CapitaLand could bank on Liang Court's potential yield of up to 4.7%: analyst

Reviving the property into a mixed-used development could command a GDV of $3.0b.

Redeveloping Liang Court could push yield by up to 4.7% or an implied land rate of $939 psf. This could be a boon for CapitaLand, according to DBS Equity Research.

“Given its prime location within the Central region, a better use could be to redevelop the property, given that it is on a land that is currently zoned for residential and commercial uses,” the report explained.

Liang Court used to be a shopping mall owned by Asian Retail Mall Fund II, a part of PGIM Real Estate Asia Retail Fund which is an open-ended private investment vehicle managed by PGIM Real Estate.

The report highlighted that CapitaLand’s coinvestment in Liang Court could be an opportunity to kick-start the redevelopment of the ageing property. The research firm believes that the benefits could be reaped by CapitaLand after seeing the reduction in the ownership of the integrated development to entities of two like-minded groups.

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“Assuming approvals for the redevelopment are obtained, we believe that a new mixed-use development could command a gross development value (GDV) of $3.0bn, implying an attractive return of 29% above our projected costs,” the report stated.

CapitaLand and CDL Hospitality Trusts’ Sponsor jointly acquired Liang Court shopping mall from PGIM Real Estate Asia Retail Fund for $400m. The development consists of Somerset Liang Court Singapore serviced residence, which is currently owned by Ascott Residence Trust, which is majority owned by CapitaLand and the Novotel Clarke Quay hotel, which is currently owned by CDL Hospitality Trusts (CDL HT).