City Developments Limited - OCBC Investment 2017-10-09: En-bloc Acquisition Of Amber Park

CITY DEVELOPMENTS LIMITED C09.SI

City Developments Limited - En-bloc Acquisition Of Amber Park

An 80:20 JV between City Developments (CDL) and Hong Leong group has successfully tendered S$906.7m for the collective sale of Amber Park.
The 200-unit development at Amber Garden is one of the largest sites in the locality with a land area of 213,675 square feet. With a plot ratio of 2.8, the allowable GFA of the project is 598,290 sq ft. Development charges are not payable for the proposed development. This translates to a price of S$1,515 per square foot per plot ratio, which we believe is a reasonable price given a competitive land market currently.
We expect sale prices of between S$2.3k – S$2.4k when the new project is launched.
Subject to approval, the JV plans to redevelop the site into a condominium project comprising four 25-storey blocks with close to 800 units and a basement carpark. Most apartments will have a NorthSouth orientation with many units commanding sea views.
We note that CDL was also the original developer of Amber Park three decades ago, and management has indicated that they are intimately familiar with the location.

The site is located in a private residential area in the Katong and East Coast area and is accessible via the East Coast Parkway. It is also within 1km to Tanjong Katong Primary School and 2km to CHIJ (Katong) Primary, Haig Girl’s School, Kong Hwa School and Tao Nan School. The new Tanjong Katong MRT station will also be located 200m from the site when it is completed in 2023.
We update our model for the site acquisition and firmer residential ASP assumptions, given recovering home prices and stronger market conditions, and our fair value estimate increases from S$12.39 to S$12.90. Maintain BUY.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2017-10-09

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 12.90 Up 12.390