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Thread: Market Street Car Park set to stay - at least for now

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    Default Market Street Car Park set to stay - at least for now

    http://www.businesstimes.com.sg/sub/...77069,00.html?

    Published April 30, 2008

    Market Street Car Park set to stay - at least for now

    CCT defers decision on redeveloping site into office building

    By ARTHUR SIM


    (SINGAPORE) CapitaCommercial Trust (CCT) has decided to defer its decision on the redevelopment of Market Street Car Park (MSCP) into an office building that could cost up to $1.5 billion.

    Asked if the huge supply of new office space after 2010 was a determining factor, Lynette Leong, CEO of CCT manager CapitaCommercial Trust Management Ltd (CCTML), said: 'No, the main reasons are the significant size of the redevelopment, rising construction costs, present volatility in financial markets and the unknown development premium amount, which have caused us to defer the decision on the planned redevelopment, such that it will not be made any earlier than mid-2009.'

    Ms Leong also added that CCTML is 'carefully evaluating the financial viability of and the funding structure for the redevelopment'.

    'We are not concerned about the new office supply after 2010 given that statistics show that office demand for good-quality office space is still strong and that the lease pre-commitments for the new supply have also reached a high level. For example, about 52 per cent of the office space at Marina Bay Financial Centre has been pre-committed three years ahead of its completion,' added Ms Leong.

    Apart from obtaining the necessary approvals, including the approval of CCT's unitholders, if required, Ms Leong said that the decision to redevelop the site will always be subject to the financial viability of the project, which includes the amount of development premium payable based on the payment of 100 per cent of the enhancement in land value (instead of the standard 70 per cent).

    She said: 'We do not have any indication of the amount of development premium payable right now. However, it is expected to be a major component of the total redevelopment cost of MSCP.'

    When the project was first announced in January, CCT said that the total project cost, depending on the development premium, could range from $1 billion to $1.5 billion.

    On rising construction costs, Ms Leong said that this has increased by 10-15 per cent since the beginning of the year and that CCTML had also sought quotations from the construction companies.

    Ms Leong said it would continue to take the necessary steps to obtain the planning permission (PP) from the Urban Redevelopment Authority, and assist its retail tenants in relocation. It would also 'continue operating the car park to serve our season and hourly car park users', she added.

    While the potential loss of 704 car parking lots at MSCP was a prickly issue with many of its current uses, CCTML said that the provision of car parking lots was not an issue in getting PP.

    Cushman & Wakefield managing director Donald Han said the deferment was 'excellent news', not least because occupancy costs, which factor the cost of car parking, would have increased.

    He also reckons that the deferment could be linked to MSCP historically being designed to serve the CBD until new lots are provided. However, new restrictions limiting the number of lots in new buildings will have an impact on the number of available lots.

    Knight Frank director (research and consultancy) Nicholas Mak believes deferring the project could be a strategic move to see if construction costs and rates for development charges could fall in the future.

    But he believes the project will not be deferred for too long. 'Reit's have to constantly look for a growth story or it won't seem interesting to investors.'

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    Default Re: Market Street Car Park set to stay - at least for now

    http://www.channelnewsasia.com/stori...344505/1/.html

    CCT decides to defer redevelopment of Market Street carpark

    By Wong Siew Ying, Channel NewsAsia | Posted: 29 April 2008 2130 hrs


    SINGAPORE: CapitaCommercial Trust (CCT) has decided to defer the planned redevelopment of the Market Street car park.

    In January 2008, CCT was granted an outline planning permission by urban planners to redevelop the property into a Grade A office building.

    Since then, it has been working with its appointed architect and consultants to finalise and submit design plans to the Urban Redevelopment Authority.

    In a statement on Tuesday, CCT said it does not expect a plan for the redevelopment to be made before mid-2009. This came after taking into consideration the significant size of the project, rising construction costs and the present volatility in financial markets.

    Industry watchers said the decision is unlikely to dampen the market. The delay may, in fact, be welcomed due to the tight car parking space situation in the Central Business District.

    Property analysts added that the deferment is a prudent move, given the bulk of office supply coming on stream between 2010 and 2012.

    They said there is no hurry for CCT to redevelop the property in a climate of rising construction costs, which could also pose some challenges in getting construction firms to work on the project.

    CCT said it will continue to take necessary steps to obtain the provisional permission from the authorities, as well as assist retail tenants in relocation and continue to operate the car park. - CNA/vm

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