Eastern & Oriental Bhd (E&O), which has not had any significant property launches in a while, is kicking off the year with a much-hyped development that could help turn the company around.

       The property developer, best known for its Seri Tanjung Pinang (STP) masterplan development in Penang, hopes to replicate the success of that venture with an integrated township project called Andaman.

       A 760-acre reclaimed island, Andaman is located just across the waterway from STP, which is known for its state of the art waterfront development.

       E&O executive chairman Datuk Tee Eng Ho says the first phase of Andaman will consist of 253 acres and will take around 15 years to develop.

       “We anticipate the entire development will take about 30 years to be fully completed,” he tells StarBizWeek.

       “We have started developing the roads and advanced works on infrastructure, landscape and greening of the island have already commenced,” he adds.

       To kick off Andaman, E&O will be launching “The Meg,” a high-rise residential development featuring two blocks of serviced apartments.

       Eastern & Oriental Bhd executive chairman Datuk Tee Eng Ho.

       Tower A and tower B will have 27 stories and 34 stories, respectively.

       Built on freehold commercial land, the development will comprise 1,020 residential units with innovative layouts that are targeted towards young executives and new families.

       The fully-furnished units start from RM500,000.

       Tee says the serviced apartments will also consist of retail offerings on the lower floors that will complement the lifestyle of the people living there.

       “We started to create some awareness of our project in December but we only started offering the units from early this month.”

       Tee says interest has been picking up fast.

       “The Meg is targeted towards millennials. However, while marketing the units, we were surprised that not only was it attracting young, first-time homebuyers, but it was also receiving plenty of interest from more mature customers.”

       Tee emphasises that E&O has yet to officially launch The Meg.

       “We’ve only started to collect bookings and have not officially launched yet. We are still conducting pre-launch activities at the moment. But so far, it has been very well received.

       “For now, we have only opened up Tower B for people to register their interests and collect bookings. Tower A will be launched in time to come.”

       Tee attributes The Meg’s excellent location as one of the prime reasons for the resounding interest from prospective buyers.

       “The Meg is located across the waters from what is currently Gurney Drive and the future Gurney wharf.

       “Gurney Drive, being part of the Pulau Tikus area, has not seen new launches in a few years.”

       Tee adds that Pulau Tikus has also always been one of the desired addresses in Penang, other than STP.

       “On top of that, property prices in that region (Pulau Tikus and STP) are quite steep. So, to have a product like The Meg that is targeted at first-time home buyers is considered quite attractive.

       “The Meg has created quite a lot of buzz, not just to Penangites on the island but also those outside of Penang. It has also gained interests from potential buyers within the northern region.”

       RHB Research regional property head Loong Kok Wen says the launch of The Meg will bode well for E&O’s future earnings.

       “E&O has not had any meaningful launches in a while, so it is good that they now have something to sell.

       “They have Conlay (a high-end high-rise development within the KLCC area) but that is very much targeted at foreigners, which was affected by the pandemic.”

       Emphasising that the launch of The Meg would be positive for E&O, Loong, however, says that it might still take a while for earnings to be realised.

       “Usually, during the initial stage of construction, the earnings are quite small.

       “It’s often during the middle-to-end stage when earnings really start coming in. Still, it’s great that they are launching but it may take some time for the group to see a turnaround in earnings.”

       Commenting on E&O’s hospitality division, Loong says earnings for this segment would have started seeing improvements from the middle of 2021.

       “From the middle or second half of last year, the hospitality division was already doing quite well.

       “This is because people were not able to travel overseas and would have spent their holidays at local destinations.

       “But looking at the breakdown, E&O’s hospitality division has never been a major contributor,” she says.

       For the second quarter of its current financial year ending March 31, 2022 (FY22), E&O reported a net loss of RM13.99mil, compared with a net profit of RM4.45mil in the previous corresponding period.

       Revenue in the second quarter stood at RM33.88mil compared with RM58.89mil a year earlier.

       PublicInvest Research says in a report that E&O’s widening net loss was primarily due to higher unrealised foreign exchange losses recorded during the quarter.

       “Despite the RM1bil planned launches in the second half of 2022, we now expect the group to see earnings recovery only in FY23.”

       Tee, meanwhile, says that he is encouraged by responses for The Meg thus far, adding that the discontinuation of the Home Ownership Campaign (HOC) from this year had not deterred buying interests.

       “So far, we’ve not had issues. We’ve been alright,” he says.

       The HOC was reintroduced in June 2020 under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic.

       Many agreed that the campaign, which ended on Dec 31, 2021, had helped to drive sales for many developers.

       Loong concurs that the HOC did help to spur sales for local property developers over the past couple of years.

       “The HOC was a good campaign to have, as it did help to provide a positive sentiment push.

       “Without the HOC, developers will need to do their own marketing.”

       Loong says she expects many developers to announce commendable earnings in the upcoming quarterly results season, later this month.

       “We expect a lot of people to have rushed to meet the HOC deadline at the end of last year.

       “For the subsequent quarterly results seasons this year, we do expect earnings momentum to slow down,” she says.

       On the outlook of the Penang property market in general, Tee says he is “cautiously optimistic” about the prospects for 2022.

       “It’s about location, the right pricing and design and giving what the market wants. Looking at what we have to offer, I am cautiously optimistic about our prospects,” he says.

       According to Knight Frank in its Real Estate Highlights report for the second half of 2021, the Penang residential market is expected to see improvements in 2022.