SOMETHING is brewing at Berjaya Land Bhd, but it is not another land deal.
The property development arm of conglomerate Berjaya Corp Bhd has in recent
years become better known for its costly and controversial land deals in
Malaysia instead of its new projects.
Lim Ching Choy, who joined Berjaya
Land as executive director in November, feels that it is time for a
change.
“That’s why I was brought in [because Berjaya Land is quiet
locally]. I know it’s a tall order but I plan to achieve sales in all our
immediate projects by April 2015, which is the end of our financial year,” he
tells City & Country.
The group has projects worth more than RM2.5
billion lined up over the next year and Lim plans to sell all of these
properties by 2015. In the financial year ended April 30, 2014, its property
development segment saw revenue of RM201.9 million and net profit of RM2.6
million.
Lim took over the group’s local projects from CEO Datuk Francis
Ng, who now looks after Berjaya Land’s projects abroad — Jeju Airest City in
South Korea (183.7 acres, gross development value of US$3.2 billion), The Four
Seasons Place in Kyoto, Japan (five acres, RM1 billion), The Great Mall of China
on the outskirts of Beijing (18.5 million sq ft built-up, RM7.5 billion), and
two projects in Vietnam.
Lim is no stranger to the real estate industry,
having spent the last 12 years as the CEO of HCK Capital Sdn Bhd, group managing
director of Ho Hup Construction Co Bhd, CEO of Magna Prima Bhd and CEO of Mah
Sing Group Bhd. Before joining the real estate industry, his career in the
banking sector spanned almost 20 years.
Can he achieve his ambitious
goal? He believes it is possible through sheer hard work.
 |
| I think if you
have a plan, a target, you have to work even if it’s the holidays … that’s why
sometimes it’s good to launch during the holiday season, because you’ll have
less competitors” — Lim |
“My philosophy is to work 365 days a year. I work during Chinese New Year, I
work during Hari Raya. There is no such thing as a slow period because it
depends on your marketing and how you position yourself. That’s why I will
launch Jesselton Villa [in Penang] on the fourth to eighth day of Chinese New
Year at Plaza Gurney. I think if you have a plan, a target, you have to work
even if it’s the holidays … that’s why sometimes it’s good to launch during the
holiday season, because you’ll have less competitors. Because they are resting,
I am working.”
He lists three immediate launches that will keep the group
occupied over the next year, including its Ritz-Carlton Residences at Berjaya
Central Park. The entire development was announced in 2009. However, the project
took a while to launch, prompting some quarters to assume that the project had
been abandoned.
Why launch it now? “We revised the plans a lot to be in
line with market requirements. For example, our Ritz-Carlton Residences was
revised to have smaller units to suit demand and it is already near completion.
Not many developers launch their projects now but we are almost ready to sell
our project,” he explains.
Developed
to sellThe group will continue to market its Menara Bangkok
Bank at Berjaya Central Park, a 2.7-acre freehold mixed-use development on Jalan
Ampang, Kuala Lumpur. The 48-storey building is named after Bangkok Bank, which
bought the top eight floors (105,000 sq ft) in 2011 for RM100 million.
Meanwhile, Berjaya Sompo Insurance Bhd, an associate of the Berjaya
group, took up six floors or 78,000 sq ft , bringing the tower’s total sales to
RM315 million. The group is putting 15 storeys on the market with an estimated
value of over RM200 million.
The offices will come with en suite
executive bathrooms with showers, low-e glass, variable refrigerant volume
system, carbon dioxide level monitoring on all floors including the seven floors
of parking bays, and a high-efficiency lift system with destination control
system. The building also comes with lots earmarked for commercial use and food
and beverage outlets.
While Berjaya Land is selling the offices on a per
floor basis, the offices will be issued strata titles upon vacant possession and
completion of payment. This means the owners will be able to sell the offices
individually on the secondary market, says Lim.
He adds that the offices
are targeted at investors, multinational corporations and companies that wish to
own office space in Kuala Lumpur’s central business district.
“We are targeting to sell 5 to 10 floors in the next three months. In fact,
we are already negotiating with several parties. We are looking at not just
local companies, but also foreign buyers who are keen to invest in Malaysia,
especially the office sector. For Singaporeans, it is cheap because it amounts
to around S$600 per sq ft and we are targeting yields of 7% net so that is very
attractive,” he says.
“We are in talks with two foreign companies now,
while a number of local companies have expressed interest in our project. They
are keen to buy some floors as they get to keep the units and enjoy capital
appreciation while paying less in instalment than what they would pay in
rent.
“Assuming you get an 80% loan to finance your purchase, you end up
paying only RM5.80 psf over the next 30 years. This beats paying RM8.50 to RM12
psf for a building of the same standards.”
However, despite the
building’s apparently good prospects, Berjaya Land is not interested in keeping
the building. “We are a developer, not an investment holding company, so it
makes more sense for us to sell the building,” he explains.
Next up is
the Ritz-Carlton Residences, which will feature 48 storeys of fully-furnished
serviced apartments. About 70% of the units will offer a view of the Petronas
Twin Towers and KL Tower, and a premium will be placed on these units.
“We are looking at late February or early March to officially launch the
residences. Today, all 16 units of the penthouses have already been reserved
while 40 typical units have been reserved,” he says.
Some facilities
exclusive to the residences include concierge service and pools. “The office
tenants have the right to look at the pool, but not swim in it,” he
jokes.
Lim is banking on the fact that the development is strata titled,
and has facilities for individual units, green credentials and a Golden Triangle
address to attract buyers. He hopes this product will sell despite the
oversupply of office space in Kuala Lumpur, coupled with competition from
decentralised areas with depressed rents.
“That the office market is
depressed is misleading. Valuers describe the office market as depressed in
general, but there is still interest in green and MSC-certified office
buildings,” he says.
YY Lau, director of YY Property Solutions Sdn Bhd, concurs: “New office
buildings that are at strategic locations and equipped with MSC Status and green
building certifications are expected to be in a better position to secure
tenants if the landlords offer reasonably higher rental rates than the buildings
without these two features,” she tells City & Country.
Outside of
Kuala Lumpur, the group will proceed with The Link 2, its Bukit Jalil mixed-use
development next to its Bukit Jalil Golf & Country Resort. The Link 2 will
comprise condominiums and shopoffices. Phase one will comprise “affordable”
serviced apartments and 4- and 6-storey shopoffices. Over half of the
shopoffices have already been sold, while the serviced apartments are not yet
available for sale.
“We haven’t decided on the price yet but the new
launches nearby are selling at around RM770 psf, so we definitely cannot sell
below that price,” says Lim.
Bukit Jalil has seen a slew of new
condominium launches in recent years but he is banking on Berjaya Land’s history
in the area to push the project through the market. Some of the group’s previous
projects in the area are Covillea, Savanna 1 and 2, Arena Green Apartments,
Greenfields Apartments, The Link, KM1 and Green Avenue Condominiums.
The
group has around 14 acres left in Bukit Jalil. This includes the second phase of
The Link 2, which will be launched at a date to be determined later.
See
Kok Loong, principal of Metro Homes Sdn Bhd, observes that most buyers are
investors who took advantage of rebates and the now-defunct developer interest
bearing schemes.
“Most the buyers are investors because of developer
interest bearing scheme (DIBS) and rebates. There is also a small group of
end-users that prefer to stay in prime locations with easy access to KL, Puchong
and PJ. Usually, they are from nearby areas like Puchong and Serdang,” says
See.
According to him, gross yields of condos in the area are around 5%
to 6%. Most investors prefer to sell their units immediately instead of holding
onto them as it firstly costs around RM20,000 to RM30,000 to furnish the units
for tenants, and secondly, capital appreciation of new condos over the past
three years range from 10% to 20% per year.
Over in Penang, the group
will launch its Jesselton Villas development, which is adjacent to the Penang
Turf Club and the exclusive Jesselton Heights enclave. So far, about 50% of the
lots have been reserved by investors from Penang, Kuala Lumpur, Singapore, Hong
Kong, Thailand and Indonesia, he says.
The project will comprise vacant
bungalow lots instead of the bungalows, semi-detached homes and low-rise
condominiums previously planned.
While Berjaya Land is only offering
vacant lots within the gated and guarded project, it will offer design and build
services to the buyers in the future. However, the designs and prices of the
bungalows have yet to be firmed up.
Lim is undeterred by what many
players and observers say will be a challenging period ahead.
“There have
been sales in the past two months and so far the response has been positive. The
regulations and policy changes in the industry have not actually had an impact
on these projects because these are very good locations.
“I think buyers
in niche and high-end projects are less sensitive to all these. I think if you
are an owner and mid-term investor, you will not be affected. As an investor, my
personal view is that if you want to make money from properties, your holding
period has to exceed five years to reap good returns. I think that
differentiates the speculators from the long-term investors,” he
says.
This article first appeared in The Edge
Malaysia Weekly, on January 20, 2014.
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