KUALA LUMPUR (Oct 14): Damansara Realty Bhd (DRealty) is forming a joint venture with Country Garden Holdings Co Ltd, one of China’s largest property developers, to develop a 53.08-acre freehold land parcel in Johor Bahru into an integrated township to be known as Central Park.
In a filing with Bursa Malaysia today, DRealty proposed to form a joint venture (JV) called DAC Properties Sdn Bhd, whereby its indirect wholly-owned subsidiary Damansara Realty (Johor) Sdn Bhd (DRJ) will own a 30% stake, while the remaining 70% will be held by Country Garden Management Sdn Bhd (CGM), which is wholly-owned by Hong Kong-listed Country Garden.
DAC Properties will develop Central Park over a six to eight-year period, starting from the fourth quarter of 2016. The township, located in the Tebrau district and five kilometres to the northwest of Johor Bahru city centre, is targeted at young homebuyers in Malaysia.
Besides residential units, DRealty said the project will also have commercial shop spaces and various amenities. The first phase will be launched in the first quarter of 2017.
Central Park covers 53 acres of land, and will cater to a dynamic and vibrant community in Johor Bahru.
“Malaysia has always been a key market for us. We see a lot of potential, particularly in Johor Bahru, where other major developments are coming up. The city is poised to become an international metropolis, and we are proud to be a part of its transformation,” said Country Garden’s Regional President (Malaysia) Fu Jinling, in a statement today.
The Central Park site is part of a larger 63-acre land parcel (TDA Land) that DRealty will acquire for RM141.53 million, following a development rights agreement it signed in 2002 and 2003, with Johor Corporation (JCorp).
DAC Properties will pay RM130.3 million to JCorp for the 53-acre site. DRealty will pay JCorp RM11.23 million for the remaining 10 acres of TDA Land, which comprises completed shop offices and undeveloped land.
Note that JCorp also owns 14.2% stake in DRealty.
“Country Garden has an impressive track record of property development in China, Malaysia and Australia. This partnership represents a significant opportunity for DRealty to execute a largescale project, alongside one of China’s most reputable developers. We expect Central Park to generate a significant and steady stream of income to the Group, over the next few years,” said DRealty’s executive vice-chairman Datuk Daing A Malek Daing A Rahaman.
“Apart from being an iconic landmark when fully developed, Central Park will also create massive job opportunities for locals in Johor, giving the economy a boost,” he added.
Meanwhile, DRealty’s group chief executive officer Brian Iskandar Zulkarim said the JV will allow the group to drive synergies from other divisions, in order to achieve balanced and sustainable growth.
“We are very proud and excited to be [a] part of this joint venture with Country Garden, as it will enable us to showcase our abilities on a much bigger scale,” he said.
On a pro forma basis, DRealty said upon completion of the proposals based on the audited accounts as at Dec 31, 2015, the group would record an increase in net asset per share to 51 sen, from 37 sen.
DRealty also mentioned that the JV formation is subject to various terms and conditions, including the approval of DRB’s shareholders and the relevant authorities in Malaysia.
Country Garden’s flagship project in Malaysia is Forest City, a mega-development in Johor and its largest outside China, with a total gross development value of more than RM400 billion.
Apart from Central Park and Forest City, Country Garden has two other real estate projects in Malaysia, namely Danga Bay in Johor and Country Garden Diamond in Kuala Lumpur.
DRealty’s shares were suspended from trading today. The counter closed one sen or 1.39% lower to 71 sen on Thursday (Oct 13), giving it a market capitalisation of RM219.65 million.