SINGAPORE (Oct 19): Religare Capital Markets on Wednesday said the proposed redevelopment of Golden Shoe Car Park will be “positive” for CapitaLand Commercial Trust.

“Amidst undersupply situation over next few years in CBD, we believe [the] 2021 completion would bode well for CCT and this building,” says Religare’s Tata Goeyardi in a sales commentary.

CCT on Wednesday announced it is seeking rezoning approvals to redevelop Golden Shoe Car Park, whose land lease expires on Jan 31, 2081, into a commercial development including a Grade A office tower.

The redevelopment could potentially create a commercial  gross floor area of about 1 million sf. A new food centre operated by the government is expected to replace the current food centre and adjoin the new 280-metre-tall office tower.

The Trust said it will evaluate appropriate investment and funding structures, including the possibility of a joint-venture and sale of existing asset.

CCT targets to commence the redevelopment by the second half of 2017, and to complete construction of the new project in 2021.

“Last time CCT went on to develop CapitaGreen, it was able to achieve yield on cost of 6.0% [compared with] buying in the market at 3-4% yield,” Goeyardi says.

The 2021 timeline will also buy CCT some time for the market to absorb the current supply, amid a soft market, Goeyardi adds.

With a portfolio valuation of S$7.77 billion as at Sept 16, Goeyardi points out that CCT is able to take on the Golden Shoe Car Park redevelopment single-handedly, if the total development cost is less than S$1.94 billion.

Under the Monetary Authority of Singapore’s (MAS) revised guidelines to the REIT framework in 2015, REITs are allowed to engage in development projects up to 25% of its deposited property.

As at 4.37 p.m., units of CapitaLand Commercial Trust were trading 1.3% higher at S$1.575.