Shanghai state government-owned Greenland Group has signed a RM2.4 billion deal with Iskandar Waterfront City Bhd (IWC) to develop the Tebrau Bay Waterfront City.
Greenland will acquire a 128-acre land from IWC, a value that underscores highest land transactions in the Eastern Corridor of Iskandar region to-date which features a snow world theme park, an opera house, a hospital specialising in Chinese traditional medicine and a school.
This is Greenland’s second deal in Iskandar Malaysia, the Special Economic Zone SEZ corridor in the southern Johor state. The first was in April last year, when Greenland invested MYR600 million for the joint-development Johor land of 13.6 acres in Danga Bay with Iskandar Waterfront Holdings Sdn Bhd, as part of the RM2.2 billion mix integrated Iskandar project.
The RM2.4bil deal works out to about RM430 per sq ft, which property consultants said set the benchmark for property prices in that area as there had not been any transaction of that size in that area previously. Most previous transactions with China developers like Country Garden, R&F Properties, Zuoda, Greenland were at Danga Bay, which is at the Causeway and near the Second Link.
The agreement is to acquire property and undertake the development and construction of a mixed integrated Iskandar project comprising commercial and residential components in Plentong, Johor Baru, via a special-purpose vehicle, Greenland Tebrau Sdn Bhd (GTSB). SCD which is subsidiary of IWC would hold a 20% equity interest in GTSB, while Greenland Malaysia Real Estate Operator Sdn Bhd (GL) would hold the remaining 80% in the joint venture JV.
GL is a wholly owned subsidiary of Greenland Hong Kong Investment Group Ltd, which, in turn, is a 60%-owned subsidiary of the Greenland group.
Together, Greenland and Johor state government-linked company IWCB will develop an RM3bil new waterfront city on the land in Tebrau Bay.
Iskandar Region Development Authority IRDA is the authority overseeing the Iskandar project development of an area measuring 200,000ha in South Johor.There are several companies undertaking the development, with UEM Sunrise Bhd being a key player.
Apart from a vast Johor land waiting to be developed, more land is being reclaimed on the Straits of Johor near the Second Link, adding more supply of land for development.This is particularly from the approval given to a JV between Country Garden Holdings Ltd and Kumpulan Prasarana Rakyat Johor (KPRJ) to reclaim and develop 1,368ha of land on the Straits of Johor to develop Forest City project that will be carried out on four man-made islands over a 30-year period.
KGV International Property Consultant executive director Samuel Tan said while more details were needed to determine if the deal was fair, it sent a strong signal to the investment market that Iskandar Malaysia was still a destination for property development in the long run.
“Development by foreign players is not confined to the usual Danga Bay, Medini Iskandar Malaysia and Nusajaya. This is good, as it will result in a more balanced geographical growth within Iskandar Malaysia,” he added.
Already, some 13 local and foreign companies are actively involved in developing Iskandar Waterfront City in Danga Bay with a cumulative gross development value of RM125bil on the western corridor, which stretches from Johor Baru to Nusajaya.
“I now want to develop the Eastern Corridor of Johor Baru, stretching from Tebrau Bay to Pasir Gudang,” said Johor Mentri Besar Datuk Seri Mohamed Khaled Nordin in a statement.
Khaled envisions the Eastern Corridor to be South-East Asia’s new lifestyle destination akin to Australia’s Gold Coast.
“Recognising Greenland’s expertise and track record in real estate products in terms of scale, product type, and quality and brand awareness globally including US, Australia, Canada, UK, Germany, France, South Korea, Thailand and Malaysia, both parties have decided (to enter into a JV) in order to leverage on each other’s expertise for the mutual benefit of each stakeholder,” he added.
“I welcome their long-term strategic interest to jointly transform Johor Baru into a modern international waterfront city and destination,” Khaled said.
IWCB is a listed entity which is 47%-owned by Johor-based Iskandar Waterfront Holdings Sdn Bhd (IWH). The Johor Government, via state investment arm KPRJ, has 40%.
The JV would enable IWH to leverage on its Chinese partner’s strength in mixed commercial development, including high-end hotels and residential towers, to reshape its waterfront land in Danga Bay and Tebrau Bay.
“We’ve undertaken urban development in over 80 cities throughout China. We’re keen to share the experience with IWH as our long-term JV partner and help transform Iskandar Malaysia into an international destination,” said Greenland group executive vice-chairman Xu Jing.