City&Country: Cover Story-- Growing in southern Klang Valley

Building a 'city in a garden'

What do Mid Valley City, Bukit Bintang and Mutiara Damansara have in common? They are hugely popular destinations located in the northern region of Klang Valley that offer a mix of shopping, leisure and work.

Lee Yoke Har, senior general manager of IOI Properties Bhd, believes the southern region of Klang Valley is largely an untapped market that is ripe for a development of the same scale.
IOI Properties is the property arm of IOI Corp Bhd.

IOI is ready to service the market with its 33.5-acre IOI City Development. Comprising IOI City Mall, two office towers and a hotel, the project has a gross development cost of RM1.5 billion and is part of the 788-acre IOI Resort City. To date, about 250 acres of IOI Resort City have been developed, consisting of Putrajaya Marriott Hotel and Spa, IOI Palm Garden Hotel, two blocks of high-rise office towers, an 18-hole golf course, residential enclaves and condominium blocks.

“Looking at the saturation in the north of the Klang Valley, it is only natural for development to head south. Here, we already have two established cities — Putrajaya and Cyberjaya — and there is still plenty of room for growth. We would like to capitalise on this early phase of development,” says Lee.

Within a 30-minute-drive radius of IOI Resort City, there is a catchment area of more than 2.7 million people or 620,000 households with a projected growth of 14% by 2020.

IOI Resort City also has the advantage of location. It is sandwiched between two gateways to Putrajaya, and is adjacent to Cyberjaya and about 20 minutes’ drive from Kajang, Bangi, Seri Kembangan, Puchong, Serdang and Subang Jaya.

Based on a recent household survey conducted by IOI, consumers living around this area have to travel more than half an hour for their shopping and leisure needs.

“With the rapid urbanisation of the suburban areas, the city centre is no longer the only option for work or social outings, and more consumers are opting to move away from it. We see this as a great opportunity to bring convenience to the consumer’s doorstep to cut down travelling time and ease traffic congestion,” says Lee.

Apart from the location and void in the market, Lee believes a golf course and a resort concept master plan serve as a major differentiating factor for IOI City Development, especially IOI City Mall.
“This is the place where one can feel a great sense of space while dining, shopping and being entertained in an intimate environment at one with nature — a rare luxury for most urban dwellers,” says Lee.

City in a garden
When architects Norman Garden and Tzong Wu, executive vice-president and principal of US-based RTKL Associates Inc, first saw the IOI City Development site in 2008, the first thing that struck them was the beauty of the land with its gentle rolling hills and abundant greenery.

Garden and Tzong set their minds on a design that would take advantage of the land’s natural terrain and create an indoor/outdoor environment that embodied the concept of a city in a garden.
“We wanted to approach the design in a sensitive way that took advantage of the views, was integrated with the landscape and gave it an iconic sense as a purposeful destination,” says Garden.

The south side of the mall fronts the spine road and overlooks the golf course while the north side offers a view of the city skyline and fronts the South Klang Valley Expressway (SKVE).

“The south side has the presence of the indoor/outdoor environment as well as a body of water within. The north side, because of the SKVE, becomes an address and statement,” says Garden.
The indoor/outdoor relationship was something the architects worked hard to create. At the same time, Garden stresses, it was critical for the design to have a contemporary look and feel.

“Some of our harder surfaces and patterns invoke the look of palm fronts and bamboo shafts. Even with the office buildings, a lot of those edges are based on natural motifs,” he says.

The architects included a green wall adorned with vines and plants and the design of the mall was climate-driven.

“We went with vertical glazing instead of horizontal glazing as the latter brings in the heat and you don’t want people to feel uncomfortable. We also ensured there were covered walkways on the exterior for shade from the sun and rain. Everything has been taken into consideration,” says Garden.

In an effort to reduce energy consumption, the mall will use a system called thermal energy storage, in which stored water is chilled at night to be pumped into the air-conditioning system to cool the air during the day.

Garden adds that the glass facade allows more daylight into the mall, thus reducing electricity consumption.

From a design perspective, a considerable amount of work has been put into creating an open layout in the interior to ensure the visibility of all the shops. It is an endeavour Garden feels is easy to talk about but difficult to achieve.

“In retail design, you should make a journey out of it and create an experience. You have to put the shops in a way where there are no blockages and dead ends. It’s like telling a story,” says Garden.
One aspect of the design addresses what Lee and Garden feel is critical to the success of malls today — the ease and speed of getting in and out of the parking lot.

“These days, if customers can’t get in and out in their cars fast, they will not come back,” says Garden.

It took the team about a year of careful planning to ensure the access and exit points of the development’s car park, exit points, ramps and lobbies are strategically positioned to achieve this requirement.

IOI City Mall is scheduled for completion by end-2013 while the offices and hotel are slated for completion by 2014.

“The design of the mall also takes advantage of the natural terrain, which gives an opportunity for the development to have multiple entrances, drop-off and pick-up points on the lower ground, ground and first floors, which are also integrated with the four-star business hotel and two office towers,” says Lee.

Being the largest shopping mall in the south of the Klang Valley with a nett lettable area of 1.45 million sq ft gives IOI the opportunity to offer a broad merchandising mix with depth, which Lee sees as the top motivator for repeat visits to a shopping centre.

The mall will be anchored by a department store, a supermarket, a hypermarket and a 10 to 12-screen cineplex. Its main retail offering will be fashion and accessories, complemented by children, home, IT, sundry and services as well as 80 F&B outlets.

Lee says the highlight of the F&B segment is its al fresco concept at the promenade area overlooking the golf course and greenery with water features.

“On the entertainment and leisure front, we are looking to deliver concepts catering for toddlers, teenagers, college students and adults with a bowling centre, karaoke, edutainment centre, book store and an exclusive entertainment idea,” says Lee.

The mall targets the mid and mid-upper segments with an average household income of close to RM6,000, which comprises mainly families, young professionals, and the 50,000 college students from eight major universities in the surrounding area.

The mall has four levels of shopping with more than 350 shops and it has an Olympic-size skating rink.

Offices and hotel
Lee sees a lot of synergy between working, shopping and living in a single location, hence the integration of the two office towers and hotel with the mall.

Each of the Grade A office towers, which will be Green Building Index-certified, has 30 levels and a gross floor area of 700,000 sq ft. The developer plans to lease rather than sell the units.

“I understand the office market may seem soft at the moment but we are talking about completion in three years’ time. By then, the mall would have been completed for about one to two years and be established. So, there will be people that are attracted to the convenience of working, shopping and living in a single location,” says Lee.

She adds IOI will try to achieve as high a green rating as possible for the towers.

The four-star business-class hotel has 363 rooms, of which 50 rooms are likely to be turned into serviced apartments.

As there are already the five-star Putrajaya Marriot Hotel and Spa and the four-star resort hotel IOI Palms Garden Hotel in IOI Resort City, the new hotel is geared towards interstate business travellers.

“We had a lot of discussion on this matter and we concluded that we don’t need another Marriot or resort hotel. By making it a business-class hotel, we fill a different niche,” says Garden.

The hotel is also targeting out-of-town holiday travellers. Citing Mid Valley City as an example, Lee says plenty of out-of-town people check into a hotel there, spending days shopping in the mall and relaxing.

She believes IOI Resort City can offer more than just shopping with its host of recreational and leisure activities, such as golfing and skating, and facilities to cater for both adults and children.
The two existing hotels run at an average occupancy of 70%.

“Typically, when you think of a resort-like development like ours, you will think it is very far away and once you’re here, you’re stuck in the resort with not much to do. What we are trying to achieve is to provide that kind of resort ambiance with city conveniences. That’s our ultimate goal,” says Lee.

Looking ahead, IOI plans to develop a blend of residential, commercial and retail developments in IOI Resort City but for now, its focus will be on IOI City Development.

“The planning of projects is ongoing. But we will not wait until the completion of the mall; once things have settled down, we will start work on new projects,” says Lee.



Retail space market remains healthy

With 43.4 million sq ft of retail space in the Klang Valley in 1H2011 and an expected increase to 46.6 million by end-2011, there might appear to be an oversupply in the market.

However, one should not take the figures at face value, says Allan Soo, managing director of CB Richard Ellis (CBRE).

“We need to qualify the figures. There could be an oversupply in terms of sq ft but it does not mean the market is weak as a result of it. In fact, the average current occupancy rate for shopping centres and hypermarkets in the Klang Valley is above 90%,” says Soo.

Citing an example, Soo says there were worries when work first started on Pavilion Kuala Lumpur in Bukit Bintang due to similar offerings in shopping centres such as Suria KLCC and Mid Valley Megamall.

“But Pavilion is trading well and while there is some dilution and overlap, it is not so much that the others can’t survive,” explains Soo.

He says better shopping centres always draw bigger crowds, simply because they offer a good retail experience.

“A lot of it is based on the provision of merchandise and services. If there is more merchandise and good service, people will be drawn to the shopping centre,” says Soo.

Soo estimates that out of the 131 shopping centres and hypermarkets in the Klang Valley, about 49 are performing well, including Mid Valley Megamall, 1 Utama, Suria KLCC, Sunway Pyramid, Bangsar Village and Subang Parade.

“It means the underperforming ones are either badly designed or should not be there in the first place. The [performing] group does well because it is market-driven,” says Soo.

The estimated 2011 Klang Valley retail space per capita is 7.35 sq ft. Soo puts the ideal figure between 3.5 to 4 sq ft. 

“Our retail space per capita is still lower than in Singapore and slightly higher than in Bangkok, so it’s not a drastic situation,” he says.

He also notes that consumers will flock to newer and better shopping centres when they are completed.

“There is a bit of cannibalisation and some dilution but overall, the market keeps growing as the population increases. Today, we have more than six million people in the Klang Valley and in five years, it can go up to eight million. Income, expenditure and tourism will increase, and the upcoming mass rapid transit will help as well,” says Soo.

However, he adds, with the uncertain global economy, it is hard to foresee how the retail market will be impacted.

“Next year is a question mark; it’s difficult to say how the global economy will affect consumer sentiment and the market. Having said that, it might not turn out to be negative,” says Soo.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 875, Sep 12-18, 2011