South Beach project to be completed in 2015

Our View

• Based on the Written Permission issued by the Urban Redevelopment Authority in March, South Beach will comprise 644,871 sq ft of office space, 60,924 sq ft of retail space, 701 hotel rooms and 180 residential apartments. Compared to the Provisional Permission granted in 2009, the retail GFA has been reduced by 60% while the number of residential units has been increased from 171. We believe this is a sensible move considering that South Beach is located between Raffles City and Suntec City, which together already have 1.2m sq ft of retail space.
• We have increased our valuations of the office and residential components, based on higher capital value assumptions. We value each at $2,500 psf after taking into consideration the valuations of Marina Bay Financial Centre and Marina Bay Suites. We estimate South Beach to have a gross development value (GDV) of $3.15b, which compares favourably to the total development cost which we estimate at $2.7b.
• Following the restructuring, CDL’s exposure to South Beach has increased from 33% to 50.1%, indirectly raising its overall exposure to the non‐residential property segment. Nonetheless, we believe CDL will continue to unlock shareholders’ value through the divestment of its other non‐core commercial assets should the price be appropriate.