City&Country: The Edge Top Property Developers Awards 2009-- Challenging year for the Top 10

There is a new but not unfamiliar name this year at the No 1 spot of The Edge Top Property Developers Awards 2009. Sime Darby Property Bhd (SDP), the property division of Sime Darby Bhd, wrested the top spot from S P Setia Bhd, which had held the position the past four consecutive years. SDP, which did not feature in the ranking last year, certainly made its presence felt this year.

The non-listed property arm of Malaysia’s largest corporation Sime Darby rode on its strong financials for FY2008 as it came first in the quantitative sub-ranking. The developer has the largest amount of shareholders’ funds totalling more than RM4 billion, the highest turnover at RM1.4 billion and the healthiest cash standing among all the developers featured in the ranking.

This is not surprising considering that SDP is the result of a merger of the previous property arms of Sime Darby — Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd — in January 2007. (Sime UEP Properties Bhd, which was ranked sixth in 2007, was delisted following the merger.) SDP is now one of the largest property groups in the country in terms of landbank. This developer came in 10th in the qualitative sub-ranking.

The developer is currently involved in several township projects in the Klang Valley, including Ara Damansara, USJ Heights, Melawati, Bukit Jelutong and Putra Heights. Despite the current soft market, SDP has managed to continue selling homes in its developments. Overseas, it has two residential projects in Singapore known as Orion and Balmoral Hills and is set to launch a waterfront development called Eagle’s Cove in Australia’s Gold Coast. The company also recently acquired 400 acres of land in Weifang prefecture in China’s Shangdong province for a mixed development. 

S P Setia, which took second place overall, came in third in the quantitative and second in the qualitative sub-rankings (based on FY2008). It was tops in both the sub-rankings last year. In its FY2008 ended Oct 31, it recorded impressive sales exceeding RM1.4 billion, the highest ever in its history. Despite the soft market sentiment, the group achieved a net profit of RM213.5 million. This was attributed to property sales in the Klang Valley, Johor and Penang.

S P Setia has expanded into the commercial sector with its first mixed-used development called SetiaWalk in Puchong and Setia City Mall in Shah Alam. It also recently launched its first high-end condominium project called Setia Sky Residences in the Kuala Lumpur city centre. Overseas, the group has a project in Vietnam called Setia EcoLakes and in April 2008, signed a cooperation agreement with Saigon Hi-Tech Park Development Company to jointly design and develop a mixed-used real estate development.

In third place is Sunway City Bhd (Suncity), retaining the position for the second year running. Suncity improved in the sub-rankings this year, with its second and third spot in the quantitative and qualitative sub-rankings respectively. It boasts the highest profit before tax in FY2008 among the developers at RM634.05 million. This was mainly contributed by the property investment division following, among others, the expansion of Sunway Pyramid Mall and the opening of Sunway Carnival Mall in Penang. Suncity also secured two en bloc sales of condos in its RM5.2 billion Sunway South Quay and in Sunway Palazzio, with a total gross development value (GDV) of RM440 million.

It is currently working on a real estate investment trust (REIT), with an estimated value of RM4 billion.
IGB Corp Bhd, the developer of the iconic Mid Valley City, is down two spots to fourth position overall, due partly to its weaker standings in the quantitative sub-rankings where it slipped from second to fifth. The company’s bottom line is derived from recurring income mainly from its Mid Valley City development, hence it is not pressured to launch new projects. Nevertheless, it continues to seek opportunities here and overseas, especially to grow its hotel business. It was also fifth in the qualitative sub-ranking this year, one spot down from last year.

Non-listed Island & Peninsular Sdn Bhd (I&P) and the previously listed IOI Properties Bhd  and Bandar Raya Developments Bhd (BRDB) all stepped down one rung to take fifth, sixth and seventh position overall respectively, while Eastern & Oriental Bhd (E&O Bhd) is in eighth spot.

I&P, the decades-old township developer, was voluntarily delisted in July 2007 and on May 1 this year, I&P Group Sdn Bhd emerged following a rationalisation exercise and merger of I&P with Petaling Garden Sdn Bhd and Pelangi Sdn Bhd. It is also among the largest developers in the country in terms of landbank. The developer of Bandar Kinrara in Puchong and Temasya Glenmarie in Shah Alam saw overnight queues forming at recent project launches in the two developments.

Although IOI Properties was voluntarily delisted on April 28, 2009, it was automatically included in the ranking based on the release of its annual report for FY2008 ended June 30. Taken private by IOI Corp Bhd, the developer is building one of its most significant commercial developments to date — the Puchong Financial Corporate Centre in Bandar Puteri Puchong. Some 15% to 20% of its income is derived from property investments including three shopping malls.

BRDB, the developer of Troika — the Foster & Partners-designed high-rise residence on Jalan Binjai near KLCC — and One Menerung in Bangsar, was in FY2008 busy with the refurbishment and expansion of Bangsar Shopping Complex while adding a new office building annex to it. These should be completing soon. The expanded BSC will provide some 325,000 sq ft of retail space while the BRDB office tower will have 220,000 sq ft. BRDB improved in its qualitative rankings but went down a rung in its quantitative rankings although its FY2008 revenue and pre-tax profit doubled from the previous FY.

E&O Property Development Bhd was voluntarily delisted in August 2008 and merged with E&O Bhd to form a larger entity. Last year, E&O Property Development was in ninth position while E&O Bhd came in 13th. This year, E&O Bhd moved up to eighth spot. The launch of St Mary Residences in downtown KL in June of one block of 169 serviced apartments saw an 80% take-up rate over three weeks and recorded an average selling price of RM1,000 psf. There was also good response to launches in its ongoing 1,000-plus acre development of Seri Tanjung Pinang in Penang.

Sunrise Bhd, the name synonymous with the development of the high-end expatriate enclave of Mont’Kiara in Kuala Lumpur, is in ninth place overall although it comes in as the developer with the best qualitative attributes in the country in the eyes of consumers. Sunrise made a record RM201.1 million pre-tax profit for FY2008 ended June 30 or a 28% increase from RM157.4 million the previous year. Revenue contributors are its commercial development Solaris Dutamas, residential developments such as Mont’Kiara Banyan, Mont’Kiara Meridin, 10 Mont’Kiara and 11 Mont’Kiara. The sales of commercial units and car park lots in Plaza Mont’Kiara to Quill Capita Trust have also contributed favourably to the group’s financial performance.

11 Mont’Kiara, a 339-unit luxury residential development with a GDV of about RM900 million, is due for completion in 2011. As of August, it has been 90% sold.

Non-listed Bandar Utama City Corp Sdn Bhd (Bandar Utama) rounded up the Top 10. The developer under the See Hoy Chan Holdings Group was in seventh place last year. Bandar Utama’s revenue in FY2008 ended Dec 31 fell from RM388.95 million in 2007 to RM346.50 million in 2008, while pre-tax profits retreated from RM160.43 million in 2007 to RM131.55 million in 2008. The developer is currently busy with a 911-unit condo development 9 Bukit Utama with a GDV of RM1 billion, and a 25-storey purpose-built green office building with a net lettable area of 550,000 sq ft. It will  refurbish the old wing of 1 Utama Shopping Centre next.

Missing from the Top 10 this year is Boustead Properties Bhd, developer of Selangor’s popular Mutiara Damansara township, which was taken private on Aug 8 last year but did not offer itself for ranking. This is the second year that the ranking is open to non-listed property developers whose participation has certainly raised the stakes. Competition is getting tighter and many developers are closing the gap on each other as shown in the qualitative sub-rankings where a number of developers are tied in the standings.

New names in the Top 30 rankings are the newly listed UEM Land Bhd (listed Nov 18, 2008), Gamuda Bhd’s property division, which made an impressive debut at 11th position overall, and IJM Land Bhd, the renamed RB Land Holdings Bhd following the merger between RB Land and IJM Properties Sdn Bhd. IJM Land is now construction group IJM Corp Bhd’s listed property arm. RB Land did not feature in the Top 30 last year, but IJM Land is now just two rungs away from the Top 10 at No 12, indicating perhaps how branding can help change consumers’ perceptions.

It was a challenging year for property developers around the world, no doubt, but the developers featured among the Top 10 of The Edge Top Property Developers Awards 2009 have stood their ground and held firm in the face of the global financial crisis.

Submissions from non-listed developers increased to 15 this year. Other non-listed or private limited companies which made it to the Top 30 this year are the property arm of Gamuda (11th position), Naza TTDI Sdn Bhd (18), WCT Land Sdn Bhd (23) and Sabah-based Sagajuta Sdn Bhd (29), the developer of 1Borneo mall.

This is the seventh year of the awards. The ranking is based on quantitative and qualitative attributes according to FY2008 results. Data on the quantitative attributes of listed companies in the property sector of Bursa Malaysia are based on published sources compiled by Interactive Data Systems Sdn Bhd, while non-listed companies were required to submit copies of signed audited accounts. The five quantitative attributes are: shareholders’ funds, group pre-tax profit, revenue, gearing, and cash plus cash equivalents.

The qualitative attributes are product quality, innovation and creativity, value creation for buyers, image and expertise. The qualitative attributes were judged by industry experts and veteran property developers, namely, Datuk Alan Tong, Datuk Richard Fong, Datuk Jeffery Ng, Datuk Teo Chiang Kok, Kumar Tharmalingam and Datuk Eddy Chen. The Edge was represented by its executive editor Au Foong Yee, who is also editor of City & Country and theedgeproperty.com.

Five of the judges abstained in the deliberation and judging of companies in which they have direct or indirect interest. They are Fong for Glomac Bhd (he is the group executive vice-chairman), Teo for Bandar Utama City Corp (he is a director), Ng for Sunway City (he is an executive director), Chen for Metro Kajang (he is the managing director) and Au for Sunrise (Sunrise and The Edge have in common a major shareholder). The results were audited by Deloitte Malaysia.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 776, Oct 12-18, 2009.