S P Setia Bhd, the flagship property arm of Permodalan Nasional Bhd (PNB), has plenty of developable land. It would be wise for it to sell some of the land to unlock value.
The proceeds could be used for debt repayment and financing development projects.
Unfortunately, S P Setia Bhd has had to terminate the sale of a 960-acre tract in Tebrau, Johor, to Scientex Bhd for RM518.1 million cash.
The deal was mutually terminated last week as it did not receive a waiver from complying with the bumiputera equity condition from the Economic Planning Unit (EPU).
The termination of the deal highlights the restriction that property companies like S P Setia face. It would be harder to find buyers as the target group is smaller. Furthermore, does the restriction affect the bargaining power of the sellers?
Scientex targets to build 50,000 affordable homes by 2028. It delivered 25,786 homes, of which more than 70% are priced below RM300,000, a year ago.
It had intended to build more affordable homes on the land in Tebrau. As with any property development, there would have been an allocation for bumiputera buyers.
Now the deal has been terminated. That effectively means there will be fewer affordable homes available in the state. Those awaiting such homes in Johor will just have to wait longer.
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