City&Country: Cover Story-- Back on the scene

Property development business streamlined

Bina Puri Holdings Bhd started rolling out new projects in November after having been  quiet on the property development front for the past two years.

According to executive director Matthew Tee,  this had nothing to do with lack of land, interest or financial muscle to build homes.

“I’m looking at projects [with a total gross development value (GDV)] of about RM1.33 billion,” he tells City & Country. “If you look at the revenue of our property division in 2009 and 2010, it was close to zilch because of the [wait for] approvals and residents protesting.

“Once residents protest, it will set you back by three to six months because everybody is so conscious, like ‘you do piling, it’ll contribute to cracks in my house’, but it’s subjective.” The company faced this problem in its One Jesselton condominium in Kota Kinabalu, Sabah, but that issue has been resolved.

Best known as a contractor, Bina Puri has undertaken property development work since its inception in 1975. For instance, Ideal Heights Sdn Bhd, in which the group holds a 20% stake, was responsible for the development of Bukit Idaman in Selayang, which comprises mostly condominiums, shops and the group’s blue-and-white headquarters.

“We have streamlined the property development business by undertaking all projects under Bina Puri Properties Sdn Bhd because previously it was a bit rojak [mixed-up] — sometimes [projects are done] by our subsidiaries, some by our associates [hence the streamlining],” explains Tee.

Rehabilitating Newgate 21
For now, the affable 36-year-old is excited about the rehabilitation of the Newgate 21 project in Taipan 2, USJ 21. The project has been renamed Taipan Square. This marks Bina Puri’s first foray into retail management through the 3-storey mall that is part of the integrated development.

The 11-year-old development was abandoned twice, first by developer Solarglow Sdn Bhd, which also abandoned the Rhythm Avenue serviced apartments project in USJ 19. The first white knight, Pinggiran Setia Sdn Bhd, bailed out in 2006. This unfortunate turn of events left some 1,000 buyers in the lurch.

Tee says Taipan 2 is not as vibrant as Taipan in USJ 10 because of the stigma attached to being an abandoned project. “The prospects for the area have improved because an LRT station is set to come up here.”

The mixed-use development’s second white knight, Sumbangan Lagenda Sdn Bhd, was appointed late last year to revive the project. Bina Puri entered the picture when it was appointed a contractor for the project, but ended up acquiring a 55% stake in Sumbangan Lagenda in June.

“We started out as a contractor but the developer proposed that we help it rehabilitate the project together as it was short of money,” explains Tee.

“So when we came in, we made sure all the legalities had been resolved and we had the financing to take over the project. Because we don’t want to come in and find that sales are bad. Then it becomes another abandoned project.

“We have had a session with half the existing buyers. They are positive and most of them want to keep the serviced apartments.”

According to Tee, almost 500 of the over 1,000 buyers met by Bina Puri have decided to pay an additional 20% of the selling price 10 years ago to account for inflation and higher construction costs.

Taipan Square now has a GDV of RM291 million and will comprise four 33-storey towers housing 1,153 serviced apartments, five levels of parking space and a 3-storey retail podium. The serviced apartments are from over 300 to 1,800 sq ft in size.

“When the apartments were built many years ago, they were meant to be holiday homes. And the main podium had a big ‘Mickey Mouse’ swimming pool. So [the idea was] that you bring your family there over the weekends to play, and there are shopping facilities with a podium downstairs,” observes Tee.

According to a court order obtained by Bina Puri for the Taipan Square development, buyers may opt to add 20% to their original purchase price or be refunded 80% of the price after the project is completed in October 2012. When the project was launched, the apartments were priced at RM150 to RM160 psf, says Tee. In comparison, Sumbangan Lagenda plans to sell the 81 remaining units at RM380 psf. “Actually, I would rather the buyers take the refund and let me sell their units at a profit,” quips Tee.

The retail podium offers almost 275,000 sq ft of net lettable area. “Our money is in the retail podium. We plan to either keep it or sell it en bloc. If we were to sell it ad hoc, it’s a recipe for disaster,” remarks Tee.

“We have brought in a professional retail expert ... it comes with a track record, the know-who and know-how ... rather than us trying to do it ourselves. We don’t pretend to be retail experts.

“We haven’t looked at the rents yet, so we will need to discuss this with our retail expert. It’s not a big mall, so it will be a lifestyle mall. A comparable one would be Plaza Damas in Sri Hartamas or Leisure Mall in Cheras. We don’t have room for expansion unlike Sunway Pyramid, for example.”

Bina Puri has a stable of new projects for launch over the next one year.  These include the landed residential development Laman Vila in Segambut or “North Kiara” as Tee would rather call the area, The Puri Tower apartments in Puchong, Petrie Vila and Medini Square in Johor, and Jesselton View and One Jesselton in Kota Kinabalu.

Laman Vila, Segambut
Laman Villa will comprise 22 units of 3-storey and 3½-storey linked bungalows and eight units of condovillas priced at RM700 psf. This translates into a GDV of RM100.2 million. The gated and guarded development will cover 3.3 acres of freehold land in Segambut. Facilities include a clubhouse, a swimming pool, a gym, landscaped gardens and a children’s playground.

“If we had developed a condominium on this 3.3-acre site, maybe my GDV would have been RM300 million to RM400 million, but the question is, can we sell it? How long will the gestation period be? Let’s say we cannot sell it, the bank will kill us, we will have to take out RM1 million a month just to keep the project going,” Tee says, adding that the project has received a lot of enquiries.

The group held a soft launch of the project at the end of November. Completion is by June 2013, says Tee.

The Puri Tower, Puchong
This medium-cost project features one 20-storey condominium block that will house 138 units, including eight penthouses. The units range from 1,162 to 2,315 sq ft in size. This development is coming up next to Trinity Group Sdn Bhd’s The Heron condominium.

Selling at RM350 psf, the total GDV of the development is estimated at RM56.8 million. The Puri Tower will also include two shops, a toilet for disabled people, a multi-purpose hall, surau, gymnasium, management office, two pools, a children’s playground and landscaped space. It is likely to be launched in 1Q2012 and expected to be completed by September 2013.

Petrie Vila, Johor
This low-density residential project in Johor Baru has an estimated GDV of RM73.6 million. The gated and guarded development will come up on two acres of leasehold land and will feature 23 linked villas with built-ups of 5,300 to 5,600 sq ft.

The units come in 4-storey and 5-storey configurations. Prices are set at RM700 psf. All units within Petrie Vila come with a sky pool. The development also comes with a clubhouse. The project’s soft launch is scheduled for 1Q2012 and expected to be completed by July 2013. The official launch date has not been set yet, says Tee.

Medini Square
Bina Puri’s other project is more significant. Medini Square in Iskandar Johor Malaysia, with an estimated GDV of RM485 million, is an integrated mixed-use development with 45 shopoffices that stand at four to six storeys high, a 32-storey office tower and a 32-storey SoHo tower. The floor layouts have not been finalised yet.

“We are quite optimistic about the take-up of our shopoffices. Meanwhile, the offices range from 900 to 4,000 sq ft [or half a floor] in size. We are talking to some institutions and investors who are looking at buying en bloc. The talks are at a preliminary stage,” remarks Tee.

The offices and SoHos are priced at RM700 psf while the shopoffices are priced at RM500 psf onwards. Medini Square will come up on 6.02 acres of leasehold land in the Iskandar Malaysia master development. Its features include a central plaza, alfresco dining environment, landscaping and water features, says Tee.

Sabah footprint
The group is expanding its presence in Kota Kinabalu as well with its upscale Jesselton View in Jalan Lintas and One Jesselton in Kepayan.

A high-end condominium development, Jesselton View will comprise 80 units with sizes ranging from 1,242 to 3,800 sq ft. Prices are pegged at RM470 psf, bringing the estimated GDV to RM66 million. Features include a sky lounge, sky garden, swimming pool, wading pool, Jacuzzi, barbecue deck, gym, 24-hour security, indoor and outdoor CCTV, children’s playground and a covered car park. The project is scheduled for launch sometime in 2Q2012 and targeted for completion in 2013.

One Jesselton will feature 144 units of high-end condos in a 12-storey block and will be built on two acres of leasehold land. The condos will be priced at RM450 psf, which translates into a GDV of RM73 million. The project is expected to be launched next June and has an estimated completion date of 2014.

For now, Bina Puri is committed to successully reviving Taipan Square and delivering its other developments. This should keep the group busy for the next two years, says Tee.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 888, Dec 12-18, 2011