KUALA LUMPUR: Property and construction company Jiankun International Bhd is expanding its real estate development activities in the northern states with the acquisition of Penang-based Oriental Link Properties (M) Sdn Bhd.
Jiankun is upbeat about the Penang property market, given that the effects of Covid-19 have generally subsided in the state, especially since the start of the endemic phase in April 2022.
Last year, 23,481 properties valued at RM13.38 billion were sold, representing a 34 per cent increase in volume and a 28 per cent increase in value over the same period in 2021 (17,526 properties valued at RM10.45 billion were sold).
With 76.2 per cent of transaction volume and 59.5 per cent of transaction value in 2022, the residential property segment remained Penang's most dynamic and active subsector.
According to the PropertyGuru Malaysia Property Market Report Q3 2023, home asking prices in Penang increased by 2.1 per cent quarter-on-quarter (QoQ) in the second quarter of 2023 (Q2 2023), following a 1.6 per cent QoQ growth in Q1 2023.
Market watchers said the Penang real estate market is anticipated to strengthen in tandem with the projected moderate economic growth of 2024.
The market will be fuelled by mid-range and affordable product categories, with certain specialised high-end projects drawing in additional customers.
The Penang REHDA also anticipates that the performance of the real estate market will also improve, with increased activity occurring in some of the larger developments, including Eco Horizon and The Light City.
According to Jiankun, Oriental Link is developing Panchor Sanctuary Garden, a 7.58-acre residential development in Nibong Tebal, Penang, in a joint venture with the owner of the land.
The project has been granted a development order until Jan 31 next year and an approved building plan until April 16.
Oriental Link is also the owner and developer of a commercial project being developed on Lot 334 Jalan Paboi, as well as a piece of land in Jalan Kampung Bukit, Bayan Lepas.
Jiankun told the stock exchange on Friday that it was acquiring a 99.99 per cent equity interest in Oriental Link from the privately-held property development company's two directors Lee Khoon Eng and Lee Phaik Choo for RM9.5 million.
Khoon Eng currently holds a 99.2 per cent stake and Phaik Choo 0.79 per cent, while the remaining 0.01 per cent is still being held by its other director, Ong Cheng Tat.
Jiankun said it had entered into a conditional share sale and purchase agreement (SSPA) with Khoon Eng and Phaik Choo for the proposed acquisition.
The acquisition is expected to provide the company with an opportunity to venture into property development in the northern part of Peninsular Malaysia.
Jiankun said through the acquisition, it may start the development of the Panchor Sanctuary Garden project in the third quarter of 2024.
Barring any unforeseen circumstances, the proposed acquisition is expected to be completed by Feb 20 next year and will be funded via internal funds. Jiankun said.
In a separate statement, Jiankun said that Panchor Sanctuary Garden boasts a gross development value of RM72.69 million, with a gross development cost of RM54.54 million.
The acquisition is not subject to the approval of Jiankun shareholders or other relevant authorities.