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Huayang really surprised me by announcing another land acquisition in Penang mainland.
It will acquire all the shares of G Land Development for RM16.6mil, who will acquire 6 parcels of freehold land in Prai, Penang mainland for RM25mil.
So the total cost will be RM41.6mil, or about RM110 psf.
The land has an area of 8.59 acres (net 6.98 acres), is 3km from Penang bridge and is accessible through federal road (Jalan Baru).
Remember that in my last post about Huayang, I wrote that I saw Huayang's new sales office at The Frontage fronting Jalan Baru?
At that time I was a bit puzzled why Huayang sell its property in Bukit Mertajam but set up its sales office in Prai, though both location are actually not far away.
Now I know the reason.
Huayang's new sales office at The Frontage, Jalan Baru
When talking about Bukit Mertajam, the hot area is Jalan Song Ban Kheng.
When talking about Prai area, the hot area now is undoubtedly Jalan Baru.
Jalan Baru is bustling right now, with new condos such as Pinang Laguna, Palma Laguna and The Signature completed.
Condos nearby include Prominence, BM City Mall, Kelisa Residence, K Residence & Primero Heights.
Besides, there are also other upcoming condos by Aroma & Wern Properties along Jalan Baru.
Mydin Hypermarket which was opposite of Huayang's new sales office, was just opened last month.
A new KFC drive-thru restaurant was also being set up recently.
Belleview Group, a famous private developer in Penang, planned a "bigger than Mid-Valley" shopping mall and office tower on the other side of the road.
This land that Huayang proposed to acquire is previously owned by GSD Land who has already planned a development called "The Presidence" here since 2012.
The Presidence comprises a 44-storey 480-unit services apartment and 15 units shop offices.
According to the announcement, Huayang's initial plan is to develop 480 units of service apartment, 148 units of condominiums and 16 units of double storey shops with estimated GDV of RM311mil.
Will there be any oversupply situation in Jalan Baru? May be there is, to be frank, but I think property here will have good demand because of its superb location.
While that stretch of Jalan Baru is a booming area, the land that Huayang acquires is not perfect as it is located next to high voltage powerlines.
Huayang's land at Jalan Baru, Prai
So, there might be a concern whether Huayang's project here will sell well or not.
Definitely some buyers/investors will not consider this project just because of the powerlines.
However, this issue may not concern some other buyers/investors as long as the location, concept and price are good.
Tambun Indah's completed apartment Kelisa Residence launched in 2011 is also located right next to this high voltage powerlines but it is completely sold out.
In Klang Valley, there are quite a lot of projects developed next to the powerlines but it seems like it doesn't matter too much.
Anyway, we can only wait and see whether Huayang has made a correct or wrong decision.
Current subsale market asking price for adjacent Pinang Laguna is about RM300-350psf, while newer Palma Laguna is about RM350-400psf.
Huayang might price its project here at RM350-400psf I guess.
Part of Huayang's land seen from Pinang/Palma Laguna
How many pieces of lands that Huayang has in Penang now?
It's a bit confusing to me.
Initially in Jan15, Huayang first invaded Penang by acquiring 2 parcels of land in Bukit Mertajam (4.9 acres + 3.14 acres), though it seemed to announce only one of them (4.9 acres).
Then penangpropertytalk website in Sep15 revealed an upcoming development by Huayang in Bukit Minyak, which is within Bukit Mertajam.
This is confirmed as Huayang's subsidiary Tinggian Development has submitted planning permission to develop 90 units strata-titled landed houses and one block medium cost 41-storey apartment with 268 units in Aug15, and it has actually been approved in Oct15.
Initially I thought this Bukit Minyak land is the 3.14 acres land that Huayang acquired in Jan15, even though it seems too small to accommodate such development.
In Nov15, it was reported that Huayang has aborted one of the earlier land deals in Bukit Mertajam, which is the land with size 3.14 acres.
Is this aborted deal referring to Bukit Minyak land? I'm not sure but I don't think it is. The planning permission was actually approved by the authorities.
One day after Huayang submitted its application of planning permission for Bukit Minyak land through Tinggian Development, a company known as G Land Development also submitted its building plan for its phase 1 project at Jalan Baru which comprises a 44-storey 480-unit serviced apartment.
This building plan has been approved since early Oct15.
Now we know that G Land will be acquired by Huayang. So Huayang might start to sell this project as soon as when the land deal is completed in the first quarter of calendar year 2016.
It should contribute to its sales in FY17 starting from 1st Apr 2016.
As a shareholder of Huayang and a Penangite, I view this acquisition positively and hope that the deal will not be terminated like the previous two.