SINCE its listing in 2003, Gromutual Bhd has been gradually growing its presence in the property development industry. To date, it has completed RM662 million worth of projects comprising 3,700 residential, commercial and factory units in Melaka and Johor.

According to deputy managing director Chew Kwee Hiok, before Gromutual’s listing, the group was already developing projects through 18 private companies, which are now its subsidiaries. “We were developing a small number of homes on parcels of less than five acres,” she says. “Even after our listing, we still have developments on smaller parcels, but we are also growing in terms of project size such as our recent launch, Austin 18, in Johor.”

Austin 18, with a gross development value (GDV) of RM150 million, was launched in July. It is the group’s first integrated development with flexible office suites and a retail mall. Sitting on a 1.5-acre freehold parcel in Taman Mount Austin, Iskandar Malaysia, it will comprise 25 storeys of 319 versatile office suites, a retail mall and a six-storey car park podium.

The selling price of the office suites starts from RM415,000. Austin 18 is slated for completion in 2017.

“We found that there weren’t many versatile suites in Johor Baru and shophouses were expensive with asking prices of about RM2 million,” says Chew. “We think Austin 18’s versatile suites will meet the demand of young professionals and businessmen who still can’t afford shoplots with that kind of asking price.”

Gromutual’s other project is the Tropika Industrial Park in Plentong, Johor Baru, which was launched in 2005. The development will have 52 single-storey detached factory units with built-ups of 13,000 to 30,000 sq ft. The selling price ranges from RM5.5 million to RM12 million. Since its launch, the price has appreciated two to three times to RM90 psf for land and RM180 psf for a building. Tropika Industrial Park is completed with all units have been taken up.

Affordable housing

Apart from the higher-end products in its property portfolio, Gromutual also develops affordable homes. Its affordable homes project in Tangga Batu, Melaka, is still ongoing. Dubbed Taman Tangga Batu Perdana, it has a GDV of RM78 million and will have 360 units when completed.

Sitting on a 65-acre leasehold parcel, the first phase was launched in October 2012 and will comprise 179 single-storey terraced houses, 46 semi-detached homes and one bungalow. The built-ups range from 1,000 to 1,300 sq ft, and prices are between RM180,000 and RM449,000. Phase 1 is expected to be completed by year-end.

The second phase was launched in June 2013 and will comprise 43 single-storey terraced houses, 86 semidees and five bungalows, with built-ups of 1,000 to 1,300 sq ft. Priced from RM208,000 to RM515,000, Phase 2 is slated for completion in two years.

This is not Gromutual’s first affordable home project. It developed the RM5.4 million Taman Ros in Ayer Hitam, Johor, which comprises 40 single-storey terraced houses and 50 low-cost houses. The 1-storey low-cost houses measure 14 ft by 55 ft and are priced at RM25,000, while its 1-storey terraced houses are 22 ft by 70 ft and priced between RM82,000 and RM104,000.

Recurring income

Besides developing products to sell, Chew says the group is looking at projects that can provide recurring income. “We currently generate about RM7 million to RM8 million in recurring income annually,” she says.

At present, the group leases out student apartments in Bukit Beruang, Melaka, and factory units in Kulai, Johor.

The student apartments, which are next to the Multimedia University, consist of the Emerald Park Apartment, a 5-storey walk-up apartment block, and Emerald Residence that comprises four 10-storey towers, with 315 units in total. The two developments are located on a 3.4-acre freehold parcel. The units have built-ups of 1,100 to 1,200 sq ft, with rentals ranging from RM1,800 to RM2,500 per month. The two developments can accommodate a total of 2,200 students.

Gromutual is looking to develop a retirement village in Johor, although the project is still in the planning stage. According to Chew, the group had originally planned to build 1,000 bungalows in Kota Tinggi.

The retirement village is targeted at Singaporeans and is expected to start operation in the next 5 to 10 years. “When we asked the Singaporean operators, they said the market for Singaporean retirees will be healthy in 10 years’ time while Medini will also mature by that time,” Chew says. “I think our retirement village will be a good project.”

Outlook

Chew remains cautiously optimistic about the local property market and says property prices will increase due to the implementation of the Goods and Services Tax (GST) in April next year.

“I don’t see property prices going down as suppliers are still increasing the price of their materials, unless there is some intervention by the federal government,” she says. “In addition, land prices are also going up. We used to able to purchase land for RM3 psf in Melaka. Now it has gone up to at an average of RM10 psf.”

Asked how Gromutual will mitigate the high cost of materials for its affordable homes, Chew says the group will adjust accordingly to the situation when the GST kicks in, but did not elaborate on this.

In the meantime, she says the group will continue to look for landbank in Melaka and Johor. “We will continue to strengthen our presence in the south as this is where we started. As of now, we have our hands full with our current projects and those in the pipeline.”

This article first appeared in City & Country, The Edge Malaysia Weekly, on  October 13-19, 2014.

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