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Sales target cut last year, Overachieving target this year.

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UEM-Sunrise’s branding advertisements are running on radio every day. I hear them every morning on Melody FM. For those who know the age group that listens to Melody FM, it’s ok. I admit. I am no longer as young as I was. Haha. Last year, due to the gloomy outlook, UEM-Sunrise slashes its sales target for 2014 from RM3.2 Billion down to RM2 Billion. This year however, the RM2 Billion would be on the low side as the company is expected to exceed its RM2 Billion sales target. One chief reason mentioned was their Melbourne project which was very well received. The massive 92-floor skyscraper with 941 serviced apartments will have a GDV of A$770 million (RM2.23 Billion). As of last Friday, a total of 403 units have been sold and that is worth RM1.16 Billion. The second reason for this would be disposal of land banks in Iskandar too. Melbourne project would contribute 25 percent, 60 percent by Nusajaya projects and the remaining from Klang Valley.

Is this considered a turnaround sign for Iskandar? UEM-Sunrise does own the largest landbank in Iskandar. Since they are now on the path towards overachieving their earlier set sales target, it should be seen in a positive light for Iskandar? I think, not yet. The current potential result is mostly because of the much lower sales targets set earlier. Imagine if they did not review their earlier sales target, then 2014 would have been a year of underperformance for them. During this slowdown, many developers have changed their plans. This included UEM-Sunrise too. They are slowing down new launches and will also be contributing to the affordable units in Iskandar. This is via their Denai Nusantara project with a GDV of RM118 million in Nusajaya. Denai Nusantara is a project consisting of five 12-storey blocks of three-bedroom apartments with a built-up area of 1,000 square feet each. This is a good size in my opinion instead of the usual 850 – 950sf which I have seen for the affordable homes launched by other developers. The total units are 1,109 and each unit is priced at RM150,000. RM150 psf? If the land cost is extremely low, I think it’s still doable. Either that or there’s some form of subsidy from the government.

UEM-Sunrise is a very important barometer of Iskandar. During the boom periods, UEM-Sunrise was in the limelight every week. In fact if we look at their launches, we can more or less see what’s happening in Iskandar. Of course, with the entrance of the China developers, a lot has changed, especially the condo units being launched which are in the thousands. Total units thus far? Largest would be Country Garden’s 9,500 units, followed by Country Garden’s 32,000 units which may take 10 – 15 years to complete followed by The Greenland Group’s 2,200 units. Others include additional 80,000 units in Danga Bay, Senibong, Medini as well as some around the Johor Bahru city area. Yeah, I do agree, just looking at the numbers alone would get many worried. However, be reminded again, Iskandar is 3 times the size of Singapore and currently, you can still say majority of the growth has just started. Let’s wait for UEM-Sunrise’s next move then.

written on 14 Nov 2014

Next suggested article: Nothing in Iskandar yet for me but does not mean it’s NOTHING to me.

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