Sunway eyes Iskandar expansion

Company aims to more than double its landbank in Medini Iskandar

PETALING JAYA: Sunway Bhd plans to more than double the size of its landbank in Medini Iskandar, raising it to around 2,000 acres from the already-announced acquisition of around 700 acres, industry sources said.

“The project will be a significant one and Sunway hopes to differentiate itself from other developments in Iskandar with a unique offering, targeting very much the Singapore market,” said one source.

“It will be more innovative than what Sunway has in Malaysia,” the source added.

Another source said there was also a plan for a new road linking the Sunway project in Iskandar to the Second Link in order to give Singaporeans better access to the development.

Sunway hopes to capitalise on its established brand name and its “Singapore connection” through the presence of the Government of Singapore Investment Corp (GIC) as one of its major shareholders since 1999.

An analyst said he was expecting the Iskandar project to be significant for Sunway's earnings going forward and was awaiting more details on their plans.

Last December, Sunway said it had entered into a joint venture with Khazanah Nasional Bhd to buy 276.4ha of land in Medini that would have an estimated gross development value (GDV) of RM12bil.

With the acqusition of the additional land, sources said the GDV of the project would be higher, at more than RM15bil.

The land is in Medini's Zone F, which is strategically located in the heart of Iskandar Malaysia.

It is about 10 minutes from Singapore via the Second Link Expressway and 25 minutes from the Senai International Airport.

The joint venture company, Semerah Cahaya Sdn Bhd, is in the midst of drawing up the masterplan for the project.

Sunway currently holds 38% in the joint venture but will increase it to 60% within 54 months from the date of the lease purchase agreement.

This integrated development project will be named Sunway Iskandar, and the first launch is expected in early 2013.

Sunway is required to pump in an initial equity investment of RM136.8mil, and will subscribe for shares in Semerah Cahaya for RM198mil in four tranches.

The first payment of RM49.5mil a year will start from the 18th month from the date of the lease purchase agreement.

Sunway already has a presence in Iskandar through its construction division which is undertaking three major construction jobs in Iskandar Malaysia, including Legoland, Pinewood Iskandar Malaysia Studios and the Central Utilities Facility at the Bio-XCell biotechnology park.

A research house has highlighted that Sunway is paying less than Eastern & Oriental Bhd (E&O) for the land in Iskandar, but said that did not mean the planned RM12bil development would carry a lower risk given the rising competition among developers in the area.

Also, the report said Sunway might have to tap shareholders for funding at some point in the future to pay for project.

“We believe Sunway has managed to pull a coup, as the location of this land is better than its other competitors at much lower cost,'' Hwang-DBS Vickers research said in a report.

This is Sunway's largest acquisition after the merger of the businesses of two public-listed companies, Sunway Holdings and Sunway City in August which resulted in the merged entity becoming one of the top five property-construction companies listed on Bursa Malaysia.