Sunway wins bid for land in Penang

KUALA LUMPUR: Sunway Bhd has acquired four parcels of land totalling 24.46 acres (9.82ha) in Penang island with its winning bid of RM267.4 million or RM251 per sq ft.

In a filing with Bursa Malaysia yesterday, the group said its wholly-owned subsidiary Sunway City (Penang) Sdn Bhd had won the titles together with the existing buildings, plant nurseries, and other structures erected thereon from Luxor Precision Sdn Bhd.

The minimum reserve price for the land was fixed at RM200 per sq ft. Sunway said that it arrived at its bid price of RM251 per sq ft after taking into consideration the land’s development potential and the group’s required internal rate of return.

“No valuation on the land was carried out, given Sunway’s knowledge of the market value of the surrounding properties and the potential development value of similar land within Penang. Sunway is not able to disclose the net book value of the land as it is not privy to this information,” it said.

The acquisition would be funded through bank borrowings or internally-generated funds.

The group added that the acquisition would provide an estimated gross development value of RM1.5 billion, consisting of commercial shops, SoHo and high-rise residential units.

“The land is strategically located within the vibrant centre of Penang island and is surrounded by tourism spots as well as matured residential townships,” Sunway said, adding that the land is located near Kek Lok Si Temple and the lower train station to Penang Hill Resort.

According to Sunway, residential and commercial properties in Penang, especially on Penang island, have good potential due to the scarcity of land and continuous strong demand.

“Penang, being one of the highest economic growth states, fits into our strategy in relation to our Malaysian landbank expansion profile. With the improving state’s tourism and economic sentiment, coupled with the strategic location of the land, we are confident that the project will get a good response when it is launched.”

The acquisition comes a week after Penang announced a slew of cooling measures for its property market, which has seen prices in its urban areas increase by 20% to 30% since the mid-2000s.

The measures included a 10-year moratorium on houses priced up to RM72,500 for first-time homeowners, a 5-year moratorium  on houses priced up to RM400,000 on the island (and RM250,000 on the mainland), 3% levy on the transaction price for non-residents and a 2% levy on property sold within three years of purchase.

The measures are above those introduced by the 2014 Budget, which included a heavier real property gains tax  and raising the minimum price of property that can be purchased by foreigners to RM1 million.

This article first appeared in The Edge Financial Daily, on December 18, 2013.


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