2 reasons why RMG's new land acquisition is a "sound move"

S$105.2m land site purchase seen positively.

Raffles Medical Group (RMG) announced that it has agreed to acquire a land site adjacent to its Raffles Hospital from the Singapore Land Authority for S$105.2m, and OCBC Investment Research said this is a great move for the healthcare firm for a couple of reasons.

"We are positive on this move given our robust view on Singapore’s healthcare market potential in the long term and also RMG’s strong track record as a medical services provider to both local and foreign patients," said OCBC Investment Research.

RMG has already obtained provisional approval to extend its existing Raffles Hospital premises, which given the size of the adjacent lot, will boost total hospital gross floor area by a whopping 72% to 49,217.28 sqm.

The research firm shared that the estimated development cost including land purchase and construction costs) amounts to S$310.0m and will be financed by internal resources and bank borrowings. Construction is expected to begin in 2Q14 and will take approximately 24 months.