City & Country: Making a comeback

Land & General Bhd (L&G) has kept a low profile since Malaysia Land Properties Sdn Bhd (Mayland) emerged as a key shareholder in the company two years ago, but that is set to change soon. 
One of the oldest property developers in the country, L&G was founded by Tan Sri Wan Azmi Wan Hamzah four decades ago and it made a name for itself with the development of the 1,200-acre freehold township Bandar Sri Damansara, which was unveiled in 1989. Bandar Sri Damansara sits on both sides of Jalan Sungei Buloh where it meets the Damansara-Puchong highway.

The future looked rosy for L&G until the onslaught of the 1997/98 Asian financial crisis. Like many other developers in the country, L&G was brought to its knees and things have not changed much since. What has compounded the company’s woes is the fact that both its Bandar Sungai Buaya and Lembah Beringin developments in Selangor have not fared well.

Still, the developer has completed and sold about 14,100 properties with a total gross development value of RM2.09 billion in Bandar Sri Damansara to date. More than 90% of the units sold were of the residential type -- terraced and semi-detached homes, bungalows, townhouses and condominiums that can house an estimated 100,000 people.

L&G’s wholly-owned subsidiaries that developed Bandar Sungai Buaya and Lembah Beringin have since been liquidated. The 1,500-acre leasehold Bandar Sungai Buaya was developed by Bandar Sungai Buaya Sdn Bhd and the project comprises mostly terraced homes. The company, which went into liquidation last year, completed and handed over 3,000 homes in 1997 before the Asian financial crisis struck. Located off the North-South Expressway (NSE) between Rawang and Bukit Beruntung, the township is accessible via Jalan Sungei Choh from Rawang or the Bukit Beruntung interchange.

The 2,000-acre freehold Lembah Beringin was developed by Lembah Beringin Sdn Bhd. The project comprises an 18-hole golf course, homestead lots, bungalows, semidees and terraced homes. This company went into liquidation in 2006. Also located off the NSE, Lembah Beringin is accessed via the Lembah Beringin interchange.

Mayland, founded and helmed by Hong Kong property magnate Tan Sri David Chiu, is the single largest shareholder in L&G, with a 16.9% stake as at June 27, 2008. Mayland is a developer of condominiums and commercial projects in Kuala Lumpur’s Sri Hartamas locale.

Market talk is that Mayland’s assets may find their way into L&G, but the latter’s new managing director Low Gay Teck dispels this as “mere rumours”. (Low was formerly the managing director of Mayland Group.)
He declines to comment on L&G’s cash flow status except to say: “We are debt-free and have successfully cleaned up our balance sheet. Now that we have done that, we plan to grow organically and independently. Mayland is our substantial shareholder and it came in because it was drawn by the potential of L&G’s landbank in Bandar Sri Damansara.”

L&G’s executive director Ferdaus Mahmood adds: “We have surplus funds to finance all our ongoing business activities as well as some of our future developments.”

After an almost two-year hiatus, the developer is set to make a comeback of sorts, with the unveiling of a commercial development called 8trium@Sri Damansara, where else but in Bandar Sri Damansara where the company had started.

This 2.65-acre commercial site is located on Jalan Sungei Buloh, just after where the road meets the Damansara-Puchong highway. The developer also has a 43-acre site in Bandar Sri Damansara where a condominium project is planned to be launched next year, pending approval from the authorities. Both these projects have been identified as the vehicles that will sustain the group for the next eight years at least.

An engineer by profession, the 44-year-old Low joined L&G as its director in October 2007 and four months later was redesignated to his current position. He says L&G aims to put Bandar Sri Damansara “back on the map as a sought-after address again” with 8trium and the upcoming condo project. 

The developer is confident about the projects given the location factor and points out that property values in Bandar Sri Damansara have risen substantially over the years. For example, a terraced house launched a decade ago at RM150 psf recently changed hands at double the value. A 4-storey shopoffice that was launched in 2003 at RM550,000 is now on the secondary market for about RM1.5 million, the developer notes.

Since he came on board, Low has been busy finalising the plans for the site of 8trium and relooking the development plans for the condo project.

These projects aside, the developer is keen to expand Sekolah Sri Bestari — its private school with 1,000 students on a 15-acre site in Bandar Sri Damansara.

There is, however, a need to grow its landbank and Low knows this only too well. “It is time to move forward. We are keen to find more prime and sellable areas and the focus will be on niche developments. We are open to joint-venture partnerships with landowners as well,” he says.

For its financial year 2008, L&G recorded a  group profit before tax of RM2.3 million on revenue of RM46.73 million. The main earnings contributors were its education and plantation divisions as the property division did not launch any projects during the year, says Low. For the year ended March 31, 2009, L&G posted an unaudited group profit before tax of RM17.57 million on the back of RM37.61 million in revenue.

“8trium is the first project we have introduced since 2007 and I’m glad to say sales of the offices so far have been encouraging. As we target to start the condo development by next year, the property division will be able to start generating income and contribute to our earnings,” Low says, adding that the target is to have the property division contribute more than 50% of earnings eventually.

L&G’s plantation division has a 2,500-acre estate in Ladang Sungai Jernih, just before Tanjung Malim in Perak. Only 50% of the estate has been planted with rubber and oil palm.

8trium
The RM170 million 8trium features two blocks of 18-storey office towers atop a three-level podium. With built-ups of 500 to 7,130 sq ft, the office blocks comprise 130 units each, with a net saleable area of 125,000 sq ft. Maintenance fee, inclusive of sinking fund, has been set at 35 sen psf.

Of the podium’s three levels, two are designated for retail use with a net lettable area of 100,000 sq ft. The developer intends to retain this component for recurring income. One level will be a facilities floor for the office blocks, offering such amenities as a swimming pool, gymnasium, business centre and cafeteria. There will also be over 900 parking bays. 8trium is expected to be completed in 2½ years.

In late June, the developer soft-launched 8trium and opened for sale the first tower with a net saleable area of 125,000 sq ft. Tagged from RM380 psf, some 40% of the office units have been sold mostly to residents in the Sri Damansara vicinity, according to the developer, which is also in talks with several corporate customers to take up the entire floor plate. The project was launched officially in early July.
The developer still has unsold units in its RM20 million guarded D’sara Villa development in Bandar Sri Damansara that was launched in 2007. This project features 30 bungalow parcels with an average size of 5,000 sq ft and priced at about RM150 psf.



This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 763, July 13-19, 2009