PRG faces hiccups on maiden luxury residential project, delayed completion

KUALA LUMPUR (Feb 25): PRG Holdings Bhd’s maiden luxury residential project Picasso Residence, which is supposed to be the company’s flagship development, seems to be running into some troubles.

The high-rise residential project, which will have an Olympic-sized swimming pool, is due for completion next month. However, purchasers are unlikely to get their keys anytime soon, as construction works have stopped for a while at the site.

A channel check shows that prospective buyers were told the new completion date will likely be delayed to next year.

*PRG’s Picasso Residence achieves 65% sales

“The project (Picasso Residence) has been in fact slightly delayed, but we are sorting things out the best we can to catch up on its completion.

“The delay is mainly because there are some hiccups in the progress of the project,” the company’s spokesperson told The Edge Financial Daily when asked to comment on talks that construction works have stopped at the project site.

Without revealing details on the cause of the setbacks faced, PRG, a manufacturer-turned-property developer, gave assurance that “everything is under control” as it has “ironed out the issues with vendors and partners”.

As at February 2018, the management said the take-up rate for the project stood at 65%, little changed  since the launch in 2016. Since January 2018, there has not been any update made to Picasso Residence’s video-sharing social media site, which is used to document the project’s site progress.

The group turned in a cumulative net loss of RM3.08 million for the nine months ended Sept 30, compared with a net profit of RM6.57 million a year ago. Revenue for the nine-month period contracted 30.2% year-on-year to RM104.42 million, from RM149.52 million before.

In its exchange filing, the group attributed its weaker performance during the financial period to the “decrease in revenue from Picasso Residence development project due to lesser units sold”, besides the lower sales volume and selling of more relatively lower-margin products for its manufacturing segment, which was its only profitable segment during the period under review.

That said, the delay does not appear to have caused much concern to PRG. The group reiterated that it has a number of projects in hand, the most current being the Subang Bestari Seksyen U5 project.

“We are committed to finishing the project (Picasso Residence) as soon as we can. We will never compromise on the promise that we made to our buyers. Also, the status of this single project does not reflect on any of PRG’s other projects and other business segments.

“Besides Picasso Residence, PRG has in its pipeline the launch of our Subang U5 project this year. Subang U5 is an affordable apartment project that comprises 650 units priced below RM500,000. It has an approximate gross development value (GDV) of RM260 million.

“We are optimistic about the demand for properties priced below RM500,000 as this is a segment that is targeted at middle-income households, which constitute 51% of the Malaysian population,” the group said in its response.

PRG’s Picasso Residence is certainly a contrast to the affordable home projects. The 3.93-acre (1.59ha) project on Jalan Jelatek, off Jalan Ampang is within a 3km radius from the Petronas Twin Towers and fetches a GDV of some RM800 million, as at February 2018.

Comprising two 38-storey towers of 472 units, the luxury residential development inspired by Spanish artist Pablo Picasso was launched with prices from RM950 per sq ft, targeting at investors and home seekers eyeing units ranging between 1,013 and 2,480 sq ft.

The project was reportedly estimated to generate profit of some RM120 million — depending on the confirmed selling price and market conditions. PRG has a 60% stake in the project, which is on a joint-venture basis with Almaharta Sdn Bhd which owns the remaining 40%.

This article first appeared in The Edge Financial Daily, on Feb 25, 2019.

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