PETALING JAYA: SP Setia Bhd, Tradewinds Corp Bhd and Dewan Bandaraya Kuala Lumpur (DBKL) have signed a public-private partnership to demolish and rebuild thousands of units of old public housing in exchange for 52.25 acres of leasehold land in Cheras, Kuala Lumpur.
A special-purpose vehicle, Retro Highland Sdn Bhd, with equal stakes held by the two private developers, will be involved in the “renewal” project, which involves planning, designing, constructing, completing and commissioning 3,971 residential units, 112 shops/stalls, a market and other public facilities, a Bursa Malaysia filing said.
A spokesperson from SP Setia told StarBiz that the project would be divided into two phases comprising 1,192 units in phase one and 2,770 housing units, 112 shops, a market and facilities in phase two.
“These 3,971 units will be three-bedroom units with a built-up area of 850 sq ft each.
“In exchange for the work done in this ‘renewal programme’ involving decades-old public housing, the two private developers will be awarded 52.25 acres in Cheras, which will carry a gross development value of RM11.03bil,” said the spokesperson.
The development period for this Cheras land is expected to take 11 years and comprises housing and commercial development. Besides the renewal programme, Retro Highland will also be involved in this proposed Cheras development.
This is “a renewal programme” whereby SP Setia will build the new units and the people who are living in the old units will move to the new ones. Retro Highland will build the units.
Whether the residents continue to rent or are given the option to buy these new units is between the residents and DBKL, the spokesperson said.
The 3,971 units are in the Taman Ikan Emas cluster houses, Sri Melaka low-cost flats, Sri Pulau Pinang low-cost flats and long houses, and Sri Johor low-cost flats, all of which were built decades ago under the government’s public housing scheme.
Each of the two phases, collectively known as Quality Sustainable People Housing (QSPH), will take four years to complete.
It is expected to be completed in 2028.
The Cheras land value of RM1.19bil will be satisfied via the phase one construction cost of up to RM344.79mil and phase two construction cost of up to RM835.12mil and a cash consideration of RM14.99mil.
If the construction cost is lower than these estimates, then an additional cash consideration for the differences will be paid to DBKL.
Upon completion and handing over of phase one of QSPH with DBKL’s certificate of acceptance, 13.89 acres of the Cheras land will be transferred to Retro Highland. The remaining 38.36 acres will be transferred on the completion and handing over of QSPH’s phase 2, the issuance of the certificate of acceptance by DBKL, the payment of cash consideration and any differences, if any.
The filing said there were risk factors “inherent” to the property development business, which include an oversupply of property, timing and changes in demand.
SP Setia, which saw its total landbank ballooning by 80% to more than 9,600 acres with the recent acquisition of I&P Group Sdn Bhd, said this was an opportunity for the company “to increase and replenish” its landbank via this privatisation agreement.
The QSPH development and the subsequent proposed Cheras development will allow the group to continue to “strengthen its presence in the Klang Valley” and is a “rare opportunity” for the group.
The Cheras land, located alongside Jalan Loke Yew, is about 8km to the Kuala Lumpur city centre and 3km to Viva Mall with established housing estates in the vicinity.