By Daryl Loo
SINGAPORE (Reuters) - Singapore developer UOL Group (UTOS.SI: Quote, Profile, Research, Stock Buzz) said on Wednesday that it will spend up to S$500 million ($366 million) over three years acquiring hotels in the United States, Australia and throughout Asia, in expectation of a boom in global travel.
"We see tremendous growth in the hospitality industry, especially from the Asia Pacific where there is a growing group of new rich, and they all want to see the world," said UOL's President and Chief Executive Officer Gwee Lian Kheng at the Reuters Global Real Estate Summit in Singapore.
"Budget air travel is also growing, and we think that with all these factors, tourism in the world will continue to boom," said Gwee, whose firm owns the Pan Pacific global hotels brand and who also heads hospitality group Hotel Plaza HPLZ.SI.
The firm, which paid $165 million in January for a Singapore residential land site, sees continued strength in the sector, even as first-quarter private home sales in the city-state dipped to a five-year low amid fears of a global recession.
"If you tell me that the market is dead, I disagree because we're still a fairly strong economy compared with other parts of the world," said Gwee, a 35-year property veteran.
UOL, whose largest shareholders are Singapore's number-two bank United Overseas Bank (UOBH.SI: Quote, Profile, Research, Stock Buzz) and its chairman Wee Cho Yaw, has a market value of about $2 billion.
It is among the few developers to have continued to put up Singapore residential projects for sale this year, even as most large builders delayed sales to wait out a moribund market.
The firm's luxury Nassim Park project, launched in early June, is now 55 percent sold and at average prices of about S$3,000 per square foot, Gwee said, but he acknowledged that sales have slowed significantly compared to a year ago.
UOL has moderated its asking prices due to weaker demand, but has been able to maintain its profit margins at well over 15 percent, he said, adding that UOL will for the next three years focus on the low and mid-tier segments where demand is expected to be stronger.
"Prices in the luxury market could see a slow-down, but the mid and lower-tier will still go up, partly because of all the people who sold their homes en-bloc last year," Gwee said.
Thousands of Singaporeans collectively sold their apartment blocks to developers in a ferocious land-grab over the past two years in deals known as "en-bloc sales", and some developers believe these sellers have yet to purchase replacement homes.
GOING ABROAD
UOL now has about 80 percent of its investments in Singapore and the remainder overseas, and is also looking abroad for growth but prefers to do so defensively, Gwee said.
Its top pick now is China, particularly its second-tier cities, but it now views Vietnam as too risky due to factors such as a lack of transparency in investment rules, spiraling inflation, and a volatile stock market.
"We've always been more defensive and we want to prioritize when going overseas. Vietnam used to be very good, but now it's getting worrisome," Gwee said. Continued...
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