PETALING JAYA: Demand in the local property market has seen a recovery since the start of last year with an increase in sales volume and lower overhang units, says Paramount Corp Bhd.
Hence, group chief executive officer Jeffrey Chew said the group has a higher launch target of RM1.5bil this year from RM1.2bil worth of launches last year.
Paramount has seven projects in the pipeline, spanning across the Klang Valley, Penang, and Kedah, he said.
“Apart from residential properties, the group is also moving towards the industrial property sector because of the demand there. However, this will not be the main core of our business,” he said in a briefing yesterday.
Chew added one of the main growth strategies of Paramount is to reduce the turnaround time for its project for higher efficiency.
“We plan to do this by sourcing new land within the vicinity of the group’s successful projects. In this way, we will not have to redo our marketing initiatives.
“Our familiarity with the approval levels and demand in these locations will also help us to be more efficient in our delivery,” he said.
With an average take-up rate of 71% and unbilled sales of RM1.4bil for the financial year ended Dec 31, 2022 (FY22), the group plans to buy RM200mil worth of land yearly to replenish its land bank.
“The RM1.4bil of unbilled sales will provide the group with cash flow visibility for the next two to three years, which will help us to purchase more land for new developments. In the past, we intended to buy RM500mil worth of land every five years.
“However, that was when our property sales were at RM500mil to RM600mil. At present, as we have achieved RM1bil in sales, we have increased our targets to purchase RM200mil worth of land on a yearly basis,” said Chew.
For FY22, Paramount’s revenue rose by 24% year-on-year (y-o-y) to RM847.5mil. Pre-tax profit also increased by 50% y-o-y to RM105.1mil. The group’s property division was the key contributor followed by its co-working division.
“Our outlets for our Co-Labs co-working business recorded an improvement in terms of revenue given the reopening of the economy from the Covid-19 pandemic.
“The average occupancy rate is 70% as at Dec 31, 2022. We are still monitoring whether or not this segment will be a core business for the group or will it be complementary to the property division,” said Chew.
Moreover, he also noted the overhang issue in the property industry is a thing in the past.
“For the residential segment, the country’s property sales in the third quarter of 2022 (3Q22) grew by 53% y-o-y. Total overhang for the period dropped by 2.3% y-o-y while unsold units under construction declined by 16.7% y-o-y.
“This shows that there are a lot more transactions in the property market and people are buying at a faster rate. In fact, the incoming supply of residential property in the country for 3Q22 has decreased by 5%,” Chew said.