London beckons for Ireka

By Sharen Kaur
sharen@mediaprima.com.my
Published in NST on April 13, 2013

FIRST FORAY ABROAD: Group keen to undertake real estate projects worth up to RM500m

Ireka Corp Bhd is gearing up to undertake high-end real estate projects in London worth between RM250 million and RM500 million each to boost earnings.

This will be Ireka's maiden foreign venture on its own.

Until now, its overseas ventures have been undertaken by its 23 per cent associate company, Aseanna Properties Ltd, which has projects in Vietnam.

Ireka Development Management (IDM) Sdn Bhd president and chief executive officer Lai Voon Hon told Business Times that the group is eyeing residential and commercial projects with fast turnaround in London.

"We have seen a few projects in London but nothing is very compelling. We are still scouting," he added.

Lai said Ireka prefers to work with a local partner who is familiar with the market, adding that "this is our preferred road".

"We are interested in a few types of projects in London. These include land development from scratch and taking over existing projects, where the owners are looking to sell," he said.

Ireka is also keen on taking up property and construction projects in Indonesia, Myanmar, the Philippines and Vietnam.

Lai said the group may launch its maiden overseas project this year or in 2014, depending on negotiations and viability of the development in the respective countries.

"Market capitalisation is very important when we go overseas. We want to make sure we are well-capitalised as it is a different ball game. But we ready," he added.

From 2006 till 2012, APL undertook Ireka's property development activities but Lai said that strategy has now changed.

"We find a lot of opportunities in real estate development and have begun to undertake our own projects to improve revenue and net profit," Lai said.

Ireka, which is involved in the infrastructure construction, real estate development and technologies, had volatile earnings recently. 

For fiscal year 2011, Ireka posted a net loss of RM11.71 million but returned to the black a year later with a net profit of RM11.1 million, mainly from construction.

For the first nine months of its year ending March 31 2013, Ireka bled red again, with a net loss of RM4.09 million due to its construction division's losses.

"APL is fully invested now and most of its projects will begin to bear fruits over the next two to five years and Ireka will benefit," he said. 

APL is the property fund arm of Ireka and invests primarily in real estate projects in Malaysia and Vietnam.

Some projects under its belt include Tiffani by i-ZEN, One Mont' Kiara, SENI Mont' Kiara, and Sandakan Harbour Square.

"The revenue and profits from real estate projects is mostly through dividends or capital return from APL based on the 23 per cent holding. This means we don't get regular earnings from APL.

"The only consistent contribution for real estate is from management fee that we derive from APL, which is in the region of two per cent of the net asset value. 

"By undertaking our own projects, there will be better earnings," Lai said, adding that Ireka is maintaining its stake in APL.

Ireka, through IDM, is the exclusive development manager of the fund with an initial size of US$250 million (RM750 million), of which it earns a fixed annual management fee and a performance fee.