S P Setia makes debut in mainland Penang

S P Setia

KUALA LUMPUR (May 18): Property developer S P Setia Bhd will launch its maiden project in mainland Penang in the second half of this year, which forms part of its launches totalling RM5.5 billion in gross development value (GDV) planned for the year.

Dubbed Setia Fontaines, the eco-themed township spans 1,675 acres (677.85ha) within the Butterworth-Sungai Petani Growth Corridor, with a potential GDV of RM9.6 billion over 20 years. S P Setia president and chief executive officer Datuk Khor Chap Jen said the launches planned for 2018 will comprise new projects, and new phases of existing projects in the country and overseas. This will help the group meet its RM5 billion sales target for the financial year ending Dec 31, 2018 (FY18).

In Singapore, the group plans to launch a luxury condominium project called Daintree Residence with a GDV of S$480 million (RM1.42 billion) in Toh Tuck Road in the third quarter. The project will feature 327 units. S P Setia also expects to sell the remaining 50% of its UNO Melbourne mixed-use development in Australia.

“We are on track to achieve our RM5 billion sales target for this year. But I think we will have to be a bit realistic due to the relatively soft market, and take a little bit of hit in margins,” Khor told reporters after the group’s annual general meeting (AGM) yesterday. He said, however, the possible squeeze on its gross profit margin is expected to be nominal. The group expects to turn in a positive performance in FY18, having secured sales of RM1.11 billion in the first quarter, which Khor deems satisfactory given that the first three-month period is traditionally a slow-moving period.

“Based on what we’ve witnessed, we’ve changed some of our products where some of the units are turned into smaller units known as starter homes. There’s always demand for this type of houses,” he said. The ruling Pakatan Harapan’s manifesto on affordable housing will also bode well for this growth strategy, he added.

On the zero-rated goods and services tax (GST) come June 1, Khor expects buyer sentiment to improve.

“The immediate impact can be felt among buyers looking to purchase commercial properties as these items would no longer be subject to the GST.

“Until we see the details [of the zero-rated GST], we do not know how it will affect our overall construction cost, with talk of re-implementation of the sales and services tax. Hopefully, sentiment of the public will be better and they might be more encouraged to commit to big-ticket items, such as houses,” Khor added.

On the Battersea Power Station project in London, the UK, Khor said the completed Phase 1 has shown a take-up “much faster than envisaged” as it is currently 70% occupied.

Construction works for Phase 2 and Phase 3A are now running “full steam” for completion in 2020 and 2021 respectively. He said there will be no new phases launched over the next one to two years as the remaining parcels of land have been surrendered for the construction of the Northern Line underground tube station.

This article first appeared in The Edge Financial Daily, on May 18, 2018.

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