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Saturday October 20, 2012

Glomac focuses on township homes

Artist impression of Bandar Saujana
Utama residences. Artist impression of Bandar Saujana Utama residences.

GLOMAC Bhd will be focusing on plans for new landed residential units within its townships of Saujana Utama in Sungai Buloh, Saujana Rawang and Lakeside Residences in Puchong, Selangor for the next 12 to 18 months.

“This is what the market wants,” the property developer's group managing director and chief executive officer Datuk FD Iskandar told StarBizWeek recently. FD Iskandar recalls with amusement that about five years ago, he felt there was not enough demand for township developments.

“Back then, I told analysts and fund managers that I was not going to do townships anymore. Now I have to say, I am going back to townships.”

FD Iskandar says there is strong demand for landed residential units at selected locations in the Klang Valley priced at RM1mil and below.

He also says that in the next two years, 70% to 75% of the group's sales would come from residential units.

“This is the opposite of the situation two years ago, when 65% of our sales came from commercial properties. Last year, the ratio went to 55% (commercial) and 45% (residential). Now, it's the other way around 55% (residential) and 45% (commercial).”

FD Iskandar points out that the launch of 105 units of two-storey terrace houses with GDV (gross development value) of RM75mil at Lakeside Residences was fully sold through balloting last month.

The units, with built-ups of 2,230 sq ft and 2,120 sq ft and lot sizes of 22ft x 75ft and 22ft x 80ft, were priced from RM680,000 onwards.

Lakeside Residences, which is a mixed development with a GDV of RM2bil on a 200-acre leasehold parcel, will be the group's flagship project in the next few years. There are plans for about 6,000 residential units to be launched at Lakeside Residences within the next six years.

About 20% of the units will be landed homes, with the balance being high-rise units.

FD Iskandar says Lakeside Residences is part of Puchong's thriving commercial hub, and the guarded development will also benefit from the LRT (light rail transit) extension line which starts from the Sri Petaling station and passes through Kinrara, Puchong and ends at Putra Heights.

The extension is expected to be completed in 2014.

The next two phases for Lakeside Residences will also consist of two-storey terrace houses, with 139 units (GDV of RM94mil) targeted to be launched before year-end.

Lakeside Residences in Puchong is among the key drivers for Glomac’s sales. Lakeside Residences in Puchong is among the key drivers for Glomac’s sales.

This will be followed by the launch of a further 75 units (GDV of RM54mil) next year.

“Once Lakeside Residences is more matured in three or four years, we will have plans to build serviced apartments, condominiums and shop-offices. We might even put up a mall. We can fully develop Lakeside Residences in five or six years.”

Regarding the 1,000-acre Saujana Utama and 345-acre Saujana Rawang, FD Iskandar notes that both the townships have contributed combined sales of RM72mil for the group's first quarter ended July 31.

“The situation is different today. A year ago, we were selling RM4mil to RM5mil a month in Rawang. Now, we are selling RM15mil to RM20mil a month (in Rawang).”

FD Iskandar says Saujana Utama with a total GDV of RM1.4bil had done well since the development began in 1996.

“To date, we have sold RM1.1bil in Saujana Utama.”

This year, the group has also expanded its land bank to tap demand from middle income home buyers in the Klang Valley.

In February, the group bought a 200-acre leasehold parcel next to Saujana Utama for RM44mil through a public auction.

“We should be launching developments on the new parcel next to Saujana Utama by mid-2013.”

In June, Glomac bought 192 acres in Dengkil, Sepang from Lee Chin Cheng Dengkil Oil Palm Plantations Sdn Bhd for RM66.8mil.

The new parcels in Saujana Utama and Dengkil are expected to have a GDV of RM800mil each.

According to FD Iskandar, the Dengkil land would cater to home buyers looking for landed units priced RM500,000 and below.

“Double-storey houses in Putrajaya and Cyberjaya are expensive now, with prices hitting RM750,000 to RM800,000. So, who is catering to the RM400,000 to RM500,000 home market and civil servants? This is the gap we are going into.”

He says the Dengkil land is only three km away from Putrajaya and Cyberjaya, and 2.5 km away from KL International Airport.

The development will face the Maju Expressway, and the group has conducted preliminary discussions with the highway concessionaire.

“We are asking for ingress and egress to the expressway.”

Another record year in store

For its financial year ending April 30, 2013 (FY2013), Glomac is on track to outdo its record sales of RM663mil achieved in the previous financial year.

FD Iskandar points out that the group had achieved new sales of RM212mil for its first quarter ended July 31 due largely to healthy take-up rates for launches at Reflection Residences @ Mutiara Damansara, Glomac Centro in Petaling Jaya as well as Bandar Saujana Utama and Saujana Rawang.

Glomac has a pipeline of future projects with a total GDV of RM7bil, out of which RM1.13bil will be launched in financial year 2013.

Key drivers for the group's sales in financial year 2013 will be Lakeside Residences in Puchong, Phase 4 of Plaza Kelana Jaya, and the townships of Bandar Saujana Utama and Saujana Rawang in Selangor and Sri Saujana at Kota Tinggi, Johor.

“Usually, we hit 80% to 85% (sales of the new property launches). So, I think we should have at least RM800mil (of sales in FY2013),” says FD Iskandar.

The group's unbilled sales as at end-July is also at a record high of RM763mil.

Reflection Residences @ Mutiara Damansara consists of 299 units of freehold serviced apartments in a 39-storey block, with a GDV of RM270mil.

The units are sized from 1,092 to 1,705 sq ft and priced from RM750 per sq ft.

Launched at end-March 2012, Reflection Residences has a take-up of 82%.

As for Glomac Centro, its phase one consisting of 54 units of two-storey shop offices (GDV of RM117mil) and 344 units of serviced apartments (GDV of RM250mil) was launched in April 2012.

The two-storey shop offices, with an average price of RM2.1mil each, has a take-up of 59% while the serviced apartments, with sizes ranging from 1,175 to 1,670 sq ft and priced from RM655,000 per unit, has a take-up of 32%.

Meanwhile, at Glomac Damansara, a 25-storey office tower sold en-bloc to Lembaga Tabung Haji for RM171mil two years ago is 62% completed.

Glomac Damansara, which sits on 6.8 acres of freehold land, has a GDV of RM950mil and also features 12 units of five and eight-storey shop offices anchored by a 16-storey office block, two towers of residential units, and a retail mall.

The residential component consisting of 356 units in two 26-storey tower blocks with a GDV of RM288mil has a take-up of 85% since its launch in February 2011.

Its final phase consisting of a 350,000 sq ft boutique retail mall (GDV of RM336mil) is earmarked for en-bloc sale.

Glomac deputy chief operating officer Brandon Ong also points out that the group's net gearing is at a comfortable 6%, which gave it the capacity to further increase its land bank when the opportunities arise.

As at July 31, 2012 Glomac has fixed deposits, short term placements, cash and bank balances amounting to RM360.7mil.

“It is a good time to be sitting pretty. Prices of land are starting to ease a bit. Land owners are more reasonable now,” says Ong.

The group has an undeveloped land bank of 1,000 acres, with 90% in the Klang Valley and the rest in Johor.

In a recent report, Maybank Investment Bank (IB) Research noted that Glomac's net gearing of only 0.07 times at end-July 2012 provides it with a potential war chest of RM315mil (based on its target net gearing of 0.5 times), which could be used for land acquisition.

“It is actively looking for sizeable landbanks in the Klang Valley to ride on the current strong demand for affordable landed properties,” says the research unit.

Maybank IB Research says Glomac's recent first quarter results had come inwithin expectations, accounting for 20% to 22% of its and consensus full-year estimates.

For its first quarter ended July 31, 2012, Glomac posted a 17.3% year-on-year increase in net profit to RM21mil, while revenue rose 26.1% to RM161.1mil.

Hong Leong Investment Bank's research unit says it expects subsequent quarters to be stronger for Glomac, on the back of its record RM763mil in unbilled sales.

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