Win-win situation for Melati Ehsan on Kelana Jaya redevelopment project

KUALA LUMPUR (April 27): Melati Ehsan Holdings Bhd believes it will not come out badly if the Petaling Jaya City Council (MBPJ) rejects a resubmitted application for a development order to redevelop the 7.5ha PKNS (Selangor State Development Corp ) Sports Complex in Kelana Jaya, Selangor. 

This is because the compensation for the project cancellation would offset the expected loss of revenue, reported The Edge Financial Daily today

"It's a win-win situation for Melati Ehsan, either way. If it gets to do the project, it will be a boost to the construction firm's earnings but it could take 10 years to complete the project," a source told The Edge Financial Daily. "But if it gets compensated for the cancellation, it could mean immediate extraordinary gains for the company."

The source close to the matter said that “if MBPJ rejects the proposed redevelopment, then the council must buy the piece of land from PKNS that is to be valued at current market prices. PKNS will then use the money to compensate Melati Ehsan.”

While the quantum of compensation is not known, it is estimated that current market prices of land in the vicinity of PKNS Sports Complex are between RM1,300 psf and RM1,500 psf due to land scarcity in Petaling Jaya.

The land was RM420 psf at the time when the project was conceptualised.

PKNS owns the land that the sports complex currently sits on and stands to gain between RM1 billion and RM1.2 billion from the sale of the land.

Melati Ehsan is controlled by businessman Tan Sri Yap Suan Chee, in a joint venture with PKNS. The proposed RM1.62 billion redevelopment of the 34-year-old sports complex is to feature 35-storey apartment blocks, two 15-storey business complexes, a performing arts centre and an integrated sporting hub.