Buffet breakfast, lunch, dinner and supper

It is comforting to watch Iskandar Waterfront Holdings (IWH) making headway in the property business around Greater Johor Bahru as the Super Mega Developer. Investments realised, properties are added value and new businesses come in to take the risk. Of course, the bet is on the rewards later.

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 unitCapitaLand 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 Hooholding the remaining 60% via Credence Resources Sdn Bhd.

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Kudos for Tan Sri Lim Kang Hoo, contractor-turned-master developer who controls Credence Resources Sdn. Bhd. (CRSB). He has been coming into the forefront and ever so often lately, when it comes to mega deals involving prime or prized properties around Greater Johor Bahru. Particularly, within the city limits and selected parcels within Iskandar Malaysia.

Lim as a corporate and property player even inadvertently spelled out the strategic plan when he outlined mega projects that would transform Greater Johor Bahru. An announcement best done from an authority higher up.

It is without doubt Lim took a lot of risk making investments and pulling up resources to be a strategic property wholesaler and later dissect the repackaged parcels for different parties dare to the take the risk and challenge.

Then again, there would a lot of issues arising from going too big, too fast. Inorganic meteoric growth often comes with a lot of speculations. Be it at the political, strategic planner, implementer, capital and financial market  players and punters or ordinary everyday persons on the street. Different stakeholders have different concerns,

The politically savvy people would speculate on the political backing Lim is enjoying. Of course the more prudent lot would look at the political opportunity costs arising from political personalities often being mentioned as providing necessary endorsements, especially in the interest of taking Johor and the Malaysian economy into the ‘transformed level’.

No less that Prime Minister Dato’ Seri Mohd. Najib Tun Razak himself are bullish about Johor, particularly the lower quarter being the serious propulsion in his economic transformation plan (ETP). Almost 50% of his ETP programs are located in and around Greater Johor Bahru. The better half of projects which are getting Federal Government injection  if not support, is banked on the notion about Johor benefitting from the growth and spill over effect from the high value Singaporean economy.

Then there are the pessimists, who would look at ‘over exposures’. Capital and financial market payers and punters often are cautious when too many eggs being placed into one basket. Of course, these self-profess advocates of market-driven-economy are never convinced and in many ways contradict their ownselves with entrepreneur like Lim is taking the charge instead of the GLCs.

The perfect example is Al Bukhary Group. They have proven to value ad and increased not on the ROIs of businesses that they privatize or took over, but also increased the productivity.

Their arguments have some validity. GLCs now behave like ordinary enterprise, where they are fully responsible of their own profitability, liquidity and ability to service their own commitments. These GLCs are subjected to the same practice like any other PLCs and corporate governance and integrity is paramount. After all, on top of being a progressive and productive enterprise GLCs also required to do serve the ‘national agenda’.

So for GLCs to take a lead charge in super mega property development projects in Greater Johor Bahru make a lot of business sense. However, that is not the case. Even though Johor State Government control one of the GLCs, which has several PLCs in its stable.

The strategic planners should be if not already is baffled, why an entrepreneur via his enterprise is taking centre stage in the ‘transformation agenda’ of Greater Johor Bahru. It is almost like Ramly Burger outlining the ‘bigger picture’ for the beef industry, especially in the disflavour of beef contamination feverish fit in the United Kingdom.

The implementers should also be  confuse, if they are not already are. Super mega property development projects and the downlines require all sorts of approval at so many stages. These approvals cut across from design, communal planning, traffic, waste and utilities management and of course, environmental issues. This man made island definitely requires special attention even though Lim is said to have ‘cleanse’ once inhabitable Sg. Danga.

Some may argue that this parcel sold to the investment arm of Singapore Government isn’t actually ‘natural’ land and nothing is taken away from Johor, be it the state or people. But then again skeptics are confident this would be the ‘door opener’ for more Johor parcels being hived off for the benefits of Singaporean investors, particularly Temasek. This would aggregate the sensitivity that property prices in Greater Johor Bahru is already sky rocketing due to the ‘push factor’ from the more power purchasing power from across the Johor Straits.

Adding injuries to insults, the strong rumour around Johor folks about the contractor for the PR1MA affordable project in Johor Bahru is non other than the contractor-turned-mega developer himself.

Lim as an individual and corporate player has been the if not part of topic of many social or serious conversations either by Johoreans be it within Johor or elsewhere or when others talk about Johor. Grandstanding would not help the perception which would could easily be twisted into something ugly even though none of it was ever substantiated.

People tend to over simplify things with the tinge of controversy, if not scandal, to make it tangy. They never discuss how and what it takes to prepare a feast-like meal, such as a buffet spread. However, the connotation of the buffet could easily be presented to depict gluttony on the eater’s end. Again, it is all about perception and manipulation of facts and circumstances.

Then again, Malaysians are known to make the wrong decisions based on perception.

Probably they have conveniently forgotten how Johoreans decided on a record breaking ‘spoilt votes’ during 12GE, after the summary cancellation of Scenic-Bridge-Over-Johor-Strait in March 2006 and November 2006 launch of the Iskandar Development Region. They also should be reminded that Johor Bahru folks voted for Shahrir Abdul Samad as ‘Key Candidate’ in 1988.

*To be continued

Published in: on February 19, 2013 at 18:01  Comments (27)