Irish-owned Singapore property investment company Fine Grain Property has just racked up a war chest of 30 million Singapore dollars (€17.5 million) in a fundraising round, and the first stage of investment will be to build a 300-room Premier Inn hotel in the city state.
Fine Grain invests in property joint ventures in Singapore, which it manages for its joint-venture partners. Many co-investors are family offices – private wealth management advisory firms that serve ultra-high-net-worth investors.
The family office is emerging as a popular model for investment and managing intragenerational wealth in Asia, especially in countries where Confucian principles of filial loyalty and family values are key to the fabric of society, such as Singapore, China, Korea and Vietnam.
At the same time, private banks and other asset managers cannot offer access to the kind of labour intensive property investments that deliver higher returns.
"It's a very good place to be. The fundraising allows us to carry on investing in Singapore," Fine Grain founder and chief executive Colin MacDonald told The Irish Times.
“The family office is a different model for us going forward, which has been opened up by our successful track record. There is a very large pool of investors looking to invest in Singapore, not through a fund but into people on the ground. It’s a private-equity approach with an individual manager.”
Fine Grain started out seven years ago with a majority of Irish investors, who have doubled their equity over the years. However, in the latest round of fundraising, Singapore investors made up the majority, including high-net-worth individuals. Less than 30 per cent of the company's investors are now Irish-based, said Darren Sabom, vice-president of Fine Grain.
“The family office and institutional investors want to write much larger cheques, in excess of S$10 million (€5.84 million), to invest into specific projects. The current fundraising allows investors with funds from $375,000 (€219,000) to participate in these joint ventures and ensures that we have real capital for investment alongside our partners,” said Sabom.
First foray
The first S$15 million investment is a 300-room hotel for Premier Inn, the Whitbread-owned British budget hotel chain, which is Britain’s largest hotel brand, with more than 50,000 rooms in more than 650 hotels. It marks the company’s first foray into southeast Asia.
The hotel will be located at 700 Beach Road. Fine Grain obtained planning permission in 2013 to redevelop the existing office property into a hotel. Demolition begins on June 10th and the project is due for completion in the first quarter of 2016.
Whitbread guarantees income for a 10-year period.
Fine Grain partnered on the Premier Inn hotel with a large local building company that is well-established in Singapore. It has contributed 70 per cent of the equity, and brings complementary skills to Fine Grain.
“In building the real estate investment business, we’re very clear in our focus on repositioning commercial property in Singapore, targeting overlooked or undermanaged properties,” said MacDonald.
The group tends to target sectors where supply is lacking, such as boutique offices. High-quality 185sq m to 557sq m (2,000sq ft to 6,000sq ft) office space is in short supply in Singapore.
“The other target sector is international three-star hotels. The large international chains are underrepresented here in Singapore, and we are well placed to meet their needs in securing and repositioning suitable sites,” said MacDonald.
“In entering joint ventures with Fine Grain, the primary factor for family office investors is trust – Fine Grain Property’s Singaporean and Irish board is a seasoned team of individuals, who have been around Singapore and the region for a long time – through many business cycles – and have built deep relationships, something which is very important in this part of the world.”
