United Engineers Update - BUY

($3.86) July 9 2007

Launch of 368 condo units at 38 storey The Rochester on July 15.

The entire project to be called UE's Vistar Exchange, designed by Japanese architect Tange) consists also of 350 hotel rooms, 120 serviced apartments, 60 units of Soho (self contained offices) and 110,000 sq ft of shopping space.

The shopping area, which can attract eateries at Holland Village Alfresco (1.5km away from The Vistar Exchange, where parking is a big problem) is unlikely to be sold by UE.

Total cost of project is around $350m.

Pre-launch recently (1% discount) from indicative average $1200-1300 psf (confirmed by DZ) same as sub-sale price of One North (developed by UOL which was sold out in 2 days at average $940 psf).

The Rochester boasts of a superior location than One North as it is about 200m from Buona Vista MRT station whereas One North is about 500m away. The whole estate development is called Biopolis with two segments - ie UE's Vistar Exchange and One North.


Gross sales of the 368 units can amount to $500m assuming 400,000 sf at $1250 psf) average, which exceeds total cost of entire project. These proceeds could be booked into this year's earnings.

The Rochester will also be the first condo sold without car park as UE is adopting Hongkong style of getting buyers to buy the 400 car park lots (common-in-common). UE did the same with UE Square.

All the space for R&D in Biopolis has been sold out.

In addition, UE's 50-50 jv with Kajima, the 40 unit Balmoral View is likely to be a big money spinner given that cost of land was 733psf per plot ratio compared to asking en-bloc prices of $1600 psf now. The units likely to be big averaging 2000 psf, could be sold at $2000 psf.

Share price performance

The stock has not budged from its $3.92 record peak on June 26 and is likely to cross $4 in coming days and move to $4.50-$5 later this year.