MAMMOTH Empire Holdings (MEH) Sdn Bhd has scrapped plans to sell its 64-acre tract earmarked for the development of Empire City Damansara 2 (ECD2) in Petaling Jaya in a single block. Instead, the master developer is keen to carve the land worth RM800 million into smaller lots to be sold and/or potentially developed in joint ventures (JVs) with other builders.
“Our strategy has changed,” group executive director Datuk Danny Cheah tells The Edge when asked about progress on the land.
In October last year, MEH had called for bids for its prized land located diagonally across the 23-acre ECD1 along Lebuhraya Damansara-Puchong heading towards Bandar Sri Damansara. At the time, it was not clear why MEH wanted to dispose of the land and what it planned to do with the proceeds from the sale. But market observers had speculated that it was to help MEH free up cash.
The 64 acres, comprising three adjoining and contiguous commercial plots, were purchased by MEH nine years ago for about RM187.53 million.
Cheah explains, “We have a two-pronged strategy [for the tract]. We will either sell smaller parcels or enter into joint ventures.”
Citing the development of KL Sentral (undertaken by Malaysian Resources Corp Bhd) as an example, Cheah adds that MEH may even decide to continue to keep and develop part of the land. This will enable the company to retain control of the land, commit less money to the entire development and yet enjoy the earnings.
The land is registered under Foster Estate Sdn Bhd, which is owned by MEH founder and group managing director Datuk Sean Ng Yee Teck (80%) and Cheah (20%).
According to Cheah, MEH has already formed a JV (in November last year) with Key Wealth Property Sdn Bhd and China’s Guanxi Construction Engineering Group Co Ltd to develop 3.6 acres. “We are now in talks with several reputable developers in Malaysia on [other] joint ventures and land sales,” he adds.
Including the 3.6 acres, ongoing negotiations with both listed and unlisted companies could see MEH carve out a total of 15 acres for a start. “Our role as the master developer is to provide the infrastructure, such as sewerage, highway ramp access and water supply,” says Cheah.
The JV partner or land purchaser will have the right to name its individual project.
MEH has already obtained planning approval from the local authority for the 64 acres, which stretch from PJ Trade Centre to Flora Damansara. Its master plan for the proposed mixed-use development includes a world-class theme park, concert auditoriums, cultural centres, retail and office suites. An old quarry pond was filled up four years ago. It is learnt that the project’s gross development value (GDV) is at least RM7 billion based on a net saleable area of 12 million sq ft.
So, who is Key Wealth Property? The company was unknown until its recent venture into ECD2. A search on the Companies Commission of Malaysia website reveals that it was set up in April 2015. The nature of its business is recorded as real estate activities with own or leased property, investment holding and general trading. Its shareholders are Loh Chang Yuen, who owns all but 20 shares of the company, and Ng Jo Jin and Chew Yoong Sim, who each own 10 shares.
When contacted by The Edge, Loh said he could not comment until Key Wealth Property had obtained the development order for the project on the 3.6 acres.
Guanxi Construction Engineering was founded 60 years ago and is based in Nanning, China. Its business is very diversified and includes building design, housing construction, investment and real estate development. It is also involved in earthworks contracting and construction machinery manufacturing and leasing activities.
It is understood that Key Wealth Property’s portion of the project has been named Habour Valley. Phase 1 of the project — The Essence @ Damansara Perdana Central Business District — will occupy the entire 3.6 acres, and comprise three towers that are 55 storeys, 49 storeys and 42 storeys high. The Essence will offer 1.1 million sq ft of net floor area (NFA) and has an estimated GDV of RM1.2 billion. It is targeted for completion in the first quarter of 2021.
It is unclear what the components of the subsequent phase(s) are as no other deal has been signed with MEH.
A visit to the site shows that while Key Wealth Property’s Habour Valley is located close to the low to medium-cost Flora Damansara apartments, the company’s sales gallery is located nearer to Menara Bata in PJ Trade Centre.
Cheah declined to comment when asked for details of MEH’s commercial terms with Key Wealth Property, citing confidentiality.
On the progress of ECDI, Cheah says, “We have a few more blocks under construction. By June this year, there will be 65 tenants in the mall, including a supermarket, a fashion brand and a pharmacy.”