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City&Country: PD Waterfront set to transform town

My family and I used to go to Port Dickson (PD) quite often over the weekends or school holidays. The beaches were lovely back then and the narrow single-lane roads and town with old shops offered an ideal small, old town charm,” recalls Josie Lim, a Petaling Jaya-born accountant. PD in Negri Sembilan is a small but popular holiday destination for locals, about a 1½-hour drive from Kuala Lumpur.

But while a number of holiday accommodations have sprung up along the PD beach, it is still a far cry from being a vibrant international holiday resort destination.

Nevertheless, believing in its potential, TSR Capital Bhd, via wholly-owned subsidiary TSR Ocean Park Sdn Bhd, has taken on a 60-acre beachfront development called PD Waterfront in the PD town centre. The company hopes this will be the catalyst for transforming the staid old town into a more vibrant tourism destination.

The development was previously an abandoned township project called Kota Impian, which was initiated in 1985. TSR Ocean Park had taken on the project on a joint-venture basis with landowner Best Reap Sdn Bhd in 2008. In June this year, TSR Ocean Park fully acquired the 40-acre tract from the landowner for RM36.8 million. The remaining 20 acres were purchased from the state government.

TSR Capital, a listed company with a market capitalisation of RM102 million, started out more than 10 years ago as a subcontractor. It then moved into construction and more recently, expanded into property development.

“We have built universities, the Penang prison, highways and roads and colleges. To date, we have completed close to RM3 billion worth of construction projects,” TSR Ocean Park director Datuk Wan Abdul Razak Ismail tells City & Country during a visit to the project site recently.

“We realise that the construction sector depends a lot on the economic situation and so, the demand and supply may not be stable. After careful consideration, the management decided to go downstream in 2003 and started aggressively negotiating for land in 2006,” he says. The company acquired a one-acre commercial tract in Mutiara Damansara, Petaling Jaya, that same year.

“Yes, it is a better mix in terms of revenue and the property development division will probably contribute 20% [to overall revenue] this year, from PD Waterfront. We will eventually aim for a 50:50 revenue contribution from the construction and property development sectors,” says Wan Abdul Razak.

TSR’s property development business started small and so far, it has only completed small development projects in Kedah worth less than RM30 million. PD Waterfront is a giant leap forward for the group and it will be its flagship development with an estimated gross development value (GDV) of RM1.8 billion.

Wan Abdul Razak describes it as a tourism project. “The land had been abandoned for many years and we saw the opportunity for a big tourism project capable of transforming Port Dickson town.
“Our intention is to develop and change the image of the town and offer a higher level of township services,” he says. He adds that the town is busy mainly during the weekends and there aren’t many activities to entertain tourists in the evenings.

TSR has grounds to believe in PD’s development potential as a resort city based on rising tourism figures. For instance, the Negri Sembilan state government has projected that there will be four million visitors to Port Dickson next year, a significant jump from the current 1.5 million. Wan Abdul Razak believes one factor could be the spillover of visitors from Melaka.

“Hotel occupancy rates in Port Dickson are rather high, and we estimate about 70% to 80% occupancy during the super peak season. There are over 30,000 rooms ranging from five-star hotels to homestays. Weekends and school holidays are the busiest times for Port Dickson and the state government is looking for something to attract visitors apart from the weekend crowd,” Wan Abdul Razak explains.

Construction on PD Waterfront started two years ago and the first phase has been launched, comprising a 17.6-acre commercial component offering sixty-four 3 to 4-storey shopoffices, 25 waterfront shops on a lease basis and a supermarket. The waterfront shops have since been completed. For intermediate units, the rent for the ground floor is about RM4,000 while upper floors can fetch about RM1,900 per month.

The first thirty-two 3 to 4-storey shopoffices, which opened for sale in November last year, have since been fully sold, mainly to investors from the Klang Valley as well as locals. Targeted for completion in April next year, the shopoffices have built-ups of 4,290 and 4,500 sq ft and were sold for about RM800,000 each. The remaining 32 shopoffices, which have been available for sale since August with prices starting from RM883,000, have been 60% sold.

The developer is now getting ready to develop the second phase of the project, and Wan Abdul Razak reveals that foreign companies have shown interest in becoming JV partners.

“We have received enquiries from China, Singapore, Korea and Hong Kong for our second phase,” he says.

Considering the international interest, the developer is giving the development plans a second look. There have been recent changes to the initial plans to make it more appealing to the international market. The 25-acre second phase will now feature a resort city comprising several hotels, a shopping mall, serviced apartments and a hospital.

Of note is the proposed RM2 billion cable-car project, which will link PD Waterfront to the small island of Pulau Arang, as announced recently by the state government. The five to six-acre island is 700 to 800m from the mainland.

While the terms and conditions for the cable project have yet to be finalised, the developer has submitted a development proposal for Pulau Arang.

“There will not be any aggressive development other than for leisure, recreational and jungle-trekking activities. The GDV for phase two is easily RM500 million, excluding the cable-car project.
“We are looking at a green development concept for our second phase, to create a relaxing environment for our visitors. There’s zoning for three hotels and a hospital with private access to tap into the growth in medical tourism,” says Wan Abdul Razak, adding that PD Waterfront is close to the jetty as well as a possible upcoming Customs, Immigration and Quarantine complex. The developer also plans to reclaim some five acres to build more al fresco restaurants along a man-made riverbank.

Meanwhile, the third phase, which may feature a theme park targeted at locals and a hotel, is still in the planning stages. The developer expects the entire project to be completed within the next eight years.

Back in the Klang Valley, TSR is currently developing a corporate office tower in Mutiara Damansara. The 17-level tower has an estimated GDV of RM130 million. It is currently open for registration and is scheduled for completion at end-2012. The developer has received numerous enquiries for leasing and en bloc sales, which it says it is open to.

Meanwhile, Wan Abdul Razak says TSR will look for development opportunities in Penang, Johor and Port Dickson. It is currently in talks for either a JV or outright purchase of a tract in the Klang Valley.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 885, Nov 21-27, 2011

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