KUALA LUMPUR: Encorp Bhd has revised upwards the gross development value (GDV) target for its integrated township project in Bukit Katil, Malacca, by 30 per cent to about RM4.1 billion.
Chairman Tan Sri Mohd Isa Abdul Samad told Business Times that he was confident the market value would pick up next year, given the strong key economic indicators.
Encorp, which posted a net profit of RM8.8 million for the six months ended June 30, had earlier this year cut the GDV forecast for the project to RM3.2 billion because of unfavourable market conditions.
Although it has now raised the GDV back to more than RM4 billion, it is still below the initial target of RM4.9 billion announced in June last year.
This was when Encorp inked a memorandum of understanding (MoU) with its major shareholder — the Federal Land Development Authority (Felda) — to develop the latter’s 259.3ha of leasehold land for the Bukit Katil project.
“When we first estimated the GDV to be RM4.9 billion, we didn’t expect the market to slow down. We see the market improving and it will get better. Right now, I can say the target is about RM4 billion.
“Hopefully by the time we launch Phase 1 of the project, the market will improve further,” said Isa.
He said the Bukit Katil project would be developed in several phases and each would be rolled out over 10 years based on market demand.
The project, of which location a nine-minute drive from the Ayer Keroh toll plaza and about 18 minutes from Bandar Hilir, would offer a mixture of residential and commercial properties on a 80:20 ratio.
Encorp, via its wholly-owned subsidiary Encorp Bukit Katil Sdn Bhd, aims to launch Phase 1 in the third quarter of next year.
It acquired the development rights from Felda, which holds a 70.97 per cent stake in the company via investment arm Felda Investment Corp Sdn Bhd in a deal that valued the land at RM380 million, or RM13.61 per sq ft.
The amount adds up to RM583.6 million, considering that it is to be paid over 13 years and at a discount rate of about nine per cent.
Last Wednesday, Encorp told Bursa Malaysia that the proposed acceptance of development rights from Felda by Encorp Bukit Katil, in relation to the development of the land parcel, had been completed.
Encorp shares closed five sen higher at 74 sen yesterday.