City&Country: Magna Prima planning ‘iconic building’ next

Niche property developer Magna Prima Bhd is in no rush to unlock the value of some of its prime land in the Klang Valley, including the 2.62-acre Jalan Ampang site where the Lai Meng Primary School and kindergarten are situated.

The company is working on projects with a GDV of RM934 million in 2H2011 alone, including the Boulevard Business Park in Jalan Kuching, Kuala Lumpur, and a new project in Australia.

“We still have many ongoing projects that we want to complete before we start on others. We are okay for now,” Magna Prima executive director Lawrence Lee Yek Hui tells City & Country.

“If we have the opportunity to acquire more land, we will but for now we are in no rush. We have to finish our ongoing projects first for strong cash flow,” he says, adding that the company’s cash position as at 1QFY2011 ending Dec 31 was RM2 million.

Currently, the company’s property development division contributes about 75% to total revenue.
Nevertheless, Magna Prima is planning an iconic development on its Jalan Ampang land, says executive director Datuk Rahadian Mahmud Mohammad Khalil. “Since it will be the company’s most high-profile development, we are taking things slow and easy to make sure the project comes out perfect.”

The developer has already started researching and studying the design for the project but nothing has been confirmed thus far.

“We are aiming for an iconic building; we have to study all the plans we have. We have not decided on the architects we will take … The project is on prime land, so we want to brand ourselves with it,” remarks Rahadian.

The Jalan Ampang development will cater for the needs of Kuala Lumpur residents, he adds.
The land can accommodate at least two towers and the developer is considering either a residential and an office tower each or making both the towers residential or office.

Although the developer has yet to pick the product components, it has already received enquiries about en-bloc sales should the company decide to build office towers.

“We have had a few parties enquiring about en-bloc sales,” says Rahadian. “We have had offers from MNCs for an entire tower … we believe it is because of the project’s location in the city centre.”

Asked if the project will have the same success as The Avare, the company’s condominium development in the vicinity of KLCC, if two residential towers are built, Rahadian says: “Magna Prima will try to better itself and aims to build an iconic landmark in the KLCC area with an outstanding façade.”

The Avare is a 41-storey freehold condominium that offers only 78 units with sizes ranging from 3,800 to 7,696 sq ft. The butterfly-shaped building offers owners a 360° panoramic view of KL city. The last unit was sold at RM2,100 psf in 4Q2007, although its 2006 launch price was RM1,350 psf.
According to Lee, the developer has not finalised its plans for the Jalan Ampang land because the relocation of the Lai Meng Primary School to Bukit Jalil has yet to be completed.

To recap, Magna Prima acquired the site in 2009 from the Lai Meng Girls’ School Association for RM148 million. It had initially announced that it  plans to build properties worth some RM1.3 billion on the site. It also purchased 5.5 acres from Santari Sdn Bhd in Bukit Jalil, where the school will be relocated, for RM10.7 million.

The timing, according to the duo, was right for Magna Prima partly because the 2008/09 global financial crisis enabled it to secure a deal that was agreeable, beneficial and viable to all parties.
The company is still in the midst of completing the paper work for the relocation of the school and is awaiting the development order (DO) for the school’s new building in Bukit Jalil, which is expected to be completed by 2013, says Rahadian.

Although the school’s new location in Bukit Jalil is further away, parents and students will not have to drive into the city and get stuck in traffic jams, he adds. “Actually, the school likes the area [Bukit Jalil]. They don’t want to be in Ampang. It’s not like we twisted their arm and told them to move out. When we presented Bukit Jalil, they loved it.”

Lee points out that the Bukit Jalil school building will be bigger and have a nice compound. It is also close to a residential area.

“Most [Lai Meng] students don’t live in that area [Ampang] but it’s a good school and has a good reputation. So, they don’t mind travelling a bit further to attend school.”

Lee and Rahadian expect better traffic in the Jalan Ampang area once the school is relocated as the current congestion is due to parents and school buses waiting to drop off and pick up students.
The Lai Meng Primary School is the third school in the city centre to be relocated to make way for redevelopment. In 2000, the Bukit Bintang Girls School was relocated to make way for the Pavilion Kuala Lumpur while St Mary’s School in Jalan Tengah/Jalan P Ramlee was moved for the development of St Mary Residences.

“I don’t think KL City Hall will allow more schools to move out as we need some schools in the city. Schools were moved mainly because they were contributing to traffic congestion,” Lee observes.
Magna Prima has another prime property in Jalan Gasing, Petaling Jaya, but Lee and Rahadian would only say any project on it would be “mainly commercial” in nature, complementing the lifestyle of the residents in the area.

“We have no plans [yet] on when construction will begin … we are still finding out what the best product is for that area. We have not submitted the DO yet … we already have a few conceptual ideas drawn up but we have not finalised anything yet,” says Rahadian. However, he reveals that the development will not be for sale as the company aims to keep it for recurring income.

“We will have an anchor tenant and negotiations are ongoing. The same company negotiating for tenancy in our Jalan Kuching development is also asking us about the Jalan Gasing development,” Lee remarks.

On June 22, Magna Prima launched the first phase of its freehold integrated commercial development Boulevard Business Park in Jalan Kuching. The development saw 70% of its 94 units of 4-storey shopoffices taken up within two weeks. The units have sizes ranging from 5,540 to 10,246 sq ft while prices start at RM550,000.

Boulevard Business Park stretches over 10.23 acres and has a GDV of RM572 million. It is to be completed by 2014. Its two remaining components  — the retail mall and a block of serviced apartments — are expected to be launched in 3Q2011.

Lee believes the project will provide tenants with many business opportunities as it is located in an established area with a huge population. The serviced apartments have attracted much interest with many already asking about the prices and when sales will kick off.

The 30-storey apartment block offers 288 residential units with built-ups ranging from 1,200 to 1,400 sq ft but their prices have yet to be decided.

The retail mall, which has already received enquiries from established brands, offers 19,400 sq m of space. The developer plans to manage it for recurring income.

Once all the components of Boulevard Business Park have been launched and sold, Magna Prima will be able to kick-start its projects in Jalan Gasing and Jalan Ampang.

Meanwhile, the residential component of its U1 mixed-use development in Section U1, Shah Alam, will be completed this month. The two blocks of residences, which are still awaiting their certificate of fitness, have a GDV of RM108 million.

The construction of U1’s 15-storey office tower will be completed by November this year. Magna Prima is looking at an en-bloc sale of the office tower, which has a GDV of RM23 million. It is Magna Prima’s first attempt at building an office tower as the developer usually builds residential units and shoplots.

Construction has begun on another of Magna Prima’s residential projects called Alam d’16 in Shah Alam. To be completed in 2012, it comprises 177 residential units of which 95% have been sold. The development of a seven-acre site adjoining Alam d’16 is pending the moving out of a few original landowners and is targeted to begin next year.

As all its projects progress, Magna Prima will go on an acquisition trail to replenish its landbank, favouring small parcels that can be developed within three to four years as the company prefers high-density and high-value properties that achieve quick turnarounds.

Australian venture
Magna Prima announced its first overseas venture at the end of June with the proposed acquisition of a high-rise residential development called Dynasty Living in Australia. It is acquiring the development from Anhui Yucai Group Investment Co Ltd for A$26 million (RM84.1 million).

“We are not paying more than what the land costs. We are buying the land with customers already on board. It is a secure investment with all the permits obtained. It’s just us taking over the project and the construction,” Rahadian says.

The development is located in Melbourne and consists of a 25-storey apartment block comprising 320 units with sizes ranging from 403 to 4,458 sq ft. The development has seen a take-up rate of 62% from first-time homebuyers and investors.

“The 62% sales were achieved as the project has been ongoing for the past two years … The previous developer had to let go of the project due to financing problems,” Rahadian says.
The development had attracted the attention of Australian developers as well but Magna Prima was quick to make an offer to lock in the deal.

“We were there at the right time and we made a bid immediately. We did not waste time. Lee and I personally went to Australia to seal the deal. They were quite impressed because while everyone else was just talking, we went there with the cheque,” Rahadian comments.

Magna Prima will start offering the remaining units of its Australian product to Malaysian buyers from 3Q2011. The development is located on 2,700 sq m of freehold land in A’Beckett Street in Melbourne’s Central Business District and has a GDV of A$210 million (RM675.8 million).

There is a choice of six designs for the one, two and three-bedroom units with prices ranging from A$309,000 for a 403 sq ft one-bedroom unit to A$1.3 million for a 4,458 sq ft 2-storey penthouse. Construction is expected to commence in 4Q2011 and be completed in 2013.

Rahadian says Magna Prima has no intention to change the original designs as that would mean the developer having to start the project from scratch, which would be time-consuming.

He adds that Magna Prima is, however, targeting a higher GDV for Dynasty Living as it is confident it can sell the residential units at better prices. “The GDV is based on the current price. Once we take over, there will be some price adjustments. We are doing due diligence and are confident we can get a higher GDV.”

Says Lee, “Australia is quite a good place for investment from the Malaysian point of view as Malaysians like to send their children to Melbourne especially for studies ... That’s why we chose Melbourne as it is familiar to Malaysian investors.”

The previous developer sold quite a few units to Chinese buyers as it was from China, he adds.
On future overseas ventures, Lee says the company will take things “step by step”, but as long as there is “opportunity and we can seize it, we will go for it”.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 868, July 25-July 31, 2011

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