A blended solution for Medini
The Medini township in Iskandar Malaysia was initially positioned as a financial centre, like Manhattan in New York, but as Global Capital and Development Sdn Bhd (GCD) CEO Keith Martin points out, the world is a different place now with all the economic uncertainty. So Medini has been repositioned as a business park with a pleasant environment.
“We don’t want to be reliant on the financial industry to set up the township. The repositioning has enabled us to focus on and be complementary to Singapore’s expansion and Malaysia’s economic growth,” says Martin.
The 908ha Medini is in Zone B, Nusajaya, one of Iskandar Malaysia’s five flagship zones. The township has four components — Medini Lifestyle, Medini Business, Medini Living and Medini Central.
GCD, formed in 2008, is one of two concessionaires developing Medini. Its major shareholders are Mubadala Development Co and Iskandar Investment Bhd (IIB). The former is an investment company that is wholly owned by the government of Abu Dhabi.
The other concessionaire is Medini Central Sdn Bhd, which is owned by Al-Nibras 2 Ltd, a Labuan-based private fund managed by Kuwait Finance House (Labuan) Bhd, IIB and Jumeirah Capital. GCD’s portion comprises the 231ha Medini Lifestyle, the 142ha Medini Business and the 285ha Medini Living.
One of GCD’s key focus areas is meeting the demands of businesses that need to expand from Singapore, such as small and medium enterprises (SMEs), financial services, back-of-house support services and business process outsourcing companies.
“We are supporting businesses that would traditionally have headquarters or offices in Kuala Lumpur or Singapore, but would benefit from locating their support services at a nearby lower-cost location. We call this a blended solution,” says Martin.
The hard part is bringing new businesses into a completely greenfield township. Hence, much of GCD’s energy and efforts have been put into seeking ways to attract new businesses, he adds.
“We have been very fortunate timing-wise as the relationship between Singapore and Malaysia is now at its best. It is almost being legitimised by Temasek Holdings and Khazanah Nasional Bhd’s presence in Iskandar Malaysia. That makes it easier for investors and developers to consider coming to a greenfield location,” says Martin.
Khazanah and Temasek will jointly develop up to 500 acres in Iskandar and six tracts in Singapore, including four prime tracts in Marina South. The projects have an estimated value of RM30 billion.
Medini will also benefit from the pioneer catalytic projects surrounding the development. These include EduCity, home to Newcastle University of Medicine, University of Southampton and Raffles Education University, among others; Legoland Malaysia; Marlborough College; Gleneagles Medini Hospital and Pinewood Iskandar Malaysia Studio.
“The one I’m really focusing on is the success of EduCity. It is a very exciting proposition for any township to see education and also health coming in first as they are very important catalysts for residential developments,” says Martin, who believes that these pioneer developments can give investors a clearer picture of the type of businesses that will complement and benefit these developments, along with the residential offerings.
A demand-driven master plan
Crucial to Medini’s success, says Martin, is a demand-driven master plan. Although the living zone is the largest piece of Medini, much of the initial focus is on its business district.
“We think getting the master plan right and being comfortable with our demand analysis for business will allow us to speak more confidently about the benefits of the residential developments later. So, the whole thing has to work in a synchronised master plan that is fully integrated,” he reasons.
Six target business clusters have been identified — media and film production; oil and gas; shipping, marine and logistics supply; shared services and outsourcing; Singaporean and Malaysian SMEs and regional relocation of business. Distinct areas within the business zone will be created for each of these business clusters.
The set-up of the Pinewood Iskandar Malaysia Studio in a plot adjacent to the business district has presented GCD with the opportunity to create a media village within Medini.
The UK-based Pinewood Studio is a leading European provider of studios and services related to the film and television industries. Its credits include the Batman and James Bond movies as well as the upcoming The Hobbit. Pinewood Iskandar will provide over 100,000 sq ft of film stages, about 60,000 sq ft of TV studios and office space and post-production facilities.
“A significant anchor like Pinewood Iskandar creates real demand. It needs an ecosystem of businesses to service the industry, allowing us to do a master plan that meets the needs of the media village servicing Pinewood,” says Martin.
He adds that the media village is a good example of the blended solution. GCD has been working with Singapore’s Mediapolis, a 19ha centre for media infrastructure for local and international media businesses, to create a full value chain of media services. Mediapolis will be home to the famed Lucasfilm Ltd’s Industrial Light and Magic, Lucas Animation and LucasArts by 2012.
“We work together in a sort of partnership arrangement as we can all see the benefits of a full value chain within a 45-minute drive. The CEO of Pinewood Iskandar has described it as coming in at one end with a draft script and coming out the other end with a complete film,” says Martin.
The media cluster will be an effective promotion and a great tool for master planning because professionals in the media industry are generally happy to live and work in the same place and enjoy interaction with the community, says Martin, who estimates Pinewood Iskandar will bring in about 300 to 400 people during the production of a movie.
“We have the ability to develop serviced apartments and accommodations that can be used for the crew as well as high-end customers. It is amazing the number of industry groups that will spring forth from Pinewood Iskandar,” says Martin.
To create an ecosystem that will meet the demands of the media industry, GCD has studied the model of the original Pinewood studio in Shepperton in the UK and its existing ecosystem. It has also sought input from key people at Pinewood Iskandar.
“They are the experts and we get from them what they need such as space requirements, types of 24-hour services, broadband usage and everything else that can be captured in the master plan. We have almost finished redesigning the ecosystem to reflect the end-user requirements. It is demand-driven master planning,” says Martin, who expects the media village to be up and running within two years, along with the completion of Pinewood Iskandar.
This applies to the other business clusters as well. Martin cites the oil and gas cluster as an example. “Petronas has announced its expansion in southern Malaysia and with that follows a whole group of support businesses, such as consultants, insurance and so on. They will need office space, which we can provide,” he says.
With work on the repositioning completed and the planning of the media village nearly complete, GCD is tackling the next wave of development at Medini — the SME business park. The company is now in the beginning stage, speaking to potential SMEs and business park operators.
“Most SMEs do not have the resources to build or have their own buildings. So the delivery solution for us is to partner a substantial investor or developer that can fund the development of a business park or building to accommodate the SMEs that need to expand,” says Martin.
He notes that there is no supply of modern, good quality, energy-efficient office space in Johor Baru, so this will be an entirely new market in the city. Nor does he doubt the appeal of Medini to SMEs, considering its location and lower costs.
The key, he stresses, is to find the right investor or developer to work with.
“It’s a new journey for us all and the clear message is that it is cheaper than Singapore, so it makes a lot of sense for SMEs to set up offices in Medini. They can also benefit from their proximity to Singapore,” says Martin.
GCD is looking to sell plots to investors and developers, but is not ruling out joint ventures. “That makes sense to us as well. There needs to be investment to build the business parks; it is critical to our way forward. We would be reasonably open to joint ventures,” says Martin. He declines to name the parties involved in the discussions except to say that each has its development concept.
“Because we are the master concessionaire, we have the ability to make amendments to the master plan. If a major investor comes along and says it wants to do a mixed-sector SME park, we will be able to work with it to make sense of the plan and amend the master plan to suit it. We can create areas where potential major developers and investors can be located next to the type of neighbours they need to be,” says Martin.
The most advanced of the three zones is the lifestyle zone housing Legoland, Lego Hotel, Gleneagles Medini Hospital, primary and secondary trust schools, a mega-retail complex, KIDZ Komos — a purpose-designed children-themed edutainment centre — and luxury condominiums. Also coming up is the urban wellness development by Khazanah and Temasek.
GCD has concession rights to parts of the lifestyle zone, with IIB managing some of the other projects, such as Legoland and the retail complex.
“If you look at the mix, it is nicely described as the lifestyle zone. It enjoys some of the catalyst developments and I can see investors coming into Medini and Nusajaya,” says Martin.
He does stress however that having two concessionaires does not mean there will be severe competition as both companies share a common rulebook, which is the single approved master plan for the whole of Medini. “The comfort of shared existence is that it’s all in one master plan, so the space allocation already makes sense,” he adds.
Further south is the living zone, which comprises the residential and hospitality developments. The zone has the benefit of a waterfront, a protected mangrove swamp and unobstructed views of the countryside. In terms of gross floor area, Martin says the residential offerings can grow up to about 25 to 30 million sq ft in the master plan.
He sees good opportunities for hospitality and residential developments along the waterfront and is looking to position its residential products at a higher level than what is being offered in Nusajaya at the moment.
“We are looking at something that has a larger land take, more semidees rather than rows of terraced housing, which is already being offered. Our differentiator is that we have land; we will consider more upmarket products,” says Martin.
Having enough space to break the zone down into various communities and clusters, GCD will allow developers to decide on the theme of their developments. “We are looking to partner the developers; they could take plots of their choosing and create their own style, theme and community,” says Martin.
GCD is already in discussion with several parties. Martin notes that hospitality groups are drawn to the waterfront while residential developers are excited by the hillside and views.
“It is beginning to gain momentum. We have not really pushed the residential projects because the hard yards are in the business district,” he says.
Doing the groundwork
The key component of any new town development, particularly greenfields, is the micro infrastructure such as power supply, transport and ports, says Martin. Already in place are a power station, two new ports and a transport plan that includes the expansion of Singapore’s mass rapid transit to Johor Baru and the RM1.1 billion Coastal Highway linking Medini to Johor Baru city centre. The Coastal Highway is scheduled for completion by end-2011 and will reduce travel time from Medini to the city centre to just 15 minutes.
“You can see that we have done a lot of groundwork. Money has been spent on building roads, landscaping, parks and also the distribution of green space. Street lightings are being constructed and the underground utilities are provided for. You can’t convince businesses and people to come until these essentials are provided,” says Martin.
While it is important to get a layering of social infrastructure, such as education, health and housing, Martin feels that to make the whole equation work, there need to be affordable offerings as well.
“It is very common for new townships around the world to target high-end developments. We have done that with the likes of Newcastle University and Gleneagles Hospital. But if I’m a business making a decision to set up office in Medini, I need to know my staff can afford the social infrastructure,” he says.
Martin notes that there are already housing developments by UEM Land Holdings Bhd and Gamuda Bhd in Nusajaya, which gives GCD the opportunity to provide anything from small studio apartments to lifestyle villas for the rich and famous.
Health-wise, there is the RM70 million Columbia Asia Hospital at Afiat Healthpark in Nusajaya, targeting the middle-income group and primary and secondary trust schools just outside Medini for education.
“With the infrastructure and utilities in place, developers can buy a plot and start building immediately,” says Martin.
Efforts have also been made to address the issue of value protection of assets.
“Following the global financial crisis, intelligent investors today take a longer-term view of their assets. Their concern lies in how best to protect the value over the life of the asset, ensuring that their investments are well maintained over the course of their ownership,” says Martin.
GCD Medini Class is an approach designed to address these issues by providing integrated facilities management, maintenance, operational efficiency and township management to ensure the protection and enhancement of asset values over the asset’s life.
While the initiative is still in its infancy, GCD is exploring various delivery models and potential partnership arrangements at both the public and private levels. It also intends to identify the most cost-effective way of providing effective and reliable township management to ensure the required service quality.
“We are primarily looking at a potential public private partnership delivery model, which will see public services provided by private companies that deliver these services,” says Martin.
Medini Class will be driven by the adoption of international best practices in terms of identifying the scope and services of delivery standards applicable to any new township such as Medini.
A frequently asked question is, where are all the people going to come from? Martin says there is a perception that there will be millions of people suddenly coming to Iskandar Malaysia. He estimates the total living and working population of Medini to be around 112,400 by 2025 and names a few potential sources — Singapore, India, Indonesia, Malaysia and some from the other regions.
“When you break it down into components, it is not such a difficult challenge to bring in the population. It’s good that we are getting interest from the region because we need to show that regional interest will feed the growth of human capital here,” he says.
When asked about the appeal of Iskandar Malaysia, Martin quotes the old adage of “location, location, location”. “In a post-financial crisis world, any investment needs to make dollars and sense. So, a strategic and affordable location adjacent to Singapore makes a lot of sense,” he says.
In terms of investment, more than RM62 billion worth of investment has been committed to Iskandar Malaysia by investors from Malaysia, Singapore, the Middle East and Europe to date. The Malaysian government has committed more than RM6 billion to infrastructure, security and transport links.
“There has been a lot of interest from China. We are speaking to Indonesian groups and are at the beginning stage of engaging India-based investors as well,” Martin says.
He firmly believes Medini is poised for success because of five key factors — location, money, people, a logical master plan and good neighbours.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 877, Sep 26-Oct 2, 2011
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