PGCC: Why did the Penang Turf Club sell a goldmine?

Say you had a home that sits on vast, potentially valuable, prime land in a popular land-scarce island. You know that bigtime developers are greedily eyeing your sprawling green turf because when they look at it, you can almost see $$$$$ pop up in their eyes and hear the chek-chek-ting! of a cash register – you know, like in the cartoons.

And then someone comes by and offers to buy your land at the present (relatively cheap) market value. And instead of paying most of the purchase price in cash, he offers to build you a “better” home on his even cheaper land on the mainland. Would you jump at the offer and dance in the streets?

This is what has been bugging me the last few days. Something just doesn’t compute. Unlike the swamp land sold by the fishermen’s cooperative (which eventually was resold to the Port Klang Free Zone authority) for a pittance, the Penang Turf Club land is prized land.

So I cannot understand why the Penang Turf Club sold its 260-acre land to Abad Naluri, the associate firm of Patrick Lim’s Equine Capital, for just RM488 million in 2002.

That works out to RM43 per square foot.

Even if you exclude the portion of the land that cannot be developed, it still works out to RM64 psf, which is dirt cheap.

Today, open recreational land in Penang is worth around RM60 psf.

But with the rezoning of the Penang Turf Club land to “mixed development” the land value could leap to RM250-300 psf, which is the land value in neighbouring Jesselton. One pro-PGCC bank analyst, in his exuberance, even suggested the land could potentially be worth RM500 psf (trying to pump up the value of the land, are we?) – though I am told that real estate valuers feel that RM250-300 psf is a more realistic range.

Either way, Abad Naluri is laughing all the way to the bank – even before the first bulldozer rumbles into the site.

Surely the Penang Turf Club was aware that it would have been possible to rezone the land. The move to rezone the land was initiated in November 2002 by the Penang state government, at about the same time that Penang Turf Club members voted in favour of selling the land to Abad Naluri at an extraordinary general meeting on 25 November 2002.

Take a look at this Thoroughbred Internet report from 29 November 2002:

PENANG track sold

Penang Turf Club members have approved the sale of the land where the present racecourse is sited and endorsed the construction of a new racecourse at Batu Kawan on the Penang mainland. At an emergency general meeting of members this week, 78% voted in favour of the committee’s proposal to sell the club’ s entire land bank in Jalan Batu Gantong to developer Abad Naluri for RM488million. They also agreed for Abad Naluri to acquire a 120ha site in Batu Kawan and to construct the new racecourse and ancillary buildings for PNTC at an estimated cost of RM375 million. More than 90 percent of members voted in favour of a resolution to authorise the committee to distribute a sum of RM20,000 to each and every ordinary member of Penang Turf Club for the additional cost and inconvenience of attending the races at the new location. Work on the Penang International Equestrian Centre, as the new site will be called, is scheduled to start next year and it is expected to be ready by 2008, replacing the 64-year-old racecourse on Penang island.

The thing is, developer Abad Naluri would only be interested in the land if it was confident it could get the land rezoned to mixed development. If Abad Naluri was confident it could get the land rezoned, why couldn’t the Penang Turb Club keep the land, get it rezoned, make a windfall – and then buy cheaper land on the mainland, if it really wanted to?

Or why couldn’t the Penang state government buy the land, rezone it, and then sell the land at a much higher value – and use the windfall profit for the benefit of the people of Penang? Or better still, buy the land, maintain the zoning as open space and turn the land into a Penang State Park as a legacy for future generations of Penangites.

No wonder the developer was so thankful to the Penang Turf Club members during the launch of the PGCC on 12 Sept.

But the question remains: why did the Penang Turf Club sell its land at only RM43 per sq foot? And why did it agree to move in the first place when it was sitting on valuable prime land? Who or what really persuaded the members to sell the land at that bargain price?