Nestcon ventures into property development with RM95 mil Iskandar Puteri land buy

PETALING JAYA (June 15): ACE Market-listed construction and renewable energy group Nestcon Bhd is making its foray into property development through the proposed acquisition of three parcels of freehold land in Iskandar Puteri, Johor Bahru, for a total cash consideration of RM95 million.

In a Bursa filing today, it said the lands — designated as Plot F, Plot G and Plot H — are located along Jalan Persiaran Afiat, Taman Kesihatan Afiat, in Mukim Pulai, Daerah Johor Bahru, and sit approximately 14.5km north-west of the Johor Bahru city centre, in close proximity to the established township of Bukit Indah.

The lands

The three freehold parcels, currently held under separate title deeds and owned by vendor KLG Iskandar Puteri Sdn Bhd, have a combined land area of approximately 33,782.284 sq m (8.348 acres).

1) Plot F, held under H.S.D 593419, PTD 212929, is the largest at 16,437.495 sq m (4.062 acres) and is priced at RM47 million.

2) Plot G, held under H.S.D 593420, PTD 212928, measures 9,891.842 sq m (2.444 acres) at RM28 million, while;

3) Plot H, held under H.S.D 593421, PTD 212927, spans 7,452.947 sq m (1.842 acres) at RM20 million.

The lands carry a commercial land use category with vacant possession and are unencumbered. They are subject to express conditions requiring the construction of multi-storey commercial buildings, as well as restrictions on the sale or transfer of units to non-Bumiputera individuals or companies without state authority consent.

Purchase consideration

The RM95 million purchase consideration was arrived at on a willing-buyer willing-seller basis, benchmarked against an independent valuation by Khong Jaafar Sdn Bhd (KJSB) dated March 12, 2026, which appraised the combined market value of the lands at RM95 million using the Market Comparison Approach as the primary method, cross-checked against the Income Approach (Discounted Cash Flow methodology) at a discount rate of 10% per annum over a six-year projection period.

This compares with the audited net book values in KLG Iskandar's books of RM13.27 million, RM7.99 million and RM6.02 million for Plot F, G and H respectively as at 31 December 2024.

The acquisition will be funded through a combination of internally generated funds and bank borrowings. Nestcon Group has secured two fixed term loans from Hong Leong Bank Bhd totalling RM80.80 million — a RM40 million, eight-year facility to part-finance Plot F, and a RM40.80 million, 10-year facility for Plots G and H. As at the latest practicable date (LPD) of May 29, 2026, Nestcon Group's cash and bank balances stood at RM104.16 million.

The purchaser

The acquirer is Nestcon Iskandar Puteri Sdn Bhd, incorporated on January 7, 2025, which is a 70%-owned subsidiary of Nestcon Property Sdn Bhd, itself a wholly-owned subsidiary of Nestcon Bhd. The remaining 30% of Nestcon Iskandar is held by Lim Aik Hoe and Lim Aik Kiat, each holding 15%.

Development plans

Upon completion of the acquisition, Nestcon Iskandar intends to undertake a mixed commercial and residential development comprising serviced apartments and retail units across the three plots in two phases, with a combined estimated gross development value (GDV) of RM1.371 billion, gross development cost (GDC) of approximately RM1.03 billion and gross development profit (GDP) of RM336.97 million.

Phase 1, to be developed on Plot F, will comprise approximately 1,231 serviced apartments and 12 retail units across two towers, with an estimated GDV of RM650.95 million and GDC of RM494.45 million, generating an estimated GDP of RM156.50 million.

It is targeted for launch in 1Q 2027, with completion expected by 1Q 2031. Phase 2, on Plots G and H, will similarly feature two towers comprising approximately 1,324 serviced apartments and 12 retail units, with an estimated GDV of RM720.10 million, GDC of RM539.63 million and GDP of RM180.47 million.

Launch is targeted for 1Q 2028, with completion by 1Q 2032. Across both phases, the development will yield approximately 2,579 units in total.

The development has received approval-in-principle for a variation from multi-storey commercial to serviced apartment use, with an increased permissible plot ratio of 1:6, granted by the Johor State Planning Committee following deliberations on August 28, 2025.

Proposed diversification

In tandem with the acquisition, Nestcon is seeking shareholder approval to formally diversify its existing business — currently comprising Building & Infrastructure and Renewable Energy — to include property development.

The board (excluding group managing director Datuk Lim Jee Gin, who has recused himself due to a conflict of interest) anticipates that the property development segment may contribute 25% or more of Nestcon Group's net profits, or result in a diversion of 25% or more of its net assets, in the future.

For context, Nestcon Group's revenue for FY2025 was RM723.75 million, with profit after tax (PAT) attributable to shareholders of RM11.49 million. Its building and infrastructure segment accounts for 98.23% of revenue, while its unbilled construction order book stands at approximately RM1.47 billion as at the LPD, expected to be recognised up to FY2028.

Lim, who holds stakes and directorships in several external property development companies — including Nestcity Cemerlang, Nestcity Land, Nestcity Property, Nestcity Development and Picoland Sdn Bhd — has voluntarily abstained from all board deliberations and voting on both proposals.

He will similarly abstain at the EGM, and has issued an irrevocable written undertaking dated April 9, 2026 not to compete with Nestcon Group's property development business.

The five companies have also granted Nestcon a right of first refusal to jointly undertake future property development projects on an arm's length basis.

Shareholders will be asked to vote on the proposals at an Extraordinary General Meeting (EGM) to be held on Tuesday, June 30, at 11.00am at DoubleTree by Hilton Shah Alam i-City, Finance Avenue, Shah Alam — immediately following the company's Sixth Annual General Meeting at the same venue.

The highest percentage ratio applicable to the proposed acquisition under Rule 10.02(g) of the ACE Market Listing Requirements is approximately 63.97%.

The board (save for Lim) recommends that shareholders vote in favour of both resolutions. Apex Securities Bhd is the adviser for the proposals.

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