LBS Bina to make high-end jump

The small property developer with a market value of about RM228 million wants to reposition itself as a builder of high-end property

LBS Bina Group Bhd, well known for building affordable homes, wants to reposition itself as a builder of high-end property, an indication that demand for expensive properties is still strong.

The small property developer with a market value of about RM228 million plans to focus on the medium-high to high-end market segment to earn better profit margins.

"We are transforming ourselves. We need to make profits as we are answerable to shareholders," LBS Bina managing director Datuk Lim Hock San told Business Times in an interview recently.

Property prices in certain parts of the country and especially the Klang Valley have been rising strong, helped by cheaper loans and easy purchase schemes offered by developers.
Last year, Bank Negara Malaysia had to set a limit on loans for those wanting to buy more than two houses as it sought to curb speculation.

Spearheading LBS Bina's brand in the high-end market will be its jewel project called D'Island Residence in Puchong - an eight-year project with a gross development value (GDV) of RM2.9 billion.

Overall, the D'Island Residence will be developed on 175 acres and once completed, it will have a total of 237 units of super-link house, 298 semi-detached units, 148 bungalow units and 352 high-end condominiums as well as commercial units.

The signs are good as during the soft launch recently, 51 units of super-link houses were sold. The official launch is in April 2011.

It also plans to launch 122 units of super-link houses that cost just below RM1 million each and 74 units of semi-detached houses at above RM2 million.

A property analyst said most developers are now pricing in higher land and development costs into selling prices to sustain profit margins.

The key items that have risen significantly are land and construction materials, especially steel.

"Of course LBS Bina has a big task to convince investors that we are able to provide return on investment for high-end projects. Location will be a key element as well," Lim added.

Still, LBS Bina will continue to build affordable homes pegged below RM350,000, albeit at a redu-ced scale.

The group has been building affordable homes at Bandar Saujana Putra - its flagship development spanning over 835 acres.

This self-integrated township was first launched in February 2003 and LBS Bina has handed over more than 5,000 units of various types of properties since then.

This year, the group plans to build 60 per cent of houses priced above RM350,000. As of March 3 2011, LBS Bina had sold properties worth RM121.7 million and 83 per cent of them were in the medium-high segment.

LBS Bina shares fell 3.3 per cent to close at 59 sen yesterday.

By Business Times