KHSB eyes RM1b project in PJ’s Section 14

SHAH ALAM: State-controlled Kumpulan Hartanah Selangor Bhd (KHSB) is planning a high-end mixed development at a prime location in Section 14, Petaling Jaya with a potential gross development value (GDV) of nearly RM1 billion.

Its chairman Datuk Abdul Karim Munisar said the company was finalising the purchase of a 9.3-acre plot there for the proposed development.

“The GDV is close to RM1 billion, but this depends on the (development) proposal.

“After signing the (sales and purchase) agreement, we will do a soft opening by year-end,” he told reporters after Kumpulan Perangsang Selangor Bhd’s (KPSB) AGM and EGM here yesterday.

KPSB owns a 56.57% stake in KHSB. KPSB in turn is a 60.7%-unit of state-owned Kumpulan Darul Ehsan Bhd.

Abdul Karim declined to identify the vendor or reveal the value of the tract which is said to be the last piece of prime land in PJ.

It is understood that the land is located near the Asia Jaya LRT station and opposite the Armada Hotel in Section 14. Officials did not confirm this.

However, Abdul Karim said given the prime location, it would “not be a problem” for the property developer to secure bank borrowings to fund the project.

As at Dec 31, 2009, KHSB’s gearing ratio stood at 0.44 time, with short and long term debts totalling RM216 million and shareholders equity of RM484.03 million.

Abdul Karim said the Section 14 project would yield better earnings for the group which posted a net profit of RM27.11 million in the fiscal year ended Dec 31, 2009 on the back of RM125 million revenue.

He said for the current fiscal year, income would be derived from its Pulau Indah project and possibly the mining extraction activity in Dengkil.

Abdul Karim said KHSB had tendered out jobs for mineral extraction in the area spanning 100-acres of idle land to unlock value of the tract.

However, he said property development remained its core business, adding it planned to launch its RM30 million mixed residential project in Salak Tinggi by early next year.

On a separate matter, he said there had not been any update on the Selangor water industry-consolidation exercise which is led by federal government’s vehicle Pengurusan Aset Air Bhd (PAAB).

Abdul Karim reiterated that it was important to resolve the water-restructuring deadlock and consolidation should be done in a holistic manner and should be managed by a company owned or controlled by the state government.

“No one could support the fact that further delay is acceptable as it will post greater risk to all parties involved and it is the consumers that will be affected,” he added.

In April, Gamuda Bhd, via its associate Syarikat Pengeluar Air Selangor Sdn Bhd (Splash), had put in a second bid to break the deadlock in the consolidation exercise which involves leasing the water assets from PAAB.

The announcement came almost five weeks after Selangor rejected Splash’s first offer as it fell “short” of the intention of the Water Services Industry Act 2006 because Splash intended not to lease but to own the water assets.

Splash had on March 24 offered to take over the state’s water assets for RM10.75 billion which was 24% or RM2.6 billion higher than the estimated PAAB offer of RM8.18 billion.

This article appeared in The Edge Financial Daily, June 18, 2010.

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