City&Country: Cover Story-- In a good place

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This year is looking to be very busy for Glomac Bhd. The developer is planning numerous launches in its township projects Saujana Bandar Utama in Sungai Buloh and Saujana Rawang in Rawang as well as its niche developments Glomac Damansara in Petaling Jaya, Glomac Mutiara in Mutiara Damansara and Suria Residen in Cheras, among others.
Datuk F D Iskandar Mohamed Mansor, Glomac’s group managing director and CEO, believes this year will be good for the group as its unbilled sales are close to RM650 million while it is enjoying steady sales in its projects. On average, Glomac’s products have a 90% take-up rate, he says.As a result, he tells City & Country, the group is targeting RM600 million worth of property launches this year in line with sales attained over the last two years of between RM600 million and RM650 million.
“This is a significant increase compared to what we have done before,” points out Iskandar. “We used to have unbilled sales of around RM300 million but since 2009/2010, our sales have jumped to over RM600 million.”
The 50% jump is attributed to sales in Glomac’s ongoing projects in the Klang Valley due to positive buyer perception of the property market.
Iskandar says the country’s steady economic growth has been a major factor in fuelling confidence in the Malaysian property market recently. Malaysia grew 7.2% last year and Bank Negara Malaysia is forecasting growth of 5% to 6% for 2011. Also when the country’s Economic Transformation Programme (ETP) projects are implemented efficiently, there will be more vibrancy not only in the property and construction sector but all complementary industries.
“Once the ETP projects, such as the LRT extension and the MRT line for Greater KL, kick off, you will see increased growth in property development in the Greater KL area. Construction and property are two areas where there are a lot of related downstream industries. I always say property development involves more than 140 other industries — consultants, lawyers, architects, engineers, bankers and so on. The sharing of wealth is great for the property industry,” he adds.In line with the new infrastructure development for Greater KL, “over the next few years, our concentration will be on the Greater KL-Klang Valley area because we have a strong brand and presence here”,  he says on the group’s strategies for future growth.
Glomac has ongoing projects with a total gross development value (GDV) of RM3 billion. Both its township projects Bandar Saujana Utama and Saujana Rawang come under the Greater KL area and have been consistently raking in sales of about RM120 million a year.
Iskandar believes 2011 will be another positive year for the property sector in general. “Malaysia is back on the radar screen of the international community and it is important that this interest is tapped. Better policies and  transparency and uniformity in implementing them are needed for the country to benefit from the buzz.
“There was no recession in 2009. In 1997, our banks were badly hit, our ringgit was downgraded and structural and financial systems were under pressure. But in 2009, our local banks were flush with funds, the ringgit strengthened and the basic structure of the financial institutions, at least in Malaysia, was solid. So, you don’t have the after-effects of over-borrowing or a property bubble. There is no such thing as a property bubble in Malaysia.”
Consumer and investor confidence in Asia is stronger than ever, observes Iskandar, who cites markets like Indonesia and Singapore as examples of recent strong performers.

Future projectsThe developer’s future projects that are still in the planning stage include a township development on 200 acres acquired for RM77 million in Puchong. “We are still drawing up plans for the Puchong land. We are putting up what we think would be the most optimum layout and will give more details later,” says Iskandar.
Some 90 acres of the land were to be developed jointly by Glomac and Score Option Sdn Bhd, the registered proprietor of the land, under an agreement signed in 2003. Christened Lakeside Residences, Phase 1 of the project was launched in 2005. The 102 units of 2-storey terraced houses, built on eight acres, were sold for RM325,000 to RM375,000. However, a legal suit between the two parties put the subsequent phases on hold.
At the present time, about 120 acres of the land have been earmarked for development but the details have not been firmed up.
The group is also looking at developing a commercial project with an estimated GDV of RM280 million on a four-acre plot at the former site of the Kelana Jaya Seafood restaurant in Kelana Jaya under Phase 4 of its Plaza Kelana Jaya development. The developer is keen on an en bloc sale and what is built on the site will depend on the buyer.
Plaza Kelana Jaya occupies about 10 acres and Phases 1 to 3 of the project comprised 81 units of 3 and 4-storey shopoffices. All have been sold. The total GDV of these three phases was RM122 million.
Glomac also has a seven-acre site situated between Damansara Utama and Bandar Utama in Petaling jaya, where it plans to develop shophouses and apartments. However, the plans have yet to be finalised.
Meanwhile, on a 16-acre site in Cyberjaya, Glomac is planning a retail centre to cater for the growing population in Cyberjaya and Putrajaya, says Iskandar.
Moving forward, the developer — with RM150 million to RM200 million in its coffers, excluding borrowings — is ready to seize any opportunity that comes its way.
Last year, news of mergers between the country’s top developers saw the industry buzzing with speculation of which developer would be next. Iskandar says Glomac is not averse to a merger but stresses that at the end of the day, it must benefit the company and its shareholders.
“If there is an opportunity to merge to enhance the value of the company, to put it on a better footing both qualitatively and quantitatively, we will consider it,” he comments.
“At the end of the day, I believe there is still a market for small and medium developers like Glomac.”
He says a developer needs to be innovative to keep up with increasingly discerning buyers. When developers in the early 1990s were building 2 and 3-storey shophouses, Glomac was building shopping and business complexes of 5 to 6-storeys high, with nice façades and lifts, which the others soon copied. In early 2002, Glomac built Aman Suria, featuring landed properties in a guarded and gated environment with facilities. “Before that, only condominiums had such benefits. The terraced houses in Aman Suria were sold for RM450,000 but today they are going for RM1.2 million,” he points out.
Glomac offers its homebuyers a unique after-sales service for a small fee. The service comprises a small armada of skilled workers like plumbers, electricians and lift service personnel to help buyers when something goes wrong at their residential or commercial unit. “We don’t make money out of this venture. It is a value-added proposition for our buyers,” says Iskandar.
“When we maintain their properties for them, the value of these properties is enhanced. This is what we would like to think we are good at: enhancing property values.”

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 848, Mar 7-13, 2011