land investment vs development vs joint...

Tan Hwa Chuan Feasibility Study

Copyright of B.I.G Plots SB

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



Loan Strategy SALE

COST

PROFIT

FINANCING

MAIN CONTRACTOR

Strategy

Funding Strategy

Working Cap

PROFIT

LAND COST Payment terms



LAND FOR SALE

(KL)

JALAN IPOH

4.3 ACRES

(2009)



New

KTM

STATION

Sri

Damansara DESA

PARK

Subject

Land

Jaya

Jusco

Carefour

• Mall

• Kepong – Chinese village

• Batu caves



Subject Land

TESCO

Shops

MONT KIARA

90% COMPLETED

100%

COMPLETED80%

COMPLETED

100%

COMPLETED

8 acres

LakeMain Access

• Old town

• jam

kepong

Selayang



Water ?

Implication?

Implication?



Lake

ViewLake

View

Lake

View

Lake

View

Lake

View

Lake

View

KLCC

View

Ja

lan

Ip

oh

To

Ja

lan

Ku

chin

g

Middle Ring Road

To Wan Utama

Subject Land

(Adjoining Lake)

New

KTM

Station

Tmn

Tasik Indah

How to draw?



Subject Land

Tesco

Ja

lan

Ku

chin

g

Ja

lan

IPO

H

Color code?



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

Development Order obtained (lapsed) for;

336 orang per ac. (66 unit per acre)

3 blocks of Condo = 284 units Condo

10 storey (76 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.

80km / 60 min

10km =



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

80’

Road

Main road Acess

From Jln Ipoh (Jln Kuching)

8 acre

Lake + Park

Landscape



8 acre Lake

MRR II

SUBJECT LAND

SUBJECT LAND

NOT

SUBJECT LAND



Subject Land

Brand New

Super Link Houses

Subject Land

Water tank

Can be tapped



80’ ROAD ACCESS

TO THIS LAND

New

Super Link Houses

- 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)



4 acre

Lake

Nadia Condo

-RM 450 psf subsale

- Lake View

- Near Jusco

- Completed in 2005

North Shore Condo

-RM 550 psf (new)

- Launched in 2008 Jan

- Sold 90% within 2 mths

- Lake View

- Complete in 2011.

Medan Putra Apartment

-RM 170 psf (new launch)

- Complete mid 09

Manjalara Apartment

- RM 150 psf sub sale

Sri Damansara Apartment

- Subsale RM 150 psf

Jaya

Jusco

Why Same Area Different Pricing?



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)



• 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%

Lakeville Residence - 2015



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

TCC

146 mil 7.2 mil 5.3 mil 3.4 mil 162 mil9.7 mil



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

• 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

LOAN

Term loan 60% Land cost 22,105,829

Bridiging 25%TCC 36,539,962

58,645,791

Working Capital

Land 40%

Land

cost 14,737,219

Consultant (upon D.O) 40% 2,880,907

Prelim / Mobilization 3% 4,384,795

22,002,922

NEW FEASI;

• GDV = 350 mil

• PBT = 70 mil

• Working cap = 15mil

• Rm 1 : Rm 4.6 = 460%



Loan Strategy SALE

COST

PROFIT

FINANCING

MAIN CONTRACTOR

Strategy

Funding Strategy

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

NEW FEASI;

• GDV = 350 mil

• TCC = 146 mil

• Bridging loan 30% = 44mil

• Term loan 70% = 25 mil

• PBT = 70 mil


• Rm 1 : Rm 4 = 400%

• Land Cost = Rm 36 mil

• 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



LAND COST

PAYMENT TERMS



NEW FEASI;

• GDV = 350 mil

• PBT = 70 mil


• Rm 1 : Rm 4 = 400%


Land Owner Payment Term;

Model A

• Booking = 2%

• SPA = 8% = within 1 month

• 90% = 3+1 month

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.



Loan Strategy SALE

COST

PROFIT

FINANCING

MAIN CONTRACTOR

Strategy

Funding Strategy

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



• PBT = 70 mil


• Rm 1 : Rm 4 = 400%




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

NEW FEASI;

• GDV = 350 mil @ Rm 650psf

• TCC = 175 mil



• Developer PBT = 53 mil


• 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

SPV = Developer + Owner



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

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

NEW FEASI;

• GDV = 350 mil

• TCC = 146 mil



• PBT = 70 mil


• Rm 1 : Rm 4 = 400%




Loan Strategy SALE

COST

PROFIT

FINANCING

MAIN CONTRACTOR

Strategy

Funding Strategy

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 Eco world bungalow land = Rm 100psf

• Sg Besi – Rm 400psf

• KL is better.



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!

• [email protected]

• www.bigproperties.com.my

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