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City&Country: YNH betting on Manjung’s prospects

YNH Property Bhd will likely see its investment in Manjung pay off in spades over the next few years. This is because its Manjung Point township is poised to enjoy the spillovers of at least RM21 billion worth of investments headed towards the district over the next 10 years. The township was launched in 1987.

“We have developed roughly 20% of our landbank in the Manjung township. We still have 900 to 1,000 acres to be developed and this should take the next 20 years as we only develop about 50 acres per year,” Daniel Chan, general manager of corporate affairs, tells City & Country.

Brazilian mining giant Vale (SA) International Ltd has committed RM15 billion to set up an iron-ore pelletising plant in Teluk Rubiah while Tenaga Nasional Bhd is expected to invest up to RM6 billion to expand the capacity of its Janamanjung plant to 4,000mw from the present 2,100mw to cope with demands from Vale and other industries coming into the area.

YNH Property expects this massive investment inflow to boost housing demand in the  township. In addition to its main product of 1-storey houses priced from RM130,000 to RM230,000 — of which 500 units a year have been sold to the Royal Malaysian Navy, whose base is in nearby Lumut, as accommodation for its recruits — YNH Property expects to build more upscale residences to cater for expatriates working for the multinational corporations, says Chan.

“YNH will also be looking into building semi-detached houses and bungalows with a gated concept for the expatriates and professionals coming to Manjung for the TNB Janamanjung Phase 2 and Vale iron ore projects. We plan to build them in stages, in line with Vale’s plan for Phase One of its project in the first five years,” he adds.

An international school is already in the offing but Chan declines to reveal any details. “We are also exploring the prospect of setting up a university here with some parties with an initial investment of RM20 million to build the campus,” he says.

On top of that, there is a RM310 million investment by YNH Property and Japanese retailer AEON (M) Bhd to set up a regional Jaya Jusco mall in the township with a gross floor area of 661,097 sq ft. The mall will be built on a 31.25-acre tract.

“AEON has agreed to a 25-year tenancy,” says Chan.

YNH Property had also entered into an agreement with medical services provider Pantai Holdings Bhd to set up a hospital in Manjung with a projected GDV of RM80 million, and has signed on for a 15-year tenancy with an option to renew for another 15 years.

These investments in amenities and services were sought as the developer expects Manjung’s population to double over the next five years from the roughly 300,000 residents now.

“We have launched some houses in 1Q with a total GDV of RM100 million. So far, sales have been good with 65% to 75% take-up,” Chan says.

The developer has launched a new commercial phase in the township in 1Q, comprising 300 shophouses with a GDV of RM210 million. The development has racked up RM136 million in sales to date. The 2-storey and 3-storey shop­houses with lot sizes of 20ft by 70ft are priced at RM600,000 and RM900,000 respectively.

In Kuala Lumpur, YNH is busy with its signature high-end projects, namely serviced apartments 188 Suites in Jalan Sultan Ismail and mixed-use development Kiara 163 in Mont’Kiara.

188 Suites
The RM650 million project features 446 fully furnished serviced apartments with sizes ranging from 610 to 20,60 sq ft and priced at an average of RM1,200 psf. These units will be housed in two towers that are 40 storeys and  20 storeys high.

The freehold project is 75% sold following preview sales in March and the official launch at end-July despite minimal publicity, says Chan. 188 Suites comes with guaranteed returns of at least 8% per annum over the next five years and will be managed by Frasers Hospitality as a hotel.

“We dare to offer such returns because we are confident of the strength of our manager’s brand. We also pay out the returns from our cash and our gearing level is healthy,” explains Chan. YNH Property’s latest quarterly results for the three months ended March 31 show its cash and cash equivalents were at RM46.82 million while its gearing ratio was 24%.

Chan says the project will be renamed Frasers Residences, following in the footsteps of Frasers Place in Jalan Perak, off Jalan Bukit Bintang in Kuala Lumpur, which was previously known as Lot 163 Serviced Suites. Launched in October 2004 with prices from RM780 to RM980 psf, these units are now selling from RM1,400 psf on the secondary market.

According to Chan, many of the buyers of 188 Suites are repeat customers and about 50% are foreign investors, especially Singaporeans. “Singaporeans are familiar with the brand in their country,” he explains.

Meanwhile, Kiara 163 in Mont’Kiara with a GDV of RM1.2 billion will comprise a 23-storey office block with 300 units of SoHos, two 42-storey serviced-apartment blocks with 564 units and a 3-storey retail podium of 300,000 sq ft of net lettable area (NLA).

The retail podium has been sold to a group comprising foreign and local investors for RM200 million while a preview of the ser­viced apartments is expected to take place in 4Q, says Chan.

He says the group sees potential in replicating the formula of offering established branded serviced residences as Mont’Kiara is suitably located for business and corporate travellers — it is connected to the Golden Triangle by the Penchala Link, Sprint Highway and Jalan Duta.

Moreover, he views the serviced apartments as a different proposition for investors in the area, which is well known for its condominiums. “We are looking at working with parties similar to Frasers Hospitality,” he says.  Prices will be between RM500,000 and RM600,000 per unit for sizes ranging from 650 to 1,300 sq ft. Yields are tentatively pegged at below 8%, adds Chan.  
On Kiara 163’s SoHos, Chan says 60% of the units have been taken up since a preview in June. The units have built-ups of 600 to 1,000 sq ft and are priced at RM800 psf.

Outlook
The group still has around 1,000 acres of land, mostly in Manjung, Perak. It also has about 40 acres in Mont’Kiara and eight to nine acres in Kuala Lumpur.

The group acquired the parcels in the Klang Valley at low prices during the recessions in 1997 and 2008 and has been waiting for the right time to develop and launch projects on them.

“In the next five years, we expect to grow stronger in terms of our balance sheet, staff and capabilities. We will be willing to acquire land at market prices then. However, we do not need to replenish our landbank yet as we have enough to keep us occupied for the next 20 to 30 years,” says Chan.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 874, Sep 5-11, 2011

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