(26-05-2011, 08:48 PM)pianist Wrote: [ -> ]i wonder if the owners at boon lay's jurong point - lee kim tah and guthrie gts, are feeling the heat and upcoming competition from the giant capitaland?
I think it probably has a positive effect on the valuation.
The article quoted $15psf per month for retail area at Jurong East => $180 psf per year.
Jurong Point has a total lettable area of 750,000 sf => estimated total rental revenue per year = $135 million!!!!
Even at a lower $12 psf , the total rental revenue is $108million.
Jurong pt can easily last another 20 years with proper maintenance. Even without factoring rental inflation, the rental revenue of the Jurong pt is easily $2 billion for 20 years.
Assuming JP can be used for the next 30 years, JP should be able to sell for $2 billion ???
i am not sure if is gg to be like that
i remember the old katong shopping centre - human traffic was literally all pulled to the newer parkway parade shopping centre..
so using a lower $12psf may be an over-statement?
I think that really depends on the condition of the shopping centre and the location.
If the shopping centre undergoes continuous rejuvenation and upgrading, it can still draw significant crowds and may even be better than new shopping centre.
Illuma and Bugis junction is one example. Being a newer shopping centre, Illuma is a downwright failure even though it is newer than bugis junction. The location of Illuma is not as good as bugis is also another prime reason of its failure.
Centrepoint, being a grandmother shopping centre as compared with 313 Somerset, is not in anyway inferior to it.
So is takashimaya as compared with Orchard Ion.
Jurong Pt is still closer to the manufactuing base, a large HDB cluster and NTU. It also has a condo and bus interchange integrated with it.
Loss of traffic is expected but looking at the kind of human traffic that is now crawling in JP, I think it will be a better shopping experience if the human traffic is lower.
(26-05-2011, 09:23 PM)yeokiwi Wrote: [ -> ]Jurong Point has a total lettable area of 750,000 sf => estimated total rental revenue per year = $135 million!!!!
Even at a lower $12 psf , the total rental revenue is $108million.
Jurong pt can easily last another 20 years with proper maintenance. Even without factoring rental inflation, the rental revenue of the Jurong pt is easily $2 billion for 20 years.
Assuming JP can be used for the next 30 years, JP should be able to sell for $2 billion ???
Based on the info on JP in LKT's Q1-FY11 results announcement [Note 1(a) in p2, and Note 2 in p3].....
http://info.sgx.com/webcoranncatth.nsf/V...penelement
I have managed to derive the following -
(1) Based on the latest quarterly running rates, the entire JP (i.e. JP1 + JP2) is now taking in a total rental and related income at $115.9m p.a. 20 years' of total rental and related income at the current rates will exceed $2.3b!
(2) The latest (as at 31Mar11) professional market valuation of the entire JP is $1317.056m. In conjunction with the above total rental and related income at $115.9m p.a., the derived yield is a rather high 8.8%p.a., which indicates the valuation is likely conservative. Based on the latest successful $969m land bid by CapitaLand Group in Jurong East, the entire JP as a prime, completed income-generating property asset being valued for $1317.056m certainly appears very CHEAP for now!
Lee Kim Tah and Guthrie probably did not expect that they were sitting on gold mine when they first developed JP1.
Neither did I when I visited it as a chao recruit..haha..
I tend to believe that Capitaland probably had tried to buy JP but I doubt LKT and Guthrie will want to give up their crown jewel.
Next year, thanks to Capitaland, we probably will see another jump in fair value gain for both LKT and Guthrie.
Although it does not really improve the cash flow..
around 5 years ago, Jurong was almost a dead town. only in recent years, HDBs in Jurong started to be sold. When I was studying in NTU, all HDBs near Jurong Point were vacant. The traffic in Jurong Point also was quite pathetic.
I think LKT and Guthrie should thank government for importing more people.
(27-05-2011, 02:19 PM)yeokiwi Wrote: [ -> ]I tend to believe that Capitaland probably had tried to buy JP but I doubt LKT and Guthrie will want to give up their crown jewel.
Next year, thanks to Capitaland, we probably will see another jump in fair value gain for both LKT and Guthrie.
Although it does not really improve the cash flow..
I think so too. As JP is such a good property asset, many Reits would have considered buying it as well. I suppose to do a deal we will first need a willing seller, and an attractive enough offer. LKT and Guthrie have been working hard to run JP well and to enhance its earnings and value; they should know its ultimate potential earnings and value.
$115.9m a year - LKT's share: in excess of $45.0m a year - in total rental and related income from JP is no small amount in recurrent cash earnings. Apart from Ion Orchard (?), I doubt any other mall along Orchard Rd earns as much a year. Of course, if and when JP is sold, it will be a bonanza for LKT and Guthrie.
(27-05-2011, 02:38 PM)freedom Wrote: [ -> ]I think LKT and Guthrie should thank government for importing more people.
I think this is partly true only. Don't forget the present JP was developed in 3 phases over some 15 years. The land tenders for the 2nd and 3rd phases were both triggered by LKT and Guthrie. The 3rd and last phase - which incorporated an airconed bus terminal into and a condo on the new extension building - was a major undertaking. JP is very much the fruit of the combined ideas and hardwork of LKT and Guthrie over some 15 years, responding to market opportunities.
I find it interesting that the mkt reaction to this news to be largely neutral or mildly positive in contrast to the mkt reaction when SPH won the bid for Clementi bid.
In both cases, the winning bid was way higher than market expectations but the naysayers were much louder in the case of SPH/NTUC. And I'm wondering if its becos the mkt perceived the CMT/CapLand/CMA partnership to be more experienced in matters of real estate development.
I'm a little amused by suggestions that any govt initiatives need the assistance of GLC or TLC to push it through. Nor do I think that the bid was over-priced. Yes its above market consensus but market consensus is not the gold standard and has been known to be frequently wrong.
While the participation of CapLand and CMA does not surprise me, its CMT's involvement that is quite interesting. I believe this is their involvement in a white site development. I wondered if they will make a cash call for the capital investments. (Vested in CMT and CMA)
CMA, CMT, CapLand to build S$1.5b retail-cum-office project
By EMILYN YAP
CapitaMalls Asia, CapitaMall Trust and CapitaLand will be building a retail-cum-office development at Jurong East, on a white site they won recently in a state tender.
The total development cost is expected to be about S$1.5 billion.
The partners had submitted the top bid of about S$969 million for the site.
> i wonder if the owners at boon lay's jurong point - lee kim tah and guthrie gts, are feeling the heat and upcoming competition from the giant
> capitaland?
It will not feel the heat. This area is too short of malls and have a HUGE population in next few years. But at such prices, the rental will be very steep. If i live there, i will take a train and shop elsewhere.
The best deals are not in the shopping malls - they are at the HDB shops!!!