This article first appeared in The Edge Financial Daily on October 25, 2018

KUALA LUMPUR: Glomac Bhd will reduce the construction of new homes amid a weak market sentiment, and instead launch RM780 million worth of an initial planned RM1 billion in the financial year ending April 30, 2019 (FY19). A large portion will be dedicated to the mid-market and affordable segments to attract millennials and first time homebuyers.

About 65% of the projects will cost RM500,000 or less, Glomac group managing director and chief executive officer Datuk Seri Fateh Iskandar Mohamed Mansor told reporters after the group’s annual general meeting yesterday.

The reduction in launches, notwithstanding, he observed, “the RM780 million is significantly higher than the RM248 million launched last year”.

The projects, which include new phases at Saujana KLIA, Saujana Perdana, Lakeside Residences, and Plaza @ Kelana Jaya, comprise 39% of high-rise residential, 44% of landed residential and 17% of commercial developments.

Although the outlook is expected to remain challenging, he said the group is targeting to sell 80% of planned launches, which is the same target as last year.

Concerning Budget 2019 which is to be tabled on Nov 2, Fateh Iskandar said he would like to see the revival of the Home Ownership Campaign as it could help reduce the growing glut of units.

Between Jan 1 and June 30, the residential property overhang was reported to have increased by 18.3% year-on-year to 29,277 units.

The Real Estate and Housing Developers' Association Malaysia (Rehda) had, in its Budget 2019 wishlist, proposed reviving such a campaign for properties priced below RM500,000, and suggested incentives such as stamp duty waiver, free or reduced legal and loan processing fees, higher margin financing, and discounted insurance premiums.

Fateh Iskandar, who is also immediate past president of Rehda, said the association had been in touch with the government and hopes its suggestions would be heeded.

To clear unsold properties, the campaign was carried out over 1998 to 1999, when Tun Dr Mahathir Mohamad was also prime minister at the time.

“Also hopefully, no more taxes too (in Budget 2019). We really need to address important questions such as how to bring down the cost of doing business and provide better financing facilities for potential homebuyers,” Fateh Iskandar said.

Shareholders approved the payment of a final single-tier dividend of 1.5 sen per share for FY18.

Glomac closed 1.5 sen lower at 38.5 sen yesterday for a market capitalisation of RM307.41 million. The stock has declined slightly over a third over the past year.