By next week, right after its analysts and fund managers' briefing on Tuesday, June 26, Glomac Bhd will be making preparations to move to its new headquarters in Damansara opposite Tropicana City Mall in Petaling Jaya. The briefing, held in conjunction with the release of its financial results for its fourth quarter, and the move to its new premises, are in a way, the beginning of a new chapter for the medium-sized developer with market capitalisation of around RM550mil.
The last several years, Glomac has been riding high on a buoyant property market. It is expected to announce strong results again, due very much in part to the multiple projects it has undertaken. Prior to 2009, results were a bit flat. But in the three years starting 2009, the net profit and revenue have been strong.
“We were not doing well because we undertook few projects. Today, we have 10 to 15 on-going projects, which account for our strong balance sheet,” says Group managing director and chief executive officer Datuk FD Iskandar.
In and around Petaling Jaya, Glomac has some pretty interesting projects. In February of this year, it launched high-rise apartments, Reflection Residences in Mutiara Damansara, which is expected to be completed at the end of 2015 starting from RM800 per sq ft. There are few units left.
It is also developing Glomac Centro in Bandar Utama, another serviced apartment from 1,175 sq ft to 1,162 sq ft with two-storey shop offices between RM700 and RM800 per sq ft.
Its third commercial project in Petaling Jaya is Damansara Residences project opposite Tropicana City Mall where its new headquarters is located. It is currently developing the fourth of a six-phased project here.
The interesting part about all three of these projects is connectivity. They will have a My Rapid Transit (MRT) station several hundred metres away, a fact that FD Iskandar is very pleased about.
Its Damansara project started out with a gross development value (GDV) of RM500mil. Today, it has nearly doubled to about RM900mil for a seven-acre site.
“Our (projects') GDV has gone up from RM3bil to RM7bil in a matter of a few years. Which brings me to this point: You can have 10,000 acres but what is important is WHERE is your land bank?”
Besides these projects, which comprise mainly serviced apartments with commercial retail element, the company will be moving into township development.
In the last 18 months, Glomac has bought three pieces of land, each about 200 acres, in Sungai Buloh, Puchong and Dengkil, Sepang.
“Landed housing is what the people want today. Two years ago, the hottest thing in the property market was commercial properties. Last year, it was three to five-storey houses. Today, there is a huge appetite for landed housing and we are going to provide this,” he says.
As for condominium developments, this will be popular in specific locations, and this can be seen in the demand for high-rise residential living in Petaling Jaya.
“Landed housing, however, is always popular. Because of that, the three pieces of land we bought will focus on landed properties and part of it, commercial projects.”
The company extended further its project in Bukit Saujana by another 240 acres, having paid RM45mil for it. Bukit Saujana is about 1,000 acres now.
It recently completed its sale and purchase for 200 acres in Puchong for RM77mil. The land is near Tesco Puchong and there are plans to have rail transport, either the LRT or MRT, about 200 metres from the site.
“In that respect, there will be good access and connectivity which will increase the value of our Puchong site. Also, this location is in Puchong proper and not far away in the peripheral of Puchong. So that makes the development noteworthy,” says FD Iskandar.
The third piece of land in Dengkil, Sepang, about 3km from Cyberjaya and 4.5km from the K L International Airport, was acquired for RM67mil. “The Sepang parcel, of about 191 acres, will be our project for the future,” says FD Iskandar.
At the same time, Glomac is keen to replenish its land bank in the Klang Valley.
On whether it is on a land buying spree, he says: “I won't call it that. We have been developing properties for the last 24 years. We have to replenish land banks.
“Why sit on cash? We have about RM350mil in cash and we must replenish. We saw our opportunities the last 12 months. Land prices are going up too high. Owners thought their land was gold, especially early this year.
“There has been tightening in lending, which we have taken note of. But the domestic economy has been good though the situation in Europe has not been addressed.”
FD Iskandar says the company is taking cognizance of these factors but it has also to consider the cash pile it is sitting on, and the gearing, which at 0.1 times can be increased to 0.5 times.
The company has seen tremendous growth in the last three years and FD Iskandar attributes this to the multiple projects the company has embarked on. Prior to this, the company had few projects.
Today, it is simultaneously developing more than 10 projects of different sizes.
Its unbilled sales have been hovering around RM300mil since 2000 and presently it is about RM700mil and still climbing.
“Unbilled sales will turn to revenue next year,” he says.
On its focus to purchase more land in the Klang Valley and not move in the same directio of other developers who have ventured into Penang and Iskandar Malaysia, FD Iskandar says the company is familiar with Klang Valley.
“We are aware of the pockets of growth in Penang and in the south in Iskandar, but 67% of the RM107bil residential sales for the whole of Malaysia last year are from within the Klang Valley. This is where the action is. This is the first point of entry.”
On his outlook for the rest of the year, FD Iskandar expects the property market to remain stable.
“There will be growth but the increase will not be as fast as in 2010 when Klang Valley property prices went up 20% to 30% .
“Prices rose last year too, but not as much as in 2010. It is expected to continue to grow this year,” he says.
By The Star
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