This article first appeared in The Edge Financial Daily on May 18, 2017 - May 24, 2017

KUALA LUMPUR: Mah Sing Group Bhd yesterday announced its first land buy in two years, a 1.42ha freehold land fronting the Titiwangsa Lake Garden here, for which it will be paying up to RM60 million, to develop a condominium project with an estimated gross development value (GDV) of RM650 million.

The buy also heralds more acquisitions to come from the group in the near term.

Mah Sing group managing director Tan Sri Leong Hoy Kum said in a statement: “We target to increase our land bank in the Klang Valley to 75% of our overall remaining GDV within the next two to three years, from the current 62%.”

Citing statistics from the National Property Information Centre, Leong said the value of property transactions in the Klang Valley itself was RM30.81 billion in 2016, accounting for nearly half of the RM65.6 billion achieved in the whole of Malaysia that year.

“Demand in the Klang Valley has remained resilient due to population and economic growth. By stepping up land acquisitions in the Klang Valley with focus on affordable pricing, we will be in a better position to meet market demand,” he said.

The plot the group is buying now, located in Jalan Beserah, is 3.7km away from the Kuala Lumpur City Centre and the Petronas Twin Towers. Zoned for residential development, the land is some 250m walking distance from the upcoming Hospital KL mass rapid transit (MRT) station that is part of MRT’s 52.2km proposed Sungai Buloh-Serdang-Putrajaya line.

“The land is slated for affordable transit-oriented, lakeside condominiums, with indicative built-up from 850 sq ft, indicatively priced from RM485,000,” said Mah Sing, adding the plot is on flat terrain and ready for immediate development.

The acquisition, which is expected to be completed by the fourth quarter of this year, will increase Mah Sing’s prime land banks to 2,328 acres (942ha), with total remaining GDV and unbilled sales of RM30.9 billion.

Mah Sing is buying the plot from Saw Shiuo Shyong @ Sonny Saw. The price tag is based on the assumption that a density of 350 units per acre or more is obtained for the project’s development order. “The total purchase consideration will be adjusted accordingly in the event the density procured is lower than 350 units per acre,” said Mah Sing.

In tandem with the group’s focus on the Klang Valley, Mah Sing said it remains committed to delivering quality homes with affordable pricing as a result of the widening gap between supply and demand for this segment.

“With the current large supply gap, well-designed products in good locations, by developers with good track record will do well. This will be especially true for products in the affordable range for mass market like what we have planned now,” said Leong.

Given the land’s strategic location, superior connectivity and accessibility and strong demand for affordable homes by the middle income group, the land has the potential for a quick turnaround development model, of which the group has had successes in the past, Mah Sing said. This, it added, should augur well for its future growth and earnings prospects.

According to Mah Sing’s Bursa Malaysia filing, the proposed development aims to cater to first-home buyers, working professionals, young families and home upgraders seeking to live in the vicinity of the Kuala Lumpur City Centre and close proximity to public transportation.

It is planning to finance the land buy and development cost for the project via the company’s internal funds and perpetual bond sale proceeds. The company is also looking into bank loans.