MANY property developers are having a hard time with their bottom lines these days but SCB Developments Bhd is one exception.
The company is laughing all the way to the bank and its two major property development projects, the Mutiara Rini in Johor and Mutiara Damansara in the Klang Valley, have chalked up excellent sales, much to the delight of executive director Datuk Ghazali Mohd Ali.
Since construction work started in 1997, Mutiara Rini has garnered sales value of over RM500mil with a 90% take-up rate of the 3,078 units launched.
Mutiara Damansara, which concentrates mainly on high-end properties, has had all its 884 units snapped up since its first launch three years ago, also generates a sales value of about the same amount.
With such a track record, Ghazali expects all the company's new property launches this year to achieve 100% take-up rate upon launching. He said turnover for Mutiara Damansara was expected to grow by over 20%.
In another two months, the company intends to launch for the first time, 360 condominiums with a built-up of 1,200 to 1,400 sq ft per unit at over RM300,000 each in Mutiara Damansara.
Ghazali said SCB would also be launching 64 units of double-storey shop houses at RM700,000 each, over 200 units of low and low medium-cost apartments at RM42,000 and RM72,000 respectively and 24 units of low-cost shops priced at RM120,000 per unit this year.
We may also decide to sell bungalow houses this year or we may sell only the land as the margin is higher when we sell bungalow land compared with standard houses, Ghazali said, adding that there was now a total of 5,000 registrants in the company's database waiting to buy bungalow lots or bungalows.
He said Mutiara Damansara land appreciated rapidly. Every time we sell land in the commercial area, it appreciates by about 20%. We had tendered out bungalow lots at a reserve price of RM88 per sq ft and sold it at RM130. Now, residential land is hitting RM155 per sq ft and we expect commercial land to hit RM170 very soon.
Launches this year for Mutiara Rini will consist of about 700 to 800 double-storey houses.
Ghazali is also very excited about Mutiara Damansara's 60-acre commercial area. This area is divided into two precincts corporate lots sub-divided into over one-acre lots for corporate offices and retail which will house Ikea (13 acres), the largest in the region to be opened in June/July, Tesco (8 acres) which opens in March and the Cineleisure entertainment centre scheduled for opening in 2004.
The gem of the retail precinct is The Curve, a lifestyle shopping mall developed over a 13-acre site and anchored by Ikea, Tesco and Cineleisure. Its main feature is outdoor and indoor functions with an air-cooled alfresco mall and an air-conditioned fashion mall.
On the company's plans, Ghazali said SCB was looking to increase its land bank and talking to local companies.
According to Ghazali, the company prefers land banks that provide total integrated development, has potential for the development of commercial, residential and industrial properties as well as educational institutions.
We want the area to be self-sustaining, a township on its own. With this, we can control our own destiny and not depend on other adjoining developments to survive, he said.
Ghazali said, however, such big tracks of land were hard to come by and if available would be very expensive. He added that one way to do this would be through joint ventures with land owners where SCB would go in as the developer.
At present, the company has a total land bank of over 7,000ha of which 50% already has been approved for development at various stages.
Ghazali said SCB did not have any plans to expand overseas as there was still a lot more that could be done here.
Mutiara Rini is 1,400 acres and we have built on only 500 acres so far. It is a 10- to 15-year development. Mutiara Damansara is only 25% developed (with building completed or under construction) and that is a 10- to 12-year development, he said.
Diversification will be property-related. For instance, the purchase of Optima Jaya Sdn Bhd which owns the 418-room Novotel Century Hotel is complimentary to the joint-venture by its parent, the Boustead group, and Yew Capital Management Sdn Bhd to develop a 4-acre piece of land opposite the hotel into an entertainment centre.
This will add value to both properties, he said, adding that the deal was expected to go through in another month.
According to Ghazali, the plantation division of the company consisting mainly of palm oil plantations will be secondary to its property division.
He said plantation contributed to 20% of SCB's profits last year and with crude palm oil prices increasing it would be additional income for the company.
As far as the group is concerned, SCB will concentrate on property development and once a plantation area has potential for redevelopment, it will be converted into real estate, Ghazali said.
The main thrust of the company's projects will be the Klang Valley and areas close to it. SCB also has land banks approved for development in Johor and Kedah.
Ghazali said the company would still concentrate on Johor as there were 2,300 acres in Kulai, with plans at various stages of approval.
We are also looking at the city centre of Johor to see if anything can be relocated elsewhere so that we can take up the land for development, he said.
On the property outlook in Malaysia, Ghazali said location was crucial. Properties in the Klang Valley are still doing well but further locations still suffer from a lot of oversupply in certain parts.
For Mutiara Rini, we are in an environment that is quite critical. The oversupply situation in Johor is still quite bad. However, we are quite fortunate as we have a good reputation and provide a lot of value-added facilities. For instance, the 32km bicycle tracks connecting the whole township and a 60-acre urban forest, he said.
OCBC Securities research head Franklin Tan said that Mutiara Damansara had a great land bank and offered huge potential for SCB.
He said demand for properties there was still strong due to the good location.
However, over the last year new launches had somewhat slowed down, he noted.
According to Tan, this could be due to the management holding back for better prices.
The company should seize the opportunity and launch its properties faster, he said, adding that the research house was forecasting over 9% growth in earnings per share for SCB in 2003.
An analyst from a local stockbroking house has considered SCB a safe company with good land banks, especially in Mutiara Damansara.
He said that in the short term prospects would be good with the project progressing rapidly and gaining buyers' attention.
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