MR. TEO HO BENG
MAJOR SINGAPOREAN COMPANY
Like a master chess player, CEO of Hiap Hoe, Mr. Teo Ho Beng, moves from a period of studied contemplation to strike decisively, strategically and some would say, boldly, to acquire three major Melbourne sites within a matter of months of each other.
The mission: three new international hotel developments for a city with bright prospects for tourism growth in the decades ahead.
In exclusive interviews with Mr. Teo and his Australian-based project design teams, The Asian Executive gains in invaluable insight into the Australian entry of a successful and respected Singaporean company.
Hiap Hoe’s foray into the Melbourne market with three significant development site acquisitions in one year alone totalling approx. AUD 176 million, namely 206 Bourke Street, (AUD 106 million), 380 Lonsdale Street, (AUD 43 million) and 6-22 Pearl River road in Melbourne’s Docklands precinct, (AUD 28.8 million) has created a great buzz in Australian investment circles. Seen clearly as part of a long term global play, the moves put upon by this respected, rock-steady real estate behemoth have been monitored closely by other serious development players. When taken from a tourist’s viewpoint, the allure for new major players is relatively self-evident. Widely recognized as the “world’s most liveable city”, Melbourne consistently charms the growing number of international visitors with its leisured lifestyle, pleasant climate for much of the year and wonderful mix of cultures set in the backdrop of both old-world Victorian-era and avant-garde architecture. However, all of this can come to naught if the underlying fundamentals for new development hotel development projects are not present.
With the operational performance of the hotel industry in Melbourne now hovering around 80% with average room rates achieving AUD 250 and acquisitive companies now re-asserting themselves. Projects that had been moth-balled years earlier are seeing the light of day.
Mr. Teo chooses his words judiciously, “we have done a considerable amount of research of course, and our newly-acquired Australian assets are part of a broader strategy of acquisition for our group. Having said this, and to Australia’s credit, we really liked the way Australians that we have dealt with, do their work. They are efficient and industrious.”
The paucity of development opportunities to meet a growing demand for a range of tourism accommodation as necessitated a calibre of investor to wrest sites from vendors at prices which has, to some extent, left local investors stranded at the alter. The credentials of the players such as Hiap Hoe entering the Australian market are impeccable. The strength of their balance sheets and depth of experience with tourism assets means they are able to take a more broader perspective on investment decisions than their Australian counterparts.
The three sites each carry different location attributes which challenges Hiap Hoe over the type of hotel operation that each should have. Teo says “Yes, each location attracts a different target market. So for our Lonsdale Street site, we acknowledge the proximity of the universities and the retail core. Executives from Asia may be more attracted to a location of our 206 Bourke Street site at the heart Chinatown with its quality dining and entertainment options. You will see a mix of leisure as well as corporate travellers attracted to our Docklands site.”
While the presence of Asian money into Australia’s property markets is not new news, investment trends demonstrates its dominance during the past few years as their purchasing power is regularly outflanking entrenched Australian investors. Within the hotel sector, the latest wave of development proposals show that Asian investors are eyeing both Sydney and Melbourne with Melbourne having the edge over Sydney by virtue of more attractive land costs and overt opportunities. Mr. Teo comments “We own two major hotels in Singapore and wish to translate our expertise and our success from Singapore to Melbourne. You ask why did we not acquire a site at this point in Sydney? We found land prices relatively higher and the available supply is not so suitable for redevelopment potential. Melbourne’s reported solid population growth trends also impressed us.”
Ultimately, the presence of Hiap Hoe in Melbourne transcends the mere acquisition of development sites. It is as powerful signal back to Singapore and the rest of Asia that a prestige brand such as Hiap Hoe has leveraged its reputation on the future success of its new Melbourne ventures. Mr. Teo adds “…… at the end of the day, a Hiap Hoe project, no matter where they are around the world, carries the hallmarks of quality and reliability. From the tradesman to the executive floor – this is what we are known for.”