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Monday, June 30, 2008

Glomac gears up for challenges ahead

GLOMAC Bhd has, over the past 20 years, emerged from a mere township developer to become a niche, high-end property player.

The recent en bloc sale of its 40-storey Glomac Tower for RM577mil (a record breaking RM1,120 per sq ft), is another outstanding achievement for the Bursa Malaysia main board company.

Group managing director Datuk F.D. Iskandar F.D. Mansor said while going for more niche projects in the Klang Valley, Glomac was constantly improving its traditional mixed housing projects.

Datuk F.D. Iskandar F.D. Mansor

For example, the company has introduced a Balinese theme with Balinese style garden and pavilion by a lake for its 350-acre Saujana Rawang (next to Bandar Country Homes) and has generously landscaped the 450-acre Sri Saujana in Ulu Tiram, Johor.

Iskandar is passionate about Bandar Saujana Utama in Sungai Buloh, Selangor. It is this early flagship project that has positioned Glomac as one of the key pioneer players in Sungai Buloh's development in the mid 1990s.

“Moving forward, we would like to bring more amenities to Bandar Saujana Utama, which has within 10 years transformed from a God forsaken place into a very affordable and family-orientated place to live. It has become a thriving township with amenities and facilities.

“We're proud to develop this township which will have 9,000 mixed units. It is two-thirds completed and the houses are 93% occupied,” he told StarBiz.

He recalled how the company started off with the Sungai Buloh Country Resort (SBCR) that is now part of Bandar Saujana Utama. Bungalow lots were sold for only RM18 per sq ft then. Prices now hover around RM25 to RM28 per sq ft.

He said the equestrian project at SBCR had been scaled down and privatised to an operator that conducted horse-riding lessons.

Iskandar said the township had a new precinct, the 43-acre Bukit Saujana, where it planned to launch terraced (1,860-sq-ft built-up) and semi-detached houses (2,500 sq ft) tagged at a bumiputra price of RM238,000/RM248,000 and RM428,000/RM438,000 respectively.

“We're working with the Government to have more schools there. At present, many children from other areas come to study at our secondary and primary schools,” he said.

Meanwhile, Glomac, like all property development companies, are affected by the big jump in oil prices, inflation and rising construction costs. It is bracing for the worst.

“It's either we increase the prices of our products or reduce the built-up area. All our margins will be wiped out if we continue selling our 22ft by 75ft terraced houses at RM180,000 in Bandar Saujana Utama.

“Steel price was below RM2,000 per tonne less than a year ago. It has now gone up to RM4,000 per tonne and we will be lucky if we have enough supply,” he added.

It is understood that it would be inevitable for the company to raise house prices and also to give smaller built-up area for certain products.

However, Iskandar realises that he has to tread carefully with suburban township projects like Bandar Saujana Utama where the buyers are more price sensitive.

On its Sri Saujana in Johor, Iskandar said the township began in 1999 and was a third completed. It has sold RM400mil out of RM600mil worth of properties.

“We are facing a more challenging market in Johor. House prices in Johor are not going up as fast as those in the Klang Valley.

'There are about 50,000 Malaysians working in Singapore and many of them buy houses in Johor,” he noted, adding that the recent slowdown in Singapore had also affected market sentiments in Johor.

“However, Johor is slowly recovering and hopefully, the Iskandar Malaysia will spur further economic growth,” he added.

On its latest project the Glomac Damansara, Iskandar said it would be launched soon. The seven-acre freehold commercial-cum-residential development would have a gross development value of about RM600mil. It will comprise shop offices, serviced apartments, a small mall and an office tower.

“We will be launching the shop offices first. We bought the land about a year ago,” he said.

Its Sri Bangi gated project in Section 8, Bandar Baru Bangi, has also done well with all 63 units of shop offices sold within two weeks of launch in March. However, in view of the current market uncertainty, the launch of 230 terraced houses has been delayed.

“We will wait and see until prices stabilise,” said Iskandar.

Glomac currently has 10 ongoing projects and should have 14 projects worth RM3.3bil by end of this year.

However, it may review further launches if fuel prices and other costs continue to soar. Its focus is on smaller pockets of prime land for niche projects that have a fast turn-around and yield better returns for its shareholders.

Glomac has constantly been re-inventing itself through innovative products as seen in new projects such as the Plaza Kelana Jaya (newly completed and built next to a lake with large central courtyard), Plaza Glomac, Glomac Galleria (shop offices priced RM3.8mil to RM4.5mil) in Sri Hartamas and Menara Glomac.

Its successful upmarket residential projects like Suria Stonor and Suria Residen have set new benchmarks in quality and pricing. For example, Suria Stonor's initial price of RM650 per sq ft in 2005 has now breached RM1,300 per sq ft and is still rising.

“We hope to do slightly better than last year. We were still okay late last year. The challenges started from April this year,” said Iskandar.

By The Star - StarBiz - (by S.C.Cheah)

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