Tycoon land sales raise questions

A few tycoons are selling large swathes of their land in Malaysia, either directly or through companies they control. Could this be a sign of the times, in the sense that these businessmen are looking to cash out of an asset class that is set for a prolonged downturn?

“You get the feeling like these tycoons are reading the market and acting on it,” says one fund manager.

Just last month, Guocoland (M) Bhd, a company controlled by Tan Sri Quek Leng Chan said its associate company announced it was selling a large piece of land in Sepang to Petronas-owned Putrajaya Holdings Bhd.

Around RM116mil of the sales proceeds will be attributable to Guocoland, in which Quek has around 65% interest.

At around the same time, Tan Sri Lee Shin Cheng decided to sell 400 acres of his privately-owned land to IOI Properties Group Bhd for a whopping RM1.58bil.

Lee will be paid mostly in shares, nudging his stake up to 58.56% from 51.47% but will also be getting cash of around RM158mil from the sale.

Lee has since explained that the deal shows his belief in the long-term prospects of IOI Properties and that the land will enhance the prospects of the latter.

He also said that he would use the cash proceeds from the sale to buy more shares in IOI Properties. But some observers say his move, of putting his privately owned land into his listed company, can be read as a decision to not want to take the risk of holding this land in these troubling times, but rather move it into his listed company.

Another notable vendor of land in recent times is Tan Sri Danny Tan. Through his listed Tropicana Corp Bhd, he has sold more than RM1.5bil worth of land this year alone.

Tan also sought to sell a large piece of land in Gelang Patah Johor to Singapore-listed Albedo Ltd for which he would have assumed control via a reverse takeover.

That deal has since been aborted and it isn’t clear if Tan has sold that piece of land, which was valued at almost RM2bil at the time of the proposed deal.

Last year, Tan Sri Desmond Lim’s Global Oriental Bhd sold 15 acres of land in Seri Kembangan to Singapore incorporated Qingdao Investment Pte Ltd for RM142mil while in 2013, DRB Hicom Bhd, controlled by Tan Sri Syed Mokhtar divested close to 250 acres of land in Johor to Eco World Development Group Bhd for more than half a billion ringgit.