Daiman scaling back launches

JOHOR BARU: Daiman Development Bhd is scaling back on new products and launches this year as the local property market cools down.

General manager Siah Chin Leong expected most local developers to adopt a similar move as they were not willing to take any business risk.

Hopefully, the unemployment rate in Malaysia would not rise as this would affect the whole market since the disposal income would be vastly reduced, he said.

Siah said developers in Johor were already facing a tough time and most had experienced a 40% decline in sales in the past two months.

“Everybody, including developers, is pessimistic. They don’t know what lies ahead in the next two years,’’ he said in an interview with StarBiz.

Siah said Daiman would be launching 87 double-storey cluster houses and 26 double-storey semi-detached houses in Taman Gaya in the fourth quarter of its financial year ending June 30 (FY09).

The company is currently building 132 double-storey cluster houses and only a few units are still unsold.

It also just started building 120 single-storey terrace houses with an average selling price of RM158,000 unit and 60 double-storey shop offices at RM398,000 per unit at Taman Daiman Jaya.

“We are looking at RM130mil gross development value (GDV) for the 425 units and they will keep us busy for the next two years,’’ said Siah.

Daiman has three major on-going projects - Taman Gaya along the Tebrau corridor, Taman Daiman Jaya in Kota Tinggi and Taman Perindustrian Murni in Senai.

Taman Gaya will take six to seven years to complete and Taman Daiman Jaya, between 15 and 18 years.

Both projects have so far contributed RM428mil in sales turnover.

About 40% of its industrial lots and factories in Taman Perindustrian Murni have been sold and contributed RM12.09mil at the end of FY08.

Daiman has leased out some of its factories which are fetching an annual yield of 6% to 7%.

Siah said despite a slowdown in the local property market, there was encouraging response to high-end properties.

Daiman was targeting professionals, senior executives, extended families and those looking for bigger houses, he said.

“These buyers are willing to pay more for their houses provided they are located within gated and guarded precincts,’’ he said.

Daiman was on the lookout for land in Nusajaya as the area would be the main growth centre in Iskandar Malaysia, Siah said, adding that its focus here would be high-end houses.

He said Daiman had over the past few years been looking for land in the Klang Valley but so far the land viewed was not feasible.

The company is also considering venturing into Singapore as demand for private properties there was still good due to the influx of wealthy buyers from worldwide to the republic.

Last April, the company’s wholly-owned overseas subsidiary Caversham Universal Ltd subscribed to 70% equity in CNES Property Pty Ltd for A$875,000.

Australia-based CNES was incorporated in February 2008 and its principal activity is property development. It plans to build some bungalows in Perth.

“We are very cautious when expanding overseas but if it is a sound investment, Daiman will definitely explore the possibility,’’ Siah said.

Daiman has some 36 years experience in the property sector in Johor and had net cash of RM74.22mil at the end of FY08.

For FY08, it recorded RM114.46mil in revenue while the pre-tax profit was RM36.43mil. That compared with RM99.81mil and RM37.99mil respectively in FY07.

By The Star (by Zazali Musa)