This article first appeared in The Edge Malaysia Weekly on February 17, 2025 - February 23, 2025

PROPERTY developer Eco World Development Group Bhd (KL:ECOWLD) (EcoWorld) seems to be busier than ever since its inception in 2013, with plans not only to further grow its businesses while aggressively looking for strategic land, but also to build its investment portfolio for recurring income to 20% of its total revenue over the next two to three years.

“The first decade we were busy establishing the EcoWorld brand. We started out with developing mass townships with sprawling parks, strata landed homes and emphasising sustainability even before sustainability was a thing, as well as building some business parks. Today, we have 20 projects and EcoWorld is a solid brand despite the market challenges over the years.

“Into our second decade, we are now redefining the way we do our business. We will be focusing on growing our key [revenue] pillars and also look into recurring income, which is something we are able to do due to [EcoWorld’s] low gearing. Last year we had our best sales ever of over RM4 billion, record earnings of over RM300 million and future revenue of almost RM4 billion. This serves as a foundation for even better years to come for us,” Eco World executive director, president and CEO Datuk Chang Khim Wah tells The Edge recently, adding that its net gearing was at a historical low of 0.19 times when it closed its financial year ended Oct 31, 2024 (FY2024).

According to AskEdge, EcoWorld’s net gearing has been improving over the years from 0.7 times as at end-FY2019 to the current level.

For FY2024, EcoWorld’s net profit rose 60.33% to RM303.54 million from RM189.32 million in FY2023, although revenue growth was almost flat, up by 1.44% to RM2.26 billion over the same period.

“Among contributing factors that led to such a great year for us are the increasing maturity of our projects. The sales and profit achieved in FY2024 are the result of efforts made over the years to accelerate value creation at all our developments, which enhanced our pricing power enabling margins to increase. We also broadened and deepened our product range and customer reach through the five revenue pillars and continuously digitalised our operations and improved processes resulting in more efficient and effective use of resources,” says EcoWorld executive director, deputy president and deputy CEO Liew Tian Xiong, who is the eldest son of EcoWorld executive chairman Tan Sri Liew Kee Sin.

The younger Liew held various positions within the company before his appointment as deputy president and deputy CEO on Jan 1, 2022.

“Our core principles from the beginning are very much still the same — customer service, the way we do our work, how we conduct ourselves at work — but it’s also time for some updates as times have changed quite significantly since we started. Last year, which was the first year into our second decade, saw us redefining our frameworks. Previously we had one framework on how we conduct the whole business, now it is more focused — frameworks for every business. Now, we have separate teams handling each pillar,” Liew says.

“With the way we work and now with these revenue pillars and dedicated teams for each pillar, we think we can build them with equal speed like how we built our townships 10 years ago. With that, our brand, the confidence and faith in us helps, and we are quite optimistic for FY2025 and FY2026,” Chang adds.

EcoWorld’s five revenue pillars are Eco Townships for landed residential homes, Eco Rise for high-rise developments, Eco Hubs for commercial, leasing and retail, and for industrial Eco Business Parks for its green industrial parks, and QUANTUM for data centres, digital, among others. Chang says Eco Township remains its “bread and butter” pillar.

“We have seen a tremendous growth the last three to four years in Eco Business Parks and it is no longer a supporting business but a [revenue] pillar by itself. As for our Eco Rise pillar, initially it was a less focus of income for us as we never really saw ourselves as a proper integrated plus high-rise developer. In 2020, when we started launching our duduk series, building affordable homes for young Malaysians with built-ups of 1,000 sq ft, priced around RM400,000 to RM500,000, with beautiful amenities and infrastructure, it went really well. Last year, this was another billion dollar business for the group.

“We are not doing digital real estate. We are doing real estate serving the digital world. For our first project is QUANTUM Edge in Kulai [Johor], we sold two parcels of industrial land to Microsoft Payments (Malaysia) Sdn Bhd and Princeton Digital Group. Beyond data centres, we are also looking for high-tech manufacturers and investors to come in as well,” says Chang. Both industrial parcels were sold at a combined total of RM626 million.

Setting the foundation to grow its recurring income, EcoWorld acquired 108 strata offices units at Menara EcoWorld (formerly The Stride) at Bukit Bintang City Centre (BBCC) in 2024 for RM151 million from BBCC Development Sdn Bhd. The 19.4-acre BBCC is a joint-venture project between UDA Holdings Bhd, EcoWorld and the Employees Provident Fund.

Apart from generating rental income, the developer is confident that the units will appreciate in value, based on the steady increase in both rents and occupancy rates experienced in Menara EcoWorld last year. “This is a strategic investment for us as we are deeply involved as both shareholder and development manager with the many plans in place to further enhance the overall development,” says Chang.

The 45-storey Menara EcoWorld has a total of 268 units and is currently over 50% occupied. EcoWorld moved its headquarters to the building in September 2023 and is currently in the process of leasing out the units targeting technology, consulting or creative start-ups that need modern office yet flexible space to scale as they grow.

“This is interesting as recurring income is something not usually associated with us. EcoWorld is known as a true blue developer … we buy land, sell [and] deliver homes. But now we think recurring income is worthwhile and it will take us another two to three years to really define this business well but we have a good start with Menara EcoWorld and The Labs BBCC. We are also finding ways to reorganise ourselves to start having recurring income to help sustain our business at a more stable level rather than buying and selling land. We are still very strong here but having a steady stream of income would make us a better company and one of the ways for EcoWorld to grow even bigger,” Chang shares.

The Labs BBCC is under BBCC Development Sdn Bhd while the rest of the Labs series where EcoWorld own and lease out its commercial components. This revenue pillar has seen rental income for FY2024 rise to RM11 million from RM8.1 million in FY2023.

CGS International (CGSI) Research in its report in January said: “We think the acquisition of unsold units in Menara EcoWorld, an office tower in the Bukit Bintang area of Kuala Lumpur, fits into this strategy. Based on our assumptions of monthly rental rates of RM6 to RM7 per square foot (sq ft) and a net lettable area of 135,000 sq ft, the asset could generate recurring rental income of RM10 million to RM11 million a year once it is fully occupied.”

To Liew, recurring income is a natural next step for EcoWorld. “We are targeting for approximately 20% of our income to be from recurring sources within the next two to three years. We see this as a natural evolution of our business model as we mature as a property developer. We see great potential for recurring income assets in the industrial space, given the strong and sustained demand for industrial properties that we have been experiencing.

“Our industrial business has been growing by leaps and bounds over the last four years with sales from this segment exceeding RM1 billion since FY2023 and FY2024. Both Eco Business Parks and QUANTUM pillars collectively contributed 27% of Group sales. Given the strong network that we have built with global and local industrials, we are in talks to potentially close a recurring income deal in the near future,” he says.

On land acquisitions, Chang says the strategy is to acquire land close to its existing townships with existing infrastructure, established commercial areas and amenities. The developer has been acquiring land, including 847.3 acres of freehold land in Semenyih, Selangor, (for EcoForest 2), 240 acres in Iskandar Puteri in Johor (for Eco Botanic 3) and nine acres in Kuala Langat, Selangor, (next to its existing Eco Sanctuary township) with plans for a high-rise project. More recently, on Dec 18 last year, EcoWorld, together with SD Guthrie Bhd (KL:SDG) and Negeri Sembilan’s state investment arm NS Corporation signed a memorandum of understanding to jointly develop a 1,166-acre industrial park in Bukit Pelanduk, Negeri Sembilan. The industrial park, with an estimated gross development value of RM2.95 billion, will be developed over eight years.

EcoWorld has presence in the Klang Valley, Penang and Johor. For FY2024, projects in Iskandar Malaysia contributed 57% (RM2.33 billion) of the Group’s sales, with 31% from Klang Valley (RM1.27 billion) and 12% from Penang (RM470 million). As one of the substantial landowners in Johor, Chang is excited for EcoWorld’s prospects in the state.

“The rapid transit system (RTS) is a real game changer. We have always been in Johor and our first project Eco Botanic in 2013 started in Iskandar Malaysia. The Johor-Singapore Special Economic Zone (JS-SEZ), while they are still putting the framework in place, holds a lot of promise and the confidence level is at its all-time high with high interest not only from Singapore but also surrounding regions including Indonesia and China,” he adds.

Eco World International Bhd (EcoWorld International) (KL:EWINT), in which EcoWorld is the largest shareholder, has a total of 18 ongoing and upcoming projects in the UK and Australia. In May 2024, Paramount acquired a 21.54% stake in EcoWorld International as a strategic investor.

Meanwhile, in a joint-venture with Bitgrim Immersify Group from South Korea, immersify KL, the first purpose-built permanent multi-dimensional media art gallery and virtual museum over 30,000 sq ft located next to Menara EcoWorld will be launched on Feb 27. EcoWorld invested RM15 million for a 40% stake in immersify KL.  

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