Top bidder for landed site at Coronation Road

CapitaLand has emerged as a highest bidder with a bid of S$366m for a site at Coronation Road, 17% above the next bidder. The site is slated for the development of 140 units of landed properties. There was strong interest in the site, with 12 bidders in total. We believe that this was reflective of the site’s attractive location within District 10, proximity to Nanyang Primary School, the Botanic Gardens, upcoming Tan Kah Kee MRT station. Notably, there has been a scarcity of prime landed projects for tender over the last few years, and this represents the first landed site up for tender since December 2011’s tender for Chestnut Avenue (S$510psf GFA).

Deutsche Bank view
We estimate a breakeven of S$3.7m per unit based on a 1900sqft average plot size, and assuming an ASP of S$4.1m per unit, we estimate a margin of 14%. As a comparison, recent launches for freehold landed properties in District 10 have transacted between S$5.8-5.9m per unit (S$2400-2600psf land). We estimate that the project will contribute approximately 1ct to our RNAV of S$4.93. The site represents CapitaLand’s first Singapore land bank acquisition since the purchase of its site in Bishan next to Sky Habitat in November of last year. We remain positive on the company’s potential for NAV crystallization, and maturing development pipeline. CapitaLand remains our top sector pick, with valuations attractive at a 34% discount to RNAV. Our Target Price remains unchanged at S$4.43, pegged to a 10% discount to RNAV.