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04-05-2014, 09:56 AM
Sounds like Profitable Plots... if it is so good, why is it being offered to retail investors...
Who wants to buy land in US oil boom town?
American developer markets stakes in raw land, promising returns two years later
Published on May 4, 2014 1:26 AM
North Dakota's Williams county, which houses Williston, saw a 10.7 per cent rise in residents last July from the year before. The increase is the fastest in the United States, outstripping the national average of below 1 per cent. -- PHOTO: REUTERS
By Tee Zhuo
Singapore investors looking overseas as the local property market cools have a new opportunity.
A massive development site in the US half the size of Toa Payoh is being offered to investors by American developer Citation Capital.
NorthStar Centre, a 216ha mixed-used site in the oil boom town of Williston, North Dakota, was launched in March.
Unlike purchasing a condo unit, buyers are putting their money into raw, undeveloped - but zoned - land under what is called "undivided interest", where each investor has a share in the whole plot based on the amounts they originally invested.
The returns come only two years down the track when the land is sold to smaller developers and firms which will add the infrastructure for commercial, residential and retail uses.
Even so, the project is being marketed as a "no-brainer" investment with a clear exit strategy, citing an undersupply of amenities and housing and high demand from workers streaming into North Dakota owing to the oil boom.
According to a Financial Times article in March, North Dakota produces about a million barrels of oil a day and accounts for nearly a third of US energy output growth since 2009. The state's economy expanded by 13.4 per cent in 2012.
Housing and infrastructure have been struggling to keep up with the sudden growth in population, with an explosion caused by the derailment of a train transporting crude oil in December last year raising safety concerns.
North Dakota's Williams county, which houses Williston, saw a 10.7 per cent rise in residents last July from the year before. The increase is the fastest in the United States, outstripping the national average of below 1 per cent.
Projected gains of up to 26 per cent at the end of two years were advertised with a relatively low barrier to entry of only a minimum investment of $10,000.
About 46 per cent of the site is being offered in Asia, with the rest reserved for private funds in the US.
It is the fourth time this year that the project has held launches in Singapore, the only Asian market the developer has entered.
Mr Tin Chew, managing director of Citation Capital Asia, a unit of the US developer, said it was a marketing strategy.
"We are confident in Singapore, and the Singapore market is big enough," he added.
The marketing tactics seem to have worked.
Six of the parcels have already been closed. While the total number and average size of the parcels were not disclosed, the two parcels offered at the latest launch were about 4ha each.
But Mr Simon Ong, 60, a Singaporean who attended the launch, was not fully convinced. He pointed out that the two-year holding period is "a bit too long".
"The property is in a foreign country, by a foreign developer. How do we know if they're not just telling us stories?"
Other buyers The Sunday Times spoke to expressed similar sentiments, highlighting the project's local marketing partner, Shenton Wealth Holdings.
The firm was in the spotlight last year after being placed on the Monetary Authority of Singapore's (MAS) Investor Alert List.
The list comprises unregulated entities which "may have been wrongly perceived as being licensed or authorised by MAS", said the central bank's website.
Shenton Wealth, which specialises in bringing foreign investment opportunities to Singapore, later clarified that "being placed on the list does not necessarily mean Shenton Wealth has breached any of the MAS's regulations".
The firm has declined to comment further.
A Singaporean finance professional in her late 40s, who wished to be known only as Jane, was not deterred. She invested $50,000 in the NorthStar project, and said a friend had invested up to $200,000 for a stake in the site.
"Any investment always has some minimal risk. Whether it has been regulated by the MAS does not really make any investment a better or safer one," she said.
teezhuo@sph.com.sg
Who wants to buy land in US oil boom town?
American developer markets stakes in raw land, promising returns two years later
Published on May 4, 2014 1:26 AM
North Dakota's Williams county, which houses Williston, saw a 10.7 per cent rise in residents last July from the year before. The increase is the fastest in the United States, outstripping the national average of below 1 per cent. -- PHOTO: REUTERS
By Tee Zhuo
Singapore investors looking overseas as the local property market cools have a new opportunity.
A massive development site in the US half the size of Toa Payoh is being offered to investors by American developer Citation Capital.
NorthStar Centre, a 216ha mixed-used site in the oil boom town of Williston, North Dakota, was launched in March.
Unlike purchasing a condo unit, buyers are putting their money into raw, undeveloped - but zoned - land under what is called "undivided interest", where each investor has a share in the whole plot based on the amounts they originally invested.
The returns come only two years down the track when the land is sold to smaller developers and firms which will add the infrastructure for commercial, residential and retail uses.
Even so, the project is being marketed as a "no-brainer" investment with a clear exit strategy, citing an undersupply of amenities and housing and high demand from workers streaming into North Dakota owing to the oil boom.
According to a Financial Times article in March, North Dakota produces about a million barrels of oil a day and accounts for nearly a third of US energy output growth since 2009. The state's economy expanded by 13.4 per cent in 2012.
Housing and infrastructure have been struggling to keep up with the sudden growth in population, with an explosion caused by the derailment of a train transporting crude oil in December last year raising safety concerns.
North Dakota's Williams county, which houses Williston, saw a 10.7 per cent rise in residents last July from the year before. The increase is the fastest in the United States, outstripping the national average of below 1 per cent.
Projected gains of up to 26 per cent at the end of two years were advertised with a relatively low barrier to entry of only a minimum investment of $10,000.
About 46 per cent of the site is being offered in Asia, with the rest reserved for private funds in the US.
It is the fourth time this year that the project has held launches in Singapore, the only Asian market the developer has entered.
Mr Tin Chew, managing director of Citation Capital Asia, a unit of the US developer, said it was a marketing strategy.
"We are confident in Singapore, and the Singapore market is big enough," he added.
The marketing tactics seem to have worked.
Six of the parcels have already been closed. While the total number and average size of the parcels were not disclosed, the two parcels offered at the latest launch were about 4ha each.
But Mr Simon Ong, 60, a Singaporean who attended the launch, was not fully convinced. He pointed out that the two-year holding period is "a bit too long".
"The property is in a foreign country, by a foreign developer. How do we know if they're not just telling us stories?"
Other buyers The Sunday Times spoke to expressed similar sentiments, highlighting the project's local marketing partner, Shenton Wealth Holdings.
The firm was in the spotlight last year after being placed on the Monetary Authority of Singapore's (MAS) Investor Alert List.
The list comprises unregulated entities which "may have been wrongly perceived as being licensed or authorised by MAS", said the central bank's website.
Shenton Wealth, which specialises in bringing foreign investment opportunities to Singapore, later clarified that "being placed on the list does not necessarily mean Shenton Wealth has breached any of the MAS's regulations".
The firm has declined to comment further.
A Singaporean finance professional in her late 40s, who wished to be known only as Jane, was not deterred. She invested $50,000 in the NorthStar project, and said a friend had invested up to $200,000 for a stake in the site.
"Any investment always has some minimal risk. Whether it has been regulated by the MAS does not really make any investment a better or safer one," she said.
teezhuo@sph.com.sg
LC
