Far East Organization (FEO)



 

Far East Organization (FEO) is a property development group founded by Ng Teng Fong in 1960. It is the largest privately held property developer in Singapore, with developments spanning the residential, commercial, retail, hospitality, industrial and healthcare sectors. In Singapore, the company has developed over 700 properties, including condominiums, hotels, offices, shopping complexes and offices. FEO contains more than 180 development and investment companies, both privately held and publicly listed. Together with its sister organisation, the Hong Kong-based Sino Group, FEO has assets of over US$40 billion and employs over 13,000 staff worldwide.

Beginnings
Ng Teng Fong, the son of Chinese immigrants, set up FEO in Singapore in the early 1960s. He reportedly had assistance from billionaire Eliya Thamby early in the venture, and named his new company after being inspired by the success of film studios Cathay Organization and Shaw Organisation.

FEO completed its first development in 1962, in the form of 72 terrace houses at Jalan Pacheli in Serangoon Gardens that were sold at S$20,000 each. Displaying his trademark boldness and foresight in the market, Ng made his maiden foray into the hotel industry the following year. The Singapura Forum hotel on Orchard Road cost S$5.5 million to construct, and sold in 1982 for S$178 million. FEO continued with residential developments such as Katong Seaview Palace in 1967 and Watten Estate in 1969. That year, FEO made its first venture into a public-listed entity with the construction of the Singapore Hilton hotel.

As FEO took on projects of ever-increasing size and costs, it ran into financing problems when a local institution withdrew credit facilities. However, Ng was able to arrange for financing with the Moscow Narodny Bank, and FEO continued to expand. By the end of the 1960s, FEO had diversified into a number of areas. Besides housing and hotel developments, it was also involved in finance, retail and investments. FEO’s associate and subsidiary companies included Lucky Realty, Far East Land & Housing Development, Far East Curio Centre and Far East Finance.

Dominance on Orchard Road

Having developed the Singapura and Hilton hotels on Orchard Road, FEO ventured into the retail market with Far East Shopping Centre in 1974. The shopping and office complexes that cemented FEO’s dominance of Singapore’s prime retail strip followed with properties such as Lucky Plaza (1978), Orchard Plaza (1981), Far East Plaza (1983) and Claymore Plaza (1984).

As the head of FEO, Ng was nicknamed “King of Orchard Road”. His shopping centres featured a number of firsts: Far East Shopping Centre was the first mall in Singapore with an atrium and external escalators, Lucky Plaza had see-through bubble lifts, and Far East Plaza had serviced apartments above the mall.

Becoming Singapore’s largest private developer
By the 1980s, Far East was regarded as the largest private landholder in Singapore. Even through downturns in the property market, FEO acquired land aggressively, a long-term, carefully calculated strategy that was Ng’s trademark. Profits from completed developments were used to acquire land, at times at record prices, and FEO was known to have one of the largest land banks in Singapore.

At the same time, FEO often utilised a strategy of acquiring land, completing and selling developments quickly. When supply overtook demand in the property market in the mid-1980s, Far East cut prices in order to attract buyers to its developments. The market crash once again brought rumours that FEO was in trouble, but the company managed to ride out the downturn.

In the early to mid-1990s, FEO reaped the rewards of a strong property market. Their land purchases peaked for the decade at S$2 billion annually in 1994 and 1995. In 1997 alone, FEO had a 41% share of the private homes market in Singapore, selling 2,410 units during the year. The Bayshore condominium, completed that year, reportedly brought in S$600 million in profits for FEO. Its stable of hotels, shopping malls, serviced apartments, offices and commercial spaces also generated a recurring income stream. FEO owned about a quarter of all serviced apartments in Singapore including the flagship Orchard Parksuites, cementing its position as the largest owner-operator of serviced apartments.

After a high-profile takeover contest with Malaysian businessman Quek Leng Chan, FEO acquired a majority stake in the well-known company Yeo Hiap Seng (YHS) in 1995. YHS and Orchard Parade Holdings became two of the more prominent listed companies in the Far East group.

In early 1998, in the midst of the Asian financial crisis, FEO and Sino Land were hit by stock market rumours that they had defaulted on bank loans. The group quickly denied the rumours but the stock prices of their listed companies plunged to multi-year lows. FEO’s measures to combat the rumours included the disclosure that it earned S$2.5 billion in sales in 1997, showing its financial position. It also revealed its gearing (ratio of total debt to total assets) as 0.47 at the time.

A sluggish property market during that period led FEO to stagger home launches and put some projects on hold. In August 1998, FEO signed the first mortgage-backed bond issue in Singapore, a S$162 million financing deal with Citibank backed by the mortgage and cashflow from the Leonie Condotel residential development.

The group’s ability to survive market downturns was underlined in early 1999 when it was revealed that despite the downturn, it had racked up total sales of S$8.2 billion in 1998, including the sales of Sino Group. A 60% jump in Hong Kong-based Sino’s sales to S$6.2 billion helped offset FEO’s 20% decline in sales to S$2 billion. By early 2000, FEO was confident enough to purchase a site in Clarke Quay for S$340.8 million that it developed as the mixed-use Central development combining retail, office and residential purposes. Sino Group was also developing the high profile Fullerton Hotel, completed in 2001. In the residential sector, however, FEO’s sales volume declined to its lowest level in eight years when it sold just over 800 homes in 2001. This saw its share of the home market, which was between 25% and 40% for most of the previous years, shrink to 11.6%.

Developments in the 2000s

By 2002, FEO’s share of the home market had returned to around 25%. At this time, property sales made up around 70% while another 30% came from recurring income such as serviced apartment rents, and commercial and industrial leases. FEO also moved into the healthcare sector by developing Novena Medical Centre opposite the Tan Tock Seng hospital. In early 2003, FEO undertook a major corporate reshuffle by creating four new business groups – Listed companies, Ventures and industrial business, Development and corporate leasing, and Retail and lifestyle concepts.

Over the next few years, FEO shifted its focus to retail and commercial developments. Having been the sales leader in the residential market for most of the 1990s when the market was buoyant, FEO slipped behind a number of other developers in the market in the first few years of the decade.

The group thrived, however, with high-profile retail and hotel developments as well as consolidating its position in the industrial and office sector. FEO also started to re-establish itself on the prime Orchard Road belt, purchasing the Pacific Plaza mall and other properties, as well as completing the tallest retail development in Singapore, the S$650 million mall Orchard Central in 2008. With stakes in Far East Plaza, Far East Shopping Centre, Lucky Plaza, Orchard Shopping Centre, Orchard Plaza and Orchard Parade Hotel, and outright ownership of Orchard Parksuites, Regency House and Elizabeth Hotel with other properties, FEO was the largest private property owner in the area.

The last few years of the decade saw FEO restart its major land banking moves. In 2006, it spent around S$1.6 billion on land purchases, including over S$800 million worth of collective sales plots for residential developments. As the home market rose, FEO recorded around S$2.34 billion of sales for 2009. In recent years, FEO has launched luxury development brands, entered the restaurant market and unveiled plans to expand its mid-range hotel brand overseas.

Image, marketing and awards

In the 1990s, FEO began working to counter its reputation for a perceived lack of quality in its residential projects. The move, including an advertising campaign, was to shift FEO’s image from a developer of mass housing to that of a developer of quality and creativity. In 1994, FEO also became the first developer in Singapore to achieve ISO certification for project management.

FEO also ran initiatives aimed at boosting its image, quality and service, including starting a quality assurance and control unit. It began to produce more upscale developments, with themed designs and its approach reflecting lifestyle trends gleaned through market research.

This led to a number of prestigious awards. Having won its first FIABCI Prix d'Excellence (International Estate Federation) award for the Bayshore development in 1999, FEO became the first developer in the world to receive six Prix d’Excellence awards with the Central in 2010. Restorations of Fullerton Hotel and Far East Square also clinched the Urban Redevelopment Authority Heritage Award, while FEO’s residential developments consistently won Building and Construction Authority Construction Excellence awards.



Author
Alvin Chua



References
Chong, V. (2002, November 29). Far East ventures into healthcare. Business Times. Retrieved November 14, 2010, from Factiva.

Chong, V. (2004, February 7). Far East wants to be Toyota of property industry. Business Times. Retrieved November 14, 2010, from Factiva.

Chow, C. (2005, March 7). City and country: Forward-looking Far East. The Edge Singapore. Retrieved November 14, 2010, from Factiva.

Far East Organization. Retrieved November 4, 2010, from http://www.fareast.com.sg

Guevarra, V. (2003, February 11). Far East in major shake-up. The Straits Times. Retrieved November 14, 2010, from Factiva.

Koh, T., et al. (Eds.). (2006). Singapore: The Encyclopedia. Far East Organization (p. 189). Singapore: Editions Didier Millet.
(Call no.: RSING 959.57003 SIN - [HIS])


Lee, H. S. (1998, February 10). Why all eyes are on Far East. Business Times. Retrieved November 14, 2010, from Factiva.

Oon, D. & Tan, C. (1998, August 26). Far East’s S$162m loan includes 1st mortgage-backed bond here. The Straits Times. Retrieved November 14, 2010, from Factiva.

Porter, B. (1998, January 16). Family secure in shadow of Far East rumour mill. South China Morning Post. Retrieved November 14, 2010, from Factiva.

Raj, C. (1999, April 14). Ng Teng Fong’s total sales hit S$8.2b last year. Business Times. Retrieved November 14, 2010, from Factiva.

Rashiwala, K. (1998, January 17). No liquidity crunch, Far East figures show. The Straits Times. Retrieved November 14, 2010, from Factiva.

Rashiwala, K. (1998, February 16). 5 Far East projects among last year’s best sellers. The Straits Times. Retrieved November 14, 2010, from Factiva.

Seow, E. (2010, May 28). Far East wins 6th Fiabci award for Central. TODAY. Retrieved November 14, 2010, from Factiva.
 

Siow, D. (1993, May 16). Rushing to build up land banks. The Straits Times. Retrieved November 14, 2010, from Factiva.

Tan, C & Ang, L. (1998, January 17). Far East property sales hit S$2.5b last year - CEO. Business Times. Retrieved November 14, 2010, from Factiva.

Tan, S. U. (2010). Landmarks: 50 Years of Real Estate Development. Singapore: Far East Organization.
(English 333.33095957 TAN)

Tee, H. C. (2002, June 8). Interesting developments. The Straits Times. Retrieved November 14, 2010, from Factiva.

Teo, J. (2006, August 23). Far East set to build tallest mall in S’pore. The Straits Times. Retrieved November 14, 2010, from Factiva.

Teo, J. (2009, October 29). Far East gears up to go regional. The Straits Times. Retrieved November 14, 2010, from Factiva.

Teo, P. L. (2001, May 24). Far East goes west. The Straits Times. Retrieved November 14, 2010, from Factiva.

Yeo, S. (1994, May 9). Far East overhauls image with $5m blitz. The Straits Times. Retrieved November 14, 2010, from Factiva.


Further reading

Landmark: An in-house publication of Far East Organization. (1994). Singapore: Far East Organization.
(Call no.: RSING 333.33095957 L)



The information in this article is valid as at 2010 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Organisations>>Companies
Real estate developers--Singapore
Business enterprises
Business, finance and industry>>Industry>>Construction and real estate>>Real estate

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