KUALA LUMPUR: Sunway Bhd has acquired five land parcels totalling 17 acres (6.9ha) in Kelana Jaya, Selangor, which is slated for a mixed development with an estimated gross development value (GDV) of RM1.8 billion.

In a statement yesterday, Sunway (fundamental: 1.5; valuation: 1.8) said Sunway Dimension Stones Sdn Bhd, a wholly-owned subsidiary of Sunway Holdings Sdn Bhd which in turn is a wholly-owned unit of Sunway, has signed two sale and purchase agreements with Kelana Resorts Sdn Bhd and its unit Viva Variasi Sdn Bhd to purchase the land parcels for a combined RM286 million or RM386.31 per sq ft.

“A total of 17 acres of land will allow us the flexibility and space to develop a contemporary mixed development with an unobstructed view of the golf courses and a concept of serene living amidst lush greenery and a beautiful lake,” said Sunway managing director of property development division for Malaysia and Singapore, Sarena Cheah.

“It will be a highly sought-after development given its prime location and wide accessibility. It is also flanked by mature and affluent neighbourhoods of Petaling Jaya, Sunway Resort City, Subang Jaya and Shah Alam,” she said.

In a filing with Bursa Malaysia yesterday, Sunway said there was no valuation done on the land, but the purchase price was arrived at pursuant to an open tender.

“Given Sunway’s knowledge of the market value of the surrounding properties and the potential development value of similar land within the vicinity of the land, that is, Kelana Jaya, no valuation was carried out on the land.

“Sunway’s bid price of RM386.31 per sq ft was arrived at after taking into consideration the development potential of the land and Sunway’s required internal rate of return,” it said. Sunway is proposing to build a mixed development comprising serviced apartments and retail shops, with the first launch expected to happen in the financial year ending December 2016 (FY16). This will be developed over five years.

The land is accessible via major highways such as the Leburaya Damansara-Puchong, the Federal Highway, New Klang Valley Expressway and Subang Airport Highway. It is close to the Setia Jaya KTM and Sunway Setia Jaya Bus Rapid Transit-Sunway Line and sits in the vicinity of Kelab Golf Negara Subang.

To date, Sunway has unbilled property sales of RM2.5 billion. This, combined with its remaining land bank of 3,380 acres with a potential GDV of RM50 billion, will keep the group busy in the next 15 years.

Sunway (fundamental: 1.5; valuation: 1.8) said the group’s latest acquisitions would not have any immediate material effect on the earning per share, net assets per share and gearing of Sunway for the FY15. However, it is expected to contribute positively to the future earnings of the Sunway group.

Sunway shares closed down 2.86% at RM3.40 yesterday, bringing a market capitalisation of RM5.96 billion.

This article first appeared in The Edge Financial Daily, on May 12, 2015.