PETALING JAYA: Government-linked company 1Malaysia Development Bhd (1MDB) has bought a 310-acre land in Pulau Indah from Tadmax Resources Bhd for RM317.3mil, or RM23.50 per sq ft.
This is the first plot of land that 1MDB is acquiring from the private sector, given that it had earlier obtained two strategically-located plots in the city via direct negotiations with the Government.
In a filing with Bursa Malaysia, Tadmax Resources, formerly known as Wijaya Baru Global Bhd, said that the deal was done via its wholly-owned subsidiary, Tadmax Power Sdn Bhd, which sold the land to Ivory Merge Sdn Bhd. The latter is a wholly-owned subsidiary of 1MDB Real Estate Sdn Bhd, which in turn is a wholly-owned subsidiary of 1MDB.
The leasehold flat land at Lot 72779 is located in Klang, Selangor. With 82 years to run its course before expiring in 2096, the land is located within a larger plot measuring 381 acres adjoining the Port Klang Free Zone (PKFZ) mega transhipment hub.
1MDB is buying 310 acres of this plot.
With this purchase in Pulau Indah, IMDB comes in second to A&M Realty Bhd in terms of land bank in the area. A&M Realty is developing the Amverton Cove Golf & Island Resort, a 2,000-acre project worth RM10bil in Carey Island, south of Port Klang.
There are several reasons why this land deal is expected to generate interest.
In 2010, the Government injected two strategically-located plots of land of considerable sizes in the city into the GLC via subsidiary 1MDB Real Estate.
Then known as Sg Besi Airport, the 495-acre plot was renamed Bandar Malaysia. The second parcel, located closer to the city, called Kuala Lumpur International Financial District, was later renamed Tun Razak Exchange. TRX has a land size of 70 acres.
Interestingly, one of the three directors at Tadmax Power is Datuk Seri Abdul Azim Mohd Zabidi, who was at one time chairman of Bank Simpanan Nasional and Umno treasurer.
In the 2008 general elections, Azim lost the parliamentary seat in Bukit Gandang, Perak, to PAS.
Also, the Pulau Indah land adjoins the PKFZ, which created a debacle that nearly brought down a few politicians. It was one of Malaysia’s largest financial scandals after the project ran into losses totalling billions. Much of the overrun was due to the land cost which was sold to the Government at RM21 per sq ft in 2002.
A property source said that at RM23.50 per sq ft, the valuation was at market value.
“It already has buildings on it, and converting it into industrial land will not cost very much since both parties will be sharing out the cost of conversion.”
He said although this land adjoins the PKPZ land, it was not possible to compare the current purchase with PKFZ’s valuation as that deal was transacted 12 years ago.
The PKFZ land spanned nearly 1,000 acres, a third of the current purchase. The rule of thumb is: the larger the land, the lower the cost per sq ft as the revenue to be generated from it will take a longer time to materialise.