Magna Prima cuts target

MAGNA Prima Bhd, whose luxury homes fetched record prices last year, slashed by almost half projected revenue from its biggest development as the global recession cuts demand for retail property.

Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said.

Lim cut his sales forecast from the development to RM600 million from RM1.1 billion.

"We have to reposition our direction," Lim, 47, said in an interview on Monday in Petaling Jaya. The "downscaling" will help Magna Prima "manage sales according to market conditions".
A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects.

The Southeast Asian nation's government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.

Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won't be affected by the cutback. He's seeking a profit margin of between 25 percent and 30 percent from the development.

The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 11/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.

By Bloomberg