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.
