Malaysia-based IOI Group is set to become City Developments Ltd’s (CDL) partner for Singapore’s South Beach project, said sources.
IOI is understood to be nearing a deal to acquire the one-third stake of US-based Elad Group in the consortium developing the office, retail, hotel and residential project on the former NCO Club / Beach Road camp grounds.
IOI could be paying about S$170 million to S$175 million for Elad’s stake, said The Business Times. The amount is higher than the S$155 million that Dubai World will receive for selling its one-third stake in the consortium to CDL.
CDL collaborated with Elad and Istithmar, a unit of Dubai World, to acquire the 99-year leasehold plot from the government for S$1.69 billion in 2007, with each holding one-third stakes in the consortium. The equity stake of CDL in the consortium will increase to two-thirds once it completes the acquisition of Dubai World’s stake.
Kwek Leng Beng, Executive Chairman of CDL, said in February that the group will eventually want to own over 50 percent of the project, though it is still open to new investors.
Market watchers are keen to see how the dynamics between IOI and CDL will play out.
Lee Shin Cheng, CEO and Executive Chairman of both IOI Corporation Berhad and its property unit IOI Properties Berhad, is seasoned in the plantation and real estate development industries, while CDL’s Mr. Kwek is experienced in the property, hotels, finance and building materials businesses.
The agreement for the construction of the project’s diaphragm wall and piling was awarded in 2010. Actual work will likely begin in the first half of this year.