Bayan Mutiara Guanomics

The recent development of the Bayan Mutiara scandal where Penang Development Corporation (PDC) was stood up and which currently plagues Penang Chief Minister Lim Guan Eng’s leadership really revving into high gear. So many Penang stakeholders demand the truth from what seemed to be a discounted deal, for a specific political purpose.

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10 February 2012 | last updated at 07:24pm

CM asked to explain sale of Bayan Mutiara land

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NIBONG TEBAL: Penang Umno today requested Chief Minister Lim Guan Eng to publicly explain the sale of 41.6 hectares (103 acres) of land to a private company at a price of RM1.1 billion.

Its chairman, Datuk Zainal Abidin Osman said Lim should give the grounds on why the large reclaimed land was not developed by the Penang Development Corporation (PDC), which is the owner.

He told reporters here today that it was surprising that the land was sold when PDC had the expertise and experience and had carried out many development projects for the people.

The land at Bayan Mutiara is considered super prime as it is in the most strategic location, near the Penang Bridge, Free Trade Zone and the Penang International Airport.

“For an administration that claims to be people friendly, it is surprising that there was no public consultation with interested parties before selling the government-owned land,” he said.

Zainal Abidin said the state government acted hastily in deciding on the land sale without making a long term evaluation of the land.

He said if the land were to be developed in phases, the price would leap to more than RM10 billion but the government had made an unwise decision when it sold the land for RM1.1 billion and gave special treatment to the company to repay in stages over five years.

He said the sale and purchase method would benefit the people if the land were to be developed in phases as the developer could also pay the state government in stages too.

“In a nutshell, as the buildings are developed, real estate value would rise, thereby giving the undeveloped land better value,” he said.

Zainal Abidin said the selling price of the government was too low if compared to the price of land in the surrounding areas such as Queensbay which was valued at several times more than the selling price of Bayan Mutiara.

He said based on available information, the state government only evaluated the land price for several months before offering it to the company and the land was sold as freehold when it was the government’s policy that government land should be sold as leasehold only. – Bernama

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 This was the announcement made to develop the land by Ivory Group, six months ago:

Penang World City – 10b Development within Bayan Mutiara

Posted by MrProperty on November 11, 2011 // 0 Comments and 0 Reaction

An estimated RM10bil GDV project in Bayan Mutiara is set to place Penang onto the world stage in its quest to become an international city.

Aptly named Penang World City, the development covers a total of 41.5ha land area, comprising 27.3ha of existing land and 14.2ha of land to be reclaimed.

Penang Chief Minister Lim Guan Eng witnessing the signing of the JV during the signing ceremony

Ivory Properties Group Berhad operations director M. Murly said the development would definitely benefit Penangites as it places Penang into the international arena.

“This is a project for Penang, in Penang, by Penang. We hope to turn the project into an international gateway for foreign tourists and investors to Penang.

“We derived our aspiration from the word ‘LIFE’, with each alphabet from the word representing different goals.

“L is to live life to the fullest, I for interact with the community, F – freedom to move and E - energy to realise your dreams.

“Inspired by the idea of an urban oasis design, the project is deliberated to link the shopping experience with educational and fun activities; with trees, plants, water
features, green roof and terracing and most importantly, pedestrian friendly facilities,” he said in a statement yesterday (Nov 11).

Earlier, a Purchase and Development Agreement was inked between Chief Minister of  Penang (Incorporation), Penang Development Corporation (PDC) and Ivory.

Ivory chairman and group chief executive officer Datuk Low Eng Hock penned the deal with PDC general manager Datuk Rosli Jaafar and Penang State Economic Planning Unit (UPEN) deputy director (macro) Hafidzah Hassan (representing CMI) while Ivory deputy chairman and executive director Datuk Seri Nazir Ariff and PDC deputy general manager Datuk Abdul Rahim Isahak were the witnesses.

Also present to witness the signing ceremony was Penang Chief Minister Lim Guan Eng. The Group had earlier won the bid for the land which is strategically located within Bayan Mutiara, a new development hub located in the eastern part of the Tun Dr Lim Chong Eu Expressway (formerly known as Bayan Lepas Expressway) and in the vicinity of Sungai Nibong.

It is located approximately 11km due South-West of the Penang Ferry Terminal, about 9.5km due South-West of Kompleks Tun Abdul Razak (KOMTAR) and about 7km due
North-East of the Penang International Airport in Bayan Lepas.

It can be easily accessed from Penang Bridge, the upcoming Second Penang Bridge, and from Penang International Airport as well.

The project, which is expected to commence in the second half of 2012, will take a span of eight years for completion.

Development components will include luxury condominiums, medium rise condominiums, business suites, serviced residences, iconic office block, waterfront
entertainment city, commercial and retail spaces, waterfront villas, medical facilities and so on.

On the development concept, Murly said emphasis would be placed on the idea of green building, green township and the development of a healthy lifestyle within its
community.

“For that, we have proposed for pedestrian network and bicycle track connecting to almost each and every building to reduce carbon emission within the township,” he said,
adding that sustainable lifestyle for the next generations is their ultimate objective.

Asked to elaborate further on the proposed development, Murly said the entertainment district on the water front would consist of restaurants, bars, cinema, bowling alley and so on.

“We have also proposed for a museum, a landscaped outdoor amphitheatre and educational interactive facilities providing state-of-the-art entertainment for all,” he said.

The heart beat of the development contained the principle retail zone and high-rise iconic residential towers, creating a new landmark visible to motorists crossing the
Penang Bridge from the mainland.

The canal-side quarter, he said, is intended to be a mixed use development with commercial and residential elements.

Murly said all components will be developed and revised in accordance to market demand and trend.

“We will be revealing more of the development concept and components at a later stage,” he said.

The project will see a joint venture between Ivory and its business associate Dijaya Corporation Berhad, with the former taking a 51% in the project and the latter holding
the remaining 49%.

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Obviously PDC had expertise to develop the project on its own and with its potential and being a state GLC, PDC could have raised the financing for the project. PDC could have realised the whole value for Penang instead of hiving it off to  a private developer to take the full realization of the value.

Interesting to note that in a recent transaction inked in the neighborhood of the Bayan Mutiara project, the value of the land is recorded at RM 474.oo psf. This is vast contrast to the 41.5 acres that was sold off to Ivory Group for a mere RM 24o.oo psf. Business Times has the report:

Wednesday, July 27, 2011

Property hotspot in Penang

George Town: The development potential of Penang island’s southeastern area is growing as more property developers are eyeing it for their projects.Business Times has learnt that CP Land Sdn Bhd, the property arm of the CP Group, has disposed of 40 hectares of land it owns in the Queensbay area at Bayan Lepas to a Penang-based property player.Sources said the land was sold at RM420 per sq foot (psf) to Asia Green Development Sdn Bhd in May and the transaction is believed to be worth RM160 million.Asia Green is said to be planning to build serviced apartments on the land, which is currently serving as a parking lot.The Queensbay development sits on 29.2ha of sea-fronting land on which Penang’s largest shopping centre, Queensbay Mall, and the Eastin Hotel are sited.The mall was sold by CP Group Sdn Bhd to CapitaMalls Asia last year for RM657 million.

On Monday, property player Ivory Property Group Bhd announced that it had won the rights to buy 41.50ha of land at Bayan Mutiara on the island, which lies south of the Penang Bridge and close to the Queensbay area.

Some 27.34ha are existing land and 14.16ha are to be reclaimed for a proposed mixed development, Ivory told Bursa Malaysia in a statement.

The reserve price of the Bayan Mutiara land is said to be RM200 psf and it is learnt that Ivory’s win-ning bid was RM240 psf, im-plying that total land cost was about RM1 billion.

It is also learnt that Ivory’s payment to the Penang Development Corporation will be staggered over five years and the company intends to embark on its maiden launch of the project next year.

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So what is with the discounted sale?

Ivory Properties and Di’Jaya stand to gain the most from this. Even their share prices rose comfortably.

Tuesday November 15, 2011

Dijaya, Ivory rise on Penang property tie-up

By JOHN LOH
johnloh@thestar.com.my

PETALING JAYA: The share prices of both Dijaya Corp Bhd and Ivory Properties Group Bhd were up after the companies announced a tie-up for a mixed-property project with a gross development value of RM10bil in Bayan Mutiara, Penang.

Dijaya rose 3.6%, or 5 sen, to RM1.44 while its warrants advanced 6.5%, or 3 sen, to 49 sen. Ivory Properties added 7%, or 7 sen, to RM1.07.

Dubbed Penang World City, the project will be undertaken by joint-venture vehicle Tropicana Ivory Sdn Bhd (TISB), which is 49% owned by Dijaya and 51% by Ivory Properties. TISB was set up on Oct 14.

Penang World City will be built on a 102.56 acre site, of which 35 acres is to be reclaimed. It will comprise residential units, a shopping mall, office suites, office towers, a hotel, retail spaces and an open mall with a boulevard.

The land is being bought for RM1.08bil from state-owned Penang Development Corp.

Bayan Mutiara is a new development hub in the eastern part of the Tun Dr Lim Chong Eu Expressway and is in the vicinity of Sungai Nibong, the companies told Bursa Malaysia last Friday.

Ivory Properties has proposed to finance the project via a renounceable rights issue of 186,000,000 new ordinary shares of 50 sen each as well as 186,000,000 new free detachable warrants.

Dijaya, meanwhile, will extend financial assistance to TISB in the form of shareholder advances, guarantee, indemnity or collateral of up to RM525.4mil, or 49% of the total consideration of the development land.

Analysts contacted by StarBiz have a positive view of the project, citing its prime location as a major plus factor.

“Land in Penang is scarce and the outlook for housing in the Bayan Mutiara area is booming,” an analyst said.

“It is not easy to get land in Penang for that price. Property developers prefer Johor Baru because land is much cheaper there.”

Another local bank-backed analyst said although he liked the land, he considered it pricey. At RM240 per sq ft, it was comparably more expensive than IJM Land Bhd‘s land further north of the island that was purchased at RM50 per sq ft. IJM Land has a 150.24-acre mixed-development called Light Waterfront Penang.

The analyst also said the upside for Ivory Properties’ stock would be capped at around 30% as its share base would be diluted by two to three times following the rights issue.

He added that the choice of office towers in the development mix was surprising as the demand for office space in Penang was tepid.

Nonetheless, he said the project was still at its early stage and was subject to change.

“We haven’t seen a detailed breakdown of the development components yet but the residential portion is likely to be larger,” he said.

Penang World City is scheduled to be completed in eight years. Work on the first phase is scheduled to begin at the end of next year.

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It makes no economic sense when PDC as a state GLC has been denied to develop the said property but instead the project was hastily sold off without realising its full economics gain, based on the recent transacted deal in the neighborhood. No clear minded decision maker would pass an opportunity to sell the asset knowingly it could make better gains. Especially if the 41.5 acres be subdivided into smaller parcels. This is Lim Guang Eng’s ‘Guanomics’.

Then again, the political motive for the sale is clear. Between the outright sales and then to the new joint venture development company, some quarters are making the ‘middle-man’ deal. If the going rate is 2%, then the ‘commission’ for the sale is RM 22 million. If its 5%, then its RM 55 million. They found a ‘friendly’ party to acquire the assets for the acquirers affordability and realise the middle man commission.

That is not withstanding gains realised from the soaring share prices of both plcs.

It is almost obvious Lim is building his political ‘war chest’. 13th General Elections is drawing near. For him to maintain status quo in Penang and fund his expanding DAP ‘empire’ elsewhere, as the Secretary General he needed the ‘acquired funds’. After all, DAP is ambitious to recapture Perak, retain status quo in Pulau Pinang, Wilayah Persekutuan and Selangor and get more footing in Negeri Sembilan, Melaka, Johor and Pahang.

DAP can no longer depend on its ‘Unwilling-backstabbing-partners-in-an-unholy-marriage-of-(in)convenience’, in the upcoming 13GE. PKR is plagued with its spiraling internal problems and recently, so is PAS. DAP must be prepared to go alone and face the voters, purely on its own Chinese Chauvinism strength.

To achieve that, DAP must have enough in its coffers. The previous ‘fund raising dinners’ are no longer adequate and they are ‘institutionalising’ its power and position with ongoing business entities. A few of these projects would fill the DAP coffer enough funds, at least to comfortably manage a strong campaign in Penang.

- bigdogdotcom