City&Country: Mitraland pulls off solo act

Following the recent success of its fast-selling mixed development C180 in Cheras, Kuala Lumpur, Mitraland Group is now focusing on another mixed development ­— The Cascades in Kota Damansara, Petaling Jaya. The developer is hoping to emulate C180’s business model in developing The Cascades.

It took Mitraland just 10 minutes to decide on the purchase of the 4.7-acre leasehold commercial tract slated for The Cascades. The acquistion of the land, situated next to the Giant hypermarket and opposite Encorp Strand, was completed at the end of last year.

Mitraland chairman Datuk Johan Ariffin tells City & Country the tract is the developer’s maiden land acquisition and enables it to develop a project on its own as previous projects were joint ventures with landowners. Johan was appointed chairman in April 2009.

The ongoing RM360 million C180 on an 18-acre freehold tract, for instance, is a joint venture (JV) with the landowner. The mixed development — comprising shop offices, serviced residences, a 2-storey entertainment block and a hotel — has been well received. Launched in March 2009, Phases 1 and 2, comprising shop offices, have been sold and completed. They were handed over to the buyers last November.

Phase 3 comprises serviced residences, corporate offices and a 156-room hotel, to be managed by the Accor Group. The corporate offices are 97% sold and the rest of the components are fully sold.
The final phase, comprising a 6-storey showroom block and three blocks of 4-storey office studios, is targeted for launch in 1Q2011. 

Among Mitraland’s completed projects is Kiara 1888 in Mont’Kiara, Kuala Lumpur. The RM140 million Kiara 1888 is the developer’s first luxury high-rise residential development, also on a JV basis with an individual landowner. It was completed at end-2008.

The Cascades
“We were scouting for land after the completion of Kiara 1888. It literally took us 10 minutes to decide on this tract in Kota Damansara,” says Johan.

“We knew it was going to be a development similar to our C180 development in Cheras. Both have matured surroundings and while C180 is next to Jusco Cheras Selatan, this tract is next to Giant in Kota Damansara,” he explains. Kota Damansara has a large and growing population and perhaps even a higher income level than Cheras.

Johan says The Cascades, with a gross development value of RM390 million, is one of the few mixed developments in Kota Damansara. The developer paid close to RM41 million, or RM200 psf, for the land. There will be three phases in all, and the first phase, comprising 40 retail units was sold within two weeks. The second phase consists of 266 units of serviced apartments with built-ups of between 561 and 1,138 sq ft. The final phase is a 28-storey corporate tower with a gross floor area of 260,000 sq ft, with initial plans for built-ups of between 1,000 and 9,000 sq ft for the units.

The retail units, with built-ups of between 5,700 and 12,000 sq ft, were sold for about RM650 psf. Intermediate units were sold from RM3.3 million, while end-lots were priced around RM4 million. The serviced apartments, comprising one-and two-bedrooms apartments, are tagged from RM580 to RM650psf.

“It is targeted more towards entry-level investors, mainly singles and young families. This will provide an opportunity for them to get into the real estate market relatively early, as one-bedroom units would cost slightly over RM300,000,” Johan says. About 70% of the units are one-bedroom.

Mitraland managing director Chuah Theong Yee says response has been very encouraging: “We received more than 1,000 registrants within a month. We expected a good response, but not that good.” About 30% of the registrants are repeat buyers, mainly locals. The preview of its second phase — the serviced apartments — is still going on, with the official launch targeted for January.

“The Cascades is going to be a fast-track project for us. We target to hand over the whole project in three years. The third phase (corporate tower) will be launched in 1Q2011,” says Chuah.

Asked if Mitrajaya plans to move its head office to the corporate tower upon completion, he says it is possible, “unless we get a really good en-bloc offer”.

Meanwhile, Johan says The Cascades was chosen as the name of the development because it will feature an interplay of water features. “Owing to the shape of the land, we got the opportunity to play with water. One of the problems with city developments is how to ensure a vibrant nightlife. Having both residential and commercial blocks in one development, we hope, will complement each other.

“Aside from that, we find there is also a lack of architectural expression in new buildings nowadays. I believe the architecture of The Cascades is unique with a significant space dedicated to water features plus the creative use of LEDs. There will also be sculptures, which will be quite contemporary. It also costs us a little bit extra but I think it will be all worth it,” he elaborates.

Johan adds that a viewing deck has been incorporated into the design. The deck will be at the rooftop — the 20th floor —  of the serviced apartment block, with panoramic views of Kota Damansara, the Sungai Penchala forest reserve and the Sri Selangor golf course.

The second phase of The Cascades has Green Building Index (GBI) certification and the developer is exploring having GBI for the third phase. “Green technology is part and parcel of our daily lives now. With today’s discerning buyers, there is a need to get certified. It also depends on the target market, especially the niche market,” Johan adds.

The developer has completed more than six projects, mainly within the Klang Valley, worth over RM360 million, including Kiara 1888 and the RM57 million The Oasis @ Cheras in Taman Cheras Utama. The Oasis @ Cheras, comprising 121 units of 2 ½- and 3-storey terraced houses within a freehold gated and guarded community, was completed and handed over in May 2009. According to the developer, intermediate units  were sold from RM418,800 in early 2007 and recent secondary transaction prices have risen to RM715,000.

For C180, Chuah says the first phase was handed over in end-November,  20 months from its launch in March 2009. “We sold standard intermediate shop offices for around RM1.3 million then, and the same units are getting offers of RM2.1 million now,” he says.

Johan reveals that the next development will be a mixed development, comprising industrial and residential components, in Puchong. “We acquired a 60-acre tract next to Meranti Jaya in February and plan to maintain the lake there. We plan to launch that in 2H2011,” he says. The indicative gross development value is RM300 million.

Asked if the developer is looking beyond the Klang Valley for future projects, Johan says: “Klang Valley is a good location. We treat every project as an individual project and we look at the viability of each differently. We carry out our research, gauge the demand, product type and pricing for that location. We are also looking at a few opportunities for property development on Penang island.”

He believes Penang is a good market but stresses that any project has to be “large enough to justify setting up operations there as we do not work via remote control. We are pretty hands on”.

Chuah adds that Mitraland remains open to JVs. “As long as there are opportunities  and landowners are reasonable with their demands, we will definitely consider it. In fact, many of our landowners have been referred to us by landowners from our previous projects. They know who we are and are aware of our track record. That shows their confidence in us.”

Johan seems upbeat about the property market: “I believe we are in for interesting times. I am looking forward to the Economic Transformation Programme, as our wages are too low and too many items are subsidised. Nevertheless, for subsidies to be reduced, income needs to be raised. Policies, while noble, sometimes fall short on implementation, so there has to be clearer implementation processes.

“The Greater KL Plan is also exciting. As for the MRT (mass rapid transit), we hear the MRT stop in Kota Damansara may be about 750m from our site, which is great,” he adds.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 839, Jan 3-9, 2011