Ho Bee stuck with 104 unsold units at Seascape

Marketing efforts must be intensified.

According to Maybank Kim Eng, Ho Bee is a name synonymous with prime living on Sentosa Cove, and its Sentosa Cove projects still account for the bulk of its Singapore residential landbank.

However, to improve the quality of its recurrent income, Ho Bee has been divesting non-core assets ahead of The Metropolitan’s completion, which the firm thinks will be another key development to watch.

While Ho Bee has not been selling units from its Sentosa Cove projects, there appears to be some activity in the secondary market there. Resale transactions at the Cove have come off a low of just three units in 1Q12 following the introduction of the Additional Buyer’s Stamp Duty in Dec 2011 to twenty-one units transacted in both 2Q12 and 3Q12 each.

Here's more from Maybank Kim Eng:

We expect Ho Bee to step up marketing efforts to sell the remaining 104 units at Seascape in FY13. Given that projects on Sentosa Cove are exempted from the Residential Property Act, we are not expecting Ho Bee to reduce their asking prices aggressively just to clear inventory.

The Metropolis, with 1 million sq ft of office space, is expected to be completed by 2H13. There have been reports suggesting various companies interested in taking up space there, such as Neptune Orient Lines purportedly seeking to lease over 100,000 sq ft, after recently agreeing to sell the NOL Building.

Proctor & Gamble had been named as potentially being the biggest tenant, possibly taking up > 200,000 sq ft of space. Given the continued economic malaise, we expect that more companies will look into the option of relocating to decentralized locations such as The Metropolis to reduce business costs.

On a stabilized basis, we estimate that The Metropolis can contribute ~SGD48m in net property income per annum.