Tan Chong to develop Segambut land after 2013

KUALA LUMPUR: Tan Chong Motor Holdings Bhd’s plan to shift its Segambut assembly plant operations to Shah Alam in 2013 will give rise to its first property development venture.  

The company is said to have already applied for a change in the land use from the current industrial use to one for mixed development, but no firm plans have been announced as yet on Tan Chong’s actual aspirations.

At present Tan Chong’s mainstay lies in the assembly and distribution of Nissan and Renault vehicles. Other than the assembly plants in Segambut and Shah Alam, Tan Chong also has an assembly facility in Serendah, bordering Rawang.

However, it was the acquisition of Sime Darby Bhd’s Shah Alam Ford plant late last year that freed up the company’s land in Segambut and nudged Tan Chong a step closer to its new business venture.  

The redevelopment of the Segambut land is said to have a potential gross domestic development value (GDV) that runs into billions of ringgit, while the land is estimated to have a value of RM480 million.

MIDF Research’s analyst Michael Seow Chor Huat was positive of Tan Chong’s planned venture into property development. He said the lack of prime land in the vicinity of the KLCC area has resulted in more developers venturing into the outskirts of the city centre, leaving Tan Chong with a very attractive parcel of property.

“Lots of developers are eyeing the land as it is strategically located in Kuala Lumpur,” he told The Edge Financial Daily.

He said a joint venture (JV) between Tan Chong and an established property developer with a proven track record would be beneficial. Seow’s pick is for Tan Chong to work with Mah Sing Bhd as a potential JV partner, due to the latter’s expertise and quick turnaround plan of buying and developing matured land as well as delivering added value.

“Although it [Segambut plant] is located in an industrial area, there are schools nearby and it’s close to the town area. On the 47-acre [18.8ha] piece of land, the company should develop condominiums with a retail centre to inject population into the area,” Seow said.

Tan Chong is understood to be in talks with several parties to unlock the value of the tract of land.

Not all, however, view Tan Chong’s plunge into property development positively. An analyst who spoke on condition of anonymity said that he would prefer Tan Chong sticking to its guns, focusing on the automotive sector, as uncertainties are abundant in Tan Chong’s development plans for the Segambut land.

“The area is jam-packed and is located on the dodgy side of Segambut,” he said.

He added that although the company may be shifting its Segambut assembly line to the Shah Alam plant, it would probably not take place until 2015 when the place is actually cleared out to commence any development plans.

This article appeared in The Edge Financial Daily, May 24, 2010.
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