This article first appeared in City & Country, The Edge Malaysia Weekly on November 25, 2024 - December 1, 2024
UEM Sunrise’s financial performance has been steady in fiscal year 2024 (FY2024). As at the second quarter (2Q2024), the developer had registered RM269.8 million in sales.
“This marked an increase of 16% quarter on quarter, keeping us [on track] with our sales target [RM1 billion] for the fiscal year of 2024,” says UEM Sunrise Bhd CEO Sufian Abdullah.
In the first half of 2024, UEM Sunrise achieved RM502.4 million in sales, half of the fiscal year’s sales target. This was driven by the positive response to The MINH in Mont’Kiara and The Connaught One, Cheras, both in Kuala Lumpur, as well as Senadi Hills in Iskandar Puteri, Johor.
In addition, the developer reported a 129% surge in net profit totalling RM18.8 million in 2Q2024, up from RM8.2 million in the previous quarter. Sufian says, “[Our net profit] is boosted by revenues that are collected from key developments such as Residensi Allevia, The MINH and KAIA Heights.”
The company’s recent projects, including Aspira Hills, Senadi Hills, and Aspira LakeHomes in Johor have achieved strong take-ups. “This shows that UEM Sunrise is able to meet customer demand while aligning with its strategic goals of producing inclusive, attainable and sustainable developments.
“Meanwhile, our gross profit margins have risen by 35% in the same quarter. The increase is largely driven by our effective cost management. Supported by RM1.2 billion in cash and bank balances, we have a solid liquidity position for operations and debt obligations.
“Our asset monetisation efforts have also improved our net gearing ratio to 0.43, and our robust unbilled sales of RM2.7 billion ensure our visibility until 2027. In addition, a 33% year-on-year reduction in inventories highlights our effective inventory management,” he adds.
However, the company reported a decline of 29% in revenue in 1Q2024, at RM430.2 million, compared with the same period last year. The decrease is primarily due to lower recognition from projects such as Residensi Astrea in Mont’Kiara and Serene Heights in Semenyih, Selangor, as they have progressed into the advanced stages [of construction].
Sufian shares that the company has been particularly busy in the southern region ramping up development activities and attracting foreign investments into its township in Johor. The company has a land bank of 4,782.9 acres in the state.
Backed by economic opportunities that are stimulated by the government, UEM Sunrise intends to ride this opportunity to help grow its property development portfolio in the state as well as contributing to the growth of Johor’s investment landscape, especially in the industrial segment.
In an email interview with City & Country, Sufian discusses the company’s performance in the past 12 months and gives an update on its ongoing and upcoming projects.
City & Country: What are UEM Sunrise’s key projects?
Sufian Abdullah: The key projects located in Iskandar Puteri, Johor, such as Aspira Hills Phase 1, Aspira LakeHomes Phases 4, 5 and 6, and DiReka Square, and projects in the Klang Valley, such as The MINH and The Connaught One, are progressing well according to their respective [completion] schedules.
Aspira Hills Phase 1 has a gross development value (GDV) of RM310.3 million. It is expected to be completed in 4Q2026. Aspira LakeHomes Phases 4, 5 and 6 have a combined GDV of RM148 million and all phases are expected to be completed in 3Q2027. Meanwhile, DiReka Square shop offices located at Puteri Harbour integrated development in Iskandar Puteri have a GDV of RM248.7 million and will be completed in 3Q2027.
[In the Klang Valley], The MINH condominium with a GDV of RM982.1 million in Mont’Kiara will be completed in 1Q2027 while The Connaught One is a RM747.5 million transit-oriented development in Cheras that is expected to be completed in 4Q2027.
On the international front, we are developing two iconic mixed-use residential developments at The Oval in Subiaco East, Perth, Western Australia. Situated at a prime location on the fringe of the historic Subiaco Oval, this project is set to redefine residential offerings in Perth by providing vibrant urban living in an iconic location in Haydn Bunton Drive.
Each of these projects reflects our commitment to quality and strategic growth [of the company] with developments spanning prime locations domestically and internationally.
How is UEM Sunrise tapping into the exciting market in Johor?
We have a strong presence in Johor as we have launched several key projects to support the region’s growth. Currently, we have four notable developments underway. They are Senadi Hills, Aspira LakeHomes Phases 4, 5 and 6, DiReka Square and Aspira Hills. We are pleased to report that these projects have received a positive response with all units that are open for sale being fully taken up. This reflects Johor’s appeal with a strong market demand.
The establishment of the Johor-Singapore Special Economic Zone (JS-SEZ) enhances the strategic appeal of Iskandar Puteri, providing connectivity advantages that are highly attractive to both investors and homebuyers. With the JS-SEZ boosting cross-border trade and economic opportunities, more people are looking to settle in this area, which only fuels a stronger interest in well-positioned developments like ours.
The proximity of these developments to major infrastructure is key. For example, the Gerbang Nusajaya Interchange offers residents at Gerbang Nusajaya township quick access to the Tuas Checkpoint via the Malaysia-Singapore Second Link, thereby reducing the travel time to Singapore to just 15 minutes. This connectivity, coupled with the anticipated economic growth driven by the JS-SEZ, makes our properties an ideal choice for those seeking a balanced lifestyle close to urban conveniences.
In addition, we are progressing well with the expansion of Gerbang Nusajaya township. We are curating value enhancement propositions that will increase the GDV of our industrial land by approximately 8%.
We remain focused on establishing key partnerships to enhance Johor’s investment landscape this year. In May, we signed a memorandum of understanding with Itramas Corp Sdn Bhd and China Machinery Engineering Corporation to establish a 40-acre renewable energy park in Gerbang Nusajaya township.
This initiative aims to attract local and international investment in the renewable energy and electric vehicle sectors. Several companies are in discussion with the consortium to set up manufacturing as well as research and development facilities in Malaysia to cater to the local and regional markets.
In June, we partnered with Logos Infrastructure Holdco Pte Ltd to develop a world-class data centre with potentially 360mw capacity on a 74-acre site in Gerbang Nusajaya. This facility will provide end-to-end construction management for long-term, built-to-suit leases that meets the high demands of the data centre industry.
The above efforts demonstrate our commitment to collaborate closely with stakeholders and strategic partners to drive the ecosystem development in Iskandar Puteri with a primary focus on attracting investments in technology, logistics and data centres. These efforts will help position Johor as a thriving, business-friendly hub in the southern region.
What is the progress on the acquired land in Subiaco East, Perth?
We have submitted the development application for Lots 1 and 2 at The Oval, Subiaco East, back in May 2024 and have received the development approval on Nov 18 from the Western Australian State Government’s central land and development agency, DevelopmentWA. We then aim to launch the project in mid-2025 with construction scheduled to begin in 2026.
The approval is for a mixed-use development on a 0.49ha site and it is the first mixed-use project approved within the Subiaco East master plan by DevelopmentWA.
We will transform the lots into tiered heights of 36 and 26 storeys for Lot 1, and 11 storeys for Lot 2, offering a mix of one- to three-bedroom apartments and townhouses with diverse amenities. The development will have a GDV of A$450 million.
We continually seek development opportunities to expand and strengthen our presence in Australia, with a particular focus in Melbourne and Perth, where we have already established a market presence with key projects such as high-rise residential towers Aurora Melbourne Central and Conservatory in Melbourne.
Where is UEM Sunrise now with its three-phase strategic turnaround plan?
The company’s initial three-phase strategic turnaround plan involves the Triage, Stabilise and Sustain (TSS) phases. We have seen the successful completion of the Triage phase in 2023 where we improved the processes and strengthened our core operations.
We are undergoing the Stabilise phase in 2024 and 2025. This phase will focus on strengthening the brand and diversifying our portfolio. For the Sustain phase, which is the final strategy that will take place from 2026 onwards, we have gone through a detailed review [of the initiatives planned for this place] to prepare the company to adapt for the future.
Following the review, in December 2023, the company embarked on its U2030 transformation journey, which fully transitioned initiatives under the previous Stabilise phase of the TSS plan. U2030 is a corporate strategy with the purpose of transforming UEM Sunrise into a balanced real estate player by 2030, with a core emphasis on long-term sustainable growth and value creation for our stakeholders.
By reevaluating development and partnership values to further stabilise our performance, these refined strategies were curated through 2030 aimed at reconditioning UEM Sunrise for sustainable growth and operational excellence.
This strategic alignment is necessary to reassess the company’s vision, mission and values through purposeful leadership and organisational resilience beyond 2030. Internally, a transformative mindset and unified consciousness are essential for adapting to changing customer needs and industry trends.
What have been some of the biggest challenges for the company this year?
This year has presented several key challenges, each requiring thoughtful and strategic responses to navigate it effectively. First, we encountered market risks such as the fluctuation of property demand and economic shifts. To address these challenges, we diversified our portfolio across the residential, commercial and industrial sectors (both locally and internationally) in order to align with current trends.
We also tackled financial risks that arise from the fluctuations of interest rates and financing challenges. Through prudent financial management, diversification of funding sources and the use of hedging strategies, we remain resilient in a volatile financial environment.
There were also challenges in terms of operation risks. These include potential project delays, cost overruns and quality issues. These issues were mitigated with rigorous project oversight, quality control measures and contingency planning. We also continuously invest in technology to mitigate these risks and to enhance our efficiency.
Meanwhile, the intensifying market competition was countered by the diversification of our product offerings, putting a strong focus on quality deliveries to reflect our strong brand recognition and reputation as well as property launches that are scheduled at strategic timing anchored by strong and strategically located land bank.
What is your outlook for the property market next year?
According to the National Property Information Centre, Malaysia’s property market has recorded a notable growth of 23.8% with an increase in transaction value that reached RM106 billion in the first half of 2024. A total of 198,806 properties were sold in the first half of this year compared with 184,140 units transacted in 1H2023.
Despite a dynamic and challenging market environment, we remain confident in our ability to deliver value to our stakeholders while strengthening our position as a market leader. Our focus remains firmly on our core segment, property development, and property investment as we actively explore more growth opportunities to build our strengths.
Looking ahead to 2025, we are optimistic about the outlook of Malaysia’s property market. Underpinned by favourable conditions that support our growth trajectory, this will position us to drive sustainable growth, deliver value to our stakeholders and continuously adapt to an evolving market landscape.
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