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City&Country: Cover Story-- New landmark in the heart of JB

Southkey building world-class integrated township

Johor Baru is a city coming alive. You have to be there to see the changes and feel the vibrancy,” says Quek Cham Hong, executive director of Southkey Properties Sdn Bhd.

Southkey Properties is a subsidiary of Selia Pantai Sdn Bhd, a joint venture between Tasik Zamrud Sdn Bhd (70%) and Kumpulan Prasarana Rakyat Johor Sdn Bhd (30%), and a unit of Selia Group.
Selia Group’s core business is engineering and construction and it has more than RM400 million worth of assets and cash reserves exceeding RM100 million.

Aside from the catalytic projects in Iskandar Malaysia that are nearing completion, such as the Newcastle Medical University and Legoland Malaysia, the state’s capital city is morphing into a modern and dynamic urban centre under the RM1.8 billion Johor Baru City Transformation Plan.

And poised to play a part in this changing landscape is Kota Southkey, more popularly known as Southkey, which is coming up in what is believed to be the last prime development tract in the densely populated city centre.

It is Southkey Properties’ maiden venture, although Selia Group has completed smaller projects under different subsidiaries before.

“Southkey is positioned as a world-class integrated township that will become the pride of Johor Baru,” says Quek.

This may sound like an ambitious statement by some, but Quek firmly believes the developer is capable of making this a reality.

“For starters, we have the best location in the city, and location is crucial to the success of any commercial development,” Quek points out.

The 330-acre mixed development (net sellable area of 204 acres) sits on the Majidee Army camp site, about 4km north of the city centre and within the flagship Zone A of Iskandar Malaysia. It is served by three major highways — the Tebrau Highway, the soon-to-be-completed Southern Link Expressway and the Eastern Dispersal Link (EDL). The latter traverses the eastern portion of Southkey and connects to the North-South Expressway.

Southkey will receive another boost if the proposal for a light rail transit (LRT) station along Jalan Bakar Batu — which fronts the development — is approved.

“There will be an LRT station within Southkey and that will enhance accessibility,” says Quek.
The development is surrounded by established housing and commercial estates such as Taman Molek, Taman Sentosa, Permas Jaya and Taman Pelangi, giving it a catchment of more than 120,000 within a 3km radius.

“Southkey is also only a four-minute drive from the new Customs, Immigration and Quarantine (CIQ) complex. We have an added advantage because of the EDL and CIQ, which give not only the locals but also Singaporeans easy access to the development,” says Quek.

Because of its location, the developer has designated about 70% of the development for commercial projects.“We feel this is the best use of the land. But we are not just building offices and shops, but also creating a lifestyle with an emphasise on sustainable development,” stresses Quek.

Southkey comprises nine precincts and is split into two phases — 88 acres for Phase 1 and 116 for Phase 2. The relocation of part of Majidee Camp for Phase 1 has been completed while the part in Phase 2 is expected to be relocated in 2014.

Quek puts the gross development value (GDV) of Phase 1 at about RM2 billion. He declines to give an estimate for Phase 2, reasoning that development plans for the phase might change depending on market needs and conditions.

“As it is, we are reviewing the development for one of the precincts in Phase 1. We want to focus on Phase 1 first before we look at Phase 2. Phase 1 will take about six to seven years to complete while the entire development is expected to be completed in about 15 years,” says Quek.

Among the planned projects for Phase 1 are a condominium, serviced apartments, a shopping mall, shopoffices, a hotel and stand alone boutique offices.

The development’s green lungs will be in the form of a 10-acre and an eight-acre park along with several other smaller parks.

On the inclusion of stand alone boutique offices, Quek says, “We want to take full advantage of our EDL frontage, which would be suitable for furniture stores, car dealerships or even major electronics stores.”

However, the number of these offices has not been determined yet as it would depend on the size needed for a particular business.

“We have applied for a master title so that we can adjust and revise the sizes accordingly. We might get investors that  want six acres or just two acres,” says Quek.

First of its kind
The planning of Southkey began in 2006. The concept master plan was designed by well-known Australia master planner Prof Philip Cox of Cox Architects.

From the onset, Southkey was designed to be a development that would create a strong commercial buzz and have all the excitement of a modern township.

The development got off to a good start with the launch of shopoffices in The Lakefront, which faces an 8.7-acre lake.

Since the launch in early March, more than 60% of the shopoffices have been sold, which Quek finds very encouraging.

Spread over 9.93 acres, The Lakefront offers 102 units of 3-storey shopoffices, 24 units of 4-storey shopoffices and one unit each of 5 and 8-storey shopoffices. Built-ups range from 3,929 to 50,614 sq ft and prices from RM833,000 to RM15.5 million.

Calling  The Lakefront units one of a kind in Johor Baru, Quek says they were designed with a focus on people, security and ambience.

“We will be the first in Johor Baru to offer a wide central piazza with water features and landscaping for a cool environment for alfresco dining and street cafes,” he says, adding that the idea is to create a dining enclave — a novelty in Johor Baru.

Considerations were also given to two common shortcomings among shopoffices in the city — the lack of covered parking bays and insufficient parking space.

“We will provide more than 1,000 parking bays in the basement as well as covered ones on the ground floor. We feel that ample parking space is essential for the success of shopoffices and is of crucial importance to retailers to attract customers,” says Quek.

Other features include covered linkways that connect different blocks on the first floor, enhanced visibility with 27.5ft wide frontage and 15.5ft high ceilings on the ground floor.

“For conventional shopoffices, you find it’s harder to lease out the units from the first floor onwards. That is why we created a linkway on the first floor. It will add value to the upper floors. We also enhanced it by putting external lifts that can be used by the general public,” says Quek, adding that private lifts are also provided for the 4 and 5-storey units.

Aside from round-the-clock security services, which include 24-hour CCTV surveillance, regular security patrols and a call assist system, the developer took the unusual step of not giving the shopoffices back lanes.

“The main reason is that a lot of crime happens in the back lanes. These can also be very dirty and unsightly. We have provided the shops with air wells, which is important if they house F&B outlets,” explains Quek.

Despite all these features, there are concerns over how the developer will achieve its plan to turn the piazza area into an F&B enclave since it has no control over the tenant mix.

“We have a deed of mutual covenant in the sales and purchase agreement. So, from the point of purchase, the buyers are aware that the ground floor units in this area are restricted to F&B,” says Quek.

Most of the buyers are Johoreans with about 10% from the Klang Valley and a couple of Singaporeans in the mix, he adds.

Quek says he spoke to the buyers for their views on the Johor property market and found that confidence was rising thanks to the major infrastructure work and announcements, launches and completion of various projects in Iskandar Malaysia. 

“The Johor buyers know the local market well and they see good things ahead. Even those from the Klang Valley and Singapore see potential in the properties here,” he comments.

The Lakefront shopoffice project has a GDV of RM203 million and construction is expected to start this month.

Making the case for lifestyle development
With the Johor Baru residents becoming more sophisticated and affluent, Quek sees them moving towards urban lifestyle developments that are common in the Klang Valley in the form of gated and guarded housing estates and city- within-city living in integrated developments.

This a reason Quek believes Southkey’s next project — tentatively named Southkey Suites — will do well.

Targeting young couples and professional singles, Phase 1 of the project comprises one block of SoHo and two blocks of serviced apartments. Built-ups for the serviced apartments range from 650 to 800 sq ft while the SoHo will be slightly larger at about 850 sq ft.

“There will also be a few retail units to cater for the residents such as convenience stores, F&B outlets and so on. I think today, people have less time, so convenience is very important,” says Quek.

He notes that residential high-rises with retail outlets or those built above shopping malls in the Klang Valley usually command higher prices and show better capital appreciation.

“It is not just about having a roof over your head anymore. It’s also about lifestyle. If you look around, you’ll see all these laptop-toting young people hanging out in Starbucks even though they have Internet access at home and people eating out after a long day at work. That’s what we want to give them,” says Quek.

The fact that Southkey is located close to the CIQ means the suites will appeal to Singaporeans or Malaysians working in the island republic.

Quek says about 100,000 Malaysians commute daily across the Causeway and about 400,000 Malaysians work in Singapore.

“That’s a good market for us to tap. Their income is relatively higher due to the currency exchange and salaries are generally higher in Singapore,” reasons Quek.

While Southkey Suites is only slated to be launched next year, the developer has already started taking registration of interest.

Based on current market prices, Quek says the selling price for Southkey Suites is about RM350 to RM400 psf.

“Because the built-up is small, they are affordable and meet the needs of young couples or even young graduates,” says Quek.

Win-win partnership
One of the developer’s key goals is customer retention.

From Quek’s personal experience with his previous company, Dijaya Corp Bhd, the percentage of repeat buyers is usually around 10% to 20%.

“For us to have a healthy group of repeat buyers, we need to create a win-win partnership with them. We have to create value in our products and deliver on our promises. We also have to price our properties right so they will have the chance to make money,” says Quek.

For the Lakefront shopoffices, Quek expects a capital appreciation of about 18% upon completion.
“If you look at shopoffices in Taman Molek, there has been substantial capital appreciation. And for Lakefront, we actually increased the price of the second batch — which was opened for sale a week after the launch of the first — by 7% because of good response.”

According to data from KGV-Lambert Smith Hampton, the value of 3-storey shopoffices in Taman Molek has appreciated by more than 100% since their completion in 2005.

“At the end of the day, if a developer can deliver a quality product, the price will appreciate,” Quek remarks.

He sees a bright future for the Johor property market as Iskandar Malaysia will help spur economic growth, creating more job opportunities which will increase the working population and in turn create demand for properties.

“Something I have noticed in the past year or so is the increasing presence of major developers in Johor. I think that speaks for itself; in business, when you see potential, you grab the opportunity,” he concludes.


 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 859, May 23-29, 2011

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