THE NEW METROPOLIS: Artist's impression showing the blueprint for Medini Iskandar, the financial district in the government-backed Nusajaya in the southern corridor. Bandar Raya has recently secured the RM2.3 billion Nusajaya project from Dubai World's Singaporean unit, Limitless.
According to researchers at OSK Research Sdn Bhd, Bandar Raya would likely be gearing to ride on the impending upcycle in the property development market by early next year.
“Bandar Raya is certainly very aggressive on its expansion plans and the benefits from the alliance is not exclusive to the group. Multi-Purpose is also very keen to expand its property development business to become the next major earnings contributor, on top of its gaming, insurance, stockbroking and treasury management businesses.
“As Multi-Purpose probably has never been in the business of property developments in a big way, an alliance with Bandar Raya; which has the necessary expertise and capacity for huge developments, is probably a sensible move to fast-track the former’s plans to expand its property development business and put its landbanks to work,” the research house responded to an email by The Borneo Post.
However, current agreements within the MoU were still sketchy, added OSK Research.
“We’re not imputing any of this into our forecasts. However, with that said, should the agreements go through, this will enable Bandar raya to venture into the Penang market as well as to expand its presence in the Klang Valley.”
In a more detailed note, AmResearch Sdn Bhd estimated that average house prices in the vicinity of the 80-acre land parcel in Penang ranged between RM250 and RM300 per square foot (psf); in Rawang it could range from RM250,000 to RM300,000 per unit, while in Gombak, the units could reach an average price of RM400 psf.
“This is positive news given that Bandar Raya is reducing its earnings risks, as most of its products in the pipeline are high-rise apartments and also office towers that are led by demand saturation and supply glut concerns,” the research house said.
Interestingly, the group’s expansion plan might go beyond these three venues, with its recent securing of stakes in the RM2.3 billion Nusajaya project in the country’s southern corridor Iskandar Development Region (Iskandar Jaya), from Singapore-based Limitless Holdings Pte Ltd (Limitless).
Last Wednesday, Bandar Raya via its subsidiary Ardent Heights Sdn Bhd inked a conditional sale of shares agreement Limitless’ entire shareholding of Haute Property Sdn Bhd for purposes of participating with UEM Land Bhd in the proposed development of ‘Residential North’ in Nusajaya.
Limitless is a business unit and subsidiary of Dubai World, a Middle Eastern investment company that manages and supervises a portfolio of businesses and projects for the Dubai government.
The purchase should enable the Bandar Raya to leverage on its expertise to participate in the growth of the government-backed Iskandar Raya, in line with its business strategy of improving profitability for the group and increasing shareholders’ value in the long term.
Iskandar Raya had so far attracted many high-profile investors from the Middle East, including the Kuwaiti-based Kuwait Finance House Group who had invested significantly towards the development of the corridor’s financial district, Medini Iskandar.
The proposed development of the corridor would be expected to be carried out in six phases over seven years, with the construction of its phase one to commence in next year’s third quarter.
Based on a preliminary feasibility study, the proposed development should generate a gross development value of about RM2.3 billion and gross development profit of about RM700 million upon completion in 2025.
by Ghaz Ghazali
Borneo Post
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