IGB expertise may reach Mid-East shores
 

By Chong Jin Hun jinhun@nstp.com.my

PROPERTY developer IGB Corp Bhd's expansion abroad may see the group exporting its expertise to the Middle East and establishing more hotels within South-East Asia.
 

IGB's prospects are also no less exciting in Malaysia, as the developer of the iconic Mid Valley City (MVC) along Kuala Lumpur's Federal Highway, will launch MVC's luxury component known as "The Gardens" on September 26.

David McCracken, chief executive of Mid Valley City Gardens Sdn Bhd, a wholly-owned unit of IGB, said the group is in talks with potential joint-venture partners in the Middle East.

McCracken said IGB, also a hotelier, is keen on tapping the budget-traveller segment in South-East Asia by setting up three and four-star hotels in the region. The segment is lucrative by virtue of the growth of budget airlines globally.

"We are working on some joint ventures in the Middle East. At the moment, we are in the early stages of the job and getting to know the people we want to work with," McCracken told Business Times in Kuala Lumpur yesterday.

"In South-East Asia, we will continue looking at projects with probably a core mid-market appeal. Generally, we will be working on three or four-star hotels in East Malaysia, Thailand and China," McCracken added.

He declined to specify details on IGB's ventures abroad, including the nature and timing of its foreign initiatives, and its overseas operations' contribution to the group's overall earnings.

IGB's hotel division chief executive Tan Boon Lee had told Business Times last year that the company planned to expand its hospitality business to Thailand, Macau, Vietnam, Australia and Europe.

On The Gardens, a RM1.5 billion job on some 4ha of freehold land, McCracken said the entire project, comprising a retail portion, two office towers and two five-star hotels, will be leased out.

Three quarters of the 800,000 sq ft net lettable retail area have been taken up so far. The company will start promoting its office space in the third quarter of 2007.

Based on IGB's management guidance, OSK Securities Sdn Bhd investment analyst Mervin Chow said The Gardens can fetch an average monthly rental of some RM9.60 a sq ft, a 47 per cent discount to the RM18 a sq ft in the Kuala Lumpur City Centre.

"Rentals from The Gardens will offer IGB a steady cash flow," Chow said. OSK has recommended a "buy" call for IGB shares with a 12-month target price of RM2.78 based on the property developer's revised net asset value.

IGB shares added 3 per cent or 8 sen to RM2.40 at Bursa Malaysia yesterday with 6.2 million units traded. IGB securities has gained 33 per cent so far this year, outperforming the broader market's 10 per cent rise.

MVC, upon completion, is expected to have some 18 million sq ft in built- up area on a 20ha site. Construction of the project started in 1995, and is due for completion by 2010.

IGB's net profit grew 29 per cent to RM135.9 million or 9.36 sen a share while revenue rose 17 per cent to RM722 million in the financial year to December 2006.