City&Country: Cover Story-- Small but committed

KL-Kepong Country Homes Sdn Bhd, a wholly-owned subsidiary of Kuala Lumpur Kepong Bhd (KLK), hopes to gain a foothold in property development with its newly launched township in Sungai Buloh called Bandar Seri Coalfields. The 1,000-acre freehold project is its single-largest to date with a gross development value (GDV) of about RM3.7 billion.

Bandar Seri Coalfields is coming up opposite the developer’s first township development — the 230-acre Desa Coalfields — which was completed in 2009. Both townships are located on what was previously plantation land.

The low-profile KL-Kepong Country Homes held the first few launches of Bandar Seri Coalfields, which consists of semi-detached homes, terraced homes and bungalows as well as shopoffices, in early May.
The township is located 12km from the proposed site of the mass rapid transit (MRT) station in Sungai Buloh and will house some 6,000 properties upon completion.

Interestingly, the three launches in KL-Kepong Country Homes’ flagship township since May are almost sold out. General manager P H Lim tells City & Country that the company did not expect such a good response. In terms of value, houses worth about RM200 million have been sold thus far in the last three months.

“As we don’t even have a show room, we found the response very encouraging. We are grateful for the buyers’ confidence in us and their appreciation of the potential of the area,” says Lim.

In fact, only one of the 129 semidees launched in mid-July is unsold. The rest were snapped up within two weeks. The built-up of these homes is from 3,066 sq ft and the price ranges from RM688,000 to RM890,000. The terraced homes (built-up: from 1,960 sq ft; price: from RM308,000) were the first to be launched.

KL-Kepong Country Homes expects the township to be completed in the next 10 to 15 years.
Sales and marketing manager Angeline Lau says the homebuyers are from all over Selangor — Petaling Jaya, Kepong, Selayang, Shah Alam, Kuala Selangor and Rawang. While some of them are repeat buyers from the developer’s other developments, the majority are new, she points out.

Lau believes escalating prices in the Klang Valley have deterred first-time homebuyers and young executives looking to invest in property. This, she says, explains the good response to the mid-priced properties in Bandar Seri Coalfields.

Next month, the developer is launching 85 superlink homes with built-ups of 2,400 sq ft. The indicative price is from RM450,000. The developer is also looking to launch 80 two-storey shopoffices, with an indicative price of RM550,000.

Lau says of the 6,000 properties in Bandar Seri Coalfields, 90% will be residences.

“I suppose people like to live in self-contained townships. Most of our units are landed and we are offering a good living environment with low density. As it is a township, there will be public amenities such as schools, sports complexes and places of worship,” she remarks.

There will also be food courts, community halls, petrol stations, bus terminals, a wet market and government health clinics.

KL-Kepong Country Homes’ first development was the high-end Sierramas in Sungai Buloh. This began in 1990 via Kumpulan Sierramas (M) Sdn Bhd, a 50:50 joint venture (JV) between IGB Corp Bhd and KL-Kepong Property Holdings Sdn Bhd. Lim says the development, which was launched in 1993 and is ongoing with small launches, has been a lucrative venture for all the partners involved. Back then, the bungalow lots were sold for around RM30 to RM50 psf. Today, they are valued at RM280 psf onwards.
Lim says the 400-acre Sierramas is almost complete except for some pockets of land. “The next launch there, some time at the end of this year or early next year, comprises 41 strata bungalows called Park Manor.”

The built-up of the contemporary bungalows varies from 5,000 to 6,000 sq ft while GDV is RM180 million.

In 2001, the developer launched Desa Coalfields, consisting of residential and commercial properties that have since been sold out. It has completed over RM370 million worth of properties so far. Depending on the phase, Lim says, recent transacted prices on the secondary market were about 30% to 40% higher than the developer’s prices.

For example, 2-storey link houses in Desa Coalfields with built-ups of 1,600 sq ft and sold for around RM150,000 in 2002 were recently transacted at around RM240,000. It is also learnt that the 1,500 sq ft 2-storey link houses sold for RM170,000 at the end of 2004 have changed hands at about RM250,000. It is said the majority of the homes in the township are owner-occupied. Desa Coalfields is home to more than 10,000 people.

Commenting on the now congested roads in Sungai Buloh, Lim says: “When we started Desa Coalfields, we had people telling us that the roads were very quiet. Now, they are saying the roads are too congested. Well, it is always good news to hear people complaining about congested roads because that means demand and a vibrant area.

“The development is connected to highways such as the Guthrie Corridor Expressway and the Kuala Lumpur-Kuala Selangor Expressway (formerly known as Latar Highway) which is connected to the North-South Expressway. I also hear the West Coast Highway is coming up.”

Meanwhile, Metrohomes Sdn Bhd director See Kok Loong believes that Sungai Buloh is an up and coming area: “It has been flourishing since the last decade. With the Shah Alam 2, Subang 2 and Kota Damansara developments, we are now moving toward Sungai Buloh as land in the abovementioned areas is getting scarce.

“Several highways such as Lebuhraya Utara Selatan, Lebuhraya Guthrie Corridor have opened up the area.  Capital appreciation of properties is expected to improve and together with the upcoming MRT which will begin from Sungai Buloh, it will bring new growth into the area.”

Value homes
The developer sees exciting times ahead for Bandar Seri Coalfields. “Our business philosophy is giving value to people. We coined our tagline ‘KLK-Value Homes’ with a focus on properties offering good value and quality. We want our customers to own decent homes at affordable prices,” Lim comments.
“We will offer value homes wherever possible and continue to cater for the man on the street looking for his first  home or to upgrade. We plan to have products to cater for a wide variety of housing needs.”

Moving forward, KLK aims to take the property group to the next level and enlarge its property division. “We will keep our focus on developing Bandar Seri Coalfields into a self-sustainable township. Then, we will explore other landbank in the Klang Valley,” Lim says.

Bandar Seri Coalfields is expected to keep KL-Kepong Country Homes busy for the next 10 years.
The developer still has about 6,000 acres of plantation land in Sungai Buloh.

“We are also looking at other locations in the Klang Valley to further our development business,” says Lim. “We are open to JV opportunities but at the moment, the only active JV we have is Sierramas, which launches niche projects. We believe the Klang Valley or Selangor is still a good place for property development.”

At the present time, the property division contributes only a small percentage to the group’s earnings. While plantations remain KLK’s core business, the group is involved in manufacturing and retail apart from property development.

The residential property market is expected to remain good in 2H2011 as there is continuous demand from a growing population. “Demand for residential units will remain strong as current conditions are still supportive of the property sector,” observes Lim. “The Malaysian property market is structurally sound and resilient and is likely to remain so, especially for financially strong property developers with a good track record.”

He points out that the property market is cyclical. “But if one buys in the right location, the property value will most probably rise in the long run. So, it’s a really good form of investment. If possible, buy early,” Lim advises.

Lau agrees. “You have got to work with a developer that is committed to the property development business, not those that seek short-term profits. A developer has to look at the business on a long-term basis. We understand a lot of people come up with their life savings to buy a property, so it is important to ensure what you buy is of good quality and offers value appreciation.

“Reputation is crucial. As long as the developer is committed, it does not have to a big player.”

With the Sungai Buloh-Kajang MRT line expected to be completed by 2016 and the proposed development of the Rubber Research Institute land, it will be interesting to see how Sungai Buloh will be transformed.

One thing is for sure, KLK’s projects will benefit as the area become better connected and more vibrant.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 871, Aug 15-21, 2011