SINGAPORE, July 17 - A joint venture that includes Morgan Stanley Real Estate and Southeast Asia's largest developer CapitaLand on Thursday borrowed $1.996 billion for a residential project in an upmarket Singapore suburb.

Comprising seven 36-storey apartment blocks designed by top architect Zaha Hadid, the project will be built at a total cost of $3 billion. The news of the loan comes in spite of a slump in sales and price growth for private homes in Singapore amid widespread investor concerns over the global economy.

"Sentiment has been affected in the U.S., but I think the fundamentals of Asia in terms of economic growth, the demand, urbanisation, it's still very strong for us," CapitaLand Chief Executive Liew Mun Leong told reporters at a briefing.

CapitaLand said the project will be launched for sale in the first half of 2009 with a breakeven cost of $1,350-$1,450 per square foot. It declined to provide the estimated selling price.

CapitaLand, Morgan Stanley Real Estate Special Situations Funds III, Hotel Properties and Wachovia Corp's Wachovia Development Corp in June 2007 agreed to pay $1.34 billion for the site on Singapore's Farrer Road.

The proceeds from the syndicated loan will partly refinance the acquisition cost and cover construction costs.

CapitaLand, which owns the largest share in the venture at 35 percent, said the financing deal was made up of a five-year $1.362 billion term loan, a five-year $500 million revolving credit facility and $133.9 million in bank guarantees.

The loan will cost the joint venture about 150 basis points above the Singapore dollar swap offer rate at the outset, and the margin will scale down to 135 basis points when the project achieves an undisclosed sales target, said CapitaLand Chief Financial Officer Olivier Lim.

Ten banks are taking part in the loan, including DBS Bank, Standard Chartered, and Royal Bank of Scotland.

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