Sunway strengthens foothold in S’pore with RM1.5 billion land tender win
KUCHING: Sunway Bhd’s (Sunway) joint venture (JV) with long-term partner Hoi Hup Pte Ltd (Hoi Hup) has successfully won a S$423.4 million or RM1.5 billion land tender from the Housing and Development Board (HDB) in Singapore.
The land tender is a for a 5 acre land parcel in Plantation Close, Tengah, and it is Sunway’s second winning bid in the area. Recall that Sunway and Hoi Hup’s JV of which Sunway has a 35 per cent stake in had previously acquired a 4 acre parcel of Tengah land back in Sep 2023 for S349.5 million for the development of an executive condominium (EC) development.
The latest acquisition translates to a land price of S$1.94 million per square feet (psf), a slight discount to its previous acquisition land price of SGD1.97m psf.
According to Singapore HDB, the newest won land Tengah land parcel sits in a well-established area and has been earmarked for the development of another EC development with an estimated 560 units. The development has commenced on Feb 14 and is slated to be completed within a 60-month time frame or sooner.
Overall, analysts were positive on the new development as they opined that it would allow Sunway to strengthen its foothold in Singapore.
Besides, Sunway’s previous Tengah land win, they also have two ongoing projects in Singapore, Terra Hills in Pasir Panjang and The Continuum in District 15.
While no details has been released yet on the upcoming development’s gross development value (GDV), the research arm of Kenanga Investment Bank Bhd (Kenanga Research) estimates that the potential GDV of the development could sit around S$850 million to S$1.22 billion.
“To evaluate its prospects, we gathered that nearby EC projects were launched at an estimated price of S$2.17 million per unit. Using its indicative 560 units, this could translate to a prospective GDV of S$1.22 billion.
“On the flipside, assuming a land cost-to-GDV ratio of circa 50 per cent which is close to the group’s previous land tender win, Parc Central Residences in Tampines, we derive a potential GDV of S$850 million,” the research arm explained.
And with Sunway’s 35 per cent stake in its JV, this would translate to an effective GDV potential of RM1.04 billion to RM1.5 billion and assuming a net profit of 10 per cent, this could amount to RM104 million to RM150 million profit for Sunway.
Taking a different approach, the research arm of Maybank Investment Bank Bhd (Maybank Research) pointed out that the latest EC project in the surrounding area, Lumina Grand by CDL at Bukit Batok, is currently selling at an average of S$1,464 psf which would translate to a circa GDV of SGD676 million for the development.
Considering a pre-tax margin of 12 per cent, an exchange rate of RM3.55 per Singaporean dollar and Sunway’s 35 per cent stake in the development, Maybank Research reckoned that Sunway may see a net profit of RM101 million from the new Tengah project.