Group set to gain from property boom in South Johor Economic Region

Group set to gain from property boom in South Johor Economic Region

KUALA LUMPUR: With land bank and properties located right smack in the South Johor Economic Region (SJER), Kulim (M) Bhd and the other companies within the Johor Corp Bhd (JCorp) stable, stand to benefit from a potential appreciation in land values as the RM12bil development of SJER takes shape.

JCorp group chief executive Tan Sri Muhammad Ali Hashim said unit Kulim had substantial assets in and around the SJEC area and KPJ Healthcare Bhd at least three hospitals. Johor Land also has a massive development in the area.

JCorp itself has shopping complexes to hotels within the area and an international convention centre is also coming up.

“We (as a group) are ready to take advantage of these developments as (we believe) many of our subsidiaries would benefit,” he said.

Kulim managing director Ahamad Mohamad added that he saw “upside potential in property values and that offers more options for Kulim in the future.”

With so much excitement over SJER, Kulim had people knocking on its doors to divest some of its assets but Ahamad said “we are not on the market but, at the right price, we would sell anything.”

Kulim has about 10,000 acres of estates and properties in Ulu Tiram and Kota Tinggi. Kulim had re-valued its plantation land bank in 1997.

The SJER, whose master plan is expected to be announced soon, is likely to boost economic activities in the corridor and create higher demand for properties in the surrounding areas.

Even though a revaluation of assets was possible, JCorp was one of the many groups that suffered from the 1996/97 Asian financial crisis from over expansion and hefty borrowings.

To this, Muhammad Ali said: “We firmly believe a crisis will never be over and no one would know where oil prices will lead us. If it goes beyond US$80 or US$100 per barrel, there would be tough challenges and the question is how prepared are we.

The last crisis has taught us to be better prepared as we went into the eye of the storm with borrowings around our neck but we managed to religiously discipline ourselves.”

For financial year ended Dec 31, 2005, JCorp reported a pre-tax profit of RM243mil on turnover of RM2.6bil. By 2012, JCorp is expected to be debt free.