Tan Sri Chai Kin Kong and a business partner took over Lintasan Mayang Development Sdn Bhd and its 265-acre leasehold township project, known as Alamesra, in Kota Kinabalu, Sabah, back in 2003.
Since then, properties worth some RM555 million have been completed in the RM1.3 billion mixed-use development located across from 1Borneo Shopping Mall and Universiti Malaysia Sabah. In fact, Alamesra is the newest and largest integrated township in Sabah now.
As the executive director of Lintasan Mayang, Chai’s son Eddie oversees the continued development of Alamesra — his family’s first foray into property development — while slowly but surely making inroads into the Klang Valley.
“Alamesra is 50% complete,” the 33-year-old tells City & Country. “We launched it back in 2004 and there are still about seven to eight years to go.”
The Chai family has been involved in the timber logging industry for more than 30 years. In fact, Eddie had left Kuala Lumpur for Sabah when he was only 19 to work for his father in the logging business.
Chai is a substantial shareholder of public listed Sanbumi Holdings Bhd, an investment holding company with interests in sawmilling and timber log trading in Sabah. He is also a substantial shareholder in public listed Permaju Industries Bhd. Sanbumi has diversified into travel and tourism while Permaju Industries is into automobile distribution and services. Property development is the Chai family’s private venture.
Eddie moved back to KL in 2006 to pursue property development in the Klang Valley, starting with boutique developments in mature areas.
“After learning the ropes at Alamesra, I suggested that we return to KL as I believe there is greater potential here. So we established Maxims Circle Development Sdn Bhd,” he explains.
Eddie is the managing director of the company and its wholly-owned subsidiary Hecta Properties Sdn Bhd, both of which are owned by his family.
To date, the property development companies that Eddie heads have completed some RM578 million worth of properties and have ongoing projects worth about RM48 million.
Boutique projects in KL
Maxims Circle Development’s first project in KL was a RM25 million commercial development in Taman Melawati, Ampang, with only eight units of 3 and 4-storey shopoffices that were completed in 2008.
“Intermediate units were sold at RM3 million and the rental yields are currently around 8%,” says Eddie.
He then acquired a 3.2-acre tract in Segambut, KL — near Mont’Kiara and Desa ParkCity — in 2008 and launched Laman Bayu, a high-end boutique development, in March this year. The RM66 million development features 21 units of 3 and 3½-storey bungalows the built-ups of which range from 5,028 to 5,740 sq ft. The bungalows, which come with a swimming pool each, are going for RM2.99 million.
“Some 60% have been sold since our March launch and we are confident of selling them all within the next two months,” says Eddie. “The design concept is a mix of contemporary and traditional.”
The bungalows are suitable for two generations to stay under one roof as they have two master bedrooms, he adds.
Maxims Circle Development general manager Lee Chan Kuen says the buyer profile has been local so far, although some expats have recently expressed interest in the bungalows. “We are offering landed properties for RM2.99 million. We are also just three minutes from Desa ParkCity, so those who feel the properties there are too expensive are looking at Laman Bayu.”
The developer has a landbank of about 30 acres in the Klang Valley and is in the midst of acquiring more.
Coming up next is another boutique development on a 6.3-acre tract in the Melawati area, close to Selangor Dredging Bhd’s 20Trees and Sunway Group’s Sunway Rydgeway. The land was acquired at the end of last year and the developer expects to launch the project in 1Q2012.
“We acquired the land as it is surrounded by greenery and limestone hills. There will be a preview at the end of this year of the 52 semi-detached homes in a gated and guarded environment. A one-acre linear park and a swimming pool are among the facilities. We are considering Green Building Index (GBI) certification for the project,” says Lee.
The gross development value of the project is RM120 million.
The 3-storey semidees come with a lift and a rooftop garden each. Their built-up is about 4,000 sq ft while the indicative prices start at RM2.3 million. The development will also feature special landscaping.
Maxims Circle Development is also planning to launch medium-range condos on a roughly 10-acre tract in the Klang Valley by next year. The units will have built-ups of 600 to 900 sq ft and be priced around RM300,000.
Meanwhile, 70 upmarket townhouses are expected to be launched in Alamesra next year. The 3-storey properties will have a GDV of RM49 million.
“As Alamesra is located in the accelerating Sabah Development Corridor, investors have enjoyed a 30% to 50% appreciation in the value of their properties since the project was launched. The township will continue to make the headlines in Kota Kinabalu with its new launches. We expect it to mature by 2018,” Eddie explains.
The first phase of Alamesra comprised mainly commercial developments — 2 to 4-storey shopoffices that are fully sold. According to Eddie, the high-end bungalows that were launched in 2009 are still under construction. He says Alamesra is set to give the lifestyle in Kota Kinabalu a distinctive edge.
There is still a lot of demand in the property market, he adds. “It depends on how you position your product. You must study the market on a micro, localised level. More importantly, it is how you position yourself and the quality of your product.”
Besides timber and property development, Eddie is also the managing director of automobile distribution companies Cergazam Sdn Bhd, Capital Intertrade Sdn Bhd and Cergaz Autohaus Sdn Bhd, which carry such brands as Volkswagen, Chevrolet and Ford. These are wholly-owned subsidiaries of Permaju Industries.
Eddie says he is busy setting up car showrooms all over the country. “We have opened seven so far in prime areas, including in Jalan Pahang, along Lebuhraya Damansara-Puchong, Jalan Ipoh, Penang and Johor.”
The group recently acquired a 3.7-acre plot along the Federal Highway to house its biggest car showroom to date and plans to build another five in the near future.
Under Max Wisdom Sdn Bhd, the young entrepreneur recently opened Steam Room — his first restaurant serving Chinese food — in Sunway Giza in Sunway Damansara, Petaling Jaya, in mid-May.
“I plan to open another 12 outlets in the Klang Valley within a year. This month, we are opening an outlet in Viva Home, Cheras, and then another in 1 Mont’Kiara mall in August,” he says.
On why the family decided to enter property development after 30 years in the logging industry, Eddie says: “My father had been in the same industry, from Pahang to Sabah, since he was 18. We felt the change was timely as the timber industry was rather challenging then. A lot of people in the timber industry moved to Papua New Guinea and other Third World countries to expand their business. So, when the opportunity presented itself, we took over the abandoned Alamesra project.
“I learned everything from scratch at 19. Logging is an industry in which you need to be totally involved. It’s something practical and one cannot learn it from theory. Besides, it is a very low-profile job, especially since we fully export our goods.”
With so much to keep him busy, Eddie believes what drives him is his desire to keep learning — about everything. “I also like challenging myself and to constantly do something new. I am also fortunate as I have a lot of guidance and mentors as friends.”
The Philea brand
“It is one of our dreams to own a hotel, so my dad is fully involved in building the business,” says Eddie Chai, whose father Tan Sri Chai Kin Kong leads the family-owned hotel business under Philea Properties Sdn Bhd.
Its first resort, the 12-acre Philea Resort & Spa, is situated in Ayer Keroh, Melaka, and was completed in 2010. It comprises 210 rooms and is the only five-star resort in the country to be constructed primarily out of Russian pine logs.
“We wanted to create a unique experience to attract visitors and invested about RM150 million in the resort. Another company is managing it professionally for us,” says Eddie.
Just 35 minutes away from Melaka city, the resort has an average occupancy rate of 70%, which goes up to 90% in peak season.
Eddie discloses that the second Russian pine log resort under the Philea brand will be developed in Port Dickson. A 12-acre tract at the fifth mile of the Port Dickson road was acquired three years ago. Philea Water Villas Port Dickson, with a GDV of about RM290 million, is set to be launched at the end of this year.
“There will 173 villas in total. We plan to sell about 70% of them on a build-sell-leaseback basis,” says Eddie.
Indicative selling prices are about RM1.4 million to RM1.5 million for a choice of three types of fully furnished villas, all of which face the sea. The developer is looking at about 6% to 7% rental returns and plans to market the development overseas.
“Investors may like to buy the villas for investment or maybe as their weekend home. For this project, we are targeting the foreign market,” says Eddie.
Three fully furnished show villas have been completed.
“Port Dickson is still the nearest beach for those living in Seremban and Kuala Lumpur and we believe we can offer something unique to tourists,” Eddie adds.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 865, July 4-July 10, 2011
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