F3 Capital builds on former GLC parcels

AS property developers scramble to snatch up the remaining parcels of land in prime areas in the Klang Valley, some developers are eyeing pocket-sized plots for niche projects. F3 Capital Sdn Bhd, a real estate investment group turned developer, is doing just that.

The company decided early on to focus on niche developments by unlocking the value of small pockets of land acquired from government-linked companies (GLCs) around the Klang Valley.

About a decade ago, F3 Capital was a real estate investment company that provided end-to-end consultancy to property developers. The company saw an opportunity to move into property development in 2002 when GLCs began to unlock the value of some of their land.

F3 Capital CEO Vignesh Naidu says the company's first two projects as the consultant for Telekom Malaysia Bhd (TM) were lessons and a stepping stone to its venture into property development.

"As an advisory consultant for the Kulim Hi-Tech Park and Avare KLCC, we had to handle the entire process of the business — from dealing with land issues to designing and marketing the development. All this, while trying to obtain a decent return," he says.

F3 Capital ventured into the property development business when it acquired a 1.9-acre freehold land from TM in Bandar Menjalara, Kepong. Its maiden project on the site, Menjalara 18 Residences, was subsequently launched in end-2006 at RM250 to RM260 psf and completed in 2009. The units are currently transacting at RM450 to RM480 psf on the secondary market. The gross development value (GDV) of this condominium project was RM88 mil.

TM's land

F3 Capital acquired all of its land from TM as the latter has been aggressively unlocking its landbank.Vignesh adds that they have bought about 12 acres in total from TM since 2002.

"In the past four years, TM has tendered more than 100 parcels of land," he says, adding that the size and location of these landbank vary and are spread throughout the country. However, he says F3 Capital has been focusing on purchasing small parcels for residential development in the Klang Valley.

Vignesh says the standard tendering and acquisition process takes between six months and a year. Following that, the developer is required to resolve any existing land issues faced during the conversion and subdivision of the parcel.

"There are no strings attached after the transaction is successful," Vignesh says. However, the company does give some discount on its properties to TM staff as a gesture of goodwill, he adds.

Moving into property development

Following its maiden project, the company launched Univ360 in Serdang that sits on a 4-acre leasehold commercial parcel, which was owned by TM. The SoFo (small office flexible office) development has a GDV of RM270 million and was launched at RM370 psf in April last year. About 77% of the units sized from 487 to 1,818 sq ft have been sold. The developer targets completion by end-2014.

F3 Capital also acquired a 0.95-acre leasehold parcel from TM for the development of Dua Menjalara in 2007. However, due to zoning and residential density issues, the condominium project was only launched in 2011.

"Kuala Lumpur has a plot ratio of 100 units per acre. In accordance to that, we only have 95 units in this development," says chief operating officer Kevin Quah, adding that this equates to four units per floor, making the residential-titled development very exclusive.

Out of the 95 units, 60 units range from 1,358 to 1,743 sq ft and are targeted at young families. Meanwhile, the larger duplexes sized from 2,408 sq ft are aimed at the more mature generation with larger households. The project, which has a GDV of RM100 million, was officially launched on Jan 6 and 68% of the units have been sold at RM530 psf.

Quah says many who purchased the units currently stay around the Damansara area. Some are repeat customers who had purchased other properties from F3 Capital. Piling works began in February and the developer hopes to complete the project by end-2015.

In March, F3 Capital held a preview of Urban 360 in Gombak. The RM145 million leasehold SoFo project was well received and garnered an 80% take-up rate at RM360 psf. Sizes range between 511 and 1,743 sq ft. The development is set to be completed by end-2014.

F3 Capital's subsidiary, Radiant Symphony Sdn Bhd, is the developer for Menjalara 18 Residences, Dua Menjalara and Urban 360. Meanwhile, Univ360 is being developed by another F3 Capital unit Zip Hill Development Sdn Bhd. The developer's upcoming project, Selayang 18, will be developed by Selayang18 Sdn Bhd, a subsidiary of Radiant Symphony Sdn Bhd.

Selayang 18

F3 Capital is now awaiting approvals for Selayang 18, a 3.2-acre mixed-use development project on commercial land acquired from TM in Selayang, Kuala Lumpur. Located in Bandar Baru Selayang and with an estimated GDV of RM200 million, the development will consist of 360 serviced apartments and 18 shoplots. The developer hopes to launch the project by the second half of the year.

"This would bring the total GDV of our projects to RM720 million," says Vignesh. He adds that the company does not have any additional landbank and has not tendered for any plots recently as it has its hands full with the current projects.

He says F3 Capital plans to continue being a niche developer that focuses on unlocking the value of small parcels of land below five acres within developed areas in the Klang Valley and greater Kuala Lumpur.

"We might look into venturing into more mixed-use developments. After the general election, we expect many GLCs to move more aggressively to monetise their land in the Klang Valley and Greater Kuala Lumpur area. We expect more tenders to be out in the second half of the year and will keep an eye out for good deals."

Vignesh is positive about the property market for 2013, adding that the market will be on an uptrend especially in the Klang Valley. "Attractive financing rates, upcoming infrastructure and an improvement in public transport will create a multiplier effect. This, coupled with the fact that Malaysian property buyers are constantly looking to upgrade, make it a very attractive market," he says.


This story first appeared in The Edge weekly edition of Apr 22 - 28, 2013.