MoF makes third attempt to sell 1MDB’s land in Pulau Indah, hopes to fetch 50% more

MoF makes third attempt to sell 1MDB’s land in Pulau Indah, hopes to fetch 50% more

This article first appeared in The Edge Malaysia Weekly on June 3, 2024 - June 9, 2024

THE government is making what appears to be the third attempt in nine years to dispose of a large tract in Pulau Indah in Klang, Selangor. The 1Malaysia Development Bhd (1MDB)-owned land, which has been designated as a free trade zone (FTZ), may be able to fetch as much as RM559 million.

The government, via the Ministry of Finance (MoF), had previously tried to sell the tract — located adjacent to Port Klang Free Zone (PKFZ) , Westports Holdings Bhd’s (KL:WPRTS) planned Phase 2 expansion and the proposed Pulau Carey Port — in 2015 and 2019.

Last weekend, The Edge spotted an advertisement by real estate agent CBRE | WTW that read, “For sale by expression of interest (EOI) approx. 285.07 acre prime industrial land @ Pulau Indah, Klang, Selangor”. The advertisement, which came with a location map, said the site has good connectivity and accessibility via the Pulau Indah Highway and South Klang Valley Expressway, as well as the upcoming Pulau Indah Ring Road and proposed East Coast Rail Link (see map).

When asked whether the tract was the same one that the agency had been seeking a buyer for five years ago, CBRE | WTW’s advisor Foo Gee Jen confirmed that it was. CBRE | WTW has been appointed the exclusive marketing agent for the sale.

In 2019, the agency had called for bids for the leasehold land, then advertised as measuring 318 acres, and had reportedly received a lot of interest but failed to complete a deal. In September 2015, through real estate agent Savills Malaysia, 1MDB had invited potential buyers to register their interest as part of its rationalisation plan. However, a buyer was not found.

Asked about the response to the sale, Foo says enquiries have been encouraging. “There has been a lot of interest this time around, especially because industrial and warehousing investments have become the darling of the industry. The land is ripe now for development, with better connectivity.”

He highlights that the land has already been committed for industrial purposes and designated as FTZ.

The sale will be conducted in two stages. Stage 1, which is the EOI, will tentatively end “in a month’s time” so the agency is able to cast a wider net to attract potential investors. In Stage 2, shortlisted parties will be invited to submit tenders. Unlike an EOI, a tender is binding.

Foo says the land has garnered interest from both local and foreign investors, signalling that competition could be intense. He believes the tract is now more appealing to investors. “This time, we are confident of a successful conclusion of the sale because the infrastructure is ready — there is an elevated highway. The area is booming with industrial, logistics and warehousing sectors.”

When asked about the smaller acreage advertised, Foo says part of the tract was acquired for the upgrading of roads leading into Pulau Indah, and for road widening and improvement.

The land, which has 72 years remaining on the lease, has been designated as industrial by the Klang Municipal Council. It is understood that the tract has a 1:3 plot ratio.

According to sources, the land is expected to fetch RM40 to RM45 psf, much higher than the RM30 psf reportedly expected in 2019, based on nearby transactions at the time. This means that the 285.07 acres or 12,417,649 sq ft of land could fetch between RM497 million and RM559 million.

The land is registered under Tadmax Power Sdn Bhd, which is wholly owned by Ivory Merge Sdn Bhd. Ivory Merge is in turn owned by Ivory Point Ltd. Ivory Merge, a 1MDB unit, bought Tadmax Power from Tadmax Resources Bhd. According to a report by the National Audit Department, between 2013 and 2015, the cost incurred for the acquisition of the land was RM344.24 million. This works out to about RM24.82 psf, based on 318.4 acres.

For comparison, in September 2018, Westports Holdings bought a 381-acre leasehold tract off Pulau Indah from Perbadanan Kemajuan Negeri Selangor for RM116.19 million. Excluding reclamation costs, the price worked out to RM7 psf. The purpose of the purchase was to expand the port operator’s container terminals. The lease on the tract expires in 2101.

Meanwhile, a search on the Companies Commission of Malaysia’s website reveals that the directors of Tadmax Power are Mohd Hisyamuddin Awang Abu Bakar and Afidah Azwa Abdul Aziz. The duo also sit on the board of Ivory Merge. A search shows that Mohd Hisyamuddin is listed as the head of special investment, real estate and services section in the Government Investment Companies Division of the MoF. Afidah, meanwhile, is deputy undersecretary in the same division.

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