Glomac sees alternatives to build-then-sell scheme

KUALA LUMPUR: Glomac Bhd sees alternatives to the build-then-sell (BTS) scheme, which will be implemented by 2015 to avoid cases of abandoned housing projects.

“The purpose of this BTS scheme is to avoid the number of abandoned houses. However, there are other alternatives that can solve this problem,” managing director and CEO Datuk FD Iskandar told reporters at Invest Malaysia 2013 conference yesterday.

Iskandar said Glomac is already in talks with local and international insurance brokers and bankers to propose an alternative to the BTS scheme.

“We can look at countering these possible abandoned homes through insurance schemes.  We, along with Rehda and the housing and local government ministry are in talks with the Korean Housing Guarantee Corp on its model,” he added.   

Iskandar, who is also president of the Real Estate and Housing Develpers’ Association (Rehda) said the BTS may also shrink the supply of residential homes which will result in a price shoot-up.

A survey conducted by the company found that big companies would be building fewer houses while smaller companies lack the opportunities to develop any.  Last year, 110,000 new houses were built.

“What happens when the demand for houses is over 150,000?  When the demand is five times more than the actual supply, then the price will shoot up,” Iskandar said.

He said the company is in talks to build affordable homes, and will collaborate with the 1Malaysia People’s Housing Scheme (PR1MA). However, nothing has been finalised.

Glomac currently has about 900 acres (364ha), and is planning to acquire at least one or two more pieces of land by the year-end.

“We are looking at landbanks in the Greater KL area, and we are also looking at land in Johor and Penang. However, our concentration would still be in Greater KL as more of our income and profit come from this area,” said Iskandar.

“We do have projects that are already within the definition of PR1MA in terms of affordable homes. We are also looking at acquiring new land and have PR1MA work with us in joint ventures.”

Iskandar noted that the affordable homes would mainly comprise units in township developments, adding that 50% of Glomac’s sales is contributed by such residential sites.

For its 2012 financial year ended April 30 (FY12), Glomac recorded sales of RM663 million.

“We have close to RM7 billion worth of new projects in terms of GDV for the next few years.

“If we were to sell about RM800 million to RM900 million worth of properties, this will last us at least seven to eight years,” he added.

For FY13, Glomac sold about RM800 million worth of properties. It expects its sales to touch at least RM900 million by year-end.


This article first appeared in The Edge Financial Daily, on June 14, 2013.