KUALA LUMPUR (March 10): Luster Industries Bhd is collaborating with Koperasi Hartanah Malaysia Bhd (Kohama) to build 106 units of affordable houses within the Taman Tasik 1 Malaysia development in Pengkalan Hulu, Perak.

In a filing with Bursa Malaysia yesterday, Luster said its indirect wholly-owned subsidiary Pembinaan LSP Jaya Sdn Bhd (PLSP) had signed a tripartite agreement with landowner Aznel Development Sdn Bhd (ADSB) and Kohama for the proposed development.

Under the deal, RM1.65 million has been paid by Kohama to ADSB in relation to its land.

“ADSB will deliver the necessary documents and information which are needed by Luster to complete the project,” said Luster.

As for PLSP, it has been given the rights to complete the construction of the houses along with necessary public amenities and crucial infrastructure. PLSP also entered into a profit-sharing agreement with Kohama yesterday, which states that out of the total proceeds of the sale of the 106 units, a profit of up to RM4.5 million will go to PLSP, and a profit in excess of RM4.5 million up to RM5 million will belong to Kohama.

“The profit in excess of RM5 million shall [then] be shared between PLSP and Kohama in a 70:30 ratio,” said Luster.

“[We are] of the view that the strategic location of the land and the positive prospect of the property industry for affordable housing will provide the group with a good opportunity to expand into property development industry for affordable housing, which would augur well for the group’s long-term strategy in diversifying its earnings base and delivering greater value to the shareholders of Luster,” it added.

PLSP will fund the proposed development through internal funds.

In a separate statement yesterday, Luster group chief executive officer Lim See Chea said throughout the years, Luster has been actively making its mark by venturing into different industries, and establishing connections with various companies to explore the opportunities beyond its core business activities.

Kohama executive chairman Datuk Jali Sekak said the proposed development is part of its Kediaman Mampu Milik 1 Malaysia (KMM1M) project, which sees the cooperative building 70,000 houses in various states in Malaysia by 2025.

“Our focus is on building one-storey terraced houses which would be sold at a lower price of between RM130,000 and RM160,000, instead of the market price which can reach RM200,000,” he added.

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This article first appeared in The Edge Financial Daily, on March 10, 2016. Subscribe to The Edge Financial Daily here.

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