Construction work on multibillion-dollar Bandar Malaysia development will soon commence as it has already secured initial funding of RM10 billion (S$3.2 billion), reported the Straits Times.
The groundworks for the project is set to start after Malaysian and Chinese authorities have addressed two or three remaining issues in the coming weeks, said Tan Sri Dato’ Lim Kang Hoo, Chairman and CEO of Iskandar Waterfront Holdings (IWH), which was appointed in 2015 as Bandar Malaysia’s master developer together with China Railway Engineering Corp (CREC).
“Meeting the conditions, such as approvals from Bank Negara for overseas loans and the degazetting of the land, has been very time-consuming. But we are almost there,” he told reporters last week before he went to Beijing to meet Chinese lenders, which will provide most of the initial financing.
The lion’s share of the financing will come from a group of financial institutions led by the Industrial and Commercial Bank of China, as well as domestic banks like RHB, CIMB and Maybank.
Situated on 196.7ha land currently occupied by a military airstrip, army barracks and other military facilities in the outskirts of Kuala Lumpur, the major project will consist of a mixed-use township featuring a financial hub, residential blocks, indoor theme parks and underground shopping malls. It is also the chosen site for the terminus for the upcoming High Speed Rail (HSR) that will link the Malaysian capital with Singapore.
Meanwhile, Beijing-based CREC plans to construct a RM8.3 billion regional headquarters in Bandar Malaysia that is expected to contribute to a gross development value of RM160 billion in a span of 25 years.
This large-scale development comes amid growing concerns that Kuala Lumpur could suffer from a supply glut of commercial spaces in the near future. In fact, construction work has started on a new financial district next to Bandar Malaysia known as the 28ha Tun Razak Exchange (TRX).
Nonetheless, market watcher Ho Chin Soon believes that the expected oversupply situation will unlikely discourage companies from China.
“For big Chinese enterprises operating overseas, market conditions are irrelevant when you can get your hands on freehold property. They see land as a very valuable commodity and believe that conditions will change.”
Previously, IWH and CREC acquired a 60 percent stake in the joint venture (JV) building Bandar Malaysia for RM7.41 billion, with the remaining 40 percent interest held by the Malaysian government.
Both firms also formed a JV, with 60 percent owned by Iskandar Waterfront Holdings, while the rest is held by the China-based company. This joint venture has already made a 10 percent down payment after it won in the international tender for Bandar Malaysia in December 2015, with the rest to be paid over the next few months after several bureaucratic issues are tackled.
Under Bandar Malaysia’s Phase 1, the JV will take possession of a third of the project’s total land area, primarily consisting of the airfield at the military airbase. Lim also shared that the remaining land will be transferred over the next two years once the military facilities are relocated.
“Once we take ownership of the airstrip land, it is all systems go and I can sign land sales with various parties. At this moment, we have 58 parties lined up,” he added.
Image sourced from FBloomberg
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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