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Mah Sing buys golf land in Shah Alam for RM327.4m

KUALA LUMPUR: Mah Sing Group Bhd is buying 85.43 acres of land in Sultan Salahuddin Abdul Aziz Shah Golf Course, Shah Alam, for RM327.4 million cash, or RM88 per sq ft, from Great Doctrine (M) Sdn Bhd.

The leasehold land, expiring in May 2102, currently has nine of the 27 holes in the golf course and is expected to yield a gross development value (GDV) of about RM2.5 billion.

In a statement, Mah Sing said the land was near Stadium Melawati, better known as Stadium Shah Alam.

“Together with this new acquisition, the group has remaining GDV of about RM31.26 billion, which will sustain the group for the next seven to eight years,” the statement said.

It also announced that Mah Sing’s wholly-owned subsidiary Enchanting View Development Sdn Bhd had entered into a sale and purchase agreement (SPA) with Great Doctrine for the land acquisition.

Mah Sing group managing director Tan Sri Leong Hoy Kum said 10% was paid upon signing of the SPA while the remaining 90% will be paid in one bullet payment either six months from the fulfilment of Conditions Precedent (CP) or 30 months from the SPA date.

He highlighted that the group plans to create a hybrid of high-end Lagenda and medium high-end residence series of properties, adding that the development is targeted to be launched in 2016.

The entire eco-themed development comprises a mix of landed and high-rise residences, including super link, linked semidee, bungalows and serviced apartments.

“We have previously met success with our Kemuning Residence in Shah Alam and strongly belief that Shah Alam still has plenty of room to grow, particularly if buyers are offered boutique-concept and high-quality homes near their workplaces,” said Leong.

Besides Kemuning Residence, the new land is in close proximity to other Mah Sing developments such as its industrial developments of iParc, iParc2 and iParc3 and its commercial development, Star Avenue.

Leong reasoned that this acquisition would enable the group to leverage all these fully sold developments and expand its presence in Shah Alam.

AmResearch’s Mak Hoy Ken is positive on the acquisition, saying that the group has already carved out a strong presence in Shah Alam with past projects.

Leong said the tract marks Mah Sing’s first landbank purchase for 2014, which will bump up its total remaining landbank to about 2,818 acres with a GDV of about RM31 billion and healthy unbilled sales of RM4.4 billion as at Dec 31, 2013.

He points out that Mah Sing’s purchase price of RM327 million is considered to be fairly attractive when stacked against its future development appeal.

“While its immediate focus is on the mass market segment, this latest deal paves the way for Mah Sing to lock in a prime piece of property ahead of its targeted launch, which is only slated for 2016,” said Leong.

He noted that the project also enjoys good connectivity via its strategic location within 3km to 6km from the Guthrie Corridor, Federal Highway and ELITE highway.

Meanwhile, CIMB Research said it views the acquisition positively as the land is in a prime location, and that the acquisition cost makes up a fair 13% of the GDV.

“We make no changes to our earnings per share as the project will only be launched in two years’ time,” said the local research house.

 

 

This article first appeared in The Edge Financial Daily, on March 14, 2014.

 

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