City&Country: First high-rise in Kampung Baru

While the government continues to grapple with the tedious process of getting the 110-year-old Kampung Baru Malay settlement redevelopment off the ground, a Kampung Baru resident is set to build a prominent building in the area.

The Federal Territories and Urban Wellbeing Ministry is said to be holding roadshows this month to explain the redevelopment plans to the estimated 35,000 residents of the seven villages that make up Kampung Baru in Kuala Lumpur city centre. More than 1,000 landowners share the 370-plus acres of Kampung Baru.

Meanwhile, contractor-cum-developer Zikay Group is going ahead with Mercu Zikay, a mixed-use development consisting of serviced apartments and a four-star hotel in a 40-storey building, on a slightly more than one-acre freehold plot here.

The project was unveiled by Prime Minister Datuk Seri Najib Razak in February and it will be the first high-rise building in Kampung Baru, according to group managing director Datuk Mohd Khay Ibrahim.

He says the RM250 million project is located next to the developer’s headquarters. Pending approval from the relevant authorities, the residential component is expected to be launched next quarter. It is the group’s first high-end development targeted at middle-income Malays.

Some 40% of the apartments are studio units. The units, ranging from 450 to 2,500 sq ft, will be priced from RM850 psf, which Mohd Khay says is “very cheap in this location”. Mercu Zikay is less than 2km from the KLCC Petronas Twin Towers, which has nearby condominium units fetching an average selling price of up to RM1,500 psf.

Mercu Zikay also seems cheap compared with, for example, Dijaya Corp Bhd's RM750 million, 50-storey hotel-cum-residential project on a plot of land on Jalan Ampang where the historical Bok House used to sit. Hotel and leisure group Starwood Hotels & Resorts Worldwide Inc will operate KL’s first W Hotel there. The hotel component will feature 150 rooms in the first 10 floors. The residential component, meanwhile, will have a gross development value (GDV) of RM650 million and offer 350 serviced apartments with sizes ranging from 700 to 1,600 sq ft. It is reported that these may be launched next year at RM1,600 to RM1,800 psf.

“Mercu Zikay is on Malay reserve land, so the buyers are restricted to Malays but we found out that there is a big group of middle-income Malays whom the market has yet to explore. We only have 130 units of serviced apartments so I don’t think it is difficult to get 130 buyers.

“These units can be rented to non-Malays at rates similar to those in the KLCC area so we can expect a yield of 10% (on the lower selling prices). The status of the land has an impact on the selling price, else I would sell them at RM1,500 psf.

“We plan to have investors come in. The selling point is the location and we are telling investors that they can get a serviced suite in the centre of Kuala Lumpur at half the rate [of those in the KLCC area],” Mohd Khay tells City & Country.

Mercu Zikay’s serviced apartments will be housed on levels 28 to 39 while levels 15 to 27 will comprise 289 hotel suites for which the developer is looking to appoint an international hotel operator to run. An announcement on the hotel operator is expected by year-end.

There are two basement parking levels and elevated parking from levels 3 to 12, which offer more than 300 parking bays. The building also features retail units on levels one and two, a ballroom (800-pax capacity) on level 13, swimming pool and recreational area on level 14, sky dining on level 27, sky lounge on level 40 and a helipad on the rooftop.

The gross floor area of the project is about 635,000 sq ft. The land consists of several small parcels that Zikay Group acquired on the open market about five years ago.

Mohd Khay says the developer wants to launch the project now rather than later when more redevelopment projects are announced in Kampung Baru.

“There is no perfect timing. We want to launch the project this year as the property market is booming. We have received 450 registrations of interest for the project thus far. We have to come up with a good design and ensure that it is value for money. I think once we start, other people will start developing in Kampung Baru as well.”

The Kampung Baru boy hopes he does not have to wait too long for the redevelopment.

“I grew up here and have my offices here, so I do have some interest in developing Kampung Baru. It would be a waste if it is not developed. Property prices here may not be the same as those in the KLCC area but we should get at least half the price. We need to enhance its value. I think Kampung Baru has great potential because of its location which is always the most crucial factor in the property industry. The only setback is the land status,” he says.

Mercu Zikay is next to the Zikay Group’s nine-storey headquarters Bangunan Zikay, which was once the tallest building in Kampung Baru. Mohd Khay says the headquarters will be refurbished to blend with the new project. There are currently no plans to tear down the building.

Mohd Khay and his younger brother founded the group as a landscaping contracting company in 1991, before venturing into other businesses. It made its foray into property development in 1995 and accumulated landbank in the Klang Valley and Pahang. The construction (building, civil engineering and landscaping  works) and property development businesses constitute 75% of the group’s total revenue, says Mohd Khay.

The property development arm started with the building of 15 units of 2-storey terraced houses on a Malay reserve site in Klang. It later developed 90 acres in Bangi, 50 acres in Selayang, 30 acres in Port Klang and six acres in Shah Alam for mainly mid-cost housing projects. These projects had a combined value of RM1 billion.

Besides Mercu Zikay, the group’s other launches this year are 44 units of 2 and 2½-storey link homes at Taman Tasik Biru in Kundang, Rawang; phase one of Bandar Baru Jengka, Pahang, which comprises 198 units of 1-storey terraced homes, semi-detached homes and shops; as well as phase one of Bandar Baru Maran in Pahang, which comprises 80 units of semidee cluster homes and townhouses.

The group’s other businesses include financial services (Zikay Factoring Sdn Bhd), security services (Worldline Security Services Sdn Bhd) and education (International College of Yayasan Melaka). It has also ventured into the construction and trading sectors in the Sultanate of Oman.
“I have been doing business since I was young. I worked as a petty trader, selling by the roadside. After university, I worked in an MNC (multinational corporation) as an accountant and then an auditor. I eventually decided to quit and start my own business. At the time, landscaping was a new industry so I thought it was the best time to go into the business.

“My brother and I were very hands-on when we started. We had to learn the scientific names of plants and learn how to read a site plan,” says Mohd Khay, who is 52 and an accounting diploma holder from Universiti Teknologi Mara.

From a two-man operation, the group now has a workforce of 500 ranging from professionals and skilled, experienced technical staff to labourers. Its current project undertakings are worth RM300 million.

After the launch of Mercu Zikay planned for next quarter, the developer is expected to announce a few new projects, some of which are joint ventures while others will involve their own landbank. A residential apartment project in Kampung Baru is in its final stage of planning, Mohd Khay notes, saying that it has a GDV of RM150 million and will be on a 30,000 sq ft site to be launched by year-end.

Zikay Group has another project on Persiaran Gurney in Kuala Lumpur. It is a 49:51 joint venture with Majlis Amanah Rakyat (Mara), a government agency set up to help bumiputera entrepreneurs to develop the 0.9ha site into a project called Gurney Avenue.

Mohd Khay says the project is still in its planning stages but hopes to launch it this year. It was reported in March that Gurney Avenue would have three blocks of medium to high-end condominiums and retail and shoplots worth some RM300 million.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 860, May 30-June 5, 2011

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.