Ecoworld’s bid to acquire land garners favourable views
KUCHING: Property developer Eco World Development Group Bhd’s (Ecoworld) bid to acquire 240.314 acres of freehold land in Mukim Pulai, Johor Bahru has garnered positive views from industry analysts.
To recap, Ecoworld’s wholly-owned subsidiary, Eco Botanic 3 Sdn Bhd (EB3SB) had entered into a conditional sale and purchase agreement with River Retreat Sdn Bhd to acquire the 13 parcels of land amounting to 240.3 acres for a total consideration of RM450.1 million or RM43 per square feet (sqft).
In tandem, EB3SB also entered into a conditional development agreement with state-owned investment holding company, Permodalan Darul Ta’zim Sdn Bhd (PDT), where PDT will nominate EB2SB for the land acquisition and facilitate in applying and obtaining the necessary development approvals for the lands development.
The anticipated land acquisition is expected to be finalised by 2024 and tentative plans for its development include the development of a Mixed Residential (both high rise and landed) and Commercial Township with an estimated gross development value (GDV) of RM3.88 billion.
In a corporate update report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) viewed the development in a favourable light as it believed it would allow Ecoworld to strengthen its presence in Johor.
As the land is strategically located next to Ecoworld’s thriving and successful Eco Botanic and Eco Botanic 2 townships, analysts at Kenanga Investment Bank Bhd (Kenanga Research) reckoned that reception of the upcoming development Eco Botanic 3 on the new land might garner a strong reception within the Pulai Region.
Kenanga Research highlighted that predecessor
Eco Botanic townships (1 & 2) have enjoyed a robust collective take-up rate of 86 per cent in financial year 2023 (FY23).
That said, it noted that the acquisition price of RM43 per sqft was at a notable premium compared to the RM35 per sqft acquisition price of the land banks on which previous Eco Botanic townships sit on.
However, it opined that the premium is fair due to the land appreciation from the two adjacent mature Eco Botanic estates and improving outlook of Johor’s property landscape.
The land acquisition is expected to be funded from Ecoworld’s own internal funds over a five-year instalment period which MIDF Research expected to marginally increase its net greating from 0.25-times to 0.26-times.
“Balance sheet of Eco World remains healthy which will continue to give Eco World financial muscle for future landbanking exercise,” said the research arm.