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Stock markets continue to feel the strain of the debt situation in the US and eurozone even as they recover from the aftershocks of Japan’s March 11 earthquake and tsunami as well as the political unrest in the Middle East.
Therefore, it is only natural for investors to flee the troubled markets to seek refuge in assets that are deemed more stable in terms of value and returns. It is against this backdrop that value creation in real estate takes on greater significance. The Edge-PEPS Value Creation Excellence Award 2011 celebrates properties that offer the best value creation from the perspective of capital appreciation and sustaining value and recognises developers that are committed to creating value for their buyers.
I & P Group Sdn Bhd returns as the winner in the residential category this year with Phase B41 of its Bandar Kinrara township in Puchong. Phase B41, known as Desiran, comprises 110 units of 2-storey terraced homes and spans 4.77 acres on an elevated site overlooking the surrounding phases. This gated and guarded phase features a single entrance and lush landscaping, including 10ft rows of greenery that act as a buffer between Desiran and the neighbouring phases. This marks the second time Bandar Kinrara has picked up the award since its inception last year.
The homes have an average built-up of 2,368 to 2,589 sq ft and land areas starting at 24ft x 70ft. When it was launched in June 2009, unit prices ranged from RM490,888 to RM650,888.
One of the five homes submitted by I & P appreciated a whopping 88.8% over 1.9 years. Their average appreciation per annum worked out to 32.38%.
The judges were wowed by the workmanship and designs of the Desiran homes. In terms of design, the large land areas and ceiling height of 12ft contributed to the spaciousness of the homes.
The 1,904-acre township in Puchong was launched 20 years ago as a model village designed to give buyers a glimpse of life in a township.
Bandar Kinrara’s rolling landscape is dotted with terraced homes, semi-detached houses and bungalows, designed in what the group calls its signature contemporary — “not modern” as group managing director Datuk Jamaludin Osman stresses — Malaysian style.
Meanwhile, amenities within the township include a golf club and golf course, basketball court, international cricket pitch, Giant hypermarket, mosque, primary schools, secondary schools and a linear park.
While Jamaludin has ruled out expanding this successful development due to the lack of available land in the area, he has incorporated elements of Bandar Kinrara into the company’s other developments in the Klang Valley.
Currently, the township has only 400 acres left to be developed, including some high-rise offerings in the pipeline. Upon completion, the township is expected to have 16,779 homes and an estimated GDV of RM3 billion.
“The Bandar Kinrara homes are much sought after. When the homes were closer to completion and being handed over, those who did not manage to buy the homes from us tried to buy them from the owners. When we checked, we found the premiums to be quite high and there have been quite a lot of transactions too,” says Jamaludin.
The development also scored highly in the areas of master planning, sustainability, after-sales service and occupancy, which helped propel it to the top spot in the value creation category.
Ingredients for value creation
Pondering the reasons for I & P’s success with Bandar Kinrara, Jamaludin says it boils down to one thing — location. But on top of location, he believes there are other factors like innovation, design, product quality and all those things that determine how people perceive a certain development.
Bandar Kinrara is accessible via a number of major highways, such as Lebuhraya Damansara-Puchong (LDP), the North Klang Valley Expressway (NKVE), the New Pantai Expressway (NPE) and the Middle Ring Road. Bandar Kinrara is also poised to house two stations of the highly anticipated light rail transit extension.
It should be noted that Desiran’s site was originally designated for a condominium development. However, I & P decided to redesign it into a landed development to preserve the area’s low-density, low-rise nature and to avoid traffic congestion.
Jamaludin says once people like the environment of the township, the developer will, of course, be able to sell its products at optimum prices. Furthermore, limited units make good capital appreciation possible. He adds that the strength of the group’s products also lies in I & P’s attention to customer feedback.
“We analyse what people want; people want big houses at reasonable prices; people want space. Some people want style but to me, people generally need space. Why? From our experience, the moment we hand over the property and before they move in, there is a lot of renovation. Why is renovation needed? It is for space. So we discover the optimum [space factor] and design [the product] according to the bylaws; anything beyond that will be done by the purchasers,” he explains.
“I think branding comes later. The moment people see the product, [although] they will say, ‘This was built by I & P’, they see brand as one thing. They still [want to] see the end product.
“Those who want to purchase a second home get it at a higher price than those who buy it from the developer [because] they must see the product first. The brand is one thing, but if the product is not that good I don’t think people are willing to pay a higher price. So a combination of the product itself and the brand is what matters,” he opines.
Some market observers have commented on the low pricing of some of I & P’s homes — for instance, corner lots do not command a very significant premium over their intermediate variants. Addressing this, Jamaludin says: “Well, put it this way; you feel it is cheap when you see capital appreciation after the products have been sold out. I think it’s psychological or just market talk. However, when we put the price a little bit higher, then people will say it is over market price.
“So some people may say that. But we believe our price is always right because we believe if you push too hard, the product may not take off.”
Moving forward
Bandar Kinrara has 400 acres left to be developed. One of the more notable future launches of the township are the serviced apartments near the Giant hypermarket, which are expected to take up 20 acres.
“We also plan to get a hospital operator. So far we have not shortlisted any yet. We are looking for an investor that is willing to open a hospital there. We have not started building the hospital yet,” he says.
According to I & P, two LRT stations will come up in Bandar Kinrara 2 and Bandar Kinrara 9 in 2013. The stations are part of the Ampang line extension that will run from Sri Petaling to Putra Heights. Upon completion, the line will stretch 17.7km and comprise 12 stations.
I & P is cognisant of its success and will, it says, try to replicate elements of Bandar Kinrara, such as its design, landscaping and low density, in other townships such as Bayuemas in Klang. Conceptualised as a garden city, the 565-acre township boasts lush greenery and lakes for a lakeside living experience.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 878, Oct 3-9, 2011
