IOI Prop’s township projects to contribute 45% to total sales

IOI Properties Group Bhd is expecting its township projects to contribute 45% to total sales for 2015.

This year, IOI Prop will have two townships added to its existing portfolio, Bandar Puteri Warisan and Bandar Puteri Bangi, which respectively have a gross development value (GDV) of RM2.5bil and RM3.6bil.

“Projects from this segment will contribute about 53% of the total GDV of RM16bil for the next three years,” BIMB Securities Research said.

“Among others, major contributors from the Klang Valley such as 16 Sierra South Puchong, Bandar Puchong Jaya and Bandar Puteri Puchong have a combined GDV of RM5.2bil,” it said.

“Whilst the southern side would be supported by Bandar Putra Kulai with a GDV of RM560mil and the new township Bandar IOI Bahau, Rompin Jempol, Negri Sembilan is expected to attain a total GDV of RM590mil.”

IOI Prop’s average margins are higher than the industry average due to its low land costs.

The property developer is not expecting to expand its land bank any time soon, although BIMB Securities Research reckons the property arm was in a favourable position for future land bank replenishment with the backing of IOI Corp Bhd.

Currently, the group has about 10,000 acres of total land bank in Johor, Negri Sembilan and the Klang Valley.

Additionally, it also has land in Singapore and China.

“We reckon the group’s residential projects priced below RM1mil – with the exception of Penang – as vital to entice the mass market buyers. Though not cheap, we deem IOI Prop’s prices as still within the reach of most middle-income earners,” BIMB Securities Research said. “As loan approvals are now more stringent, we view the group’s pricing policy as strategic since they cater mostly for genuine demand.” - The Star