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GBG: Trust and transformation are key to winning foreign investors flocking to Malaysian properties

NOV 27, 2019, South China Morning Post
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One Jesselton waterfront, mixed development comprising premier retail mall, hotel, serviced suites, residential condominiums and commercial office space.

Malaysian real estate is courting a growing number of foreign investors, especially those from Hong Kong and China. While those keen to buy properties in Southeast Asia have conventionally focused on Singapore, they are now increasingly drawn by the attractive opportunities available in neighbouring countries like Malaysia – where modern urban infrastructure and luxurious living can be enjoyed at a relatively lower cost.

For example, houses in Kuala Lumpur, the capital city of Malaysia, are among the cheapest compared to 34 other cities worldwide, according to the Global Living report by real estate firm CBRE released in April 2019. The average property price in Kuala Lumpur is US$119,738. In comparison, the average property prices in Hong Kong and Singapore are ranked as the priciest – at US$1.2 million and US$874,372 respectively.

As the Malaysian real estate market anticipates more foreign investment. Gabungan AQRS (GBG) is poised to satiate the booming demand for high quality and competitively-priced residential properties.

The homegrown construction and property development player has been listed on the Main Board of Bursa Malaysia Securities since 2012. The listing cemented GBG’s strong financial standing and gave it the leverage it needed to participate more actively in capacity building for the country, and to grow and expand its property development business.

GBG built a strong foundation in its core business of construction, completing and undertaking noteworthy and large-scale infrastructure, including the Klang Valley Mass Rapid Transit (MRT) Line 1, the new state administrative centre of Pahang - Pusat Pentadbiran Sultan Ahmad Shah (PPSAS), Sungai Besi – Ulu Kelang (SUKE) Highway, Light Rail Transit 3 (LRT3), and so on.

Having cemented its reputation in construction excellence, the company then expanded its portfolio to property development and strategic investment. Besides undertaking affordable-luxury developments, GBG also offers a plethora of premium real estate in mature metropolises and emerging economic hotspots in Johor, Kota Kinabalu, Kuala Lum¬pur and Selangor.

“On top of our current construction value of around RM2 billion (US$477 million), which is still our core business, we have diversified into the property sector. Our property arm is expected to bring in almost RM3 billion (US$715 million) worth of gross development value (GDV) over the next five years,” says Azizan Jaafar, group CEO of GBG. “We are a strong organisation known for delivering quality and value. This is the DNA that we want to carry into our property division.”

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The Peak, a premium low-density development of two 39-storey interconnected towers spread over 5.5 acres.

Transformation to build trust

Taking over the reins of GBG in April 2016, Azizan, who has over twenty-six years of experience in the construction and property industry, had barely warmed his cushy seat as the new chief when he sprang into action to spearhead a massive restructuring exercise. The transformation plan was timely to turnaround the business, which was facing mounting debt levels, a dwindling construction order book, and inefficiencies in operation costs.

To tackle the piling debt, GBG monetised several non-core assets, including three parcels of land in the state of Selangor. This raised net cash proceeds of about RM58 million (US$14 million), of which RM25.6 million was received by the end of the 2017 financial year.

Meanwhile, the company remained steadfast on its ongoing joint-venture projects on two parcels of land. One of them is The Peak in Johor Bahru, Johor. The other is the One Jesselton Waterfront mixed development in Kota Kinabalu, Sabah, which is slated to be the group’s flagship development with the potential to contribute a sizeable chunk of recurring income from the mall and hotel operations in the future.

A revamp of the contract procurement strategy also bulked up GBG’s construction order book considerably. Before 2016, the group recorded a total of RM350 million (US$83 million) business wins over three years. Now, under Azizan’s leadership, the order book stands at RM2.8 billion (US$668 million) in 2018. GBG also secured the RM1.3-billion (US$310 million) project from Prasarana Malaysia Berhad to construct and complete part of the LRT3.

From a high 22.8 per cent overhead cost as a percentage of revenue in 2015, the transformation process managed to reduce the operation cost to a healthier 8.9 per cent last year.Technology and innovation have been key in boosting productivity and management processes, as well as implementing stringent cost controls throughout the restructuring period.

Azizan strongly beliefs that the company’s success depends on GBG’s human capital, and employee commitment to the transformation strategy. “Part of our transformation plan was to build a GBG team that is committed, innovative, and has high integrity,” explains Azizan. “Everyone has got strengths and weaknesses, but most importantly, our team has the drive to learn and grow as one”.

Azizan believes the company is on track for a solid turnaround. This is evident from the growth in shareholdings of institutions such as pension and insurance funds from zero to 47 per cent of total equity in April 2017 – a mere 12 months into the restructuring exercise.

“The main goal of the transformation is to build a trustworthy organization that can deliver. In April 2016, when I took over, we only had one per cent of institutional investors in the group. Today, the number has increased to more than 50 per cent, which shows that our restructuring has been successful in solidifying trust that our group is efficient, competitive and able to deliver the bottom line,” explains Azizan.

“That is the true value of our company, and the reason why we have gained the trust and support of our stakeholders, clients, subcontractors, and suppliers,” he says.

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Contours @ Melawati Heights, a gated and guarded freehold property on a mountain ridge with a plush and intimate enhancements of over 5,300 sf of imposing space that embrace the natural contours of the land which offers unobstructed views of the surroundings tranquil hills and greenery.

Johor Bahru hilltop development satiates demand for luxurious real estate

In April 2019, GBG has officially reactivated its property development arm. Four major projects carrying its brand of excellence are now on investors’ radar, namely The Peak in Johor Bahru, Contours in Melawati Heights, Kuala Lumpur, E’Island Lake Haven, Puchong and its flagship development, One Jesselton Waterfront, Kota Kinabalu.

The Peak, especially, stands out with its prestigious address and proximity to Singapore – seamless access to the island state takes only about 30 minutes.

“The Peak is the only residential property in Johor Bahru that the threshold for foreigners to purchase is RM500,000 (US$119,000); most of the other properties have threshold sitting above RM1 million. Situated 30 minutes away from Singapore, the condominium is also a freehold development – this is a great opportunity for foreign investors,” Azizan points out.

The luxurious hilltop sanctuary has integrated the latest security and lifestyle technologies to deliver peace-of-mind and quality of life. Every apartment, fitted with full-glass façade for an uninterrupted view, is also designed as a corner unit.

Sky Villas, which are the larger units of The Peak, boast of balconies that can be turned into sky gardens, with only two apartments per floor for even more exclusivity and privacy. Alternatively, up and coming executives seeking more practical sizes may find their dream home in the 2-bedroom suites, 2+1 bedroom Executive Suites, and 2+1 bedroom Panorama Suites.

Slated for completion by the end of this year, The Peak is strategically located along highways and public transportation routes to allow easy connection to Singapore. The low-density, furnished homes are surrounded by amenities including Mid Valley Southkey Megamall and IKEA, world-class golf courses, local and international schools, as well as top medical facilities.

Residents of The Peak can also look forward to a posh 1.85-acre private club of their own. The development offers 50 different amenities wrapped in prestige and exclusivity, including a stargazing deck, look out point, sky barbeque and dining area, 50-metre lap pool, floating sun lounge, tennis courts, aqua gym, yoga room, sauna, various gardens, aqua park for kids, and kids putt-putt golf.

Other golden opportunities and lucrative potentials

Those in the market for idyllic living in the midst of urban convenience may find an ideal investment at One Jesselton Waterfront at Kota Kinabalu, Sabah.

“The One Jesselton Waterfront is my dream development,” says Azizan smilingly, “It is part of the waterfront mixed development that is located right next to the cruise terminal and Sabah’s international convention centre,”.

Now open for registration, the luxury waterfront condominium and serviced residence is part of GBG’s flagship mixed development that will comprise of the One Jesselton Premier Lifestyle Mall, hotels, offices and retail spaces and the Jesselton Point Ferry Terminal.

The thriving holiday scene at the Sabah capital is also a compelling reason to park investment dollars at One Jesselton Waterfront – the Kota Kinabalu International Airport receives about 4 million tourist arrivals per year, making it the second busiest airport in the country after the Kuala Lumpur International Airport (KLIA).

For those preferring a roomy nest in the vibrant economic hub of Kuala Lumpur, Contours in Melawati Heights is a low-density development of 40 spacious villas with build-ups ranging from 5,688 to 8,051 square feet. The gated and guarded premium neighbourhood overlooks a breathtaking quart ridge, and is equipped with clubhouse facilities including swimming pool, playground, barbeque area, gymnasium and a multi-purpose hall. Within each unit, there is also private lift access, private pool and deck, and a large private garage that can fit four to eight cars.

Moving forward, GBG maintains its zeal for growth. The ambitious group is planning for expansions through the year 2020 in line with Malaysia’s commitment to improve the transportation network, tourism infrastructure, and housing supply. “Looking ahead, I am confident that the Group will continue to record positive growth in 2020 from all fronts, including its financial position, construction order book and property sales”.