Laguna Park 'too expensive'

Not a good investment at $1.2 billion

Singapore property giant CapitaLand has ruled itself out of bidding for the Laguna Park estate, which was put up for collective sale earlier this week.

CapitaLand's chief executive Liew Mun Leong said yesterday that the reserve price tag of some $1.2 billion for the estate is "too high to yield affordable homes".

He was speaking on the sidelines of an event to unveil the design of The Interlace, an upcoming CapitaLand project at the site of the former Gillman Heights estate.

Laguna Park, a former HUDC estate at Marine Parade, was launched for tender two years after the idea of an enbloc sale was first mooted.

Its marketing agent, Credo Real Estate, said it expects keen competition for the plot, but developer CapitaLand said the asking price is simply too high.

"I'm not very sure that at the end of the day, after paying over $800 per plot ratio, plus construction costs, plus your cost of financing, your break-even cost would be something like $1,500 or $1,600 (per square foot). "Are buyers prepared to pay for it at that location and that price? I am less sanguine than them," said Mr Liew.

Two years ago, CapitaLand bought Farrer Court in a collective sale for over $1.3 billion.

However, CapitaLand said on a per-square-foot basis, Laguna Park is more expensive.

Farrer Court was sold at between $762 and $783 per square foot per plot ratio (ppr). Laguna Park's reserve price works out to about $844 ppr. Mr Liew said "that is simply too high a price for it to be a good investment".

Mr Liew said CapitaLand has enough land in its portfolio and is not looking to buy more. He added that CapitaLand now has enough land to build some 3,000 homes, a third of which will be launched next month for The Interlace project.

Source: Today, 5 Sep 2009