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Saturday, March 15, 2008

New Strategies

Dijaya lays foundations to move ahead

DIJAYA Corp Bhd is on the threshold of further growth under the helm of MD Tong Kien Onn, who took over from P.K. Koh.

Tong is currently putting down new foundations to move ahead. He is taking on a more aggressive move as competitors have sprouted and managed to establish themselves as major players in the property sector.

“We were (well) known at one time. We still are but compared to these several competitors who have marched on, I would like Dijaya to be a name that people can identify with,” he says. The completion of the Tropicana City at the end of this year will help but Tong is laying down other strategies to propel the group forward.

The completion of the Tropicana City at the end of this year will help Dijaya

The group has property launches totalling some RM890mil planned for the first half of this year. Over the last year, Tong has been buying up land to replenish its depleting land bank. He has paid RM96mil for three pieces of land outside the inner city development, which he refers to as the second tier.

Located in Balakong, Sg Long and Jenjarom in Banting, the land spans some 190 acres.

Analyst Kevin Khoo from Insider Asia says the company is “aggressively expanding its land bank at low prices.”

Besides its land purchase and launches of close to RM900mil in Tropicana and Sg Buloh for the first six months of this year, it is also excited about its move to India soon.

“When I took over, I spent the first six to nine months looking for land and exploring opportunities overseas. We hardly bought any land the last 15 years. Tropicana and Damansara Indah kept us busy for a while. Today, we are at the tail end. We have four pieces of land, of which only one is for residential development in Tropicana itself, near the Lien Hoe building,” says Tong.

He says the company will adopt the concept of a guarded and gated community for these projects. The company has 93.4 acres in Jenjarom, 66 acres in Balakong, Selangor and 26.7 acres in Sungai Long, Cheras.

“We aim to have some elements of Gita Bayu and Desa Park City in Jenjarom and Balakong but have not worked out the concept for Sg Long yet. We are still looking for more land in Sungai Buloh. The focus of development will be around Sg Buloh area over the next five to eight years,” he adds. He opines that there is a market for such developments in the second tier townships.

“There are people with a lot of money out there,” he says.

“In property development, it is crucial to have good pieces of land and this is becoming scarce and expensive. The second thing I did was to look overseas ... my focus is India and Vietnam.”

Tong says while he is keen to go abroad, he is cautious because it is not as simple as it sounds or as many make it out to be. The company has teamed up with a local partner in a 54:46 joint venture to build a high-rise residential project in India.

Phase 1 will be launched in the second quarter of this year. The total gross development value is RM800mil. They are still exploring in Vietnam.

In addition, another step taken by him over the year is to have a bigger budget for landscaping in their projects. In Villa Green 3A semi-detached units, the budget was increased from RM200,000 to RM600,000. A total of 50 out of 80 units were sold. These will be ready by the end of March.

“When a company offers lifestyle homes, there is a certain ambience that is needed. Having more trees, and more mature ones, lends a new feel to the place and this is what people want. If they are going to part with millions, it is our part to do the necessary.”

For the newer developments, the landscape architects will be brought in at an earlier stage instead of at the tail end of a project.

Along with this new emphasis, the company will continue with its bread and butter projects, which is middle to upper end residential development and lifestyle commercial projects.

In the next several months, it will launch its condominium Tropicana Grande, a contemporary 300-unit condominium of 39 storeys. Average size is about 3,000 sq ft, priced at around RM500 per sq ft. The project has a GDV of RM390mil.

It will also launch Tropicana Avenue, which comprises nine to 11-storey shop offices on 2.8ha, priced at RM300 to RM350 per sq ft for office space and between RM600 and RM700 per sq ft for the shops (GDV: RM210mil)

On the cards is Tropicana Gardens, a six-storey lifestyle shop offices project fronting Persiaran Surian on a 17.6 acres. It will have 80 units of shops and about 140 units of offices. This will be launched at the end of 2008.

On its up and coming Tropicana Mall which fronts the LDP in Petaling Jaya (opposite Dijaya’s headquarters), Tong says they will keep the 12-storey office block for leasing purposes at about RM4 per sq ft. The office block has a floor plate of about 8,000 sq ft so it is quite unlike some of the new projects that have come up around Petaling Jaya.

“We need something that will give us a recurring income. We will also be leasing out the mall and after paying off the loan, I get RM20mil to RM30mil annually from the mall. We will sell all the 600-odd apartment units, which is currently 75% sold,” says Tong.

By The Star (by Thean Lee Cheng)

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