KUALA LUMPUR, 20 July: PRG Holdings Bhd and Baycity Park Sdn Bhd will jointly develop a high-quality affordable apartment project, consisting of 650 units priced from RM250,000 to RM450,000 each in Subang Bestari Seksyen U5, Shah Alam, Selangor.
Speaking to reporters after the signing of the development joint-venture (JV) agreement yesterday, PRG group managing director Datuk Lua Choon Hann said the project is targeted to be opened to the market by the end of this year and is expected to be completed within 36 months after its launch.
Under the agreement, PRG’s unit Premier Gesture Sdn Bhd has a 51% stake and Baycity Park 49% in the JV company called Premier Baycity Sdn Bhd, which will undertake, carry out, complete and manage the development and sale of units on behalf of Baycity Park.
In return, Premier Gesture will pay RM11 million to Baycity Park, which owns the 6.48-acre land.
Lua said the project, with build-ups ranging between 800 and 1,000 sq ft, will be funded via internal sales cash flow and bridging loans, but declined to disclose its gross development value (GDV) as it is still at preliminary stage.
He said the project would provide an opportunity for the group to expand its revenue sources, which is in line with its strategy to strengthen its presence in the property development market through acquisitions and/or JVs to secure landbank and/or property development projects.
Lua added that the project would also an opportunity for the group to participate in high-quality affordable housing, as it views the supply of medium-range housing as still very much lacking.
“Thus, venturing into this sector will benefit PRG in terms of revenue and profit from the sales of units,” Lua said, adding that he expects the project to start contributing to the group in 2017.
Meanwhile, Lua said the group’s manufacturing segment will remain as its significant contributor, although the property development segment has the potential to overtake the manufacturing segment contribution in the future.
For financial year ended Dec 31, 2015 (FY15), manufacturing segment contributed 68% to the group’s revenue compared with 92% in FY14, while property development contributed 32% in FY15, from only 8% in the previous year.
PRG, formerly known as Furniweb Industrial Products Bhd, started its operations as the manufacturer of accessories and bi-products for the furniture, textile, medical, automotive and food industries, which later include property development and construction as its core business.
Lua noted that the group’s maiden project, Picasso Residence @ Jalan Ampang, which has an estimated GDV of RM600 million, has achieved a take-up rate of 60% to date.