Developer counts on Southgate

This is in view of supply shortage and high demand for commercial properties in Kuala Lumpur

MAH SING Group Bhd foresees good response for its contemporary European-designed Southgate commercial properties in view of the high demand and short supply of commercial properties in Kuala Lumpur.

Deputy chief operating officer Andy Chua said the commercial market is facing a shortage of supply and the demand for good office space, especially in Kuala Lumpur, was “very high”.

An artist’s impression of Mah Sing’s contemporary architecture for the Southgate Commercial Centre

“This is because ultimately for a business, people still prefer to set up offices in the city centre,” he told StarBiz, adding that new office buildings in Kuala Lumpur were fetching very high prices.

For example, he said, Menara YNH was sold for RM1,230 per sq ft, Glomac tower for RM1,120 per sq ft and Bumiputra Commerce building for over RM700 per sq ft.

“All these commercial properties were sold very fast through en bloc sales,” Chua said, adding that Mah Sing saw a lot of potential for purchasers to buy Southgate units at a reasonable price from RM430 per sq ft for an office suite.

The company is confident that purchasers would enjoy good appreciation when Southgate is completed in about three years.

“We are looking at yields of 8% and above,” he said.

Mah Sing, Chua said, could no longer benchmark itself locally but internationally as many foreign investors were coming to Malaysia.

“The architecture or properties that we offer to foreigners must be of international standard,” he said, adding that it would focus more on contemporary and cutting-edge architecture, which would add value to its commercial properties.

Besides Europe, the company also does research and gets ideas from countries like South Korea, Japan and Australia.

Chua said commercial properties were going to be a competitive market as there were many developers like Glomac, Bandar Raya Development and Malton who were also getting into this segment.

The commercial properties in Kuala Lumpur were beginning to look good because the prices still lacked behind residential properties, he said, adding that prices of residential properties in Kuala Lumpur City Centre (KLCC) had hit more than RM2,000 per sq ft.

He said many developers were looking for commercial land in good locations thus mixing up their traditional portfolio of residential properties.

“Our business model has always been in fast turnaround. We only acquire land in strategic locations,” he said.

He added that the company did not mind paying a premium for these land because it wanted good sales and to launch a project within the shortest time possible, normally within six months.

On its plans moving forward, Chua said Mah Sing targeted its commercial projects to contribute 50% of its revenue by 2009.

The commercial contribution would come from projects in Malaysia, Vietnam, India, Middle East and China.

“We are actively sourcing for development land in these countries. There are talks going on now for some joint ventures, outright purchase and mergers with our local partners in Vietnam, India and the Middle East.

“We hope to secure some projects by the first half of this year,” he said.

By The Star