Capitaland announced its plans to build approximately 1,400 apartments and commercial and retail space on the 6.7-hectare site in District 2 in Ho Chi Minh City (HCMC) in partnership with Thian Du Co Ltd. The total investment capital for the project is estimated at S$690m and will be developed in phases. CapitaLand's equity interest will be 60% and Thian Du holding the remaining 40% stake. Assuming at least a 20% development margin similar to its other projects in Vietnam, the project could potentially contribute more than S$103m in pre tax profits.
Capitaland plans to build high-rise condominium with 28 storeys on the site. The first phase of the project is expected to launch in 2Q09. The move by Capita Land is in line with its expansion and diversification strategy by setting up a strong presence in the Asia's growth cities and benefit from the property upcycle in that region. We have not incorporated the potential S$103m contribution at this point in time as it is small compared to the overall RNAV. We will incorporate it subsequently as we get more details on the project. We are reviewing our target price and recommendation.
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