UM Land gets off to good start

By THE EDGE

Main Board-listed United Malayan Land Bhd has got off to a good start this year — it had locked in sales of RM162 million as at Jan 1. This development firm, whose substantial shareholder is Singapore-based CapitaLand Ltd (with a 21.58% stake), has come a long way since the 1997 Asian financial crisis.

Over the last two years, the developer has recorded strong sales from its township projects. For the year ended Dec 31, 2006, UM Land achieved profit before tax (PBT) of RM67.5 million on the back of RM417 million in turnover. This represents growth of 94% and 83% in turnover and PBT respectively from the previous year.

The developer’s focus today seems to be on two areas — township developments and niche projects.

Anthony Yap, UM Land’s group CEO who took office in August last year, says Johor offers potential for the group’s township development. “With the focus on the Iskandar Development Region and the resources being put into it, the Johor economy is set to improve,” he says.
To date, 15,738 units worth RM2.57 billion have been launched in Bandar Seri Alam, Johor, UM Land’s first township project.

There is still the remaining 1,667 acres left on this tract for which the developer has plans for some 8,000 over units worth about RM3.26 billion.

Going forward, Yap hopes to offer higher-end products in addition to the typical mainstream housing it has been offering, where the average price for a standard 22ft by 70ft terraced house is RM250,000.

“We have been producing what the market wants, which is not luxury-type houses. The Johor market is competitive; if you don’t price it right, buyers could go next door. But as the situation develops in Johor, you will eventually see demand for higher-end homes,” he says. To this end, Yap is certain that the sale of 205 bungalow plots to a developer, Bina Meganmas Sdn Bhd, at RM14.50 psf, bodes well for UM Land’s direction to offer higher-end homes.

Its second township project was Bandar Seri Putra, in Bangi. It is no secret that Bandar Seri Putra was initially been hit by poor sales, having been launched at the onset of the 1997 financial crisis. But Yap says the take-up rate now is encouraging. To date, 91% of the 3,988 property units launched have been sold. “What we went through was similar to what other developers experienced at that time; no developer was spared from the property cycle, save for some niche projects,” he says.

Now, Bandar Seri Putra is at its tail-end, with about 200-odd acres left to be developed. “Of this, over 100 acres are for commercial use,” says Yap.

“We draw our customers from places like Putrajaya. Some senior government officers have bought houses in Bandar Seri Putra. Our location gives us an advantage because as prices start to escalate in areas closer to the city centre, buyers will drive out further. We and other developers in this area stand to gain from this trend. A nice terraced house in a highly desirable area would cost you over RM1 million; drive out another half hour and you pay one third the price,” he says.

In 2005, another project — the 500-acre Taman Seri Austin — made its debut in Johor. Of the 934 units launched, take-up stands at 62%. There are over 400 acres left to be developed and there are plans to build 4,853 units with GDV of over RM1 billion here.

As for niche projects, the developer launched Seri Bukit Ceylon in Kuala Lumpur in 2003. The 246 units comprised condos, serviced apartments and SOHO (small office home office). To date, only four units of SOHO remain unsold. (Ascot is managing 96 units of serviced apartments under the Somerset brand.) Its second niche project — Suasana Sentral Loft, a joint venture between UM Land and Malaysian Resources Corp Bhd — is one of UM Land’s more popular projects. Located within the up-and-coming KL Sentral development, the 600 units of high-end condominiums are fully sold, with completion expected early next year. Launched in January 2005, the units, with sizes from 811 to 2,961 sq ft, were pegged from RM350,000 to RM1.6 million. There are also plans for three more high-end projects in the city vicinity.

New projects

Going forward, UM Land is planning a dual frontage condo project over a 4.3-acre site on Jalan Mayang, off Jalan Yap Kwan Seng, in partnership with Bolton Bhd. The tract, which Yap says is one of the largest in downtown KL, was purchased for RM112.29 million. The targeted launch is next year.

“We are rethinking the design. The end-product will have about 1.2 million sq ft of space. While we haven’t decided on the size of the units, I feel that the market is moving towards larger units as there are already a number of small ones in the market. When we did our feasibility study, we priced them at RM650 psf. You can see the upside that we have but I don’t want to reveal the launch prices now.”

UM Land has also teamed up with MMC Corp Bhd to build 310 serviced residences on a 1.5-acre site on Persiaran Raja Chulan. In the feasibility study, the units were pegged at RM360 psf. The project is expected to take off later this year. Why serviced apartments? Explains Yap, “As KL city progresses, it will become more difficult to find help to manage your home. So, if you can have a provider who can do this for you for a fee, why not? And as spaces become smaller, I don’t think people want live-in help.”

UM Land is also making inroads into Bangsar, having purchased a 40,407-sq ft site for RM24 million. This is currently a five-level car park structure on Jalan Kaloi. Plans are for 191 condominium units. The pricing was set at RM400 psf in the feasibility study, working out to a GDV of RM99 million. The targeted launch is next year.

Needless to say, UM Land is on an expansion mode. “We are looking for more land, and are open to buying land outright or getting into a joint venture. We are talking to many people. Nothing is firmed up yet but we have lined up our projects for 2008, so we need to look beyond that,” he says.

The way ahead will also mean more joint-venture partnerships similar to what it has been doing before. Another area that the developer will focus on is raising the profile of UM Land. “Some of our buyers in our township don’t really know our track record. Buyers today look at who the developer is; if you establish your credibility, you have a better chance of succeeding. To promote our township, we want to focus on better product planning and development,” says Yap. Towards this end, UM Land has engaged a consultant to work on its branding, with a plan to be ready by the second half of this year.

He adds that while the company aspires to deliver on time, its target is to hand over ahead of schedule. This was done in certain phases within Taman Seri Austin in Johor, which was completed eight months ahead of schedule.

While Yap understands the need to ensure advance planning, especially when it comes to large tracts of land, UM Land is committed to meeting market demand. “We are market-driven; our launches are not automatic; we look at them again and again before we launch them because we want to make sure we are offering what the market wants,” he says.

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