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Monday, August 4, 2008

Mutiara Goodyear takes rising costs in its stride

As other property developers brace themselves to weather rising building material costs and general slowdown in the economy, Mutiara Goodyear Development Bhd is forging ahead with its projects.

Mutiara Goodyear chief executive officer Kee Cheng Teik is continuing with the launch of Prima Avenue, Mutiara Gombak and Melawati projects, which have a combined gross development value of RM950 million.

KEE: The Mutiara Goodyear CEO believes that even though uncertainty in the market may hold up decisions on property buying, it is temporary in nature and buyers will eventually come around.

Prima Avenue and Mutiara Gombak are commercial developments, while Melawati is a combination of commercial and residential.

The first of its projects on offer is Prima Avenue, a 1.38ha development, which will house business suites as well as retail outlets in Kelana Jaya.

"We have not factored in the increase in building materials into our pricing of the units," Kee told reporters in Petaling Jaya last week. Each business unit is priced at RM280 per sq ft while the retail lots are at RM400 per sq ft.

Kee gave two reasons for the move.

He does not expect price of building materials to remain at current levels for long and also the book cost for the 1.38ha land is almost zero, a "leftover" from its Dataran Prima development.

Steel bar prices have reached an all time high of RM4,100 per tonne, while cement prices are up a further RM1 to RM14.25 per 50kg.

"We are still happy with the profit margin we are getting," Kee said.

The project, which will house 342 business and 33 retail lots, has a GDV of RM120 million.

He said the group's status as a medium-sized developer gave it a lot of flexibility on its development.

Kee said even though he acknowledges that the uncertainty in the market might hold up decisions on property buying, it is temporary in nature and buyers will eventually come around.

"Comparatively, property and real estate are still very durable," Kee said.

On whether the current price of building materials will affect its profits for the year, Kee said it was fortunate to have completed two big projects this year and have yet to award the work for current projects.

The 35 year old company has an undeveloped land bank of 360.86ha in Klang Valley and Penang.

By New Straits Times (by Presenna Nambiar)

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