Why is Felda overpaying for London property?

Bagan MP and Penang Chief Minister Lim Guan Eng wants Felda toexplain its purchase of serviced apartments for close to RM500 million in London, United Kingdom, a price which Lim said had been inflated by RM100 million.

Lim said this move by Felda also defied one of the main thrusts of the Economic Transformation Plan (ETP), which is the divestment of non-core assets.

"An online portal reported today that Felda's £97.9 million (RM495 million) deal for the 198-unit Grand Plaza service apartments in Bayswater, London, is overpriced as high-end real estate agents Savills and Knight Frank had only valued the property at £80 million (RM408 million) in the past few years.

"In other words Felda overpaid by nearly RM100 million!"

This, the DAP secretary-general said, has raised fears as any economic downturn would result in Malaysian-linked firms buying London properties at inflated prices and losing millions of pounds in public money.

Lim pointed out Felda has neither the expertise nor intimate knowledge in operating serviced apartments.

Until today, he said, Felda and the government refused to justify the purchase of the London properties.

Lim said he raised the matter in Parliament on Monday, but the government did not reply how Felda planned to recoup the investment and only said the market value of the property had increased to £115 million.

"There is no proof that the market value of the London property has risen," he said, adding that when Pakatan took over the Penang government in 2008, it was shocked at the level of non-core activities the state had engaged in.

"With the RM500 million capital expenditure by Felda, it is unlikely that even if Felda makes a profit, the profit will justify the cost of investment.

"For this reason, BN leaders should not treat public monies as their private holdings but justify, in the interests of accountability and transparency, the financial benefits of investing in non-core businesses to the people," Lim added.