Frasers Centrepoint Limited (FCL), the property arm of bluechip conglomerate Fraser & Neave, plans to invest about A$419 million (S$530 million) to develop two residential projects in Western Australia.

And to ride on an expected upswing in the Australian residential market, FCL intends to spend another A$200-300 million over the next year to acquire land in the country.

Chief executive Lim Ee Seng told BT that the actual investment amount for acquired sites will, however, be significantly higher as the current figures take in only the land cost.

The latest deals - one each in Mandurah and Perth - takes FCL’s investments in Australia to about A$1.76 billion.a

Mr Lim said that FCL would be developing a 1,250-unit riverine project in Mandurah for about A$425.9 million. FCL will hold an effective stake of 56.3 per cent in the project, so its investment contribution is A$239.8 million.

Units will range from town houses to apartments and individual homes, and is slated for completion in 2015. FCL paid A$17 million for the 53 hectare site earlier this year.

In Perth, the developer will undertake a 288-unit project that’s expected to cost A$204.4 million. FCL’s effective stake is 87.5 per cent, which means its investment contribution is about A$178.9 million.

The 128,000 square foot site, which will host a 140-suite Fraser Suites hotel and more than 53,820 square feet of commercial space, was bought for A$16.3 million in May 2006. The project is due to be completed in 2011.

FCL’s entry into Australia started in 1992 with its purchase of the Bridgepoint Shopping Centre in Sydney. Since then, the developer has grown its presence in the country in a big way. Right now, FCL has more than 3,000 units under development in Australia and another close to 800 homes, also in the works, in neighbouring New Zealand.

Since last year, FCL has also sold more than 160 units - out of a total of 456 - in its Sydney project, Lumiere, at prices averaging around A$929 per square foot. Lumiere, located in Sydney’s Regent Place, is a mixed-use residential, commercial, retail and serviced apartment tower.

Other than a 56-storey residential tower, it also has 75,350 sq ft of commercial and retail space and a 42-level Fraser Suites Tower with 201 units.

Mr Lim explained that FCL has held off selling more units in Lumiere in expectation of a price increase as the Australian property market looks set to pick up.‘We have been investing a lot in Australia and New Zealand,’ Mr Lim said. ‘Everywhere else, the prices are skyrocketing but these are the two countries where the market hasn’t recovered.’

But this is all set to change, and FCL, with its thousands of units stockpiled, hopes to ride the property upswing. ‘We see a recovery either by the end of this year or next year,’ said Mr Lim.

In Australia, he expects prices to pick up once interest rates, which have been climbing, stabilise. FCL will be ‘quite happy’ with a 5-10 per cent increase in home prices, he said.

The company’s contribution from Australia has picked up over the past few years. From 2004 to 2006, turnover from Australia grew five times.

More overseas deals for FCL could soon be announced, Mr Lim said - both in Australia and elsewhere.‘Apart from China, the next two big markets for us will be Vietnam and Australia,’ Mr Lim said. India is also considered to be an attractive location, he added.

Source: The Business Times, 23 April 2007