Until today I still remind my wife about my property investment mistake. I had booked another unit of Regency Heights many years ago during its launch. I decided that it was too risky and did not proceed. Well, this unit was RM269,000 and today, it would be easily RM650,000. Then, I read this piece of news. Perhaps I should have bought lands instead! Global Oriental Bhd in a filing with Bursa Malaysia said that it will be selling a piece of land it bought in 1994 at a cost of RM8,336 for RM43.3 million. This is sold by its wholly-owned subsidiary Pertanian Taman Equine to Kemanis Residences Sdn Bhd. What an awesome return.
Of course, over the years, the total carrying value of the land as well as other related development expenditures as at March 31 2015 is RM15.27 million. Thus, this proposal would only give it a net gain of RM15.92 million for the financial year ending March 31 2017. As per a valuation report by CH Williams Talhar and Wong Sdn Bhd, the market value for that piece of land is RM42 million. In other words, the buyer is paying a very slight premium over the current market value. The proposed disposal should be completed by April 2016 and the proceeds would help to improve the group’s cashflow. Instead of holding a piece of land that they have no immediate plans, turning it into cash may be a better decision.
I remember many years ago, I went with a few friends to view a piece of land in Balik Pulau Penang. It was 11 acres if I remember correctly, planted with durian trees and rubber trees. The selling price then was RM1.2 million. The plan then was to buy, get it subdivided and build some facilities for team-building and homestay. Nothing happened with a group of friends who are not really that close and daring. Haha. Today, I think that same piece of land would have given us handsome profits. Lessons learnt? Property investment does not need to be just the building, buying the land on which the building is built may be worth a more serious consideration. After all, the number of high-rise may rise in terms of numbers but that piece of land would remain just that piece of land. Happy searching.
written on 18 Aug 2015
Next suggested article: Land scarcity or abundant, which is better?
