Damac signs Dh448m deal with UEM Land

Damac Properties signed a deal with UEM Land to buy into the largest urban development in South East Asia.

Wan Abdullah Wan Ibrahim, the managing director of UEM Land, briefs journalists while silhouetted against a map of Nusajaya.

DUBAI // Damac Properties has signed a Dh448 million (US$121m) deal with UEM Land from Kuala Lumpur to purchase property for development in Nusajaya, the largest integrated urban development in South East Asia. Damac will purchase three parcels of land totalling 176 hectares in Puteri Harbour, an integrated waterfront and marina development on which it will construct a 743,000 square metre mixed-use development.

Puteri Harbour - which overlooks the Strait of Johor, separating Malaysia from Singapore - will consist of commercial and residential segments and a private marina with a projected Gross Development Value (GDV) of Dh4.4 billion. It is one of seven core elements making up Nusajaya. Other precincts include a 27ha medical city, a 247ha education city, a destination resort centred around a major theme park, an industrial park focusing on the "clean" technology sector, a second residential area, as well as the new headquarters of the Johor state government, which will also include parks, gardens and federal government offices, extending over 129ha.

UEM Land, Nusajaya's master developer and a subsidiary of the publicly quoted UEM World, has planned the city to become a regional hub that will anchor the Iskandar Development Region on the southern tip of the Malay Peninsula. When completed, the city will cover 9,700ha and house 500,000 people. The total estimated development cost is 55 billion Malaysian ringgit (Dh61bn). Work on the inner lagoon of Puteri Harbour, including a marina, clubhouse and public promenade, has been completed and the marina is expected to receive its first boat by the end of this year.

Damac's investment in Nusajaya follows the announcement last December by Limitless, a subsidiary of Dubai World, that it had signed a 60-40 joint venture with UEM Land to develop the Residential North precinct in the new city. Extending to 45ha on the northern edge of Puteri Harbour, it will comprise a mixture of upmarket condominiums and canal-front villas. Limitless said that the land cost of the deal was 241.8m ringgit and the development cost would be $450m. Work will commence later this year and completion is scheduled for 2013.

Last week Malaysia Reserve, a business publication, reported that UEM Land's parent company UEM World was expecting challenging times ahead, due to rising construction and energy costs. It said that the group's revenue growth of 19 per cent in the first quarter of this year was one per cent short of its target and quoted Ahmad Pardas Senin, the group's managing director and chief executive, as saying: "Material prices are rising and we need to closely monitor our costs and ensure delivery of key projects."

UEM World's net profit for the quarter was 60.75m ringgit, a 24 per cent increase on the same period last year. [e-mail]