Singapore-based international ASX-listed property investment firm Aquaint Capital is in shopping mode and eyeing prospects in Perth, Brisbane, Sydney and Melbourne. And the current or potential green qualities of any property is at the top of its mind, chief executive Yang Po Tan told The Fifth Estate on Thursday.
Speaking by phone from Sydney, Ms Tan said the firm was looking for commercial office and retail properties in the $10 million to $100 million range, which it can then hold under management by the company’s new facilities management division, and also for residential development possibilities with a gross development value of between $300 million and $500 million.
“This price range puts us in a very good position,” Ms Tan said. “Out there you have a lot of big boys [who] won’t consider retail and commercial investments less than $100 million, and many smaller investors looking at up to $5 million, so being in the middle is a niche for us.”
The acquisition strategy will vary between cities. In Sydney and Melbourne Ms Tan is considering property on the outskirts of the cities due to high inner-city pricing.
“In Brisbane and Perth we are looking in the main city centres; the market in those cities is not very mature yet so assets in the centre are very affordable. Perth is going through a rise, and is a good place for growth, and the government is investing in infrastructure.”
In terms of the financial strategy, commercial and retail properties with existing tenants are the goal, to provide immediate and ongoing cashflow. For the residential opportunities, Ms Tan said the initial capital outlay was lower, but the capital uplift was bigger with rapid pre-sales covering development costs and producing income.
Adding to Australian staff
The firm listed on the Australian Stock Exchange last November and currently has one Australian employee based in Melbourne. Within the next 12 months, Ms Tan said she predicted that number to grow to between five and 10 Australian staff across the investment, development and FM divisions, with the FM services being provided both to Aquaint-held properties and for other property owners.
Aquaint already holds properties in London, Texas and Malaysia, and has a major multi-residential apartment project, Azea Botanica, under construction in Lucknow, India. Ms Tan said the company follows a horizontal investment strategy of acquiring assets across multiple sectors and countries, rather than taking a vertical one sector, one country approach.
The London properties are typical of the company’s approach to existing assets. For two blocks of apartments that were acquired as distressed assets during the immediate aftermath of the GFC, the immediate priority was to improve their sustainability.
The blocks were heritage properties, which meant major changes such as installing solar power or making structural alterations were not economically feasible.
“We looked at what the small things were we could do instead,” Ms Tan said.
The blocks had aging and inefficient centralised heating and cooling, so this was taken out and replaced with energy efficient heating and airconditioning for each flat, and LED lighting was also installed across all the flats. Energy use monitoring systems were installed, including individual monitoring for each flat so residents could keep track of their own energy use, and a central system that alerts Aquaint to excessive energy use. The building management can then liaise with the occupant to rectify the cause.
“We find distressed assets and turn them around; we find them and refurbish them into green properties,” Ms Tan said.
“We find distressed assets and turn them around; we find them and refurbish them into green properties.”
The whole world is going through a green transition
“The whole world is going through a transition [to green property] so it is not so easy to find assets that are already green as there are not many. The whole green movement is just starting to take off.”
Ms Tan said that for her company, property investment is about creating an environment that benefits people. The firm’s architects are involved with the Singapore Green Building Council, and apply the principles of Greenmark, the Singapore equivalent of the Green Building Council of Australia’s Green Star.
Where the company is developing a project, such as one of its apartment projects in Malaysia, bigger initiatives are incorporated, such as no airconditioning at all in common areas and corridors, which Ms Tan said will require some getting used to on the part of occupants.
These assets are located in Johor Bahru, a Malaysian central business district that is the gateway to Singapore. Many Singaporeans are purchasing residential property in the locality due to its relative affordability compared to Singapore, and it is also a popular retail and recreation destination.
Ms Tan said that while people from Singapore are generally accustomed to – and even very fond of – airconditioning due to the hot, humid climate, she believes they will adjust to its absence.
Natural light is another thing Ms Tan hopes they can bring into the retail and commercial properties in JB. Investigations are underway to see if it is possible to open up the ceilings. In the company’s new buildings, she said use of natural light is “a given” and easy to do.
“In any development, that’s the first thing we think of.”
One of the energy efficiency technologies that is becoming standard across Malaysia is LED lighting. Ms Tan said this reflects a downwards shift in pricing driven by increased demand from the USA market.
“LED is a big thing right now; it has really taken off in the past year or so, and there is a real push for it in Asia,” Ms Tan said.
She expects the forces of supply and demand will also push down the cost of solar installations, which she said is still very high in Malaysia.
The same also holds for rainwater harvesting systems, as unlike Australia, Malaysia has not to date required the same type of roof plumbing that makes it a relatively simple matter of installing a tank, and has also tended to have roof spaces substantially occupied by plant such as chillers, which reduces the space for water harvesting. Also, the costs of pipework and tanks are still high due to low demand, but rainwater collection systems are something Aquaint is investigating for new developments in Malaysia as Ms Tan said it is a “very good way of recycling the water”.
Green materials such as low VOC paints are another area where the Asian market is not yet providing an affordable product.
“[In Malaysia] we have to be a little bit more selective of what we can and can’t do. It is a fine balance between green and income,” Ms Tan said.
This means there are some sustainability innovations the firm would like to pursue but may need to hold off on until the price of them decreases as demand grows more strongly in the Asian market.
“In some ways Australia is a little ahead of Asia in terms of green requirements. But once it reaches the tipping point, and they become more affordable, Australia will be able to export those things to Asia,” Ms Tan said.
“Like solar panels for example, which are so expensive in Asia. It’s a chicken and egg situation. When the government [like Australia’s government] says you must use these green initiatives, you can go back to the manufacturers and it brings down the cost. In Asia we just need a few big boys, big companies, and governments to take the lead.”
One of the properties Ms Tan has looked at in Melbourne is an aging outer-suburban office building. She said this could have potential to be redeveloped into a multi-residential apartment project, and is open to the idea of finding similar opportunities in Sydney.
The Aquaint Capital business grew from Ms Tan’s own personal investments in property. At age 20 while working as a marketing manager for Wellcome in Singapore, she purchased, refurbished and “flipped” her first property. Over the next 25 years, while working as a high-level executive for companies including Mont Blanc, Kenzo and Yves St Laurent Beauté, she continued to grow a property portfolio.
In 2009 she founded the Aquaint Group, which comprises Aquaint Capital, the property fund arm; Aquaint Property, the investment and development arm’ Azeana, an online seminar and property investment coaching business; and the new Aquaint Property Management division. The group has offices in Singapore, Malaysia and Taiwan, in addition to an associate office in Brunei and the Australian staffer, who is based in Melbourne. Ms Tan said she recruits locals to run operations in each country.
“I like to create things and to make a difference. That’s why I like to buy distressed assets and convert them, because it is making a difference in people’s lives. It’s not just for the yield or the money.
“We are actively looking for Australian assets we can play a part in because we are listed here; we want to make our mark and contribute back to the community.”