Heeton looks to brighter future after paying $22.5mil in QC charges
View of iLiv@Grange, a freehold condominium at 74 Grange Road.
Heeton Holdings is now on the road to recovery after completely disposing of two housing developments, from which it incurred penalties totalling about $22.5 million for previously failing to sell all units within a specified timeframe, reported the Business Times.
In obtained the temporary occupation permit (TOP) for its iLiv@Grange in October 2013, but wasn’t able to find buyers for all 30 units in the upscale condominium.
As such, it had paid $5 million in Qualifying Certificate (QC) charges. Then in October 2016, it sold the project via a sale of shares to a group of Singaporean private investors including KSH Holdings’ Executive Chairman Choo Chee Onn and The Straits Trading Company Executive Chairman Chew Gek Khim.
For The Lumos condominium in Leonie Hill, which it jointly developed with Koh Brothers, it suffered penalties amounting to about $17.5 million, while its joint venture partner forked out a similar amount.
Although the 53-unit project was completed in August 2011, 36 units were still unsold before the entire stake in the development’s holding firm was purchased by a company controlled by individual Singaporean buyers in July 2017.
Under the Residential Property Act’s Qualifying Certificate (QC) rules, all developers with non-Singaporean stockholders or directors must complete their housing projects within five years and thereafter sell all units in two years.
Otherwise, they need to pay an additional eight percent, 16 percent and 24 percent of the land purchase price to extend the deadline for one, two or more years, respectively. The penalty is pro-rated based on the proportion of unsold units.
According to Heeton’s CEO Eric Teng, the QC penalties had previously reduced its cash flow. With the units in both projects all sold, he is now optimistic about the company’s future.
“This sets the group in the right direction to move on instead of having something constantly pulling on your leg and preventing you from moving far.”
In fact, the company’s latest financial report shows that its earnings rose to $40.3 million for a nine-month period compared to a net loss of $1.9 million in 2016. It is also seeing a return in demand for its units, particular at the 121 Collection at Whitley project, which comprises one bungalow and eight semi-detached homes.
“In the last two years, we have tried to push for sales (at 121 Collection) but it was not so easy because people were resistant. But in the last two months we have sold four units,” he noted, adding the dwellings have an average price of around $5.4 million.
This article was edited by Keshia Faculin.
