‘CANADA LAND SALE TO FUND EXPANSION’
Part of proceeds will be used on new property projects in Malaysia, Australia and S. Africa, says UEM Sunrise
SHAREN KAUR
KUALA LUMPUR bt@mediaprima.com.my
UEM Sunrise Bhd will use part of the C$113 million (RM382.54 million) proceeds it received from selling a plot of land in Canada on new property projects in Malaysia, Australia and South Africa.
Managing director and chief executive officer Anwar Syahrin Abdul Ajib said it would park the balance with its stakeholdAlderbridge er in Canada for use in future expansion plans and also to earn on foreign exchange.
“We have sold everything in Canada and now we have funds to expand.
“In fact, we just got the money. We will bring some back to further expand UEM Sunrise and retain the rest in Canada,” Anwar told NST Business.
UEM Sunrise’s subsidiary, UEM Sunrise (Canada) Ltd, sold the 1.98ha plot in New Westminster, Richmondm to 1107782 BC Ltd, a unit of South Street Development Group. According to Bursa Malaysia filing last week, the proposed disposal was completed on September 29.
Tabung Haji raised its stake in UEM Sunrise to 6.88 per cent following the announcement by acquiring 2.44 million shares over three days.
Analysts, who spoke on condition of anonymity, said UEM Sunrise made a right decision to sell the land, where it would have to spend the next 10 years developing just to recognise gains.
“It is quite clear that UEM Sunrise’s strategy is to focus on developments in Malaysia and Australia, where it is actively looking for land to acquire.
“I also understand that UEM Sunrise plans to start developing the land in Durban (South Africa) next year so it needs funding for all these,” said the analyst.
Analysts had estimated the outright gain on the sale of the land at about RM150 million.
UEM Sunrise acquired the land in April 2014 for C$70.23 million.
The company had originally intended to develop the parcels into a mixed development comprising residences, offices, retail shops and amenities with a gross development value of C$516.9 million.
Anwar said UEM Sunrise had to diversify.
“We have to make sure that we are robust so that when it is soft here we will have somewhere else that can fill the gap. Right now we are focusing on Australia and we have land in Durban. Going international gives us a lot of learning that we can bring back, too.
“Malaysia is a different market altogether. The market is a lot wider and we are catering for more mid-income.
“The Australian market is a bit more exclusive where we are targeting high net worth individuals who want investments or people who are uprooted from the suburb and want to downsize into a small posh area,” he said.
Meanwhile, Anwar said he was “cautiously optimistic” on the property market in Malaysia.
“Our biggest concern is always about the outlook and about the economy. When the economy is good the property business is good.
“All the potential political instability, that is beyond our control. We are talking about North Korea, the United States, China and Brexit. All these things will affect us because we are still an export-oriented economy.
“Anything that happens externally will affect us internally. But the government’s pump-priming is also useful, such as the infrastructure projects. So we are cautiously optimistic about what the domestic market will bring in the coming months,” said Anwar.