CICT to develop, own commercial component of mixed-use Hougang Central site

[SINGAPORE] CapitaLand Integrated Commercial Trust ( CICT ) will develop and fully own the commercial component of the mixed-use Hougang Central site that it clinched at a recent state tender.

The commercial component spans about 300,000 square feet (sq ft) in net lettable area – potentially the largest commercial space in Hougang.

The total development cost is around S$1.1 billion, and CICT will assess funding needs – including evaluating the most efficient mix of debt and other financing options – to maintain a “strong balance sheet and prudent gearing levels”, the trust’s manager said on Wednesday (Jan 14).

It added that CICT has “ample financial flexibility and sufficient resources” to fund the project through debt if needed.

Tan Choon Siang, chief executive officer and executive director of the manager, said CICT gains an “attractive entry yield with an expected yield on cost of over 5 per cent, which compares favourably with recent transactions of operating assets in the market”.

Slated for completion by 2031, the commercial component is likely to have recurring consumer demand, given the strong household density, connectivity and amenities in the estate.

The manager noted: “With private retail space per capita in Hougang at 2.8 sq ft, significantly below the national average of 11.4 sq ft, the area presents untapped potential, supporting the development’s long-term prospects.”

CICT – alongside CapitaLand Development, UOL, Singapore Land and Kheng Leong – submitted the top bid of S$1.5 billion or S$1,179 per square foot per plot (psf ppr) ratio for the 99-year leasehold site.

UOL and CapitaLand Development will develop the residential component in a 50-50 split.

The tender, which closed in December, drew three bids. The winning bid was 2 per cent higher than the next-highest bid of S$1.47 billion or S$1,155 psf ppr from the Sim Lian group.

A Frasers Property-led consortium including Sekisui House and Lum Chang came in third, with a bid of S$1.4 billion or S$1,101 psf ppr.

Tan said: “This investment presents an opportunity to expand our retail footprint in Singapore, where well-located suburban malls at major transport nodes are tightly held and rarely available, while establishing a strategic foothold in the north-east region.”

Units of CICT ended Wednesday 0.4 per cent or S$0.01 down at S$2.42, before the announcement.