What new initiatives is Glomac involved in?
ISKANDAR: Glomac is a property development company. We work in all aspects of property, from development, to construction, property management and car park operations. In the last 18 months or so we have continued replenishing our land bank and at this moment in time we have a gross development value (GDV) of approximately $2.2bn. We're working on 12-15 projects at any one time. These are exciting times for us. We hope with economic sustainability, especially in this region with the trend moving forward for the property development industry, that things will continue to be positive.
How would you describe the market for property development investment in Malaysia?
ISKANDAR: Well, obviously, the degree of confidence is a very important factor. As you know, property will be the single largest purchase of a person's life and the degree of confidence in that purchase will be part of the decision. The slowing down of the US economy, the crisis that the Eurozone is facing, are obviously external factors that will affect the degree of confidence. Domestically, in Malaysia, and regionally in ASEAN and throughout Asia, the demand is still very strong. Hopefully the domestic demand will be our main provider for the spur to actually push economic growth in this region.
With regards to the various regions of Malaysia, what are the major differences among these areas?
ISKANDAR: The central region would be the most robust because it is the administrative and economic center of Malaysia. The northern region, Penang, is strong, as is the southern region, the Iskandar region. Last year, total residential sales alone in Malaysia exceeded $35 billion. Of this figure, the Greater KL area still accounts for more than 60% of total residential sales. The main economic regions that actually drive the property market are the central, northern, and southern regions. Of course we also have Sabah and Sarawak, which have always been very steady, mostly because of the domestic demand for those markets. Sabah is very well visited for its forest market and because of its natural beauty it has become a market for tourism. We have seen the forest industry from Japan, Korea, Taiwan, and Mainland China start to invest in Sabah.
What are the most interesting areas for you internationally in terms of growth?
ISKANDAR: Regionally, it would be ASEAN. This is a region with a population of 600m. The intra-trade within ASEAN last year was a bit more than $2 trillion. If you look at the GDP growth apart from China and India, this would be the region that has the highest GDP growth. Within ASEAN, we are all young economies. You have Malaysia, which has only been independent for 55 years. With the purchasing power becoming stronger in the region due to economic growth, we think that this will be an area for enormous growth in the future.
To what extent are investors from the Middle East contributing to the growth of Malaysia’s property development sector?
ISKANDAR: GCC countries have always been big investors, especially in property investments. I think they can go anywhere they choose. The GCC investors have been very aggressive in Malaysia, especially in 2008/9. They are still around, not only in Malaysia, but also in the ASEAN region. We are trying to make Malaysia the Islamic financial center of the world. The honor of ‘financial center of Asia’ has already gone to Hong Kong but the honor of the ‘Islamic financial center’ is still up for grabs and with Malaysia having the proper infrastructure for Shariah compliant products, I think we have a head start for acquiring this title. I believe this is one of the added attractions for the GCC market as they look at Malaysia as an investment destination.
Is the current share price of Glomac fair?
ISKANDAR: If you ask me personally, I would definitely say no. However, our business is property, not the share market. The fundamentals speak for themselves. I believe in the share price; we know where the company is headed. We've had strong growth over the last 4 years, and looking at our results, we know where the growth is, where our un-billed sales are, and where our future cross-development values are. So, yes it is undervalued I would say. If you look at the NV of the company, then definitely it is undervalued.
Malaysia has got everything. It's a stable country, with very good infrastructure and the education system is good. In terms of tourism, retail, and health services, within ASEAN we would be somewhere at the top. However, we have not made this known to the international community. We have not made this known to the world. Yes, we have been reasonably successful with our tourism campaign. However, to make Malaysia as the preferred property destination, there's still quite a bit of work to be done.
What are the biggest challenges in the property development market and for Glomac?
ISKANDAR: Well these challenges go hand in hand because whatever the industry faces, Glomac faces as well. Of course, the first thing is the degree of confidence in the market, which has been affected by the meltdown in the Eurozone and the issues facing the US. These will certainly affect Asia because today we live in a global marketplace. If anything happens in NY, within 2-3 minutes we will know due to the world of technology. Secondly, the central bank has put more pressure on the margin of loads for potential purchases. Many of us are concerned about household debt, but at the same time, property is probably the only commodity that actually grows in terms of value. If you were to buy a car, 9/10 times your car value will actually depreciate, whereas property appreciates in value. With regards to credit card debt, there are cases that cannot even be recovered. With property however, the intrinsic value will always be there. The central bank has certainly asked banks to be more prudent in property lending. However, 2-3 months ago the government said that they never asked banks to put a brake on lending altogether. What they have asked is to practice responsible lending. So, I hope the banks will actually listen to the advice of the Central Bank to lend responsibly, rather than putting a sudden stop to property lending altogether. A third challenge of course for Malaysia is how to make Malaysia a top-property investment destination. We have to find our niche. What's our strength? What do we focus on? Fifteen to twenty years ago, we wanted to be good at 40-50 things. We were the first ones to build a place known as the Silicon Valley of Asia with Cyberjaya. We had 40 of the best IT brains in the world. The then Prime Minister Dr. Mahathir, introduced Cyberjaya. We had Bill Gates, the Late Steve Jobs, and Stan Shih of Asia involved in the project. Somehow we never managed to make Cyberjaya the destination for IT. Today, when you talk about IT or the Silicon Valley of Asia, that honor has gone to Bangalore in India. Instead of being good at 40 or 50 things, the government invited the private sector about 2 years ago and told them what they want the country to focus on. As a result we’ve come up with 8 key areas. If we can be good in these 8 key areas, I believe that by 2020 Malaysia will become a high-income, fully industrialized nation.
Is Malaysia doing a good enough job of promoting property investment opportunities?
ISKANDAR: I think we are doing an OK job but I think we could do a better job. We are not good at selling ourselves. This is my personal view. I think more can be done. Some form of branding has to be introduced. Malaysia has got everything. It's a stable country, with very good infrastructure and the education system is good. In terms of tourism, retail, and health services, within ASEAN we would be somewhere at the top. However, we have not made this known to the international community. We have not made this known to the world. Yes, we have been reasonably successful with our tourism campaign. However, to make Malaysia as the preferred property destination, there's still quite a bit of work to be done.
What are some specific projects you are currently working on?
ISKANDAR: The first point of entry for most foreigners would be the Greater KL area. We are fairly strong in the Greater KL area. Out of the 15 projects that we are doing now, 13 are in the greater KL area. We recently sold one of our buildings, which faces the Petronas Twin Towers; we sold it to the Kuwait Finance House for about $200m about 3 years ago. Therefore, we have some experience dealing with the GCC investment community. The other projects that we are currently working on that the international community would be interested in would be our projects in the KLCC area, including our apartments which face the Twin Towers as well a project which is about 20 minutes from the area of KL. We have about 5-6 projects, which are residential, mixed, and, commercial. Suria Stonor, Glomac Damansara, and Reflection Residences in Mutiara Damansara, where we have just launched 299 units of apartments, are some other projects we are currently involved in.