By Radin Ghazali
Dominance in the property market where sentiments can be weak or unpredictable is paramount in ensuring survival and relevance to stakeholders, investors and genuine homebuyers. Hence, merging or acquisition of companies and lands have been a pliable business solution in broadening influence and power, as well as domination of primary land and projects.
The biggest mover and shaker of recent mergers of H1 of 2017 is the proposed acquisition of I&P by SP Setia along with Permodalan Nasional Bhd (PNB), putting into stones that the company will have one of the biggest landbank in Malaysia.
The staggering total of the acquisition ranges in between RM3.5b and RM3.75b, which in return will see 4,263 acres of landbank available to SP Setia’s disposal.
What also leads to SP Setia grabbing the such lucrative title is the purchase of 342 acres of prime land from Seriemas Developments at RM447.58m, which solidifies the company’s stature as the country’s key property player.
Analysts are upbeat about the merger and its various acquisitions. HLIB Research has highlighted that the proposed acquisition would double SP Setia’s current landbanks to 9,500 acres and this will in return making them the biggest and largest property player in the country.
“We believe investor’s sentiment towards SP Setia would improve as the proposed acquisition of I&P is expected to be (RNAV) accretive, synergistic in the long run and potentially become the largest pure property player in the market. Consistent dividend yield of 5% is another positive point,” said HLIB in an interview with The Star.
Among SP Setia’s projects that will be taking off soon are a series of mid-ranged landed properties around Klang Valley within the range of RM600,000 to RM800,000 and double-storey homes in Johor. All developments are valued at gross development value (GDV) of RM5.41b.
Other existing and new SP Setia’s projects also include Eco Templar Selayang, ViiA Residences at KL Eco City, Setia Sky Seputeh, Setia Eco Hill, along with its Australian projects – the A$478 million (RM1.54 billion) mixed development project at Exhibition Street within Melbourne’s central business district as well as the A$38 million (RM122.29 million) residential project in Prahran, Melbourne.
Merging or acquisition with smaller companies is also seen as another feasible way of intensifying influence, power and ownership, depending what are at stake or what can be gained. Mah Sing along with LTS Properties (M) Sdn Bhd, TS Law Corp Sdn Bhd and Law Wai Cheong acquired Cosmowealth Housing Development Sdn Bhd (CHD) for RM55mil recently, which is equivalent to 78% stake of the company.
This shows a great sign of intent by Mah Sing in terms of progression as a company in expansion and market dominance especially when it comes to padding on more affordable developments within Klang Valley.
This action will allow Mah Sing to own 2,328 acres of prime landbanks along with GDV and unbilled sales of RM30.9b.
The acquisition of Cosmowealth also leads to the company undertaking M Centura, an affordable residential project in Jalan Sentul Pasar that is estimated to be gross development value (GDV) of RM1.3 billion. The apartment consists of units ranging from 650 sq ft. to 1,000 sq ft. with indicative price starts at RM326,000 per unit.
Besides that, Mah Sing has also acquired 8.5 acres of land in Sentul and 3.56 acres of land located adjacent with Titiwangsa Lake Gardens. These lands are expected to yield probable GDV of RM1.95b.
The company plans to build affordable condominium on its Titiwangsa land with a minimum of RM485,000 for units ranging from 850 sq ft. in FY 2018. Mah Sing is upbeat and remains focus in building affordable developments around Klang Valley given the positive upsurge of demands from the urban and middle-class populace, supported by promising economic progress.
The company is also adamant to increase their hold on landbanks in Klang Valley from 65% to 75% over the coming two to three years.
Dominance within the affordable to mid-ranged developments in prime areas of Klang Valley is clearly Mah Sing’s main agenda. Hence, such strategic acquisition has led to accumulation in landbank of valuable areas is paving way for them to build these affordable projects in catering to the untapped middle-class folks with purchasing power who are opting the ‘wait and see’ policy now.
Among other Mah Sing’s current and notable developments are Residensi Seri Wahyu RUMAWIP project in Lakeville Residence, Laman Ayu in Rawang, Lakeville Residence, D’sara Sentral within central Klang Valley and Meridin East in Pasir Gudang.
Edging closer to an acquisition is Wing Tai Holdings along with Wing Tai Investment & Development acquiring its Malaysia counterpart, Wing Tai Malaysia by offering RM290.7m. Hence, full ownership will give power to Wing Tai Holdings to carry out restructuring exercise in its Malaysia counterpart as well as full ownership on its array of businesses ranging from properties to apparels retails in the form of Uniqlo and Topshop.
Wing Tai Malaysia’s property portfolios include high-end developments in the form of Le Nouvel KLCC, Plaza DNP, Nobleton Crest and a shopping complex in Johor, Meanwhile, its future property plans consist of developments in Mahkota Promenade and Jesselton Hills in Penang as well as a 24-shop retail unit located closely to AEON Mall in Johor Bahru.
Given the proposed mergers and acquisitions that are taking place in H1 2017, developers are clearly keen to lock in primary land in Klang Valley rather than just expanding their landbanks elsewhere. Again, location is key in embarking on billion ringgits worth of developments, which would probably be marketed as affordable projects in targeting the majority pool of homebuyers from M40.