The consortium that owns the South Beach site now plans to begin construction ‘by next year’ – since most of the mega projects including the two integrated resorts are nearing completion and ‘contractors will be hungry’ for business by then.
This will enable the consortium to award construction contracts at lower cost, reckons Kwek Leng Beng, executive chairman of City Developments Ltd (CDL), a member of the consortium.
In August last year, he had indicated that construction was likely to begin around the third quarter of this year. CDL teamed up with Dubai World and El-Ad Group to buy the 99-year leasehold site for $1.69 billion at a Singapore government tender in 2007.
In June last year, a new party entered the picture when Hong Kong developer Nan Fung, along with CDL, subscribed for five-year secured convertible notes under a refinancing exercise for the site’s land loan.
CDL also announced yesterday that South Beach Consortium Pte Ltd has appointed a new CEO, Aloysius Lee, to replace Paul Gately, who has left.
Mr Lee, who came on board late last year, was formerly managing director (commercial) of Shui On Development Limited and executive director of Shui On Land, where his duties included overseeing the branding and operations of Shanghai Xintiandi.
The South Beach consortium has also hired special structural engineering consultants from the UK to assist in lowering costs by ‘value engineering’ to maximise the asset’s value. The plan is to develop South Beach into a retail, office, hotel and residential project. Mr Kwek also reiterated that the consortium is studying how to tap synergies between South Beach and next door Suntec City convention centre as well as Marina Bay Sands and Resorts World Sentosa.
Last year, Mr Kwek indicated that Nan Fung and CDL would probably be the ones to pump in further money. El-Ad and Dubai World are likely to be passive investors who may then see their share in the project diluted.
Yesterday, he said that a meeting will be held among South Beach investors sometime next week to discuss contribution for the project’s further development.
‘In terms of financing, we have not discussed and we cannot presume the two partners have no money, their shares will be diluted. Our verbal understanding with Nan Fung is that both of us will put in more money . . .
‘I am not concerned whether there’s shortage of money to build. I’m more concerned (whether we) can we build something that can be very exciting, everyone falls in love with, (and comes) knocking at my door: ‘Can I buy this?’
Based on a recent external valuation for the year ended Dec 31, 2009, no impairment charge is required for the South Beach development.
Source: Business Times, 26 Feb 2010