Titijaya partners China firm for RM2.1b project at Embassy Row, KL

KUALA LUMPUR: Titijaya Land Bhd will partner China’s CREC Development (M) Sdn Bhd (CRECD) for a mixed development project at Embassy Row, Jalan Ampang, Kuala Lumpur, with a gross development value (GDV) of RM2.1 billion.
To facilitate the collaboration, Titijaya’s wholly-owned subsidiary Titijaya Resources Sdn Bhd and CRECD entered into a share sale agreement yesterday to acquire the entire stake in Ampang Avenue Development Sdn Bhd from Chan Peng Kooh and Rafidah Menan for RM80 million.
Ampang Avenue’s subsidiary Nipah Valley Sdn Bhd is the registered proprietor of the 6.06ha Jalan Ampang leasehold land, which is valued at RM403 million currently.
CRECD will be appointed the main contractor of the development project, known as 3rdNvenue. It will also monitor, manage and supervise the day-to-day construction operational related matters.
China Railway Group is no stranger to Malaysia and is currently teaming up with Iskandar Waterfront Holdings for the RM200 billion Bandar Malaysia project. It has also committed to investing US$2 billion (RM8.1 billion) to set up its regional centre there.
Titijaya and CRECD will own a 70% and 30% stake respectively in the 3rdNvenue project. Titijaya’s portion of the total purchase consideration, amounting to RM56 million, will be satisfied via internally generated funds and/or bank borrowings.
The project, which consists of small office home office, serviced apartments and retail units, is expected to contribute 20-30% to the group’s earnings from FY18, according to Titijaya managing director Tan Sri Lim Soon Peng.
It will be developed over the next seven years in four phases. The first block of service suites will be launched in the first half of next year.
The indicative selling price for the first phase is about RM900 per sq ft with built-ups from 450 to 650 sq ft. The gross development cost for the entire project is RM1.2 billion.
When asked of the low acquisition price of RM80 million against the land value of RM403 million, Lim explained that it is only for the development rights.
“We only buy over the development rights at RM80 million. Of course, there are other payments, which will be paid through the project period,” he added.
Lim said the joint venture with CRECD will allow both parties to leverage on the synergistic outcomes for mutual benefit.
“Given the strategic location of the land, coupled with connectivity to key roads and highways, the proposed development will cater to the anticipated demand for commercial and residential properties within the prime area,” he said.
He also believes the proposed acquisition will complement the group’s existing business in property development in seeking new strategic growth and future expansion plans within the property development in Greater Kuala Lumpur as well as to ensure earnings sustainability moving forward. The acquisition is expected to be completed by the first quarter of 2017.
Titijaya shares rose 4 sen or 2.22% to close at RM1.84 yesterday, with some 2.6 million shares changing hands.
On a separate note, China Railway Dongfang Group managing director Cai Zemin said the group is looking for more investments abroad, including Malaysia.
“The presence of Chinese firms in Malaysia is still small, we want to increase our investments in Malaysia,” he said.