Over the last week, the authorities highlighted their various plans to transform the Jurong Lake District into a key regional center and also announced a new Thomson-East Coast line (TEL) that will connect neighborhoods along the East Coast stretch to the MRT grid. We believe that these initiatives to further enhance the outer regions in terms of infrastructure and mix of use will underpin the long-term attractiveness and potential for appreciation of real estate in Singapore. In particular, we see the transformation of the Jurong Lake District to be positive for CapitaLand and CapitaMall Trust, which operates three large retail malls (IMM, J-Cube and Westgate) in the area with a combined retail NLA of 1.0m sq ft. We also highlight that UOL’s Seventy St. Patrick’s condominium project (~186 units), located near the upcoming Marine Terrace MRT station, is ready for launch and could benefit from the TEL announcement. We have BUY ratings on CapitaMall Trust and CapitaLand with fair value estimates of S$2.20 and S$3.79, respectively. We also have a BUY rating on UOL with a fair value estimate of S$6.95.
The transformation of the Jurong Lake District
During the National Day Rally last Sunday, PM Lee highlighted the Jurong Lake District as an area in Singapore which he planned to further transform. The new Jurong Lake Gardens will be formed by integrating the Chinese and Jurong Gardens and Jurong Lake Park, with an area size of more than 70 ha. The Jurong Lake District neighborhood will also see enhancements with the addition of more developments, such as a new Science Centre, which will be located near Chinese Garden MRT and expected to be ready by 2020. We believe the transformation of the Jurong Lake District will be positive for developers with real estate exposure in the area. In particular, we highlight that CapitaLand and CapitaMall Trust operates three large retail malls (IMM, J-Cube and Westgate) in the area. Together, these assets comprise a whopping 1.0m sq ft of operational retail net leasable area, and we believe the group finds significant synergies in positioning these three assets as a “3-in-1” retail proposition that caters for a wide range of shoppers in Singapore’s largest regional hub. We have BUY ratings on CapitaMall Trust and CapitaLand with fair value estimates of S$2.20 and S$3.79, respectively.
Improving MRT connectivity in the East Coast
The authorities also recently announced a new Thomson-East Coast line (TEL) that will connect the East Coast stretch to the MRT grid and significantly reduce travel times to the town area. We believe that the announcement of the TEL could trigger interest for residential assets in the area and would be beneficial to developers with projects ready for launch near the upcoming MRT stations. One potential beneficiary is CapitaLand’s upcoming Marine Blue project (~124 units; acquired for S$100.7m or S$1,056 psf GFA in 2011), which is near the planned Marine Parade MRT. UOL’s Seventy St. Patrick’s condominium project (~186 units), located near the upcoming Marine Terrace MRT station, is also ready for launch. UOL’s site was acquired through an en-bloc process for S$172m in Jul-12 and we estimate break even prices around S$1,250 psf. We have a BUY rating on UOL with a fair value estimate of S$6.95.
During the National Day Rally last Sunday, PM Lee highlighted the Jurong Lake District as an area in Singapore which he planned to further transform. The new Jurong Lake Gardens will be formed by integrating the Chinese and Jurong Gardens and Jurong Lake Park, with an area size of more than 70 ha. The Jurong Lake District neighborhood will also see enhancements with the addition of more developments, such as a new Science Centre, which will be located near Chinese Garden MRT and expected to be ready by 2020. We believe the transformation of the Jurong Lake District will be positive for developers with real estate exposure in the area. In particular, we highlight that CapitaLand and CapitaMall Trust operates three large retail malls (IMM, J-Cube and Westgate) in the area. Together, these assets comprise a whopping 1.0m sq ft of operational retail net leasable area, and we believe the group finds significant synergies in positioning these three assets as a “3-in-1” retail proposition that caters for a wide range of shoppers in Singapore’s largest regional hub. We have BUY ratings on CapitaMall Trust and CapitaLand with fair value estimates of S$2.20 and S$3.79, respectively.
Improving MRT connectivity in the East Coast
The authorities also recently announced a new Thomson-East Coast line (TEL) that will connect the East Coast stretch to the MRT grid and significantly reduce travel times to the town area. We believe that the announcement of the TEL could trigger interest for residential assets in the area and would be beneficial to developers with projects ready for launch near the upcoming MRT stations. One potential beneficiary is CapitaLand’s upcoming Marine Blue project (~124 units; acquired for S$100.7m or S$1,056 psf GFA in 2011), which is near the planned Marine Parade MRT. UOL’s Seventy St. Patrick’s condominium project (~186 units), located near the upcoming Marine Terrace MRT station, is also ready for launch. UOL’s site was acquired through an en-bloc process for S$172m in Jul-12 and we estimate break even prices around S$1,250 psf. We have a BUY rating on UOL with a fair value estimate of S$6.95.
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