Kwasa Land Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund (EPF), has completed its acquisition of 2,330 acres (943ha) of land in Sungai Buloh that was previously owned by the Rubber Research Institute (RRI), setting the stage for Malaysia’s largest property development project.
Kwasa Land said in a statement yesterday that it was paying the federal government RM2.28 billion for the land that will be developed into a township. The company is responsible for obtaining all the necessary approvals for the master layout plan from the Selangor government and for the construction of the main infrastructure on the land.
The huge development, which will commence in 2013, is expected to be a much sought after address as it will be connected to the city centre via mass rapid transit (MRT) and also have a green park spanning 65ha.
According to Kwasa Land, the project will be divided into parcels, developed in phases and sold to developers according to plot ratios, development components and in conformance with the urban design guidelines by Kwasa Land.
“We will soon be calling for the pre-qualification of developers to participate in the creation and building of an iconic township that will be the toast of the town in the coming years. We are looking for experienced property developers with a strong track record and have successfully completed developments with a high gross development value in the past two to three years,” said Kwasa Land chairman Tan Sri Samsudin Osman in the statement yesterday.
A key aspect in the evaluation is that the design concept plan has to be evaluated first, before the tender price, he added. The property developers that were contacted said they were preparing for a beauty contest of design and concept fitting for Kwasa Land’s overall master plan for the development of the RRI land, which is being finalised for submission to the state planning committee.
“It may not be the developer with the deepest pockets that will be the front runner, although their balance sheet would be an advantage. The design and concept is key, before the financial plan,” a senior executive with a property developer said.
The executive added that the parcels of land were likely to be divided into plots from as small as 30 acres to as large as 300 acres. Most analyst have picked the EPF’s 42.2%-owned subsidiary Malaysian Resources Corp Bhd (MRCB) to be the front runner to be Kwasa Land’s partner in developing one of the larger tracts. Apart from being owned by the EPF, MRCB has the track record of developing KL Sentral, a major transport hub in the heart of the city.
“It is widely known that MRCB’s potential exposure to the RRI land could be huge as it could bring infrastructure and construction opportunities for the group,” CIMB Research analyst Sharizan Rosely tells The Edge Financial Daily.
Sharizan is neutral on Kwasa Land’s announcement and also has a “neutral” recommendation on MRCB’s stock, on which he has a target price of RM1.73. MRCB added six sen yesterday to close at RM1.67.
The provident fund also owns 16.71% of IJM Corp Bhd, 16.44% of WCT Bhd, 12% of Sime Darby Bhd and 11.71% of IOI Corp Bhd -- all of which have property development units with a track record to undertake massive developments. Other developers that were previously linked to the RRI development included Dijaya Corp Bhd and Mah Sing Group Bhd.
Property executives say Kwasa Land’s strategy to maximise yields and ensure the EPF has recurring income will be two-pronged -- to call for tenders for the outright sale of land parcels and make requests for proposals (RFPs) for joint developments.
It is learnt that the EPF will be buying the RRI land on an agriculture deed and the Selangor government stands to benefit from the fees for land conversion applications. It is understood that the parcels will be a mix of freehold and leasehold land, and that the federal government will be entitled to profit sharing should the land fetch higher-than-expected prices. An EPF spokesman declined to comment when contacted yesterday, saying details will be announced “soon”.
Kwasa Land’s statement did not specifically say how the price tag was arrived at. There were also no details on whether the 2,330ha of land is gross or net land area that can be developed into commercial and residential real estate. According to previous reports, the RRI would retain 535 acres for its own us, while an MRT depot would take up 72ha.
Nonetheless, according to Kwasa Land, the development planning for the township is “in an advanced stage”, with development works expected to commence next year. “Among the key features in the design and layout plan is a development hub comprising modern residential, commercial, recreational and educational facilities,” it said.
The redevelopment of the RRI land in Sungai Buloh is part of the Greater Kuala Lumpur Strategic Development initiative, a project under the 10th Malaysia Plan. Part of the land, which borders the upmarket Tropicana development, falls under the jurisdiction of the Petaling Jaya City Council, while another portion comes under the purview of the Shah Alam City Council.