KUALA LUMPUR: Maybank IB Research said that S P Setia Bhd's (SPSB) latest prime land acquisition in Melbourne, Australia is a positive move as it marks the group's first landbanking activity in two years.
In a note today, the research house said that the parcel of land in question is strategically located in Melbourne's central business district (CBD) and is estimating a development net profit of RM333.5mil from the venture.
SPSB had entered into a conditional contract of sale with Australia's Telstra Corp Ltd to buy 1.02 acres of freehold land in the northeast precinct of Melbourne's CBD for AUD101mil, translating to a price of AUD2,273 per square feet.
The estimated gross development value (GDV) is AUD640mil, said Maybank IB.
“The land cost of AUD101mil accounts for 16% of the estimated GDV, and is fair given in our view given its prime location. Melbourne's central public transport hub and the Royal Melbourne Institue of Technology University are within five minutes of walking distance,” it explained.
Maybank has a 'buy' call for SPSB with a target price of RM3.86 per share.
SPSB intends to turn the land into a mixed development with prime A-grade offices and retail space, as well as luxury apartment towers. The development is slated to be launched by the second half of next year. (2H17).
