The group is in the process of buying the 1.37ha prime freehold land from owner Khaw Bian Cheng Sdn Bhd for RM38.7 million, or RM262.19, per sq ft.
At present, there is a dilapidated unoccupied small bungalow on the site.
In a filing to Bursa Malaysia yesterday, Mah Sing said that its wholly-owned unit, Klassik Tropika Development Sdn Bhd, had signed a sale and purchase agreement with Khaw Bian Cheng for the proposed acquisition.
The transaction is expected to be completed in the financial year ending December 31 2010.
Mah Sing said it will be procuring a development order in respect of the proposed development from the relevant authorities for approval.
"Therefore, it is currently too preliminary to ascertain the total development cost and the expected profit to be derived from the proposed development," Mah Sing said.
If approval is granted, construction could start in the second half of next year.
Mah Sing said that no valuation was carried out on the land and was thus unable to disclose its net book value as it was not privy to this information.
The group intends to fund the proposed acquisition and development cost of the land through internally generated funds and/or bank borrowings.
Mah Sing added that the proposed acquisition is strategic as it allows the group to tap the success and spillover demand of its Residence@Southbay project in Batu Maung.
"Residence@Southbay comprises superlink homes and the launched phases are 90 per cent sold. The encouraging take-up reflects Mah Sing's strong branding on Penang island and the group is confident of replicating that success with the new condominium project," it said.
The Pykett Avenue parcel is located near major establishments such as the Chinese Recreation Club and Penang Plaza along Burma Road, and Komtar.
There is ready infrastructure with good accessibility through some major roads, and it is close to amenities and facilities.
According to the National Property Information Centre, the outlook for residential properties in Penang is promising as the residential stock overhang in the state is the lowest of the big three markets, namely Klang Valley, Johor and Penang.
By Business Times
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