Commercial & Industrial Property News Update

Malaysia - Ireka Corp Announces RM 1.9 billion Worth Of Projects

September 28, 2012

The developer will embark on four real estate projects over the next five years.

Over the next five years, Ireka Corp Bhd will invest in four new development projects with a total gross development value of about RM 1.9 billion.

Two of the announced projects will be a boutique hotel and a 200-unit serviced residence project in Jalan Kia Peng, near the Kuala Lumpur Convention Centre. The developer added that it was in the advanced planning stage for the boutique hotel, whereas the serviced residence project will be a 30:70 joint-venture with Aseana Properties Ltd.

Said Ireka group managing director Lai Siew Wah, "It is only natural for Ireka to return to direct investment in property development, now that we have fully implemented the investment strategy for Aseana Properties Ltd as its development manager."

Ireka set up Aseana Properties in 2007 to undertake property development projects in Malaysia and Vietnam. The company is listed on the London exchange.

Ireka said that the serviced residence project is meant to cater to the luxury apartment niche market, with 80% of units ranging between 878 sq ft and 906 sq ft in size. Meanwhile, the boutique hotel is designed to cater to business and leisure travellers, and will be sold on a sale-and-leaseback scheme. An international hotel operator will be contracted to manage the hotel on Ireka's behalf.

Leveraging on its track record in high-end real estate and hospitality segments, the company is diversifying into mid-market residential and commercial sub-sectors, as well as modern industrial buildings.

For the current financial year, Ireka said it would focus on the replenishment of its orderbook, which currently stands at RM 745 million, of which RM 400 million remains outstanding.

The group is currently involved in the building works package at the City International Hospital in Ho Chi Minh City, Vietnam; two office towers and a hotel block in KL Sentral; as well as a high-rise serviced apartment and office project at Puteri Harbour in Nusajaya, Iskandar Johor, which was secured in August this year.

The group reported a drop of 3% in revenue for the financial year ended 31 March this year to RM 429.89 million, against RM 443.95 million in the previous year. This was attributed to lower volume of construction work completed in Malaysia and Vietnam.

However, pretax profit was recorded at RM 14.12 million this year, significantly improving on last year's loss of RM 11.09 million. The turnaround was attributed to improved performance of the group's construction activities and positive results from Aseana.

Tags: Commercial real estate, Shop for rent, Income properties

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