GEORGE TOWN, Aug 8 ― The termination of Penang’s RM1.3 billion joint venture BPO Prime was a mutual decision reached with Singapore’s Temasek Holdings due to the softening conditions in the current property market, Datuk Seri Lee Kah Choon said today.
The InvestPenang executive director said a survey conducted by a consultant showed demand for housing property had weakened substantially.
“As a result, the joint venture parties decided to terminate the project,” he told Malay Mail when contacted.
Lee, who is currently on a work visit to the United States with Penang Chief Minister Chow Kon Yeow, said all parties in the joint venture had tried to fulfil the conditions stipulated in the agreement but could not do so due to the market conditions.
“The investment environment for residential properties turn bad (banks cut down on granting housing loans; property price falling etc),” he said in a WhatsApp message.
Temasek entered into a joint venture with Penang Development Corporation (PDC) and Economic Development Innovations Singapore Pte Ltd (EDIS) in 2015 to build the BPO Prime project on 6.8 acres of land in Bayan Baru. The land is currently occupied by the PDC office.
Lee said the objective of the project was to create offices and housing units for global business services (GBS) and their workers.
“The residential sale proceeds was to finance the office block,” he said.
With the cancellation of the project, Lee said PDC has started works to build office space to meet demands by the GBS industry.
“PDC has started the construction of [email protected] (at the compound of PDC HQ),” he said in his text message.
This was the same area where BPO Prime was supposed to be built on.
Lee said [email protected] will have 80,000sq ft of Multimedia Super Corridor (MSC) status office space and it was expected to be completed in March 2020.
New Straits Times reported earlier today that Temasek and its partners have decided not to proceed with the BPO Prime in Penang due to market conditions.
The project was supposed to have commenced in 2016 and completed this year.
When contacted, Chow said PDC will issue an official statement on this matter soon.
*A previous version of this story contained an error which has since been corrected.