Titijaya looks to tourism pickup in Sabah to boost growth

KOTA KINABALU (March 6): Titijaya Land Bhd, which is making its debut venture in Sabah via an RM575 million waterfront mixed development in Kota Kinabalu with a Chinese partner, aims to capitalise on tourism and recreational activities in the state to fuel demand for its projects.

“The world population is ageing. Unlike the old days, [the] elderly nowadays like to travel around and they are wealthier. Moving forward, combining property development and tourism, leisure is the way to go,” the group’s 62-year-old founder and group managing director Tan Sri Lim Soon Peng told The Edge Financial Daily last week after launching the Kota Kinabalu project, The Shore.

“[So] for this project, we hope to bank on Kota Kinabalu’s robust tourism activities. [The] property market may have slowed down, but not in Kota Kinabalu. Projects in good locations can still sell,” he added.

The Shore, to be built on a 1.83-acre (0.74ha) leasehold plot in the Kota Kinabalu city centre, also marks the group’s second tie-up between the Klang Valley-based developer and China state-owned China Railway Group Ltd’s unit, CREC Development (M) Sdn Bhd (CRECD).

Titijaya inked a framework agreement with CRECD last Monday, here, to establish the general terms of their partnership. Titijaya will hold 70% of The Shore, while CRECD will take up 30%. The agreement is similar to the pair’s first partnership in the RM2.1 billion mixed development in Jalan Ampang, Kuala Lumpur, said Titijaya.

Essentially, CRECD is to provide expertise and international exposure, while Titijaya will take the lead in securing the land for development and sale of the units, besides credit management and administration. No special purpose vehicle will be set up for this project.

Titijaya is in the midst of finalising the finer details of the tie-up, in respect of the engineering, procurement, construction and commission aspects, said Soon Peng, in which joint marketing collaboration for The Shore will be included. Hence, details of the working relationship are scarce presently.

The Shore comprises two blocks of 25-storey buildings, with 561 serviced apartment and commercial units. On completion, it will have the first rotating sky bar in Kota Kinabalu and the highest glass observation deck in Borneo.

The selling price per sq ft is at RM1,107, starting from RM453,000 per unit, with build-up sizes ranging from 409 sq ft to 541 sq ft. The project targets local and foreign buyers, and 100 units have already been taken up, said Soon Peng.

Also last Monday, Titijaya inked an agreement with The Ascott Ltd that will see Ascott managing the serviced residence component of the project, known as the Citadines Waterfront Kota Kinabalu, for 15 years.

With a total development cost of RM415 million, Titijaya said the project will mainly be funded internally. It declined to reveal whether CRECD will be footing part of the cost or not.

With construction to start this year, the project is expected to start contributing to Titijaya’s earnings in the second half of 2017, with an estimated gross profit contribution of RM150 million over five years.

Titijaya’s announcement came after it proposed to buy three parcels of leasehold land in Kota Kinabalu, via the acquisition of Sri Komakmur Development Sdn Bhd for RM70.92 million. The three parcels, measuring a total of 75.44 acres — on which The Shore will take up 1.83 acres — could fetch a total gross development value of RM1 billion, according to Titijaya deputy managing director Lim Poh Yit.

As The Shore only takes up a small portion of the land Titijaya is buying, Soon Peng said Titijaya and CREC “are both keen to explore the possibilities of further collaborations in the property development scene in Sabah, to establish more new landmarks in the state”.

Meanwhile, Poh Yit said the remaining parcels will likely feature integrated projects with a mix of residential and commercial components too. “Stay tuned,” he told reporters, when asked when the company will launch those projects.

“Outside of Kota Kinabalu, we will continue to look for land bank, particularly on islands including Penang,” added Soon Peng.

This article first appeared in The Edge Financial Daily, on March 6, 2017.

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