KUALA LUMPUR (Aug 25): Global Oriental Bhd (GOB), a property developer and restaurant chain operator, is expecting the property market downturn to persist until at least 2018.
GOB executive director (ED) Wee Beng Aun told The Edge Financial Daily after the company’s annual general meeting yesterday that the group will be more cautious in launching new projects under the current economic environment.
“We can see that there are not many speculative buyers now — more are genuine homeowners, which is good for the industry. The market will take some time to recover; by 2018, [property] sentiment will be more positive,” he said.
Nevertheless, Wee said GOB will still be launching projects that are worth over RM900 million in the current financial year ending March 31, 2017.
“We have to time the market very cautiously, to an extent that is favourable to us, so we don’t want to launch too many and too fast. Luckily, we managed to sell most of our property units before the downturn began,” he said.
“The market is actually in a dilemma now. More and more developers are jumping onto the affordable housing bandwagon, but at the same time, they all know that loan approval rates for buyers of this kind of product are not very encouraging,” he explained.
In January this year, GOB announced that it had teamed up with Menteri Besar Inc (Perak) to develop a mixed development on a 147.84-acre (59.83ha) parcel of land in Manjung, Perak, which has a gross development value of RM900 million.
The deal is expected to be completed by November, but GOB has not finalised the financing method for the land acquisition.
The group had a cash balance of RM79.21 million as at June 30, after several asset divestments last year.
Asked if there will be any further asset divestments, GOB chief financial officer Ng Eek Meen, who was also present at the meeting, merely said the group will make an announcement in due course if there is any new development.
Wee, on the other hand, also said GOB is always open to new business opportunities, but as of now, the group has no new potential venture on its radar.
This article first appeared in The Edge Financial Daily, on Aug 25, 2016. Subscribe to The Edge Financial Daily here.