Raffles Medical redevelopment of Holland Village to cost $65m
Construction to take two years.
Raffles Medical Group (RMG) recently announced entered into a sale and purchase agreement with DBS Bank to acquire its property at 100 Taman Warna (located adjacent to Holland Village MRT station) for a purchase consideration of S$54.8m.
The property has a land area of ~20,907 sf and has 72 years of tenure remaining (99-year leasehold land). RMG has already obtained regulatory approval to increase its gross plot ratio from 1.2 to 3.0. This will allow RMG to redevelop the property into a five storey commercial building comprising five above-ground levels,one basement level and two levels of basement car parks with a total floor area of 62,720 sf.
The total redevelopment cost is estimated to reach ~S$65m and we believe construction will take approximately two years. RMG intends to occupy 9,000 sf of space for its own outpatient medical and specialist clinics (~20% of the net lettable area). We believe this will enable RMG to target the Holland Village community, which is largely made up of expatriates and the more affluent local population.
DBS will lease 4,500 sf of space, while the remaining leasable areas are expected to be leased out to retail shops and F&B outlets. According to data from URA REALIS, shops in the Holland Avenue, Holland Drive, Holland Road and Holland Close area have fetched a median rental of S$12.93 psf per month from Jan to Dec 2013.
The total transaction and redevelopment costs will aggregate S$119.8m, and RMG expects to finance this with internal resources and bank borrowings. As at 30 Sep 2013, RMG was in a net cash position of S$141.7m. It also received gross proceeds of S$120m in 4Q13 from the sale of its Thong Sia commercial podium. As the redevelopment will be purpose-built, we believe it will be easy for RMG to expand its medical operations in the property in the future.