AS land valuations in Iskandar Malaysia pick up, the biggest loser in Southeast Asia's largest property development is Tan Sri Halim Saad, a former kingpin of Corporate Malaysia.
The opportunity cost for the man who used to control Renong Bhd — now known as UEM Land Holdings Bhd — runs into billions of ringgit.
If only Halim, who helmed Renong from 1985 to 2001, had managed to steer it out of its financial woes.
Prolink Development Sdn Bhd, a 64%-owned subsidiary of Renong, had held the sprawling 25,000-acre tract — now known as Iskandar Malaysia — that is located near the Second Link that connects Malaysia to Singapore.
When Halim quit Renong and the UEM group in 2001, land prices in Nusajaya, the key driver of Iskandar Malaysia, were around RM3.50 to RM6 psf, depending on the location of the land in the area and its utilisation.
For instance, in a 1999 transaction between Prolink and a subsidiary of UEM Bhd, the land was valued at RM6 psf. The valuation was done by two firms and the tract was transferred to UEM as part of a debt settlement.
Based on RM6 psf, the 25,000 acres work out to RM6.6 billion, a far cry from the values today under UEM Land, which is now controlled by Khazanah Nasional Bhd.
In the latest agreement between UEM Land and FASTrack Autosports Pte Ltd to build a project called Motorsports City, the land was transacted at RM19 psf. In the joint venture, FASTrack Autosports will hold a 70% stake and UEM Land the rest.
At the conservative price of RM19 psf, the value of land in Iskandar Malaysia is almost RM21 billion. The land for Motorsports City is at the lower end of the scale because it is not for housing.
Also, the joint venture has to incur an estimated cost of RM200 million upfront to develop the racetrack before other components of the development can be monetised.
However, at the other end of the scale are apartments that are being sold for as much as RM700 psf. More than 80% of the units in UEM Land's latest launch in Puteri Harbour, which is one of the prime developments in Iskandar Malaysia, were taken up mainly by foreigners.
"Assuming even a quarter of the land was developed and sold at RM700 psf, the value of the entire development would be astronomical. Halim lost out quite a bit because he could not hang on to Renong," says a banker.
In 2001, the government, through Khazanah, took over Renong and the UEM group. Under an initiative to clean up Corporate Malaysia, the government intervened in Renong and UEM on the grounds that their outstanding debts were too high and posed a danger to the banking system. The group's liabilities were estimated at RM20 billion.
When Khazanah stepped in, Halim gave his support. However, in 2010, he said in an interview that he was forced out. He also said that if he had not been made to leave and given a free hand in running the group, he would have turned it around.
But that is all water under the bridge. The reality is, under Khazanah and a strong push by the government to develop the southern corridor, the price of the land that Halim used to control is worth billions today — something he lost as a result of Renong's huge debts.
Now, Halim is making a comeback on the corporate scene through Sumatec Resources Bhd, where he has proposed that the company undertake some work in an oil and gas field he owns in Kazakhstan. He has also been reported to be keen on taking over the beleaguered National Feedlot Corp.
This story first appeared in The Edge weekly edition of Dec 10-16, 2012.