PETALING JAYA: Other than the recent appointment to helm Kwasa Land Sdn Bhd, it has been rather quiet at the vast former rubber plantation known as Kwasa Damansara.
Once a much-hyped development spanning more than 2,000 acres with a 15-year development time frame, according to Budget 2010, it has not received any favours from the current slow property market. Current concerns about a looming recession do not help.
Although highly controversial, the story of Kwasa Damansara did not begin at a low point of the property market.
Kwasa Land, a wholly owned subsidiary of the Employees Provident Fund (EPF), was set up in 2010, at about the same time property prices began to rise.
In a recent statement, Kwasa Land said it has appointed Mohamad Hafiz Kassim as managing director designate, taking over from Datuk Mohd Lotfy Mohd Noh, who retired at the end of March 2020.
Mohd Lotfy joined Kwasa Land as CEO in March 2011, plucked from the EPF’s property investment department, which he had headed since 2005. Mohd Lotfy was formerly a director at Malaysian Resources Corp Bhd (MRCB).
Mohd Lotfy witnessed the signing of six development agreements with developers who were awarded land parcels ranging from about four to 64 acres. But he never witnessed these commercial and residential projects getting off the ground, despite a clear start and launch schedule when the awards were formalised.
A source said some of them were scheduled to launch but they baulked when loans were tightened with the introduction of prudential lending measures. In January 2014, the root cause of most of the property speculation – the developer’s interest bearing scheme – was banned. But the market chugged along even then, unlike today. It was during 2014/15 that most of the land parcels in Kwasa Land were awarded.
According to an April statement, that township will now be developed under a 25-year time line versus Budget 2010’s 15 years.
Kwasa Damansara has its roots in the Rubber Research Institute of Malaysia, an agency of the Malaysian Rubber Board (MRB), which sold the land to a special-purpose vehicle (SPV) belonging to the Finance Ministry (MoF) for RM1.5bil, according to press reports. The SPV then sold about 2,330 acres to the EPF for RM2.28bil cash a year later. Property prices peaked in 2012. There were claims that the MRB lost out on RM780mil as a result of a middle party, the MoF SPV.
Hafiz’s appointment is effective from April 1. Like his predecessor, he too heads EPF’s real estate department, and will continue to head EPF’s real estate investment team.
Whether Hafiz will get to see the projects actually kicking off is anyone’s guess, considering the current climate and the massive overhang in virtually every property segment today.
“The commercial and residential development projects have not commenced due to market conditions in the property/real estate industry in the past few years, ” Kwasa Land said in a statement.
“We are working closely with our development partners in planning and development to ensure that all aspects are looked into, including identifying the suitable development time frame for each development area, given the current market conditions, ” the statement said.
Among the six developers it has executed development agreements with, the first and largest is MRCB, which was awarded the crown jewel in a plot known as MX-1.
The 64.30-acre leasehold land is the site of a commercial centre, supposedly the catalyst for the township and is located close to Kwasa MRT. An SPV - Kwasa Development (2) Sdn Bhd - was created to develop that mixed development, reportedly costing RM1.09bil with a gross development value (GDV) of more than RM8bil.
The agreement will also see MRCB warranty a profit of RM2bil to the SPV company in which MRCB has taken up a 70% stake at a subscription price of RM816.6mil, while the remaining 30% stake will be held by Kwasa Land, a 2014 statement said.
Excluding this commercial jewel, 53 acres were awarded to other bumiputra developers “to develop residential land under Development Rights Agreements.”
“To date, we have executed development agreements with six development partners, ” an April 2020 Kwasa Land statement said.
“Kwasa Land is also in ongoing talks with potential development partners who can add value to the master development, ” it said.
The statement also said that there would be a total provision of 9,956 units of affordable housing in Kwasa Damansara. Its first project totaling 800 units is targeted to be launched this year under the Rumah SelangorKu initiative.
Because the developers kept seeking extension after extension, Kwasa Land decided to focus on putting in the infrastructure, a source said. To date, infrastructure works are 70% completed. This includes road works, water supply, sewerage and drainage works, a sewerage treatment plant, electrical services and river realignment.
It is currently developing a 42-acre park, which will be open at the end of this year, the statement said. The EPF headquarters is 45% completed. The 12-storey Grade A Platinum-rated green building will be ready for occupancy by June 2021.
Sources said the EPF would have added value to the land, converting it from agriculture to development land and putting in the infrastructure. But in a poor market situation which was getting bad, and now is worse, it has not, and will not be easy to sell.
It is easy to say, why don’t you do this and that? Nobody goes into a business to make a loss. At the end of the day, what is needed is market and feasibility studies to gauge demand.