Good going for Sunway’s Cheras land purchase
KUALA LUMPUR: Sunway Bhd’s wholly-owned subsidiary Sunway Kinrara Sdn Bhd signed a sale and purchase agreement with CTM Development Sdn Bhd to acquire a 1.35-hectare freehold land in Cheras here for RM42 million.
In a statement, Sunway said the prime freehold land in the matured neighbourhood of Taman Mutiara, Kuala Lumpur was purchased for a development of townhouse and condominium, with consideration of new norm lifestyles.
The company said the land was acquired with an approved development order secured, which will accelerate the development’s speed to market.
The development is expected to be ready for launch by the first half of 2022 with the expected completion in 2026, contributing positively to Sunway’s earnings from 2022.
Commenting on the acquisition, Sunway Property’s managing director Sarena Cheah said the proposed development will cater to the pent-up demand for larger living spaces with more activities done at home as part of the new normal including working from home.
“We plan to develop an exclusive residential development comprising just 255 units of townhouses and condominiums with slightly larger built-up area to accommodate new normal lifestyles.
“We expect prices to start from approximately RM650 per square foot which would be competitive given the low density, freehold tenure and strategic location in the heart of Cheras,” she added.
The acquisition was Sunway Property’s first landbank acquisition for the year and reflects its confidence that the property market will recover in 2021 after a slower 2020 as a result of the pandemic.
AmInvestment Bank Bhd (AmInvestment Bank) said the acquisition price of RM42 million or RM288 per square feet (psf) implies a cost to gross development value (GDV) ratio of 18.6 per cent, and is within the range of 10 to 20[per cent for mixed residential developments in Klang Valley.
“While there are not many identical transactions within the area recently, the asking price for residential land surrounding the neighbourhood with land area larger than 10,000 square feet ranges from RM250 psf to RM600 psf.
“We are positive on the acquisition as it will help sustain Sunway’s property earnings over the medium term.
“Moreover, we believe the project will be a strong seller given its strategic location. Nonetheless, we made no changes to our FY20–22 earnings forecasts as the project is still in the planning stage.”
AmInvestment Bank further believed that the outlook for Sunway remains positive premised on its unbilled sales of RM3.1 billion; a robust outstanding order book of RM5.3 billion; and strong growth potential in its healthcare business.