SHL and Marubeni to build China townships


  • Business
  • Wednesday, 17 Oct 2007

KUALA LUMPUR: SHL Consolidated Bhd and Marubeni Corp of Japan are studying the development of townships in China.  

Besides Malaysia, Marubeni has been successful in property development in China. It also has sizeable tracts of land in the Philippines, Indonesia and Vietnam.  

However, they need to find suitable overseas Chinese with the experience to partner them there.  

“They invited SHL and asked for ideas,'' said SHL executive director Datuk Yap Teiong Choon. “They want to do things differently and move away from Beijing and Shanghai and go into the secondary towns. There is a lot of potential there and property development is an ongoing game catering to the basic needs of mankind.'' 

“They do their usual trading in these countries and if things augur well for property development, they will move in. For any project, it is the entry cost level. If (entry costs are) permissible and demand is there, why not? For SHL, this is good timing. Also, the ringgit is doing better against the US dollar,'' Yap added. 

The new partnership is not neglecting the home turf. “Our strength is in the Klang Valley and that will be enforced. We shall be looking for good landbank and projects,'' Yap said. 

“Shah Alam (where SHL has launched its maiden Alam Budiman project) has great promise for further landbank development. We have enough landbank for the next 10 years in the Klang Valley,'' Yap said.  

SHL is a Klang Valley-centric developer. “The Klang Valley is growing rapidly. It gets an average of 25,000 new migrants and is growing by 300,000 per year. There will be a market as long as people move in. There should be further incentives for home ownership,'' he said.  

SHL struck a relationship with Marubeni in 1986/87. That was during the recession when the Government wanted to encourage foreign investments.  

Marubeni came into property development and requested for a 40% stake in the joint venture (JV) with SHL. That was granted by the Government on condition that it sold down by 10%. The JV under Sin Heap Lee-Marubeni (SHL-M) grew very fast and the Japanese had more than tripled their original investment of only RM18mil. 

But this JV was restricted to the original parcel of 500-600 acres in Sungai Long. Marubeni decided to sell down in SHL-M and move to the parent level at SHL.  

“This new relationship will reflect the strength of both parties,'' Yap said. “It will be used as the gateway for regional expansion.'' 

“SHL has the experience in township development overseas and is strong in engineering and construction. Marubeni is good in fund-raising and detailed studies. It is one of the six big sogososhas in Japan.  

“They also help with pricing decisions. In the course of our JV, they have always stressed on averaging the costs and cashflow is very important to them,'' Yap said.  

SHL builds its reputation on delivering quality homes and the build-and-sell concept. “There will be a lumpy profit trend as a result of the build-and-sell concept. But that allows us to understand our own costs and make the decisions based on pricing, profits or cashflow.  

“Also, it is not all about money,'' Yap said. “We have our social responsibility too. We build suraus in the townships which was not done previously.''  

The Universiti Tunku Abdul Rahman business campus in Bandar Sungai Long is rented out at below market rate. 

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