CapitaMalls Asia’s Latest Mega Project

Shopping mall owner, manager, and developer CapitaMalls Asia (SGX: JS8) will be embarking on a new 49:51 joint venture with Changi Airport Group to co-develop the 3.5 hectare open-air carpark at Changi Airport Terminal 1.

Codenamed Project Jewel, the joint venture is the latest mega project for CapitaMalls Asia and is estimated to cost around S$1.47b in total. Once completed, it will likely be considered as one of Singapore’s iconic landmarks.

capitamalls asia project jewel changi airport

Source: CapitaMalls Asia Presentation Slides

The Plan

According to CapitaMalls Asia’s announcement regarding the project, Project Jewel will be targeting tourists, visitors to Changi Airport, as well as residents – numbering up to 1.5 million individuals – who live within a 20-minute drive from the vicinity of the area.

In addition, Changi Airport is expected to increase its passenger handling capacity from 66 million to 135 million in the next few years.

The plan for the new 10 storey-complex consists of 5 underground (basement) levels and 5 levels that will be above the ground. All told, Project Jewel will be a mixed-use development that would house airport facilities, a hotel, retail shops and leisure outlets.

Impact on CapitaMalls Asia

Although CapitaMalls Asia states that it will be financing the project with a mixture of internal funds and external borrowing, a quick check on its latest September 2013 balance sheet shows that it has more than enough cash to finance this project without taking on additional debt and thus would not be unduly stretched in terms of its finances.

Furthermore, based on CapitaMalls Asia’s 49% stake in Project Jewel and the joint-venture’s estimated costs, the value of the project rounds up to around 7.5% of the company’s total assets.

Investors in real estate developer CapitaLand (SGX: C31) might also be interested in how Project Jewel shapes up ultimately as the company owns a majority stake in CapitaMalls Asia.

In Summary

Singapore is expecting air traffic passengers to increase 5% annually for the next few years. Construction work for Project Jewel is anticipated to commence in the second half of 2014 and when completed,  CapitaMalls Asia will be able to add one more iconic structure into its property portfolio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.