Greenland eyes major role in RM4.4bil River of Life project

Greenland eyes major role in RM4.4bil River of Life project

A model of the proposed Jalan-Jalan development near the Klang River in Brickfields which is part of the River of Life project.

PETALING JAYA: Fresh from selling land worth RM600mil to China’s Greenland Group, Iskandar Waterfront Holdings Sdn Bhd’s (IWH) Tan Sri Lim Kang Hoo is believed to be eyeing another tie-up with Greenland – this time for the RM4.4bil River of Life (RoL) project in Kuala Lumpur.

People familiar with the matter told StarBiz that Greenland, one of China’s top five property developers by sales, was in talks with Lim for it to play a major role in RoL.

The Shanghai-based firm could be planning a “city within a city” à la Shanghai’s iconic The Bund along the bank of the Klang and Gombak rivers that flow through Kuala Lumpur, sources said.

Lim’s construction outfit Ekovest Bhd has a 60% stake in the joint-venture company that was appointed the project delivery partner (PDP) for RoL in 2011 by the Government. Malaysian Resources Corp Bhd (MRCB) holds the remaining 40%.

A spokesperson for Ekovest declined to comment when contacted.

RoL – an anchor project of the Economic Transformation Programme for Greater Kuala Lumpur that aims to breathe new life into the long-polluted Klang and Gombak rivers – is spearheaded by a multiagency task force under the purview of the Federal Territories Ministry.

The project calls for a massive cleanup and redevelopment of an 110km stretch of river by 2017. In return, the contractors given the mandate get plots of land along the river for development.

Greenland had two weeks ago agreed to buy 13.96 acres of land from IWH in the coastal Danga Bay area south of Johor for properties with an estimated gross development value (GDV) of RM2.2bil, marking its maiden foray into Malaysia.

It is understood that the state-owned enterprise may seal another purchase from IWH soon for two parcels measuring some 20 acres on the eastern side of Johor near the Permas Jaya township.

The deal is yet to be finalised as the land is held under IWH’s 47.16% associateTebrau Teguh Bhd, another listed entity in Lim’s stable, and will have to undergo the usual due diligence processes.

“Greenland ultimately plans to acquire up to 150 acres in Johor with a GDV exceeding RM10bil. The land alone is expected to cost RM3.8bil,” a property executive said.

That would make Greenland the biggest China-based landowner in Iskandar Malaysia. Guangzhou R&F Properties, which last year bought 116 acres in Tanjung Puteri from the Sultan of Johor for RM4.5bil, is a close second.

Lim owns 60% of IWH via Credence Resources Sdn Bhd, and Kumpulan Prasarana Rakyat Johor, a state-backed vehicle, 40%.

Shares of Tebrau Teguh were up some 14% since early-April to RM1.37 on Friday. Ekovest, meanwhile, has drifted downwards after peaking in December. The counter closed Friday at RM2.62.

A deal between Greenland and Lim on RoL, should it materialise, could have implications for MRCB.

However, company officials told StarBiz that MRCB has no intention of selling down its interest in RoL currently, and neither was it on the lookout for buyers.

Unlike the Duke highway, in which MRCB used to own a 30% stake, RoL is a "division we want to keep", an executive said. “We will honour our commitment to the Government as PDP.”

Even so, the executive conceded that RoL could be a target of various parties given its large construction orderbook.

MRCB had in January hived off its interest in highway concessionaire Duta-Ulu Kelang Expressway to Ekovest for RM230mil in cash in a bid to pare down its debt and dispose of non-core assets.

Although RoL is still sorting our land valuation issues, its first phase kicked off in March involving a 10.7km stretch of the river dubbed Precinct 7. Ekovest-MRCB JV Sdn Bhd is the contractor appointed to carry out the project.

Work on the other four phases, comprising 10 precincts, is expected to begin in September.

A slew of developers from China have expanded abroad aggressively in recent years, but Greenland could well be the most ambitious of the lot.

Greenland, a Fortune 500 company, has interests in real estate, coal mining, finance and automobiles. Known as a builder of skyscrapers, three of its towers rank among the 10 tallest in the world.

It is targeting a spot in the Fortune 200 and revenue of 500 billion yuan by 2015.

In January, it had launched a US$480mil project in Sydney, its first in Australia, as part of a US$1bil push Down Under. The Greenland Centre in Sydney’s central business district will comprise a high-end boutique hotel and residential tower.

The group had acquired land in downtown Los Angeles, its first in the United States, last July for US$1bil from a teacher’s pension fund, with plans for a hotel, offices, serviced residences and luxury homes.

Across the pond, Greenland is investing £1.2bil in two London developments, one in the southwest and the other in the Canary Wharf financial district.

Foreign news reports suggest that Greenland also has its eye on France, Canada, Singapore and Thailand.

Four other major Chinese property firms are in talks with IWH for mixed-use developments featuring waterfront properties.

IWH is the master developer of 1,620ha of waterfront land in the eastern and western side of the Johor Causeway, with Danga Bay, located in Zone A of Iskandar Malaysia, as its centrepiece.

It has inked 17 deals to-date with local and foreign partners to develop properties worth RM127bil in GDV, bolstering its plan to transform the coastline of Johor bordering Singapore into a waterfront metropolis.