Performance
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The general slowdown in the economy had a severe impact on property development in the country. The Group's property development activities were also affected especially in the first nine months of 1998. For the year ended 31 December 1998, property development contributed RM 118 million in turnover and produced a pre-tax profit of RM27 million, As a comparison, turnover for property development was recorded at RM217 million with a pre-tax profit of RM137 million in 1997.
Bukit Jelutong in Shah Alam, developed by Guthrie Property Development Holding Sdn. Berhad (GPDH) contributed RM28.4 million in profit while Sungai Kapar Indah in Klang, undertaken by Syarikat Pembangunan Hartanah Guthrie Sdn. Berhad, made its maiden profit of RMO.5 million.The deferment of property project by Haron Estate Development Sdn. Berhad and the bearish sentiment on bungalow lots in the north, which were developed by Harvard Jerai Development Sdn. Berhad, resulted in combined losses for both projects of RMI.7 million.
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Operations
1998 was a difficult year for the property sector. The rising of interest rates and the tight liquidity experienced in the major part of 1998 had dampened the interest on property.
GPDH, which developed Bukit Jelutong project, faced similar predicament as other developers. During the year, some purchasers cancelled their booking of units but the effect was neutralised by new sales recorded, mainly in the last quarter of 1998. The double-storey link houses were completed and handed over to purchasers together with full certificate of fitness in December 1998, a remarkable feat by any standard. At the end of 1998, 90% of the S98 units of link houses had been sold and new launching of 46 units of double-Storey link houses in October 1998 registered 100% sales.
Sungai Kapar Indah in Kiang registered encouraging response on its launching of 383 units of double-storey link houses, all priced at below RM 150,000 each. To date, more than 70% of the units have been sold. Bukit Subang, another project developed by GPDH, also launched 400 units of low-cost apartments in late 1998, The apartments were only opened to eligible candidates shortlisted by the Selangor State Government.
During this difficult period, Property Division took a proactive stance. Preparing a product for launching takes up a considerable period of time. Hence, with the help from its panel of consultants, plans were prepared for a diverse range of property types, aimed at various price points and submitted for approval to the local authorities.
As a result, these products are ready launching under whatever market condition the industry is in.
Prospects
The successful launching of new products at Bukit Jelutong, Sungai Kapar Indah and Bukit Subang in late 1998 brought some conficlence back to the Group's property segment. 1999 onwards will be viewed as a critical period for property as a whole where the right planning and timing will determine the success of new products launched.
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The balance of all available units of link houses in Bukit Jelutong and Sungai Kapar Indah are expected to be fully sold in 1999 and a new phase of link houses will be launched in Sungai Kapar Indah. Bukit Jelutong had successfully launched its first high-cost apartment in April 1999, where during the launching weekend, 65 units out of the total of 105 units on offer were taken up. More launching of apartments are planned for 1999 and in the pipe line, there are also plans to launch twin frontage double-storey link houses and limited number of semi-detached houses.
Bukit Subang plans several launches of medium-cost apartments as well as medium low-cost apartments in 1999. For low-cost apartments, lists of purchasers' names provided by the Selangor State Government will ensure the units on offer will be fully taken up. Sungai Kapar Indah will see a hive of activities in 1999. New phase of double storey link houses, low-cost houses as well as shop-houses are some of the products expected to be launched in 1999 and the response to the recent launches has been very encouraging. Up in the north, Taman Jerai in Gurun, Kedah expects to sell out its 105 units of single-storey link houses, priced below RM70,000 each.
Overall, contribution from property segment in 1999 is expected to improve compared with that of 1998 in line with the expectation of improved market sentiment.
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