CapitaLand is teaming up with City Developments Limited and Ascott REIT, a listed trust managed by the unit of Temasek-backed giant, to redevelop a riverside site in Singapore into a one million square foot (92,903 square metre) complex, according to statements by the companies.
The redevelopment of the Liang Court complex along Clarke Quay will include two residential towers comprising 700 units, a 475-unit hotel and a 192-unit serviced apartment component, slated to open in phases starting from 2024.
“By harnessing the strengths and capabilities of all the partners involved, we plan to transform the site into an iconic landmark along the Singapore River,” said CDL’s group chief executive officer, Sherman Kwek.
The CapitaLand-CDL joint venture expects to invest S$300 million to redevelop Liang Court, after Singapore’s largest government-backed property firm teamed with the city’s biggest privately-controlled home builder to consolidate the project earlier this year. The partners bought back Liang Court shopping mall from a fund managed by PGIM Real Estate in June this year for S$400 million, stating at the time that they would “explore ways to enhance the value of the asset.”
Targeting Riverside Revitalization
The announcement of the Liang Court redevelopment plan comes just over two weeks after CapitaLand and City Developments Limited launched their joint residential development, Sengkang Grand Residences, with 32 percent of the total 680 units purchased on the opening weekend of sales at an average price of S$1,700 ($1,249) per square foot.
The developers are aiming to replicate that success with the development of Liang Court, which occupies a prime site facing Singapore River on one side and Fort Canning Hill on the other. Adjacent to the Fort Canning metro, residents would be able to commute to the Raffles Place financial hub in 15 air-conditioned minutes.
“Its redevelopment offers CapitaLand a prized opportunity to deliver an upmarket, high-rise riverfront residential development that comes with stunning views of Singapore River and the city centre,” CapitaLand Group’s Singapore and international president, Jason Leow said of the Liang Court project.
Trio of Deals Sets Up Multiphase Project
The three parties have set up the redevelopment through a trio of transactions.
CDL Hospitality Trust (H-REIT) is selling the 1984-vintage Novotel Singapore Clarke Quay, which occupies one tower of the current Liang Court complex, to a 50:50 joint venture between CDL and CapitaLand.
The JV is paying S$375.9 million in cash for the property under a forward purchase agreement with CDL Hospitality Trust.
To help mitigate H-REIT’s loss of income following the sale of the Novotel, the listed trust will use the proceeds of the divestment to fund the acquisition of another property from CDL — the 240-unit W Singapore hotel at Sentosa Cove – for S$324 million.
Upon completion of the new hotel at Liang Court in 2024, H-REIT has committed to purchase the property for S$475 million or 110 percent of the development costs, with plans to operate the new hostelry under Marriott International’s millennial-focused Moxy brand.
In the third element of the deal, Ascott REIT has agreed to sell 15,170 square metres of Somerset Liang Court Singapore, a serviced apartment building on the Liang Court site, to the joint venture for S$163.3 million, with the hospitality trust retaining the remainder of the space. Overall, the CDL–CapitaLand JV will be developing over 60,000 square metres of residential space for sale.
Repositioning the Somerset Serviced Apartments
Following the sale, Ascott REIT, which is soon to merge with another CapitaLand-managed fund — Ascendas Hospitality Trust, will redevelop the retained 13,034 square metres into a new Somerset serviced residence with a more efficient floor layout and room sizes catering to business executives.
The redevelopment of the Somerset will be mainly funded by the net divestment proceeds of S$41.5 million, the REIT said.
“Somerset Liang Court Singapore has enjoyed capital appreciation, and a healthy average occupancy rate of about 90 percent,” said Bob Tan, Ascott Residence Trust Management Limited’s (ARTML) Chairman. ‘With revitalisation plans in place for the Singapore River and Clarke Quay precinct and the proposed construction of a new integrated development, it is an opportune time to recycle our capital into redeveloping our ageing property into a new Somerset serviced residence and refresh the land’s lease to 99 years.”
Capitalizing on Singapore’s Rising Popularity
With 60 percent of the proposed redevelopment expected to be residential for sale, the developers are banking on the city’s trend of rising home prices to continue.
Just over three weeks ago, the Urban Redevelopment Authority said that home prices in the third quarter had risen 1.3 percent from the previous quarter, extending gains for the second straight quarter, while apartment prices in prime districts showed a quarterly rise of two percent for the same three months.
The government agency also reported that purchases of newly launched residential units by foreign buyers had risen by 80 percent during the three months from July through September.
Singapore, which is seen as a tax haven, has attracted some high profile home purchases over recent years.Four months ago, bagless vacuum cleaner pioneer James Dyson bought a “super penthouse” for S$73.8 million, topping the S$60 million Facebook co-founder Eduardo Saverin is said to have paid for his city pad in 2017.