|We want to tell the residents that Damansara City will not reduce the value of properties in the neighbourhood, but enhance it. — Tan|
AFTER many years on the drawing board, GuocoLand (Malaysia) Bhd’s multi-billion-ringgit flagship project Damansara City is finally ready to be introduced to the market.
“You won’t believe the amount of time and effort we have put into designing this project. There were so many rounds of changes to the plan simply because the team was unwilling to compromise … as we are keeping most of the components, we have to ensure they last in terms of design, quality and maintenance,” managing director Tan Lee Koon tells City & Country.
“It was the planning of so many aspects of the project that led to its delay. I admit it took too long, but it was worth the effort!” he adds with a chuckle.
The RM2.5 billion development, which is coming up on an 8.5-acre freehold site next to Pusat Bandar Damansara, comprises two 28-storey residential towers, two office blocks at 33 storeys and 19 storeys each, a five-star hotel and a 4-storey shopping mall.
Currently, only the residences, named DC Residency by Clermont, are up for sale. There are 370 one-bedroom to 3+1-bedroom luxury serviced apartments with built-ups that range from 938 to 3,056 sq ft. Tan says about half the units are under 2,000 sq ft in size.
The 185 units in the first tower offer views of Bangsar and Damansara Heights. They will feature premium fittings, such as Poggenpohl, Miele, Gessi Emporio and Catalano, while the facilities include an Olympic-length saltwater infinity pool, an aqua gymnasium and a regular gymnasium, a multi-purpose hall, function rooms, private dining rooms, a barbecue area and a mini-theatre.
As the residences come under Clermont — a newly launched five-star hotel brand under the Guoco group’s UK-based GLH Hotels Management — the hotel will offer à la carte services, such as room service. Maintenance fees are set at 35 sen psf for the first year and will be decided by the joint management body thereafter.
Prices average RM1,500 psf, which is probably a new benchmark for high-rises in Damansara Heights.
“It is one of the best products you can find in Kuala Lumpur today. In fact, price-wise, it is a ‘value buy’ because property prices even outside the city are not low anymore. It is also not often that you get the chance to own a unit in a big strata development with a Damansara Heights address. So, this is a good opportunity for people who want to own hotel-serviced apartments or condos outside KLCC. You really don’t have that many opportunities in Damansara Heights or even Bangsar,” Tan claims.
|An artist’s impression of Damansara City, GuocoLand’s flagship integrated development in Damansara Heights|
He opines that the closest competitor for DC Residency by Clermont is Bandar Raya Developments Bhd’s Serai condominium in Bangsar, which is similarly priced on a psf basis.
Over 90% of Serai’s units (built-up: 4,025 to 6,913 sq ft) have been sold since they were launched late last year, says a BRDB spokeswoman. “The more popular built-ups were the bigger 5,000 to 5,200 sq ft units,” she adds.
While Serai’s sales are commendable, the condos are not similar to Damansara City’s serviced apartments. They are bigger and are not part of an integrated development.
However, Twins — a 708-unit condominium in Damansara Heights — is comparable. The built-up of its average units is from 766 to 2,098 sq ft while that of its larger units is 2,171 to 5,261 sq ft.
According to Jalin Realty senior negotiator Eugene Liew, occupancy at Twins is around 30% to 40%. Although most of the condo owners are “extremely reasonable” in their rental expectations, the ongoing construction nearby and the resultant noise pollution have discouraged take-up.
“However, with an MRT station in Pusat Bandar Damansara, once the whole of Damansara City is developed, expect the take-up and rents to be good,” he says.
Tan is not overly worried about the prospects for Damansara City’s serviced apartments, though. He says the developer did not take the “branded residence” route to merely entice buyers.
“The condo market in KL is very speculative and that is not the direction we want to take. Of course, we cannot avoid some speculation, but what we want is for buyers to eventually live here and appreciate what we have done for them. The hotel and services are in line with this,” he explains.
That being said, GuocoLand will see how the first phase fares before releasing the next residential tower, the units of which offer views of KLCC. The residential component of the project will be the first to be completed, in around 1Q2015.
Next to the serviced apartments will be one of the first Clermont hotels in the world. The 312-key hotel will have standard 45 sq m rooms and its features will include a relationship manager who will identify guests’ preferences before they even step into the hotel, all-day dining, a Chinese restaurant, an executive lounge, function rooms, ballrooms, a bar, swimming pool, spa, gym and health club.
To set it apart from the other hotels, the operator will infuse its design and services with some local flavour.
Clermont will be targeted at the leisure market, although it also plans to cater for business travellers due to its proximity to town. It is eyeing rates similar to those charged by hotels in KL Sentral.
“You’d be surprised. According to a study we did, there are no five-star hotels in Damansara Heights and Bangsar. The demand for hotels in this area is very strong. Our nearest competitors are probably the hotels in KL Sentral and there are a lot of hotels of different classes that are either available or under construction, such as the KL Hilton, Le Meridien, the newly opened Aloft and the upcoming St Regis.
|An artist’s impression of DC Residency by Clermont, GuocoLand’s branded residences|
“However, I don’t think we can compare our hotel to those in KL Sentral because they are focused on business travellers, thanks to the electric rail link to KLIA and the offices there. Ours will service the catchment in Bangsar and Damansara Heights,” Tan points out. The hotel is expected to open in 2016.
Meanwhile, the two Grade-A office towers have received much interest because there are hardly any new office towers in Damansara Heights. GuocoLand is in discussions with a number of prospective tenants, but Tan would not say if they have inked any deals.
“Currently, most offices are in the Golden Triangle. Damansara Heights has an advantage because traffic is not that bad compared with that in downtown KL. But it is still not so far away and you still have the KL address. Corporations are very concerned about the address of their offices, so this location is good,” he says.
Both towers are Green Building Index and LEED-certified, but only the 19-storey tower is MSC-certified. This will enable the offices in Damansara City to capture a wider number of industries, Tan explains.
The 33-storey office tower has a gross floor area (GFA) of 686,836 sq ft and floor plate of 15,661 sq ft while the shorter tower has a GFA of 329,441 sq ft and floor plate of 15,069 sq ft. Tan would not divulge any other details, including the rent psf of the office towers.
According to DTZ Malaysia executive director Brian Koh, office rents in Damansara Heights range from RM3 to RM5.50 psf, depending on the quality of the building.
Last but not least is the mall. GuocoLand plans to set the mall apart from competitors in Bangsar, namely Bangsar Village I and II (BV), Bangsar Shopping Centre (BSC), and Publika in Mont’Kiara, through its lifestyle-retail mix and an open rooftop.
“There is a lot of weightage on F&B, including our anchor tenant. There are a few fashion tenants as well. Of course, we are cognisant of the malls in Bangsar, and we will try not to have anything identical to what is in the other malls because then what would be the point of visitors coming to our mall?”
According to Tan, the mall has received good response from potential tenants, thanks to the high spending power of its targeted households in Bangsar, Damansara Heights, Mont’Kiara, Sri Hartamas, Jalan Duta and Taman Tun Dr Ismail.
He says the developer is looking at around 60,000 households within these neighbourhoods with a monthly income of about RM20,000 and hopes the footfall will be comparable to that of BSC and BV.
Another reason the group has to be choosy about its tenants is its net lettable area (NLA). While its GFA is 311,000 sq ft, its NLA is only 169,000 sq ft because the rest of the space will be outdoors, including on its open rooftop.
“The concept is very nice. It’s a 2-storey terraced structure where each unit has a restaurant. It’s probably comparable to Pavilion KL’s Level 3 where you have an outdoor walkway lined with F&B outlets,” Tan explains. The mall and offices will be completed around mid-2015.
Damansara City, earmarked as an entry point project under the Economic Transformation Project in 2011, is set to transform Damansara Heights, whose rows of quiet, luxurious bungalows and odd medium-rises reflect its history as the place high-ranking civil servants retired to.
Given its sizeable footprint, some residents of the posh enclave have protested its construction for fear of it upending their peaceful neighbourhood.
“It took us some time to explain to the residents what Damansara City is all about, but sometimes people oppose change no matter what. So, communication is vital. We want to tell them that Damansara City will not reduce the value of properties in the neighbourhood, but enhance it,” Tan stresses.
He draws parallels to Eiffel Tower, which saw opposition from the French before it was built. “Now, it is a tourist destination, so I guess the French are proud of it,” he laughs.
“This happens everywhere. There will always be resistance to large-scale projects. I cannot say all the residents are on board because that is impossible — only time will tell. It’s not up to us to draw conclusions about how Damansara City will turn out,” he says philosophically.
New price benchmark, bright prospects for office space
Two consultants and a negotiator polled by City & Country are mostly upbeat about the prospects for Damansara City, which is coming up in Damansara Heights. However, the high price per square foot of the residential component, DC Residency by Clermont, garnered mixed opinions.
“I am not sure if the market is ready to accept RM1,500 psf at this point as the asking price for Twins [a nearby condominium] ranges from RM750 to RM1,100 psf and the units are only about 30% to 40% occupied now. That said, the sizes of Damansara City’s serviced apartments will draw interest due to the lower absolute value of its prime location,” says Jalin Realty senior negotiator Eugene Liew.
Two projects that have fared well despite a RM1,500 psf price are Bandar Raya Developments Bhd’s Serai and One Menerung Block C. The sales of these projects were driven by three main factors: the owners of large houses in the area wanting to “downsize” to units in a secure environment; the prime location near Bangsar Shopping Centre; and the sterling reputation of the developer.
However, the units of Serai, to which GuocoLand compares its serviced apartments, are larger, Liew points out. The built-up of the typical units is from 4,900 to 6,900 sq ft while that of the penthouses is around 13,000 sq ft.
Moreover, the condominiums in Damansara Heights and Bangsar are in general standalones while DC Residency by Clermont is part of an integrated development, he says, adding that most of the condominiums in Damansara Heights are older, such as Desa Damansara, Prima Damansara, Desa Bestari, Chempenai Parc, SPB Towers and Aman Berigin. Their occupancy varies from 60% to 80%, depending on their maintenance, facilities and location.
The next project to be launched in the area is likely to be Selangor Properties Bhd’s SPB Towers 2 — a 20-storey block with 107 units — in Jalan Batai early next year.
Meanwhile, VPC Alliance (Malaysia) Sdn Bhd managing director James Wong says due to a lack of land and new supply of high-end condominiums in Damansara Heights, coupled with a high office population there, there is pent-up demand for such properties. “Any new high-end condominium there is likely to do well.
“DC Residency by Clermont will set a new price benchmark in Damansara Heights. Hence, we expect a spin-off effect of higher condo prices in both existing and future developments in the area because they will benefit from the higher selling prices and new amenities nearby.
“The Clermont brand will differentiate its luxurious residences from other high-end condominiums in the vicinity. This development will be selling a lifestyle.”
According to the consultants and negotiator, most of the buyers will likely be residents of Damansara Heights and its immediate neighbours Bangsar and Kenny Hills, who are familiar with the area, followed by investors from Asia and Europe.
DTZ Malaysia managing director Eddy Wong opines that many buyers will likely by owner-occupiers, but there will also be strong investment interest on the back of the MRT station coming up at the intersection of Jalan Damansara and Jalan Maarof.
According to DTZ Malaysia executive director Brian Koh, the office rental market in Damansara Heights is quite stable with rates ranging from RM3 to RM5.50 psf, depending on the quality of the building.
“There has not been any new Grade A office in the area since the completion of Menara Millenium in the early 2000s. So, there is expected to be some latent demand for higher-quality space, but in a more competitive environment,” he says.
Wong of VPC Alliance says some Grade-A offices in the vicinity are Menara Millenium in Jalan Damanlela (occupancy: 95%, rent: RM5.50 psf), Wisma UOA Damansara II in Jalan Semantan (95.2%, RM4.90), UOA Damansara in Jalan Dungun (84.4%, RM4.50) and Bangunan Malaysia Re in Jalan Dungun (88.4%, RM4.80).
“Rents of Grade-A buildings here are about 30% to 40% lower than in KLCC, where the average is about RM7 to RM10 psf. Because of this, easier access via the SPRINT Highway and proposed MRT stations within walking distance of each other in Jalan Semantan and Pusat Bandar Damansara (PBD) by 2017, the prospects for new Grade-A offices in the commercial area of Damansara Heights are bright. There is a high probability of decentralisation and relocation of offices from KLCC to this area,” he remarks.
There are 28 office buildings in Damansara Heights with a total net lettable area of 5.72 million sq ft. Of this, nine office blocks in PBD account for 3.05 million sq ft. However, in 3Q2015, when Damansara City’s office towers are slated for completion, PBD is expected to be in the middle of redevelopment to include four new office towers and two refurbished offices with 1.09 million sq ft of gross floor area. Therefore, there will be only 3.44 million sq ft of office space in the market at the time.
“Hence, we don’t see any oversupply of office space in Damansara Heights. Occupancy will remain resilient even though there is a glut of office space in KLCC,” Wong points out.
This article first appeared in The Edge Malaysia Weekly, on October 28, 2013.
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