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City&Country: Cover Story-- Ambitious plans

The oft-asked question — where exactly is the centre of Petaling Jaya? — stems from the fact that properties located closer to the town centre usually command higher values and returns. The chief reason buyers are attracted to such developments are, of course, the easy access to amenities.

With this in mind, Cherish Springs Sdn Bhd — a wholly-owned subsidiary of Leadmont Development Sdn Bhd that is known for such projects as Leadmont Hill in Cheras, Kuala Lumpur, and Amansiara in Selayang, Selangor — aims to make its mark on the property scene by redefining the “centre” of PJ with its mixed-use development, Centrestage.

Cherish Springs executive director Mark Tung tells City & Country that the company is looking to make Centrestage not only Petaling Jaya’s new focal point, but also to stand out from the myriad developments in the area.

The RM500 million project will be located on a 3.66-acre leasehold site that was previously home to an EON service centre on Jalan 13/1. The status of the land has since been converted from industrial to limited commercial.

Leadmont’s projects have been mainly small, medium-cost ones, so Centrestage will mark a milestone for the developer as its first mixed-use development and its largest project to date in terms of value.

At the helm of Leadmont is director Wong Hon Chong, 70, who has over 30 years’ experience in the real estate business. The other directors are Lai Kui Yin, also 70, and Wong Tzy Jian, 44.

Lai is also the chairwoman of Optima Lead, another of Leadmont’s subsidiaries. Along with Hon Chong and Tzy Jian, she was previously on the board of Halick Holding Sdn Bhd and Hatak Development Sdn Bhd, which completed a shophouse development in Port Klang and three housing developments in Negri Sembilan — Taman Pantai Mewah in Port Dickson, and Taman Rantau Jaya and Taman Bunga Orkid in Seremban.

One of Leadmont’s better-known projects is Amansiara, developed by a subsidiary Wirama Sdn Bhd. The RM308 million project spans 100 acres and comprises nine phases. It is 50% completed, says Tung.

Wirama’s other projects include the RM60 million Taman Bukit Emas in Balakong that was completed in 2005. The development comprised both semi-detached and terraced homes.

Tung — a qualified architect — is also a director of Comtrac Glenview Sdn Bhd, a unit of DRB-Hicom Bhd, which is involved in projects like Glenview Villa in Cheras. He says the Leadmont directors are very hands-on in their projects. He himself took the lead in designing Centrestage.

The project
Centrestage will offer 33 retail duplex units, a 352-room hotel and 775 office suites in two blocks — one, 11 storeys and the other, 14 storeys. The hotel rooms will be sold under a sale and leaseback scheme as serviced suites.

The developer is currently working out the details such as prices, rental returns and hotel management, and expects to finalise them by mid-July. It is also aiming for at least a three-star rating for the hotel. Tung says the company sees demand for quality accommodation from the businesses coming up in Petaling Jaya.

The office suites, marketed as designer suites, will be the first phase of the project. With built-ups of 300 to 956 sq ft and priced from RM198,000, they were put up for sale in February.

These suites, based on the work, relax and play concept, will be partly furnished and come with a pantry and bathroom. They will be serviced by One-Inspiration Development Sdn Bhd, also known as The Inspiration Group, which has common shareholders with Cherish Springs.

As a group, this will be Leadmont’s first attempt at managing a mixed-use development. Its previous experience includes managing Amansiara, a landed strata development.

However, some of the directors have experience managing high-rise properties. Tung, for one, has 10 years’ experience with Comtrac Glenview, managing Glenview Villa in Cheras.

Tung says the suites are an affordable proposition for young professionals looking to set up businesses as the suites will allow them to work and live at the same place. This will cut down the time and cost spent on commuting to work, he says.

To date, 70% of the designer suites have been sold. As for the retail duplexes, the developer has not decided whether to sell or keep them to lease out. Nevertheless, it wants to attract trendy al fresco dining outlets, fashion boutiques and auto showrooms that require good frontage. Tung notes that there are five car dealers in Section 13 and Section 17 alone.

Tung says some Singaporean investors have proposed to acquire the office suites en bloc, but Cherish Springs is not ready to sell them en bloc for two reasons — firstly, it wants to control the tenant mix and secondly, it wants to ensure that the office suites achieve a comfortable occupancy before opening the retail suites for sale or lease. The retail suites range from 453 to 5,055 sq ft.
“It would be irresponsible to sell/lease the retail suites without making sure that the offices are taken up first so as to create human traffic in the area,” he says.

The retail area will have two entrances and a 44ft long common area on the ground floor for tenants to carry out promotional activities or hold events, Tung adds.

Cherish Springs is in the midst of applying for a Green Building Index (GBI) certification for Centrestage. It expects to complete the project by 3Q2014.

Future plans
The developer has 20 to 30 acres of prime land in the Klang Valley. Although Tung declines to reveal further details, he says the group owns another site in Section 13, PJ, on which it plans to develop a lifestyle retail project.

The lifestyle retail project, with an emphasis on fashion, has been christened Avenue D’Vogue to reflect its aspiration as a “house of design”. Tung says the 12-storey block near Centrestage at Jalan 13/2 will have a catwalk in the concourse area for retailers to promote their fashion products.
The retail development will also offer al fresco dining and a pool on the roof as it is designed not just as a “one-stop” resource for all things fashion design-related, but also as an after-hours venue for guests to unwind. Avenue D’Vogue will have 127 office suites measuring 300 to 500 sq ft each.

The developer believes the area has room for more lifestyle commercial and residential products to cater for the local population, which is growing not only in numbers but in affluence. The group’s research, says Tung, shows that there are about 40,000 three-generation households in PJ, where the average monthly income per person is RM10,000.

While Cherish Springs may launch Avenue D’Vogue later in the year, it is eager to get Centrestage off the ground and transform this part of the city further. This will keep the developer busy until mid-2014.

The reinvention of Section 13

A number of developers see great potential in the Special Area Plan (Rancangan Kawasan Khas, or RKK) for Section 13, gazetted by the Petaling Jaya City Council (MBPJ) to facilitate the conversion of land in the area from industrial to mixed use or limited commercial use. This is expected to affect 220 acres of industrial land.

The RKK has helped bring about developments such as Jaya One, 3 Two Square and Jaya 33 that have created a new building landscape and lifestyle experience for the area, with its offices, retail outlets and dining places.

Other upcoming developments in the neighbourhood include Fraser & Neave Holdings Bhd’s redevelopment of its 12.7-acre dairy manufacturing plant site into a landmark mixed-use development with a gross development value (GDV) of RM1 billion.

Star Publications (Malaysia) Bhd has inked a deal with JAKS Resources Bhd’s indirect subsidiary JAKS Island Circle Sdn Bhd to develop a 24,568 sq m parcel here into two office blocks, a 20-storey commercial and educational block and a 15-storey residential block with a GDV of RM370 million.

Office development Plaza 33 is coming up right next to Jaya 33 on a 2.3-acre tract at the intersection of Jalan Semangat and Jalan Kemajuan. It will offer 500,000 sq ft of net lettable area upon completion next year.

It is learnt that Sime Darby Property is also planning to build an office block in Jalan Kemajuan for leasing purposes, an industry observer tells City & Country. A Sime Darby Property representative says the project plans are still pending approval from the board of directors.

Centrestage developer, Cherish Springs executive director MarkTung says Cherish Springs had its eye on a one-acre parcel next to Jaya One, but another developer got it instead. According to him, the price of the parcel has appreciated to RM420 psf from RM200 three years ago.

What are the prospects?
According to SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng, office developments in Section 13 and Section 19 that have redefined the commercial landscape there include Jaya One, 3 Two Square and Jaya 33.

In general, investors who purchased units in these developments at the end of last year and early this year have seen rental yields of 7% to 10%, while those who bought these offices four years ago are currently enjoying yields of 9% to 10%.

Chan says rents at 3 Two Square, where her agency is headquartered, averages RM2.50 psf. Noting that some offices in PJ are experiencing a slower take-up — tenancies have not hit 70% to 80% yet — she advises investors of newer developments to wait for their offices to gain more traction before charging higher rents.

Centrestage will complement the redevelopments in Section 13, says Chan, adding that the designer suites with facilities like kitchenettes and bathrooms will more likely be used
as SoHos.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 862, June 13-19, 2011

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