Sime Darby Property Bhd, Malaysia's biggest property developer in terms of land bank says its future remains promising and resilient despite the current challenges in the property market.
Its chairman Tan Sri Dr. Zeti Akhtar Aziz said because of challenges and imbalances in the sector over the years, the developer has been focusing on identifying opportunities in the market to sustain its performance and remain competitive.
This has helped the company deliver a positive year in 2019, she said in Sime Darby Property's latest annual report filed with Bursa Malaysia yesterday.
Sime Darby Property posted a net profit of RM598.5 million for the financial year ended December 31, 2019 on revenues of RM3.2 billion, a significant improvement over 2018.
Zeti said 2019 was a strong year for Sime Darby Property.
While the demand in certain property segments remained below average, the potential with landed and affordable properties and the industrial products were promising, she said.
Sime Darby Property delivered landed properties at affordable prices which generated a positive outcome for the company thanks to the strong take-up rates during the launches, said Zeti.
Zeti said the rollout of marketing campaign, which effectively highlighted the company's unique value propositions, garnered a positive response despite the weak market.
The campaigns helped the company achieve RM2 billion in sales, contributing to its revenue potential, she said.
Sime Darby Property Bhd launched several marketing campaigns in 2019 which garnered RM2 billion in property sales for the company. File Photo
Sime Darby Property also strengthened its industrial development capabilities through a joint venture with its sister company, Sime Darby Plantation. The company launched Bandar Bukit Raja Industrial Gateway, featuring built-to-suit facilities and ready supply chain hubs.
The Malaysia Vision Valley 2.0 in Negeri Sembilan is also gaining traction with the groundbreaking of its first industrial park in Nilai Impian.
"The developments in 2019 were already extremely overwhelming with the global externalities from the US-China trade tensions and the aftermath of Brexit, to the local market conditions with disparate demand and supply trends and the weak market sentiments. On the cusp of the new year 2020, trade and investment flows worsened with the Covid-19 pandemic that has plagued the world and augmented with the collapse in oil prices following tensions among the major economies.
"(At Sime Darby Property) while our strong legacy and parentage provided an initial impetus for growth, we have demonstrated our inherent capabilities and strong fundamentals by delivering an improved financial year amid a highly challenging operating environment, she said.
Zeti said the year 2020 will experience an even more challenging environment, following the economic consequences of the global spread of coronavirus early in the first half of the year.
"Market uncertainty and volatility arising from global trade tensions, geopolitical developments, digital disruptions, the unprecedented health scares, and more discerning customers, all seem to be the 'new normal' of this decade.
"In the face of adversity, the option is not to fail, but to overcome such challenges and to become more resilient. Our shareholders and stakeholders are invested in Sime Darby Property's future," said Zeti, who is a former governor of Bank Negara Malaysia.
Sime Darby Property's growth in the industry is represented by the 24 strategically located and active townships/developments built to date.
The company has about 7,990 hectares acres of remaining developable land with a total estimated gross development value of RM86.9 billion.
In a separate filing, Sime Darby Property said that it has entered into a supplemental agreement in relation to the disposal of two 11-storey blocks of commercial office buildings together with accessory parcels and one level of a basement car park in Ara Damansara, Petaling Jaya.
The sales and purchase agreement (SPA), dated June 20, 2017, was entered into between Sime Darby Brunsfield Damansara Sdn Bhd, Sime Darby Property (Ara Damansara) Sdn Bhd, and Sime Darby Holdings Bhd.
The parties have agreed to amend and vary the terms of the SPA, including adjusting the purchase price from RM230 million to RM200 million due to a shortfall in the net floor area (NFA).
The NFA derived from strata plans is 316,730 sq ft. The said NFA of 316,730 sq ft showed a variance of 45,958 sq ft, which is equivalent to a 12.67 per cent shortfall as compared to the NFA as stipulated in the SPA of 362,688 sq. ft.
Sime Darby Property said the shortfall in the NFA translated into a reduction of the purchase price of about RM29.1 million, based on the adjustment rate of RM634.15 per sq ft.
