KUALA LUMPUR (Oct 29): IOI Corp Bhd will begin construction of its first independent property development in Xiamen, China, next year, which is estimated to have a gross development value (GDV) of RM2 billion.
According to the group's executive chairman Tan Sri Datuk Lee Shin Cheng, the group recently acquired land in Xiamen for 1.2 billion yuan (RM586.7 million), which will be converted into a mix-development over the next ten years.
"The first phase will be a four million square feet development of a shopping mall, hotel, offices and residential units and is expected to be completed in two years time," Lee said at a press conference after the group's annual general meeting Monday.
"We will hold the mall, hotel and offices for long term investment purposes while the residences and offices will be sold off. We have been studying the market in China in the past three years and we think this will be a very viable source of revenue for the group," he added.
In IOI's 2010 annual report, it was reported that the company had also acquired a 7.7-acre high-rise mixed development land in Xiamen, costing the company around RMB314 million.
"This is our joint venture with a Taiwanese company and construction has already started," Lee said.
The joint-venture development will be a 900,000 square feet commercial and residential development and will also be completed in the next two years.
Meanwhile, commenting on IOI's outlook next year, Lee said that he is expecting recent low crude palm oil (CPO) prices to affect the group's bottomline for its plantation operations.
"While CPO may affect our bottomline, IOI is fortunate to have other sectors such as our property development business to help us. I think the property market is still fine in Malaysia," he said.
Lee highlighted that the recent government announcements on palm oil export duties may suffice for now, but the plantation industry still has a major problem with a shortage of workers.
"The industry is losing billions due to this shortage of workers. I really urge that the government does something about it as soon as possible. This is not just for the good of the company but for the industry as a whole," Lee said.
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