Its managing director and CEO Datuk Soam Heng Choon said IJM Land would continue to launch projects in FY12 due to strong demand for property that is underpinned by young buyers and attractive interest rates.
“Apart from the soft market in Kuala Lumpur City Centre and Mont’Kiara, demand continues to be strong for properties in the country,” he said after the group’s AGM yesterday. He said low interest rates continue to remain low and attractive for property investments. He added that the volatile equities market, which had been trending downwards, would see investors looking at bricks-and-mortar to hedge against inflation, besides commodities.
“Last year, we (the housing industry) saw 376,000 units sold nationwide, which was a record for the industry. The total properties sold had a combined gross development value (GDV) of RM107 billion. This year, we expect demand to be remain strong, but it could be slightly lower due to the higher base and weaker sentiments of the global economy. But we remain optimistic,” he said.
IJM Land’s current unbilled sales stand at just over RM1 billion that would last the group for two years. Soam said IJM Land is planning to launch projects in Seremban, Bandar Utama and mainland Penang this year.
He said properties priced around RM500,000 would continue to see good demand, and is bullish on the mass rapid transport (MRT) system to drive property prices up.“The MRT project has a multiplier effect for the value of properties” he said.
Soam is particularly bullish on Penang where IJM Land is one of the more prominent property developers with a 325-acre (130ha) landbank on the island, including 153 acres on reclaimed land.
He said IJM Land currently has 4,800 acres with a potential GDV of RM19 billion that will last the group for 10 to 12 years.
On a possible property glut in Penang, Soam said IJM Land has positioned itself as a market leader and is unperturbed with other developers emerging on the island.
“The pie is big enough, but our product offerings will set us apart from others. Our properties are located near the Penang bridge and have premium waterfront position,” he said. He said IJM Land will launch a RM400 million project in Bukit Mertajam consisting of cluster and terrace houses by year-end.
Soam said IJM Land’s three key projects — the RM1.4 billion Sebana Cove in Johor, the RM10 billion Canal City project in Kota Kemuning, and the RM5 billion The Light commercial phase in Penang are on track for launch in the middle of next year.
“Land reclamation works in Penang are currently underway and we are doing the detailed planning for the Canal City township which has an acreage of 2,000 acres. These projects are on schedule for launch next year,” he said.
According to analysts, the three projects are expected to boost IJM Land’s earnings in FY13 onwards. HwangDBS Research said in a recent note that the on-going investments by Petronas in Pengerang, Johor, would buoy housing and rental within the area.
“Canal City should be an excellent beneficiary from the matured Kota Kemuning township and eventual completion of light railway transit extensions to Putra Heights. It would also give IJM Land a much needed flagship Klang Valley project,” said the research house in a recent note. It has a “market perform” call on IJM Land with a fair value of RM2.74.
Soam said IJM Land is open to merger exercises, but it is not looking for any partner anytime soon. Last year, it entered into a memorandum of understanding with Malaysian Resources Corp Bhd (MRCB) for a proposed merger but it later fell through.
At the heart of the merger is the Employees Provident Fund (EPF), which is a common substantial shareholder for IJM Land’s parent, IJM Corporation Bhd, and MRCB.
EPF holds the mandate for the much-coveted 3,300-acre Rubber Research Institute Malaysia (RRIM) land in Sungai Buloh. Despite the merger setback, Soam said IJM Land remains interested in developing the RRIM land and would submit an application when the tender is called.