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City&Country: Versatile office suites of Summer VOS targeted at Gen Y

UEM Land Holdings Bhd is set to launch Summer VOS, the second commercial block of its Summer Suites development in Jalan Sultan Ismail in Kuala Lumpur’s central business district, later this month.

Summer Suites is coming up on a 1.65-acre leasehold tract close to the Petronas Twin Towers and KLCC.

It comprises two 34-storey towers with a gross floor area of about 800,000 sq ft, featuring versatile office suites and two levels of retail space with a net lettable area of 20,000 sq ft that the developer plans to keep for recurring income. The gross development value of the project is RM485 million.

Launched in January last year by Sunrise Bhd, the first block of Summer Suites, consisting of 403 business suites — dubbed SoVos — with built-ups of 469 to 1,347 sq ft, was almost sold out within a week of its launch. Sunrise is now UEM Land’s wholly-owned subsidiary following a corporate exercise.

The upcoming launch of Summer VOS will offer 474 versatile office suites with sizes ranging from 444 to 867 sq ft.

“Summer VOS is the second phase of our Summer Suites project, which was successfully launched in January last year. The success of the launch is due to the strategy we have adopted. The Sunrise team has been involved in this project since day one. It is trying to capture a new market where people need to occupy smaller spaces but still want to be in the CBD. The most important thing is that it has to be at an affordable price,” UEM Land managing director and CEO Datuk Wan Abdullah Wan Ibrahim tells City & Country.

Higher pricing
The average price of Summer VOS is RM880 psf, an increase of about 17% from the average price of RM750 psf for units in the first phase. All units come partially furnished.

“Yes, the price of Summer VOS is slightly higher than that of the earlier phase, but we don’t simply increase prices. They rose after a lot of freebies that are being offered — including the developer interest bearing scheme (DIBS) or rebates given if purchasers are not interested in DIBS — were factored in,” Wan Abdullah points out.

The rebate is about RM35 psf or an average of RM20,000 per unit.

“Today’s market compared with last year’s is different. Some even say the ground has shifted. We take recognition of all these factors, but the numbers don’t lie. Whoever wants to provide this kind of quality and standard needs to generate that kind of value,” explains Wan Abdullah.

The partially furnished units come with a refrigerator, kitchen hood and hob and cabinets, among others.

“The promise that we make to the market is based on our track record. We always sell value. We have a track record of always keeping our promise and our brand value,” Wan Abdullah observes.

Summer Suites is feng shui-endorsed while amenities and facilities include a swimming pool, gym, function room, landscape deck, food court and F&B outlets. There are eight levels of podium-elevated parking space with a total of over 800 bays.

“The location of the project is vibrant and if you do a comparative study with a nearby office tower, for example, the rental average is RM6 psf. Based on the average selling price of Summer VOS of RM880 psf, your return gross is 8%,” UEM Land general manager (development division) Raymond H C Cheah says, adding that further along the road, strata office units are being sold for around RM1,300 psf.

The developer is also targeting the younger generation. “We are targeting Generation Y or the Google age.The business proposition nowadays is different ... they work round the clock and make their money online [advertisements, online sales] be it via e-Bay, Google or Facebook. So this is more for the younger generation as well as those involved in intellectual property, software programmers, lawyers and accounting firms,” says Cheah.

“If they are looking for a new office address, this would be it … right in the CBD. They are looking for entry-level bite-sized units. If they want a bigger office, they can buy two units or more with individual strata titles. So in the future, if they decide to sell, they can have the flexibility to sell the offices individually. This is what we call versatile office suites, something most developers do not consider.

“We also realise that people who buy our units may want to use them themselves instead of buying to flip.”

The developer has also noticed that the younger generation is more independent than those before them and want to own property for their own use. Gen Y also likes to be in a “happening” place in the city.

Outlook for 2012
UEM Land recorded a 3.84% y-o-y jump in earnings to RM140.56 million in 4QFY2011 ended Dec 31. According to its filing with Bursa Malaysia on Feb 28, the developer’s 4Q2011 revenue soared 115.22% to RM597.8 million from RM277.76 million previously. The higher revenue was attributed to the improved performance of the group’s projects in Johor, including East Ledang, Nusa Idaman, Nusa Bayu, Symphony Hills and Southern Logistic and Industrial Clusters.

“The board is confident that 2012 will be a better year. We term 2011 ‘the platform for growth’. Every year, we have different types of captions. The year 2012 is the much-talked-about tipping point,” comments Wan Abdullah.

“We have unbilled sales (as of Dec 31) of about RM1.8 billion. In 2011, we recorded sales of RM2.2 billion. This will underpin our momentum, backed by our unbilled sales and the number of launches we are doing this year. We have a sales target this year of RM3 billion,” he adds.

In Nusajaya, most of its catalytic projects that have been in progress over the past few years are about to be completed — hence the “tipping point”. These projects include Legoland, (Shangri-La Hotels and Resorts) Traders Hotels, an indoor theme park, Bio-XCell, Marlborough College and the Dutch Maritime Institute. “These will create a new wave of demand there,” says Wan Abdullah.

On the property market, he observes that the market is cyclical with boom and bust periods. “I have always maintained that we have to be in a state of readiness with the right products at the right place at the right time. Whatever the economic outlook, we will be there to ride whatever wave or ripple to maximise our presence.”

UEM Land is also looking at new locations in the country, for example in Sabah, Sarawak and Penang.

“We are going regional as well,” says Wan Abdullah. “It is too early to make any comments, but we are in the thick of things and hopefully, it will happen this year. We like Sabah very much; we believe there is a lot of potential there and that it is set to fly.”


 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 900, Mar 5-11, 2012

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