Glomac halves property sales goal
Posted on | July 8, 2009
By REUTERS
PROPERTY developer Glomac is cutting its property sales target by half for fiscal 2010 as demand falters due to the global economic downturn, a top executive said yesterday.
Glomac aims to sell houses, shopping lots and offices worth about RM400 million in the year to April 2010, down from its previous target of RM800 million, its managing director Fateh Iskandar Mohamed Mansor said.
“At this moment in time, looking at the weak take-up rate of our properties, I have to be conservative,” Fateh Iskandar said in an interview.
Mid-sized developer Glomac, which is building a 40-storey office tower in the Kuala Lumpur City Centre, ranks behind larger players such as Sunrise and SP Setia.
As a result of the lower sales target, Glomac will take longer than expected to clear planned projects, which have a gross development value of about RM3 billion, he said.
The company initially expected to market the projects in four years, he said.
“To finish this RM3 billion in four years, we have to sell RM700 to RM800 million a year. However, because of the economic slowdown, what would have taken us four years may now take six to seven years.”
Glomac has reduced its net gearing ratio to below 0.1 times currently as it prepares itself for tougher economic conditions.
“We have gone through the downturn in 1997. Once bitten twice shy, I would like to keep it at about 0.5,” said Fateh Iskandar.
The target gives the company scope to borrow for expansion, he said.
“If there is any opportunities such as land for sale, joint venture or acquisitions, we are in good position to look at them,” he added.
The company is in “advanced talks” to sell en bloc a 25-storey corporate tower at Glomac Damansara, a mixed commercial and residential development outside Kuala Lumpur, he said.
The building has a market value of about RM170 million, he said. “We hope to complete the sale by the end of the year. If that happens, these are bonuses,” said Fateh Iskandar.
Glomac shares closed up 1 sen at RM0.795 yesterday. The stock has risen 60 per cent so far this year, outpacing key rivals and a 22 per cent rise in the broader market.
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