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City & Country: On a different path

Defying the critics

Questions were raised when news leaked that Newfields Property Management Sdn Bhd (Newfields) was planning to develop a 52-acre tract located in Puchong South back in 2004.

“People were sceptical, saying that the location was in the middle of nowhere. It was seen as a highly risky and ambitious development, more so considering this was our first project,” says executive director Khoo Boo Tee.

The tract is beside Lebuhraya Damansara-Puchong (LDP), a few minutes’ drive from the LDP Puchong toll.

An artist's impression of The Sanderson at Bukit SerdangThe sudden departure of an experienced consultant brought in to do the project planning left the new and inexperienced team on its own.

It was a difficult period as the team was new, says Khoo, but somehow it managed to pull through.

It is safe to say the team must have done something right, for phase 1 of Puchong Gateway, comprising 104 shopoffices, was fully sold a month after its launch in January 2010. The units have built-ups ranging from 3,960 sq ft to 7,400 sq ft and were priced at RM488,000 to RM1.5 million per unit. Phase 1 was delivered six months ahead of schedule in 2009, and according to Khoo, now enjoys a capital appreciation of up to 75%.

Phase 2, Gateway Square, comprising 66 units of shopoffices, was launched in January 2010 and was fully sold by end-March. The built-ups for the shopoffices in Phase 2 range from 3,575 sq ft to 11,648 sq ft, and are selling at RM788,000 to RM3.2 million per unit.

An artist's impression of Puchong Gateway Phase 2The entire development has a gross development value (GDV) of RM800 million.

“We expect to complete the Puchong Gateway development in six to eight years. The estimated GDV for the proposed Phase 3 is about RM200 million,” says Khoo.

Khoo attributes its success to the company’s approach to business. “If people do not see the value in a place, it is our job to create or add value. That is our approach.”

Seow Li-Ling, Newfields assistant general manager, chips in, “It’s good to take the initiative to go in and develop first, and others will follow.”

Newfields Group is the brainchild of Seow Lun Hoo, the former president and CEO of Hong Leong Credit Bhd (now known as Hong Leong Financial Group Bhd), the financial services and property arm of Hong Leong Group Malaysia. He is now CEO of Newfields.

The company was founded in 2002 with the setup of Newfields Advisors Sdn Bhd, an independent financial advisory firm.

Seow, who saw the potential in property development, started the property arm in 2004, with the acquisition of the Puchong Gateway tract.
From the outset, it was decided that Newfields would not be a cookie-cutter developer, adopting the same principles and standards as Newfields Advisors.

“Yes, we set out to make money but we must also deliver something good and of value to customers,” says Khoo.

“The relationship you have with the customer is very important, and it should come out in the product as well,” adds Seow.

Khoo, a chartered accountant with over 20 years’ experience in finance and corporate services, believes that the financial background of the senior management gives them an advantage.

“For us, everything starts from zero base. So, we don’t have these constraints about the things you can and cannot do,” says Khoo.

It was also an approach that helped the team push forward with its next project despite the cynical murmurs — The Sanderson at Bukit Serdang.

A first in Serdang
Serdang — a township neighbouring Seri Kembangan and Balakong known for its industrial parks — is hardly a place dotted with exclusive, high-end residential developments.

But, that may soon change if Newfields has its way.

Covering about eight acres of freehold land in Bukit Serdang, The Sanderson, the developer claims, offers a concept not before seen in Serdang — an affordable modern luxury living condominium within an eco-friendly gated community.

The development sits on the southern border of Technology Park Malaysia and is about 20 minutes drive to the Kuala Lumpur city centre via major highways such as Bukit Jalil Highway and Sungai Besi Expressway.

Newfields did all it could to ensure The Sanderson would stand out from the other developments in the area, from the concept down to the name itself.

Seow says the name was chosen after poring over nearly 20 pages of names.

“Sanderson is actually the name of a boutique hotel in London. The name fits with what we want to do as the hotel, like our product, is modern and fresh,” says Seow.

Khoo: If people do not see the value in a place, it is our job to create or add value. That is our approachThe name has attracted attention, invoking a sense of sophistication rarely seen in Serdang’s developments. According to Khoo, inquiries started flowing once news of the development spread, resulting in over 3,000 registrants before the launch.

Even so, not everyone was convinced about the project. “I remember people asking if we are really sure we want to go ahead with this kind of development in Serdang,” laughs Khoo.

He acknowledges that the location was chosen partly because of the lower land price compared with prime areas.

“As a new developer, this is a good location as the initial investment is not too expensive. It is also quite a mature area, so we see the opportunity to do something different here that targets the younger generation,” says Khoo.

The low-density (376 units with eight units per floor in Blocks A and B, while Block C has only two units per floor) development offers three types of products to cater for different groups.

Sanderson Homes (Block A) has 134 units with built-ups of 1,480 sq ft to 1,550 sq ft for young families. Sanderson Suites (Block B) offers 112 units measuring 900 sq ft catering for singles and newly-weds. The more exclusive and low-rise Sanderson Villas (Block C), meanwhile, offers 130 units with built-ups from 1,390 sq ft to 1,600 sq ft for larger families. Each unit comes with a garden and swimming pool view. Prices start from RM236,500.

The Sanderson also features a two-acre landscaped linear park, access card system for the car parks and lobbies, modern art sculptures created from recycled materials, rainwater harvesting system for landscaping use and 24-hour security patrols among others.

The development sits on elevated ground, situated in the inner and quiet part of Bukit Serdang, which Khoo feels gives the development a sense of privacy and exclusivity.

The project, which has a GDV of RM160 million, was launched in September 2010 and achieved 85% sales before the end of October. Block B is fully sold.

Khoo notes that at least half of the buyers are residents of Serdang, and he estimates about 30% are first-time home buyers. Notable too, is that majority of the buyers are buying for their own stay, which pleases Khoo as this will create a better tenancy profile.

“It shows that the younger generation living in this area are looking for a lifestyle product such as ours. It is the concept that grabbed their attention. There are hardly any similar products in Serdang or even Bukit Jalil,” says Khoo.

The team has been following some of the forums and websites commenting on this project, noting that some feel that The Sanderson may be the catalyst for an upgrade of the housing market in Serdang.

“Because of The Sanderson, property prices for condominiums in the area seem to have increased,” claims Khoo, who expects the property landscape of Serdang to change in the coming years.

A check with two real estate agents familiar with the area confirmed that the prices of other condominiums, such as the neighboring Villa Park, have increased by an estimated 5% to 10% since the launch of The Sanderson. The condominiums are mostly within the low- to medium-cost range.

There is also a rumoured high-end development of semi-detached homes and bungalows priced between RM1 million and RM2.5 million on a plot close to The Sanderson. If the rumours are true, the project could usher in more high-end developments here.

The Sanderson is not without its flaws. In order to get to the development, one would have to drive past a light industrial area, which can be unsightly to some.

However, Khoo says the industrial area is slowly being converted to commercial as proven by the conversion of some factories into shops.
“We believe Serdang is an up-and-coming area,” says Khoo.

The Sanderson is expected to be completed in 2013. However, as it has done with Puchong Gateway, Khoo hopes to deliver vacant possession ahead of time.

Playing it smart
With the success of The Sanderson, Newfields is keen to build more similar developments.  Khoo  notes that a lot hinges on the location and market.

“The property market changes frequently these days and it is so competitive. We have to be smart. Market research is essential to understand supply and demand,” says Khoo.

It is a key reason why Newfields is holding off on the development of a proposed 15-storey green office tower in Jalan Tun Razak, despite the prime location. The vacant land is sandwiched between The Icon and Menara See Hoy Chan and once completed, the tower will have a net lettable area (NLA) of 130,000 sq ft.

“We are talking to two potential long-term tenants. If they commit, we will start building. Or, if someone likes our concept and makes an offer to buy upon completion, we will build,” says Khoo.

What is already certain is the development of phase 3 of Puchong Gateway, scheduled to be launched in the second half of 2011. The six-acre phase currently has two proposed components — a retail mall with an estimated 200,000 to 250,000 sq ft retail space and 500 units of serviced apartments. The objective is to turn the mall into a destination mall, says Khoo, and he does not rule out changing the serviced apartments into office towers.

“It all depends on the market. We are still in the planning stages and the concept will evolve as it goes along,” says Khoo.

Meanwhile, Newfields is aggressively looking to increase its landbank, which presently consists of Puchong Gateway, The Sanderson and Jalan Tun Razak plots, measuring a total of 60.5 acres.

“We are scouting for land in Serdang, Puchong, Cheras, Kajang and Bangi as demand for properties in these areas is on the rise. We are also open to joint ventures,” says Khoo.

These areas of interest are in line with the company’s strategy to build in more matured townships where it can contribute fresh ideas and make a difference.

The company is looking at both residential and commercial developments, though Khoo admits residential projects are harder to develop.

“With commercial, most buyers are investors. Their concern is how the property will make money. With residential, most buy to stay so they are more particular, and if you’re selling 376 units, you are dealing with 376 homeowners,” says Khoo.

The goal, says Khoo, is to eventually become a township developer. While he cannot predict when that will happen, Khoo believes the team is slowly building its competency.

“We are very confident that in a few years, our company can easily double in size,” smiles Khoo.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 840, Jan 10-16, 2011
 

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