KUALA LUMPUR: EcoFirst Consolidated Bhd is marking the start of its expansionary phase, after over five years of restructuring efforts, with the launch of the first phase of its RM3 billion gross development value (GDV) Ampang Ukay development targeted for next month.
Group chief executive officer (CEO) Datuk Tiong Kwing Hee said the project is central to EcoFirst’s efforts in turning around its operations, as the project is expected to provide a steady recurring income to sustain the group’s operations over the longer term.
The first phase, comprising a mixed development, will take up 6.5 acres (2.63ha) of the total 87 acres the group is in the midst of acquiring in Ulu Klang, fronting the Middle Ring Road 2.
EcoFirst signed the sale and purchase agreement with Zurich Insurance Malaysia Bhd for the acquisition of the first piece of the 62-acre land in 2013, for RM145 million or RM54 per sq ft, as a part of its turnaround plans, when Tiong took the helm as CEO during the same year.
“When I came in as CEO, it was very difficult. All my work was cut out for me. We had to undertake a major restructuring to transform the company, and we had to purchase the land as part of our turnaround plans,” Tiong told The Edge Financial Daily in an interview.
He said, along with the new management, they took the company from the brink of bankruptcy in 2009, and managed to turn it into a profitable company.
In its financial year ended May 31, 2009 (FY09), EcoFirst reported a net loss of RM90.58 million on the back of RM44.02 million in revenue. After five years of some heavy restructuring, the developer managed to book a net profit of RM6.12 million for FY15.
In April last year, the group entered into another agreement with IGB Corp Bhd for the purchase of the remaining piece of land, for RM62.8 million or RM58 per sq ft.
The 87 acres of land are one of the largest undeveloped freehold tracts in the Klang Valley with an excellent connectivity to existing highways.
“We have almost completed the acquisition. All the parameters for the completion of the sale are set and ready. We just need to push a few buttons, we have some things to be agreed upon,” Tiong said, adding that there were no issues relating to the financing of the development.
He said the delay in the completion of the deal was due to a compulsory acquisition of one acre by the government.
“Under the agreement, there is a provision that if there was a government acquisition, we had the option to either opt out of the deal or to renegotiate. All parties have agreed to renegotiate and provide an extension to handle the government acquisition,” he said.
Tiong said the first phase of the Ampang Ukay project comprises retail, commercial and SoHo (small office, home office) units, with an estimated GDV of RM600 million.
“We did a prelaunch to test the market and to our surprise, there were over 6,000 people registered who were keen to buy, so we are quite bullish on the development. We are hoping to commence works next month,” he said.
Meanwhile, Phase 2 of the development, which has an estimated GDV exceeding RM900 million, will see a nine-acre high-rise development, comprising retail units and 2,000 units of serviced apartments.
The following phases will comprise mostly residential units, he said.
“In total, we will have about 10 to 12 phases of high-rise condominiums, with each phase measuring about seven acres to eight acres. The development of the entire 87 acres will take about 10 to 15 years,” explained Tiong, adding that the entire development will be worth billions in terms of GDV.
The first phase of the development will commence contributions in FY17.
Despite the current challenging property market, he expects the project to do well, due to the good connectivity it offers to major areas in the Klang Valley.
“This area will do well, as the land is in a very prime location. It only takes six minutes to travel from the site to the city centre and only 12 minutes to the major areas such as Hartamas, Damansara and major highways such as the North Klang Valley Expressway and the North-South Expressway,” he said.
For FY16, Tiong said EcoFirst’s performance will still be driven by its development in Ipoh, Perak, dubbed Upper East @ Tiger Lane, which will be completed in the next 18 to 20 months, instead of the normal 36 months.