Paragon Globe to undertake RM733m GDV residential project in Johor

• Construction is expected to commence in 2025 and take seven years to complete. The gross development cost for the project is estimated at RM545.03 million.

KUALA LUMPUR (Nov 12): Paragon Globe Bhd (KL:PGLOBE) said it has secured the rights to develop 67.42 acres of land in Iskandar Puteri, Johor, for a residential project with an estimated gross development value of RM733.12 million.

The development rights were obtained through an agreement between the group’s wholly-owned unit, Paragon Globe Properties Sdn Bhd (PGPSB), and Iskandar Capital Sdn Bhd (ICSB), according to Paragon Globe's filing with Bursa Malaysia on Tuesday.

This grants the Johor-based property developer the rights to develop two prime freehold parcels: an 11.5-acre site about 450m from Jalan Ismail Sultan and a 55.92-acre site about 450m from Lebuh Kota Iskandar.

The project, which marks Paragon Globe’s entry into the landed property market, will feature 340 properties, comprising 324 semi-detached houses, two bungalows, and 14 bungalow land lots.

Construction is expected to commence in 2025 and take seven years to complete. The gross development cost for the project is estimated at RM545.03 million. As a result, Paragon Globe is expected to achieve a gross development profit of about RM188.09 million over the course of the development.

As consideration for being appointed the exclusive developer of the lands by ICSB, PGPSB has agreed to pay ICSB RM102 million in four separate installments. Paragon Globe disclosed in its Bursa Malaysia filing that the payment will be financed through a combination of internally generated funds and bank borrowings.

“We are focused on addressing the growing housing demand in Iskandar Puteri, enhancing shareholders’ value, and promoting sustainable development in line with the Johor-Singapore Special Economic Zone (JS-SEZ) driven expansion,” said Paragon Globe executive chairman Datuk Seri Edwin Tan Pei Seng in a statement.

“By developing landed property projects, we aim to diversify our portfolio while creating stable, long-term returns that support the company’s continued growth in the property sector,” said Tan who, along with his brother Datuk Seri Godwin Tan Pei Poh, controls the group through their private vehicle, Paragon Adventure Sdn Bhd, which holds a 51.8% stake.

In addition to the 67.42-acre project, Paragon Globe said PGPSB has also secured rights from ICSB to develop a 4.10-acre parcel along Jalan Marlborough. PGPSB is currently in the process of finalising the development plans for this site.

In August, Paragon Globe announced that its wholly-owned subsidiary PGB Desa Heights Sdn Bhd, entered into an agreement with Tropicana Danga Bay Sdn Bhd, a 60%-owned indirect unit of Tropicana Corp Bhd (KL:TROP) for the first serviced apartment project in Johor Bahru, with an estimated GDV of RM1.49 billion.

The project, expected to yield a profit of RM334.45 million, will feature four 36-story towers comprising a total of 2,552 serviced apartments.

For its first quarter ended June 30, 2024, Paragon Globe reported a net profit of RM5.73 million, compared to a net loss of RM826,000 in the same period a year earlier, as revenue more than doubled to RM22.95 million from RM9.14 million.

As of the end of June, Paragon Globe had cash and bank balances of RM45.35 million, compared to RM162.45 million in long-term loans and RM1.82 million in short-term loans.

Paragon Globe shares slipped half a sen or 1.69% to close at 29 sen, giving the company a market capitalisation of RM220.3 million. The counter has climbed over 31% since the start of this year.

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