8 Conlay project's main contractor suspends works

8 Conlay project's main contractor suspends works

KUALA LUMPUR (Aug 18): Grand Dynamics Builders Sdn Bhd (GDBSB), a subsidiary of GDB Holdings Bhd and the main contractor of the 8 Conlay development project, has suspended works at the mixed-use development in the heart of Kuala Lumpur.

“Please be informed that we have suspended the execution of the works under the main contract. We hereby direct you to suspend performance of the sub-contract works in accordance with Clause 26.16 of the sub-contract’s conditions of contract,” GDBSB said in a letter to its sub-contractors sighted by The Edge.

The letter dated Aug 16 (Tuesday) was signed by GDBSB's group managing director Cheah Ham Cheia.

A spokesperson for GDBSB confirmed the suspension of works when contacted by The Edge on Thursday (Aug 18), but declined to comment further on the matter.

GDBSB had bagged a RM1.25 billion contract to undertake the main building works for 8 Conlay, from Damai City Sdn Bhd, a unit of KSK Land Sdn Bhd, in 2020.

KSK Land, in response to questions from The Edge previously, had denied that the development worth RM5.4 billion was facing financial difficulties.

“No, we have not missed or defaulted on loan repayments,” its managing director Joanne Kua was quoted as saying in the June 27-July 2, 2022 edition of The Edge Malaysia weekly.

    Sources, however, had said that KSK Land, a wholly-owned subsidiary of privately-held KSK Group Bhd (formerly known as Kurnia Asia Bhd), had come into financial stress and missed on loan repayments.

Rejecting the claim in an email response, Kua had said that the development continued to show steady progress. “KSK Land remains financially strong with sufficient resources to ensure the completion of the 8 Conlay project. We are now, in fact, looking forward to the increased interest in our project from investors from various markets, with the reopening of international borders,” said Kua, who is also the CEO of KSK Group.

8 Conlay, which is located between KLCC and the Golden Triang, features two towers of branded residences (Tower A and Tower B), designed with an eye-catching tilt; a five-star luxury hotel The Kempinski Hotel Kuala Lumpur (Tower C); and a lifestyle retail podium. The branded residences are known as YOO8 serviced by Kempinski.

Kua, in her email response to The Edge, had said that Tower A would be ready by early 2023 and Tower B by the end of 2023.

Prior to the pandemic, the 8 Conlay project had been targeted for completion by late 2020.

For GDB Holdings, its outstanding order book amounted to RM1.37 billion as at March 31, 2022, which provides the group’s earnings visibility until the first quarter of the financial year ending Dec 31, 2024 (FY24). The outstanding order book consists of construction works for Park Regent at Desa ParkCity, Perla Ara Sentral in Ara Damansara, Hyatt Centric Hotel in Kota Kinabalu, Sabah; and 8 Conlay in Jalan Conlay, Kuala Lumpur City Centre, the construction outfit’s filing with the local bourse showed.

However, the company has warned that it is expecting a challenging outlook for FY22, due to rising construction costs as a result of soaring building materials prices and higher labour costs due to labour shortages, which could potentially impede profitability of ongoing projects.

“Besides that, the surge in construction costs may lead to property developers deferring new launches, hence affecting our pipeline of project tenders, as well as our new contract wins, moving forward,” the company said.  

GDB Holdings' share price closed unchanged at 26.5 sen on Thursday, giving the group a market capitalisation of RM248 million.

http://www.theedgemarkets.com/article/8-conlay-projects-main-contractor-suspends-works