2 Penang-based firms bid on 1MDB land development

GEORGE TOWN - Two Penang-based companies have been short-listed from a competitive tender exercise to buy over the development of a 94.7ha land in Air Itam from 1Malaysia Development Bhd (1MDB).

Sources said that the two short-listed companies from the tender exercise were a joint venture between the Ideal Property and BSG groups, and a company related to Goh Choon Lye, a well-known developer in the state.

It is learnt that the companies, which have submitted the tender to 1MDB, were valuing the development at over RM180 (S$60.60) per sq ft, which was higher than the price 1MDB paid for it in 2013.

However, the valuation was based on the development potential of the land over time.

"This tags the value of the land at more than RM1.8bil, but full value can only be realised over time," said a source familiar with the deal.

According to sources, the bids came in with the initial payment of just over RM1bil, with the rest to be paid when the land was developed.

In 2013, it was reported that 1MDB paid RM1.06bil for the property due to encumbrances such as removing the squatters. The cost of removing the squatters was estimated at more than RM250mil.

The current valuation by CH Williams for the property without vacant possession is RM130 per sq ft or RM1.325bil.

1MDB had opened the sale of the land through a Request for Proposal exercise last month.

It is learnt that the two were selected from a field that also included developers from Penang.

Among the two, Goh is seen to have an upper hand in the bid due to his familiarity with the land.

A company where he has interest, Gerak Indah Sdn Bhd, was one of the parties that reportedly sold the land to 1MDB in 2013.

The tender result is expected to be out by mid-2016. Sources added that the companies have included in the tender a profit-sharing package with 1MDB from their proposed mixed-development projects.

It is learnt that the companies would need to fork out at least another RM300mil to relocate the 3,000 squatters, which may not be sufficient.