CapitaLand moves ahead with Danga Bay acquisition despite Iskandar sales slowdown

It will be executed in phases over a decade.

CapitaLand revealed that it has satisfied the conditions precedent to to the acquisition of parcels of land on A2 Island in Danga Bay, Iskandar Malaysia, Johor.

According to OCBC analyst Eli Lee, the group is moving ahead with the acquisition although home sales at Iskandar have slowed in recent months.

“We understand the group’s earlier plan was to sell and build ~900 residential units but, given the slow sales in Iskandar now, we believe it will be challenging to raise meaningful pre-sales proceeds over the nearer term to fund development costs, and the development plan is likely to be under review,” Lee noted.

“That said, we have an overall neutral view on this acquisition; while near term headwinds will likely prevail, this acquisition will give CAPL a meaningful foothold in the Iskandar region over the long term and has fairly limited impact on the group’s balance sheet,” he added.