Another non-developer entering the market to become a developer. This time is is a electrical good brand manufacturer for which I am quite familiar with in Malaysia. I once bought its electric oven for a close friend’s house-warming party. In it’s announcement to Bursa Malaysia, it said that the original plan was to developer the land into a commercial office building which part of it will be for own use and another part would be rented out. After considering the many designs and development plans, KHIND decided to maximise the utilisation of the land by incorporating a retail component and service apartments.
Sometimes, when the opportunity comes along, one just have to maximise it. If there are no market demand, building serviced apartments would increase the building cost and yet find no buyers. Fortunately, this is just incremental cost because KHIND had wanted to build their office anyway. As for why some listed companies would like to expand their business into property development, read here: Need more profits? Just become a developer I have been to Setia City Mall. I think it is a very good mall. Thus, building serviced apartments nearby is considered a good decision by me. Just sell the units quickly at a very attractive price. This is after all something extra. Haha. Perhaps I should go and take a look too.
The project will feature a 17-storey apartment wing and eight-storey office wing as well as commercial space with amenities, retail units and carpark. The commercial component and majority of the office space would be for own use while the rest of the space would be rented out. Some portion of the carpark bays and the service apartments will be sold. After listening to many billion ringgit GDVs, this one is a small one, at RM150 million, with an estimated gross profit of RM37.5 million. It will be paid for by internally generated funds, bank borrowing and progressive sales billings. This will add another 25 percent or more to the net profit for the group.
written on 24 July 2015
Next suggested article: Developers and their profit margins, recent updates, Sept 2014
