“When com­pa­nies ven­ture into prop­erty de­vel­op­ment, they must have ex­per­tise... if they don’t have it, they should hire ex­perts.”

New Straits Times - - Business -

SARKUNAN SUBRAMANIAM,

Knight Frank Malaysia MD

KUALA LUMPUR: Com­pa­nies ven­tur­ing into any prop­erty de­vel­op­ment must have the right ex­per­tise, knowl­edge, part­ners and cred­i­bil­ity as the mar­ket is now “hot” and sat­u­rated.

Knight Frank Malaysia man­ag­ing di­rec­tor Sarkunan Subramaniam said in­stead of al­low­ing just about any­body to be a prop­erty de­vel­oper, poli­cies must be in place to en­sure that only qual­i­fied play­ers en­ter the sec­tor.

“Any­one who comes in with­out ex­per­tise would cre­ate a lot of prob­lems for con­sumers as the mar­ket is hot,” he told NST Busi­ness re­cently.

Sarkunan said the prop­erty mar­ket was lu­cra­tive and every­body wanted to be­come a prop­erty de­vel­oper.

“When com­pa­nies ven­ture into prop­erty de­vel­op­ment, they must have ex­per­tise... if they don’t have it, they should hire ex­perts,” he said.

Sarkunan said there was no right or wrong time for one to ven­ture into the prop­erty busi­ness as the mar­ket was com­pet­i­tive.

“Most im­por­tantly, you either hire ex­perts or you buy a de­vel­op­ment com­pany. You don’t start from scratch.”

MIDF head of re­search Mohd Redza Ab­dul Rah­man said as the value of land would in­crease over time, buy­ing land was a good nat­u­ral hedge against in­fla­tion.

“Hav­ing land­bank at strate­gic lo­ca­tions will en­sure higher prices and should they then de­cide to de­velop it, the gross de­vel­op­ment value can be placed at a premium.

“Prop­er­ties at strate­gic lo­ca­tions, such as near trans­port hubs, will al­ways be in de­mand.”

Redza added that when a reval­u­a­tion ex­er­cise took place on the land bank, the in­crease in price (reval­u­a­tion sur­plus) was re­flected in other com­pre­hen­sive in­come.

“While the na­ture of prop­erty de­vel­op­ment in­volved recog­ni­tion of in­come when the prop­er­ties are sold, the com­pany could also re­tain parts of the de­vel­op­ment for fu­ture rental in­come by al­lo­cat­ing a few floors (high-rise de­vel­op­ment) for of­fice and com­mer­cial lots.”

Redza said the mar­ket was try­ing to find a bal­ance be­tween af­ford­abil­ity and lo­ca­tion for the projects.

Based on the re­cent data, prop­erty priced at RM500,000 and above saw a rise in trans­ac­tion value.

Mean­while, prop­erty con­sul­tant CBREWTW man­ag­ing di­rec­tor Foo Gee Jen said busi­ness di­ver­si­fi­ca­tion was de­pen­dent on the avail­abil­ity of the com­pa­nies’ land­banks.

“For ex­am­ple, firms that are ven­tur­ing into man­u­fac­tur­ing may find them­selves with plants that do not meet their re­quire­ments.

“The fac­tory may too old or the lo­ca­tion is not ideal.

“Ob­vi­ously with the land they have, it is only nat­u­ral to think what can be done with the land. The best op­tion is a prop­erty de­vel­op­ment,” he said.

Foo said com­pa­nies like Kobay Tech­nol­ogy Bhd and Boon Group Bhd could ven­ture into prop­erty busi­ness due to its sur­plus land­bank.

“In terms of best use of the land, it would be prop­erty de­vel­op­ment. Al­though the tim­ing is a not per­fect, they come into mar­ket with dif­fer­ent prod­ucts.

“It does make sense for them to move into prop­erty.

“A good ex­am­ple will be Mah Sing Group Bhd. It started out as a plas­tic man­u­fac­turer in the late 1980s be­fore be­com­ing a de­vel­oper in the mid1990s. It is a nat­u­ral pro­gres­sion.” Ayisy Yu­sof

Knight Frank Malaysia man­ag­ing di­rec­tor Sarkunan Subramaniam

CBRE-WTW man­ag­ing di­rec­tor Foo Gee Jen

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