Location, quality to drive GuocoLand’s growth

Tan showing the dining room of a DC Residency show house.

WHILE some developers are rolling out property launches at a slower pace this year, GuocoLand (M) Bhd is not slowing down as it aims to achieve RM2bil gross development value this year.

Managing director Tan Lee Koon tells StarBizWeek the main drivers for the company will be Damansara City at Damansara Heights, Emerald at Rawang, Alam Damai at Cheras and Pantai Sepang Putra.

“It will be a busy year for us. Furthermore, our land is in prime areas so it shouldn’t be much of a concern for us,” he says.

He expects 80% to 85% of the launches to be residential units this year.

To him, location and quality are the key ingredients for good sales.

“Apart from GuocoLand Malaysia’s track record, we will pay greater attention to product differentiation, innovative concept, designs and quality,” he adds.

As the prices in Iskandar Malaysia have gone up a lot, people are starting to see value in the Klang Valley.

“We see buying interest returning to Kuala Lumpur as the price gap between Johor and Kuala Lumpur reduces,” he says, explaining that the population growth in the Klang Valley will generate demand for property.

He also says the company has not encountered issues of tremendous slowdown in sales as most of its customers purchase for own-stay and it does not provide the developer interest bearing scheme which was lifted due to new rulings.

The developer’s outstanding landbank is at a sizeable 10,000 acres, which is enough to keep it busy for a long time. It has 4,760 acres in Sepang, 560 acres in Rawang, 3,870 acres in Jasin, and 46 acres in Alam Damai.

Living room of the show house with drapes.

However, the company is still on the lookout for more land, particularly strategic parcels in the city and large tracts for township development.

It is in the midst of planning the development in Sepang as well as looking for a development concept for the Jasin, Malacca land which is planned this year.

“Some local and foreign investors have approached us so we hope to conclude something this year,” he says without elaborating.

Updating on one of its most exciting projects – the RM2.5bil Damansara City, he says it will sell the residential units but will keep the hospitality, mall and possibly the commercial components.

Asked if there are plans for the office towers to be injected into its sister company, Tower Real Estate Investment Trust, he says there are no definite plans about where to keep the assets but it will be within the Hong Leong group.

The 8.5-acre development started in late-2012 will see DC Residency block A comprising 370 units, the shopping mall, and the 19-storey MSC-status office tower B completed in the first quarter of 2015.

Office tower A will be completed in the second quarter of 2015 and the hotel block, that will be operated by a brand under its parent’s belt The Clermont, will be ready in the fourth quarter of 2015 and expects to open its doors in 2016.

“As construction works at the site is done concurrently, the various components will be ready at about the same time,” he says, adding that it is the sum-of-parts that enhances the value of each property by leaps and bounds.

Residents can request for room service that will be provided by the hotel operator while the residential block will have a concierge.

“Residents at the serviced apartments will be able to enjoy services like hotel guests and the only difference is that they own the unit,” he quips.

Some of the elements of the luxurious residential units include imported and branded fittings, personal lift, integrated smart home system, marble flooring and American oak timber flooring for the rooms.

On top of that, the master bedrooms will feature a walk-in wardrobe and all the toilets have marble finishing up to the ceiling.

Half the buyers for DC Residency are foreigners, of which about half of them are Singaporeans.

He says Damansara City will see some contribution in the financial year ending June 30, 2014 (FY14) and the contribution will be stronger in FY15 and FY16.

Its office suites Commerce One at Old Klang Road, Kuala Lumpur will also contribute to its top and bottom line for FY14.

As for its 1,000-acre township development in Rawang, which has been going on for more than a decade, has also been an important revenue contributor to the property player.

It is launching 74 units under the project known as The Rise, which sits on the highest point in the Emerald development, today. It has received overwhelming interest particularly on the zero-lot bungalows.

“Rawang has benefited from rapid development and publicity. A lot of people have chosen to upgrade their homes there,” he says.

Due to the lifestyle and concept it introduces in Rawang, he says houses in Emerald is able to fetch a premium compared to other development.

For its second quarter ended Dec 31, 2013, the company raked in RM59.1mil revenue, 32% higher than the revenue it gained for the same quarter a year earlier.

Net profit, however, declined to RM12.3mil. Its net asset per share for the period was RM1.23.

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