The developers for Bandar Malaysia said they will build more than 12 world-class towers with a gross floor area of over 12 million square feet in Phase 1 of South East Asia's largest development project.
Construction will commence by June next year, reflecting their confidence that the development will spur the Malaysian economy and create hundreds of thousands of jobs, says Iskandar Waterfront Holdings Sdn Bhd (IWH) executive chairman Tan Sri Lim Kang Hoo.
Lim, in an interview with NST Property, said the first phase will see an estimated gross development value (GDV) of around RM10 billion.
He again dismissed notions that the mammoth project would add to the over-supply of residential and office space in the city.
"We have done our homework and property boom-and-bust is a cycle. Statistics show that when there is a bust, the recovery comes within three years and the boom lasts much, much longer.
"The boom sustains; the bust will overcome," Lim said, explaining why he was embarking on the project.
"I am a businessman and I wouldn't be doing this if I thought it would not succeed," he said.
Lim said with the master plan that they have put in place when the first phase is completed in four years after starting work, multinational companies and financial institutions can either lease or buy properties at prices considerably lower than other CBDs (central business districts) in neighbouring countries.
Phase 1 will kick-off with infrastructure development involving the building of several roads and highways, as well as installing power and water supply, costing several hundred million ringgit.
Lim said that IWH-CREC Sdn Bhd (JVCo) will invite qualified investors, developers, consultants, and contractors, both local and overseas, to submit proposals to participate in the development.
"We are doing a pre-qualification for all international and local firms, including Bumiputera companies to be registered for participation in this project. We will select the best," he said.
In the first phase, there will be several Grade A office towers, hotels, serviced apartments, and luxury residences, developed across 20.23ha over four years.
Property overhang to be resolved
Lim said the Bandar Malaysia project will help to dramatically ease the current overhang in the property market by creating hundreds of thousands of job opportunities and economic spillovers across major industries.
"I disagree with those who say that the Bandar Malaysia project will further worsen the oversupply of properties in Kuala Lumpur.
"Thousands of people, including expatriates, will be working on this project in the next four to five years. They will require office space, and a home to stay and they will be looking at the KLCC area as Bandar Malaysia is not too far off from there.
"As a start, it can be expected that property prices and rents in the KLCC area will increase," he said.
Lim reiterated that when he launched Danga Bay in Johor Bahru 23 years ago, many had expressed similar negative views, given that Johor was one of the worst affected states by the Asian financial crisis.
"Look at Johor Bahru today," he said.
"There are many activities in Johor Bharu today and most shops and offices are occupied."
Lim argued that the situation in the country and in Johor will improve despite the current slow economy, partly because of the Johor Bahru–Singapore Rapid Transit System (RTS). The RST will further enhance the connectivity between Johor Bharu and Singapore.
"We can expect more Singaporeans coming to Johor Bahru to look for a place to stay as the properties are three times cheaper than in their home country. In the future, we may also see a lot of Singapore-based companies setting up offices in Johor Bahru to take advantage of the tax incentives and the lower cost of operation," Lim said.
Prime national development to boost the local economy
Lim said that Bandar Malaysia, a prime national economic project will resuscitate and jump-start the Malaysian economy.
"Malaysia needs such a large scale project to prime pump the economy. A project of this nature will attract foreign direct investments (FDIs) and that is what we are aiming for. With FDIs, there will be economic benefits and spillover effects across the various industries and a lot of Malaysian companies are going to benefit, including Bumiputera firms.
"We need a massive project like Bandar Malaysia to attract FDIs and talent from around the world and reduce the glut in the property market. There must be large scale economic activities and the project itself must be attractive in terms of its product offerings. We are building a smart, intelligent city...a new CBD," Lim said.
Bandar Malaysia is located at the site of the former Royal Malaysian Air Force base in Sungai Besi. It will be developed across 194.5ha and will be the single largest city development project in South-East Asia.
Based on international real estate consultants' estimates, the GDV of the Bandar Malaysia project is estimated to be over RM200 billion; the Ministry of Finance Incorporated (MOF Inc) had earlier in December 2019 estimated an RM140 billion GDV for the project.
The master developer of the project is IWH-CREC, which holds 60 per cent in Bandar Malaysia Sdn Bhd while the government holds the other 40 per cent through the Ministry of Finance Incorporated's (MOF Inc) wholly-owned subsidiary TRX City (TRXC) Sdn Bhd.
IWH-CREC is a joint venture (JVCo) between IWH and China's state-owned enterprise China Railway Engineering Corp (CREC). IWH holds a 60 per cent stake while the remaining 40 per cent is owned by CREC. However, they both share 50:50 in economic benefits.
Lim is a common shareholder of Ekovest Bhd and IWH. He holds 63 per cent in IWH through his private vehicle Credence Resources Sdn Bhd.
The Johor government holds the remaining 37 per cent in IWH, through Kumpulan Prasarana Rakyat Johor Sdn Bhd.
IWH-CREC tendered for the project, which attracted around 40 bidders, at RM12.35 billion, and its 60 per cent stake works out to RM7.41 billion.
Ekovest seeks to acquire 40 per cent of IWH's equity. Upon the successful completion of the strategic stake, Ekovest will own 12 per cent of Bandar Malaysia and its construction order book, currently at RM1 billion, will balloon multiple times over the 20 to 30 year period of the development.
The Main Market-listed group's property development division will also get a major boost.
Lim has said that IWH's offer to Ekovest is so that the latter can offer participation opportunities to all companies which he has investments in.