A JOINT venture between City Developments Ltd (CDL) and US-based Wachovia Development Corporation is buying two blocks at CDL’s Cliveden

A JOINT venture between City Developments Ltd (CDL) and US-based Wachovia Development Corporation is buying two blocks at CDL’s Cliveden at Grange condo for $432.4 million or an average price of about $3,750 per sq ft (psf).

And according CDL executive chairman Kwek Leng Beng, the deal attests to the freehold project’s ‘high investment potential’ and reflects CDL’s ‘business strategy of leveraging on the capital appreciation potential of our developments’.

In an interview with BT in May this year, Mr Kwek said he was considering retaining a portion of some new residential developments for rental income and capital appreciation.

At CDL’s Q2 results briefing in August, he said he was considering retaining two blocks at Cliveden.

A Hock Lock Siew column in BT later that month speculated on whether CDL was mulling a residential real estate investment trust (Reit) to which it could spin off apartments held for investment.

CDL was silent on this in its statement to the Singapore Exchange yesterday. But market watchers reckon a possible exit strategy for the CDL-Wachovia joint venture for their investment in the two Cliveden blocks would be to divest them to a residential Reit.

Without elaborating, a CDL spokesman said yesterday: ‘We will look into this business model of retaining units in some of our future residential developments.’

CDL is taking a 40 per cent stake in the joint venture company Grange 100 Pte Ltd that is buying the Cliveden blocks, comprising 44 apartments. Wachovia holds the majority 60 per cent.

The 44 units are three and four-bedders, and two penthouses. The prices at which they were bought range from $3,392 psf to $4,313 psf.

Before the deal was announced yesterday, CDL had sold 42 units at Cliveden at an average price of $3,690 psf since the project’s soft launch in June. More than 90 per cent of these units were bought by foreign buyers from the UK, Australia, Hong Kong, China, Taiwan, Indonesia, France, Korea and Japan.

After the latest deal, only 24 apartments will be left at the 110-unit Cliveden, which is coming up on the former Kim Lin Mansion site.

Last year, CDL bought the Lucky Tower site, diagonally opposite the Kim Lin plot, for $1,134 psf per plot ratio.

Source : Business Times - 6 Nov 2007