Perennial: Out of limbo

For nearly three years it’s been an odd sight in Singapore’s Civic District. The centrepiece of the $800 million Capitol development project—two colonial landmarks transformed into a luxury hotel—appeared to be finished, but then didn’t open. No limousines dropping off dignitaries. No Michelin-starred chefs whipping up extravagant meals. No wealthy visitors loaded down with shopping bags.

In September, the opulent, 157-room hotel finally opened, under the Switzerland-based Kempinski brand. It’s the end of a bruising battle that pitted two of Singapore’s top real estate tycoons against each other before culminating in a drawn-out court case. Despite losing in court, Pua Seck Guan and his Perennial Real Estate Holdings emerged with full control. The task ahead: To turn his project on Stamford Road—which includes the iconic Capitol Theatre, the vast Capitol Piazza shopping centre and a ten-storey, newly built condominium tower—into a moneymaker.

For now, Pua is happy that the Capitol Kempinski Hotel Singapore is at long last receiving guests. “It could be better than Raffles,” he says. “This is the top of the five-star category, not an ordinary five-star.” More than 15 chains bid for the management contract, but Pua and his partners liked Kempinski, Europe’s oldest luxury brand, because it focuses solely on luxury, avoiding the distraction of three- and four-star venues. It’s privately held Kempinski’s first hotel in the city as it expands in Asia, joining Kempinski hotels in Bangkok and Jakarta; Bali follows next year and Kuala Lumpur in 2020.

Kempinski signed up only in May, and it began taking bookings just in August, so the opening has been somewhat soft. Perennial says it spent $8 million on fixtures, fittings, equipment and supplies for the empty hotel to get it ready in time. But the company has tempered expectations, noting that the hotel’s full range of services, including the food-and-beverage offerings, will arrive in phases. The promised Michelin-calibre chef won’t be announced until later in the year. In mid-September, Kempinski’s marketing department said there had been a “steady pick-up in reservations and inquiries” and was expecting more interest once the hotel is up and running.

A weak link in the Capitol development project is the Capitol Piazza, which opened in 2015. It includes the high-end shops on the cross street, North Bridge Road: Cortina Watch, French porcelain-and-glass producer Daum-Haviland and German tableware-maker Villeroy & Boch. But the languishing Galleria promenade is not quite so upmarket. On an August afternoon, two lone patrons sit under indoor palm trees outside the 1933 by Toast Box café, where a signboard promotes an inexpensive “Tok Gong” combo of chilli crab dip with toast sticks. It seems a far cry from the scene that the hotel chain described in its press release in May—a promenade that includes “an array of quintessentially Kempinski gastronomic delights”.

At the luxury condominium building, Eden Residences Capitol, only 16 of the 39 units have sold. The last one closed for $7.5 million—in 2015.

Meanwhile, the 89-year-old Capitol Theatre, which got a $45 million refurbishment, also opened in 2015. It had been dormant for more than a decade. Aiming to be the location of choice for glitzy events, the 977-seat theatre screened Crazy Rich Asians in August, rolling out its red carpet for the film’s stars, director and producer. Inside, a ceiling centrepiece includes an intricate golden zodiac, while the $10 million floor can rotate to whisk away 500 seats and create a ballroom. But Perennial declines to answer whether the theatre is turning a profit.


Pua acknowledges the headwinds, noting that he needs to overhaul the Capitol Piazza, replacing a number of the mid-scale shops and cafés with higher-class ones. “We will attract more and better tenants,” he says. Also on the agenda: Integrating the staff at the Capitol and Perennial’s nearby Chijmes retail development, which was formerly the Convent of the Holy Infant Jesus Middle Education School.

Over tea and cakes in the hotel’s lobby lounge before the opening, Pua casts his eyes around the 114-year-old building that was once Stamford House, one of the island’s early department stores. He recalls how in 2010, he and the two other members of a consortium—Singapore tycoon Kwee Liong Seen and his Pontiac Land Group, and Sukmawati Widjaja, daughter of Indonesian tycoon Eka Tjipta Widjaja, and her property firm Top Global—mounted the winning, $190 million bid against 14 rivals for the government property. Pua contributed his expertise in retail, Kwee in hotels and Sukmawati in residential. “We put up a good scheme,” says Pua. “We didn’t stinge on a single cent.”

For Perennial, the win came as a shock, according to deputy chief executive Annie Lee, who joined the firm at its start just the year before. She says the fledgling outfit had participated in the process mostly to get experience with government tenders, this being only its third project. Pua was overseas when his staff gathered to check the winner. “We kept looking at the screen. Is it us? Is it us?” she says. “We didn’t expect to win.”

In 2012 Sukmawati sold her stake to Osim International founder and billionaire Ron Sim, now Perennial’s vice chairman, and Pontiac Land affiliate Chesham Properties. With Perennial and Chesham now each owning half of the project, the stage was set for conflict between Pua and Kwee. Pua winces when asked about the feud, which began the next year, according to reports. “We tried very hard, and despite various people trying to help, we had a fundamental deadlock,” he says. Their dispute involved “a number of key issues”, which included expenses and when to sign a joint-venture agreement, according to court records. Pua declines to discuss the details on record.

In 2016 Perennial went to court, asking a judge to wind up their three associated companies. While the judge acknowledged that a “loss of mutual trust” had “straitjacketed” the project, the court rejected the request and then also the appeal, citing an agreement that allowed one party to sell its shares to the other at the fair-market value. “We were stuck,” says Pua, reflecting on the court’s decision in February.   

Pua went back to Kwee with an offer he had made once before: Buy Perennial’s 50 percent stake for $400 million. “They decided they did not want to, so we bought [Chesham’s stake] at the same price and the same terms,” he says. The deal was signed in March. “We are glad we ended up owning the entire project. It’s a flagship for us.” Kwee declines to comment, referring all questions to Perennial.

At 54, Pua seems to be a local boy wonder. Not only is he Perennial’s CEO, he’s also chief operating officer and executive director of commodities powerhouse Wilmar International and a non-executive director of Singapore-based United Engineers. Apart from earning a master’s degree in civil engineering at the Massachusetts Institute of Technology and doing a stint in India with ­engineering firm DLF, he has spent his life in Singapore, building his reputation as the CEO of three companies at ­CapitaLand, where he pioneered real ­estate ­investment trusts and specialised in mall development around Asia.

He started Perennial with $7 million of his own money, giving himself five years to succeed. In 2011 he listed Perennial China Retail Trust in Singapore, and one investor was Kuok Khoon Hong, the scion of Singapore’s Wilmar International and nephew of Malaysia’s richest tycoon, Robert Kuok. Their relationship helped drive Perennial’s growth, with Kuok becoming a major shareholder in 2012.

Perennial Real Estate Holdings went public in 2014, and the company has expanded beyond property into health care. It boasts a $950 million market cap, and Kuok and his Wilmar International is the biggest shareholder, with a 56.2 percent stake. Pua holds 10.3 percent, and Sim holds 15.4 percent. Sim, whose V3 Group houses massage-chair maker OSIM International and TWG Tea, first invested in 2010 after Perennial’s consortium won the Capitol tender; he had also bid on it.  

Pua is quick to put the Capitol project in perspective. He says it represents only 10 percent of the company’s holdings; 67 percent of the portfolio is made up of enormous mixed-use developments in China as Perennial seeks to become the dominant high-speed-rail player. Three projects—in Chengdu, Xi’an and Tianjin—are along the national high-speed-rail network, offering stores, hotels and medical hubs that include eldercare facilities. Five more may be in the works. “We think margins in China are much better,” he says, comparing it with Singapore.

Perennial has also invested in Indonesia, Malaysia and Ghana. In May the company announced the $15.6 million acquisition of a site in Sentul City, a master-planned township in Jakarta. In Penang, Perennial has a joint venture with Malaysia’s IJM Corp to develop the Light City, billed as a waterfront precinct that will include a mall, convention centre, two hotels, an office tower and two condominium buildings, plus attractions such as a theme park, an art gallery and a large number of restaurants.

The purchase of half of the Capitol project, as well as lower gains in China, is hitting Perennial’s profits this year. Net profit is expected to reach only $5 million, down dramatically from last year, and rising to $7 million next year, according to an average of analyst estimates compiled by Bloomberg. But revenue is expected to come in at $69 million, a 29 percent rise from last year, before jumping to $146 million next year.

The two banks that cover Perennial have “buy” recommendations on its shares. DBS calls Perennial’s China projects “hidden gems”, though with lengthy gestation periods, while a CIMB report cites “a faster-than-expected ramp-up of Capitol Singapore” as one potential catalyst for growth. CIMB estimates that when the Capitol project is fully operational it could yield up to $40 million of annual income.

At 54, Pua seems to be a local boy wonder. He started Perennial with $7 million of his own money

Perennial does have industry sceptics, though the most prominent ones decline to speak on record. One competitor has concerns about Perennial’s China investments, pointing to the cooling property market, rising government oversight and consumers’ preference for online shopping.

Another competitor doubts that the Capitol project will live up to expectations because high-class retail tenants will be wary about replacing mid-level ones, and Kempinski will face stiff competition from the area’s numerous luxury hotels. The 131-year-old Raffles Hotel, for instance, is set to reopen early next year after a full-scale renovation. It announced recently that three celebrity chefs will open new Raffles’ restaurants.

Pua dismisses the doubts. “There are many successful developments which house various tiers of retail tenants,” he says. “As long as it’s well-planned and executed, it would provide a much more holistic shopping experience to cater to a wider range of customers.” As for the hotel competition: “The hospitality outlook for Singapore remains positive, and there are limited ultra-luxury hotels which are housed in conservation buildings in the Civic District. The ability to leverage the Capitol Theatre for major events puts the hotel in a good position to compete in the market.”

Meanwhile, sceptics warn that Eden Residences Capitol, with several flats already on the resale market, needs an overhaul. Veteran property agent Samuel Eyo, managing director of Lighthouse Property Consultants, says it can be “repositioned” for newly rich millennials but only after the Capitol’s retail component has been upgraded. “Older rich clientele won’t go for North Bridge Road as a luxury address,” he says, adding that it’s now competing with the nearby South Beach development, where 190 luxury residences just went on the market. “It’s brand new, and Eden has already launched; it will need a lot of marketing.”

Taking the long view, Pua marvels at Perennial’s growth to date. “In nine years, from nothing we created a company of this size,” he muses before skipping ahead to the opportunities in China. Perennial’s eight high-speed-rail projects, once they’re online, will contain more than 4 million square metres. “In five to ten years we will be a different company.” Where does that leave Singapore? “We’re happy to grow in Singapore,” he says, “if we can create value—but Singapore is getting tough.”

As for lessons learnt from the Capitol project, Pua first lists patience in resolving disputes. When asked for other lessons, he replies: “I think, for partners you have not dealt with before, it’s important to sew up everything on paper. Some long-term partners are the only ones to trust.”