Higher UEM Sunrise cost within ‘range of tolerance’

PETALING JAYA: One of Malaysia’s largest property developers, UEM Sunrise Bhd, has hinted about the possibility of raising its property prices if the spike in construction costs continues.

The group, however, said the higher costs remain within “a range of tolerance at this point”, and hence it would refrain from significantly raising its prices this year.

Speaking to reporters, chief executive officer Sufian Abdullah said the group may revise its position on pricing towards the end of the first half of 2022.

“For the property launches that we have for this year, we are fine-tuning our prices (due to other costs), but to say there is a chunky impact in terms of our pricing strategy, we are not going to get into the territory this year.

“Even if we do revise our outlook in terms of pricing, there is no plan for us to consider raising the prices of our products at this point,” he said at a virtual briefing yesterday.

Sufian clarified that UEM Sunrise was mitigating the rising construction costs via a strategic tender process.

“We organise a vendor development programme with selected vendors. “In the long run, it is about us letting people know how much is our demand for construction material for the next five years.

“This will allow our vendors to assume or quantify the supply risk, and in return, what we hope to see is a considerable pricing gap for the construction materials that we procure,” he said.

The property group is also mitigating higher construction costs with bulk purchases and bundling and packaging of contracts, as well as partnerships and collaborations.

“The focus that we are working on in terms of managing construction price hikes is rather than aiming for cost savings with cost-cutting exercises, (we) go forward with cost certainty, and that will mitigate the risk of fluctuations over the course of construction,” he said.

Looking ahead, Sufian said UEM Sunrise expects to record total property sales of Rm1.5bil in 2022, which is rather flattish compared with the sales made last year. In 2021, the group registered total sales of Rm1.46bil by selling 1,595 units, surpassing its target of Rm1.2bil for the year.

Sufian expressed confidence that UEM Sunrise would bounce back into profitability on a full-year basis in the current financial year ending Dec 31, 2022 (FY22). The group, which was loss-making in the past two financial years, returned to the black in the first quarter of FY22 with a net profit of Rm19.02mil. Revenue surged 65% year-on-year to Rm416.45mil.