Published November 4, 2006

Lippo condo draws OCBC, RZB, Marina developer


LIPPO Group has drawn together an interesting array of partners for its first condo development at Sentosa Cove, BT understands.

Two banks - Singapore's OCBC and a European bank - as well as the developer of ONE 15 Marina Club, right next to Lippo's site, are all taking equity interests in the 99-year leasehold condo project.

OCBC is also expected to provide Lippo the loan for the development, in addition to taking a 10 per cent equity stake in it. The European bank - said to be Austria's RZB - is expected to take a bigger stake, possibly around 25 per cent. Interestingly, the developer of ONE 15 Marina Club, SUTL Group, took part in the tender for the condo site when it closed in September.

Market watchers expect SUTL and Lippo to explore synergies between the adjacent developments. 'The two could be packaged such that buyers at the condo get free membership of ONE 15 Marina Club. This would enable condo residents to use the marina's facilities,' one market watcher suggests.

Lippo is expected to participate in the development through its Hong Kong-listed unit Hongkong Chinese Ltd and will retain a majority stake of about 50 per cent in the project. The 170-unit condo will be four storeys high and is slated for launch in the second half of 2007. Lippo was the highest bidder for the site, at $234.7 million or $818 per square foot (psf) per plot ratio. Analysts say its breakeven cost could be around $1,200 psf.

Property consultants reckon Lippo aims to surpass the $1,600 psf average selling price that Ho Bee is now getting for The Coast on Sentosa Cove. Ho Bee has sold about 80 per cent of its 249-unit project. Lippo is understood to have appointed Australia's Philip Cox as design consultant for its project and to have tasked Architects 61 with creating 'a bungalow in a condo'. Market watchers say OCBC's 10 per cent interest in the project marks the second time the bank is known to have taken a stake in a property development here in recent months.

OCBC earlier took a 10 per cent interest in the Orchard Central mall project by Far East Organization. That was seen as a strategic investment to pave the way for closer cooperation between Far East and OCBC, which owns the next-door Specialists' Shopping Centre which it plans to redevelop.

Contacted yesterday, OCBC spokeswoman Koh Ching Ching declined to comment on the bank's participation in the Lippo condo project. However, she noted that the Banking Act allows OCBC to take a stake of up to 10 per cent in any company without prior approval from the Monetary Authority of Singapore. And the bank is allowed to hold properties not for its own use, so long as their aggregate net book value does not exceed 20 per cent of the bank's total capital funds.