Apart from its close proximity to the city centre, its positioning as a future transport hub is a key selling point for Bandar Malaysia.
KUCHING: The year 2015 ended on a positive note for the Malaysian property sector where a consortium comprising Iskandar Waterfront Holdings Bhd (IWH) and China Railway Engineering Corp Sdn Bhd (CREC) sealed the purchase of a 60 per cent stake in Bandar Malaysia on Dec 31 for RM7.4 billion.
A 10 per cent deposit worth RM741 million will be paid upon the execution of the share sale and purchase agreement (SPA), which is set to be completed by June 2016, said AmResearch Sdn Bhd (AmResearch).
IWH is the master developer of Flagship A within the Iskandar Malaysia Economic Growth Corridor – where it owns 4,300 acres of prime seafronting land. In turn, IWH is a 60:40 joint venture (JV) between state-backed Kumpulan Prasarana Rakyat Johor and Credence Resources Sdn Bhd.
The Federal Government is also a strategic partner in IWH; the EPF and Khazanah Nasional Bhd are shareholders in IWH subsidiary, Iskandar Waterfront Sdn Bhd via Iskandar Investment Bhd (IIB).
On the other hand, CREC is the Malaysian unit of China Railway Group Ltd, which is ranked no 71 in the Fortune 500 list.
CREC’s involvement in Bandar Malaysia, which is to be the planned terminus for the proposed KL-Singapore High-Speed Rail (KL HSR) project, would certainly give the construction giant a head start when bidding for this massive rail project.
“The SPA follows a Request for Proposal (RFP) initiated by CH Williams, Talhar and Wong (WTW), for Bandar Malaysia that generated Expressions of Interest (EOI) from over 40 local as well as international players that included Singapore, China, Japan, South Korea and Australia.
“This was subsequently narrowed down to two, final and funded binding bids on Nov 9, 2015. After the tenders had closed, there were reports that revealed a late bid by Tan Sri Desmond Lim together with investors from Qatar.
The price tag of RM7.4 billion for a 60 per cent stake values Bandar Malaysia at RM12.3 billion or circa RM697 per square foot (psf) if the project’s RM2.4 billion Sukuk Debt that is to be assumed by the IWH-CREC JV is included.
This compares with the lowest transacted price of RM2,700psf at the Tun Razak Exchange (TRX). At the same time, local media reported that the IWH-CREC JV will also bear the RM2.7 billion relocation cost for the Sg.Besi Airforce Base.
“At this juncture, we are unsure if the RM2.4 billion Sukuk Debt has already been factored into the RM7.4 billion that the IWH-CREC JV is to fork out in return for a 60 per cent stake in Bandar Malaysia. Local media however indicated that the relocation cost forms part of the entire consideration of RM12.3 billion for Bandar Malaysia,” said the research house.
To be developed over 15 to 25 years, the 486-acre Bandar Malaysia is projected to generate a GDV of RM150 billion. The 486-acre Bandar Malaysia is being positioned as a mixed use urban development that is expected to serve as a catalyst for the transformation of Greater KL.
Apart from its close proximity to the city centre, its positioning as a future transport hub is a key selling point for Bandar Malaysia. As mentioned earlier, the proposed KL-Singapore High-Speed Rail terminus will be located here.
“Future linkages have also been mooted for the MRT lines 2 and 3, KTM Komuter, Express Rail Link (ERL) to KLIA and KLIA2, Bas Rapid Transport (BRT), as well as connections to 12 major highway networks. The latter may include the proposed DUKE 3, we believe,” said AmResearch.
“As the relocation works at the Bandar Malaysia site need to be completed first, we only expect the actual development of Bandar Malaysia to take off in 2018. Yet, we believe the monetisation of land in Bandar Malaysia – either directly or indirectly, has significant positive implications on the Malaysian property market on a few counts.
“Firstly, at an implied value of RM697psf, it will set a benchmark value for land within its surrounding areas. Second of all, a successful takeoff of Bandar Malaysia could create positive spillover effects for the Tun Razak Exchange (TRX) project, which is located approximately 3km away.
“Last but not least, attention could gravitate towards other potential players that could be roped in by the IWH-CREC JV to accelerate the development of Bandar Malaysia. Already, select developers have purchased land within the vicinity ahead of Bandar Malaysia’s debut.”