SINGAPORE (Apr 4): Perennial Real Estate Holdings has entered into a joint venture to develop the former Goodluck Garden freehold residential site along Toh Tuck Road in Singapore.

PRE 9, an indirectly wholly-owned subsidiary of Perennial, will hold a 40% stake in the JV, with Qingjian Group of Companies and its minority partners controlling the remaining 60%.

Qingjian Group comprises subsidiaries of Hong Kong-listed CNQC International Holdings, which acquired the 210-unit Goodluck Garden for $610 million in March.

Based on the acquisition price and stamp duty payable, Perennial’s capital commitment for its 40% stake in the JV amounts to approximately $96.5 million.

Perennial says this will be funded via a combination of internal cash and bank borrowings.

Following the subscription of the shares, Qingjian Perennial will become an associated company of the Perennial group.

Perennial adds that the residential development, when launched and sold, is expected to generate cash flows and earnings for the group.

The site, which is situated in close proximity to the Beauty World MRT Station, Bukit Timah Plaza, and Bukit Timah Shopping Centre, has a land area of about 360,130 sq ft.

It has a gross plot ratio of 1.4 times, and is zoned for residential use under Urban Redevelopment Authority’s 2014 Master Plan.

This works out to a maximum permissible gross floor area (GFA) of approximately 504,182 sq ft. Including a 10% bonus balcony GFA, the maximum permissible is around 554,605 sq ft.

Accordingly, the acquisition price translates to a land price of approximately $1,210 per sq ft per plot ratio.

However, with no development charge payable for the 10% bonus balcony GFA due to a high development baseline, the land price works out to a lower $1,100 per sq ft per plot ratio.

“The relatively large freehold site with excellent transport connectivity in prime District 21 provides significant room for the creation of a development with comprehensive offerings and long term investment value,” says Pua Seck Guan, chief executive officer of Perennial.

“Together with our complementary expertise and experience in developing and managing large-scale integrated developments in China and Singapore, we are excited to create a quality development in the precinct,” he adds.

Perennial’s entry into the JV is not expected to have any material impact on its net tangible assets or earnings per share for the current financial year.

Share of Perennial closed half a cent down at 85 cents on Wednesday.