Be cautious and selective, companies advised

Be cautious and selective, companies advised

WHILE pursuing the many opportunities in the offshore property market has many advantages, developers have been cautioned to do the necessary homework and check the project's viability carefully before taking the plunge. They must be careful to balance the risks and rewards.

Sunway City Bhd (SunCity) senior managing director Datuk C.K. Wong advised Malaysian companies to remain cautious and selective because of the volatile nature of overseas property markets.

“Avoid mega residential and commercial developments initially. Residential developments should be the starting point, and only later the opportunities to develop mixed and commercial projects,” he added.

Wong said a strong equity partnership with an established and reputable local partner was advisable.

“SunCity requires a higher rate of return from its overseas property developments to manage and mitigate the additional risks.”

Mah Sing Group Bhd president and group chief executive Datuk Leong Hoy Kum concurred on the need to be cautious.

Having been approached by some foreign parties to pursue developments overseas, Mah Sing is currently conducting in-depth studies on several opportunities and evaluating the risks and returns.

“We are not in a hurry as there are still a lot of opportunities in Malaysia. Being a prudent developer, we are careful in ensuring that we face minimum risk by putting out minimum capital outlay.

“We also need to do a thorough research on the demand before embarking on any of the projects,” Leong said.

Should the company decide to venture overseas, it is likely to do it via a joint venture with an established local party so that it needs minimum capital payout.

“We need to take into account a whole range of factors and among the most important criteria we are looking for is that our joint-venture partner should be a reputable local party with extensive knowledge of the local market,” he said.

“If we can have that in place, we can concentrate on what we do best and introduce our lifestyle concepts and our branding in their market".