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Wednesday, March 25, 2009

Magna mulling features of RM1.3b project

Magna Prima Bhd may build luxury residences or office towers, or both, on the 1.05ha prime site in Jalan Ampang, Kuala Lumpur, which it is buying from a school association.

It is learned that Magna is finalising the development features, which will be market-driven.

"We are doing a study to decide on the best components. It may be office towers, or commercial and residential mix," an official said on condition of anonymity.

The project, worth more than RM1.3 billion, will begin in 2012 and be completed in four years.

It will be Magna's single largest development to date and its second project in the Kuala Lumpur City Centre area.

The first was the RM300 million Avare condominium, neighbouring the Petronas Twin Towers near Jalan Stonor, launched in 2005.

"Magna aims to start the project in 2012 as it believes the economic situation will improve by then, thanks to the two stimulus packages launched by the government," the official added.

The official said it may construct the buildings on its own, or in a venture with a reputable firm to be identified later.

Magna is buying the land on which the 44-year-old Lai Meng Primary School and Kindergarten sits from the Lai Meng Girls School Association for RM148 million.

It may use its own funds as well as borrow to pay for the land, the official said.

Under the agreement, Magna is to rebuild the school and kindergarten on land it owns.

It is unclear where Magna will rebuild the school.

The company has pockets of land in Bukit Jalil and Jalan Kuching, Kuala Lumpur.

"We have not decided on the location. We will call for open tender to build the school, which will be at a choice location," the official said.

Analysts, who declined to be named, said that Magna is acquiring the land at a fair price and may sell the properties for between RM950 and RM1,000 per sq ft.

"Assuming 10 times plot ratio, construction cost of RM400 per sq ft and 80 per cent efficiency ratio, it would potentially translate into a total redevelopment cost of RM660 per sq ft, with average selling price of RM950 per sq ft, at 30 per cent margin," said an analyst.

By Business Times (by Sharen Kaur)

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