If we have a choice, we would always strive for a win-win situation. For a property transaction to happen, the seller would have to sell at a price which is equal to or above his minimum objective expectation and the buyer would have to be buying at a price equal or below what he was prepared to pay for that particular property. In other words, the transactions would make both the seller and the buyer happy.
Recently, we have a land sale in Jalan Khoo Kay Kim which should be making the seller and the buyer happy. Generally, the reason why the seller wants to sell can vary but the reason why a property developer wants to buy a land? That’s an easy one. They are looking to develop the land! This time, it’s a prime piece of land in Section 13, Petaling Jaya. Let’s get to know the details.
Article in theedgemarkets.com UEM Land Bhd has entered into a conditional sale and purchase agreement (SPA) to buy a 9.93-acre leasehold piece of factory land and the buildings thereon from Dutch Lady Milk Industries Bhd at Section 13, Petaling Jaya for RM200 million. It plans to build a RM1.3 billion mixed-use development there.
UEM Sunrise chief executive officer Sufian Abdullah said, “What attracted us most about this land is its location within the Draft Special Area Plan Section 13 Petaling Jaya, identified by Majlis Bandaraya Petaling Jaya to redevelop the area into a commercial hub as part of its urban renewal efforts.
“With the land strategically located in Petaling Jaya, its proximity to the central business districts and the education hub, we want to accommodate first-time homebuyers, young or small families and customers looking for investment opportunities in targeting short- or long-term tenancies by young professionals and students in the various universities and colleges nearby.” Please do read the full article here: Article in theedgemarkets.com
Why would the seller (Dutch Lady) be happy?
There were no information as to what was the price which Dutch Lady bought the piece of land for BUT, Dutch Lady has been there since 1963. I hope everyone could immediately understand that the RM200 million is definitely a great price to sell for because Dutch Lady is a manufacturer and they are not a property developer who could develop piece of land even if they (Dutch Lady) wanted to. Better stick to what they do best.
As for what they could do with the money, they could actually use it to buy a much bigger piece of land somewhere further away from some prime location and pay a much lower price too. In a report last year, Dutch Lady was said to be purchasing a piece of land in Bandar Enstek, Negeri Sembilan for RM56.79 million and the land size is 32.6 acre. The piece of land they currently occupy and is selling is just 9.93 acres.
We can see that they money they gain is many times higher than the money they intend to spend (for new piece of land) and the new piece land they intend to purchase for their new manufacturing plant is many times bigger than the land they are going to sell. Definitely a happy news for them on both fronts; price and size of land.
The buyer is definitely happy.
The gross development value (GDV) for the development on the piece of land is definitely going to be at least 5 times or higher based on typical land price vs GDV. In other words, they get to develop on a prime piece of land where the sale of all the units would usually be faster versus if they had bought a piece of land somewhere much further away where the demand is likely to be weaker and the time needed to sell is likely to be higher.
Thanks for reading and understanding the situations facing the buyer and the seller.
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