Dated 7 October 2010
Canal City land deal at the final stage. The Canal City land deal is currently at the final stage. Upon relocation of the squatters and the necessary steps to settle the squatters, the land is staged to become a major township development for IJM Land in the coming years. From our recent meeting with management, we gather that IJM Land has recently signed a termination agreement with the state government for the construction of canal. To recap, under the agreement signed with the previous state government, a 18-km canal is required to be built for flood mitigation, linking Sungai Klang and Sungai Langat. Since the construction of the Smart Tunnel, the canal is no longer needed as part of the flood mitigation plan. For the development to be taken off, the JV company (50% with Keuro) will have to incur some cost for the land, including the construction of low-cost component for squatters and acquisition of replacement oil palm land for squatters. We estimate that these would translate to a price of about RM4-6 psf for the land, which is rather attractive in our view, as it is getting very difficult to secure a large parcel of land in Klang Valley. Based on management’s guidance, the leasehold development, which will be re-named later, will worth a GDV of about RM4bn, but we think there is further upside potential given IJMLD’s brand name, innovative value- added concept and step-up pricing for its property launches. The land is surrounded by a few townships - Putra Heights (by Sime Darby Property), Kota Kemuning (by Gamuda) and mid-end development Bandar Saujana Putra (by LBS). There will be two key access to Canal City land: (i) Behind Kota Kemuning; and (ii) Through Saujana Putra Interchange. We think IJMLD’s range of properties offered will be similar to Putra Heights and Kota Kemuning. The mid-end development by LBS should not affect the development potential of Canal City land, considering the IJMLD’s track record on quality, value-added concept with modern design. Furthermore, we understand that Putra Heights project is almost fully sold and Kota Kemuning is a matured township. Hence, we expect some spilt-over demand from the neighbourhood.
Source: RHBInvest
This post has been edited by kh8668: Mar 21 2012, 10:23 AM
BANDAR RIMBAYU (CANAL CITY, SHAH ALAM), IJM & K-EURO