Reference no: EM132598002

BPM303 Project Development and Finance - Singapore University of Social Sciences

Question 1

In the project development process, construction is an important stage that attributes to the success of the development. The objective is to construct a good quality building under a safe working environment, and to meet the schedule and budget.

(a) Demonstrate THREE (3) reporting methods that a project manager can adopt to monitor the progress and budget of the construction.

(b) Discuss the fallout of not meeting the schedule and budget of construction to the return or profitability of the development.

Question 2

The $3.7 billion Paya Lebar Quarter (PLQ) development was officially opened on October 2019. The four hectares site spans across two adjacent parcels and features three modern Grade A office towers, a retail mall and three residential towers, surrounded by a lush expanse of greenery and landscape.

Using the marketing mix: Place, Product, Price and Promotion, appraise the four levels of marketing decision to enhance the attractiveness to the Paya Lebar Quarter.

Question 3 Describe FOUR (4) drivers behind the expansion of property development into other countries.

Question 4

The Urban Redevelopment Authority (URA) has launched the commercial site at Paya Lebar Road for sale by public tender. The site is intended for a predominantly office development with a site area of 21,000 sqm and plot ratio of 4.2.

Macland Holding Company (Macland) is interested in this land. Macland intends to tender the land at the price of S$ 900,000,000.00 (Nine hundred million dollars). Macland plans to hold the building for a period of 48 months after completion of the construction and thereafter they will sell the building to an investment fund at S$ 2,000,000,000.00 (Two billion dollars)

Market research indicates that current rent is estimated to be S$ 100 per m2 per month for comparable commercial building and expected to escalate at 3% p.a. A bank has agreed to provide a short-term financing scheme at an interest rate of 7% p.a. The project team has also advised the construction cost to be S$ 3,000.00 per m2 on Gross Floor Area (GFA) and the Net Lettable Area (NLA) is 90% of the GFA. The total construction period including the design is 36 months and the professional and authorities' fees is estimated to be 15% on construction cost.

Macland investment team assumes the total construction cost and fees are spread equally over 36 months of construction period. When the building is in operation, they forecast the annual operating expense will be S$20,000,000.00 (Twenty million dollars) with an escalation of 3% p.a. The occupancy rate for the tenanted areas is 70%, 80% and 95% on first, second and third year respectively. The occupancy rate of facilities will be stabilised at 95% thereafter.

Analyse the above information and answer the following questions.

(a) Apply the appropriate technique to project the cash flow for the project in Appendix I. You can ignore taxes and debt servicing.

(b) Appraise the Net Present Value of the project with a weighted average cost of capital of 8% in Appendix II and PVIF table is as shown in Appendix III.

(c) Demonstrate your understanding of the feasibility of this project.