CapitaLand's One-North Investment Costs More

Source : The Business Times, September 16, 2008

It cites construction costs; projected return still on track

CAPITALAND yesterday said that its investment in one-north hub will now cost $476.8 million - up from $380 million announced in September 2007 - because of rising construction costs.

CapitaLand will own and manage a retail and entertainment zone called the hub at Vista Xchange at JTC's one-north.

Partner New Creation Church's Rock Productions, which will own and manage a civic and cultural zone, will invest $499.5 million in that project - up from $280 million announced last year.

Rock's increase is partly due to a planned increase in gross floor area (GFA) at the civic and cultural zone.

The zone will now have a GFA of 38,000 square metres, up from 'over 30,000' sq m announced previously.

The new investment figures mean that the hub will now cost $976.3 million, up from $660 million announced in September 2007.

CapitaLand and Rock yesterday said that they have awarded a $633 million contract for construction of the hub to Hexacon Construction Pte Ltd.

The project is expected to be completed by mid-2012.

CapitaLand said that despite the higher cost, its projected return will remain the same.

'We have enhanced our asset plan and are thus still able to achieve our target rate of return,' a spokesman told BT.

Shares of CapitaLand, Singapore's largest developer, continued to take a beating yesterday on various concerns - news of the increased investment, worry over the developer's exposure to China and a plunge in the Singapore stock market.

CapitaLand lost as much as 28 cents or 6.5 per cent. It ended the day 26 cents down at a one-year low of $4.03.

Like other developers, CapitaLand has seen its stock price sink as warnings about China's property market emerged over the past few weeks.

China's market could be headed for a 'meltdown' as home prices and sales slump, Morgan Stanley analysts said on Sept 12.

Developers including China Vanke, the nation's biggest publicly traded real estate developer, and Poly Real Estate Group have reported falling sales amid government lending curbs.

'Investors are a bit jittery about the forecasts,' CIMB property analyst Donald Chua said yesterday.

CapitaLand's shares have fallen 8 per cent since end-August, while Keppel Land's stock has fallen 16.2 per cent in the same period.

Keppel Land lost as much as 28 cents or 8.1 per cent yesterday. The stock closed 19 cents down at $3.25 - also a 52-week low.