CONLAY was a strictly construction-based operation from the time it was set up in 1998. However, much like companies of its ilk, it is slowly making a transition into property development.
According to Lim Lian Chee, director of Conlay Group of Companies Sdn Bhd, this is a natural progression. But despite being new on the property development scene, the company already owns an impressive list of sites in prime locations in Selangor and Kota Kinabalu that are ripe for development. It plans to develop projects with a total gross development value (GDV) of RM1.5 billion on these sites over four years.
Conlay hopes to brand itself as a high and medium-end niche developer and is starting off with 8 Suria Boutique Offices in Petaling Jaya, next to Dataran Prima that is adjacent to Aman Suria and Kampung Chempaka. This 0.93-acre office development sits on freehold commercial land that was acquired in 2007.
8 Suria, which has a GDV of RM50 million, comprises eight 6-storey towers. The units, the built-up of which ranges from 9,322 to 11,428 sq ft, are priced at RM650 psf, which translates into RM6 million to RM7.4 million per tower.
The office development features a private lift lobby and double-volume grand entrance, 140 private allotted parking bays, lush landscaping with a vertical garden along the corridors for natural ventilation, sun-shading with granite stone finishing in the walkways and Shanghai plaster on the ceilings and columns. The sun-shading costs close to RM700,000 while the driveway's compressed stone costs close to RM400,000. In fact, the construction of 8 Suria is taking up almost 40% of its GDV. On top of that, Conlay has two architects working on the design of the development.
"We're developing 8 Suria for branding purposes," explains Lim. "There is not much profit for us, but for our purchasers it will be a bargain."
The eight blocks of the development come equipped with elevators that can accommodate 14 people per trip. With only 40 to 60 people per block, some would say this was overdesigning, but Lim says Conlay is thinking of the comfort of the end-user.
So far, a pharmaceutical and an engineering company have purchased a block each of 8 Suria while a public-listed company and a corporate brand are negotiating to buy one each.
Each block can house a company with up to 60 employees. According to Lim, Conlay is looking for buyers who are looking to occupy the units. The developer will also control the tenant mix and screen the buyers to create a healthy environment for the development's occupants.
"We are looking for buyers that we think are suitable for this place," says Lim. "This is so that buyers won't have questionable tenants next door to them."
He reveals that there were a lot of potential buyers for the blocks, but Conlay did not find a lot of them appropriate for tenancy.
Lim says buyers have a lot of faith in 8 Suria, especially since the development was 80% complete when it was launched. Its site is also the last piece of commercial land in the area. Visibility from the North Klang Valley Expressway is good as well. No wonder Conlay can afford to pick and choose its buyers.
"Our top floor comes with a large space for the companies occupying our building to advertise their brands on a big signboard," Lim remarks.
As one of the founders of the company, Lim's decision to go into property development came with the need to reach a wider market.
"In the past, the focus of Conlay was construction and the majority of our projects were won through tenders. However, our client base was limited," he says. "With our recent venture into property development, we needed to reach a bigger market, including homebuyers, investors and corporate entities. Hence, Conlay's decision to intensify its advertising and promotional efforts."
8 Suria is not the developer's first project. "About three years ago, we jointly developed Dua Sentral in Brickfields with Amanah Raya Bhd," says Lim.
Conlay was initially brought in as the main contractor of the project. But halfway through, Magic Coast Sdn Bhd — a subsidiary of Oilcorp Bhd that had an equal share in the project with Amanah Raya Hartanah, a subsidiary of Amanah Raya — suffered financial problems and was forced to exit the joint venture. Conlay was then invited to take Magic Coast's place.
Located on 2.19 acres of freehold land, Dua Sentral has a GDV of RM500 million and comprises two 33-storey towers with 378 hotel suites and office units. The hotel suites — with built-ups of 587 to 1,032 sq ft — are priced at RM600 to RM700 psf. Dua Sentral was handed over to buyers in June 2012.
"After our experience with Dua Sentral, we began planning 8 Suria on the land we had purchased in 2007," Lim says.
Conlay is immersed in property development at the moment. "We have developments that we are looking at launching next year," says Lim.
The developer plans to stay put in the areas it knows best, like the Klang Valley and Kota Kinabalu. "These two addresses are the most familiar to us and as a construction company and a new player in development, we want to work in places that we know best," Lim explains. But, he adds, land values are rising in Kota Kinabalu, making it more difficult for the company to acquire more.
"The land we purchased in Kota Kinabalu was at either market price or above market price," he points out. "Also, land is getting scarce in the city, so we have had to develop towards Penampang and Budusan, which are easily 10km away."
Lim, who learnt more about the Kota Kinabalu market after Conlay conducted several studies in the area, says the rising prices are not deterring the company from looking for more land there.
"We want to get land with good value and in a good location. We are a contractor and we can still compensate for a little loss of margin here and there. What's important is that we want a good end-product."
Conlay, which is optimistic about the Kota Kinabalu market, is aiming for a bigger presence in the area. It is looking to build medium to high-end developments in the city to take advantage of the Sabah Oil and Gas Terminal project. Located in Kimanis Bay, some 65km southwest of Kota Kinabalu, the project is expected to bring close to 3,000 expatriates to the market. Other major upcoming oil and gas projects in Sabah include the Sabah-Sarawak Gas Pipeline, the Kimans Power Plant, the Sabah Ammonia Urea Plant in Sipitang and the Lahad Datu Regassification Terminal.
"The existing supply of medium to upper-medium developments in the area cannot meet the demand of this new workforce," Lim reasons.
As an eager developer just starting out in the industry, Conlay has acquired land in strategic locations — four parcels (including the 8 Suria site) in Selangor and three in Kota Kinabalu.
One of the parcels consists of two acres of freehold land in the established neighbourhood of Section 17 in Petaling Jaya, where Conlay is proposing to build [email protected] Jaya, a serviced apartment project with a retail podium. Located on Jalan 17/27 near the section 17 morning market, the development has a GDV of about RM300 million. The plan is for 425 serviced apartments and 113 retail units with a supermarket on the lower ground.
The serviced apartments — with built-ups of 529 to 1,288 sq ft — are tentatively priced at RM650 to RM750 psf. The built-up of the retail units ranges from 389 to 480 sq ft while that of the supermarket is 18,019 sq ft. The retail units are going for about RM1,000 psf.
[email protected] Jaya is located in a commercial hub that features integrated amenities, facilities, security and access and is surrounded by a mature housing neighbourhood. It is expected to be launched in 2Q2013 while completion is expected to be in 2Q2016.
In Subang Jaya, Conlay is planning to launch two projects in 2Q2013. The first — [email protected] — is a commercial development with an estimated GDV of RM300 million on 3.25 acres of freehold land. It comprises 162 SoHos, 263 serviced apartments, one 17-storey office tower and 21 retail units.
The SoHos have a built-up of 678 to 881 sq ft and are priced at around RM680 psf while the serviced apartments have a built-up of 563 to 1,277 sq ft and are priced at roughly RM630 psf. The retail units cost about RM1,000 psf.
The development is expected to be launched in 2Q2013 and completed in 2Q2016.
The other project — [email protected] — will offer shopoffices and duplex office suites on about 0.46 acre of freehold land and has a GDV of about RM80 million. The four shopoffices on the ground floor have built-ups of 2,964 to 3,435 sq ft while the seven on the first floor have built-ups of 713 to 1,687 sq ft. The duplexes on the seventh, eighth and ninth floors boast 57 office suites with built-ups of 1,178 to 2,509 ft. The prices range from RM430,000 to RM2.7 million.
[email protected] is expected to be launched in 2Q2013 and is expected to be completed in 2Q2016.
The two parcels in Kota Kinabalu are located in Donggongon and Bundusan.
Hilton Hilltop condominium in Donggongon is a high-end condominium project on 6.99 acres of leasehold land and has a GDV of about RM260 million. It is offering 512 condos, including 26 duplexes. The built-ups range from 674 to 2,681 sq ft.
The launch of Hilton Hilltop is expected in 3Q2013 and its completion in 3Q2016.
Bundusan Valley Mixed Development is coming up on 2.87 acres of leasehold land in Penampang. The mixed development comprises retail and SoHo units and has a GDV of about RM260 million.
It offers 765 SoHos with a built-up of 505 sq ft and is priced from RM400 to RM450 psf. There are 102 retail units with a built-up of 759 sq ft and priced at about RM700 to RM1,200 psf.
The development is expected to be launched in 4Q2013 and completed by 4Q2016.
According to Lim, all these projects will keep the company busy for three years. "We will start launching by the second quarter of 2013," he says. "Normally, it takes a few years but one or two parcels will be late and only start in the third quarter of 2013 or the first quarter of 2014."
Conlay has also purchased a one-acre parcel in Damai on which it plans to develop a high-end project in a joint venture with the landowner.
Down the road, Conlay expects to acquire more land in the Klang Valley and Sabah. Lim says if there are pockets of land that meet its requirements, Conlay will be interested in purchasing them or entering into joint ventures to develop them.
This story first appeared in The Edge weekly edition of Jan 28-Feb 3, 2013.
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