UEM Land, Iskandar Investment in RM850m Nusajaya project

KUALA LUMPUR: UEM Land Holdings Bhd (ULHB) says its bread and butter property development projects in Nusajaya are on the threshold of greater prospects in 2012, as the 24,000-acre enclave reaches critical mass, which will further spur the area's growth.

ULHB managing director and CEO Datuk Wan Abdullah Wan Ibrahim said the development of Nusajaya, which began in 1996, had progressed well to date with infrastructure such as highways and the establishment of crucial industries such as healthcare, education, and manufacturing to support job creation.

"That leads to my theory of the tipping point in Nusajaya, and a new demand structure will evolve here," Wan Abdullah told reporters on Thursday at a shareholders' agreement signing ceremony between ULHB and Iskandar Investment Bhd to undertake a mixed project in Nusajaya.

The tipping point of Nusajaya will lead to "better profit", according to Wan Abdullah, as ULHB reaps the fruit of its labour in the enclave, considered the key driver of the Iskandar Malaysia growth region in Johor.

The 24,000-acre Nusajaya is one of the largest property development projects in Southeast Asia.

Nusajaya comprises seven main components — Kota Iskandar, Johor's new administrative centre, the Southern Industrial and Logistics Clusters, Puteri Harbour waterfront development, EduCity, Afiat Healthpark, international destination resort and Nusajaya Residences. Nusajaya is seen as a new economic growth centre by virtue of its strategic location in Johor and proximity to Singapore.

Worth noting is the completion of the RM1.1 billlion Coastal Highway which links the eastern and western portions of the southern corridor of Johor.

In the healthcare segment, Wan Abdullah said Khazanah Nasional Bhd — the ultimate parent company of the UEM group — is planning to build a 350-bed hospital in Nusajaya.

Other projects within Nusajaya include the Newcastle University medical faculty campus, the first of eight tertiary faculties to open in Educity, and the Legoland Malaysia theme park.

Wan Abdullah said there were currently some 20,000 houses occupied by a population of 100,000 people in Nusajaya. The area is expected to accommodate about 100,000 homes with a population of some 500,000 in the long term.

He said Nusajaya was targeted at regional buyers from China, Indonesia and South Korea.

"We intend to be a regional player in the long term," Wan Abdullah said, commenting on UEM Land's potential foreign ventures. He did not elaborate.

Iskandar Malaysia, initially known as the South Johor Economic Region, covers 2,217 sq km encompassing the logistics triangle of Senai Airport to the north, Port of Tanjung Pelepas to the southwest and Johor Port in Pasir Gudang to the southeast.

The development plan is the first of five nationwide economic growth corridors announced by the goverment.

The region, which is about three times the size of neigbouring Singapore, is expected to create more than 800,000 jobs between 2005 and 2025. Iskandar's population is expected to more than double to around three million by then.

Khazanah Nasional owns 60% of Iskandar Investment, while the Employees Provident Fund and Kumpulan Prasarana Rakyat Johor Bhd have 20% each.

ULHB's financials have improved. Net profit rose more than fivefold to RM17.61 million in 1Q11 ended March compared with RM3.14 million a year earlier helped by the group's projects in Nusajaya and the consolidation of results from Sunrise Bhd.

Revenue more than quadrupled to RM187.69 million from RM39.7 million a year earlier.

ULHB, a 77.1% subsidiary of UEM Group Bhd, acquired property developer Sunrise for RM1.39 billion or RM2.80 per share last year.

The acquisition is seen as a win-win deal considering that ULHB will be able participate in Sunrise's upmarket property projects in the Klang Valley while Sunrise will be able to expand its presence in Nusajaya

On Thursday, June 9, ULHB and Iskandar Investment signed a shareholders' agreement to jointly develop a RM850 million mixed project comprising retail and residential properties on a 14ha site within the Medini North enclave in Nusajaya. ULHB is acquiring the leasehold site from Iskandar Investment for RM100 million.

Both companies will set up a joint venture entity Nusajaya Lifestyle Sdn Bhd where ULHB and Iskandar Investment will own 55% and 45% respectively. Nusajaya Lifestyle will have an initial paidup capital of RM10 million.

The four-phase project known as the Lifestyle Retail Mall and Residences@Medini North will have a gross floor area of two million square feet upon completion by 2020. Its components include street-style retail outlets apart from malls and serviced apartments.

Sunrise will play a crucial role in providing development management services to the project.

"The project will help us boost our recurrent income base," Wan Abdullah said.

In a separate statement to the stock exchange, ULHB said the project represented the company's foray into retail properties in Nusajaya. The firm intends to keep a portion of its retail units to generate recurrent income to safeguard against the effects of a cyclical property sector.

According to the statement, ULHB and Iskandar Investment had agreed that the proposed development cost, which includes the land acquisition price, will not exceed RM665 million.