In a surprising turn of events, YNH Property Bhd has decided to halt the sale of a strategically positioned 6.49-acre plot in Segambut, opting instead to develop the land into a high-potential serviced apartment complex. This new project, in collaboration with Chin Hin Group Property Bhd, is anticipated to boast a Gross Development Value (GDV) of RM685.1 million, positioning it as a prime investment in Kuala Lumpur’s vibrant real estate market.
This decision follows a detailed development agreement between YNH’s subsidiary, Kar Sin Bhd, and Chin Hin’s dedicated unit, Chin Hin Property (Segambut) Sdn Bhd. Kar Sin holds the beneficial rights to the land, while New York Empire Sdn Bhd (NYESB) remains the registered owner. The development plan includes the construction of 2,434 modern serviced apartments, which Chin Hin estimates will cost around RM575 million to complete. This ambitious venture not only reflects the robust dynamics of the Malaysian property market but also underscores the strategic foresight of the involved parties.
Strategic Financial Dynamics
Under the terms of the agreement, Chin Hin will be compensated with RM633 million, plus an additional 84.5% of the GDV should it surpass the initial RM685 million estimate. This structure ensures that both Chin Hin and Kar Sin benefit significantly from the project’s success. Kar Sin is set to receive at least RM52 million from Chin Hin even if the project does not meet its expected GDV. This payment includes a substantial security deposit of RM52 million, which Chin Hin will secure within three months post-approval of the agreement. This deposit will also facilitate the settlement of various financial obligations, including a portion owed to Frazel Group Sdn Bhd, enhancing the financial integrity of the project.
Interestingly, this land has a storied past, with ownership and developmental plans passing through several hands. Initially sold by NYESB to Kar Sin in June 2008, the land has been encumbered by multiple financial and legal complexities over the years, including a now-revoked sale and purchase agreement with Frazel. Despite these challenges, Chin Hin’s engagement signifies a new chapter for this prime real estate piece.
Project Launch and Prospects
Scheduled to commence in July next year and targeted for completion by June 2030, the project’s financing will be sourced from external borrowings and internally generated funds. Chin Hin’s involvement aligns with its strategic goals to expand its landbank and leverage lucrative locations for future earnings. This development, given its prime location and comprehensive planning, is expected to make a significant positive impact on Chin Hin’s financial health and its investors’ portfolios.
Broader Market Impact
The announcement of this development has already begun to stir the market, with Chin Hin’s shares climbing, reflecting investor confidence in the project’s success and strategic value. Conversely, YNH’s slight share price dip post-announcement suggests a cautious market response, awaiting further developments and clearer outcomes.
In a separate but equally significant development, Chin Hin Group Property Bhd has been appointed to transform a 2.67-acre piece of freehold land in Dutamas, Mukim Batu. This project plans to erect a 974-unit serviced apartment complex with a Gross Development Value (GDV) of RM395.51 million. The construction budget is set at RM323.2 million and spans from May 2025 to April 2030. This land, however, is currently marked by a caveat from the Malaysian Anti-Corruption Commission (MACC) and is also under a financial charge to United Overseas Bank (M) Bhd’s Ipoh branch.
Addressing Legal and Financial Challenges
The involvement of the MACC and the existing financial encumbrances add layers of complexity to the project. Within the next 12 months, Chin Hin, along with the land’s beneficiary owner, Suasa Sentosa Sdn Bhd, and the registered proprietor, Archmill Sdn Bhd, must navigate these legal waters. They need to clear the land from its existing charges and resolve the MACC’s caveat. Furthermore, they are tasked with terminating a previous turnkey construction agreement with Kar Sin, dating back to January 2011, to pave the way for this new development.
Financial Stake and Expectations
For its part, Chin Hin stands to gain RM353 million, plus 81% of any GDV exceeding the projected RM395 million. Conversely, Suasa Sentosa will claim a 19% share of the excess GDV. To secure this arrangement, Chin Hin will provide a RM42 million security deposit to Suasa Sentosa. This financial framework is designed to incentivize both parties to exceed the baseline financial targets and maximize the project’s potential profitability.
Strategic Significance and Market Impact
This Dutamas development is not just a business venture; it represents a strategic move within a high-potential area, adding to Chin Hin’s growing portfolio of properties. Positioned in the vicinity of the affluent Sri Hartamas neighborhood, the project is expected to attract significant interest from both investors and prospective homeowners, given its strategic location and the quality of living it promises.
Investor Outlook
The unveiling of this project has also influenced the financial markets, as observed with Chin Hin’s share price movements. The dual announcements of the Segambut and Dutamas projects have showcased Chin Hin’s proactive strategy in securing high-value landbanks and developing them into profitable, high-demand residential spaces.
Overall, these developments by YNH Property and Chin Hin not only aim to reshape significant portions of Kuala Lumpur’s urban landscape but also signify a robust confidence in the Malaysian real estate market’s growth prospects. The successful navigation of the legal and financial hurdles for the Dutamas project will be crucial for realizing its full potential and reinforcing investor confidence in these large-scale urban developments.
