KUALA LUMPUR: By 2025, Sime Darby Property Bhd - the country's largest developer by land bank - will have morphed into a real estate company from a pure-play property developer.
The transformation journey to diversify its operating income base to a 70:30 split between property development and non-property development/recurring income kicked off at the cusp of the Covid-19 pandemic. Currently, the ratio stands at around 90:10.
Group managing director Datuk Azmir Merican said the pandemic provided an opportunity for SD Property to start off on a clean but fundamentally strong slate, with a focus on unlocking and creating value despite the various challenges.
SD Property aimed to broaden its income streams by focusing on strengthening the master developer model, investment and asset management (I&AM) as well industrial and logistics development, Azmir added.
"In addition to industrial clusters, the expected continuous expansion of retail businesses will be long-term catalytic placemaking components in our townships beyond our first wholly-owned mall, the KL East Mall in Kuala Lumpur.
"This is coupled with our plans for landbank management and monetisation exercise to accelerate the unlocking of land value and convert it to the overall growth of SD Property. We ensure that clear monetisation plans are in place for all existing and newly acquired lands," he told the New Straits Times.
SD Property holds about 6,475 hectares (gross acreage) across Malaysia with a gross development value of more than RM100 billion.
It has some 2,023ha of available industrial land for future developments across its six major townships namely the City of Elmina, Bandar Bukit Raja and Serenia City in Selangor, Hamilton Nilai and Nilai Impian in Negri Sembilan, as well as in Bandar Universiti Pagoh in Johor.
SD Property is optimistic on the growth potential of its industrial and logistics development segment.
Azmir said the company would continue to benefit from the sub-themes of logistics and warehousing, e-commerce and a shift in consumer preference aided by very high internet and mobile phone penetration.
"This segment offers potential for the company to diversify and grow our income mix beyond residential and retail/commercial, which also allows for recurring income. We also have the capability to form partnerships with established segment experts in new business ventures to add value to the company's business," he said.
One of SD Property's strategic moves to boost contribution from the I&AM business is through the set-up of a voint venture with LOGOS Property Group of Australia to establish the former's first industrial development fund last year.
Contribution is expected to come in the form of new recurring income streams such as fund management, developmental services fees, and leasing income.
"To provide you with an indication of the type of growth that we are targeting within the I&AM business through fund management, the inaugural fund with a target capital commitment of up to RM1 billion is on track for first close in the first half of FY2022, and we expect new income streams to accrue to the group in financial year 2022 itself," Azmir said.
SD Property currently has about five million in net lettable area (NLA) across Malaysia, Singapore and the UK, spanning residential, commercial, retail, industrial and logistics, education and healthcare assets.
The industrial and logistics development business features 384,000 square feet in NLA.
Azmir said the inaugural industrial and logistics development in Bandar Bukit Raja via its partnership with Logos Property was targeted to expand its current NLA by about eight million square feet to 13 million square feet over the coming years.
"This will contribute to the growth of the company's investment and asset management (I&AM) business and complement our property development business."
Azmir said SD Property wanted to attract major industrial and logistics players to the Bandar Bukit Raja Industrial Gateway by providing total solutions through end-to-end development services.
This includes built to suit facilities that are equipped with sustainable building features and the offering of long-term leasing solutions.
Azmir said SD Property's industrial and logistics products were strategically located close to major ports, highways as well as other key hubs in manufacturing and logistics.
"We expect the industrial and logistics segment to continue to act as a key catalyst in our transformation, particularly during the post pandemic recovery phase."
Azmir said SD Property had also seen interest from global logistics and supply chain companies across all its developments.
He does not discount the small and medium enterprises which are keen to upgrade their facilities to well-planned developments with better accessibility and connectivity, ready infrastructure and utilities as well as sustainable building features.
"We are also leveraging digital platforms to reach out to customers, including through the availability of our virtual reality marketing initiatives for customers. These digital initiatives have enabled us to expand our reach to potential clients and to disseminate critical information required by clients, seamlessly and instantaneously," he said.