The text message blasts went out on the evening of May 23. Before the night was through, more than 80 registrants had set up camp at Eco World Development Group Bhd’s sales gallery in Semenyih, Selangor. They were joined by a few hundred more the next day to get their queue numbers to buy a house in its flagship township, the 1,089-acre EcoMajestic in Semenyih.
A similar scene unfolded at its sales gallery in Johor Baru, where Phase 1 of two other townships — the 613.8-acre EcoSpring and EcoSummer in the Tebrau corridor — was up for grabs. The three developments were simultaneously launched on May 25, along with a preview of Eco Business Park I in Iskandar Malaysia, Johor. According to Eco World, more than 2,000 people turned up at its Semenyih and Johor Baru galleries to book their units.
EcoMajestic saw a take-up of 95% while EcoSpring and EcoSummer had a combined take-up of 85% by the end of the launch day. The first phase of EcoMajestic comprises 612 terraced houses, priced at RM586,000 onwards. EcoSpring offers clusters and semidees, costing RM1.1 million onwards, and EcoSummer consists of terraced houses, with the starting price at RM650,000.
“We were quite overwhelmed by the response … the launch of EcoMajestic, EcoSpring and EcoSummer were really well received, and we are extremely thankful to all the interested purchasers who came in full force to support us,” says Datuk Chang Khim Wah, president and CEO of Eco World.
The take-up rate was strong, considering the challenging property market, which has been affected by the government’s cooling measures, such as the abolition of the developer interest-bearing scheme and the more stringent housing loan regulations, as well as the fact that Eco World is a new player in the market. According to the National Property Information Centre’s (Napic) Property Market Report 2013, transaction volume dropped to 381,130 from 427,520 in 2012.
Chang believes that the experience and good reputation of the management and the team were strong contributing factors to the success of the launches. He, the key management team and the directors, including Tan Sri Liew Kee Sin, Tan Sri Abdul Rashid Abdul Manaf and Datuk Leong Kok Wah, were from S P Setia Bhd.
Chang also attributes the success to the master plans and concepts of the townships, which he says resonated with their purchasers.
“For example, EcoMajestic, which offers the largest strata-titled project in the Klang Valley, appeals to both the younger and older generation of buyers. In general, our buyers come from all walks of life; young families looking for their first home and a very strong upgrader’s market wanting a better lifestyle off ering,” he says.
Despite the strong take-up rates, dropouts are expected mainly due to funding problems. Napic notes in the report that housing loan approvals dropped 22.5% in 2013, compared with an expansion of 47.4% the previous year.
Chang says it is not possible to forecast the dropout rate as this depends on the credit-worthiness of the purchasers and the willingness of the banks to lend.
“From our previous experience with EcoSky in Jalan Ipoh, [Kuala Lumpur,] we saw a dropout rate of less than 10%. We are looking at different products for this launch as EcoMajestic, EcoSpring and EcoSummer are landed homes and a part of a township development. We are not overly concerned about this as we have recorded a strong registration interest, and we have a waiting list.”
There is also the issue of the impending Goods and Services Tax. Even though the GST is not imposed on residential products, the cost of construction, including the materials, is not exempted. Some property consultants and developers have warned that the GST will add to the construction cost, which in turn will raise property prices.
How will this impact the costs and prices of Eco World’s products? Chang says, “It takes a lot of planning before our products are launched, and we take into account all market factors that will have an impact on costs, but we hope to offer our customers the best value proposition there is when buying an Eco World product.”
The developer has set a sales target of RM2 billion for FY2014 and RM3 billion for FY2015. As at March 31, Eco World’s first two projects — EcoBotanic in Iskandar and EcoSky in the Klang Valley — had achieved combined sales of RM1.13 billion.
