IJM Land charts new direction

An artist's impression of The Light, one of IJM's crown jewels

Existing and future projects to keep developer busy for several years

Life is even busier for IJM Corp Bhd CEO and managing director Datuk Krishnan Tan, now that plans to rationalise the group's property development division are in place and moving on to the second stage at full speed.

"We have a lot of work to do, with projects all over the country and overseas, especially now that we have integrated two divisions (IJM Properties Sdn Bhd and RB Land Holdings Bhd) into one listed vehicle," Tan tells City and Country after unveiling The Light — IJM's ambitious, RM6.5 billion project on reclaimed land in Penang recently.

Tan: The Light will be a symbolic landmark in Penang, clearly visible from the mainland and the Penang Bridge

"The first action is over," he says, referring to the merger, which was aimed at streamlining the group's property development business.

"Now, we need to execute the second stage, which is the rebranding exercise of our property development division, to be known as IJM Land Bhd.

"IJM Land is poised to be a core division of our group as real estate development is expected to contribute significantly to our profits," he adds.

Property development contributed 24% or RM77.1 million to IJM Corp's pre-tax profit of RM318.9 million on revenue of RM463.8 million for FY2007, ended March 31.

During the brief interview that his tight schedule could permit, Tan talks about the group's penetration of India, the contingency plans in view of rising construction and material costs, and The Light.

When asked how IJM Land will position itself on the country's property scene, he says with over 9,000 acres in its landbank, IJM Land is set to be among the top property developers in the country.

"Our existing and future projects will keep us busy for several years and essentially make us one of the top developers in the country," says Tan.

Among the then IJM Properties' notable projects are the PJ8 Tower in Petaling Jaya, Ampersand@Kia Peng, which is a high-end condominium project in the KLCC vicinity, mixed residential projects in Saujana Puchong, Ukay Green in Ulu Kelang and Riana Green East in Wangsa Maju.

In Sandakan, Sabah, IJM is involved in a 320-acre housing project.

RB Land, on the other hand, is credited with building the booming townships of Seremban 2 and Shah Alam 2.

The enlarged company's (IJM Land) landbank in the Klang Valley, Penang, Negri Sembilan, Johor and Sabah is expected to translate into a gross development value (GDV) of more than RM15 billion.

On IJM's overseas ventures, Tan says: "IJM will stick to the same strategy as in the past, which is to go into any country as a contractor first and then finding opportunities to develop properties there.

"Our move into India was carried out using the same approach, where we went in as a contractor and then started developing land."

According to Tan, IJM has three key development projects under construction in India, and it is in talks with several landowners in India on future projects.

"In Hyderabad, we are undertaking a residential and commercial project on an 80-acre tract and in Nagpur, we are working on a residential project on 35 acres.

"In Vijayawada, which is a third-tier city, we are undertaking the development of 119 acres of low and high-rise residential units," he offers. The GDV of the projects in India, he adds, is in the region of RM3.5 billion.

IJM's vehicle in India is known as IJM (India) Infrastructure Ltd. Among its notable projects is the Raintree Park, an integrated township in Hyderabad.

Hyderabad is the capital city of Andhra Pradesh province, with a population of 6.1 million. Vijayawada is the third largest city in the province, while Nagpur is one of the largest cities in central India, with a population of 2.1 million.

When asked if IJM plans to launch projects in any other country, especially the Middle East, where it has a strong presence as a contractor, Tan says: "We are looking around but there's nothing at the moment."

He is optimistic IJM will remain profitable in times to come despite rising construction and material costs.
"Profit margins will continue to erode with escalating costs as this is a reality in property development, but we are going for cost compression.

"The key issue is to do more, which is to carry out more projects and hedge where we can and bring in savings in other forms.

"Since these (costs) are mostly driven by external factors, we will carry out significant market research to stay profitable," he says.

Future landmark: Visitors viewing a model of the Light project

The Light
Tan singled out The Light as one of IJM's crown jewels. "The Light is a spectacular project that will bring pride to the people of Penang as not only will it showcase the island's biggest waterfront development, it will also be on a par with renowned properties such as Canary Wharf in London, Melbourne's Docklands and Queens Quay of Toronto.

"It will be a symbolic landmark in Penang, clearly visible from the mainland and the Penang Bridge," he says.

The Light will be built over the next 10 years over 152 acres in three phases by Jelutong Development Sdn Bhd, a subsidiary of IJM Land.

It is located on the eastern coastline of Penang in Gelugor, along Jalan Udini heading towards Bayan Lepas, where the Penang government has given IJM the right to reclaim 338 acres in exchange for constructing the Jelutong Expressway.

What The Light's high-end waterfront homes will look like

Land reclamation works are currently underway and construction is expected to start before the end of 2008.
The Light will feature 1,186 units of high-end waterfront condominiums, office towers, four hotels, a family mall, an IT mall, a fashion mall, dining and entertainment facilities and a seafront park.

Under phase one, covering 17ha, six parcels of high-end waterfront residences, comprising 1,186 units, will be developed. Under phase two, a commercial and retail city, comprising the Gateway Towers, hotels, signature offices, showrooms, banquet and conference facilities, cultural hall, visitor centre and waterfront amphitheatre, will be built on 41.7ha.

A unique feature of The Light is a floating stage and a floating restaurant, with the entire development interconnected by water taxis. Tan says The Light will also boast a seafront park with 2km set aside for greenery.
The prices of the residential and commercial units at The Light are expected to be in the region of RM350 to RM650 psf.

With the launch of The Light, Tan believes IJM Land has made an impact as a trusted developer building quality properties besides creating new townships and opportunities.

By The EDGE MALAYSIA - City and Country (by Tim Leonard)