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Monday, October 6, 2008

Glomac to continue with overseas investments

Property developer Glomac Bhd, unperturbed by the global economic turmoil, will continue to invest overseas, especially in Australia, through takeovers of commercial buildings.

Group executive vice-chairman Datuk Richard Fong Loong Tuck said there will be more opportunities to buy with the collapse of two venerable Wall Street institutions, Lehman Brothers and Merrill Lynch.

"With the economic downturn, there will be a lot of good deals coming out in the market.

"Property owners may start to sell assets at below market rate, which is when we will buy," he told Business Times in an interview recently.

Fong said Glomac's business model is to buy old commercial buildings, refurbish them for better yields and sell at a higher price later.

Glomac made its presence in Australia in 2006 when it bought 380 Lonsdale Street in Melbourne for A$30.5 million (RM82.4 million).

The acquisition was through its unit, Glomac Australia Pty Ltd and partner Victoria Investments & Properties Pty Ltd.

The Lonsdale St property encompasses a commercial building and a seven-storey carpark complex, with 445 bays offering eight per cent rental yields.

"We are looking around in Australia for suitable office buildings to buy. We won't move (our focus) away from commercial buildings as they are easier to maintain and market," Fong said.

He said the Lonsdale St property, although worth A$40 million (RM108 million) now, will be retained until its value has appreciated by 25 per cent to 30 per cent.

"When we sell it, we will also make on the exchange rate. The gains will be reinvested for new acquisition," Fong said.

"We are being opportunistic with our investments as the outlook in Australia for commercial properties is still doing well," Fong said, adding that d Glomac is also prospecting India and Vietnam for similar acquisitions.

By Sharen Kaur

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