Daiman Development undeterred
By Racheal Lee Mei Nyee
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While other property developers may have delayed their development projects or product launches in view of the global financial crisis, Daiman Development Bhd decided to go ahead with some of its launches for 2009 but on a smaller scale by offering only a limited number of units for sale.
The Johor-based developer has all its projects in the southern region of the state. Its general manager Siah Chin Leong tells City & Country that Daiman, like other developers, is taking a cautious approach in its sales and marketing strategy.
The developer hopes to initiate new products in both its Taman Gaya and Taman Daiman Jaya projects in Johor by mid-2009, depending on how the economic situation turns out in the next couple of months. "This time, we will launch only a few units instead of all the units available. We will open the remaining units if the response is good," says Siah.
Taman Gaya, which is about 13km from Johor Baru, is a freehold 459-acre residential area along the Tebrau corridor within the Iskandar Development Region (IDR). Taman Gaya has a total gross development value (GDV) of RM34.8 million, and Daiman plans to build 87 units of 2-storey cluster houses. However, Siah says the company intends to initially offer only 59 units, which has a built-up of between 2,347 sq ft and 2,467 sq ft each, at about RM170 psf.
"Four years ago, we launched 128 units of 2-storey cluster houses in a gated and guarded enclave here. They have all been completed and the response has been positive, with only 14 units left. But with the current financial turmoil, we have to be cautious about our next launch," adds Siah.
The developer also sees good response from the shop offices in the residential area. Out of 118 units launched in 2007, only eight remain unsold.
To date, Daiman has launched 2-storey terraced houses of different built-up sizes, 1-storey terraced homes and low medium-cost flats in Taman Gaya.
Besides the cluster houses, also in the works are some 76 units of 2-storey semi-detached houses with a total GDV of RM41.8 million. Similarly, the developer does not intend to put up all the semidees for sale during its scheduled launch in 1H2009. Instead it plans to put on the market only 26 units with a built-up of 3,039 sq ft at an indicative price of RM181 psf.
According to Siah, most of its customers are locals buying the houses for their own use and that Daiman has not been affected when the neighbouring Singapore fell into technical recession in October.
Over in the 950-acre integrated township of Taman Daiman Jaya in Kota Tinggi, the developer plans to launch 2-storey cluster houses with a built-up of 2,150 sq ft although it has yet to decide on the selling price.
Meanwhile, Daiman is constructing a commercial building for lease to Econsave Supermarket in the Taman Daiman Jaya township. Expected to be completed next year, the building has a net lettable area of more than 70,000 sq ft.
Although sales have currently slowed down, earlier residential launches in Taman Daiman Jaya had received good response. "We launched some 120 units of single-storey terraced houses for a total GDV of RM20 million in Taman Daiman Jaya in June 2008. The houses, with a built-up area of 1,212 sq ft, were priced at about RM148,000 for each intermediate lot," says Siah.
"The response was very good and some 60% to 70% have been sold. Three months later, we launched another 40 units of 1-storey terraced houses at a higher price of RM158,000 due to the higher cost of construction. Sales slowed down following the higher selling price," adds Siah.
Some 60 units of shop offices launched in Taman Daiman Jaya early 2008 have also received positive response. Out of the 38 non-bumiputera units, 26 units have been sold. The shop offices have a total GDV of RM25.5 million. An intermediate lot has a built-up of 3,840 sq ft and is priced at RM104 psf or RM398,000 per unit.
Daiman has a total land bank of over 2,500 acres, with a GDV valued at RM1.8 billion, in Taman Gaya, Taman Daiman Jaya, Taman Perindustrian Murni, Taman Johor Jaya, Taman Senai Utama and Taman Sri Senai, in which some commercial land parcels in these housing estates are available for lease or sale.
Daiman is also a developer of factories and the company plans to build another six units of 1½-storey semi-detached factories with a total GDV of RM8.7 million in Taman Perindustrian Murni Senai, which is also within the IDR. Daiman sold three out of four units of semi-detached factories launched there. Each new factory unit, with a built-up of 8,815 sq ft, will be priced from RM165 psf.
Cash-rich developer
Cash flow is crucial for developers to get through this tough period. Nevertheless, Daiman is looking for acquisition opportunities. "We are careful in reading the economic data. We need to look at employment rates, the economy and other issues before we move on," says Siah.
"We have the cash and this is a good time for acquisitions. We are basically open to anything, be it properties or land. We are looking for investments in both local and overseas markets," adds Siah. As at Sept 30 last year, Daiman had a total cash pile of RM105.96 million and some RM109 million worth of investments.
"It was reported that there may be a 5% drop in property prices in general and 10% at some locations and in certain segments. Our margins may be eaten up, but we will wait and see what will happen this year," says Siah.
Venturing into Australia
Daiman is eyeing the overseas market for more development opportunities. Siah says the company has already made inroads into Perth, Australia, after it acquired a piece of land along Lockhart Street there last year, through its wholly-owned overseas subsidiary Caversham Universal Ltd. The developer is still looking to acquire good landbank or investments in Perth.
"We wanted to go into Australia and it so happened that there was such an opportunity for us in Perth," says Siah.
He, nevertheless, declined to elaborate on the project as the developer is still working on the development plan of the land.
In the second quarter of last year, Caversham Universal bought some 437,500 shares, or a 70% stake in CNES Property Pty Ltd for USD410,944 (RM1.3 million based on the exchange rate of RM3.153 per USD).
CNES was incorporated in Australia on Feb 6 last year and its principal activity is property development.