KUALA LUMPUR (March 3): Construction outfit Nestcon Bhd (KL:NESTCON) has proposed to diversify into property development through a joint venture (JV) serviced apartment project in Petaling Jaya Selatan, Selangor, to expand its revenue streams.

In a filing on Monday, Nestcon said its subsidiary Nestcon PJS Sdn Bhd had entered in a joint development agreement with Kumpulan Wilayah Sejati Sdn Bhd (KWSSB) for the mixed-use development project — including commercial lots and approximately 480 serviced apartments units — with an estimated gross development value (GDV) of RM211.7 million and gross development cost of RM174.3 million.

Under the agreement, KWSSB will provide the land and receive RM10 million as an entitlement, while Nestcon PJS will oversee sales, marketing, design, construction, and financing. 

The project is expected to commence in late 2025, pending regulatory approvals, and will be completed within five years.

“The project will provide an alternative source of income for the group in addition to its existing businesses in construction works and renewable energy business,” Nestcon said.

Therefore, the company is seeking its shareholders’ approval for the proposed business diversification, as the property development is expected to contribute at least 25% to its net profits and net assets in the future.

Meanwhile, Nestcon has also entered into a conditional sale and purchase agreement with Nestcity Cemerlang Sdn Bhd, to acquire three units of office space within its newly developed Nest 2 Residences in Puchong, Selangor for RM15.1 million. 

“This will allow the company to relocate from its existing corporate office to set up its new corporate office, and own a permanent business premises for growing its business, operations and human resource capacity,” it said.

The proposed acquisition is deemed a related-party transaction as Nestcon’s group managing director and major shareholder, Datuk Lim Jee Gin, is also a major shareholder of Nestcity Cemerlang.

Nestcon said that both joint development and acquisition will be funded through a combination of internally generated funds and bank borrowings.

As at Dec 31, 2024, Nestcon’s cash and bank balances stood at RM82.74 million, while bank borrowings amounted to about RM203.33 million, its latest financial statement showed.

Shares of Nestcon settled up half a sen or 1.25% to 40.5 sen on Monday, valuing the group at RM289.46 million.