In the latest Malaysia property news, Sunway Bhd’s joint venture with Austral Meridian Property is set to acquire Jalan Peel road.
Jalan Peel Road, KL, Malaysia | Photo Courtesy: The Star MY
Known to be a food destination, 3.41ha of Jalan Peel road will be owned by Sunway Bhd after its joint venture agreement to obtain Austral Meridian Property Bhd.
It is also reported that with an estimated growth development value of approximately RM2 billion, Sunway will own 50% +1 share stake in the joint venture while Low Pieng Kat holds 40%, and CRSC Property Sdn Bhd with 10%.
Sunway can choose to increase its shares to 70% + 1 share within a period of eight years. Due to the proposed land purchase, the overall GVP will increase to 5% or RM32.5 billion, which can support the property development for about 15 years. The net present value of the project is estimated to be RM83 million.
Analysing the numbers based on the equity stake of 50+1% for RM500,000, a shareholder advance of RM98 million due to the effective stake of 70%, as well as the additional funding of RM183 million because of the 20% additional stake, the net present value of the land is RM228 million for a 70% stake. As stated by a note from Hong Leong Investment Research, these numbers imply a RM886 cost per square feet.
If you’re looking for an overseas property investment, you may have to wait a little longer. This is because Malaysia properties such as serviced apartments, retail shops and office tower that are set to rise in the newly purchased land will be developed in a period of 10 years.
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