Sime Darby Property bucks trend

SEPANG: Property developer Sime Darby Property Bhd is bucking the trend in a declining property market, with expectations to increase unit sales with two launches next year in Sepang.

Head of Business Unit 2 general manager Mohd Idris Abdullah said he is pushing to have two launches in Serenia City, Sepang, instead of one.

“Today, even in a soft market, we are planning to push for about 700 units (to be sold), or a market absorption rate of about 700 units, ” he said of the 2,370-acre township. Development began in 2013 and is expected to be completed by 2035.

Idris, who also oversees the Bandar Bukit Raja township in Klang, said Bandar Bukit Raja enjoyed an absorption rate of about 700 units at the height of the property market in 2012/2013.

“So, I would say that Selangor townships are able to absorb between 500 and 700 units a year, ” he said, adding that there was a difference between landed township units and the high-rise residential market with better demand for landed township units which come with all the amenities.

Idris oversees Bandar Bukit Raja, Kuala Selangor and Sepang’s Serenia City, which is the latest and youngest township in the property group with a gross development value of RM9.32bil.

The company will focus on commercial development between five to seven years from today, as there is sufficient retail and commercial development around that area at the moment. It has invested about RM1bil in residential and industrial projects there so far.

The property arm of the Sime Darby Group has 23 active townships.

He plans to offer phase A9 and A10 for sale next year, comprising 324 units of 20×70 double-storey landed housing units and 408 units of 22×70 of the same.

He is slating the launch for August 2020 and end-2020, but declined to name the price.

Serenia City had five launches in 2018 and 2019 with prices starting at about RM540,000 in March 2018. Its last launch was in August this year. Prices had reached about RM650,000 then, with an 80% take-up rate, said Idris. He said 45% of its buyers are between 25 and 34 years old. Buyers are from Putrajaya and Shah Alam but it is also seeing more from Puchong.

On the affordable segment in Serenia City, Idris said according to its market research, there is no market for affordable high-rise residential housing projects in that locality.

“The state government has approved the building of townhouses and single-storey terraces under Rumah Selangorku (RSK) instead of building high-rise, as is normally the case for affordable housing.

“So, we would be building about 630 units of these, which is about 30% of what we were supposed to do.

“This is only for phase one. We will appeal to the state government again for phase two and three to build low-rise affordable housing later, ” he said, adding that the effect of providing low-rise housing instead of high-rise ones would help to reduce density.

Idris said it is supposed to submit its plans this year and begin RSK construction next year.

On his outlook for the property market, Idris said if one were to look at its financial results, it is doing good work in township development.

“From our company’s perspective, we are vibrant (in this segment of the property market) and we don’t see major hiccups in township development, ” he said.

In the January-June 2019 period, Sime Darby Property had a revenue of RM1.44bil versus RM1.18bil previously, a rise of 22.4%. Net profit rose 486.2% to RM470.33mil from RM80.24mil a year ago.

The results were boosted by higher contribution from the property development segment and one-off gains from the disposal of properties in Singapore.

In March, Sime Darby Property said the company was planning to launch between RM1.5bil and RM2.5bil worth of projects for the current financial year ending Dec 31,2019. It sold RM1.34bil worth of properties during the July-December 2018 period, a third more than its targeted RM1bil.

In late August, during its second-quarter 2019 results briefing, the company said it would continue to dispose of non-core land in Kedah in the next two years to focus on the Klang Valley and reduce gearing.

The company said proceeds from the disposal would be used, among others, for future developments and in keeping the group’s net gearing ratio manageable.

The company said its land in Kedah was under the low-yielding assets for the group and outside Sime Darby Property’s common area of projects.

Source: TheStar