Land and General faces up to 20% cost increase for future projects

KUALA LUMPUR (Sept 9): Property developer Land and General Bhd (L&G) has admitted that the weakening ringgit against the US dollar will have an increase development cost for their future projects, if the situation has not abated.

Speaking to a press conference after attending its annual general meeting, L&G's managing director Low Gay Teck said there will be a definite impact on imported items, commodity and construction items quoted in US dollars for new projects, but current projects are unaffected.

“Cost have been going up progressively over the past two years. The past six months' development have seen the weakening ringgit and this will impact future contract awarded as part of the construction materials, some imported raw items or finishing items are quoted in US dollars.

“However, I don’t think the cost increase will be too drastic… it would be somewhere around 10 to 15% range, at most 20%. The bulk of the raw materials used for construction is locally produced. Cement and steel bar are price controlled items. So most of our cost is local,” said Low.

When asked if the group will past the price hike to their customers, Low said they will “adjust the price cost accordingly”.

Moving forward, L&G does not see any major concerns on any of their current projects due to their unbilled sales of RM369 million, and they are confident with a 95% sales rate on their current projects.

“I would say for us here at L&G, [that] the ongoing project, as well as our land-banks are in prime location, even in hard times, I don’t foresee major concerns for the group, because we can sell. Our land-banks and projects are in prime, mature housing areas.

“In addition to that, the group have on-going projects, locked in sales, work in progress and unbilled sales of RM369 million,” said Low.

He also expressed confidence that financial year 2015 (FY15) will see substantial growth of L&G, especially with 50% registered interest in their new high-rise Astoria Ampang.

Currently, the group have obtained building plan approval for the project and is in the midst of applying for developers license and advertising permits from the relevant government authorities.