Prime land to improve Sunway’s sales outlook for FY18

KUALA LUMPUR: Sunway Bhd’s (Sunway) acquisition of a prime land in Jalan Belfield has been viewed positively by analysts as the land is expected to generate better sales for the group for the financial year 2018 (FY18).

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) said, “We view the land acquisition positively as it improves the sales outlook for FY18.

“The land will be acquired with approvals obtained for a mixeduse development with plot ratio of 8.81 times, indicating projects on the land is readily launched.”

It noted that the proposed development on the land would be primarily service apartments with some lifestyle retail units.

“The estimated gross development value (GDV) for the proposed development is at approximately RM1.1 billion, translating into land cost to GDV ratio of 15 per cent which is within the industry average,” the research team said.

Meanwhile, it pointed out that acquisition price of RM836 per square feet (psf) is higher than price of RM485psf Tradewinds Corp paid for Jalan Belfield land back in 2015. It said, this could be due to the strategic location of the land that Sunway is acquiring.

“The land is located less than 500 metres from Maharajalela monorail station hence we expect the good connectivity to underpin good take-up rate of the project,” it added.

In a separate note, the research arm of AmInvestment Bank Bhd (AmInvestment Bank) also viewed the acquisition positively as it believed the land paid for the acquisition is fair, considering the potential development value of similar land within the vicinity.

“The land will increase Sunway’s land bank of prime land in Kuala Lumpur,” it added.

“Consistent with the purchase price, we understand that the development is targeted towards the higher end of the market, with an estimated selling price of RM850psf to RM900psf. We expect the residential units to have built-ups between 600 and 1,200 sq ft, consistent with Sunway’s past developments, with selling prices for the units from RM550,000.