BTO: SLP looking up in downturn

Business Times - 14 Apr 2009

SME INC
SLP looking up in downturn

The property consultancy finds that recession brings more opportunities for overseas growth and acquisitions, reports JESSICA YEO

 

SLP International Property Consultants sees the downturn as a refreshing change of pace. In fact, the recession is a welcome respite for the company to start expanding.

 

'It's a situation where so many markets are down. So as an investor, you are spoilt for choice, and not just in Singapore,' says managing director Kain Sim.

 

The property agency, which specialises in consultancy and marketing services for industrial properties, has offices in Singapore, Jakarta and Shanghai.

 

'It's a win-win situation, because many local developers are looking beyond Singapore's shores,' Ms Sim says. 'Many of them are looking for strategic partnerships with other developers and investors in other countries. This is where we provide the link,' she added.

 

SLP aims to open 35 outlets in China within the next three to five years, in key cities beyond Shanghai.

 

The company plans to reinvest gains to propel growth. 'Our motto has always been ploughing back into the business,' Ms Sim says. 'The moment we are in profit, we will plough it back to start another outlet.'

 

SLP's Shanghai branch, which was opened about three months ago, has already broken even despite the downturn.

 

'People are very amazed that we even dared to go there in this downtime, because many agencies are shutting down,' Ms Sim says.

 

SLP has already identified a residential site in Shanghai and are gathering investors' interest to develop the project together. However, it is still in the preliminary stage, Ms Sim says.

 

SLP plans to grow into a regional company, so as to also provide a career path, making it easier to attract talent.

 

It has 50 employees in Singapore, 20 in Shanghai, and 10-15 in Jakarta.

 

'As a home-grown company with no financial support and without a brand name, it is very hard for us to attract talent,' Ms Sim explains. 'We realised that for us to be attractive to the employees, we have to be a regional company - someone that can provide a career path for our people.'

 

Given the downturn, Ms Sim is sure that it will be easier to hire fresh talent, as jobs are harder to come by now. She also sees that investor appetite is becoming global, thus having overseas offices will help facilitate the flow of projects being marketed.

 

'Investor appetite is not just in their home country. They are also interested in overseas countries, and the overseas countries also have interest in Singapore,' Ms Sim says.

 

Besides expanding overseas, SLP also plans to grow through more divisions and acquisitions. 'Our plan is to expand into other divisions such as investment sales and auctions. We are also looking into property management,' says Ms Sim.

 

No loans

 

She adds that, should an opportunity arise, SLP would be interested in acquiring property management companies.

 

However, expansion plans require money. Ms Sim says that the company has yet to borrow any money from banks; though it secured a Spring Singapore micro loan in 2005.

 

The absence of loans was also due to setbacks the company faced in obtaining loans in the past.

 

'We tried approaching banks . . . but it was as good as lending to ourselves,' Ms Sim said.

As SLP had no assets back then, banks were sceptical about extending loans.

 

Having acquired The Alexcier, an office building near Redhill MRT, banks have now started extending facilities. 'Banks are finally comfortable, they see brick and mortar as assets,' Ms Sim says.

 

SLP has now applied for a bridging loan, which will help with growth plans.

 

'Right now, we will be more aggressive with our expansion, because of more facilities given by the bank,' Ms Sim says.

 

SLP can also turn to its sister company, which focuses on investments. 'This actually cushions the business a lot more,' says Ms Sim, who sees it as another avenue of funding to help with expansion.

 

Investors wanted SLP to be a shareholder in developments, thus it had to invest in minority stakes of about 5-10 per cent of the projects.

 

'It gives them the comfort that we are committed to the project,' Ms Sim says.

 

SLP has so far invested in about 7-8 projects.

 

The company also made a move into residential properties about a year ago. It plans to build up its residential portfolio, having established a foothold in industrial properties. This started mainly with Natura Loft in the Bishan Design Buy and Sell Scheme (DBSS).

 

'With this downturn, more opportunities are coming to us,' Ms Sim says.

 

Although SLP saw a deficit from October last year to January, its turnover has doubled. Last year's revenue was around $5 million.

 

Ms Sim is confident despite the economic situation. 'Buyers are coming forth again. In fact, we have seen a return of activity since February.'

 

She expects this to last because of the government's support in helping SMEs sustain and expand during the downturn.

 

In addition to this, she sees Singapore experiencing population growth and a new wave of wealth migration, especially from China.

 

'There is still a lot of demand in the market place . . . I think all this will continue to support and sustain the market.'