City&Country: The Edge Top Property Developers Awards 2009-- Consolidating for greater growth

I&P Group Sdn Bhd's positive sales performance in recent months sees it primed to continue through 2009

The journey taken by I&P Group Sdn Bhd to become one of Malaysia’s top property developers has seen it go through many changes.

I&P Group Sdn Bhd was established in 1963 as Island & Peninsular Development Ltd. It underwent a name change to Island & Peninsular Bhd in 1984, the year it launched its first township, Taman Setiawangsa, in Selangor, as its only developer. Today, Taman Setiawangsa, atop 257 acres of freehold land and almost 100% completed, is a bustling township.

In November 2004 as part of the rationalisation exercise by its majority shareholder, Permodalan Nasional Bhd (PNB), Island & Peninsular Bhd had acquired Golden Hope Plantations Bhd, I&P Seriemas Sdn Bhd (formerly known as Golden Hope Development Sdn Bhd), and I&P Alam Impian Sdn Bhd (formerly known as Golden Hope Properties Sdn Bhd), making it the largest property developer in Malaysia in terms of landbank.

In April 2007, PNB proposed a voluntary general offer to acquire the remaining 285.3 million Island & Peninsular Bhd shares it did not own, and the company was subsequently delisted voluntarily from the local bourse in July 2007.

Most recently, on May 1, 2009, I&P Group Sdn Bhd emerged following a rationalisation and merger of Island & Peninsular Sdn Bhd, Petaling Garden Sdn Bhd and Pelangi Sdn Bhd. The exercise also saw several subsidiaries becoming part of the I&P Group, namely Perumahan Kinrara Bhd, Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (SPPK) and I&P Alam Impian Sdn Bhd.

Positive Action
With the exercise in place, the enlarged entity now boasts a combined track record of more than 100 years in property development, says Datuk Jamaludin Osman, I&P Group managing director, in his usual jovial way.

Keeping the company afloat during the global economic slowdown is no mean feat. For Jamaludin, the task called for hard work and financial prudence.

“We went on a cost-saving exercise. We continued to launch projects to manage our cash flow but these were reduced to batches of 50 to 60 units each time,” says Jamaludin. This makes sense because in the event that a launch is not successful, the smaller number of unsold units would exert less pressure on the developer’s cash flow.

What also helped to keep the group going was its low gearing. “We’ve learnt to be prudent when it comes to spending and taking loans. If you have a manageable gearing ratio, you will be able to stay afloat during troubled times,” he says.

Recalling the 1997/98 Asian financial crisis, Jamaludin says this time around, people are better prepared as they have a lot of savings. Equally important is that financial institutions are stronger now than in 1997.

Township maker
Going foward, Jamaludin is bullish on the property outlook for the next two months at least. Barring any adverse effects on the economy, he is confident the positive momentum could carry on into 2010. The developer’s upbeat mood is hardly surprising as the response to its recent launches in Shah Alam and
Bandar Kinrara has been hot.

There were long queues at the launch of the superlink houses called Temasya Suria @ Temasya Glenmarie in Shah Alam. Some buyers stood in line for seven days and eight nights to ensure they were the first few to get a house. The 133 units, spread over eight acres and priced from RM750,000 to RM1.4 million, had built-ups of 3,427 to 4,652 sq ft. The gross development value (GDV) of the project is RM121 million.

In Bandar Kinrara, Puchong, buyers were even more gung-ho with some camping out at the Perumahan Kinrara sales office for 10 nights and 11 days. A total of 80 link homes, with built-ups ranging from 2,151 to 2,551 sq ft, in Phases B39 and B40 were up for sale at RM462,888 to RM693,888. The development’s GDV is RM40 million.

In recent months, Jamaludin says some 500 units across all of I&P Group’s townships have raked in sales totalling RM300 million.

Most of the I&P Group’s projects are townships such as Bandar Kinrara, Termasya Glenmarie, Bayuemas, Seri Beringin, Taman Setiawangsa and Alam Impian. It also has a strong landbank of about 5,607 acres.

How will the developer continue to attract buyers? “The location of our townships is good. These projects are situated close to the city centres,” says Jamaludin, adding that the projects offer variety — from terraced houses to semidees and bungalows. “Also, we are able to hand over the units ahead of schedule or on time. We have never abandoned any of our developments,” he adds.

Another strong selling point, he says, is the capital appreciation enjoyed by buyers. Jamaludin points to Bandar Kinrara’s Majestika bungalows which have doubled in value in the last two years. These 2-storey structures were launched in 2007 at between RM1.5 million and RM2.7 million. The 27 units in this guarded development have built-ups of 5,213 to 5,726 sq ft on lots sized from 9,992 to 28,950 sq ft. These houses, which were all sold, were handed over to buyers in May 2009. A check on the Internet revealed that a unit listed in August this year, with a built-up of 5,700 sq ft on a land area of 18,500 sq ft, was going for RM3.6 million.

Bandar Kinrara, launched in 1991, is a freehold development in Puchong, Selangor, that sits on 1,904 acres and is about 70% developed.  I&P Group is master developer for the township and the entire project has a GDV of RM3 billion. The township is developed and managed by Perumahan Kinrara in a joint venture with Lembaga Tabung Angkatan Tentera and Lembaga Tabung Haji.

Alam Damai is another township where property values have risen significantly. The first phase of 2-storey terraced houses, measuring 22ft by 75ft, was launched in 1998 at RM148,000 onwards. The same units can now fetch about RM450,000 on the secondary market according to the developer. Semidees launched in Alam Damai in 2002 at RM450,000 onwards are now going for RM750,000 on the secondary market, a hike of about 67%. This leasehold township, launched in 1998, will have an estimated GDV of RM1.3 billion upon completion. About 60% of the area has been developed.

Is the developer under-pricing its products? “This is one of our strategies to ensure that the developer and buyers will make money — a win-win situation that will keep them coming back,” says Jamaludin.

A strong contributor
Going forward, township development will remain a strong contributor to the group. While there are no immediate plans to build and retain projects for recurring income, Jamaludin says I&G Group will venture into this area in due course. Currently, the group’s only recurring income are some bungalows in Seri Beringin, Damansara Heights.

The developer will also be moving towards sustainable developments, which require the homeowners to play their part. “Things like how to take care of the parks and trees and how to dispose of rubbish properly are important,” says Jamaludin.

The I&P Group, says Jamaludin, has incorporated “green” and sustainable elements in its townships for years. These include quality landscaping, with all the utilities installed underground.

While many successful developers have ventured or are looking at overseas market, the focus of the I&P Group is on Malaysia. “However, if there is an irresistible offer aboard, we may consider it,” adds Jamaludin.

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