An aerial view of LBS Bina’s Alam Perdana township in Bandar Puncak Alam, Selangor, where the developer has built a 38ha industrial park with an anticipated GDV of RM800mil.
PROPERTY developer LBS Bina Group Bhd
has attained AA-IS rating for its sukuk wakalah programme with a “stable” outlook from MARC Ratings Bhd – marking a historic milestone for the company.
This achievement underscores the group’s dedication to efficiency and opens avenues for significant cost reductions.
The successful first tranche issuance of the inaugural tranche of Asean Social SRI Sukuk Wakalah of RM200mil signifies the commencement of LBS Bina’s RM750mil sukuk wakalah programme.
The first tranche, priced at a yield of 5% per annum, is secured and has a tenure of five years from the issue date – maturing on Jan 23, 2029.
Group executive chairman Tan Sri Ir Dr Lim Hock San attributes this positive development to the company’s remarkable performance over the years, showcasing significant improvement.
LBS Bina was able to successfully garner an exceptional response from the sukuk issuance, with an order book size of RM1.276bil – reflecting an oversubscription of 6.38 times, which is comparatively high among real estate players in Malaysia. The investors are made up of 85% institutional investors and 15% retail investors.
“This substantial response underscores the strong appeal and confidence our offering has garnered across both institutional and retail sectors, reinforcing the broad support for our initiative,” says Lim.
Chanelling of funds
On the utilisation of the proceeds, Lim says the group will primarily allocate funds to eligible projects aligned with their sustainable financing framework.
“In the inaugural issuance, our focus centres on social projects, specifically within the domains of affordable housing and socioeconomic advancement and empowerment,” he shares.
In the affordable housing category, funds will be directed towards Idaman Bandar Saujana Putra (BSP) and Mercu Jalil in the Klang Valley, while for socioeconomic advancement and empowerment, allocated resources will support the BSP flyover as well as the surau located at the district police headquaters at Cameron Centrum in Cameron Highlands, Pahang.
Upholding ESG
LBS Bina advocates the implementation of sound environmental, social, and governance (ESG) practices.
“We foresee issuing the sukuk at the right time if it benefits the group’s cash flow in supporting eligible projects aligned with the sustainability financing framework.
“Our Sustainability Financing Framework, which has been assigned a ‘gold’ impact bond assessment by MARC Ratings, stands as a testament to our commitment to ESG principles,” says Lim.
Moving forward, Lim says the company anticipates issuing the sukuk at an opportune time, strategically aligning with the group’s cash flow requirements to support eligible projects that adhere to the sustainability financing framework.
2024 targets
LBS Bina has set a sales target of RM1.8bil for 2024, having achieved RM1.7bil in 2023.
This target is expected to be supported by the group’s industrial projects, strategically catering to the growing small and medium enterprise (SME) market.
The developer’s 38ha industrial park at Alam Perdana in Puchong, Selangor, with an anticipated gross development value (GDV) of RM800mil, is set to finalise next month.
Lim says the group has already garnered substantial booking orders, signalling strong demand and interest in the upcoming industrial park.
As for the group’s industrial park project on a 20ha-site at Teluk Gong in Klang, Selangor, with a GDV of RM1.3bil, Lim is confident of investor interest as the take-up rate has been over 90% for the majority of the group’s developments.
“We aim for a 100% sale before the handover,” he says.
Market outlook
Lim says he remains cautiously optimistic on the real estate sector in Malaysia despite challenges stemming from the aftermath of the Covid-19 pandemic and economic uncertainties.
He attributes his positivity to several key factors, including Malaysia’s strategic location, government initiatives that promote foreign investment and infrastructure development, a growing urban population and increasing disposable incomes driving demand for properties.
“The post-pandemic phase in Malaysia has led to a notable transformation in housing preferences – emphasising spacious living environments and robust digital infrastructure.
“The rise of hybrid and remote work arrangements has fuelled a growing demand for suburban residential developments, with initiatives like the home ownership campaign that offers incentives and property discounts for Malaysians,” he says.
Lim acknowledges potential threats and challenges such as global economic conditions, interest rate fluctuations, rising construction cost, and, policy changes affecting property ownership and taxation.
He believes that affordable housing and sustainable development are critical issues that can ensure long-term growth and stability in the real estate sector.
The weak ringgit combined with a rising tax burden has led to increased caution among homebuyers, he noted.
To address rising construction costs, Lim emphasises the need for government support in promoting the use of the industrialised building system (IBS) which can lower costs and enhance efficiency in housing projects, ensuring affordability.
Affordable housing
Lim acknowledges the competitive nature of the affordable housing market.
LBS Bina’s approach to staying relevant is by offering unique features and amenities, and selecting locations with excellent accessibility and infrastructure.
According to Lim, the robust and sustained demand for affordable housing in Malaysia – driven by the fundamental need for accessible and budget-friendly housing – has positioned LBS Bina to expand its market share.
“By embracing innovative construction methods and technology, LBS Bina could reduce costs and improve the efficiency of its property development – providing more affordable houses while maintaining the quality of the houses,” he explains.
In 2024, LBS Bina plans to launch 10 new affordable housing projects in the Klang Valley, Johor and Pahang – offering 4,858 units with a total GDV of RM2.33bil.
Sustainable growth
In response to the challenging economic landscape, LBS Bina will adopt a multifaceted strategy focused on financial stability and sustainable growth.
“The key elements of this approach involve diversifying LBS Bina’ portfolio across residential, commercial, retail, energy and tourism sectors, mitigating risks, and capitalising on emerging opportunities,” says Lim.
He says LBS Bina prioritises the Malaysian affordable housing market and remains responsive to consumer needs, swiftly adapting projects to address demands.
He believes the company’s commitment to sustainability is evident through its sustainable financing framework – integrating green building initiatives and innovative technologies across all sectors.
“This not only ensures financial viability but also contributes to long-term stability, cost savings and attractiveness to investors, aligning with LBS Bina’s goal of sustainable growth in the Malaysian real estate market,” he concludes.
