The condominium project is 17% completed and take-up rate is only 10%. The group was initially banking on institutional buyers, especially from China, whose commitments have been affected by funding issues.
“The current funding restriction from China has affected sales. We are relooking at the sales and marketing plan to go back to the market more aggressively in the second half of this year,” he told reporters at its AGM yesterday.
Eu said the group has the resources to complete the project and demand is still there, and it will not sell the project at a discount despite receiving offers for en bloc purchase at a discount.
“8Kia Peng was developed with a view of targeting the international community, working with MM2H (Malaysia My Second Home) programme. At that time, we had very significant interest from China. If there was something that we didn’t do very well, it was that we focused a lot on that particular market segment.
“Now that the segment has not been so encouraging, we have to go back and start all over again with a different market segment. But it is still focused on the international community,” he said.
During the launch in March last year, the group had indicated 70% sales to come from foreign buyers from China, Hong Kong and Singapore. However, China implemented capital controls late last year to curb capital outflow and to stabilise the currency.
Meanwhile, I-Bhd is confident of achieving RM500 million revenue per year from property development by 2018 and expects to see double-digit growth in revenue from this segment in 2017.
Eu said this is achievable with its unbilled sales of almost RM600 million – with RM300 million worth of properties available for sale in Shah Alam and new projects in the pipeline. The group expects RM8 billion of gross development value (GDV) to come on stream over the next 10 years.
“The RM500 million per year is not a big issue because if you add up the pipeline, unbilled sales and so on, we have easily more than RM1.5 billion of properties,” he said.
At its i-City project in Shah Alam, the group has maintained sales at RM300 million per year and is confident of achieving RM300-RM400 million sales this year. The project will take another 10-15 years to complete.
New launches include the RM123 million Hill 10 Residence which will be launched in mid-2017 while the RM559 million Converge and RM230 million smart office will be launched next year.
“We are now working on plans for 2019 onwards including a number of high rise developments comprising a five-star hotel, medical hub, institution of higher learning and one tower for senior citizens. These are still at the design stage,” he said. The plans have a GDV of about RM4.4 billion.”
For property investment, I-Bhd is targeting a portfolio worth RM1 billion by 2020 with a 5% rental yield. For the leisure segment, it is targeting RM100 million revenue per year at 7% return on net assets.
Eu said the group is working with a number of financing institutions to address lending issues.
In 2015, the group submitted RM688 million loan submissions but only RM319 million were approved. Last year, it submitted RM852 million loan submissions with RM313 million approved.
— THE SUN