Kee Cheng Teik
What is your outlook for the property market?
The Malaysian economy has been resilient in the first half of 2008, but is increasingly being affected by the global downturn. Consumer demand for properties has slowed down from the third quarter of 2008 due to the market uncertainties and we expect this to continue in 2009.
But we are happy with the measures introduced by the Government to spur the local property market. Incentives such as the abolishment of the real property gain tax and the elimination of Foreign Investment Committee approval for foreign purchases of residential properties above RM250,000 are among positive signs that will spur the primary and secondary property market in the short to medium term.
Furthermore, we applaud the Government’s move to allow savings in the Employees Provident Fund to be used for monthly repayments of housing loans as this will stimulate consumer spending and house ownership, besides easing the burden of paying monthly loan instalment by home owners.
In addition, the Government just recently announced a stimulus package worth RM7bil, a large chunk of which will be allocated to the housing and construction sector. The Government has removed import duties for cement and long iron and steel products, and also abolished approved permits for long iron and steel products, making these building materials more competitively priced.
While these incentives are very much welcomed, markets may remain volatile for some time — more so because the present crisis is of global proportions. So even with the stimulus package, it may take a while before the measures kick in and the market pick up again.
We view property based on its long-term prospects as a property development cycle encompasses at least three years; from the initial study phase to completion. Hence, even though the property market’s short-term prospects are uncertain; we are bullish over its long term prospects.
The success of a property development is based on location and a well-managed cost structure. In times of uncertainty, optimum cashflow management takes precedence in a development to ensure an increase in asset value.
Going forward, at least in the medium term, the Malaysian property market will still be largely led by high end residential properties but it will naturally spill over to medium range properties as well.
What are the challenges ahead for the company, especially in a slowing economy?
Our challenge for the coming years is to enhance the value of our assets, manage cashflow, and put all our development plans in order so that we can take advantage of the market when the timing is right to launch.
We are still seeking to increase our landbank in key markets either via joint ventures or strategic partnerships. We will take this opportunity to consolidate ourselves and to realign our focus and resources. We believe when the market recovers, the opportunity will arise and we want to be in a position to ride on the opportunity.
What are the new launches the company plans to undertake in the Klang Valley and Seberang Perai?
We are planning to launch a few projects, the timing of which depends on market conditions. These projects include:
• High-end mixed development project located at the exclusive Melawati Hills. The first phase of which shall comprise of 142 units of high-end bungalows;
• A mixed residential and commercial development in Kajang;
• Mixed residential projects in Seberang Perai and Penang Island;
• A commercial development in Sunway Commercial centre.
These projects are expected to carry an overall gross development value (GDV) of more than RM2.5bil.
How have the recent launches fared?
Mutiara recently launched a 1.38ha commercial development project, Prima Avenue in Dataran Prima, Kelana Jaya. This modern contemporary development incorporates two blocks of 15-and 16-storey freehold commercial office tower with a retail podium called The Tube.
We have received overwhelming response for the duplex units at The Tube while interest in the office suites has been very encouraging. As of to date, more than 70% of the first block launched in September has been fully taken up.
What is your current landbank?
Mutiara has a total of about 356.4ha of landbank in Penang and the Klang Valley with an estimated total GDV of RM4.1bil when fully developed.
By Business Times
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