ADAPTING to market demand is key to staying relevant in any business. For IJM Land Bhd, it is addressing the current market slowdown — prompted by the tougher lending rules — by offering affordable homes at its Bandar Rimbayu township in Teluk Panglima Garang, Klang.
Penduline, the first phase of the township’s Fauna precinct, will feature 625 two-storey terraced homes in a 54.95-acre leasehold parcel. The homes are priced from RM625,000, or RM356 psf, with built-ups of 1,751 to 2,021 sq ft and land area of 20ft by 70ft each. Sales incentives for the units include a 12 to 24-month instalment plan that covers part of the down payment. To qualify, buyers must use their RHB, Maybank or CIMB credit card to pay the amount. Penduline has a gross development value (GDV) of RM451 million.
“We are offering house prices [at a little] over RM300 psf for a landed property. Even a condominium in the Klang Valley is already priced at RM700 to RM800 psf, with an absolute value of over RM1 million,” says IJM Land managing director Edward Chong.
“Penduline is for buyers who have held back their dream of owning a landed home for a long time and are looking to revive that dream. The price we are offering can hardly be found in the Klang Valley now,” Chong points out.
Penduline is targeted at young families and couples from nearby areas such as Kota Kemuning, Putra Heights, Subang Jaya and Puchong, with a household income of RM6,000 to RM8,000 and who plan to upgrade to landed homes, he says. One of the township’s attractions is Oasis International School, which is scheduled to open in 4Q2017, he adds.
The development will come with a 5.7-acre park, with amenities such as a lawn park, 730m walkway and futsal court. IJM Land has designed it to have features such as a single entry and exit point to facilitate the implementation of a guarded scheme, once residents have moved in and voted to do so. Citing Bandar Rimbayu’s first phase The Chimes as an example, Chong says the residents had unanimously decided to turn the development into a guarded scheme. IJM Land then helped to build a guardhouse and put up a fence around the area.
The soft launch for the first 132 units of Penduline, with built-ups of 1,751 to 1,897 sq ft, was held on Nov 14 for the 1,500 people who had registered their interest. Sales will be on a first come, first served basis, says Chong.
“We decided to return to the first come, first served sales method as we felt that it would be fairer to our buyers — they queue up themselves to obtain a unit.”
This is in contrast with the launch of The Chimes in March 2013, when about 2,000 buyers showed up to ballot for 115 out of 526 two-storey terraced houses with built-ups of 2,179 sq ft (22ft by 75ft) to 2,322 sq ft (24ft by 75ft) and priced from RM580,000 onwards.
“When we sold our houses via balloting, we got post-mortem comments saying that it was not fair as it was based on luck. There were buyers who had enquired about our properties months ahead but did not manage to get a unit,” says Chong.
Thus, selling on a first come, first served basis is preferable, even if IJM Land has to spend extra on housing, feeding and entertaining the potential buyers who camp out at its sales galleries in the days leading up to the launch, he says with a chuckle.
Meanwhile, IJM Land is cautious about releasing too many units into the market when demand is still muted as Malaysians are finding it harder to obtain approval for their home loans, Chong explains.
Other previously launched phases of Bandar Rimbayu include Scarlet, Perennia and Wisteria, which comprise 2-storey terraced homes; and Periwinkle, which consists of 2-storey semi-detached cluster homes. To be launched in 1Q2016 is two blocks of serviced apartments in Blossom. With the exception of Blossom, all the non-bumiputera lots for all the phases have been taken up. Twenty per cent of houses are left available for sale.
The 1,879-acre Bandar Rimbayu is connected to five major highways, including Lebuhraya Shah Alam (Kesas) and Lebuhraya Kemuning-Shah Alam (LKSA), which links Subang, Petaling Jaya, Damansara, Kuala Lumpur city centre, Puchong, Shah Alam and Klang.
The township will be linked to Putrajaya, Cyberjaya and Kajang via the South Klang Valley Expressway (SKVE), while Ekspresway Lingkaran Tengah (ELITE) will provide access to Kuala Lumpur International Airport and the southern region.
Bandar Rimbayu will also have access to the proposed West Coast Expressway (WCE), which will link Banting to Taiping, Perak. This will further enhance connectivity to the west coast of Malaysia, says Chong.
Within the township is a private park called The Arc, which is about 108,000 sq ft. The structure comprises a roof deck that arches towards the ground on both ends, allowing pedestrians direct access to the deck. The deck encircles a football field and also contains Bandar Rimbayu’s show gallery and office.
Some of The Arc’s green features include a man-made creek that collects rainwater to irrigate the green spaces and plants and a green roof deck, which insulates and filters rainwater before discharging it to the canal waterways and community vegetable gardens — such as the spice garden — which houses different types of vegetables and fresh herbs. Bandar Rimbayu has been awarded the green township status certified by Green Building Index (GBI).
The Arc received an honorary mention in The Edge-PAM Green Excellence Award 2014.
According to Chong, IJM Land is able to price Penduline affordably because it eliminated the frills — “wants” such as solar panels and rainwater harvesting systems — without compromising on quality.
“If you want to install solar panels or renovate your home, you can still do it later. For now, the goal is to own a home first.”
The developer also trimmed the built-ups and land areas to make them smaller than the 2,000 sq ft and 22ft by 75ft typically found in the market, says Chong.
“In the current market conditions, we need to adjust accordingly. Yes, the units are smaller but we are not compromising on quality. Our smallest unit still comes with two bedrooms and two bathrooms, which is a very decent home to live in.”
While he acknowledges that buying a property can seem intimidating as it is a huge commitment, he says it is vital to overcome that psychological hurdle by making that first purchase.
“When I bought my first property in the mid-1990s — an RM80,000, walk-up apartment (700 sq ft) in Bandar Sri Damansara with my then girlfriend, now wife — I was only earning less than RM1,000 a month. I later sold it for about RM140,000.
“With my salary back then, there was no way I could afford it without a strict budget. No property is ever affordable, but everyone has to start somewhere. Otherwise, you will be left out of the property market,” he says.
According to Chong, as the growth in the value of properties will always outpace that of income, it is important to buy before prices rise too much. This could mean settling for a first property that is not a “dream home”, he says.
Penduline is not a strata-titled scheme, so there will be no maintenance fees levied on owners. This reduces the cost of owning the property, Chong remarks.
“For strata-landed properties, you would need to fork out a few hundred ringgit for maintenance such as for the street lights, landscaping and rubbish collection, on top of the RM2,000 to RM2,500 to service your loan. Some people may feel burdened by the extra cost.”
Loan margins are key
Global Link Properties head of sales and real estate negotiator Juin Lee says while Penduline offers affordable terraced houses near Kota Kemuning, banks may still offer smaller loan margins for homes priced over RM600,000, so buyers will need to come up with a substantial sum for down payment.
She adds that most of the newer launches around Kota Kemuning, such as Bandar Rimbayu and Eco World Development Group Bhd’s Eco Sanctuary, are leasehold while homes in Kota Kemuning are freehold.
“You can get a freehold landed property in Kota Kemuning for RM700,000 to RM800,000, but these properties are 10 to 15 years old.
“There is still a huge demand for landed properties in Kota Kemuning as buyers prefer having space,” says Lee.
She adds that the upcoming SKVE and link to ELITE are expected to help ease traffic coming into the township and those going to Kuala Lumpur.
Meanwhile, CBD Properties team manager Christina Gordon says Kota Kemuning continues to draw people from nearby neighbourhoods, thanks to its slower pace and amenities.
“We have a lot of retirees and families in the vicinity who enjoy taking things a bit slower. We have hospitals such as Columbia Asia, banks such as CIMB, OCBC and Public Bank, schools, eateries and supermarkets. For those who enjoy golfing, there is the Kota Permai Golf and Country Club and Bukit Kemuning Golf & Country Resort,” says Gordon, who resides in Kota Kemuning.
She adds that there is a community of expatriates, including a sizeable Korean population. “We also have international schools such as the Kuala Lumpur Chinese Taipei School and the upcoming Tenby International School to cater for their needs.”
Gordon says there are fewer renters this year and the rent rate has fallen compared with two to three years ago.
On the high loan rejection rates, Chong says there is a mismatch between the expectations of buyers and the banks over loan margins. Moreover, some buyers do not furnish enough evidence to show that they are capable of servicing the loans.
For example, during a credit check, banks will ask for documents such as income statements that show other commitments such as car loans, insurance and additional housing loans. However, the statement will not include other sources of income such as from rent or side businesses. Therefore, the banks will not be able to accurately assess the borrowers’ ability to service the loan.
What’s next for Bandar Rimbayu? “We will still be focusing on the residential components for now and from time to time, we will adjust our launches according to market demand. We will be launching 488 units of serviced apartments in Blossom next year,” says Chong.
“The key is to grow our population first, by making sure we have occupants in the township before we move on to the commercial side, because the key drivers of the offices and commercial buildings will be the residents of the township.
“People always tell me, ‘If you are a businessman, sell off your commercial lots first. They bring you the highest margins.’ For me, I want to take a different approach. I want to make sure I have fulfilled my responsibility to grow the area first before I focus on the commercial hubs. That will be my plan for Bandar Rimbayu,” says Chong.
This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on Nov 16, 2015. Subscribe here for your personal copy.