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City&Country: Banking on Tiong Nam’s industrial heritage

The Tiong Nam name is associated with logistics. After all, Tiong Nam Logistics Holdings Bhd (TNLH) has been in business since 1972 and steadily extending its operations into new locations and industries.

In the latter case, TNLH has ventured into equipment manufacturing and real estate development. Given the group’s background in logistics, going into property was a natural step.

“The group has actually been involved in property development over the past 25 years. [For example], we’ve been building and then leasing back warehouses to clients such as Flextronics,” Tiong Nam Properties Sdn Bhd (TNP) project manager James Tan tells City & Country.

Besides warehouses, TNLH also builds shops, showrooms and workshops for sale and lease and configures them according to the needs of its customers. So far, the group has built these properties across Malaysia and ventured into Thailand and China, albeit on a small scale, with one-off warehouses.

Despite sharing the Tiong Nam name, it should be noted that TNP is merely a related party of TNLH — the latter’s founder and managing director Ong Yoong Nyock has a 50% stake in the former while the rest is held by his wife Yong Kwee Lian, who is also an executive director of TNLH, a search on the Companies Commission of Malaysia’s website shows.

Ong has a 15.24% direct stake and 29.12% indirect interest in TNLH while Yong holds  a 0.19% stake and has deemed interest of 44.17%, according to Bursa Malaysia filings on Oct 1, 2007.
“TNP is the marketing and management company for all TNLH’s projects,” explains TNP sales director Jimmy Khoo.

According to the promotional materials for the industrial parks launched by  TNP and TNLH,  the latter’s associate company Complete Bayview Sdn Bhd and indirect subsidiary Japan Original Electric (M) Sdn Bhd are listed as the developers of the projects.

These companies have developed corporate factories — light-industrial products with modern façades that double as shops and offices — in Shah Alam and Petaling Jaya.

“We saw good demand for semi-detached, multi-use corporate factories from small-scale distributors and small and medium enterprises, which form the bulk of our clients,” explains Khoo.

Thus, TNP and TNLH have been launching small-scale industrial parks in quick succession this year, each larger than the last. Their latest offering is Tiong Nam Industrial Park 2, a 26-acre leasehold project in the Shah Alam Industrial Park. Tentatively, the project will feature 50 units of 3-storey semi-detached factories and 3-storey detached factories with built-ups of 7,000 to 10,000 sq ft. Prices have not been firmed up. The units will have warehouse space of 46ft high. The ceiling height of the first floor is 20ft while for the second and third floors, it is 13ft.

Other features include a service lift that can support loads of up to 1.5 tonnes and three-phase 150 amp power supply. The project is open for registration and its launch date is to be set within the next two to three months.

Previous projects
In March this year, TNP and TNLH launched the Alam Premier Industrial Park in Alam Megah in Section 33 of Shah Alam, says Khoo.

“That comprised 10 units on 3.7 acres of freehold land. We have not used the Tiong Nam name yet because we want to capitalise on the ‘Alam’ name. After all, Alam Megah is a much sought-after part of Shah Alam,” he  adds.

The factories were priced from RM4.4 million to RM8.1 million. Land areas range from 9,500 to 20,679 sq ft while the built-ups are between 7,900 and 14,500 sq ft. Currently, the project is about 70% sold.

In June, TNP launched its leasehold Tiong Nam Industrial Park, which will be built on a 7.66-acre tract in Section 51 of Petaling Jaya. The project comprises 19 units of 3-storey corporate factories — 18 semi-detached units and one detached unit — with built-ups of 7,700 to 14,000 sq ft and land areas of 9,000 to 20,000 sq ft respectively.

The ground floor of the factories has a ceiling height of 20ft while on the the upper floors, it is 13ft. Other features include a 1.5-tonne service lift with door width of 1.3m and a three-phase 200 amp power supply. The ground floor can withstand forces of up to 7.5 newton per sq m. Prices start from RM4.7 million.

A month after its launch, the project achieved a take-up of 50%, says Khoo. Cumulatively, the three industrial parks have a gross development value (GDV) of RM450 million.

In the future
On the drawing board of TNLH and TNP are their first residential and commercial projects next year in Puteri Harbour, Nusajaya and Shah Alam.

TNLH unit Terminal Perintis Sdn Bhd acquired a 3.23-acre tract from UEM Land Holdings Bhd unit UEM Land Bhd for RM30.95 million in June. TNLH plans to build a hotel and serviced apartments there. While the GDV, number of hotel rooms and units of serviced apartments have not been firmed up, the development cost of both projects is estimated at RM156 million.

TNLH will also develop retail properties and serviced apartments on an 8.5-acre parcel in Shah Alam. The GDV and specifics of this project have also not been firmed up.

In the meantime, the group will continue to develop its landbank with emphasis on industrial properties as TNLH has accumulated mostly industrial land over the years.

“We have enough land to keep us occupied for the next 10 years,” says Tan, declining to say how big the group’s landbank is.

Outlook
Economists have predicted that Malaysia’s exports will slow in the wake of the economic uncertainty wrought by the debt crisis in the US and Europe and Japan’s twin natural disasters.

However, Khoo is unperturbed by the bleak picture. “Of course, it will affect consumer sentiment. But if you were to look at the previous two experiences we had — the 1997 and 2008 financial crises — our property market reacted at a different level. As the 2008 crisis was a global one compared with the 1997/98 Asian financial crisis, the property market in 2008 should have been in worse shape. However, it performed better that year.

“Nowadays consumers and investors are smarter in terms of managing their cash. Hence, the most important factor is the location of the property. A good location will sustain values,” he comments.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 873, Aug 29-Sep 4, 2011

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