LBS Bina makes it big in affordable housing

  • Business
  • Monday, 15 Sep 2003


LBS BINA GROUP BHD, dubbed the affordable housing developer, is rapidly making inroads into the property scene with its low-cost joint-venture model of acquiring land for development. 

The group, which assumed its listed status in January last year after a reverse takeover of Instangreen Corp Bhd, has expanded its land bank from 1,561 to 2,844 acres now, with about 80% under joint ventures.  

Spearheading LBS's rapid growth is managing director Datuk Lim Hock San, who introduced the joint-venture way for the group to gain a sizeable share of the big affordable housing market. 

“Having established a track record as a reliable developer, we have been inundated with many land offers for joint ventures and have to be selective in where we want to build our projects.  

“We have land starting from two to 820 acres and our focus is the South Klang Valley corridor which holds vast growth potential,” Lim told StarBiz in an interview. 

He said the strategy provided LBS with access to good tracts of land at a minimum cost and the flexibility to move according to market needs. 

“We started in the mid-1990s by signing up a joint venture with the Thomas Cup players to develop a 50-acre industrial park in Serdang, Selangor,” said Lim.  

Judging by the big jump in group sales to RM353mil in the first eight months for the financial year ending Dec 31, compared with RM335mil for the whole of the financial year 2002, LBS has made good headway with its strategy, especially in the low-medium and medium-cost housing sector.  

From just sales of RM174mil in 2000, the figure jumped to RM257mil in 2001, and RM335mil last year. 

Lim said about 85% of LBS's ongoing projects were properties priced below RM180,000 and the big jump in sales could be attributed to the government's May stimulus package, which reduced transaction costs of affordably-priced properties.  

The group's sizeable land bank will translate into an estimated gross development value of RM5.7bil, sufficient to sustain its growth for the next eight to 10 years, or about RM500mil a year. 

Commenting on LBS's potential, an analyst with a local brokerage said: “As a medium-sized developer, LBS has flexibility in a bigger stable of projects, albeit smaller scale, which gives it a more diversified income stream.  

“With its proven track record and ongoing projects, the group should be able to grow its net profit by at least 25% per annum over the next few years.”  

Lim said the special home ownership scheme for young executives provided by a panel of bankers, which only required a RM1,000 deposit to purchase a home in Bandar Saujana Putra, had contributed to the good take-up rate of its flagship project. 

The 820-acre project featuring 12,500 units is slated for completion in seven to eight years for a gross development value of RM2.8bil. With the majority featuring apartments and double-storey terraces of below RM180,000, the later phases in the next two to three years will offer 405 semi-detached homes and 136 bungalows.  

Lim said an interchange costing RM27mil would be built to provide better access to Bandar Saujana Putra, located in the southern corridor adjacent to the USJ/ Putra Heights township.  

The joint venture with Permodalan Negeri Selangor Bhd has received tremendous response since its soft launch in March, and from 2004, an annual sales of RM300mil is expected. An additional 1,700 units with an estimated gross development value of RM230mil will be launched next year. 

“Over the next five years, Bandar Saujana Putra will be the main contributor to group sales while the other ongoing developments are in the Klang Valley, Ipoh, Cameron Highlands and Batu Pahat,” Lim said.  

According to Lim, another project scheduled for launch by year's end is the 163-acre Taman Tasik Puchong, which comprises 1,258 low- and low-medium cost apartments, double-storey terraces and shop lots, for a gross development value of RM35mil.  

On the China dreams, Lim said LBS was keen to make a bigger presence there as the country's 1.3 billion population would provide a big market for its specialty product, affordable housing. 

“Once our feasibility study proves it is viable to do so and the board gives a stamp of approval, we may consider exercising the option to repossess the Zhuhai project, at a price of US$1, which we inherited from Instangreen,” he said.  

Instangreen is believed to have injected some US$45.6mil into the 880-acre project, which comprises an F3 racing circuit, a golf course, and over 300 acres of adjacent property development land. 

Lim said the recent go-ahead given by the Chinese government for the proposed bridge connecting Hong Kong and Macao to Zhuhai and a tender call for a railway track linking Shanghai to Zhuhai would benefit the group in the long term.  

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