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Thursday, June 25, 2009

MK Land eyes RM3b Indian JV project

(From left): Emkay Group COO Peter Teh, Mustapha Kamal, Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir and Jitendra at the signing of the MoU at Damansara Perdana, Petaling Jaya yesterday. Photo by Chu Juck Seng

PETALING JAYA: MK Land Holdings Bhd is venturing into India, partnering India’s property developer Embassy Group for an integrated township development with a gross development value (GDV) of RM3 billion on a 120ha parcel of land in northern Bangalore.

The joint venture (JV) also sees the participation of MK Land’s sister company, MKN Embassy Development Sdn Bhd, which is under the privately owned Emkay group. The project will be undertaken by a JV company named Milan Gateway Sdn Bhd.

MK Land, via Ritma Mantap Sdn Bhd, and Embassy, via Star Dreams, each holds a 47.5% stake in the JV company, while MKN Embassy owns the remaining 5%.

MK Land chairman and chief executive officer Tan Sri Mustapha Kamal Abu Bakar, who is also the chairman of Emkay, said the project would serve as a stepping stone for the group to expand to other parts of India.

“We are replicating our previous developments (in Malaysia) into that development (in Bangalore). If we implement it successfully in Bangalore, there is tremendous potential in the whole of India. This is just the beginning,” he told reporters after the signing of a memorandum of understanding among the three companies here yesterday.

While the JV partners had yet to decide on the exact investment in the project, Mustapha said it would need to invest at least US$10 million (RM35.3 million) to start a project in India.

He said MK Land would fund its portion of the investment using internal funds. He added that funding was not a problem, as the company had returned to the black with a nine-month net profit of RM13.25 million up to March 31, and had recently redeemed its final tranche of outstanding bonds amounting to RM60 million.

Mustapha said construction on the Bangalore project would start about a year later after obtaining the necessary approvals from the Indian authorities. The expected returns of the project are about 20%.

The project to last more than five years would build 16,000 units of apartments ranging from 650 sq ft to 1,200 sq ft and 560 units of retail shops.

Embassy Group executive chairman Jitendra Mohandas Virwani said the houses would fetch selling prices of RM100,000 to RM150,000, which are considered “affordable homes” in India for the lower middle-income group.

Citing Indicus Analytics Research, he said urban India would need to build at least 10.5 million houses in the next six years to meet rising demand, and that 65% of the demand in India’s top 112 cities is for houses less than 1,000 sq ft.

This is not the first time MK Land/Emkay group collaborates with Embassy. Emkay and Embassy had previously set up MKN Embassy to jointly undertake a RM400 million office building project known as MKN Embassy Techzone in Cyberjaya.

The MK Land/Emkay group had previously ventured into Namibia in 1993. It was involved in construction and housing project in the South African country.

By The EDGE Malaysia (by Gan Yen Kuan)

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