The RM312mil land deal with the country’s most reputable university, University Malaya

After long speculations, finally University of Malaya (UM) announced that the university through its investment arm, UM Holdings Sdn Bhd, has agreed on a joint venture with a consortium, PPC-Mint and Glomac, to develop a parcel of land measuring 11.13ha. The land is located within the UM’s main campus and adjacent to the thriving and flourishing area of Damansara/Bangsar.

In a statement released by the university last week, it revealed that the joint venture will generate the university with a minimum income of RM312 million or the land value of RM200million plus a share of the developer’s profit, whichever is higher. The UM deputy vice-chancellor (academic and international relations) Prof Datuk Dr Mohd Amin Jalaludin also highlighted the land would be developed to benefit staff and students.

The development of University Malaya’s main campus is not something out of the blue. In fact, many developers have had their eyes on this strategic land. However, the development of the university land seems to be quite sensitive and controversial. Some developers had denied that they were keen on it, and tried to distant themselves from being involved. Goucoland, a subsidiary of Hong Leong Group is one of them. So when the university announced the joint venture proposal, it actually shocked several parties.

A few interesting points here on this deal:

a. There is no explanation or clarification from UM’s statement about the mode of payment on how the university will receive their profit.

b. No justification on how the most reputable educational institutional in the country make its decision on the development proposal. Simple question arise, why Glomac? Why not Sunrise, IOI, SP Setia, YTL, IGB, IJM, etc? The decision process is not transparent.

c. According to the statement, eight developers were invited to submit development proposals but only five did. The question arising here is who were the eight shortlisted?

d. The students from the university are facing problems of accommodation shortage. Is it advisable to dispose the university’s land for development or build more hostels for the graduate?

The Location Plan of the UM Land

Note:
The members of UM Holdings are Prof Amin, Prof Emeritus Tan Sri Dr Augustine Ong, Anuar Mohamad, Azhar Haron and Prof Dr Muhamad Zakaria.

The Oval – A good deal for GuocoLand?

GuocoLand (formerly known as Hong Leong Properties Bhd) will launch its high-end condominium, The Oval, in the Kuala Lumpur City Centre (KLCC) enclave by mid of the year. The Oval is located on a 2.14-acre land along Jalan Binjai. It comprises two 41-storey blocks, East Tower and West Tower, with 70 units in each block. The estimated saleable floor area or net floor area is approximately 586,356sq.ft.

The Oval is an interesting project whereby it was formerly owned by a private developer, Titan Debut Sdn Bhd. The project was thence sold to tycoon Tan Sri Quek Leng Chan, for RM475.58 million or RM811psf when it was almost 30% completed. According to the Chief Executive of Guocoland, Paul Poh, approximately 30% of East Tower had been sold after a sales preview in Hong Kong last month. Most of the units are Sky Villa, offering a built-up area of 3,750 sq ft. Each block also offers eight Mansionary Villa, measuring 7,500 sq ft each. The price ranges from RM1,200 to RM1,900 per sq ft.

With this new selling price range, the estimated Gross Development Value generated by this project is approximately RM800million. The resale price is about double of what Tan Sri Quek has invested! Is this, then, a great deal by Guocoland? It is still too early to comment. The move by Tan Sri Quek reflected the confidence in the city’s luxury residential sub-sector. However, investors should not forget that the current rental market within the KLCC is experiencing a tremendous slowdown. Furthermore, there are a few more high-end condominiums such as Troika, Park 7, etc. which will crowd the market when they are completed.