KUALA LUMPUR (Aug 20): Eco World Development Group Bhd, unfazed by the slump in the local property market and slowdown in the broader economy, aims to launch its RM8.7 billion Bukit Bintang City Centre (BBCC) mixed development as part of the bigger Pudu jail site redevelopment, in the last quarter of this year.
“We are currently doing a lot of planning and pre-marketing for the BBCC project and we plan to launch it at the end of this year, in the last quarter of 2015,” Eco World chief executive officer Datuk Chang Khim Wah told reporters yesterday.
He was speaking after the group’s extraordinary general meeting to approve the proposed joint development with UDA Holdings Bhd and the Employees Provident Fund (EPF), which will be undertaken by BBCC Development Sdn Bhd (JV Co).
Under the JV, Eco World will hold a 40% stake in the JV Co, while UDA and EPF will hold 40% and 20% equity interests respectively.
The Pudu jail redevelopment is part of the government’s Economic Transformation Programme (ETP) to turn the Klang Valley into the Greater Kuala Lumpur economic district.“The development order has already been obtained. We will start construction in the first quarter of next year,” Chang said.
He said the planned shopping mall for the BBCC project will be integrated and unique, to differentiate it from other developments. “We want to add a different [dimension] to the golden triangle and are in intense negotiations with Mitsui Fudosan [Co Ltd],” Chang said, adding that emphasis is given to infrastructure design to ensure easy accessibility to the mall.
Eco World said early this year that Japan’s Mitsui Fudosan will jointly develop the shopping and retail component of the project.
Meanwhile, Chang said Eco World is on track to achieve its RM3 billion property sales target despite a slower property market this year. “We are in the broad spectrum of the property market so we are ready to face many challenges. We are in every segment of the market so we are quite confident that we can ride out [the slowdown],” said Chang.
He disagreed that Eco World was being too aggressive in its project launches as its projects are located in good locations — catchment areas with easy accessibility.
He also said Eco World’s gearing ratio after its rights issue remains relatively healthy.
Eco World had proposed a renounceable rights issue of 656.74 million new shares in February, on the basis of one rights share for every two existing Eco World shares, which, at an issue price of RM1.20 apiece, raised it some RM788 million.
The rights issue came with 525.39 million free detachable warrants on the basis of four warrants for every five rights shares subscribed, which would raise RM1.092 billion — assuming the full exercise of the warrants at an exercise price of RM2.08 each.
Yesterday, Chang noted that while construction costs are typically on the rise, it is still “manageable” as most Eco World’s building materials are sourced locally.
He added that the group’s key challenge now is to ensure smooth buyer purchase as some buyers are finding it hard to obtain loans.
Eco World closed one sen or 0.79% higher at RM1.28 yesterday, giving it a market capitalisation of RM3.05 billion.
This article first appeared in the digitaledge Daily on Aug 20, 2015. Subscribe here.