Paramount holds back new launches

KUALA LUMPUR (Sept 1): Paramount Corp Bhd will hold back on launching new projects but will continue to roll out new phases of existing projects, said the group chief executive officer Jeffrey Chew Sun Teong.

Chew told the digitaledge DAILY last week that the group will defer the launch of its new projects in Section 13 (Petaling Jaya), Batu Kawan (Penang) and Jalan Goh Hock Huat in Klang (Selangor).

“We are more concerned about new projects. As such, we have decided to hold back on launching new projects, except that in Salak Tinggi, Sepang and those projects that we have already mobilised [resources], there is no point holding back because it will create a lot of inconveniences,” he said.

The group is planning to launch part of its second township development in the Klang Valley on 237.3 acres of land on Salak Tinggi by year end. It has an estimated gross development value of RM1.2 billion.

According to Chew, the reason it decided to roll out the Salak Tinggi project is the affordable prices of landed homes in the area as the risk and cash flow requirement are different from mixed-use developments.

Mixed-use developments usually have longer gestation periods, higher cash flow stress and lower profit margins arising from more interest costs.

“We will offer landed homes [in Salak Tinggi] at prices of RM500,000 and below. We want to try to target the right segment with the right products. I think we still have a good chance of achieving our budgeted sales [of RM400 million] for the year,” he said, adding that year-to-date the company has achieved new sales of RM278 million.

Paramount is set to roll out RM200 million worth of GDV new launches this year, out of which RM98 million will come from its existing Paramount Utropolis@Glenmarie development in Shah Alam, while another RM40 million will come from its Salak Tinggi project.

However, Chew conceded that property sales had fallen 30% year-on-year in July and August because of the shift in sentiment.

Paramount’s property development business accounted for 74% of the group’s revenue for the six months ended June 30, 2015, while its education segment, which includes KDU University College, contributed the remaining 26%.

Chew expects the weak ringgit to have neutral impact on the education sector. He also urges the government to take advantage of the weaker ringgit by streamlining its immigration process to make the country more attractive to international students.