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Saturday, August 22, 2009

Expanding Sime’s international presence

SIME Darby Bhd is a well-diversified conglomerate with operations in 20 countries and 70% of the group’s income is derived from outside Malaysia. In comparison its property subsidiary, Sime Darby Property Bhd, with footprints in six countries, derives only 10% of its income from overseas.

“We can leverage on the group’s global presence and it will be easier and less risky for us to penetrate the new markets where the Group already has a presence. To realise our international aspirations, we will be leveraging on the strong reputation and global reach of the parent company,” Sime Darby Property managing director Datuk Tunku Badlishah Tunku Annuar says.

Currently Sime Darby Property has property related interests in Singapore, Indonesia, Vietnam, China, Australia and the United Kingdom with business activities that include asset management, hospitality and leisure, strategic investment and property development.

According to Badlishah, Singapore has been the company’s most successful international market to-date.

Given the limited land availability in the city state, most of its projects involve redevelopment of low-yielding properties into high value assets.

The timing of its recent condominium developments in Singapore has been fortunate and the company has managed to sellout its properties at the peak of the market and gain maximum value out of the projects, just before the global financial meltdown last September.

One good example is The Orion which was originally an old service apartment block with very low building efficiency within the vicinity of Orchard Road.

Upon redevelopment, 46 luxurious residences on a 27 storey condominium block were built and sold. The return on investment was a remarkable 63%.

Another successful project, Balmoral Hills is an exclusive freehold residential development at Balmoral Park in the prime District 10. The 62 apartments measuring more than 1,300 sq ft to 1,841 sq ft have gross development value of RM344mil.

In Australia, Sime Darby Property is developing Eagles Cove, an exclusive residential development on Queensland’s popular Gold Coast.

A joint venture re-development project of 250 acres of prime freehold land, it comprises high-end waterfront resort bungalows, low rise apartments and commercial units. The A$529mil project is planned for launch in mid 2010.

Badlishah says Eagles Cove is a unique example of a creative re-development initiative by the company in Australia.

“After the acquisition, we have undertaken some improvements to the site and provided linkages and access from an existing lake to the open sea.

“The creative engineering work has provided residents access to the open sea via a private lock which provides a non-tidal, secure environment for residents to moor their boats. The effort has significantly enhanced the value of the property,” he adds.

Other hospitality projects that have been completed Down Under include The Karri Valley Resort near Perth; and Quest Margaret River and Quest Subiaco in Western Australia.

The vast China market is also beckoning Sime Darby Property to expand its presence there.

Sime Darby Property first ventured into the China market via a joint venture development called Richmond Park in Beijing.

After exiting the successful Richmond Park project in November 2007, the company has been actively pursuing new development opportunities in China.

Sime Darby already has a presence in Weifang, a coastal city located within the fast growing Shandong Province, through ownership of ports and a water treatment plant and Badlishah says that Sime Darby Property is in the midst of acquiring two land parcels of 163 acres and 224 acres in Weifang.

The estimated gross development value (GDV) for the land parcels is estimated to exceed RM3bil upon completion in 10 years time.

United Kingdom is also under the radar of Sime Darby Property. Its presence in the UK is through Sime Darby London Ltd (SDLL) which has acquired a property in Bognor Regis for about £10.5mil.

Recently, the company signed a conditional sale agreement to sell part of the property for £26.5mil.

“With Britain’s property prices having dropped by some 40% and 50% since the global financial crisis, there are ample opportunities to pick up good assets at depressed prices. Our management is eager to explore London’s West End for some good low priced assets that are up for sale there. In the next few weeks, we will be putting in our bids for some open tenders. We believe there are still many opportunities to shop around for some good bargains in Britain,” Badlishah says.

With its wide geographical spread and relentless efforts to expand further, Sime Darby Property may become a household name in many other cities around the globe in the years to come.

By The Star

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