This article first appeared in City & Country, The Edge Malaysia Weekly on April 15, 2024 - April 21, 2024

While continuous growth is essential for a company to survive in the highly competitive property development industry, staying focused and establishing a clear market position are key to distinguishing itself from the others.

“When I first started in the property industry about 20 years ago, I focused on building high-rise residential projects in Setapak despite many doubts because the area was very competitive and the growth for the high-rise residential property segment was said to be limited. Today, we have built some 30,000 units there and they were all sold,” says Radium Development Bhd group managing director Datuk Gary Gan. “Hence, staying focused is a very key strategy at Radium. In the next three years, we will continue to focus on high-rise developments in the Klang Valley.”

In a recent interview with City & Country, Gan says Radium strives to be a city-centric developer, focusing on development projects with a fast turnaround in the Klang Valley, particularly in mature locations with existing amenities.

“Location is still my golden mantra in the decision-making process [of starting a new project]. The project will not [get too bad] if you get the location and product type right in the first place. It is why location always comes first when we are searching for development land. Secondly, we look at what the market needs.

“Although our bread and butter is affordable homes in the price range of RM300,000 to RM800,000, we always listen to the local market needs and provide what is needed, just like our R Suites Chancery Residences launched last year,” he says.

Officially launched in January 2023, R Suites Chancery Residences is an integrated development on a 2.18-acre plot of freehold land in Ampang, Kuala Lumpur. The 51-storey development has a gross development value (GDV) of approximately RM500 million, and offers 944 SoHo units with built-ups from 452 to 1,873 sq ft. The units are priced at RM422,000 onwards, or about RM933 psf.

“Some 278 units have been sold so far, which is about a 30% take-up rate. It is not exactly within our expectations because generally, our projects sell out within one to two years after the launch. But I must highlight here that it is a premium, integrated product with a hotel in it. We are now in the very final stage of discussions with an international hotelier, which we intend to bring in to run the hotel. Once the agreement is signed, I believe the positive news will further push up sales,” Gan says.

He adds that the operator of the 4-star international hotel is keen to make R Suites Chancery Residences the first location of its sub-brand in Malaysia. If everything goes smoothly, the agreement will be signed this month or next, just in time for the project’s marketing campaign in the second half of 2024.

“As most of the SoHo units are priced below RM1 million, we are not aiming for foreign buyers. Also, we did not push the sales in a big way last year; we only did some roadshows in Penang and the response was good — thanks to the strategic location and [the fact that] this kind of investment product is rare in the current market,” says Gan, adding that Radium aims to fully sell the SoHo units before the completion of the project, which is in 2026.

While the details are still being finalised, Gan shares that the hotel will occupy five floors. Most of the rooms will be located at the lower zone of the development, while a limited number will be in the higher zone. There will be a total of 145 guest rooms and suites. The SoHo and hotel components will have separate lifts and lift lobbies.

“The location is perfect. It is sandwiched between two renowned hospitals, and the station for an upcoming MRT3 line will be built right next to the project. The AKLEH (Ampang-Kuala Lumpur Elevated Highway) interchange is right opposite and it has very good visibility from MRR2 (Kuala Lumpur Middle Ring Road 2). The project is poised to be the next landmark in this part of Ampang, hence we are very confident about it and decided to go ahead with the launch last year despite the market being still pretty uncertain at that time,” he explains.

Radium also launched Adesa @ Desa Timur in Sungai Besi, Kuala Lumpur last year. The 9.76-acre development consists of two residential components — Vista Adesa and Radium Adesa. The former is a residential project under the government’s affordable housing scheme called Residensi Wilayah, while the latter is an open-market product.

Vista Adesa offers one standard layout of three bedrooms and two bathrooms with a built-up of 800 sq ft. It is priced at RM300,000 and about 60% of the units have been sold so far.

Radium Adesa has more layout options, from the minimum 2 bedrooms and 2 bathrooms (850 sq ft) to 4+1 bedrooms and 4+1 bathrooms/powder rooms (2,300 sq ft). The selling price is from RM388,000 and it has achieved a 78% take-up rate.

Both components have 1,218 residential units each, or a total of 2,436 units. The entire project has a GDV of RM1.5 billion.

“Overall, this project is selling like hot cakes, although the open-market one is doing better than the Residensi Wilayah. It is usually the other way around. We believe this is partly due to Radium Adesa having more layout options and the fact that it offers more common facilities. It is a pretty good deal in that location, at this price point,” Gan explains, adding that the components will have separate entrances, guardhouses and facilities.

He believes that sales for Vista Adesa will be catching up soon, owing to its strategic location and mature amenities, and is confident it will be fully sold before completion in the second half of 2026.

Radium is planning to launch its next project, located in OId Klang Road, Kuala Lumpur, in the middle of this year. “The project is adjacent to Datuk Lee Chong Wei Sports Arena. It is also how we decided on the name of the project — Radium Arena Residences. It has a GDV of around RM500 million. We are targeting to roll it out soon, in June or July,” Gan says.

He adds that the project will offer 988 units with built-ups from 658 to 920 sq ft, at an estimated price of RM400,000 onwards.

Radium is also looking to launch another residential project in Kepong, Kuala Lumpur. Details will be finalised soon as it is awaiting the announcement of the Kuala Lumpur Structure Plan 2040, which will guide the development of the city until 2040.

“We are hoping to launch it by the end of this year. If time does not allow, the launch will be deferred to early next year,” he says.

Apart from new launches, Gan says the team is busy with a new business venture, for which it is undergoing negotiations with a potential partner.

While he will not divulge details on the venture, he says it is quite relevant to its existing business.

“It is something new and we are very excited about this new business venture… As much as we are clear and certain about our market positioning — to be a city builder — we cannot put all our eggs in one basket. So, when this opportunity arose, we happily explored the potential.”

Gan emphasises that property development will still be the biggest revenue contributor in the company’s long-term business development plan. However, he is also exploring other revenue streams.

“Ideally, we wish to achieve an 80:20 revenue contribution ratio in the long term, where 80% is from the property development division and 20% from the ‘dan lain-lain’ (others). Our upcoming hotel in Chancery is part of this ‘lain-lain’, and we are now looking for more. Hopefully, we will be able to announce good news in the next couple of months.”

Gan says Radium is in talks to purchase a pocket land in a mature area with ready amenities in the city.

“We do not have other undeveloped land bank except for the one in Kepong. While I agree that land bank is the lifeline of a developer, I do not buy the idea of buying and keeping too many pieces of land because it will create cash flow and financial risks. For example, if you do not manage to develop a piece of land as planned, you will have to bear the unexpected interest rate and holding costs.

“During our IPO (initial public offering), we made it clear that we want to be a developer that builds fast turnaround projects. Our target is to develop and launch a project within 12 months of getting the land. Our upcoming Radium Arena Residences is an example; we purchased the land for RM71 million with the funds we raised from our IPO last year, and we are going to roll it out in the next two months, which is within the 12 months,” he point out.

Gan explains that being asset light not only reduces unexpected financial risks, but also keeps the company’s gearing ratio low, hence strengthening its financial fundamentals. Currently, Radium’s gearing is at 0.05 times as at Dec 31, 2023.

“It is unfortunate that our current share price (as at March 27) is at 40 sen, lower than our listing price of 50 sen. However, it does not reflect the true fundamental value. It is more of [reflecting] the poor property market sentiment last year. I believe we are already at rock bottom, so moving forward, we can expect a better share price, as well as financial-year result performance.”

Radium recorded RM128 million in revenue and RM18.22 million in profit after tax for financial year 2023. This year, Gan is targeting “much higher” sales.

“Our sales target will be much higher than last year because we would be able to recognise the sales from Chancery and Adesa, which were both in the pilling stage last year. We also expect the sales of both projects to catch up this year, plus our upcoming project will also contribute to revenue. We should be able to record much higher sales this year.”

With well-thought-out strategies in place, ­Radium is ready to increase its revenue streams while staying focused on its core business.

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