WCT Bhd is keen to expand its presence in the local property market and is actively seeking out new land to replenish its landbank in the Klang Valley and other parts of the country.
Executive director Choe Kai Keong says although WCT's forte is in engineering and construction which contributes 64% of the group's operating profit, it is building up its presence in property development, investment and management.
“By 2016, contribution from construction and engineering is expected to reach a more equitable level of 45%, while that from property development will increase to 30% from 21% now, and investment and management to 25% from 15%,” he tells StarBizWeek.
The group has more than 2,000 acres that are in various stages of development, and has recently acquired two parcels of 468 acres and 57 acres in the Klang Valley.
Choe says the land costing RM450mil has potential gross development value (GDV) of RM5.2bil.
The 468 acres in Rawang, Selangor, would be developed into an integrated township comprising mainly medium to medium-high priced properties. The development worth an estimated GDV of RM1.2bil is set for launch in 2014 and is slated for completion in 10 years.
The 57-acre in Overseas Union Garden in Kuala Lumpur is planned for a mixed development of residential and commercial project worth RM4bil.
The target launch is 2014 for completion in eight years.
WCT's healthy balance sheet provides a war chest of RM800mil which can be used for land acquisition. Its net gearing ratio at 0.4 times allows room for the group to expand its landbank.
“Besides the Klang Valley, we are also on the look out for land in Iskandar Malaysia, Penang, Kota Kinabalu, Vietnam and China. This is in line with our strategies of branching out into a more balanced and broader range of property offerings including high-rise residences, luxurious homes, service apartments, offices, shopping malls and hotels,“ Choe adds.
He says despite concerns of a market slowdown amid the prevailing economic uncertainties, demand for good quality properties, especially landed houses, in good locations with accessibility and amenities, is still strong.
WCT has lined up some RM1bil worth of project launches this year. They comprise RM320mil worth of high-rise condominiums in 1Medini in Iskandar Malaysia; RM400mil of landed housing units in Bandar Parklands, Bukit Tinggi Klang; RM120mil apartments in Bukit Jelutong; and RM150mil luxury homes in Klang.
For the financial year ending Dec 31, 2012 (FY12), WCT is expecting sales to jump to RM700mil from RM450mil recorded in FY11. In the first quarter ended March 31, it chalked up sales of RM200mil.
Flagship projects
“In widening our market presence, we will be leveraging on our expertise and track record in the development of WCT's flagship township Bandar Bukit Tinggi in Klang and the recently completed d'Banyan luxury homes in Kota Kinabalu,” Choe says.
WCT's 1,336 acre parcel in Bandar Bukit Tinggi, Klang, is in advanced stage of development into an integrated township; with another 350 acres to be developed.
The project will have a GDV of RM4.8bil, of which some RM3.3bil worth of properties have been completed in the past 15 years. The balance of another 350 acres with GDV of RM1.5bil is expected to take five more years.
WCT has a 56-acre parcel in Klang that has been earmarked for a luxurious housing project worth some RM450mil. The project is slated for launch in the fourth quarter of this year.
A 2.26-acre commercial parcel in Bukit Jelutong will be developed into 280 units high-rise apartments. The RM120mil project is also planned for a fourth quarter launch.
In Johor, WCT owns 21 acres in Iskandar Malaysia. The first parcel of 11 acres is earmarked for 1Medini high-rise residential units with GDV of RM700mil. Launched in January, it will take five years to be fully-developed.
The second parcel of 10 acres across the road from 1Medini will be developed into the Medini Business District comprising mixed commercial properties worth some RM800mil.
WCT's maiden project in Kota Kinabalu, the d'Banyan is a 22-acre high-end residential project comprising bungalow villas, semi detached homes and super link villas worth a GDV of RM269mil.
However, the group's 33 acres in Ho Chi Minh City, Vietnam, will not be taking off anytime soon pending the conclusion of the land resettlement process.
Although it has been issued with the investment certificate by the Vietnamese authorities in 2008 for the first 23 acres and in 2011 for the balance 10 acres, the project's launch had been delayed due to weak consumer sentiment caused by the unstable dong and high interest rates.
“Although the dong is stabilising and inflation is under control, we are still waiting for consumer confidence in Vietnam to return before launching our project there. In the past two months, bank interest rates have dropped by 2% and things should continue to get better,” he adds.
Widening income streams
Next year, WCT can look forward to higher contribution from its investment and management activities with the coming on-stream of its two latest retail assets - Paradigm Mall and KLIA-2 Integrated Complex.
Choe says WCT will own 2.1 million sq ft in net lettable area (NLA) of retail space in the country by the second quarter of 2013.
The group's investment and management projects comprise its maiden retail project, AEON Bukit Tinggi Shopping Centre and Premire Hotel in Klang, and two toll highway concessions in West Bengal, India.
The duration of the highway concessions, awarded by the National Highway Authority of India, is from 2004 to 2020 and contribute to RM10mil to RM15mil in annual earnings to the group.
WCT's maiden retail project, AEON Bukit Tinggi Shopping Centre with NLA of 1.1 million sq ft, was opened in Klang in 2007.
Construction of Paradigm Mall in Kelana Jaya is near completion and the mall with NLA of 700,000 sq ft is set for opening on May 23.
The mall is already 91% occupied with average base rental of RM6 per sq ft. WCT will operate and manage the Paradigm Mall.
Among its anchor tenants are Tesco, Golden Screen Cinemas, Padini Concept Store, Marks & Spencer, Zara, Elle, G2000, Harvey Norman, Toys R' Us, Popular Bookstore, TGI Friday's, Starbucks, and Chili's.
Its next retail project, the KLIA-2 Integrated Complex with 350,000 sq ft of retail space at the departure and arrival levels, is due to open in the second quarter of 2013.
The project is a 25 + 10-year build-operate-transfer concession which is 70% owned by WCT and 30% by Malaysia Airport Holdings Bhd.
“Each of the mall is expected to provide an annual internal rate of return of 6% to 8%. This translates to some RM10mil in revenue from Bukit Tinggi Shopping Centre, about RM10mil to RM15mil from Paradigm Mall, and RM15mil to RM20mil from KLIA-2,” Choe adds.
He says WCT's investment and management division is also looking to expand into the hospitality sector and planned to open its second Premire Hotel in 2014.
The new Premire Hotel to be located beside the Paradigm Mall in Kelana Jaya will have 350 rooms.
WCT's maiden hotel, the 250-room 4-star business class Premire Hotel in Klang, was launched in 2010.
“We plan to expand our portfolio of retail and hotel assets to widen our earnings streams and it will be done in tandem with our expansion into new growth markets,” Choe says.
Trailblazer in GCC
In engineering and construction, Choe says WCT has build up a strong presence in the Gulf Cooperation Council (GCC) region with 10 projects to its name in the past decade.
The most high profile projects are the two F1 circuits in the region - Bahrain F1 Circuit and Yas Marina F1 Circuit in Abu Dhabi, UAE.
WCT's first entry project in the GCC is the Bahrain circuit which was completed in 2004.
Built at a cost of RM600mil, it holds the record as the first F1 circuit ever to be built in a desert.
The highly acclaimed circuit soon landed WCT another project - the Yas Marina F1 Circuit - which at a cost of RM4.2bil is the most expensive F1 circuit in the world.
The project, a 50:50 joint venture between WCT and its Bahraini partner, Cebarco, was completed in 2009.
The WCT management is understandably excited that the group is blazing the trail for Malaysia in the GCC construction and infrastructure business, and hopes to make further inroads in the region.
Despite the global financial meltdown and prevailing economic uncertainties in many parts of the world, the group believes there are still much untapped opportunities in the GCC countries.
“We currently have two projects in Qatar - the Government Administrative Office worth a contract value of RM1.3bil, and the New Doha International Airport contract worth RM3.2bil which is a 49:51 joint venture between WCT and Gamuda.”
WCT has an outstanding construction order book of RM3.3bil, with half of the amount comprising projects in Malaysia and the balance in the GCC.
It is also bidding for some RM5bil worth of new contracts.
By The Star
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