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WHEN you are a township developer that has been in the business for more than 30 years, many of your projects would have been developed in accordance with the surroundings of the sites.
However, what happens when 20 to 30 years down the road, new opportunities for the sites are unlocked that could not have been incorporated back then?
Mature townships that have seen new developments, roads and business districts spring up around them experience such problems as road alignments becoming less convenient and centres of activity slowly losing their relevance.
To avoid this, Sime Darby Property Bhd is in the midst of an urban regeneration exercise that will enhance the value of its existing developments, such as the Kuala Lumpur Golf & Country Club (KLGCC) estate and Desa Melawati.
Urban regeneration
According to Zulkifli Tahmali, Sime Darby Property’s head of property development 1, urban regeneration is the development of undeveloped land, the rationalisation of landbank in the area, enhancement in terms of infrastructure to create new land and the redevelopment of existing assets.
He says as far as urban regeneration is concerned, mature townships are the best places to start. “We basically have a number of townships that are already mature, such as Ara Damansara, Subang Jaya and Putra Heights. Opportunities that were previously unavailable to further develop these townships have now opened up, spurred by the extension of the light rail transit (LRT) line from Kelana Jaya to Putra Heights.”
Chief investment and marketing officer Dr Tan Kok Heng tells City & Country that Sime Darby Property is consciously looking at efforts to maintain and enhance the value of its existing townships, along with ways to provide them with better facilities and amenities.
“In this urban regeneration exercise, we will not only be adding residential properties, but also commercial, office and retail products. Along with these, we may even provide business parks and industrial facilities,” he says, adding that urban regeneration is mostly about harnessing the improved transport network in an area.
“We will enhance land value by developing around the train stations. Naturally, if you are residing in that area, the value of your land will increase.”
Sime Darby has kept aside two parcels in Subang Jaya for close to 40 years now and Tan feels it is time to look at enhancing their value and improving the facilities and amenities around them.
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| Top: An artist’s impression of the SJCC (in the foreground) Bottom (left to right): Zulkifli: Opportunities that were previously unavailable to further develop these townships have now opened up; Tan: In this urban regeneration exercise, we will not only be adding residential properties, but also commercial, office and retail products; Salem: SJ7 will have an integrated station for both the LRT extension and the bus rapid transit line that connect SJ 7 to Sunway and Sungei Way, making it the only development with both transport terminals integrated into it |
Upcoming launches
Two projects — the Subang Jaya City Centre (SJCC) and SJ7 — are coming up on the brownfield sites. Both are located along the LRT extension near stations No 4 and No 7.
According to Zulkifli, to tap the full potential of the SJCC site, Sime Darby rerouted the Tenaga Nasional Bhd transmission line that previously occupied a nine-acre stretch along the Subang Jaya Keretapi Tanah Melayu station and allocated a five-acre parcel for a new Tenaga main intake station.
“Tenaga had approached us to acquire the land for its main intake station, but we couldn’t allow that as the plan for the SJCC had a residential component. So we gave Tenaga the five-acre parcel and rerouted the transmission line away from the site. By doing so, we could reclaim the nine acres the Tenaga station had occupied and add them to the SJCC development. Otherwise, the space would have just been wasteland.”
The SJCC is Sime Darby’s latest transit-oriented development (TOD). TODs and TADs (transit-adjacent developments) are designed to maximise ridership on 400m to 800m of the transit points.
Coming up on 30 acres of freehold land in Jalan SS16/1 in Subang Jaya, the SJCC has an estimated gross development value (GDV) of RM3.96 billion and offers two blocks with 720 semi-furnished small offices/home offices (SoHos) with built-ups of 450 to 900 sq ft; a retail mall with a net lettable area (NLA) of 400,000 sq ft and a gross floor area (GFA) of 600,000 sq ft; serviced apartments and 350,000 sq ft GFA of office space. The prices have yet to be determined.
The SJCC will also feature a 1km landscaped boulevard with retail shops lining the bridges connecting the LRT station to the development. Sime Darby expects to launch the first phase in June this year.
Another one of the developer’s TOD developments — SJ7 — is coming up near LRT station No 7.
According to Salem Kailany, head of property development 2, the site on which SJ7 will be built used to be the office of one of Sime Darby Bhd’s subsidiary companies. “We have relocated the office and submitted the papers for the conversion of the land from industrial to commercial,” he says.
SJ7 will have an integrated station for both the LRT extension and the bus rapid transit (BRT) line that connect SJ 7 to Sunway and Sungei Way, making it the only development with both transport terminals integrated into it.
The 35-acre freehold development in Persiaran Kewajipan, USJ7, is located 6km from the SJCC and will feature 10 to 11 blocks offering 320 SoHos and 2008 apartments. The built-ups are between 580 and 1,500 sq ft while the prices start at RM750 psf.
The GFA of the project’s retail component stands at 1.5 million sq ft, office space at 783,130 sq ft and hotel at 661,400 sq ft. The GDV is estimated at RM3.86 billion.
The four-star, 12-storey hotel will feature 210 rooms, and serviced suites and retail outlets. The average room rate has yet to be determined.
The office component comprises four blocks offering units with built-ups of 220,000 to 240,000 sq ft and one block of shopoffices.
The launch of Phase 1 is targeted for FY2014 or FY2015 while the whole project is expected to be completed in FY2024 or FY2025.
Under its urban regeneration programme, Sime Darby is introducing more TODs and TADs, but Salem says it is facing challenges in incorporating the former into its plans in terms of connectivity and traffic dispersal.
“We are working very closely with the Subang Jaya City Council (MPSJ) and we are coming up with solutions in accordance with the master plan we are submitting.”
According to Tan, Sime Darby will not be focusing its urban regeneration efforts only on Subang Jaya, but also on its other mature townships, including Putra Heights; Section 13, Petaling Jaya; Desa Melawati and the Kuala Lumpur Golf and Country Club estate.
Putra Heights will have one LRT station and both the Ampang and Kelana Jaya lines, says Zulkifli. He believes Putra Heights will eventually become very popular due to its affordability and its location on the outskirts of Kuala Lumpur but with city centre-like connectivity.
Desa Melawati is a 230-acre development located next to the Middle Ring Road 2 (MRR2) and a ready interchange.
Besides the interchange that connects the township to the MRR2, Desa Melawati’s uniqueness comes from the fact that the Damai Melati station, which is an integrated transport terminal, is the last station on the Putra LRT line and is located only 800m away, Tan points out.
He adds that regeneration is not just implemented in locations next to a train station, but also takes into consideration the transport network.
Desa Melawati, which will be renamed KL East by the developer, is built on freehold land and offers 1,049 apartments and 1.6 million sq ft of office space. An 8.72-acre parcel will be allocated for equestrian and spa purposes. The plan for the equestrian park is still being finalised. The apartments, which have built-ups of 753 to 3,638 sq ft, have been 63% taken up since their launch in 2012.
“Regeneration doesn’t necessarily mean that the site must have a train station, but of course, we link and utilise all the transport terminals in the area. Some of our developments that are earmarked for urban regeneration do not have a train or LRT station in their vicinity, but we will continue to focus our urban regeneration efforts on them anyway since we are constantly trying to improve and give more to the residents who have been living there for a long time. This is in line with Sime Darby’s philosophy and efforts on sustainability,” Tan says.
Sime Darby has been working closely with the state government on rationalising the land and traffic circulation in the Melawati town centre, going so far as to contribute a few million ringgit to the road works.
Zulkifli says this will create more capacity in the town centre. With the infrastructure work done, Sime Darby has plans to develop a shopping mall in the area with an NLA of 620,000 sq ft called Melawati Mall.
“If we had not undertaken the Melawati urban regeneration programme, we would not be able to build a mall there as there would have been no capacity for it,” remarks Zulkifli.
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KLGCC
Sime Darby Property has plans for a provisional station to be built on the KLGCC estate. The state has approved the station, but it has yet to be decided whether it will be incorporated into the master plan.
The developer also plans a commercial development with serviced apartments and retail space that can tap the potential of the station, which will be linked to the convention centre in KLGCC and its commercial area G2.
KLGCC occupies 345 acres of leasehold land in Mont’Kiara, Kuala Lumpur, some 278 acres of which comprise two 18-hole golf courses. Another 47.81 acres will have 1,177 residences. Built-ups for the residential component are between 4,422 and 5,488 sq ft.
The commercial component of the development with a net floor area of 3.1 million sq ft is on 13.09 acres. Sime Darby has yet to finalise the plans for it.
Zulkifli says the plans for the residential and commercial components have been approved but there are still some refinements to be done. “We will also develop individual projects within the estate and then upgrade the whole area.”
Section 13, Petaling Jaya
Sime Darby Property is open to the possibility of redeveloping existing sites or acquiring any land next to them and developing it to complement them.
“We are open to options and if something can add value to the overall development, we will consider it,” Tan says.
In fact, Sime Darby Brunsfield Holdings, a joint venture (JV) between Sime Darby Property and Brunsfield International Group, will be developing two 1.5-acre sites with IOI Properties Bhd and amalgamating the two parcels.
According to Zulkifli, it is a JV within a JV for the development of a three-acre parcel in Section 13, Petaling Jaya. “IOI’s parcel fronts the main road while ours fronts the secondary road. If they develop their 1.5 acres, there will be problems. It’s the same for us. So we approached them and asked to amalgamate the two pieces of land for a bigger development with added value.”
The development, the plans for which have yet to be finalised, offers retail units fronting the two roads and serviced apartments with sky lounges.
It will be launched in Sime Darby Property’s financial year ending June 30, 2014.
Overseas urban regeneration
According to Zulkifli, Sime Darby Property’s urban regeneration exercise will not be restricted to its Klang Valley projects, but also apply to its overseas developments.
The Battersea Power Station in London was built in the early 1930s but lay idle for 29 years. Then, a consortium made up of three Malaysian entities — Sime Darby Property, S P Setia Bhd and the Employees Provident Fund — became its new owners. The plan conceived by the consortium for the site involves 3,400 homes, 1.7 million sq ft of office space, 552,716 sq ft of shops, 161,190 sq ft of F&B space, two hotels and 508,821 sq ft of community, cultural and leisure space, all on 39 acres.
“The Battersea Power Station project in London is both an urban regeneration project and a TOD. We have a new Tube station called the Battersea Power Station that is integrated into the development while the space occupied by the power plant is being transformed into apartments, serviced apartments and offices,” says Zulkifli.
He adds that the developer’s Bukit Timah development in Singapore, a joint venture with CapitaMalls Asia, is also an urban regeneration project and a TOD as the site used to house an industrial show room and the Bukit Timah train station. It is expected to be completed by the end of next year.
“This is a predominantly high-income location,” says Zulkifli. “So, in line with that demographic, we are going to develop a showroom and industrial building.”
The existing building will be torn down and in its place will be erected a 300,000 sq ft suburban mall with an NLA of 200,000 sq ft. The JV has also received approval for a basement linkage to the MRT.
Called the Sime Darby Centre, it is coming up on 140,879 sq ft of freehold land and will comprise a 5-storey commercial building with the potential to be converted into a retail mall.
Zulkifli says the products offered in Sime Darby Property’s TODs and TADs are targeted at first-time homebuyers and young professionals.
“It’s a matter of pricing. The demand is there, but if you start building apartments that are beyond the reach of young professionals, like a 3-bedroom, 2,000 sq ft apartment, then it won’t work.”
He adds that 60% to 65% of Sime Darby Property’s products in the SJCC, SJ7 and KL East are within the RM300,000 to RM600,000 range.
“First-time homebuyers can’t expect to buy a big house, but they can purchase a decent start-up home because this is the type of demographic we are targeting.”
Housing index
Not long ago, Sime Darby Property was the focus of young professionals when it announced the Housing Income Index 2013 in collaboration with Universiti Malaya.
In the report, it stated that the average household monthly income required to own a home in the Klang Valley was RM14,580. The lowest income level, at RM9,360, would be in Melawati.
Needless to say, the developer was bombarded with criticism. Shortly after, Sime Darby Property came out to say that the study focused on existing homeowners intending to purchase another property and not first-time homebuyers. It also said the research took into account the spending patterns of those owners.
“The data was on the average household income of homeowners looking to purchase new property, but that doesn’t mean you can’t afford a house. If you cut down one portion of your spending, you could save up enough to afford your own home.”
Moving forward, Tan says the developer is in the midst of preparing another survey, this time targeting first-time homebuyers and their spending patterns.
“We want to know the spending patterns and what the term ‘accessibility’ is to first-time homebuyers. It will be interesting to know how the spending patterns of first-time homebuyers differ from those of existing homeowners.
“It will also be interesting to know that if they insist on buying, how they will cut down on their monthly expenditure on other items.”
This article first appeared in The Edge Malaysia Weekly, on April 21 - 27, 2014.
