KUALA LUMPUR: Property developer Land & General Bhd (L&G) has revealed that the weakening of the ringgit against the US dollar may increase the development cost of their future projects by up to 20% if the situation does not abate soon.

The impact comes from imported items — which are quoted in US dollars — and will affect new projects, though current ones will be spared, L&G managing director Low Gay Teck told reporters after the group’s annual general meeting yesterday.

“Costs have been going up progressively over the past two years. The past six months have seen the ringgit weakening and this will impact future contracts awarded, as part of the construction materials, some imported raw items or finishing items, are quoted in US dollars.”

However, he did not think the cost increase will be too drastic. “It would be somewhere around 10% to 15% range, at most 20%. The bulk of the raw materials used for construction is locally produced. Cement and steel bars are price-controlled items,” said Low.

Asked if the group will pass the price hike to customers, Low merely said the group will “adjust the price cost accordingly”.

As for its ongoing projects, the group is enjoying an average 95% sales rate — with unbilled sales now at RM369 million.

“Ongoing projects as well as our land bank are in prime locations, [so] even in hard times I don’t foresee major concerns for the group because we can sell. Our land bank and projects are in prime, mature housing areas,” he stressed.

“In addition to that, the group has ongoing projects, locked-in sales, work in progress and unbilled sales of RM369 million. These are locked-in sales and will materialise in the next three to four months,” Low added.

He also expressed confidence that FY15 will see substantial growth in sales for L&G — but did not specify any numbers. This, however, would depend on L&G’s yet-to-be launched high-rise Astoria Ampang, which has already registered a 50% interest, he added.

Currently, the group has obtained a building plan approval for the project and is in the midst of applying for a developers’ licence and advertising permits from the government authorities.

On another note, the group also has a long-term plan to convert 1,000ha of its plantation land in north Selangor into a township.

“We have around 1,000ha of plantation land, which is planted with rubber and oil palm. This is the parcel of land where we have plans to develop into a township. We won’t be doing it in a few years.

“It will take a minimum of around 10 to 20 years and it is a long-term project,” said Low, adding that the project will start in two years’ time.

The first phase of this new township is expected to take around 24% of the 1,000ha land space.

Regarding new acquisitions, Low said L&G is in the midst of completing a 112 acre (45.32ha) purchase earmarked for  development of a landed property with an estimated gross development value (GDV) of RM1 billion.

“The agreement has been signed. We are going through the process of completing the sale. By the time preliminary approvals and the acquisition process are completed, it will probably take us one year. So development of this parcel will most likely take place in 2017,” said Low.

L&G’s shares closed up one sen at 40 sen, for a market capitalisation of RM427.8 million.

This article first appeared in digitaledge Daily, on September 10, 2015.