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City&Country: Busy days ahead for MCT

The year 2012 is shaping up to be the busiest year for MCT Consortium Bhd since its establishment some 17 years ago. With 14 new property developments, coupled with a new business focus and its entry into Johor’s property market, means that the group will likely have its plate full for the coming decade.

The surge in the number of projects is in sharp contrast with the recent lull in its business activities. “The last two years have been very dry for us,” MCT executive director Danny Goh tells City & Country. This was due to the planning of its developments, which encountered a lot of hiccups due to their designs and roadblocks from the local authorities, he adds.

This year, MCT is targeting to launch projects with a total gross development value (GDV) of RM2.6 billion and has set a sales target of RM1.6 billion, says Goh.

Since 2008, the group has completed nine projects with a total GDV of RM702 million. However, this amount will be dwarfed by the 14 projects, comprising townships and mixed-use developments, that are ongoing and in the pipeline. When fully rolled out, the 14 developments will have a total GDV of RM11.8 billion.

These projects, to be launched on a staggered basis over five years from 2012, include Taman Tropika in Bangi; T-Parkland at Templer Park in Rawang; The Place in Cyberjaya; Kingsley Hills in Putra Heights; Taman Bunga Raya @ Universiti Tunku Abdul Rahman (UTAR) in Segamat, Johor; Lakefront in Cyberjaya; V-Residence in Selayang Heights; V-Residence in Serdang; d’Pristine in Medini City, Johor Baru; 162-Residence in Selayang; V-Residence in Serdang; Vertical City in Tebrau, Johor Baru and One City in USJ 25.

The group currently has a landbank of 950 acres of which 331 acres will be utilised for the 14 developments while the rest will be developed within a span of 10 years. Most of the land is located in the Klang Valley (773 acres) while the balance is located in Johor Baru and Segamat, totalling 177 acres. Of the latter, 8.42 acres is located in Medini Iskandar.

New directions
Established in 1995, MCT started out in civil construction as a design and build contractor specialising in pre-cast construction. In 2005, MCT diversified into property development. To date, it has completed RM1 billion worth of projects.

MCT has made a successful transition from a pure construction play into a property development outfit, with almost 100% of the group’s turnover now derived from sales of new properties. Its construction division still exists, according to Goh. It currently does in-house projects.

However, Goh acknowledges that the property business is a highly challenging one. “The main concern is the acquisition of prime land, which has become increasingly harder to find. Also, the time span between acquiring your land and developing it takes up to five years and it becomes very tiring.”

With more developments springing up in the Klang Valley, land there is becoming scarce. For Goh, who believes that the Klang Valley is the best place to develop, this becomes a major concern. “Available land in the Klang Valley will diminish,” he says. “Thus, when you eventually want to acquire land for developments, the right type of land is hard to come by.

“The group needs to have constant income to keep it afloat. It is very challenging as your staff expect increments and bonuses, so as a boss, you have to look for opportunities to keep the group growing.”

This has prompted MCT to look into broadening its revenue base to ensure stable and sustainable income streams. Goh reveals that MCT has decided to diversify into asset management, the education sector and penetrating the Johor property market.

One example of its move towards growing its recurring income stream is the group’s One City project in USJ 25 in UEP Subang Jaya. The development sits on 77 acres of freehold land, has a total GDV of RM3.6 billion, and comprises five phases.

The first phase, Garden Shoppe, consists of 63 units of three and four-storey shoplots located on 2.62 acres of freehold land and commands a GDV of RM97 million. Garden Shoppe is currently 100% completed and fully taken up.

One City’s second phase, dubbed Sky Park, will comprise 243 hotel rooms with 460,000 sq ft of retail space and 500,000 sq ft of office space. It sits on 5.14 acres of freehold land and commands a GDV of RM439 million. Completion is expected to be in early 2013.

The third phase, The Place, will offer 220,000 sq ft of boutique retail space, 200 karaoke rooms and a banquet hall that can accommodate 1,000 people. It sits on 1.44 acres of freehold land and commands a GDV of RM224 million. Completion of The Place is expected to be in the middle of 2013.

The fourth phase, dubbed The Square, will offer 324 units of small office flexible offices (SoFos) and 176,000 sq ft of retail space. It is located on 1.61 acres of freehold land and chalks up a GDV of RM268 million. Completion of The Square is expected to be in the middle of 2015.

Its fifth and final phase will comprise a 1.5 million sq ft retail mall, 1.5 million sq ft of office space, 1,000 hotel rooms and 1,000 units of SoFos. It sits on 19 acres of freehold land and commands a GDV of RM2.6 billion. Completion is expected to be at end-2017.

Goh points out that only 20% of One City will be up for sale as MCT is retaining 80% of the development worth RM2.4 billion for recurring income, as part of the group’s new business direction.

To become an asset owner and manager, MCT is also rolling out hotel, mall, shoplot and serviced apartment projects. From the previously mentioned potential GDV of RM11.8 billion, Goh plans to keep RM3.8 billion worth of assets for passive income.

“Hotels and shopping malls, which have potential for growth, will make for good passive income,” he explains. “In five years, MCT’s turnover will rely on passive income while 20% will be from sales. By becoming an asset manager, the group will gain more constant returns.”

Among such assets are the hotel, retail and office space at phases two, three, four and five in One City @ USJ 25, 690 units of hostels in Taman Bunga Raya @ UTAR in Segamat, Johor, and 946 units of SoFos, 284 hotel rooms, premium offices and retail space in Vertical City in Tebrau.

Hotels and education
Goh says the hotels will be independently owned and managed by MCT under its hotel, entertainment and recreation division. “Experienced hotel management personnel will be engaged to manage the hotels and its related businesses. New concepts in hospitality management will be introduced, incorporating electronic technology to facilitate and create a new and exciting hotel experience,” he says, adding that the first hotel — dubbed E-city hotel, which will offer 243 rooms located in One City @ USJ 25 — will be operational by mid-2013.

Besides asset management, MCT is also diversifying into education. “We are looking at education in the long run with our Kingsley International School,” says Goh. “The international school offers primary and secondary education, and A-levels.”

The group is also looking into tertiary education ventures like colleges as it believes this business will be another stream of steady recurring income. MCT is already constructing a six-acre campus for its Kingsley International School in the 98-acre Putra Heights, Subang Jaya. Currently, it has 450 students under its education programme. The students occupy a shoplot in Putra Heights, which is rented by MCT while waiting for the campus to be completed by end-3Q2014. The campus will be 80% managed by MCT.

Goh sees the education division as making up 10% to 20% of the group’s income. This, he says, will make MCT more stable.

d’Pristine @ Medini City
MCT is also expanding into the Johor property market. It recently signed a collaborative agreement with Iskandar Investment Bhd (IIB), the master developer of Medini Iskandar, to develop an 8.42-acre land parcel in Medini City, Nusajaya.

Dubbed d’Pristine @ Medini City in Johor Baru, the project will offer 641 units of SoFos, 1,323 units of studio apartments, 300 hotel rooms and retail shoplots.

Goh says MCT had been eyeing opportunities in Medini Iskandar for the past five years. However, the group felt the timing was not right then and there was not much infrastructure to support its interests there.

“The Medini land is very strategic, opposite Legoland. We approached IIB first and found that there was a lot of potential within the Iskandar region.”

MCT currently has 177 acres of land in Johor Baru — 6.88 acres of freehold land in Tebrau acquired seven years ago and a 161-acre parcel in Segamat acquired in mid-2011. In Tebrau, the group will roll out its Vertical City development with a GDV of RM613.6 million by early 2014. It will offer 946 units of SoFos, 284 hotel rooms, premium office and retail space.

In Segamat, MCT plans to develop a mini township dubbed Taman Bunga Raya @ UTAR consisting of a hostel, landed houses and shoplots. MCT has signed an agreement with the university to build its hostel. Plans are still being finalised.

Goh says if its first development in Johor garners good response and is successfully delivered, the group will look into developing more land within Medini Iskandar. However, this would also depend on whether IIB provides more land to MCT.

Asked about MCT’s plans moving forward, Goh says the group already has enough to keep it busy for another 10 years. He also believes that Malaysia remains the best place for property development and the group has no intention to enter foreign markets.

“Malaysia is still our main focus since it has a lot of potential. If you are in the property business, you must be familiar with the area you are developing. If you venture overseas, you may not understand the market sentiments there,” he says.


This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 918, July 9-15, 2012

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