LAND INVESTMENT Vs DEVELOPMENT vs JOINT VENTURE Tan hwa chuan
Tan hwa chuan is a Merger n Acquisition specialist for land investment and development. He is Director of B.I.G group of companies, an organization specializes in property development, investment, real estate advisory, merger and acquisition. He develops and fine tunes his methods and making him one of reliable real estate partners in Malaysia today. His MnA daily job scopes cover; Business development and marketing for Property Development. Sourcing land, government study, market study, draft design, preparing feasibility study and cashflow for property development. Grouping for enblock marketing to ease the cashflow of a property development. Due to his nature of jobs, Tan always has the opportunities to get good properties before launching or below market value. Tan graduated from Warwick University, UK, in master of science in engineering business management. He was top student with flying color results. He is shareholder / director for a few property development projects n companies. Sunway Eastwood sb 33ac. 259 units Semi D. Gdv = Rm 370mil. Completed. Mitraland Melawati sb 9ac. 100 units Residential. Gdv = Rm 220 mil. Completed. 7.8ac Commercial Land in Setia Alam. 9ac JV land in Semenyih. A few others He is the Author for a popular book, Make BIG Money via Land. More info www.bigproperties.com.my
AGENDA LAND Investmment Vs Development Vs Joint Venture LOAN STRATEGY Main Con Strategy Land Cost Strategy New Funding Strategy Next Hot Land
SALE Loan Strategy COST MAIN CONTRACTOR Strategy LAND COST Payment terms FINANCING Funding Strategy PROFIT Working Cap PROFIT
LAND FOR SALE (KL) JALAN IPOH 4.3 ACRES (2009)
Sri Damansara DESA PARK Subject Land Carefour New KTM STATION Jaya Jusco Mall Kepong Chinese village Batu caves
MONT KIARA Selayang kepong 90% COMPLETED 100% COMPLETED TESCO Main Access 100% COMPLETED Shops 80% COMPLETED 8 acres Lake Old town jam Subject Land
Water? Implication? Implication?
Jalan Ipoh To Jalan Kuching Lake View Lake View Middle Ring Road To Wan Utama Lake View Subject Land (Adjoining Lake) Lake View KLCC View Lake View How to draw? Lake View New KTM Station Tmn Tasik Indah
Color code? Subject Land Tesco Jalan IPOH Jalan Kuching
Jalan Ipoh Land Sri Utara 2009 4.3 acres. Leasehold 99 Fronting and Adjoining Lake (size approx 8 acres) Tesco is located nearby (walking 5 mins, driving 1 min) 2 min driving to new KTM Station (located in Taman Wahyu n Tmn Mastiara) Walking distance to amenities. (banks, old town kopitiam, restaurants. offices) Neighbouring are SEMI D, Super Links 7 acres of landscape and jogging track surround this land, lake and township Subject Land can access to Jln Kuching via Jln Ipoh Main road or via Alternative Road (Tmn Wahyu exit at TNB Jinjang) to Jln Kuching. Converted Development Land. RM 82 psf (negotiable) = RM 15.36 mil.
Distance Analysis 10 mins to Wan Utama, The Curve, Mutiara Damansara, Taman Tun, Petaling Utara. 5 mins to Sri Hartamas. Mont Kiara 8 km to KLCC (10 to 13 mins driving) Easy Access Highway; 2 mins to Jalan Kuching via Jalan Ipoh 1 min to Middle Ring Road 8 min to LDP highway via Middle Ring Road 5 min to NKVE Jln Kuching or Middle Ring Road 80km / 60 min 10km = Development Order obtained (lapsed) for; 336 orang per ac. (66 unit per acre) 3 blocks of Condo = 284 units Condo 10 storey (76 units) 13 storey (100 units) 18 storey (108 units) Ready with infra; Tar Road access (80 road access) Water Supply Electricity tap point Oxidation infra Back filling is done 10 years ago. etc.
Pricing Factors; 2009 SUBSALE Sri Utara Semi D = approx RM 1 mil (approx 3.5k sqf) Super link = RM 640k per unit (approx 3k sqf) Gated community. Approx RM 170 per month. Townhouse = RM 350k (1600 sqf) (Subsale price) (no facilities) Launched 3 years ago. All Leasehold 99 Taman Tasik Indah; RM 640k (3k sqf) (Subsale price) Completed 5 years ago Gated community All Leasehold 99 HALF PRICE STRATEGY
High End SEMI D Landscape 80 Road 8 acre Lake + Park Main road Acess From Jln Ipoh (Jln Kuching)
MRR II NOT SUBJECT LAND 8 acre Lake SUBJECT LAND SUBJECT LAND
Brand New Super Link Houses Water tank Can be tapped Subject Land Subject Land
New Super Link Houses 80 ROAD ACCESS TO THIS LAND - Brand New Infra - road, lights, surroundings
- 5 mins walking distance (1 min) to TESCO. Shoppers? Adjoining sri Utara = 90% Chinese
- Subject land located within 72 acres Sri Utara Township - All gated community. - 7 acres Open Park (Landscape) surrounded this 72 acres Township. Surrendered to dbkl?
DBKL 2020 CITY DRAT PLAN Draft Plan is welcome for changes. Malaysia Boleh!
SUPER LINKHOUSES
Pls refer to R3 Table
DBKL Requirements (Under New KL 2020 Draft Plan); Subject Land is under R3 Residential. 160 persons to 400 persons per acre = max 100 units per ac No height control Pls check with KL Draft Plan for R3 Classification Table. Zoning is not Gazette, thus it is possible to be dezoned for other purposes
TITLE
DIMENSION
Your text here
Market STUDY Bandar Menjalara (Kepong)
Sri Damansara Apartment - Subsale RM 150 psf Medan Putra Apartment -RM 170 psf (new launch) - Complete mid 09 Manjalara Apartment - RM 150 psf sub sale 4 acre Lake Jaya Jusco Why Same Area Different Pricing? North Shore Condo -RM 550 psf (new) - Launched in 2008 Jan - Sold 90% within 2 mths - Lake View - Complete in 2011. Nadia Condo -RM 450 psf subsale - Lake View - Near Jusco - Completed in 2005
Case Study Conclustion Why Desa Park can fetch RM 550 psf? While Medium Class Menjalara is RM 170 psf? Lake (4 acre) View condo Walking distance to Jaya Jusco Gated + Guarded community Nice landscape Similarity in Sri Utara Land Lake View condo (adjoining 8 acre lake) Walking distance to TESCO Gated + Guarded community Not too bad landscape environment RM 250 psf in Batu Caves and Selayang area. Can we fetch RM 330 psf in Sri Utara? HuaYang Symphony Rm 250k / 1100sf = 227psf (adjoining TNB)
QUICK FEASI (2010)
QUICK FEASI = CONDO (2010) GDV = RM 320 psf x 1300 sqf x 80 units x 4.3 acres = RM 143 mil (RM 416k per unit) Net Profit @ 20% = RM 29 mil Land Cost = RM 15 mil @ RM 80 psf (negotiable) Note: Subsale link house in Taman Tasik Indah = RM 640k per unit Subsale link house in Sri Utara = RM 650k per unit
QUICK FEASI = SEMI D GDV = 8 units x 4.3 acres = 32 units = Unit price = Rm 580psf x 3500 = Rm 2. mil = RM 2 mil x 32 = RM 64 mil Net Profit @ 20% = RM 12.8 mil Land Cost = RM 15 mil @ RM 80 psf (negotiable) Note: Subsale link house in Taman Tasik Indah = RM 640k per unit Subsale link house in Sri Utara = RM 650k per unit
Market Study (2015)
Lakeville Residence - 2015 Land Area : 12.38 acre Leasehold 6 Blocks of Residential 37 to 41 storey Total 1800 units = 150 units per ac (if resi) Landscape & facilities 3 acre 2 car park Built-up area 977 to 1,329 sq ft = average 1150sf x 1800 units NSA = 2 mil sf GFA = 2 mil sf / 73% = 2.74 mil sf 2.74mil / Land area = 5.0 Plot ratio Completion Aug 2018 977 sq ft @ Price RM600,000 Phase 1 Blocks A & B RM570psf Phase 2 Block E RM650psf @ 30% sold since June to July 2015 Block F RM650psf @ 80% sold since Nov 2014 to July 2015 Package Discount 10%
Eco Sky by Eco World - 2015 Land Area: 9.6 acres Freehold. Commercial land Retail & Office no info 3 Block Residential 39 to 41 storey Total 975 units. If resi = 100 units per ac. Average 1200sf x 975units NSA = 1.17 mil sf GFA = 1.17 / 75% = 1.56 mil sf Plot ratio = 1.56mil sf / LA = 3.7 2 car park Built-up area 861 to 1,905 sq ft Completion Block A & B at End 2017, C at Mid 2018 936 sq ft @ RM714,000 Block A @ RM650 psf @ 100% sold within 1 mth. Block B @ RM650 psf @ 100% sold within 1 month Block C @ RM720 psf @ 50% sold since Mid 2014 to July 2015. within 1 yr Discount 5% to 7% depend layout Booking RM10,000 Free legal SPA & loan
Conclusion DBKL Study Resi = 100 to 145 units per ac Comm = 3.7 to 5.0
FEASIBILITY Study (2015)
CONDO (GFA - (GFA x 30%) ) / 500sf
338 units (1200sf)
TCC x 30% x 8% x 2 yr Land cost = 14% x gdv 146 mil 7.2 mil 5.3 mil 3.4 mil 162 mil 9.7 mil TCC
DEAL STRUCTURING
GDV = 265mil TCC = 146 mil (55% x gdv) Land cost = 36 mil Profit = 54 mil Working Capital = 22 mil Density = 80 units per ac LOAN Term loan 60% Land cost 22,105,829 Bridiging 25%TCC 36,539,962 58,645,791 Working Capital Land Land 40% cost 14,737,219 Consultant (upon D.O) 40% 2,880,907 Prelim / Mobilization 3% 4,384,795 22,002,922 If plot ratio = GFA / LA = 2.75 GFA 507,480.0 Plot ratio 2.75 How to increase GDV? Increase Density = 80 units to 100 units = 100 x 4.3 x Rm 780k = Rm 335mil Re zone into Commercial = Plot ratio 4.5? = 4.3ac x 4.5 x RM 650psf = 400 mil Increase size? How to decrease Working Capital? Increase Loan = Term + Bridging Borrow further OD working capital RC = Revolving Credit Defer payment for Land Cost Defer Main Con NEW FEASI; GDV = 350 mil PBT = 70 mil Working cap = 15mil Rm 1 : Rm 4.6 = 460%
SALE Loan Strategy COST MAIN CONTRACTOR Strategy LAND COST Payment terms FINANCING Funding Strategy PROFIT Working Cap PROFIT
LOAN STRATEGY
WHY E-BIKE? Reduce car park problem Easy to park No need to pay car park Family time. Ride with kids Go green. No petrol needed. Go green. No noise Increase Repeat walk in to Sale Office. Test run. Reduce Loan reject rate. Increase Sale.
Construction Cost Strategy
Main Con Strategy BULLET PAYMENT = 146 mil Upon signing contract = 5% to 10% Upon Completion = 85% Retention 1 yr = 5% Bank Guaranteed is required = 1% per year Developer save loan interest = 30% x TCC x 7% = 3mil Main Con profit sharing = (15% or 20%) x PBT Total Profit = (146mil x 6%) + (17% x 70mil) = 8.8 mil + 12 mil = 20.8 mil @14% margin NEW FEASI; GDV = 350 mil TCC = 146 mil Bridging loan 30% = 44mil Term loan 70% = 25 mil PBT = 70 mil Working cap = 15mil Rm 1 : Rm 4 = 400% Land Cost = Rm 36 mil
LAND COST PAYMENT TERMS
Land Owner Payment Term; Model A Booking = 2% SPA = 8% = within 1 month 90% = 3+1 month NEW FEASI; GDV = 350 mil PBT = 70 mil Working cap = 15mil Rm 1 : Rm 4 = 400% Land Cost = Rm 36 mil Model B Booking = 2% SPA = 8% within 1 month 90% within 9 month / upon Development Order Model C Booking = 2% SPA = 8% within 1 month 60% within 9 month 30% in kind
Financing Strategy
NEW FUNDING TOTAL BORROWING = 30% X NTA Min amount USD 10 mil. No need to charge land. Borrower must provide CORPORATE GUARANTEED. Borrowing interest = 6% Max loan tenure = 3+2 yr. up to 15 yrs. Pay back Principal in yr 4. Borrower need to hv 5% to 15% x Loan amount in corporate bank current account. Loan Margin = up to 85% x Total Construction Cost. Good for Hotel / Mall / Dev project Good for Working capital purpose, avoid shareholder s cash call. Non listed is allowed to borrow too. Allow to combine 2 sdn bhd to achieve NTA. Borrowing release via local CHINA bank.
SALE Loan Strategy COST MAIN CONTRACTOR Strategy LAND COST Payment terms FINANCING Funding Strategy PROFIT Working Cap PROFIT
CONCLUSION
CONCLUSION Outright (Resell at 61mil)
CONCLUSION DEVELOPMENT IF Buy this land in 2015, at RM 36.8 mil land cost = Rm 200 psf NEW FEASI; GDV = 350 mil @ Rm 650psf TCC = 175 mil Bridging loan 30% = 52mil Term loan 60% = 22 mil PBT = 70 mil Working cap = 15mil Rm 1 : Rm 4 = 400% Land Cost = Rm 36 mil
CONCLUSION JOINT VENTURE IF JV this land in 2015, at RM 53 mil land cost = Rm 277 psf Rm 53 mil / GDV = 15% land cost May be Plus, 10% shares x PBT = 5.3mil Thus total land owner entitlement= 58.5mil @ Rm 312 psf SPV = Developer + Owner NEW FEASI; GDV = 350 mil @ Rm 650psf TCC = 175 mil Bridging loan 30% = 52mil Term loan 70% = 37 mil Developer PBT = 53 mil Working cap = 15mil Rm 1 : Rm 3.5 = 350% Land Cost (JV) = Rm 53 mil Advantage of JV; Working Capital Vs Profit Upfront payment Less commitment to Bank Allow to charge Land for development purposes
JOINT VENTURE KEY TERMS
JV KEY TERMS 1OK to charge land provided with Bank guaranteed / Corporate guaranteed for entitlement 220% x GDV = Land owner entitlement 20% x Rm 350 = Rm 70 mil 3Upfront payment = 10% x Rm 70mil = Rm 7 mil Payable upon signing JV agreement 4Share subscribe at 20% x 70mil = 14mil 5Land cost payment terms across 4 yrs NEW FEASI; GDV = 350 mil TCC = 146 mil Bridging loan 30% = 44mil Term loan 70% = 25 mil PBT = 70 mil Working cap = 15mil Rm 1 : Rm 4 = 400% Land Cost = Rm 36 mil 6Land is converted and Premium paid by Land Owner 7Development Charges is paid by Land Owner 8Min Plot ratio is 4.0 9Power Attorney is given to Developer for D.O / Bplan and property development purposes 10 Developer guaranteed min GDV
SALE Loan Strategy COST MAIN CONTRACTOR Strategy LAND COST Payment terms FINANCING Funding Strategy PROFIT Working Cap PROFIT
NEXT HOT LAND
Next Hot Land Rawang Rm 22 psf Puncak Alam Rm 15psf Batu Kawan Rm 40psf Pajam Rm 9.70psf. X 3ac = 1.2 mil Sg Besi Rm 400psf KL is better. Eco world bungalow land = Rm 100psf
Land Partnership Opportunities; 1) Rawang jv land = 13% x gdv 2) 100 ac 10 min to damansara. GDV 2.4B. Profit 500 mil. Land cost 200 mil 3) Klang Industrial land 50 ac - Land cost = Rm 56psf - GDV = 500 mil. PBT = 150 mil 4) China / etc 5) RTO / IPO / PE 6) Bukit bintang land. 7) Setia alam 7.8ac Ideal Partner; Good Fund; 1) Bankable Profile 2) User Or Good Deal / Land 1) 1 to 10 ratio 2) Land cost vs GDV 3) Working capital vs PBT
QnA Thank You Call me if u have Land for sale Land for JV Enblock for sale Good Funds : ) If u want to seek opinions. Pls call us! tanhwachuan@yahoo.com www.bigproperties.com.my Facebook / tanhwachuan Google.com/tanhwachuan Youtube.com/tanhwachuan