his experience with Central Park, Sydney, an urban redevelopment project purchased by FPA or Australand as it then was, in 2007, from Foster&rsquo s Group, which is now Carlton & United Breweries.

 

&ldquo That was an A$2 billion development planned by Norman Foster. It started in 2008, and we completed it,&rdquo Sirivadhanabhakdi describes. One Central Park, which is part of Central Park, was designed by French architect Jean Nouvel and was conferred the best tall building award in 2014. The mixed-use tower was a joint-venture between FPA and Sekisui House and was constructed as part of the first phase of the Central Park urban renewal project.

 

Central Park Sydney comprises residential units, student living, a multi-level shopping centre, commercial office space, childcare facilities and hotels.

 

In Singapore, FPL developed an integrated development, Northpoint City South Wing, a shopping mall, and North Park Residences, comprising 920 units, which was completed in 2018. In 2020, FPL divested 50% of NorthPoint City South Wing to TCC Assets for $1.1 billion.

 

None of FPL&rsquo s previous integrated projects are on the scale of One Bangkok. The foundation work took two-and-a-half years, during which the project boasted the largest concrete pouring in Southeast Asia.

 

Each pouring took 33 continuous days, and the project had five such pourings. &ldquo We built more than five million sq ft underground. The project is connected to the MRT. We worked with the largest concrete manufacturer in Thailand to create a new recipe for the pouring. It was such a large pouring that we generated a new low-heat concrete, which released less carbon. The manufacturer developed a GPS system for the concrete trucks so they could be positioned for the continuous pouring,&rdquo Sirivadhanabhadki describes. As he tells it, Malaysian, Korean and Singaporean engineers worked on the project day and night.

 

As soon as Covid-19 restrictions were lifted in Thailand, the One Bangkok project was the first in the county to restart construction.

 

&ldquo We had a design competition which resulted in One Bangkok. We appointed four international architects to design the project and paid them for their designs. At the final submission [for the project], the winning design would be given to all the designers,&rdquo Sirivadhanabhakdi says.

 

In Thailand, architects are a protected profession. Foreigners are prohibited from working in Thailand as architects.

 

&ldquo The condition is, at the final submission of the competition, because it is a paid design competition, I will be able to give the winning design to all the designers so they can consider what should be in the final submission. We learnt a great deal from these global architects we are building a city masterplan. What isn&rsquo t stated is that we built a four-city block. If you go to the Grand Palace, there is an open field, like a courtyard. That&rsquo s the resemblance mapped into how One Bangkok was designed,&rdquo he indicates.

 

Additionally, with One Bangkok, Sirivadhanabhakdi says the joint-venture companies &ldquo learned how to integrate different parts of the projects, to connect better, to create a secure environment, without compromising the strength of what each component needs but to extend and innovate such that each component of the development connects with other parts.&rdquo

 

Smart development

 

Two certifications reflect One Bangkok&rsquo s smart building credentials. Achieving the highest level of both certifications places One Bangkok among the top 1% of the certified buildings.

 

WireScore certification is a global rating system for building infrastructure recognising best-in-class digitally connected buildings. SmartScore certification is the global smart building certification for technologically advanced intelligent buildings. This achievement signifies that the offices at One Bangkok meet the highest international standards for physical resilience and digital connectivity features, including Wi-Fi and mobile internet.

 

The entire One Bangkok district is equipped with over 250,000 sensors and 5,000 CCTV cameras for real-time monitoring and data recording, enhancing security and traffic control. Smart poles provide lightning and high-speed Wi-Fi connectivity throughout the project. Additional features and measures can optimise internet and mobile connectivity.  

 

&ldquo In the design stage, we looked at the customer journey and designed and built One Bangkok around the customer journey. We have a control room in One Bangkok called One Power. Here, One Bangkok is divided into 16 different components, where we have 5,000 cameras and 250,000 sensors. Being smart is about having data,&rdquo Sirivadhanabhakdi says.

 

Accenture was brought into One Bangkok as a consultant at the design stage. &ldquo We wanted to frame the connected architecture for the different asset classes within the development. The project with Accenture was about building the customer journey with the built space,&rdquo Sirivadhanabhakdi says.

 

Hitachi Consulting was brought in to design a smart building. It was responsible for the high-level design of One Bangkok&rsquo s Smart City Platform and Sensor Grid. Everything in the development runs off an IoT-driven platform with smart services integrated into energy, water, telecommunications, predictive maintenance, security, traffic and parking. Sensors and analytics allow property management to adjust and optimise One Bangkok&rsquo s operations.

 

The benefits of smart building services at One Bangkok include optimal temperature, noise and air quality adaptation through sensors, as well as sensor-based predictive maintenance to reduce building system costs and downtime. Hitachi&rsquo s Platform also allows for highly efficient energy and water usage and enhanced security from property-wide CCTVs.

 

&ldquo When technology is smart, you&rsquo re not supposed to feel it. You&rsquo re supposed to use the technology,&rdquo Sirivadhanabhakdi adds. For example, automatic, heat-sensitive lights turn on when people enter a room. At night, the light should dim down. The temperature should remain constant, irrespective of the day&rsquo s temperature range.

 

Taking shape

 

One Bangkok has yet to be fully completed. However, it has taken shape. Sirivadhanabhakdi says it was a dream come true to build One Bangkok at such a scale, to an international standard in his hometown. &ldquo I could not imagine the physical form, but it took shape. It is an accidental marriage, a perfect match, a strong local base, creating a unique design of a large mixed-use development.&rdquo  

 

There was a concern that the entire development would create unwanted noise and too much wind, but he points out that it now has good airflow because of its elevation, the stairways, escalators and open spaces.

 

The design was tested for safety in Canada. &ldquo This became a design for safety for the flow of people. We went to Canada to test the entire model in a wind tunnel,&rdquo Sirivadhanabhakdi reveals.

 

&ldquo I still need to make sure the baby can walk it can then run, and the nutrients will help it grow. The built form is large the open space is useful, not just for design purposes but for safety, for the flow of people,&rdquo he explains.

 

On a granular scale, Sirivadhanabhakdi points out that developers such as FPL value properties for their ability to generate income. &ldquo Investment properties are a natural hedge to inflation. We picked the office sector because it is stable. And retail can be very dynamic. We are going to be one of the most competitive spaces. We have a competitive advantage with our entry cost.&rdquo He reiterates that One Bangkok&rsquo s retail is in the very centre of town, akin to ION Orchard.

 

Loo says the property will ultimately be valued on a discounted cash flow (DCF) valuation, which depends on the income (and rent) that One Bangkok can generate. &ldquo To get a return on our investment, the return must exceed our weighted average cost of capital.&rdquo  

 

One Bangkok has many facets, all at once, for FPL. To Sirivadhanabhakdi, who oversaw it from an empty piece of land, &ldquo One Bangkok is an example of modern real estate in the core CBD. I need this project to be authentic to Bangkok and worthy of what Bangkok deserves, a sense of place and a sense of structure, improving the quality of life in the city.&rdquo

 

Frasers Property and regular partner Sekisui House are jointly redeveloping Robertson Walk and Fraser Place Robertson, which it now holds under a 999-year lease. 

 

Besides a 348-unit residential development, the site will include F& B options as well. The redevelopment will commence next year and is slated for completion by end of 2028.

 

According to Frasers Property TQ5 , the redevelopment will have a gross floor area of 30,664 sqm.

 

Soon Su Lin, CEO of Frasers Property Singapore, says the redevelopment is line with the company' s active asset management strategy.

 

" We have identified this opportunity to unlock the highest and best use returns for our prime 999-year site in the heart of Robertson Quay," she says.

Its board proposes a first and final dividend of S$0.045 per share

 

FRASERS Property posted a net profit of S$148.9 million for the second half of its financial year ended Sep 30, reversing losses of S$52.6 million in the same period the prior year.

 

This came as revenue for H2 FY2024 stood at S$2.7 billion, up 33.2 per cent from S$2 billion the previous year, it said on Wednesday (Nov 13). 

 

The company attributed its improved performance to contributions from residential projects in Singapore and China and its share of fair-value gains from a joint venture&rsquo s industrial and logistics properties in Australia.

 

The group&rsquo s H2 fair-value losses in relation to investment properties held by its subsidiaries decreased 55 per cent to S$198.5 million from the S$441.8 million it logged for the same period of the previous year. 

 

The net losses came from its commercial properties in the UK and Australia and were offset by fair-value gains from its properties in Singapore, as well as its industrial and logistics properties in Australia and Europe. 

 

Its earnings per share for the half-year period stood at S$0.033, compared to its loss per share of S$0.019 previously.  

 

For the full year, Frasers Property&rsquo s net profit rose 19.2 per cent to S$206.3 million from S$173.1 million in the corresponding period of the previous year. 

 

Revenue for the full year stood at S$4.2 billion, up 6.8 per cent from S$3.9 billion for FY2023. 

 

The board proposed a first and final dividend of S$0.045 per share, unchanged from the year before. This is subject to shareholders&rsquo approval at the next annual general meeting. 

 

A US$3.2 billion ($4.22 billion) mixed-used project co-developed by Frasers Property TQ5 Holdings (Thailand) and TCC Assets (Thailand) called One Bangkok has launched today, after it was first announced in 2018. 

 

The project is one of Thailand&rsquo s largest private sector development projects, connecting the business districts of Sathorn and Silom with Rama IV Road. The development comprises luxury and lifestyle hotels, residential towers, offices, and retail malls. 

 

In its retail mall, One Bangkok Retail has three interconnected retail destinations that spans a total net lettable area of 160,000 square meters. It has the capacity to house 900 stores.

 

&ldquo As one of Thailand&rsquo s largest private sector development projects, we have brought together the collective expertise and experience from Frasers Property' s signature real estate projects across our multinational portfolio into a smart, sustainable and fully-integrated district in the heart of Bangkok. We celebrate the realisation of this vision and look forward to One Bangkok taking its place in the hearts of Bangkokians, tourists and visitors alike as a world-class destination for all to enjoy,&rdquo said Panote Sirivadhanabhakdi, Group Chief Executive Officer of Frasers Property Limited, the development manager of One Bangkok.

The group&rsquo s assets for these segments have increased by over 80 per cent in the last five years to S$11.7 billion as at the end of March 2024

FRASERS Property : TQ5 +0.63% has been beefing up its industrial and logistics portfolio as the property group looks to increase its exposure to high-performing asset classes. 

 

The group&rsquo s assets on balance sheet for these sectors increased by over 80 per cent from S$6.4 billion as at end September 2018 to S$11.7 billion at the end of March 2024. 

 

In an interview with The Business Times, Reini Otter, Frasers Property Industrial&rsquo s chief executive officer, said: &ldquo In the last five years between FY19 and FY23, Frasers Property has focused its investment on industrial and logistics, diversifying outside the residential and hospitality sectors.&rdquo  

 

&ldquo The industrial sector is the backbone of any economy, providing a vital supply chain to nearly every sector, as well as products and services that people use every day, which means the demand for property assets in the space continues to grow.&rdquo  

 

Expansion in Thailand and Vietnam

In addition to continuously growing its industrial and logistics investments in Europe, the group has been increasing its exposure to the sector in Thailand and Vietnam, Otter said. 

 

He added: &ldquo We think we will start to generate a lot of business coming from Europe to Asia and we are already seeing it with the China + 1 effect, where we are seeing lots of investments coming into Vietnam and Thailand.&rdquo

 

As the electric vehicles and third-party logistics sectors take off in Vietnam, foreign direct investment has increased massively, Otter said. 

 

Large high-tech players such as Samsung are building very large facilities in Ho Chi Minh City for manufacturing, significantly shifting business operations to Vietnam, he said.  

 

Otter said: &ldquo So for us to be able to be present in North and South Vietnam and be able to identify those key emerging trends, especially the entry of those global manufacturing players, is a huge advantage.&rdquo

 

Such companies would be looking for a trusted partner in those markets who are able to deliver sustainable, quality buildings and who will be able to manage the construction and fit-out of projects, he added. 

 

Otter said: &ldquo With the scale we can bring on in Vietnam which is close to a million square metres (sq m) of institutional grade facilities, I think it&rsquo s going to be quite a good story for us.&rdquo

 

In 2021, Frasers Property began developing Binh Duong Industrial Park (BDIP), which marked the group&rsquo s first foray into the industrial and logistics sectors in Vietnam. 

 

The site is expected to span about 51.8 hectares when completed in FY2026, with more than 220,000 sq m of industrial facilities.

 

Occupiers are steadily coming onboard, with SPX, the in-house logistics arm of Shopee, set to occupy a 106,000 sq m automatic sorting centre in BDIP built by Frasers Property. 

 

There are plans to expand the group&rsquo s presence in North Vietnam over the next three to five years and to build approximately 460,000 sq m of industrial facilities in the provinces of Bac Ninh, Hung Yen and Quang Ninh by 2027, Otter said.  

 

In Thailand, the Eastern Economic Corridor programme, which seeks to drive investments in high-potential sectors such as smart electronics and the digital economy, will also provide opportunities which the group can tap as a market leader, he added. 

 

Going green

Meanwhile, in Australia, Germany and the Netherlands, where Frasers Property has a 2.9 million sq m land bank it has yet to tap, industrial rents are still rising post Covid-19, albeit at a slower rate and vacancies are hovering near historic lows. 

 

For instance, the vacancy rate for industrial properties in Sydney increased from 0.2 per cent in H1 2023 to 0.5 per cent in H2 2023,while vacancies in Melbourne increased from 1.2 per cent to 1.6 per cent in the same period. 

 

Otter said: &ldquo You&rsquo ve got limited land, complex planning systems &ndash whether it&rsquo s Europe or Australia, getting hold of (land) is not that easy and that creates high barriers to entry.&rdquo  

 

&ldquo If you are an incumbent in those markets and have an ability to develop properties, you&rsquo ve got an advantage.&rdquo  

 

In April, tool manufacturer Techtronic Industries opened a 74,056 sq m facility at The Yards, an industrial estate co-developed by Frasers Property Industrial in New South Wales, Australia. 

 

The Yards was the first industrial estate in Australia to achieve the country&rsquo s 6 Star Green Star Communities rating, in recognition of its sustainability features, which include water efficient fittings and fixtures, electric vehicle charging points and cycling paths within the estate. 

 

Otter said: &ldquo In the next 10 years, (we) will see a dramatic increase in the impact of climate change and how businesses respond to that will be very important.&rdquo

 

&ldquo We&rsquo ve taken a leading position in this because we think getting ahead of the curve is very important to future proof your assets.&rdquo  

 

The Yards is also a premium estate, a concept which Frasers Property has rolled out since 2021, combining high-quality industrial and logistics facilities with wellness and sustainability features.

 

Green open spaces and cycling lanes have been built around the 77-hectare estate to boost the mental well-being and health of workers on-site. 

 

Otter said: &ldquo Market reaction to our premium estates concept has been positive, although we will measure the real success of this approach over the long term through tenant retention over the next five to 10 years, as well as the health of employees.&rdquo  

 

FRASERS Property : TQ5 +0.64% said that it is managing its residential business in Thailand with &ldquo agility amid a challenging operating environment&rdquo in a business update on Wednesday (Aug 7) for the third quarter ended Jun 30.

 

The developer noted that the Bank of Thailand had raised its policy rate to 2.5 per cent in September 2023, up from 1.5 per cent at the beginning of that year, with the rate remaining the same since then. &ldquo High interest rates, increase in minimum wages and construction material prices, and stricter assessment of housing loan approvals are key risk factors for the real estate sector in 2024,&rdquo it said.

 

The developer also pointed that strategic diversification across housing segments have helped to drive sales in Thailand amid residential market headwinds. By focusing on cost control, it has successfully reduced average material costs by 10 per cent year on year through efficiency improvements in the materials bidding process. Adjusting construction methods and outsourcing management are (the) next areas of focus, it added.

 

For the nine months ended June 2024, the company settled 1,241 units, sold 1,131 units and had unrecognised revenue of S$50 million, with 248 contracts on hand in Thailand as at Jun 30.

 

Frasers Property said that its industrial and logistics portfolio in Thailand continues to maintain positive momentum with an average occupancy rate of 87 per cent for its warehouses and factories. Strong leasing demand for factories on the back of the expansion of the electronics and automotive sectors had contributed to a net leasing growth of 48,222 square metres (sq m) over the nine months in FY2024, it pointed out.

 

The developer added that demand for warehouse facilities continues to keep pace with the expansion of the e-commerce and logistics sector, although strong supply is expected in 2024. Industrial and logistics leasing conditions across Australia and Europe also remain strong.

 

The group said that it had achieved strong leasing activity, with renewals and new leases of about 168,700 sq m in Australia and about 48,600 sq m in the European Union in Q3. &ldquo Industrial and logistics as an asset class largely remains real estate investors&rsquo top pick due to its perceived stability and growth potential.&rdquo

 

Meanwhile, Frasers Property remains confident in its Singapore residential projects. It said that it has secured a new government residential site at Lorong 1 Toa Payoh through a joint venture with a 25 per cent stake. The project is expected to be launched in the first half of 2025, and will yield about 777 units.

 

Frasers Property noted although home prices in the Republic have remained resilient, developers are more cautious on land bids in view of the increase in housing supply to cater to local housing demand.

 

Average occupancy rates (AOR) rose 0.9 percentage points to 76.8 per cent for the nine months ended Jun 30 from the corresponding period a year ago. Meanwhile, average daily rates (ADR) were down 1.6 per cent at S$221.6. Revenue per available room (RevPar) was also down 0.5 per cent at S$170.1. The decline in ADR and RevPar was due to the impact of the depreciation of the Japanese yen against the Singapore dollar on the Japan portfolio, it explained.

 

As for its properties in Europe, the Middle East and Africa, the group noted that the elevated geopolitical tensions in the Middle East continue to present challenges and risks.

 

ADR for the group&rsquo s hospitality properties in that region improved 1.9 per cent to S$233 in the first nine months of FY2024, when compared with the same period last year. RevPar was also up 1.7 per cent at S$177.80. However, it said that the improvement in ADR and RevPar was partially offset by the fall in long-stay and leisure demand in its UK portfolio.

Five-year facility will be used to refinance existing loans and for working capital

 

FRASERS Property : TQ5 0%&rsquo s wholly owned subsidiary, Frasers Property Treasury, has secured a dual-tranche, sustainability-linked loan aggregating about S$904 million.

 

On Tuesday (Jul 9), the group noted that the two tranches are a loan of A$407 million (S$354.1 million, based on March 2024&rsquo s exchange rate) and a US$407 million loan.

 

It added that proceeds from the facility, which has a tenure of five years, will be used to refinance existing loans and for working capital and other general corporate purposes.

 

With the addition of the facility, Frasers said it has obtained more than S$13 billion of green or sustainability-linked loans and bonds.

 

It also noted that the latest facility&rsquo s price reduction structure is pegged to its global real estate sustainability benchmark (GRESB) performance, by which it will incur lower borrowing costs if pre-specified targets are met.

 

GRESB &ndash which is used by more than 170 institutional and financial investors to inform decision-making, including interest rate savings from sustainability-linked loans &ndash ranks entities yearly based on two benchmarks.

The development benchmark ranks real estate companies based on how focused their development of new construction and major renovation projects are on environmental, social and governance (ESG) factors. Meanwhile, the standing investment benchmark looks at how well their existing investments are managed.

The launch marks the business unit&rsquo s expansion in North Asia

 

FRASERS Hospitality, a strategic business unit of Frasers Property : TQ5 -0.63%, announced on Thursday (Jun 20) its entrance into Taiwan with its premium serviced apartment, in partnership with Taiwanese real estate developer Hongtai Group.

 

Fraser Residence Taipei, which will offer more than 200 suites ranging from one to three bedrooms, is due to open in 2027. The launch marks Frasers Hospitality&rsquo s increased presence in North Asia, with properties already operational across China, Japan and South Korea.  

 

The residence is located in Taipei&rsquo s Beitou District, near the Tianmu neighbourhood, which serves as an enclave for corporate executives and the foreign expatriate community. 

 

It is also near medical facilities and transport nodes, such as Songshan Airport and Shipai metro station. The serviced apartment will feature recreational facilities such as a heated pool and a yoga studio, as well as meeting spaces and a business centre for business travellers.

 

Frasers Hospitality owns and manages more than 100 premium serviced apartments and hotel residences in over 20 countries. 

 

The business unit said that it will continue to &ldquo anchor its growth strategy within Asia-Pacific, Europe, the Middle East and Africa&rdquo . 

 

Its partner, Taichung-based Hongtai Group, is a real estate developer with businesses in construction and electronics.

 

The group reported a net profit of S$35.8m, down from S$197.2m a year ago

FRASERS Property will focus on capital recycling and growing its development exposure, the group said, after it posted an 81.8 per cent drop in net profit in the first half of the financial year. 

 

For the first six months ended March 2024, Frasers Property reported a net profit of S$35.8 million, down from S$197.2 million in the year-ago period. 

 

At a briefing on Monday (May 13), Panote Sirivadhanabhakdi, Frasers Property&rsquo s group chief executive officer, said: &ldquo Continual market headwinds have created ongoing challenges for us, which are reflected in these results.&rdquo

 

He said that in order to add market resilience, the company will focus on the disciplined and consistent unlocking of value, increasing development exposure over the medium to long term, and strengthening the resilience of the group&rsquo s income streams. The group has executed capital recycling transactions totalling S$1.1 billion in H1, he said. 

 

In the first quarter of this year, Frasers Property inked a deal to sell the 313-room hotel Capri by Fraser, Changi City, for about S$171.8 million. The purchaser is believed to be a consortium comprising Atelier Capital Partners, TPG Angelo Gordon and Far East Consortium International. 

 

On Monday, Sirivadhanabhakdi said that the Capri asset was part of Frasers Property&rsquo s strategic development and had created value. 

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&ldquo But it&rsquo s a shorter tenure, and it has also seen its structural challenges within the industrial business park area. We have seen what we can get out of (it) and what we would get more out (from) the capital we are able to recoup,&rdquo he said.

 

Frasers Property is also understood to be in advanced negotiations for the sale of its 72-unit serviced-apartment property and three conserved warehouses along the Singapore River, The Business Times reported in May. An entity linked to Tuan Sing Holdings is tipped to be the prospective buyer at a price said to be slightly above S$130 million.

 

Group revenue for the first half fell 20.4 per cent to S$1.5 billion for the six-month period, down from S$1.9 billion the year before.

 

Earnings per share dropped to 0.91 Singapore cent, from 5.02 Singapore cents in the previous corresponding period.

 

No interim dividend was declared, unchanged from the previous year.

 

Overall revenue from the Singapore operations fell 63 per cent to S$266 million, while profit before interest and tax (PBIT) shrank 39 per cent to S$202 million. The drop was partially due to the absence of contribution from Riviere, which obtained its Temporary Occupation Permit in January 2023.

 

Soon Su Lin, chief executive officer of Frasers Property Singapore, said: &ldquo We remain very confident (in) the Singapore residential market. Of course, sentiment could have turned a bit more cautious as inflationary pressures have stepped in, but prices have been very resilient.&rdquo

 

In Thailand, revenue fell 13 per cent to S$234 million, while PBIT slipped 25 per cent to S$61 million due to a lower level of residential settlements, though this was offset by improved performance from investment properties.

 

Giving an update on One Bangkok, the massive mixed-use project Frasers Property is developing in Thailand, Lim Hua Tiong, chief executive officer, Emerging Markets, Asia, said the first two shopping malls are expected to open at the end of 2024. So far, the shopping malls are about 60 per cent pre-leased, he said.

 

Meanwhile, Frasers Property&rsquo s industrial segment contributed S$204 million in PBIT in H1 2024, about 13 per cent higher than the previous period due to higher contribution from newly completed investment properties. As at Mar 31, Frasers Property has S$35 billion in property assets, with about one-third of these assets in the industrial and logistics sector.

 

The group&rsquo s gearing rose to 79.6 per cent, from 75.8 per cent as at Sep 30, 2023.

 

Frasers Property is actively exploring and diversifying its funding sources, including tapping the Japanese market as part of efforts to manage debt costs in a higher-for-longer interest rate environment, said Loo Choo Leong, Frasers Property&rsquo s group chief financial officer. 

 

The group will be increasing its development exposure in both residential segments that offer better risk-adjusted returns, as well as non-residential markets that are aligned with sectoral structural trends.

 

In H1, Frasers Property completed around 356,000 square metres (sq m) of development projects in its non-residential portfolio, with about 1.1 million sq m of pipeline projects under development for the current financial year and beyond, mainly in the industrial and logistics sector.

 

The group will also strengthen its recurring income asset classes, which constitute 87 per cent of its property assets as at Mar 31.

 

Sirivadhanabhakdi said: &ldquo While we have not fully mitigated the impact of external forces, we have (the) discipline to drive returns across property cycles and cushion the impact of what we cannot control.&rdquo

 

Frasers Property has reported earnings of $57.4 million for its 1HFY2024, down 74.6% y-o-y. Revenue was down 20.4% in the same half year ended March to $1.55 billion.

 

The company attributes the lower bottom line to fair value losses and impairment booked on certain UK commercial properties amounting to $115.3 million.

 

On the other hand, it booked fair value gains on some of its industrial and logistics assets in other markets in Europe, and Australia, which enjoyed higher rental.

 

Lower residential sales in Singapore and Thailand, plus higher financing costs, weighed on the numbers as well, the company says.

 

PBIT, meanwhile, was down 15.7% y-o-y to $577.6 million.

 

" Continual market headwinds have created ongoing challenges for us, which are reflected in these results," says CEO Panote Sirivadhanabhakdi.

 

To cope with the challenges, Frasers Property TQ5 0.00% is looking at ways to build up its recurring income stream. 

 

It is also actively recycling its assets, with a total of $1.1 billion recorded in 1HFY2024.

 

As at March 31, it has a portfolio of $48.9 billion in assets under management.

 

Frasers Property says that 87% of its property assets in recurring income asset classes, while 86% of its PBIT was generated from these assets.

An entity linked to Tuan Sing Holdings, said to be the prospective buyer, is looking at a price just above S$130 million

 

FRASERS Property is understood to be in advanced negotiations for a potential sale of its 72-unit serviced-apartment property and three conserved warehouses along the Singapore River.

 

An entity linked to Tuan Sing Holdings is tipped as the prospective buyer. The Business Times understands that it has been doing exclusive due diligence for a potential purchase at slightly above S$130 million.

 

The asset comprises the four-storey block of serviced apartments named Fraser Residence River Promenade and the three warehouses, or godowns, which housed the popular Zouk nightspot for about 25 years until it moved to Clarke Quay in late 2016.

 

The serviced apartments and warehouses are part of a development that also includes the Riviere, a 455-unit high-end residential project that received its Temporary Occupation Permit (TOP) in January 2023. It was fully sold in April that year.

 

The 72 serviced residences and three warehouses are held as a single strata unit in the development, BT understands.

 

Frasers Property developed the project on a 99-year leasehold site in Jiak Kim Street, which it clinched in an Urban Redevelopment Authority tender that closed in December 2017.

 

Its winning bid of S$955.4 million translated to S$1,732.55 per square foot per plot ratio, just 0.6 per cent above the second-highest bid from Hong Leong Holdings and Hong Realty.

 

The tender drew a total of 10 bids. The site has about 93 years left on its lease.

 

Fraser Residence River Promenade received its TOP in May last year and opened its doors in September.

 

One of the three warehouses is leased to Brewerkz, which operates Jiak Kim House, a modern Asian cuisine restaurant, in the space. The second warehouse has been designed as a versatile space suitable for coworking and hosting of events, and the third warehouse serves as the front-of-house and reception for Fraser Residence River Promenade, according to Frasers Property&rsquo s latest annual report.

 

Some market watchers said it is difficult to determine the value of the warehouses, because only part of the warehouse space is currently generating income there are also specified uses for the warehouses.

 

All 72 serviced apartments have kitchenettes and range from 258 sq ft for the studio units to 516 sq ft for the one-bedroom units, The Straits Times reported in January.

 

Based on just the 72 serviced apartments, a price of S$130 million works out to S$1.8 million per key. And by some estimates, the net yield is about 3 per cent.

 

While such pricing is more akin to that for freehold hotels in Singapore, Fraser Residence River Promenade is attractively located it fronts the Singapore River and is near Havelock MRT station on the Thomson-East Coast Line. There is also potential to increase the number of serviced apartments.

 

The sale is understood to have been brokered by Savills Singapore, which marketed the property through an expression-of-interest exercise that closed in late March.

 

In the first quarter of this year, Frasers Property inked a deal to sell the 313-room hotel Capri by Fraser, Changi City, for about S$170 million to a consortium comprising Atelier Capital Partners, TPG Angelo Gordon and Far East Consortium International.

 

The hotel, part of an integrated project that was developed on a site with about 45 years left on its lease, is a stone&rsquo s throw from the Expo MRT station and the Singapore Expo.