City&Country: Glomac to launch RM1.2 bil worth of properties

Glomac Bhd is set to launch about RM1.2 billion worth of properties in FY2012, following its strong showing in FY2011. The developer saw its net profit jump 46% to RM63 million in FY2011 ended April 30, from RM43 million in FY2010.

Two projects ready for launch by year-end are Glomac Utama in Bandar Utama and Glomac Cyberjaya 2.

Glomac Cyberjaya 2, which has a gross development value (GDV) of RM250 million, is the follow-up to the successful Glomac Cyberjaya 1, which was launched in July 2009 and fully sold by the end of that year. Glomac Cyberjaya 2 fronts Persiaran APEC at the centre of the Flagship Zone, with neighbours that include HSBC, DHL Malaysia and IBM.

The freehold project on a 7-acre tract comprises 15 units of 3-storey shopoffices, 32 units of 3½-storey shopoffices and eight units of 4 ½-storey shopoffices. Prices for the project, to be launched in the middle of the month, start from RM1.29 million.

Meanwhile, the leasehold Glomac Utama, which comprises 55 units of 2-storey shop
offices and 344 serviced apartments, will have an estimated GDV of RM400 million. The apartments and shopoffices will feature modern tropical designs.

The apartments have built-ups of 1,170 to 1,662 sq ft while the shopoffices have built-ups of 1,295 sq ft to 1,558 sq ft. Both the apartments and shopoffices are priced at RM1.4 million to RM2.6 million.

The launch is tentatively set for November, with only the shopoffices to be opened for sale initially.
According to Glomac deputy COO Brandon Ong, the developer is targeting RM500 million in operational sales for FY2012.

“Our target excludes en bloc sales, which is something we are looking at for some of our commercial projects,” he says.

A bit further down the road next year will be the launch of the freehold Glomac Mutiara Damansara Residences, comprising 299 high-end condominium units with sizes ranging from 1,200 to 1,600 sq ft. The project will have an estimated GDV of RM250 million.

“The prices will depend on the market when the project is launched sometime early next year, but it will be at least RM650 psf. It is a small development but we have received a lot of enquiries and registrations,” Ong says.

The next flagship project is likely to be the 200-acre Lakeside Residences in Puchong. Originally a joint development with land owner Score Option Sdn Bhd, the first phase of 2-storey terraced houses was launched in 2005. However, a legal tussle between the two companies put the project on hold. The project has an estimated GDV of RM1 billion and is expected to be launched sometime next year.

“We have bought the land and are in the process of finalising the deal. We expect the GDV to be higher than the projected RM1 billion because Puchong is thriving now. It will mostly be terraced houses, with some shops, semidees and bungalows,” says Ong.

Glomac is also looking at en bloc sales for phase 4 of Plaza Kelana Jaya —a four-acre site on which the former Kelana Jaya Seafood restaurant sat. The mixed-use development comprises office towers, shopoffices and retail outlets, and has a GDV of RM280 million.

“We have received quite firm offers but we are still fine-tuning the details. We hope to announce en bloc sales by the end of the year,” says Ong.

Meanwhile, sales at its current flagship project, Bandar Saujana Utama in Sungai Buloh, continue to be strong. The 1.070-acre development, launched in the mid-1990s, raked in sales of RM151 million in FY2011.

“Our other township project, the 345-acre Saujana Rawang, is also doing well. It brought in sales of RM70 million last financial year. So, these two townships have given us about RM240 million in revenue,” says Ong.

Continuing growth
In the last four years, Glomac has seen steady double-digit growth and its group managing director and CEO Datuk F D Iskandar Mansor expects the performance to be sustained in FY2012.

“We are already sitting on unbilled sales of RM550 million, which will sustain our earnings for the next two years,” he says.

He acknowledges that there is talk of slowing sales in view of the economic crisis in Europe and the US.

“We are lucky because we have a diverse portfolio. We have different types of products, from low-cost houses to high-end condominiums, and we are in different locations. So, if one of our products in one location slows down, we can still make money on another product and site,” he says.

Glomac has no plans for now to explore overseas projects. “For the near future, our focus will be on greater Kuala Lumpur. Last year, 69% of real estate transactions was focused on the Klang Valley. So, we will concentrate on this area,” says Iskandar.

The developer is currently in a net cash position with cash of RM361.6 million as at July 31, compared with RM176.7 million in the previous quarter. Glomac plans to use its war chest to pare its debt and expand its landbank. It currently has about 1,000 acres, worth an estimated RM3.8 billion in GDV.

“We are aggressively looking for landbank, with a focus on the greater Kuala Lumpur area. Other areas we are looking at are Penang and Johor,” says Ong.

He notes that over the past five years, Glomac’s strategy has been to acquire smaller parcels of land, mostly measuring less than 10 acres but with high GDV that allows for fast turnaround.

Qualities to improve
Despite the strong financial performance, Iskandar feels that Glomac still has room for improvement, especially in design, quality and property management. He would like to believe that when people buy a Glomac property, they know there is a premium but still see it as worthwhile because they are getting value for their money.

He cites Kelana Jaya, where Glomac has several developments, including Kelana Centre Point, as an example. While Glomac is not the only developer in this area, its products can still sell at prices 5% to 10% higher than its competitors, he notes.

“If the buyers trust you, they don’t mind paying the premium because they are assured of product quality, good management and response from us should there be any problems,” he offers.

In terms of design, Iskandar says Glomac can be considered a pioneer for its shopoffices.

“In the early 1990s, people were talking about three to four-storey shopoffices. We improvised on that by going up to five to six storeys, put in lifts, used more windows and put in basement parking. We are always at the forefront, which is why our business parks are successful,” says Iskandar.
Glomac was also one of the first few to develop gated and guarded landed residential properties. It launched the 53-acre Aman Suria in Petaling Jaya in 2002.

“Aman Suria is probably one of the best performing properties in terms of capital appreciation and yield in greater Kuala Lumpur,” says Iskandar.

He says a 2-storey terraced house in Aman Suria, which was sold for RM488,000 in 2002, is now commanding RM1.2 million to RM1.3 million. And a semi-detached house, sold at RM800,000 when it was first launched, is now going for RM2.5 million to RM2.6 million.

One area that Iskandar feels is crucial but often overlooked is property management. It is something that he personally feels only one developer — Sunrise Bhd — has mastered.
“The rest of the developers are doing all right in this area — and I think we are in that category — but good property management can enhance the capital value of the property and with proper management, they can get better rental yields,” he says.

Glomac has managed several of its projects, including the gated and guarded Aman Suria and Kelana Centre Point. The developer has a property management team of more than 100, ranging from plumbers to property managers.

Even though Glomac is considering offering property management services to other developers, Iskandar says the business is still very new and will contribute only a small portion to the group’s turnover.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 879, Oct 10-16, 2011