LAND INVESTMENT Vs DEVELOPMENT vs JOINT VENTURE
Tan hwa chuan
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Tan hwa chuan is a Merger n Acquisition specialist for land investment and development.
He is Director of B.I.G group of companies, an organization specializes in property development, investment, real estate advisory, merger and acquisition.
He develops and fine tunes his methods and making him one of reliable real estate partners in Malaysia today.
His MnA daily job scopes cover; Business development and marketing for Property Development. Sourcing land, government study, market study, draft design, preparing feasibility study and cashflow for property development. Grouping for enblock marketing to ease the cashflow of a property development. Due to his nature of jobs, Tan always has the opportunities to get good properties before launching or below market value.
Tan graduated from Warwick University, UK, in master of science in engineering business management. He was top student with flying color results. He is shareholder / director for a few property development projects n companies. Sunway Eastwood sb – 33ac. 259 units Semi D. Gdv = Rm 370mil. Completed. Mitraland Melawati sb – 9ac. 100 units Residential. Gdv = Rm 220 mil. Completed. 7.8ac Commercial Land in Setia Alam. 9ac JV land in Semenyih. A few others
He is the Author for a popular book, Make BIG Money via Land.
More info www.bigproperties.com.my Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB AGENDA
• LAND Investmment Vs Development Vs Joint Venture
– LOAN STRATEGY
– Main Con Strategy
– Land Cost Strategy
– New Funding Strategy
• Next Hot Land
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB SALE Loan Strategy
COST MAIN CONTRACTOR Strategy
LAND COST Payment terms
FINANCING Funding Strategy
PROFIT Working Cap Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB PROFIT LAND FOR SALE
(KL)
JALAN IPOH
4.3 ACRES
(2009)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Sri Damansara DESA PARK
Subject Land
New Carefour KTM STATION
Jaya • Mall Jusco • Kepong – Chinese village • Batu caves
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB MONT KIARA Selayang
kepong
90% COMPLETED
100% 100% COMPLETED 80% COMPLETED COMPLETED TESCO 8 acres Shops Lake Main Access
Subject Land • Old town • jam
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Water ?
Implication?
Implication?
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Lake View
Lake View
Middle Ring Road To Wan Utama Lake View
KLCC Subject Land View (Adjoining Lake) Lake Lake View View
How to draw? Ipoh Jalan To Jalan Kuching Jalan To
Tmn Tasik Indah Lake New KTM View Station Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Color code? Subject Land
Tesco
Jalan Jalan IPOH Jalan Jalan Kuching
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Jalan Ipoh Land – Sri Utara 2009 . 4.3 acres.
. Leasehold 99
. Fronting and Adjoining Lake (size approx 8 acres)
. Tesco is located nearby (walking 5 mins, driving 1 min)
. 2 min driving to new KTM Station (located in Taman Wahyu n Tmn Mastiara)
. Walking distance to amenities. (banks, old town kopitiam, restaurants. offices)
. Neighbouring are SEMI D, Super Links
. 7 acres of landscape and jogging track surround this land, lake and township
. Subject Land can access to Jln Kuching via Jln Ipoh Main road or via Alternative Road (Tmn Wahyu exit at TNB Jinjang) to Jln Kuching.
. Converted Development Land.
. RM 82 psf (negotiable) = RM 15.36 mil. Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Distance Analysis 10 mins to Wan Utama, The Curve, Mutiara Damansara, Taman Tun, Petaling Utara. 5 mins to Sri Hartamas. Mont Kiara 8 km to KLCC (10 to 13 mins driving) Easy Access Highway; 2 mins to Jalan Kuching via Jalan Ipoh 1 min to Middle Ring Road 8 min to LDP highway via Middle Ring Road 80km / 60 min 5 min to NKVE Jln Kuching or Middle Ring Road 10km =
Development Order obtained (lapsed) for; 336 orang per ac. (66 unit per acre) 3 blocks of Condo = 284 units Condo 10 storey (76 units) 13 storey (100 units) 18 storey (108 units)
Ready with infra; Tar Road access (80’ road access) Water Supply Electricity tap point Oxidation infra Back filling is done 10 years ago. etc.
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Pricing Factors; 2009 SUBSALE
Sri Utara . Semi D = approx RM 1 mil (approx 3.5k sqf)
. Super link = RM 640k per unit (approx 3k sqf)
. Gated community. Approx RM 170 per month.
. Townhouse = RM 350k . (1600 sqf) (Subsale price) (no facilities) . Launched 3 years ago.
.All Leasehold 99
Taman Tasik Indah; . RM 640k (3k sqf) (Subsale price) HALF PRICE STRATEGY . Completed 5 years ago . Gated community . All Leasehold 99
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB High End SEMI D
Landscape
80’ Road 8 acre Lake + Park
Main road Acess From Jln Ipoh (Jln Kuching)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB NOT MRR II SUBJECT LAND
8 acre Lake
SUBJECT LAND
SUBJECT LAND
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Brand New Super Link Houses Water tank Can be tapped
Subject Land
Subject Land
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB New Super Link Houses
80’ ROAD ACCESS TO THIS LAND
- Brand New Infra - road, lights, surroundings Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB - 5 mins walking distance (1 min) to TESCO. Shoppers? Adjoining sri Utara = 90% Chinese
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB - Subject land located within 72 acres Sri Utara Township - All gated community. Feasibility Study - 7Tan acres Hwa Open Chuan Park (Landscape) surroundedCopyright of this B.I.G 72 acresPlots Township SB . Surrendered to dbkl? DBKL 2020 CITY DRAT PLAN
• Draft Plan is welcome for changes. • Malaysia Boleh!
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB SUPER LINKHOUSES
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Pls refer to R3 Table
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB DBKL Requirements (Under New KL 2020 Draft Plan); . Subject Land is under R3 Residential. . 160 persons to 400 persons per acre = max 100 units per ac . No height control . Pls check with KL Draft Plan for R3 Classification Table. . Zoning is not Gazette, thus it is possible to be dezoned for other purposes
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB TITLE
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB DIMENSION
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Your text here
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Market STUDY
Bandar Menjalara (Kepong)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Sri Damansara Apartment Medan Putra Apartment Manjalara Apartment - Subsale RM 150 psf -RM 170 psf (new launch) - RM 150 psf sub sale - Complete mid 09
4 acre Lake Jaya Jusco
North Shore Condo Nadia Condo Why Same Area Different Pricing? -RM 550 psf (new) -RM 450 psf subsale - Launched in 2008 Jan - Lake View - Sold 90% within 2 mths - Near Jusco Feasibility Study - Lake View - Completed in 2005 Tan Hwa Chuan Copyright of B.I.G Plots SB - Complete in 2011. Case Study Conclustion Why Desa Park can fetch RM 550 psf?
While Medium Class Menjalara is RM 170 psf?
• Lake (4 acre) View condo • Walking distance to Jaya Jusco • Gated + Guarded community • Nice landscape
Similarity in Sri Utara Land • Lake View condo (adjoining 8 acre lake) • Walking distance to TESCO • Gated + Guarded community • Not too bad landscape environment • RM 250 psf in Batu Caves and Selayang area. • Can we fetch RM 330 psf in Sri Utara?
HuaYang Symphony • Rm 250k / 1100sf = 227psf (adjoining TNB)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB QUICK FEASI (2010)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB QUICK FEASI = CONDO (2010)
GDV = RM 320 psf x 1300 sqf x 80 units x 4.3 acres = RM 143 mil (RM 416k per unit)
Net Profit @ 20% = RM 29 mil
Land Cost = RM 15 mil @ RM 80 psf (negotiable)
Note: Subsale link house in Taman Tasik Indah = RM 640k per unit Subsale link house in Sri Utara = RM 650k per unit
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB QUICK FEASI = SEMI D
GDV = 8 units x 4.3 acres = 32 units = Unit price = Rm 580psf x 3500 = Rm 2. mil
= RM 2 mil x 32 = RM 64 mil
Net Profit @ 20% = RM 12.8 mil
Land Cost = RM 15 mil @ RM 80 psf (negotiable)
Note: Subsale link house in Taman Tasik Indah = RM 640k per unit Subsale link house in Sri Utara = RM 650k per unit
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Market Study (2015)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Lakeville Residence - 2015
• Land Area : 12.38 acre • Leasehold • 6 Blocks of Residential • 37 to 41 storey • Total 1800 units = 150 units per ac (if resi) • Landscape & facilities 3 acre • 2 car park • Built-up area 977 to 1,329 sq ft = average 1150sf x 1800 units • NSA = 2 mil sf • GFA = 2 mil sf / 73% = 2.74 mil sf • 2.74mil / Land area = 5.0 Plot ratio • Completion Aug 2018 • 977 sq ft @ Price RM600,000 • Phase 1 Blocks A & B – RM570psf • Phase 2 Block E – RM650psf @ 30% sold since June to July 2015 • Block F – RM650psf @ 80% sold since Nov 2014 to July 2015 • Package Discount 10%
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Eco Sky by Eco World - 2015 • Land Area: 9.6 acres • Freehold. Commercial land • Retail & Office – no info • 3 Block Residential • 39 to 41 storey • Total 975 units. If resi = 100 units per ac. Average 1200sf x 975units • NSA = 1.17 mil sf • GFA = 1.17 / 75% = 1.56 mil sf • Plot ratio = 1.56mil sf / LA = 3.7 • 2 car park • Built-up area 861 to 1,905 sq ft • Completion Block A & B at End 2017, C at Mid 2018 • 936 sq ft @ RM714,000 • Block A @ RM650 psf @ 100% sold within 1 mth. • Block B @ RM650 psf @ 100% sold within 1 month • Block C @ RM720 psf @ 50% sold since Mid 2014 to July 2015. within 1 yr • Discount 5% to 7% depend layout • Booking RM10,000 • Free legal SPA & loan
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Conclusion DBKL Study
• Resi = 100 to 145 units per ac • Comm = 3.7 to 5.0
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB FEASIBILITY Study (2015)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB CONDO
(GFA - (GFA x 30%) ) / 500sf Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB 338 units (1200sf)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB TCC x 30% x 8% x 2 yr
Land cost = 14% x gdv
146 mil 7.2 mil 5.3 mil 3.4 mil 162 mil 9.7 mil
TCC
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB DEAL STRUCTURING
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB LOAN • GDV = 265mil Term loan 60% Land cost 22,105,829 Bridiging 25%TCC 36,539,962 • TCC = 146 mil (55% x gdv) 58,645,791 • Land cost = 36 mil Working Capital • Profit = 54 mil Land Land 40%cost 14,737,219 • Working Capital = 22 mil Consultant (upon D.O) 40% 2,880,907 • Density = 80 units per ac Prelim / Mobilization 3% 4,384,795 22,002,922 • If plot ratio = GFA / LA = 2.75 GFA 507,480.0 Plot ratio 2.75
How to increase GDV ? • Increase Density = 80 units to 100 units = 100 x 4.3 x Rm 780k = Rm 335mil • Re zone into Commercial = Plot ratio 4.5? = 4.3ac x 4.5 x RM 650psf = 400 mil • Increase size?
How to decrease Working Capital ? NEW FEASI; • Increase Loan = Term + Bridging • GDV = 350 mil • Borrow further – OD working capital • PBT = 70 mil • RC = Revolving Credit • Working cap = 15mil • Defer payment for Land Cost • Rm 1 : Rm 4.6 = 460% • Defer Main Con
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB SALE Loan Strategy
COST MAIN CONTRACTOR Strategy
LAND COST Payment terms
FINANCING Funding Strategy
PROFIT Working Cap Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB PROFIT LOAN STRATEGY
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB WHY E-BIKE ?
• Reduce car park problem • Easy to park • No need to pay car park • Family time. Ride with kids • Go green. No petrol needed. • Go green. No noise • Increase Repeat walk in to Sale Office. Test run. • Reduce Loan reject rate. Increase Sale.
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Construction Cost Strategy
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Main Con Strategy
NEW FEASI; • BULLET PAYMENT = 146 mil • GDV = 350 mil • Upon signing contract = 5% to 10% • TCC = 146 mil • Upon Completion = 85% • Bridging loan 30% = 44mil • Retention 1 yr = 5% • Term loan 70% = 25 mil • PBT = 70 mil • Bank Guaranteed is required = 1% per year • Working cap = 15mil • Developer save loan interest = 30% x TCC x 7% = 3mil • Rm 1 : Rm 4 = 400% • Land Cost = Rm 36 mil • Main Con profit sharing = (15% or 20%) x PBT • Total Profit = (146mil x 6%) + (17% x 70mil) • = 8.8 mil + 12 mil = 20.8 mil @14% margin
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB LAND COST PAYMENT TERMS
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB NEW FEASI; • GDV = 350 mil Land Owner Payment Term; • PBT = 70 mil • Working cap = 15mil Model A • Rm 1 : Rm 4 = 400% • Booking = 2% • Land Cost = Rm 36 mil • SPA = 8% = within 1 month • 90% = 3+1 month
Model B • Booking = 2% • SPA = 8% within 1 month • 90% within 9 month / upon Development Order
Model C • Booking = 2% • SPA = 8% within 1 month • 60% within 9 month • 30% in kind
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Financing Strategy
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB NEW FUNDING
• TOTAL BORROWING = 30% X NTA • Min amount USD 10 mil. • No need to charge land. • Borrower must provide CORPORATE GUARANTEED. • Borrowing interest = 6% • Max loan tenure = 3+2 yr. up to 15 yrs. • Pay back Principal in yr 4. • Borrower need to hv 5% to 15% x Loan amount in corporate bank current account. • Loan Margin = up to 85% x Total Construction Cost. • Good for Hotel / Mall / Dev project • Good for Working capital purpose, avoid shareholder’s cash call. • Non listed is allowed to borrow too. Allow to combine 2 sdn bhd to achieve NTA. • Borrowing release via local CHINA bank.
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB SALE Loan Strategy
COST MAIN CONTRACTOR Strategy
LAND COST Payment terms
FINANCING Funding Strategy
PROFIT Working Cap Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB PROFIT CONCLUSION
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB CONCLUSION – Outright
(Resell at 61mil)
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB CONCLUSION – DEVELOPMENT
IF Buy this land in 2015, at RM 36.8 mil land cost = Rm 200 psf
NEW FEASI; • GDV = 350 mil @ Rm 650psf • TCC = 175 mil • Bridging loan 30% = 52mil • Term loan 60% = 22 mil • PBT = 70 mil • Working cap = 15mil • Rm 1 : Rm 4 = 400% • Land Cost = Rm 36 mil
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB CONCLUSION – JOINT VENTURE
• IF JV this land in 2015, at RM 53 mil land cost = Rm 277 psf • Rm 53 mil / GDV = 15% land cost • May be Plus, 10% shares x PBT = 5.3mil SPV = Developer + Owner • Thus total land owner entitlement= 58.5mil @ Rm 312 psf
NEW FEASI; • GDV = 350 mil @ Rm 650psf • TCC = 175 mil • Bridging loan 30% = 52mil • Term loan 70% = 37 mil
• Developer PBT = 53 mil Advantage of JV; • Working cap = 15mil • Working Capital Vs Profit • Upfront payment • Rm 1 : Rm 3.5 = 350% • Less commitment to Bank • Land Cost (JV) = Rm 53 mil • Allow to charge Land for development purposes
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB JOINT VENTURE KEY TERMS
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB JV KEY TERMS
NEW FEASI; 1OK to charge land provided with Bank guaranteed / Corporate guaranteed for entitlement • GDV = 350 mil • TCC = 146 mil 220% x GDV = Land owner entitlement 20% x Rm 350 = Rm 70 mil • Bridging loan 30% = 44mil • Term loan 70% = 25 mil 3Upfront payment = 10% x Rm 70mil = Rm 7 mil Payable upon signing JV agreement • PBT = 70 mil • Working cap = 15mil 4Share subscribe at 20% x 70mil = 14mil • Rm 1 : Rm 4 = 400% 5Land cost payment terms across 4 yrs • Land Cost = Rm 36 mil
6Land is converted and Premium paid by Land Owner
7Development Charges is paid by Land Owner
8Min Plot ratio is 4.0
9Power Attorney is given to Developer for D.O / Bplan and property development purposes
10 Developer guaranteed min GDV
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB SALE Loan Strategy
COST MAIN CONTRACTOR Strategy
LAND COST Payment terms
FINANCING Funding Strategy
PROFIT Working Cap Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB PROFIT NEXT HOT LAND
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Next Hot Land
• Rawang – Rm 22 psf • Puncak Alam – Rm 15psf • Batu Kawan – Rm 40psf • Pajam – Rm 9.70psf. X 3ac = 1.2 mil Eco world bungalow land = Rm 100psf • Sg Besi – Rm 400psf • KL is better.
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB Land Partnership Opportunities;
1) Rawang jv land = 13% x gdv
2) 100 ac – 10 min to damansara. GDV 2.4B. Profit 500 mil. Land cost 200 mil
3) Klang Industrial land – 50 ac - Land cost = Rm 56psf - GDV = 500 mil. PBT = 150 mil
4) China / etc Ideal Partner;
5) RTO / IPO / PE Good Fund; 1) Bankable Profile 6) Bukit bintang land. 2) User
7) Setia alam – 7.8ac Or
Good Deal / Land 1) 1 to 10 ratio 2) Land cost vs GDV 3) Working capital vs PBT
Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB QnA Thank You
Call me if u have • Land for sale • Land for JV • Enblock for sale • Good Funds : )
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Feasibility Study Tan Hwa Chuan Copyright of B.I.G Plots SB