OCR Group Bhd and Magna Prima Bhd will jointly develop a RM1.5 billion integrated e-commerce logistics complex in Shah Alam, Selangor, to be launched in stages starting next year.
OCR said in a statement that the joint venture would be carried out with Magna Prima’s 70 percent-owned subsidiary, Magna Ecocity Sdn Bhd.
Magna Ecocity owns a 20-acre leasehold land in Section 15 where the logistics hub will be built.
Magan Prima has earlier revealed on its website that it intended to build three to five-story shop offices, two massive shopping malls, and four blocks of serviced apartments on the same 20-acre tract of land, with a gross development value (GDV) of RM1.4 billion.
The developer may have decided to adjust its development plans for the area because the terrain has evolved in recent years, with more demand for logistical hubs than shop offices, according to a real estate planner and consultant.
“There are some unoccupied lots in Section 15 and the adjacent regions, which are swamped with shop offices and retail lots. Just look at i-City in Section 7, which is not far off, or other developments in Shah Alam. Magna Prima made a good decision to construct other properties, given the land’s prime position.
“I believe the planned e-commerce logistics centre by Magna Prima and OCR will do well because there are numerous industries in Section 15 that are operating productively today,” the consultant said.
It was reported that the market value of the land stood at RM200 million, per the valuation carried out in 2019.
According to the statement by OCR, the proposed development with Magna Ecocity will include retail and commercial areas such as multi-story integrated e-commerce spaces specifically intended for SMEs, as well as serviced apartments.
It will include a profit-sharing arrangement in which OCR Avenue would pay Magna Ecocity RM160 million as a minimum entitlement or 30 percent of the development profit (whichever is higher) if certain requirements are met.
With a planned GDV of RM1.5 billion, OCR said that it will be its largest investment into the CRE (commercial real estate) segment to date.
OCR’s managing director Billy Ong said the project is its first integrated e-commerce development, and it marks a significant milestone for the company.
Ong said the proposed development will benefit from the secular strong growth of the e-commerce industry and CRE segment.
“For OCR, this development is in line with our sector diversification strategy, which currently mainly features residential properties. With the target launch of our RM750 million affordable housing project in Shah Alam by the second half of 2022, the proposed integrated e-commerce spaces will further cement our foothold in the thriving city,” he said.
The proposed logistics hub is projected to appeal to SMEs due to its proximity to commercial and light industrial regions in Shah Alam, as well as convenient access to major highways and ports, according to OCR.
