KUALA LUMPUR: Newly-integrated property developer OSK Property is finding it challenging to meet its RM1 billion sales target this year due to shifts in the global markets.
“We are going through a very challenging economic cycle. There will be a time when the market is robust and there will be a time when the market is challenging,” chief executive officer Ong Ghee Bin told Business Times.
He did not provide any indication of the group’s sales for the first seven months of the year.
He said similar to the oil and gas sector, the property market should also look at consolidating with other players to gain a stronger footing.
On the target last year for the company to become one of the country’s top 10 property developers by 2020, Ong said it was too soon to comment. He said for now, the company would focus on projects in hand.
Earlier this year, OSK Property Holdings Bhd and the property arm of PJ Development Holdings merged to become OSK Property.
The group has projects with gross development value (GDV) of RM18 billion across Peninsular Malaysia and in Melbourne, Australia.
Ong said the company did not have plans to venture into Sabah or Sarawak.
“Despite the economic challenges, there is still demand here,” said Ong, stressing that OSK Property was always open to development ventures if the opportunity arose.
Projects in the pipeline this year include TimurBay Seafront Residence in Kuantan; Luminari in Harbour Place, Butterworth; a bungalow development in Sungai Petani and the second phase of Windmill Upon Hills in Genting Permai, Pahang.
“We have also received approval from the state government of Victoria for the integrated property project in Kavanagh Street in Melbourne. We are going to market the project in the fourth quarter and start the first phase of the development,” said Ong.
The Australian project consists of four residential towers, an office block, a hotel and a retail podium with a total floor space of 411,000 square metres. It has an estimated GDV of A$3 billion (RM9.17 billion) and is expected to be completed in eight years.
The project will help put OSK Group in a strong position to expand in Australia.
Ong is also optimistic about the impact of the recent Overnight Policy Rate (OPR) reduction on the company’s business.
“Lower interest rates will help buyers. It also has a direct impact on us as borrowings become cheaper.
“But on whether the lower OPR will help us with our new sales target this year, well it’s too soon to tell.”
OSK Property contributed 71 per cent and 12 per cent to OSK Group’s revenue and profit after tax, respectively, for the financial year ended December 31 2015.
On an aggregate basis for the year, the combined property business generated property sales of RM1.1 billion, with unbilled sales of RM1.4 billion, which is expected to help sustain revenue for the property division in the coming three years on a progressive basis.
Last week, OSK Property announced a collaboration with GreenTech Malaysia Alliances Sdn Bhd and KLOTH Lifestyle Sdn Bhd to produce company uniforms from recycled plastic bottles.
“This is one of our first rebranding steps after our merger. This also marks the beginning of OSK Property’s sustainability journey as we hope to adopt more green technologies.
“The OSK Group is also in discussions with KLOTH Lifestyle to expand this to the rest of the group so that we can further push the recycling and sustainability cause,” said Ong.
KLOTH Lifestyle collects clear plastic bottles from waste processors around the country and shred them into plastic flakes. The plastic flakes are then cleaned and converted into pellets and spun into polyester yarn.
OSK Property’s new uniform is made of 40 per cent recycled polyester and 60 per cent organic cotton.