Good take-up expected for RM1.04b Dang Wangi project

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KUALA LUMPUR: Contractor and property developer Crest Builder Holdings Bhd is confident that its soon-to-be-launched RM1.04 billion transit-oriented development at Dang Wangi light rail transit (LRT) station here will achieve a good take-up rate, despite being priced above the affordable range amid a slowing property market.

Dubbed The Bank, prices of its serviced apartments housed above the Dang Wangi LRT station are expected to go for RM1,300 per sq ft (psf), and the group is targeting 50% of buyers to be foreigners.

Crest Builder executive director Eric Yong Shang Min, however, is unperturbed by the current property market condition, saying it is temporary.

“At RM1,300 psf, the price is still attractive enough to entice buyers as the development will be on a ready-to-move basis. The serviced apartments will be fully furnished, and I am confident that it is an attractive value proposition from us,” he told The Edge Financial Daily in an interview.

He said the project’s average selling price remains attractive compared to other surrounding luxury properties in Bukit Bintang and the Kuala Lumpur City Centre area, which can go for some RM2,000 psf.

The Bank will feature a retail mall podium, office spaces and serviced apartments, a 207-room business hotel as well as an exclusive rooftop club, and will be launched in the second quarter of next year, a delay from the original launch date in the second half of 2014.

Analysts have expressed concern over the steep price tag of the project’s serviced apartments, given the dampening property market.

On its other transit-oriented development at Kelana Jaya LRT station in Petaling Jaya, which has a lower gross development value (GDV) of RM1 billion, Yong said the indicative pricing psf will start from RM1,000.

It will feature a six-level retail block, serviced apartments and office spaces on 4.95 acres (2ha) of land and is expected to be launched in 2016.

Both projects, in Dang Wangi and Kelana Jaya, are a joint venture with Prasarana Malaysia Bhd, which mark the latter’s maiden foray into the property development business to monetise its assets and unlock the value of its land bank.

Prasarana — being the land owner of both Dang Wangi and Kelana Jaya LRT stations — is entitled to RM220 million or 21.2% of the GDV for The Bank development and RM248 million or 24.8% of the GDV for the yet-to-be-named project in Kelana Jaya.

Yong said Crest Builder is expected to enjoy a gross profit of 20% from the total GDV of each project.

The group’s total GDV now stands at RM4 billion, with unbilled property sales of RM103 million.

In a report dated Oct 3, 2014, JF Apex Securities Bhd said it is concerned about Crest Builder’s depleting construction order book and the challenging property market ahead, especially the impact on its two transit-oriented developments next year.

Yong said the group is expected to win one or two construction contracts this year as it seeks to replenish its construction order book that fell to RM70 million from RM500 million in 2012.

This is reflected in its second-quarter results ended June 30, 2014, in which the construction segment posted a pre-tax loss of RM2.5 million on revenue of RM22.6 million due to completion of certain construction projects as well as higher construction costs.

So far this year, it has bagged one construction contract worth RM63.88 million for the super-structure works of a 36-storey serviced apartment project in Damansara here, which was awarded by Naza Engineering and Construction Sdn Bhd.

“The current construction order book of RM70 million is enough to last us for another 18 months. We hope to clinch one or two [more] contracts before year-end,” Yong said.

Crest Builder’s total tender book currently stands at RM4 billion, with a targeted success rate of between 15% and 20%.

Year-to-date, shares in Crest Builder have declined 19 sen or 12.18%. The stock closed down 1.44% to RM1.37 last Friday, giving itv a market capitalisation of RM224.36 million.

 

This article first appeared in The Edge Financial Daily, on October 27, 2014.