Property developer Du Val Group is dressing itself for an initial public offer on the Singapore Exchange (SGX) as it looks to global expansion and to tap into east Asian investor firepower.
The listed entity will also seek a secondary, or foreign-exempt listing on the New Zealand Stock Exchange within the next few years.
The privately owned firm has a portfolio of nine large-scale apartment developments in south Auckland with an estimated book value of $750 million.
Its completed developments include the $80m, 101-unit Rātā Terraces in Papatoetoe and the 151-unit Lakewood Plaza in Manukau.
It has a further pipeline of work in south Auckland on the cards, valued at about $600m and extending to 700 units across seven developments. The most significant of those is its Mountain Vista Estate, a 180-unit development in Māngere, coming in at a build cost of $150m.
Chief executive Kenyon Clarke told BusinessDesk the SGX listing was aligned with the firm’s international plans and it had already done “considerable work”, meeting with investment banking teams in Singapore to progress its plans to be "IPO ready" by 2026.
The SGX, with an average price-to-earnings (PE) ratio over the past five years of 24.3 times, is considered cheaper than the historical average PE ratio of the NZX, which is at 28.3 times.
Clarke and wife Charlotte, who co-founded the company in 2013, are planning to relocate with their four children to Fiji within the next two to three years, to be closer to their international businesses.
Both have featured prominently in media social pages for their high-flying lifestyle and have recently concluded filming a six-episode reality TV show called The Property Developers.
Clarke confirmed that international distribution rights were being finalised with a "major streaming service".
But, he said, while the family will relocate, they will always identify with being Kiwis and being a New Zealand firm.
He said the firm will also live up to its agreement with Blues Rugby, of which it is principal sponsor for the next three years.
The property group now employs 120 full-time staff in Auckland and has additional staff in offices in Singapore, London and Hong Kong.
It also operates a funds management division for wholesale investors, under its mortgage and build-to-rent (BTR) funds.
The former fund guarantees a return of 10% on a $250,000 minimum investment, with returns from the BTR fund generated through 171 units across two BTR properties, with rental levels currently at the $400-per-week level.
Last October, however, the firm fell foul of the Financial Markets Authority (FMA), for "misleading" Instagram advertising in relation to its mortgage fund, after Du Val suggested investment in financial products connected with property development was "low risk".
There are also parallels to fast-track residential developer Williams Corp, which promises a 10% return to its wholesale investors under its Capital Partnership arm.
Off-plan buying platform
That Christchurch-based firm, founded by friends Matthew Horncastle and Blair Chappell in 2012, has 1,139 dwellings on its books valued at about $245m. Both firms have had representation in Singapore since last year.
A potential cornerstone of the Du Val offering could include its new "proptech" venture under Du Val Global, which has taken more than two years to develop at a cost of US$15m ($26m).
Ashley Osborne, a former Colliers International executive who has headed up development of the platform from London over the past two years, said the venture will roll out later this month to “democratise” traditional real estate investment – allowing both retail and individual investors to combine their buying power and negotiate volume discounts from developers.
For developers, he said, the appeal of the product is about tapping into a potential investor market without going through the “significant” expense of marketing to an international investor audience.
Osborne said developments were both capital intensive and risky, particularly where developers were speculating on development land, while requiring between 30% to 50% of pre-sales to secure finance.
Du Val Global is tracking about 900 sites across Australia, the UK and NZ, and “anticipated being instructed on the majority of them", he said.
Boiler room
At a subscription price of US$69 per month or US$625 per year, investors are also able to tap into independently sourced data, Osborne said, including comparable pricing and tax information across different jurisdictions.
That means investors can avoid “high-pressure boiler-room” situations, where they end up potentially paying more than the worth of a property and do so without really having enough information at their disposal.
“Tech is a very, very interesting space to be in, but it's also complicated,” Osborne said. "The learning curve is steep and long and there have been trials and tribulations along the way – from what is the right way to code a digital platform like this, to what's the right infrastructure to use."
He said the firm was expecting to pick up an initial 20,000 subscribers and was aiming to get to 100,000 by 2023, although there was “more scope beyond that”.
“The investor market is the obvious place to start, but what we can do in the future is for an owner-occupier or NZ-based investor, once they start aggregating themselves with Asian capital, they become part of this journey.”
He said it’s tough for a first-home buyer to purchase property at a good price, because they don’t have a great deal of negotiating power as they come in at a late stage of the development. The platform aggregates them with investors and that gives the domestic buyer a lot more buying power – "and that’s where we see the platform progressing ultimately into off-plan buying".
