By Ben Shane Lim of theedgemalaysia.com | The Edge Malaysia – Fri, May 25, 2012
KUALA LUMPUR (May 25): Kumpulan Hartanah Selangor Bhd (KHSB) will be developing 1,196 acres (484ha) on Pulau Indah with an estimated gross development value (GDV) of RM6 billion to RM8 billion.
KHSB on Thursday signed an Memorandum of Understanding (MoU) with architectural consultancy services firm, Norzakiah Architect, to prepare an integrated township master plan for the development dubbed Pulau Indah East.
The current proposed masterplan is for a mixed development with a resort, residential development and a town centre. Pulau Indah East will be located on the eastern side of the island away from the two ports that operate on the island, Northport and Westport.
"We want to transform the image of Pulau Indah as a port or an industrial site into a place that people want to visit and live in," said KHSB chairman Raja Idris Raja Kamarudin.
He added that a key purpose of the development is to enable KHSB to unlock the potential value of its assets.
"So far, we have been realising the value of our assets by industrialising the land or selling it off. We need to focus on creating recurring income from our assets which will help us pare down our debt," he said.
The land is currently marked as industrial or commercial land for development in KHSB's books with an average book value of RM3 psf.
"The land alone is now worth around RM1 million per acre [RM22.96 psf]. If we can develop it, it will be worth much more. The residential developments could rise to as much as RM500 psf [for completed units]," said Raja Idris.
"Hopefully, we can begin construction in 2013 and complete the first phase in 2014 or 2015."
Residential, commercial and resort developments will be undertaken simultaneously, said Raja Idris, adding that the individual components are not viable on their own.
He said the South Klang Valley Expressway, which is expected to finish in 2014, will give direct access to Pulau Indah from KLIA.
Raja Idris said KHSB will be looking for partners with the relevant expertise in each area.
"We will look for both foreign and local partners. We need experts in resorts, theme parks, golf courses and hotel for example, to help us in the design phase," he said.
In terms of funding, KHSB only has RM19.4 million in cash on its books against RM67.5 million in short-term debt.
Raja Idris said: "At this stage, we are open to taking on an equity partner [for the project]. Of course, as a public listed company, we can always go to the public to raise funds as well."
The 300-room, five-star resort will be located on a peninsula on the southern end of the island. The resort will also incorporate an 18-hole golf course with 48 guest villas and a club house. The planners want to build an active water recreation park next to the resort.
The residential development will range from affordable housing to high-cost apartments and over-water apartments.
Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim, who was present at the MoU signing, said: "Pulau Indah hasn't been a 100% success story. It has been plagued by abandoned projects, which is unfortunate. However, I believe the current real estate market will allow this project to be a success."
KHSB also recently signed an MoU with Hong Kong-based developer Sun Lohas Group Ltd to develop 2,013ha in Bestari Jaya, Kuala Selangor, which it said has a potential GDV of RM8 billion.
This story appeared in The Edge Financial Daily on May 25, 2012.
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