ETP drives demand for luxury condominiums

Luxurious condominiums (as seen in the background) enhance the surrounding of Desa Sri Hartamas while pulling up the property prices in this neighbourhood.

The various initiatives announced under the Economic Transformation Programme (ETP) is said to be attracting investment opportunities into the country and in turn, boosting the demand for luxury condominiums in Malaysia.

Just ask Johor-based property developer BCB Bhd, which has seen good response for its luxury condominium development, Concerto Kiara @ Mont Kiara.

Tan: ‘We are also targeting those local buyers that have gone abroad.’

“We launched it in early July and about 80% of our first phase have already been snapped up,” group managing director Datuk Robert Tan Seng Leong tells StarBizweek.

Concerto Kiara is also sought for investment purposes.

According to him, Concerto Kiara @ Mont Kiara comprises 440 units of luxury condominiums with a gross development value of RM580mil and will be built in three phases. The first phase will comprise some 166 units.

“Currently, the first phase is still under construction and should be completed within the next three to four years,” said Tan, adding that the price of the units start from around RM630 per sq ft.

The size of the units range from 1,580 sq ft to around 1,900 sq ft.

“We are targeting both local and foreign buyers,” said Tan. He says some of local buyers were from as far as Johor.

“We are also targeting those local buyers that have gone abroad for a while and who are looking for that similar (overseas) lifestyle here in Malaysia. This group of people can afford our properties,” he says.

According to the Property Market Report 2012 by C.H. Williams Talhar & Wong, the demand for luxury condominium properties in the Klang Valley has continued to increase.

“The influential force that is creating demand for properties in the Klang Valley is the ETP initiated by the Government to transform Malaysia into a high income economy by the year 2020.

“Encouraged by the Government through liberalisation and tax incentives, more foreign companies are expected to invest in the country and consequently, increase the entry of more expatriates and demand for up-market residences.

“This will create demand for condominium properties especially in the up-market sector.”

The report went on to note that with these expectations, several developers have introduced newer designs and innovative concepts in their latest projects.

Meanwhile, asked if Concerto Kiara @ Mont Kiara is expensive, Tan says: “Many also buy it for investment purposes. They are worried that the price will escalate further in the future.”

He also says having luxury condominiums would be in line with the Government's Greater Kuala Lumpur/Klang Valley National Key Economic Area (NKEA) 2020.

According to reports, the Greater Kuala Lumpur/Klang Valley NKEA 2020 targets are to be in the top 20 most livable cities list and the top 20 in economic growth.

The goals under this NKEA are to be realised through the implementation of nine Entry Point Projects (EPPs) and the two business opportunities. These include improving the city's attractiveness to foreign multinational companies (MNCs) and foreign talent, putting in place an efficient public transport system and enhancing the ambience of the city by improving its physical environment through various initiatives.

Intensive efforts are ongoing to upgrade the water quality of Kuala Lumpur's main rivers and beautifying and developing its surroundings via the River of Life EPP, going green through the planting of more trees in the city, developing iconic places within the city and providing comfortable walkways for the pedestrians.

There are also plans to enhance solid waste management and sewerage services for the metropolis, as well as efforts to improve housing opportunities and to vitalise Putrajaya.

It is envisaged that initiatives under the Greater Kuala Lumpur/Klang Valley NKEA would contribute RM190bil in gross national income over the next 10 years and create over 300,000 jobs.

An analyst from a local bank-backed brokerage noted that the property sector was a “safer heaven” as far as investments are concerned.

“I foresee more foreign investors putting their money in our local property market, in light of the various initiatives announced by the Government to make Kuala Lumpur more vibrant and liveable.

“Also, Malaysian property prices are cheaper compared with other countries around the world,” she says, adding that she also expects to see more local investors taking their money out of the local stock market and putting it into the local property market.

According to C.H. Williams Talhar & Wong's Property Market Report 2012, there were 22,877 luxury condominiums and serviced apartment units in the Klang Valley as at end-2011. It noted that over 50% of the new developments completed last year were located within the Mont Kiara/Sri Hartamas area.

It said that the average occupancy rate for the condominium market remained stable at about 68%.

“Occupancy for condominium had declined to 69.5% from 70.3% in 2010, while serviced residences recorded a slight improvement of 67.1% from 66.8% in 2010.

“In addition, latest launches comprised smaller and more affordable unit sizes of 500 sq ft to 1,000 sq ft with selling prices ranging from RM850 per sq ft to RM2,000 per sq ft in the KLCC area, RM700 per sq ft to RM1,200 per sq ft in Mont Kiara/Sri Hartamas and Kenny Hills areas.”

In terms of outlook, the report states that luxury condominium developments will face a threat from the large incoming supply in the future.

“Developers are also marketing actively to foreign investors as the prices for luxury condominiums in Kuala Lumpur are still considered relatively cheap as compared with other countries such as Hong Kong and Singapore.

“In addition, the pro-active measures from the Government, efforts to promote the Malaysia My Second Home as well as the lifting of Foreign Investment Committee's approval in purchasing the properties by foreigners will boost the luxury condominium sector.”

The report added that occupancy rates and condominium rentals will be on a downtrend as new units enter the rental market at a faster rate than the slower projected demand from working expatriate professionals entering Malaysia.

“Buyers are still actively looking for condominium properties for investments in the KLCC and Mont Kiara areas but are now have more leeway for negotiation of prices.”

By The Star

Penthouses of St Mary Residences will be sold with the option of owning a Lamborghini

St Mary Residences is located in Jalan Tengah, off Jalan Sultan Ismail, Kuala Lumpur.

In what may well be the first time a developer collaborates with a car company in order to sell a property, both being big ticket items, the flavour of this partnership between Eastern & Oriental Bhd (E&O) and Lamborghini has an intoxicating whiff of big names, superb brands and luxury all coming together.

The partnership has several elements that are difficult to ignore. First, the aspect of consumerism today. It is a subject that can lead to many lessons in marketing, retail, advertising and promotion. Is opting for the branded the way to go? For many consumers, the answer is Yes because branding, more often than not, equates quality. So there is a price to be paid for quality.

Chan with a Lamborghihi Gallardo. He say the Lamborghini is a lifestyle purchase. Just like properties today.

On another aspect, if one were to stay focus and not be distracted by the gleaming wheels of the sports car, what is the way ahead for the high-end property market? Will other developers also co-brand in order to sell their properties?

In the property world, the E&O group is nothing less than innovation, luxury and lifestyle all rolled into one. It has always been the first to market.

Says E&O deputy managing director Eric Chan: “The direction the high end property sector will take depends on how the regional market responds to what we have in Kuala Lumpur. There is value here.”

The last decade or so, in many ways, the niche developer has been rather bold and innovative.

Consider the following. Before the Kuala Lumpur City Centre (KLCC) became the sought after location it is today although it is beyond the reach of a majority of the Malaysian population E&O came up with Dua Residency, the first luxurious condominium development with built-ups of more than 2,000 sq ft and beyond. At a time when few have seen or experienced such luxury, except for high net worth individuals, Dua was sold starting from RM500 to RM600 per sq ft. Today, those units average about RM900 per sq ft.

A couple of years after that in 2006/07, nearly every developer who had the resources tried to enter that KLCC market.

In June 2009, months after the 2008 global financial crisis, E&O boldly launched St Mary Residences, at Jalan Tengah, off Jalan Sultan Ismail, Kuala Lumpur.

It was the first developer to launch anything after the September 2008 fall of Lehman Brothers. Unlike Dua Residency where units were predominantly more than 2,000sq ft and above, the developer changed strategies in 2009 by offering quite a number of one-bedroom units of about 1,000sq ft.

Hungary for launches, its introduction of St Mary Residences saw a strong 80% take-up rate after just a five-day preview, at an average price of about RM900 per sq ft. St Mary Residences is located on four acres of former church land. Three blocks were built. Two blocks were sold and one named E&O Residences. These 200-unit block was “given” to the Synod of the Diocese of West Malaysia in exchange for the land. Besides the serviced apartment block, the church also negotiated for the building of a school in Selayang.

E&O will be operating and managing E&O Residences for 15 years, with the option to extend for another five. It will offer luxury short-term stays. Thus far, all the units in the two remaining blocks have been sold with the exception of three super penthouse units. Next week, purchasers who bought into the development will be getting their keys.

Here is where the co-branding comes in. The three penthouses, with a built-up of about 7,000sq ft, are priced between RM10mil and RM12.18mil. They are being sold with the option for purchasers to own a Lamborghini Gallardo.

Lamborghini Kuala Lumpur chief operating officer Marcus Chye says there are about 200 units of Lamborghini in Malaysia, but there are only 20 Gallardo models. Thirteen have been sold, and three have been put aside for this special partnership with E&O.

Those familiar with the luxurious car market says the Lamborghini is at the top end of the sports car range with aspiring new entrants buying a Lotus which costs about RM500,000 before moving on to a Porsche, then a Ferrari, if they are die-hard collectors.

But why a Lamborghini and not a Bentley or a Rolls Royce?

Says Chye: “The best goes with the best.”

The Bentley and the Rolls Royce are business cars, says Chye. “You go to meetings, dinners and to the office with a Bentley or a Rolls Royce. The Lamborghini is for the weekend.”

Unlike the perception of many that the Lamborghini owner belongs to the 30-to-40-something age group, Chye begs to differ.

Some clients are older and wiser, he says.

Which thus solves the question of who will buy E&O's super penthouses priced between RM10mil and RM12mil. Purchasers cannot contra the price of the property with the price of the car.

Says Chan: “They will get the car at a very special rate.”

Both Chan and Chye are of the view that when it comes to super brands and premium luxury the likes of E&O and Lamborghini, there is “no question of a discount.”

Says Chye: “The Lamborghini is a lifestyle. Just like properties today.”

By The Star

EPF and Dijaya may develop RRIM land

PETALING JAYA: The Employees Provident Fund (EPF) and Dijaya Corp Bhd are presently in talks to jointly develop certain parcels of the Rubber Research Institute of Malaysia (RRIM) land in Sungai Buloh, as well as to build an access road, according to a source.

Currently, the RRIM land that begins from the Sungai Buloh My Rapid Transit Depot in the north and ends with its southern portion bordering the Tropicana Golf & Country Resort, belongs to Dijaya.

The source said that the EPF would need an access road connecting the RRIM land to Petaling Jaya, and that access road would have to cut across the Tropicana Golf resort.

“Dijaya will probably need to relocate a small part of its golf course to make way for this access road. At the same time, the EPF has also invited Dijaya to jointly develop certain parcels of the RRIM land. While no concrete details have been decided, both parties have expressed their intention to work together,” it said.

The source added that the EPF wanted to start developing the RRIM land from the south, as it would make more commercial sense.

“By developing from the Tropicana side, it will also be easier for the EPF, as it is empty lots on that side, and hence being less complicated to develop.

“The mid-portion of the RRIM land is already developed and needs to be teared down and redone. Furthermore, land beside the Tropicana Golf Resort will also fetch better pricing for now,” it said.

When contacted, a spokesperson for the EPF said this market talk was not true.

Currently Dijaya is also in the midst of an amalgamation deal where in April it entered into agreements with several vendors for a proposed acquisition of 73 properties, comprising 49 parcels of land and 16 buildings, for RM949.9mil.

Meanwhile, it is understood that Kwasa Land Sdn Bhd, which is the EPF's wholly-owned unit, will be calling for bids for the RRIM land in Sungai Buloh by year-end. Kwasa Land is the master planner for the RRIM development.

Pre-qualification bids will be opened to developers who meet the requirements, which will include financial muscle, reputation and innovation, according to recent reports.

Kwasa Land is expected to divide out the RRIM land in portions of 20ha to 200ha each, which will be used to develop affordable residential and commercial properties.

The other parts of the RRIM land is to house the Malaysian Rubber Board hub (217ha) and the My Rapid Transit Sungai Buloh depot (72ha).

The redevelopment of the RRIM land is part of the greater Kuala Lumpur Strategic Development initiative and is a project under the 10th Malaysia Plan. The EPF is buying 890ha of the available 1,215ha RRIM agricultural land from the Federal Government for over RM2bil.

By The Star

IJM Land in UK venture

PETALING JAYA: IJM Land Bhd is venturing into the United Kingdom via a joint venture to build a five-star hotel and residential apartments that will have a gross development value (GDV) of £280mil (RM1.4bil).

The company told Bursa Malaysia yesterday it had entered into a shareholders' agreement with Lite Bell Consolidated Sdn Bhd to form a joint-venture company, Mintle Ltd, in Jersey to acquire a 999-year lease over a 2.7 acre site with detailed planning consent for about 650,000-sq-ft space.

The site is predominantly situated above the National Rail and DLR railway lines adjacent to the Royal Mint Street in central London.

Mintle also acquired one share of £1 each in dormant company RMS (England) Ltd for £1. RMS England and Mintle would undertake a mixed-use development on the property.

Network Rail Infrastructure Ltd is the freehold owner of the property and granted ZBV (RMS) Ltd an option to acquire the lease of the property.

The working capital to be funded by the company to develop the property would be between £25mil and £30mil.

“The joint venture is part of a strategic move by the group to expand its property development footprint beyond Malaysia and is in line with its long-term vision of being an internationally admired property developer,” it said.

IJM Land added that the current favourable exchange rate regime and the lack of funding opportunity for property developers in London due to the eurozone crisis provided a window of opportunity to venture into the mature and international central London property scene.

“The company's ability to attract a number of buyers from the Asian region, who are one of the biggest groups of property investors in London in recent times, also augurs well for the project,” it said.

IJM Land said the project, when completed, would have “excellent views of the popular London landmarks such as Tower of London, Tower Bridge, Royal Mint Court, St. Katharine's Docks and River Thames.”

It said the project, granted detailed planning consent in April 2012, comprised one block of 5-star hotel-cum-residential apartments and three blocks of residential apartments with a total gross built-up area of 650,000 sq ft.

“The gross development value of the project is expected to be around £280mil. The cost will be funded via a combination of borrowings and internal funds, the details of which have yet to be determined,” it said.

By The Star

IJM Land in joint venture with Lite Bell

KUALA LUMPUR: IJM Land Bhd has entered into a shareholders’ agreement with Lite Bell Consolidated Sdn Bhd to form a 51:49 joint venture, Mintle Ltd, to undertake a RM1.4 billion mixed-use development in London.

In a filing to Bursa Malaysia yesterday, IJM Land said Mintle will acquire 1.08 hectare above the national rail and DLR railway lines adjacent to the Royal Mint Street in Central London, for the project.

By Business Times

Excitement over landmark project

Lancaster House is a mansion at the affluent St James district in London. It is a landmark that has gained prominence in recent years after it was used as a location in the award-winning British movie The King's Speech.

The building has now become the British Business Embassy and an Olympics investment conference is being held there until the Games are over.

While the Olympic Park will see men and women in track suits, the British Prime Minister is hoping to see more people in business suits visiting Lancaster House.

There are good reasons the fact is that Britain is in the longest double-dip recession in 50 years and official figures released recently showed that the number of inward investment projects has fallen for the third year in a row.

An estimated 4,000 top businessmen are expected to watch the games and David Cameron is hoping they will take time off to do some business.

If the athletes are looking at gold medals, the PM is looking at £1bil in new deals.

He is well aware that the Olympics have bankrupted some host cities.

The Olympic Park is located in East London, regarded as the downside of London, and the naysayers have questioned whether the location could be transformed after the security fence of the Games comes down.

But of all the business deals that have been spoken about, the biggest eye opener is the £8bil development of the Battersea power station.

On the day that I arrived in London last Thursday, I switched on the television in my hotel room to watch Cameron talking about the Battersea project, Pink Floyd and Malaysia.

He had spoken about his trip to several countries including Malaysia on an investment tour and he singled out the importance of the development of Battersea which involved a consortium comprising SP Setia Bhd, Sime Darby Bhd and the Employees Provident Fund.

The same day, London Mayor Boris Johnson hailed the project, which he described as a regeneration scheme, where an estimated 16,470 homes would be built.

More importantly, new shops and businesses could create 33,000 jobs 13,000 permanent.

That is the sort of excitement Malaysia has created in London as the city has an unemployment rate of 8.9% but thanks to the Games, there was a 1.2% dip.

The Battersea power station is located on the south bank of the River Thames on a 15.82ha site and represents one of the last few opportunities for an important development in London.

An extension of the Northern Line tube network will see a ride of eight minutes from Westminster and 12 minutes from the City.

The Malaysian consortium, it is understood, managed to beat Chelsea Football Club owner Roman Abramovich to it for the site because the local non-governmental organisations were unhappy with his plans to set up a stadium there along with other mixed development.

Residents in the area feared that the prices of their properties would drop if a massive stadium was built, as it would result in horrendous traffic congestions.

The British press has given positive coverage to the Battersea project.

For the EPF contributors, a property investment project in London not in the other parts of England is a guarantee for getting investment returns.

There are many property buyers but little land or properties for sale because of the strict rules against high-rise buildings in London.

The reality is that land does not grow in London and it has proven to be recession-proof as far as properties are concerned because the City is an international hub.

Well, Cameron like the actor Colin Firth who portrayed King George VI in the movie delivered a fantastic speech to the listeners which comprised of investors and businessmen.

But Cameron will be judged by how many medals he can collect before his term is over. That's what counts finally.

By The Star

Chartis narrows it down to two buildings

CHARTIS Insurance Malaysia Bhd is said to be close to picking either Menara Worldwide or Cap Square Tower as its new corporate office in Kuala Lumpur.

Sources told Business Times that the two office towers fit the insurer's requirement - able to accommodate more than 3,000 employees and have the Multimedia Super Corridor (MSC) status.

It was learnt that Chartis needs close to 200,000 sq ft of office space to house all of its staff under one roof.

Menara Worldwide in Bukit Bintang is a 27-storey office block with a net lettable area of 250,000 sq ft.

The Grade A tower is owned by Worldwide Holdings, a subsidiary of the Selangor State Development Corp, and was completed in 2010.

Meanwhile, Cap Square Tower is a 41-storey office tower with a net lettable area 601,574 sq ft located directly opposite Chartis' existing office in Jalan Ampang.

Realtors said both office towers could fetch rental rates above RM6 per sq ft, which are negotiable in a long-term lease involving large space.

Property agencies in the city are already scrambling to tie the insurer to several office towers in the city, but remaining discreet since it involves a high-profile client.

Chartis is the global property-and-casualty insurance business of American International Group (AIG).

AIG received US$182 billion (RM570 billion) in government support at the height of the US financial crisis.

Top of the insurer's requirements is that its new office tower must have MSC status since its expanded operations will include those of American International Group Global Services Sdn Bhd (AIGGS), an information infrastructure service provider, and Chartis Technology and Operations Management (CTOM), a shared service centre for insurance and financial services and operations management.

Multimedia Development Corp website listed Menara Worldwide as a MSC status-building.

Cap Square Tower, according to its owner Europe-based Union Investment Real Estate (UIRE), was built to MSC specifications.

UIRE bought Cap Square Tower for RM440 million from by Bandar Raya Developments Bhd back in 2008.

Chief representative of AIG (Malaysia) Matt Harris, who is also chief executive officer of Chartis Malaysia Insurance Bhd, recently told Business Times that the insurer had reached full capacity at its current office and would need to move.

Wisma Chartis, its current head office in Jalan Ampang, Kuala Lumpur, now holds 540 workers.

The insurer also has a call centre and a back office team in Dang Wangi, Kuala Lumpur.

Currently, AIGGS has 300 staff operating in Cyberjaya and this is expected to more than double to 700 strong. CTOM, meanwhile, has 300 employees at Technology Park Malaysia in Bukit Jalil, which are expected to grow to 1,600 in future.

By Business Times