Nope, nothing to do with 1MDB. You have been reading thousands of that on Facebook. This is about Magna Prima Bhd which has announced to the market that it is selling a piece of land in Jalan Ampang; Lai Meng School. In 2010, it paid RM148.2 million for it. The plan then was to develop it. The latest plan is to sell the land, take the money and do something else. The price that it is asking for? RM400 million or RM3,500 psf. It’s group managing director, Datuk Wira Rahadian Mahmud Mohammad Khalil said that land prices within the Golden Triangle have appreciated. Thus, their current asking price is within market expectations.
The piece of land’s main attraction is really because it’s a stone’s throw away from KLCC Twin Towers. Nope, it is not a stone’s throw away if my daughter is the one throwing it. 🙂 An earlier report said that pension fund Kumpulan Wang Persaraan (KWAP) was bidding for it at RM3,300 per sq ft or around RM376.6 million. This bid is not yet finalised and talk is ongoing. Wira also revealed that they have also received enquiries from international investors too and the land would be sold to the highest bidder. Actually, as soon as it is an international investor, the potential that they would win is higher. I remember many years ago, one Penang based developer told me that when the KL based developers bidded for lands in Penang, their bids were all crazy. There was no way that any Penang developers could beat them. I think the same situation happens today when the foreign ones are coming in.
The profit from the purchase of this piece of land is pretty crazy. The ROI beats any development at all, even if the development has a GDV of even RM1.5 billion. This is based on assumption of the typical net profit margin at 15%. Yes, this has yet to include the amount of work and the number of years that Magna Prima would have to build it. So yes, a clever move indeed. Sell, get the huge profit and go for the next development. If I am the managing director I think the choice is clear. Let’s see who wins and at what price.
written on 10 July 2015
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