A Fool Checks In With Perennial Real Estate Holdings Limited’s Development Project In Malaysia

During Christmas, I visited Penang, Malaysia. Apart from enjoying the good food, I spent some time in the sales gallery of The Light project by IJM Corporation Bhd (KLSE:3336.KL)

The Light is a high-end waterfront development overseeing the Penang bridge. Perennial Real Estate Holdings Limited (SGX: 40S) announced in 2015 that it had entered into a 50-50 joint venture with IJM to co-develop the second phase of the project.

The first phase, which was developed solely by IJM, is already completed. There is no official name for the joint-venture at the moment, thus to make things simpler, I would refer to it as The Light Phase Two.

Source: Stanley Lim; Scale model of The Light Phase One

According to my chat with the sales rep, The Light Phase Two is not launched yet and is being redesigned at the moment.

Source: Stanley Lim; Old scale model of The Light Phase Two (to be redesigned)

The reception for phase one of the project appears to be a success. Phase one is a collection of high-end residential developments that include condominiums, town-houses, and even four-storey waterfront villas that are worth around RM15 million each.

Source: Stanley Lim; Four-storey villa within The Light Phase One

The sales manager at IJM’s sales gallery also mentioned that the new design for phase two might be completed by the first quarter of 2017. As previously announced by Perennial, The Light Phase Two would be an integrated development with retail, entertainment, residential, and hospitality components. There would even be a conventions and exhibitions centre.

Source: Stanley Lim; Site for The Light Phase Two

The site for phase two of the project will be roughly 32 acres in size. When I saw the land, I noted that it has been cleared and prepared, so construction should be able to start whenever the two companies in the joint-venture decide to launch the project. Perennial expects the total development cost of the project to be more than RM3.0 billion.

Although I was unable to see any detail about how The Light Phase Two would look like, I got a chance to visit some of the showroom units of phase one. The visit gave me the opportunity to better understand the workmanship as well as concept of the whole development.

Source: Stanley Lim; Completed low-rise condominium of The Light Phase One

The build-quality of the properties in phase one looked impressive to me. The waterfront concept of the whole area is almost like a world of its own.

Given the success of phase one of the project and the great location of the site, I left the tour feeling relatively optimistic about it. However, it is still too early to know how the project will perform for Perennial in the coming years. At this moment, the new design for The Light Phase Two is still unknown.

Source: Stanley Lim; low-rise condominium in The Light Phase One, Overlooking the land for Phase Two

IJM is currently trading at 1.3 times book value and offers a 2.2% dividend yield. Perennial Real Estate has a price-to-book ratio of 0.5 and offers a dividend yield of only 0.5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Perennial Real Estate Holdings Limited.