Smaller firms join hands to battle big developers

SMALLER firms are taking on the big boys in the battle to buy development land plots. 

By joining hands and pooling funds, these upstarts have secured various prime sites around town despite stiff competition in a robust property market. 

At least three out of the 11 residential sites sold under the Government Land Sales (GLS) programme this year have been snapped up by consortiums of smaller investors. Smaller firms have also done well in the private land sale market. They are redeveloping sites including McDonald's Place at King Albert Park and Seletar Garden.

For instance, a group of investors comprising SingXpress, Creative Investments and Kay Lim Realty secured an executive condominium (EC) site in Tampines for $234 million last month, outbidding others like Sim Lian Group and MCL Land.

Experts say that smaller firms are banding together as it helps them spread the risk involved in the development of larger sites.

This is especially vital amid market uncertainties such as the possibility of a fresh round of cooling measures here and global concerns over the euro zone crisis, they added. 

Contractors are able to control their costs better and they might be able to translate the savings from the lower costs into a higher bid instead. 

Source: The Straits Times – 4 June 2012