TA Global delays property launches
Move comes amid soft real estate market
KUALA LUMPUR: TA Global Bhd is delaying the launch of three residential and mixed-development property projects worth RM5.5bil to next year, mainly due to the soft property market.
The projects pushed to next year are the Dutamas residential project worth RM450mil, the TA 3&4 project (worth RM2.6bil) in Kuala Lumpur city centre, and the Annexe mixed-development project (worth RM2.5bil) in Bandar Sri Damansara.
These projects were initially set to be launched this year.
“The delay in the projects for this year is mainly due to the oversupply of properties in the market,” chief executive officer Tiah Joo Kim told reporters after TA Enterprise Bhd and TA Global’s AGM.
The company plans to pace the launch of these projects to each quarter next year due to financing as well as the higher amount of manpower and resources required.
“We plan to launch the Dutamas residential project in the first quarter of 2019 (Q1’19), followed by TA3&4 in Q3’19 and we are also considering launching the Damansara Annexe development project in Q4’19,” Tiah explained.
Moreover, the launch of the first phase of the Kluang residential project worth RM450mil will be in the second quarter of next year.
However, Tiah said the Dutamas residential project was put on hold because the company could not get the development permit in time, adding that the launch could possibly be in time for Chinese New Year next year.
Following the postponement of project launches, TA Global executive director Kimmy Khoo is hope- ful about achieving “good” earnings for financial year 2018 (FY18) due to improved first quarter earnings, sales from Ativo Suites and the Little Bay Cove development in Australia.
“We still have three quarters to go ... we expect profits to be contin- uously maintained for FY18,” she added.
The Little Bay Cove development in Australia is worth RM482.3mil (AU$162mil), which is 99.4% sold, while the Ativo Suite units are 60% sold, with the remainder to be sold by year-end.
TA Global’s Q1’18 net profit to end March almost tripled to RM230.15mil from RM57.56mil a year ago, due to the disposal of an Australian property and a compulsory land acquisition by the federal government.
Moving forward, Tiah’s strategy is to focus on more domestic projects, while ensuring the projects are the best in class to build a brand for the company.
“We are also open to overseas opportunities, but our main aim is to focus on the domestic market for now,” he said.
The company has a total landbank of 720 acres in Malaysia, from which 162 acres are planned for developments with a gross development value of RM14.2bil.
When pressed if the company’s hotel operations in the Trump International Hotel would take a hit from the soured ties between the United States and Canada, Tiah said “some will boycott certain hotels but there are some that will support. So, my hope is that there is balance.”
On the other hand, TA Securities’ senior vice-president of research, Kaladher Govindan, said the FBM KLCI could fall as low as 1,580 points, given that the US has threatened to impose tariffs on an additional US$200bil worth of Chinese imports.
“I don’t think the US will reach the stage of imposing US$200bil worth of tariffs, but if that were to happen, there would be more fund outflows from regional markets and Bursa Malaysia.
“It all depends on July 6, as US tariffs will take place then,” he said.
Kaladher believes that US president Donald Trump will not proceed with the second tranche of tariffs on US$200bil of Chinese imports, saying that it is most likely that the US would stop imposing tariffs on US$50bil worth of goods from China.
“On that note, with the first tranche of tariffs of US$50bil, my estimate is that the FBM KLCI would remain at 1,780 points by year-end on the back of a price to earnings ratio of 15.5 times,” he said.