Gefung Holdings makes its foray into property development

KUALA LUMPUR: Gefung Holdings Bhd is making its foray into the property development industry with first project in East Jakarta, Indonesia.

It had on Thursday, Mar 10 entered into a Memorandum of Understanding (MOU) with PT Greenworld Development (Greenworld) to undertake a mixed development project in East Jakarta, Indonesia, it said in a press release on the same day.

The location of the proposed development is approximately 14km from Central Jakarta, and is connected via highway and other trunk roads. It is surrounded by established neighbourhoods in the Kelapa Gading subdistrict, which is predominantly middle to upper-class area and known to the local population as a "city within a city".

The subdistrict of Kelapa Gading contains six shopping malls within a 20km radius. About 65% of its population are Chinese Indonesians.

Gefung Holdings's embarkation in property development, which spans over 50.74 acres in Rawa Terate Village in Cakung subdistrict, is in line with its long-term strategy to diversify its revenue stream and to deliver greater value to its shareholders.

"Given the pace of the Indonesian property market, which is forecasted to grow by 20% in 2011 as the nation's strong economic growth will result in more demand for housing, and coupled with the project's strategic location, Gefung Holdings predicts its foray into property development as a tactical decision that will transform the company's profile in the region," it added.

Greenworld was incorporated in the Republic of Indonesia in 2007 as a private limited company, with principal activities being property development and property investment.

Pursuant to the MOU, Gefung Holdings intends to enter into a development right agreement with Greenworld, where Gefung Holdings will be appointed as the developer of the project and in return Greenworld will be paid a land value for the land and a percentage of profit sharing from the development profit after tax.

"The purpose of the MOU is to allow all parties to negotiate on the parameters of the development, leading to the signing of a definitive agreement. It is anticipated that the proposed development will contribute significantly to GHB group's future earnings taking into consideration the strategic location coupled with the sizeable piece of land," it noted.

The key parameters to be agreed upon are profit sharing arrangement on the development, determination of the land cost, development component of the proposed development and preliminary feasibility study.