That seems like flogging a dead horse actually, this branding thing. After all, it was doing that since Ikea first bought its corporate lot about 10 years ago. And with each component that came on board, Boustead drove the branding vehicle – with Ikea, Ikano, Tesco, The Curve and Cineleisure.
Boustead Properties Bhd executive director Datuk Ghazali Mohd Ali.
Boustead Properties Bhd executive director Datuk Ghazali Mohd Ali says it is necessary. “Last time, we were branding all the individual components. Now we are branding the entire development as a single large entity, with all its infrastructures that make this an award-winning township, both for commercial and residential pruposes.
“It’s different, and we need to push this strategy further if we are to remain relevant,” he says.
An analyst likens Boustead’s strategy to Coca Cola’s. “It’s a global brand, but it continues to emphasise on branding. It’s a strategy to stay at the forefront. And it will reap from it.”
Ghazali says in order for Boustead to remain attractive to shareholders, and Mutiara Damansara to buyers, it has to do things differently.
“We have proven that we can and now we are leveraging what we have started,” he says.
By that he means the overall package, and what’s on the card now that it has taken Boustead Properties private.
“We will shed some non-core assets and do a bit of rationalising, and wait out the current challenging period.”
Ghazali says the conglomerate has partners like Johnson Suisse sanitary ware, a paint company in the form of Boustead Sissions Paint and UAC Bhd which is involved in building materials as a buffer.
Boustead Holdings reported sterling first quarter 2008 results, thanks to higher contribution from the plantation business, consolidation of subsidiary Boustead Naval Shipyard’s (BNS) earnings and lower effective tax rate. The trading division reported stronger earnings as well as its pretax profit increased by 7.5 times to RM22.8mil on the back of better sales volume and some inventory gain. Bulk of the earnings was contributed by BHPetrol.
The property division’s operating profit on the other hand declined 26% due to lack of sale of corporate lots.
“We still have nine corporate lots of about an acre each in Mutiara Damansara in Petaling Jaya but we are in no hurry to sell. We can wait for prices to move up. We have a successful mall which we can inject into a real estate investment trust (Reit).
This, says an analyst, is a tactical delay to capitalise on expected forward price appreciation. All in, net profit jumped 140% year on year and 21.2% quarter on quarter to RM152.3mil. The group declared an interim dividend of 5 sen gross as a reward to shareholders.
Fresh from its corporate exercise of going private, Boustead Properties is now preparing to launch its last residential development later this year in Mutiara Damansara Surian Residency, its second condominium project there. Its first is Surian Condominium.
The freehold development will have about 300 units of between 900 and 2200 sq ft. It will have two blocks of 23 and 25 storey each and some low-rise units. In terms of overall architecture, it will be fairly similar to Surian Condominium.
“The project will be more upmarket than Surian Condominium in terms of finishing and design, our first high-rise residential development there.”
He says Surian Residency will be selling for about RM400 per sq ft.
“We want to ride on the success of Surian Condominium, which is now changing hands between 30% and 40% above its launching price in the secondary market,” he says.
Boustead Properties is at the same time negotiating with potential tenants on the lease of Surian Tower, in the same township. The office block will be part of the overall development there.
With visitors to The Curve alone numbering 2 million a month – compared to 600,000 four years ago when it first opened – the numbers, he says, speaks for itself.
“We have tenants like Living Quarters and MetroJaya who are expanding. We also have tenants who have seen better sales when they moved over here than when they were in their old place. We also have competitors who are buying corporate lots here. This says something – that Boustead Properties is on the right track, notwithstanding the current economic situation,” says Ghazali.
Glomac Bhd recently bought two pieces of land totalling 10,800 sq ft for RM38.69mil. A third lot was sold to an insurance company. Boustead Properties has four core divisions – plantations, which contributes about 35% to sales, property development (40%), hotel and property investment.
Ghazali says that although its 26-storey Surian Tower is yet to be completed, one-third of it is already leased to a multinational company.
The lease for its remaining two-thirds of the building is being negotiated currently. He hopes the place will be occupied by September 2009.
With so many visitors to The Curve, Boustead is putting in 30% more to the car parks at Surian Tower than what is required by the local authorities.
Besides this office block with a net lettable space of 335,000 sq ft, Boustead Properties will also be building a new hotel and convention centre behind Cineleisure. Like its other 150-room hotel in the popular suburb, The Royale Bintang Damansara, the new hotel will have about 300 rooms.
“The Royale Bintang Damansara is nearly always full. So this idea to have another hotel with convention facilities is a good idea. With the price of petrol today and in the years to come, I would think people will be reluctant to drive into the city. Ideas and plans just evolve, we did not have this in mind earlier.”
To integrate the various components there, Boustead Properties hope to have a physical link from the proposed LRT station in the suburb to Surian Tower office block and the new hotel and convention centre.
Ikea, among its first buyers of commercial corporate lots, bought their site for RM99 per sq ft eight years ago. Corporate lots are now in the region of RM380 to RM400 per sq ft. Things have certainly moved.
By The Star (by Thean Lee Cheng)
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