Business

Tuesday February 19, 2013

Land and development on man-made Danga Bay island to cost RM8bil

By B. K. SIDHU
bksidhu@thestar.com.my


The total cost of the land and the integrated development was likely to cost RM8bil. A joint venture has been formed for this deal between CapitaLand Malaysia, IWSB and Temasek, with the Singaporeans taking the bigger share. The total cost of the land and the integrated development was likely to cost RM8bil. A joint venture has been formed for this deal between CapitaLand Malaysia, IWSB and Temasek, with the Singaporeans taking the bigger share.

PETALING JAYA: Singapore's Temasek Holdings Pte Ltd and its unit CapitaLand Malaysia Pte Ltd will enter into an agreement with Iskandar Waterfront Holdings Bhd (IWH) today to buy a man-made island measuring about 28.33ha at Danga Bay for about RM800mil.

Those in the know said that IWH unit Iskandar Waterfront Sdn Bhd (IWSB) would also be party to the acquisition, and the three parties would jointly develop the 28.33ha into a mixed integrated development, comprising high-rise buildings and landed homes complete with a shopping mall and food and beverage outlets, to be completed over the next few years.

The total cost of the land and the integrated development was likely to cost RM8bil, they said.

A joint venture has been formed for this deal between CapitaLand Malaysia, IWSB and Temasek, with the Singaporeans taking the bigger share.

This is the second largest tract of land that is being sold by IWH in less than two months after China's Country Garden bought 22.26ha for RM900mil in December.

In total, IWH would have sold about 242.81ha thus far. It is the master developer of a waterfront city at the southern tip of Johor Baru fronting Singapore. IWH has a total land-bank of about 1,618.74ha in that area.

This deal with Temasek/CapitaLand signifies the entry of a big Singaporean investor that sees potential in Iskandar Malaysia, the southern economic corridor of Malaysia, and could signal the entry of more Singaporean investors into Iskandar Malaysia.

In fact, the premiers of both countries will be witnessing this deal today and also a ground-breaking ceremony for a wellness centre that is being jointly developed by Khazanah Nasional Bhd and Temasek.

Khazanah and Temasek are the investment arms of Malaysia and Singapore, respectively. CapitaLand Malaysia is a wholly owned subsidiary of CapitaLand Ltd, one of Asia's largest real estate companies. Temasek has a 40% stake in it.

Khazanah and Temasek, via their joint-venture vehicle Pulai Indah Ventures Sdn Bhd, are developing the “urban wellness” project on a 2.02ha site in Medini North and the 84.98ha “Resort Wellness” development in Medini Central. The whole development has a gross development value (GDV) of RM5.2bil.

Both the projects, the man-made island and the wellness centre, will have a combined GDV of over RM16bil and these development will be spread over a few years, catalysing construction and other business activities in the state in the process.

Those in the know claim that the negotiations for the sale of the man-made island, also known as the A2 island, took almost two years to complete, as both parties were haggling over the price. It is man-made because it is a result of reclaimed land.

IWSB is the master developer of over 1,699.68ha at the southern tip of Johor Baru. Of this, 809.37ha make up Danga Bay, a development of 10 flagship projects, including a marina. The other parcels of land owned by IWSB are within the Johor Baru city centre, Tebrau Coast, and also 121.41ha in Desaru.

Apart from today's land sale and that to Country Garden, IWH has sold 81.75ha to Australia's Walter Group, 99.15ha to Dijaya Corp and about 10.12ha to the Brunsfield group.

The Johor government, via Kumpulan Prasarana Rakyat Johor, has a 40% stake in IWH, with influential businessman Tan Sri Lim Kang Hoo holding the remaining 60% via Credence Resources Sdn Bhd.

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