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Dalian Wanda teams up with Tan Sri Desmond Lim's Malton, EPF to bid for Bandar Malaysia

Bandar Malaysia masterplan proposed by IWH CREC Sdn Bhd. Bandar Malaysia masterplan proposed by IWH CREC Sdn Bhd.

Headquartered in Beijing, Dalian Wanda Group, or Wanda Group, a multi-national conglomerate founded by China’s richest man, Wang Jianlin, is speculated to be bidding for the Bandar Malaysia project together with local property developer Malton Bhd, which is headed by Tan Sri Desmond Lim.

Sources say that there is a possibilty of the Employees Provident Fund (EPF) being part of the team.

Shares linked to Lim – namely Malton Bhd and WCT Holdings Bhd – saw active trading. Malton was up 18 sen to close at RM1.55 while WCT increased by 12 sen to finish the day at RM2.31.

“Lim and the Malton group have in the past been associated with the Bandar Malaysia project. The foreign partner at that time was said to be Qatar Investment Authority (QIA), the sovereign wealth fund of that country,” said a source.

There were said to be 40 bidders during the Bandar Malaysia's tender process in 2014, among them Tan Sri Desmond Lim partnering a QIA.

However, QIA no longer put its money into iconic property development projects.

Set up in 1988, the Dalian Wanda Group focuses on several major industries namely commercial property, luxury hotels, culture, Internet, finance, tourism, sports and departmental stores.

Under the leadership of Wang, 63, who has been chairman of the group since 1989, Dalian Wanda has grown to become the world’s largest private property developer and owner, and the world’s largest cinema chain operator.

The group wholly owns Wanda Cinemas in China and Hoyts Group in Australia, as well as a majority stake in US-based AMC Theatres.

In its website, Dalian Wanda says its vision is to become a world-class multi-national corporation with assets of US$200 billion (RM867 billion), market capitalisation of US$200 billion, revenue of US$100 billion and net profits of US$10 billion by 2020.

Last year, the group’s assets stood at 796.2 billion yuan (RM500.7 billion), with an operating revenue of 255 billion yuan.

Dalian Wanda was ranked 385th on the Fortune Global 500 List in 2015.

The group’s property division Dalian Wanda Commercial Properties made its debut on the Hong Kong Stock Exchange in December 2014. The exercise raised US$3.7 billion.

Wang Jianlin has a net worth of US$31.4 billion making him the richest man in China. He is ahead of Jack Ma of US$29.5 billion according to Forbes' latest ranking.

At present, its unit – Wanda Commercial Properties – is the world’s largest commercial property enterprise, holding a combined 32.33 million sq m of property space. It has opened 187 Wanda Plaza projects in Beijing, Shanghai, Chengdu and Kunming with plans to open 50 more in China this year.

In its cultural division, the company’s Wanda Cultural Industry Group is considered to be China’s largest cultural enterprise, with an annual revenue of 64.1 billion yuan in 2016.

Through its subsidiaries, the company operates cinemas, film industry parks, performing arts, film technology entertainment, theme parks and karaoke venues. It also offers film production, publications, media, art collecting and cultural tourism services.

In the Internet segment, the group’s Wanda Internet Technology Group is China’s only Industry + Internet large open platform. It has Ffan Technology, 99Bill, Credit Rating Company, Online Credit Company, Big Data, cloud computing, artificial intelligence and scene application.

In the financial segment, Wanda Financial Group has investment, asset management, insurance and other companies. It aims to achieve a fully-licensed financial operation.

 

Valuation issue

One key issue to note is that the value of Bandar Malaysia should have significantly increased since IWH CREC Sdn Bhd (ICSB) inked the deal with the then 1MDB Real Estate Sdn Bhd, now TRX City Sdn Bhd.

This was part of 1Malaysia Development Bhd (1MDB)'s efforts to pare down its debts through asset monetisation. 

The deal was signed in December 2015 for ICSB to pay RM7.41 billion for its 60% stake. Thus, this deal valued the 486 acres (or 21.17 million sq ft) Bandar Malaysia land at RM12.35 billion, or RM583.37 psf.

The land was also said to have an estimated gross development value (GDV) of RM200 billion at that time.

1MDB first acquired the plot of land in Sungai Besi, which was an old airport site, for RM400 million in 2013. Based on reports, the book value of Bandar Malaysia stood at RM4.2 billion as at 31 March 2014.

TRX City is the master developer of the Bandar Malaysia project that is under the ambit of the Ministry of Finance (MoF), which has taken over from 1MDB following a restructuring. The transfer of TRX City and Bandar Malaysia from 1MDB to the MoF came into effect recently.

ICSB is a consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC). In March this year, Iskandar Waterfront City Bhd (IWC) had proposed to acquire IWH in a deal that was closely looked at by investors because of the potential exposure to Bandar Malaysia.

 

Higher price now?

Market observers say the value of the land is much higher today.

This was all the more apparent after Alibaba founder and executive chairman Jack Ma visited Malaysia last month to jointly launch the Digital Free Trade Zone (DFTZ) with Prime Minister Datuk Seri Najib Tun Razak.

The DFTZ, which has two key aspects – Alibaba’s regional logistics (e-fulfillment) hub in the KL International Airport (KLIA Aeropolis project) and the Kuala Lumpur Internet City (KLIC) – that is set to become the New Silicon Valley of South-East Asia located in Bandar Malaysia.

The DFTZ is expected to accelerate the growth of Malaysian small and medium enterprises, increase overall exports by US$25 billion (RM108 billion) and create 60,000 jobs by 2025.

Intrinsically and sentiment-wise, Ma’s presence and plans for the DFTZ have boosted the value of Bandar Malaysia’s land.

More importantly, Bandar Malaysia is no longer viewed with a jaundiced perspective.

On a conservative basis, if one were to value the 486 acres of the land in Bandar Malaysia at RM1,000 per sq ft, this would translate into RM21 billion in terms of land value.

Some 20 years ago, the central business district (CBD) around the Kuala Lumpur City Centre (KLCC) area was only valued at RM100 per sq ft. Today, high-end apartments are going for more than RM1,500 per sq ft.

That same effect in KLCC could be replicated in Bandar Malaysia, considering the very ambitious developments and infrastructure that have been put in place.

“We believe if all 486 acres were to be sold on an outright basis, it would cost about RM1,000 per sq ft.

“If the land were to be sold in smaller plots or on a net developable basis, it could fetch between RM2,000 and RM3,000 per sq ft. If valued at RM1,000 per sq ft, the land will be worth RM21.17 billion,” says PPC International Sdn Bhd managing director Datuk Siders Sittampalam.

“Valuing the land at RM1,000 per sq ft is as cheap as you can get, especially for CBD land,” says one observer.

He adds that the plot ratio in Bandar Malaysia is 8 times (which could go higher), whereas in TRX, where the lowest transacted land pricing was going for RM2,700, the plot ratio is 4 times.

Bandar Malaysia is a mixed-use transit-orientated development (TOD) strategically located in the heart of Greater Kuala Lumpur.

It is planned as Kuala Lumpur’s gateway to the high-speed rail (HSR) to Singapore and to become a central transportation hub in the city via the MRT Line 2 and Line 3, KTM, ERL (Airport Transit), BRT and future access to major highway networks such as the upcoming 32km Duta-Ulu Kelang Expressway Phase 3 (DUKE 3), whereby its 2km portion is located inside Bandar Malaysia.

In essence, the value of Bandar Malaysia is different now, considering that it has a clear masterplan, tax incentives formalised and transport elements firmed up.

It is likely that a new tender process will be carried out by the Government for the project.

 

News Source: The Star BizWeek, 6 May 2017

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