Scaling up amid robust gains
In its financial year ended June 30, 2024 (FY2024), IOI Properties Group Bhd (KL:IOIPG) had to navigate through a challenging global landscape caused by slower economic growth, geopolitical trade tensions and rising material costs due to inflation and higher interest rates.
The group remained resilient, as evidenced by the 13% increase in its revenue to RM2.94 billion in FY2024 from RM2.59 billion in FY2023. Profit before tax surged 42% to RM2.3 billion in FY2024 from RM1.62 billion in FY2023, while profit after tax grew 48% to RM2.07 billion from RM1.40 billion.
In an email interview with City & Country, group CEO Lee Yeow Seng talks about IOI Properties’ robust expansion strategies, dedication to sustainability as well as plans for long-term growth as the developer diversifies its portfolio and operations.
City & Country: Please share some of the group’s highlights in FY2024.
Lee Yeow Seng: On the back of a challenging year, IOI Properties made considerable progress and our revenue increased year on year. One key highlight in Malaysia during our FY2024 was the opening of our 480-room Moxy Putrajaya — the first Moxy hotel in Southeast Asia — in February, just before Chinese New Year. Also, the acquisition of the 150-room W Kuala Lumpur for RM270 million was completed in the same month.
Prior to that, our Palm Garden Hotel at IOI Resort City, Putrajaya reopened in November 2023 following major refurbishment works and the same goes for our Palm Garden Golf Club, which reopened in May 2024 after replacing the greens and upgrading the facilities.
In April, we broke ground on the 117-acre Senna Puteri township in Salak Tinggi, Sepang, with an estimated gross development value (GDV) of RM2.7 billion.
Other highlights during the year include the announcement in July on the acquisitions of three assets — namely Tropicana Gardens Mall for RM680 million, the 199-room Courtyard by Marriott Penang for RM165 million and a 9.86-acre parcel in Pantai Kok, Langkawi — which are expected to be completed during FY2025. These acquisitions will not only expand our asset portfolio towards strengthening recurring income but also our presence in the retail and hospitality sectors.
In Singapore, our IOI Central Boulevard Towers, a premium Grade A office with 1.29 million sq ft of net lettable area (NLA), received its Phase 1 Temporary Occupation Permit (TOP) in April and its Phase 2 TOP in July. It has also begun generating lease income from FY2024.
What is the current revenue contribution ratio of the property development, property investment, and hospitality and leisure segments?
The property development segment remains the key contributor with a 69% contribution at RM2.015 billion and the property investment segment accounts for 22% at RM646 million while the hospitality and leisure segment contributes the remaining 9% at RM279 million.
In FY2024, our property development revenue grew 7%, mainly due to our land sales of RM233 million in Johor. Our property investment segment had a notable achievement of 32% growth y-o-y, mainly due to the lease income generated from IOI City Mall Phase 2, which began operations in August 2022, and the partial lease commencement of IOI Central Boulevard Towers in Singapore.
The hospitality and leisure segment grew 25% on the back of the contributions from the newly opened Moxy Putrajaya and the completion of the acquisition of W Kuala Lumpur.
The group continues to expect considerable growth in our property development segment due to the much-anticipated launch of the 683-unit W Residences Marina View in Singapore in FY2025, which is expected to be the main contribution driver in the city state, on top of the upcoming industrial products in Malaysia, which are targeted to be launched in the fourth quarter of FY2025.
In FY2025, for our property investment segment, we look forward to the potential full-year lease income from IOI Central Boulevard Towers in Singapore since it had registered committed occupancy of 68% for its office and 89% commitments for its 30,000 sq ft retail NLA as at Oct 31, and the lease income contributed by IOI Business Park in Xiamen, China, as it has achieved a full tenancy rate of 100% upon its completion in FY2024.
As for the hospitality and leisure segment, we look forward to the contributions from the acquired 199-room Courtyard by Marriott Penang, whose purchase was completed in July. Additionally, the commencement of the 370-room Sheraton Grand Xiamen Jimei, which is slated in the third quarter of FY2025, will further expand our hospitality portfolio.
What are your plans for your property investment and hospitality portfolios? How will they contribute to IOI Properties’ growth?
Since the completion of the acquisition of W Kuala Lumpur in February, it has begun contributing to our revenue in FY2024 whereas the Courtyard by Marriott Penang purchase was completed in July. Both these assets are in operation with their own established target markets and are expected to contribute positively to our hospitality subsegment, in terms of revenue and profitability, in FY2025.
Meanwhile, the 9.86-acre parcel in Pantai Kok, Langkawi will be developed into a branded 200-room luxury hotel, which is targeted for completion in 2028. Our hospitality subsegment is well poised to benefit from the continued momentum of recovery in the tourism and hospitality sectors, especially with the forthcoming Visit Malaysia Year 2026 and the influx of international tourists with the continued visa-free initiative by the Malaysian government.
As for Tropicana Gardens Mall, its excellent value proposition with a 28% discount to its book value of RM944 million and its prime location given its connectivity to the Surian MRT station as well as proximity to several mature townships, were the main factors which made it an opportunistic investment.
The plan for Tropicana Gardens Mall would be to turn around the mall as it follows the successful model of the IOI Malls and leverage its brand in providing a vibrant lifestyle experience with dynamic offerings.
The group plans to launch more than RM5 billion worth of properties in Malaysia and Singapore in FY2025. What are your strategies for these upcoming launches?
The group remains focused on strategically timing our property launches and clearing our inventories.
In Malaysia, the developer’s property development segment continues to have an optimistic outlook on the back of promising economic growth and overall consumer sentiment due to the expected salary hike in the public sector and the government’s support for higher minimum wages in the private sector.
In FY2025, this segment will continue to bring to the market products that are well tuned to lifestyle choices and market preferences. These include a continued emphasis on mixed-use products and value-added amenities to uplift the lives of the communities within our developments and townships.
Upcoming launches include new phases at Senna Puteri, Salak Tinggi, Sepang and Bandar Puteri Bangi in the Klang Valley.
Also, under the industrial category, over 50 units of semi-detached, detached and cluster factories as well as land will be brought to the market, with an expected GDV of RM464 million, at IOI Industrial Park @ Banting, Selangor.
Apart from the Klang Valley, prospects in Johor remain promising due to the wide range of catalyst developments and initiatives as announced by the federal and state governments.
Our southern region will see 12 launches, in Bandar Putra Kulai, Taman Lagenda Putra, Taman Kempas Utama and Bandar IOI Segamat.
In Singapore, the launch of the bespoke 683-unit W Residences Marina View in FY2025 will drive our property sales well into the next couple of years.
Overall, we will strategise according to the market forces and needs to provide distinct value propositions in our products, and time our launches appropriately to capitalise on the targeted and niche markets that we serve.
IOI Properties has a presence in Singapore and China. What are your upcoming plans in these two countries?
IOI Properties have continued to maintain a sustained momentum of value creation across our business segments and charted positive growth in Malaysia and Singapore while maintaining a strong presence in China.
We will continue to take cognisance of the socioeconomic environment in China due to the protracted crisis in the property sector — with its ripple effects on investors, consumers and businesses — which has yet to recover fully since its decline in 2021.
The Chinese government has announced a suite of measures to stabilise this sector and we will closely monitor the ongoing developments and align our marketing strategies accordingly, especially to ensure clearance of our inventories in Xiamen.
Notably, IOI Business Park in Xiamen with 371,000 sq ft of office NLA was completed in 4QFY2024 and has achieved a tenancy rate of 100%, which will generate recurring income for IOI Properties.
Also, with the Sheraton Grand Xiamen Jimei slated to open in FY2025, this will contribute to the income stream of our hospitality portfolio.
Over in Singapore, the property market — especially the office real estate market — remains resilient, supported by diversified demand drivers such as consumer and private wealth and flexible workspace sectors. Sentiment could pick up as interest rates and inflationary pressures ease with the economy strengthening and companies regaining confidence in embarking on expansionary plans.
This will bode well for our IOI Central Boulevard Towers as it is on track to receive its final TOP by year end. Having obtained its Phase 1 TOP in April and Phase 2 TOP in July, these two TOPs represent over 70% of the total NLA of 1.29 million sq ft.
With this, IOI Properties looks forward to our potential recurring income contribution since our Singapore team has received committed occupancy of 68% for the 1.26 million sq ft of office space and about 89% committed occupancy for the retail space as at Oct 31.
There is much attention on Johor with the Gemas-Johor Bahru Electrified Double Track (EDT) project due for completion in 2025 plus the proposed Johor-Singapore Special Economic Zone (JS-SEZ) and Special Financial Zone (SFZ). How does IOI Properties plan to leverage the upcoming initiatives?
The group’s townships and developments in Johor are expected to benefit from the anticipated effects of these economic zones and proposed infrastructure projects as they are well established along the rail connectivity lines, especially along the Gemas- Johor Bahru EDT and highways as well as within the zone precincts.
Specifically, the EDT line provides convenient access to all our townships and projects in Bandar IOI Segamat, Bandar Putra Kulai, Taman Kempas Utama, Taman Lagenda Putra, IOI Industrial Park @ Iskandar Malaysia (formerly known as iSynergy, Senai) and The Platino.
This improved connectivity, coupled with the upcoming Kuala Lumpur-Singapore High-Speed Rail, proposed LRT lines and the Johor Bahru- Singapore Rapid Transit System Link, will further enhance the appeal of our residential and commercial offerings to investors and homeowners.
Furthermore, the proposed JS-SEZ and SFZ are expected to generate positive spillover effects, increasing the value and attractiveness of our developments, including our industrial park. IOI Industrial Park @ Iskandar Malaysia, with its expanding acreage from 507 to 1,107 and continued strong sales performance, is poised to benefit from this increased economic activity and attract foreign direct investments.
In addition to the above-mentioned catalysts, the Kulai Fast Lane (KFL) initiative, which expedites regulatory approvals for investors, further strengthens the appeal of our industrial offerings in Johor.
In fact, the spillover effects have been evident during our FY2024 performance, with our townships in Johor registering robust sales of RM847.71 million (including RM211.07 million from a 404-acre land sale in September 2023) or 44% of total sales in Malaysia, led by Bandar Putra Kulai which remained resilient in its strong sales and continued to be the largest contributor to our regional sales.
To capitalise on this upbeat outlook in Johor in FY2025, we plan to introduce 12 new launches in the aforementioned townships such as Bandar Putra Kulai, Taman Lagenda Putra, Taman Kempas Utama and Bandar IOI Segamat. This mix of over 1,700 units of residential and commercial products is expected to have a GDV of over RM720 million.
What are some of the company’s sustainability initiatives in FY2024 and goals for FY2025?
Our sustainability initiatives in FY2024 included partnerships and stakeholder engagements on the IOI Sustain Roadmap 2030, communicating 12 strategies to improve sustainability practices on climate change, supply chain management, biodiversity, well-being, risks and opportunities.
Another embodied carbon assessment for landed property, named Marvela at Bandar Putra Kulai, was completed where it identified the carbon-intensive materials for our future planning of lower embodied carbon products.
The communication of the urban biodiversity at our parks, Town Park @ Bandar Puteri Puchong and Central Park @ IOI Resort City, through citizen science activities and nature walks created awareness of the importance of the natural ecosystem and ecological services that are readily available at our urban parks. This helps to build internal capacity to conserve nature-based solutions.
We have installed a solar energy capacity of 4,793 kWp to be commissioned at IOI City Mall Phase 2, Palm Garden Golf Club, IOI Mall Puchong and Sales Galleria Puchong.
IOI Properties is also strengthening our greenhouse gas inventory, paving the way for decarbonisation planning towards net zero. We are expediting a climate change vulnerability assessment that looks into scenario analysis. We are also planning more engagement with our supply chain as we address Scope 3 emissions in moving towards climate change readiness for the group and value chain.