Greenland Group invests US$3.2 bil in Iskandar Malaysia

/ The Edge Property |

August 25, 2015 9:00 AM SGT

On July 27, China state-owned Greenland Group, one of the country’s biggest property developers, held a groundbreaking ceremony for its two development projects, namely Greenland Tebrau and Greenland Danga Bay, in Iskandar Malaysia.

Both sites were purchased from government- linked company Iskandar Waterfront Holdings, the master developer of some 4,000 acres of waterfront land within Flagship A of Iskandar Malaysia. IWH is a public-private partnership involving the Malaysian federal government, the Johor state government and private equity.

The groundbreaking ceremony was attended by IWH managing director Lim Kang Hoo, ranked by Forbes as one of Malaysia’s 50 richest men, and Johor Chief Minister Mohamed Khaled Nordin.

“To date, Greenland has injected US$3.2 billion ($4.39 billion) into Johor, covering the inner circle of Iskandar Special Economic Zones,” says the Shanghai-based company’s executive vice-president, Xu Jing, at the ceremony.

The Chinese developer’s maiden development, called Jade Palace Danga Bay, is situated on 13.6 acres of freehold land. When completed, it will contain about 2,000 housing units, according to a Greenland representative.

Private previews of Jade Palace started last year, with units priced at an average of RM800 psf. About 80% of the buyers are Malaysians and 20% are from Singapore, says the representative.

‘Another global city’

The Greenland Tebrau project will be the most comprehensive mixed-use development in the “international zone” of Iskandar, which is poised to be “another global city”, says Khaled in his speech. The development is expected to create more than 1.5 million jobs in Iskandar by 2025.

Sitting on 128 acres, Greenland Tebrau will have office towers, apartments, hotels, an arts and cultural centre, schools, a children’s theme park and an ice-skating rink. The development by Greenland Tebrau Sdn Bhd is a joint venture between IWH and Greenland, which hold 20% and 80% stakes, respectively.

The project will be developed over five phases spanning 15 years. Xu envisions the Greenland Tebrau project will create “the ultimate standard of coastal living”, as well as “an excellent investment opportunity”. The Tebrau site was reportedly purchased by Greenland on a freehold basis for RM2.37 billion (RM426 psf) last year. At this point, it still does not have an official name.

The first phase will contain an office block, a hotel, three serviced apartment towers, a retail village that includes a wellness centre and a children’s theme park similar in concept to Kidzania, according to a representative of Greenland.

The later phases will contain a mix of apartments, seafront villas, hotels, offices, an arts and cultural centre, schools, an edutainment centre and a “snow city” theme park with an ice-skating rink. The last phase will see the development of a marina, seafront houses and water villas. When fully completed, the entire project will comprise about 20,000 housing units, according to the representative.

Given that Greenland Tebrau is within the “international zone”, foreigners will be able to purchase residential units from RM500,000, instead of the minimum RM1 million that came into effect under the property cooling measures introduced last October.

Tentatively, the first phase of the project is targeted for launch next year. Greenland is planning to market the development in other Asian markets, such as Hong Kong, Taiwan, Singapore and South Korea.

More land reclamation Tebrau Bay faces Singapore’s Sembawang across the Straits of Johor. About 100 of the 128 acres that make up the Greenland Tebrau development will be reclaimed land, says the representative. Land reclamation works is said to have started last year, following the site acquisition.

“From the state government’s point of view, we do not want rapid development to benefit only one side,” says Khaled. “We want a ‘win-win’ situation, knowing full well that such a development will directly impact the daily lives of the local community.” Therefore, the state has decided to levy a charge of RM0.30 psf on land reclaimed for development, he adds.

Greenland is the third Chinese developer to undertake land reclamation works to extend the waterfront in Iskandar.

Guangzhou-based R&F Properties is currently developing Princess Cove, which is a mixed-use development that will also include about 3,200 housing units. It is reclaiming land by the Johor Causeway, off Johor Baru.

Hong Kong-listed Country Garden has been reclaiming land next to the Second Link between Malaysia and Singapore for its Forest City project. Owing to concerns about its environmental impact, the original 1,978ha project was scaled down to 1,386ha by the Department of Environment early this year. And, it will be developed as a series of four islands. Still, the project is three times the size of Sentosa Island.

Overseas forays Greenland has been aggressively expanding its footprint overseas since 2013. Besides Malaysia, the Chinese state-owned developer has ventured into major cities around the world to erect skyscrapers — from New York to London, Sydney, Toronto and Seoul. It is also developing a waterfront resort development in Pattaya, Thailand. To date, Greenland has invested more than US$20 billion in nine countries, including Malaysia.

In Iskandar Malaysia alone, Greenland will be investing a total of RM20 billion. “This is by far, the single largest real estate project ever invested in Malaysia by a Chinese enterprise,” according to Xu.

Total committed investment in Iskandar Malaysia stood at RM172.5 billion as at end- June, according to Khaled, and over 50% or RM 87.8 million of that investment has been realised.

This article appeared in the City & Country of Issue 688 (Aug 3) of The Edge Singapore.

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