INTRODUCTION

Charting Growth: Achievements, Initiatives, and Dynamism of Malaysia’s Property Industry
Anticipating an exciting trajectory ahead, the property sector is gearing up for a potential upswing, where Titijaya is preparing for the launch of pivotal infrastructure projects, such as the Klang Valley Double Track (KVDT) Phase 2 upgrade, the accelerated advancement of ongoing infrastructure ventures the likes of the East Coast Rail Link (ECRL), and Light Rail Transit 3 (LRT3). These strategic undertakings are positioned to provide a significant boost catalysing opportunities for the property sector.

Additionally, the manufacturing sector’s green-lighted investments are primed to take shape, translating into improved demand for non-residential structures. The activity within the residential building’s subsector is also expected to chart steady growth. This trajectory is primed by the enhanced availability of affordable housing in alignment with the Twelfth Malaysia Plan (12MP)’s strategic roadmap. The Group’s commitment to the ‘i-MILIKI’ incentives also underscore our dedication to promoting home ownership and reigniting demand within the residential segment.

The Budget 2023 showcases the Malaysian government’s strategic vision for the property sector. Maintaining the thrust of measures introduced in the October 2022 Budget, the government demonstrates its resolve to invigorate the real estate landscape by extending tangible benefits to first-time homebuyers. These measures include a full stamp duty exemption for homes valued at RM500,000 and below to be remained until 31 December 2025 and a substantial 75% exemption for properties priced between RM500,001 and RM1 million for Sale and Purchase Agreements executed until 31 December 2023. These interventions not only make homeownership more accessible but also bring fresh energy to the property market, thanks to the government’s proactive stance.

One notable aspect of the budget is the expansion of the housing credit guarantee scheme. The allocation of RM5 billion, up from the initial RM3 billion, demonstrates the government’s proactive approach in addressing financial challenges for gig economy contributors. This extended support, aimed at assisting up to 20,000 borrowers, aligns with the government’s commitment to adapt to changing economic conditions while ensuring fair financing options for potential homeowners. Additionally, the adjustment of stamp duty rates for property transfers reflects a balanced approach between family property arrangements and fiscal responsibility. The exemption for the first RM1 million and a discounted ad valorem duty rate for amounts exceeding RM1 million emphasise a comprehensive approach that considers both societal norms and economic factors.

The comprehensive measures outlined also mirror the government’s endeavor to nurture a robust and inclusive property ecosystem, enriching the lives of Malaysians. Against this backdrop, it’s noteworthy to acknowledge the recent achievements of the property market. The property market demonstrated resilience in its transactional activity, recording a total of 184,140 transactions amounting to RM85.37 billion. While there was a marginal 2.1% dip in volume, the market value saw a slight uptick of 1.1% compared to the corresponding period. Notably, transfers in 2022 accounted for 32.1% (59,090) of the total, with 2023 contributing the majority share of 63.6% (117,129). The remainder was attributed to transfers from previous years.

Within this landscape, the residential sector saw 114,973 transactions worth RM44.78 billion, marking a modest 1.0% reduction in volume and 1.8% in value year-on-year. The secondary market played a dominant role, constituting 79.4% (91,318 transactions) of the total residential transactions, while the primary market, involving purchases from developers, contributed 20.6% (23,655 transactions). Despite an overall decline, states like Johor, Negeri Sembilan, Perlis, and Kedah showcased positive market activity, offsetting the downturn with increases of 39.9%, 14.6%, 4.3%, and 3.2% respectively. Pulau Pinang, WP Kuala Lumpur, Johor, and Selangor, as the four major states, collectively accounted for roughly 50% of the total national residential volume.

In the first half of 2023, the residential market witnessed a strategic reduction in overhang units, totalling 26,286, with a value of RM18.30 billion, marking a 5.3% drop in volume and 0.6% in value compared to second half of 2022 (“2H 2022”). Similarly, unsold under-construction residential units decreased by 4.9%, totalling 54,844 units compared to 2H 2022’s 57,649 units. Reflecting the cautious stance among developers, residential construction activity experienced a slowdown, with a 10.4% decrease in completions (28,412 units), 1.2% drop in starts (41,101 units), and a 15.8% reduction in new planned supply (31,139 units) compared to the first half of the previous year. This nuanced shift underscores the industry’s adaptive nature in response to evolving market dynamics.

Amidst these accomplishments and ongoing initiatives, the property sector stands as a vibrant stage of opportunity, aligning seamlessly with our nation’s holistic economic aspirations. Titijaya, as a pivotal player, remains resolute in our commitment to steer this narrative.

 

PROSPECTS
As part of the Group’s strategy, we are adopting a diversified approach by launching various types of developments in Financial Year Ending 30 June 2024 (“FYE2024”). This helps mitigate risks and tap into diverse market demands, spanning from affordable to high-end residential and commercial projects. Each project will be crafted with a unique selling proposition, be it location advantages, distinctive design, or exceptional amenities.

To fine-tune our offerings, we’re actively seeking feedback from industry experts, potential buyers, and financial partners before the official launch. This ensures our products, pricing, and sales packages align with market expectations. Tailored marketing campaigns will target specific demographics for each project, utilising both digital platforms and conventional marketing methods.

Titijaya is prioritising a strong digital presence with dedicated project websites and engaging social media profiles. This not only keeps potential buyers informed but also creates an interactive space for them. For selected projects, the Group continues with conventional marketing based on customer profile and behaviour.

Showcasing properties through virtual tours or physical show units provides potential buyers with an immersive experience. Detailed project information, including floor plans, location maps, and nearby amenities, will be readily available. Our sales team will be thoroughly briefed on each project’s unique features, enabling them to address buyer inquiries effectively.

Before the official launch, pre-registration and hosting of exclusive pre-launch events will be initiated to generate excitement and interest. Additionally, the marketing team is exploring partnerships with local businesses, such as banks, for joint marketing efforts. These strategies collectively reflect our commitment to deliver distinctive, market-oriented projects while ensuring our sales team is well-equipped to engage potential buyers.

With these strategic initiatives in place, the Group is poised for a better FYE2024. The diversified approach to development, coupled with a keen understanding of market demands, enables the Group to mitigate risks and capitalise on opportunities across various segments. These collective endeavours exemplify our dedication to deliver market-centric projects and equipping our team for success.

 

DIVERSIFYING INCOME AND PIONEERING GROWTH OPPORTUNITIES

Acquisition of Menara TM Semarak
We are pleased to share with our shareholders a significant development of an agreement reached between Titijaya PMC Sdn. Bhd. and Titijaya South Asia Sdn. Bhd., our wholly-owned subsidiaries, and Menara ABS Berhad for a proposed acquisition of Menara TM Semarak, a twenty-two (22) storey purpose-built office building, annexed with a six (6) storey Telekom Exchange and a five-level basement car park on a leasehold land located at Jalan Raja Muda Abdul Aziz (“Proposed Acquisition”). The Proposed Acquisition spans approximately 30,115 square metres in net lettable area at a total purchase price of RM72 million, holding a potential significance for our growth trajectory.

The Proposed Acquisition aligns with the Group’s long-term strategic goals, to secure reliable sources of long-term rental income, with the objective of enhancing shareholders’ value. This move not only ensures stable revenue streams but also opens up avenues for potential capital appreciation of the property in the future. In light of our core business in property development, this strategic move lays the groundwork for the Group’s potential entry into the data center business as well as diversifying our income sources and introduces new prospects for the Group.

 

Built-to-Suit for DHL
Continuing our progress from the previous year, we are pleased to provide an update on a significant milestone of the collaborative partnership between City Meridian Development Sdn. Bhd. (“CMD”) and DHL Properties (M) Sdn. Bhd., part of DHL, a global leader in shipping and courier services (“DHL”). Titijaya embarked on the development of a state-of-the-art logistics commercial complex facility in Bayan Lepas and this venture involves an investment of approximately RM200 million for the construction of a Built-to-Suit (BTS) logistics facility, tailored to DHL’s requirements.

In line with the above, Aman Duta Sdn. Bhd. (“Aman Duta”), an indirect wholly-owned subsidiary of Titijaya, had also entered into an agreement with DHL on 15 June 2022 and 20 June 2022 for the construction and leasing management of the Facility. Aman Duta assumed responsibility for building and letting the BTS logistics facility as well as the owner of the Plot 2 of the Land (CMD entered into a Sales and Purchase Agreement (“SPA”) with Aman Duta for the acquisition of Plot 2 of the Land which was completed on 3 April 2023). However, the title for Plot 2 of the Land has yet to be transferred to Aman Duta. Upon transfer of the title, Aman Duta will become the registered owner of Plot 2., while CMD retains ownership of the balance of the Land.

Following the expected completion in FYE2024, the facility is set to be leased to DHL for a ten-year period, with estimated lease income ranging between RM160 million and RM210 million.

We are pleased to update shareholders that development works have commenced, with the Land cleared and levelled. The Facility is projected to occupy 7.06 acres or approximately 34.57% of the Land’s southern portion. Notably, as of the latest practicable date of this announcement on 25 April 2023, Aman Duta has completed the earth and piling works for the Facility, underlining our commitment to timely progress.

In line with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Group had announced our intention to propose a variation to these developments at an Extraordinary General Meeting (“EGM”). We are pleased to share that the EGM was successfully held on 12 September 2023, where shareholders duly approved the proposed variation. This outcome underscores our shareholders’ support and aligns with our strategic goals of unlocking value and driving growth.

 

Property Development
For the FYE2024, the Group will pan its focus within Klang Valley, with various launches, Phase 2 of the residential development at Newton @ Jalan Ampang, in continuation with the success of Phase 1, Neu Suites, Seri Residency landed residential development, Dahlia & Daniel and a new landed commercial development with industrial element, Zone Innovation Park 2 at Bukit Raja, Klang, amongst others.

The Group currently holds 95 acres of strategically located landbank, primarily in major Klang Valley cities. This landbank is poised to provide an estimated future Gross Development Value (“GDV”) of RM5.0 billion, with a current ongoing GDV of RM1.3 billion.

 

Appreciation
As we reflect on our journey, I am thankful to our distinguished Board of Directors, including the retired members whose contributions have been invaluable, for their steadfast leadership, guidance, and support that have charted the Group’s achievements. I extend my heartfelt gratitude not only to our esteemed board members but also to the dedicated management team, heads of departments, and every employee who has contributed to our success.

Together, we have achieved greater financial milestones and profitability, a testament to our collective efforts and strategic approach. Despite the prevailing challenges, we remain committed to further strengthen our position. Our resilience and determination have been key in navigating uncertainties while actively seeking growth opportunities.

As we express our gratitude for our achievements, we recognise that the road ahead requires vigilance. In this evolving landscape, Titijaya stands poised to embrace the future with confidence, supported by the new Board members whose expertise will undoubtedly enrich our journey. With the combined efforts of our human capital, the unwavering support of our stakeholders, and a strategic outlook, the Group is well-equipped to continue our journey towards even greater heights of success.