LBS Bina expects sales cancellation rate of 30% this year

KUALA LUMPUR (May 4): Property developer LBS Bina Group Bhd expects 30% of its overall project sales to be cancelled this year — the same ratio it saw last year — due mostly to buyers failing to obtain loans following cooling measures for the property market that were introduced by the central bank.

“We used to have [a] 15% to 20% [cancellation rate]. Last year, it was 30%; I think this year will continue to be about 30%,” LBS Bina managing director Tan Sri Lim Hock San (pictured) told reporters after launching the first phase of the largest integrated development in Brinchang, Cameron Highlands — the Cameron Centrum Precinct 1 — yesterday.

“Last year, we were supposed to sell RM1.5 billion [worth of properties], [but we saw a] cancellation of about RM500 million, which was about 30%,” he explained.

LBS Bina achieved total sales of RM1.029 billion last year, up 60% from 2014. This year, it is looking to launch RM1.95 billion worth of properties, a mix of high-rise and landed residential and commercial developments, mainly in its township, Bandar Saujana Putra, and the Klang Valley.

The group’s unbilled sales currently stand at RM1.16 billion, while its land bank stands at 2,530 acres (1,024ha). Year to date, the group’s total sales stand at RM270 million.

“Unless Bank Negara [Malaysia] revises the lending guidelines, the situation should remain the same,” Lim noted.

He pointed out that the property market is not as bad, but not so vibrant like it used to be. Still, LBS Bina is confident of remaining on track to achieve its next target of a 20% increment in total sales this year of RM1.2 billion, he added.

This is because the company intends to focus more on the affordable range of between RM400,000 and RM500,000, and properties in the affordable range are still selling, said Lim. High-end properties, on the other hand, have been “greatly affected”, he said.

“It depends on [the] products and location,” he added.

Meanwhile, its newly launched Cameron Centrum Precinct 1 is the first phase of its RM2 billion development in Brinchang. The project comprises 58 commercial units with an estimated gross development value of RM183 million.

Lim expects the commercial units to be sold out within the year, and start contributing to the group next year.

Shares in LBS Bina closed unchanged at RM1.59 yesterday, valuing the group at RM892.22 million.

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This article first appeared in The Edge Financial Daily, on May 4, 2016. Subscribe to The Edge Financial Daily here.