SHRUGGING off concerns of a softer property market and looming oversupply, China's Greenland Group yesterday inked an agreement with Iskandar Waterfront Holdings (IWH) to acquire 13.96 acres of land in Danga Bay for RM600 million (S$231.6 million) or nearly RM987 per square foot.
The state-owned developer will commence work on its maiden Malaysia venture in a 90:10 equity partnership with IWH by the end of the year, with completion expected within five years. Located near the Johor city centre, the development has an estimated gross development value (GDV) of RM2.2 billion.
The Fortune Global 500 company, which was on a fact-finding mission to Iskandar Malaysia in late February, is looking at two or three additional land acquisitions. This confirms media reports last month that it is prepared to invest some US$3.3 billion in a resort and residential developments in the economic zone.
In the wake of China-Malaysia friction over the loss of Malaysia Airlines Flight MH370 - nearly half the passengers were Chinese - there has been a marked reduction in tourist arrivals from China. Malaysian officials, however, say bilateral trade and business remain unaffected.
Greenland is the latest in a list of Chinese developers including Country Garden Holdings and Guangzhou R&F to make a beeline for Iskandar following a softening of their home market. The Chinese appear prepared to ignore a slowdown in the current market.
In a media statement released out of Shanghai yesterday, Greenland's group chairman said: "We believe this investment, by virtue of its strategic location and proximity to Singapore, will offer good returns on our investment."
On its part, IWH - the masterplanner of some 1,600 hectares in Iskandar - appears to be striking while the iron is hot - albeit at the risk of oversupplying the market.
Its managing director, Lim Kang Hoo, revealed the company has joint ventures with 16 local and foreign firms to develop properties with a cumulative GDV of RM125 billion. It also intends to tap Greenland's expertise in mixed commercial developments to transform its Danga Bay area into "an integrated international waterfront city".
Realtors say the Johor property market, especially for strata title units, has softened noticeably owing to cooling measures in the October budget and the doubling of the minimum purchase price for foreigners to RM1 million.
The simultaneous commencement of numerous projects - Country Garden for instance is planning to deliver 9,000 units in a few years - has compounded the situation and realtors fear Johor Baru lacks the expatriate population to occupy the apartments when many are completed in the coming months. Still, investment in the zone is expected to pay off so long as it is for the mid to longer term.
"If Iskandar continues to do well after the present knee-jerk reaction, my personal opinion is that selected locations are still worth exploring," said KGV-Lambert Smith Hampton (Johor) Sdn Bhd director Samuel Tan.