The Greenland Group is the latest developer from China to purchase land for a property project in Danga Bay, Johor Baru.
It entered an agreement yesterday to buy 13.96 acres from Iskandar Waterfront Holdings Sdn Bhd (IWH) for 600 million ringgit (S$231 million) with plans to develop projects with a potential gross development value (GDV) of 2.2 billion ringgit. The transaction comes amid an environment where property developers are seeing lacklustre response from buyers for their launches in Johor.
The latest to feel the heat was Singapore's Pacific Star Development Pvt Ltd that saw only 25 per cent bookings in the second phase of its condominium project in Puteri Harbour that is located in Iskandar Malaysia.
The purchase price works out to 984 ringgit per sq ft, which is just below the record 991 ringgit psf that Hao Yuan Pte Ltd, a Singapore-based but China-owned firm paid for 37 acres in Danga Bay last December.
However according to sources, Greenland planned to purchase more land at lower valuations, an exercise that may average down its cost.
"This is only the beginning for Greenland which is a state-owned enterprise" sources said. The Shanghai-based firm is understood to be eyeing a GDV in excess of 10 billion ringgit in Danga Bay with several more transactions to be wrapped up in the coming months.
This is Greenland's maiden investment in Malaysia, for which it will form a joint venture with IWH to develop the land into an integrated project within five years.
Inclusive of the Greenland transactions, IWH has to-date inked 17 deals with local and foreign partners to develop properties worth 127 billion ringgit in GDV, providing a fillip to its ambitious plan of transforming the coastline of Johor bordering Singapore into a waterfront metropolis.
According to industry executives, Greenland is set to finalise "very soon" the purchase of two more land parcels on the eastern corridor of Johor Baru near the Permas Jaya township, where Tropicana Corp Bhd is also a landowner.
Previous news reports said Greenland was keen on acquiring around 60ha in Iskandar Malaysia.
At least four other major China developers were in talks with IWH for mixed-use developments featuring waterfront properties, the company said in a statement.
"This massive influx of foreign direct investment is a boon for Malaysia and Johor because of the economic spillover and thousands of job opportunities that these projects will generate," IWH managing director Tan Sri Lim Kang Hoo said.
"We believe Greenland Group will pave the way for more China state-owned companies to invest in outstanding property projects in Iskandar Malaysia and IWH's extensive waterfront landbank in Johor Baru."
A delegation from Greenland had visited Malaysia in February to explore investment opportunities. The state-backed group has over the past few years snapped up real estate in major cities such as New York, Los Angeles, Sydney, London and South Korea.
IWH is the master developer of 1,620ha of waterfront land in the eastern and western side of the Johor Causeway, with Danga Bay, located in Zone A of Iskandar Malaysia, as its centrepiece.
Other international property players who have already secured a foothold in Danga Bay include Singapore's Temasek Holdings Pte Ltd and CapitaLand Ltd, Australia's Walker Group and China's Country Garden Holdings Ltd and Hao Yuan, while local firms with ongoing developments include Tropicana and the Brunsfield Group.
Maybank IB Research had recently expressed concern about Iskandar Malaysia's medium-term prospects, saying the massive incoming supply of residential and retail properties in hotspots like Danga Bay and Nusajaya could be harmful to asset values.
"Judging from the planned launches (serviced apartments, hotels, office and retail spaces) by Country Garden, Hao Yuan, Guangzhou R&F Properties Co Ltd, CapitaLand and Greenland Group, the hotspot areas, ie, Danga Bay and Tanjung Puteri, could be flooded with an enormous supply of high-rise mixed development projects, inducing price volatility," it said in a client note last week.
"For instance, Guangzhou R&F plans to launch 15 blocks of 35-storey apartment buildings under phase 1 in the second half of this year, which implies an enormous 3,150 units of apartments, assuming six units per floor.
"That said, investor interest could return to developers with projects in Iskandar Malaysia on the finalisation of the Johor Baru-Singapore rapid transit system. Also, the listing of IWH in the second half could re-rate existing players in Iskandar Malaysia."
PA International Property Consultants Sdn Bhd executive director V Sivadas told StarBiz that buyers were in "transition mode" due to changes in state policy and foreign ownership.
"People still have money, but they are being more careful about how they use it," he said.