MB Builders rides demand for high-rise residences

RIDING the new wave of developments and demand for high-rise residences in Johor Baru (JB), MB Builders Sdn Bhd will be developing Tri Tower Residence, comprising two serviced apartment towers and a hotel tower, with a gross development value of RM450 million.

"Tri Tower Residence is our key project this year," says marketing manager Datuk Jacky Ker. "It is the nearest residential project to the Johor Baru Customs, Immigration and Quarantine (CIQ) Complex. Local amenities such as the JB Sentral transport hub and City Square shopping mall are within walking distance. The proposed Malaysia-Singapore Rapid Transit System (RTS) link will definitely help increase accessibility too."

MB Builders and Mahabuilders Bhd, which is well known for being a "white knight developer", having taken over a number of abandoned projects, are members of the Johor-based MB Group. MB Builders was incorporated in 2009 and initially focused on construction before moving into property development. Its recent projects include the Pandan Residence serviced apartments, Nusa Heights shopoffices and Desaru Villas in Taman Desaru Utama, which comprise bungalows and 1 and 2-storey semi-detached homes. The company has a landbank of just over 917 acres, primarily in Johor.

The 52-storey, 360-room hotel at Tri Tower Residence will be managed by a hospitality firm, while the two 55-storey serviced apartment towers will offer 360 units for sale. The built-ups range from 696 to 2,976 sq ft, with prices starting from RM800 psf.

"Each floor will have four units served by four lifts," Ker says. The serviced apartments' unique design element is the linked floors on level 43 and 44. These feature recreational facilities such as a swimming pool, gym and lounge area. For those uncomfortable with heights, a pool is available on the ground level as well.

Due to its location, the project has attracted a lot of interest. "We have received many enquiries and expressions of interest of up to RM1,300 psf from some groups of buyers that want to buy 10 to 20 units per person. Due to the good response, we have set a limit where each purchaser will only be allowed to buy one unit, so that more purchasers can benefit [from owning a unit]," says Ker.

"The forecast appreciation rate for the Tri Tower Residence serviced apartments is about 30%, with an estimated rental yield of 7% to 8%."

Tri Tower Residence, which is expected to be officially launched at end-April and be completed by 2017, is among a series of launches planned by MB Builders this year. The company has set itself a target of being the top residential developer in Johor by launching projects with an estimated GDV of RM2.5 billion and building 4,500 residential units.

Ker says MB Builders enlists the expertise of the other companies under the MB Group that specialise in landscaping and design as well as construction to create value-for-money products. "It will be as if the buyer is purchasing a home from a wholesaler."

The average appreciation rate for MB Builders' properties is between 30% and 40%, Ker says, which shows that one of its strengths lies in creating value for its customers.

Upcoming launches

Besides Tri Tower Residence, MB Builders has several upcoming launches, one of which is M Condominium. "This is a long-awaited condominium project in JB as there aren't many similar developments around. The condominium offers resort-living elements, such as a mini clubhouse, landscaping and water features," says Ker.

The condominium project, which sits on a four-acre leasehold tract, is in Larkin and only five minutes from the JB CIQ Complex. The project, with a GDV of RM450 million, comprises 944 units with built-ups of 1,068 and 1,100 sq ft housed in four towers. The selling prices start from RM387,000. It is targeted for completion in 2016.

Another upcoming launch is the 239-unit Marinea 2-storey terraced houses in Taman Desaru Utama, a 917-acre mixed-use township development. The starting price for the 22ft by 70ft homes that come in two variants — Type A (built-up of 1,798 sq ft) and Type B (built-up of 2,000 sq ft) — is RM400,000. The houses are expected to be completed in 2015.

Ker is confident the Marinea homes and the other properties in Taman Desaru Utama will sell well and benefit investors in the long term. This is because of the estimated 50,000-plus oil and gas workers moving into the area, thanks to the Economic Transformation Programme (ETP) project in Pengerang. The Petronas Refinery and Petrochemical Integrated Development (RAPID) is only 20 minutes from the township.

Taman Desaru Utama is 40% developed and has an estimated GDV of RM606 million. According to Ker, upcoming launches in Taman Desaru Utama will include 44 semi-detached homes and 23 bungalows.

In the works are two major mall developments that are currently in the planning stages — the MB City Mall, which was previously called Pacific Mall, and Desaru Mall. MB City Mall, which was previously an abandoned project with retail and office components, will undergo a full refurbishment.

Ker says the developer is looking for architects and designers from Singapore to design the project. Plans are for the MB City Mall to have 317 retail units with a net lettable area (NLA) of 370,080 sq ft and 160 offices with an NLA of 262,074 sq ft.

Desaru Mall is expected to have an NLA of 150,695 sq ft. Ker believes the mall will be popular as there are not many prominent malls in the eastern part of Johor. Most people would have to travel to JB to visit one, says Ker, who expects the influx of the 50,000 workers at Pengerang and another 20,000 workers at the Bio Desaru organic farm to keep the mall viable.

MB Builders opened two hotels in Johor last year — the 263-room Amansari Hotel City Centre and the 144-room Amansari Express Hotel, where the average room rate is RM110 per night. In the pipeline are two more hotels, the Amansari Hotel Nusajaya and Amansari Hotel Desaru, which will start operations this year and next respectively. Ker says MB Builders hopes to build a name for itself in the three-star hotel business.

Centre of attention

Johor's growing property development market, particularly in Iskandar Malaysia, has garnered much attention of late. According to KGV International Property Consultants director Samuel Tan, the JB market is buzzing with excitement, thanks to the entry of regional players into Iskandar Malaysia. This has boosted consumer and developer confidence.

"Developers do not want to miss out on the action in Iskandar Malaysia; not just local developers but also those from abroad," Samuel says. "There are deals made by Ascendas, Fastrack and China Mall with UEM Land; Capitaland and Temasek with Iskandar Waterfront Holdings Bhd; and Country Garden with Danga Bay, as well as other investments in Medini Iskandar, apart from the earlier Afinity, an urban wellness centre by Capitaland, and Avira, a wellness resort by Mapletree and E&O."

"End-purchasers take their cue from these massive investments as a sign of confidence that Iskandar Malaysia is on the right track [of development]," Samuel says. "As more announcements pour in, reinforcing this perception, demand for properties move northwards. The completion and operation of some catalytic projects such as Legoland and Family Indoor Theme Park proves that the targets set in the master plan [for Iskandar Malaysia] are achievable." Samuel says several residential high-rise projects have seen a good take-up rate. Units at [email protected] Harbour development, [email protected] Meldrum and Paragon Residences have mostly been taken up.

"With regards to Tri Tower Residence, it is a unique product. It is near the CIQ and with such an advantage, it is expected to attract many buyers who travel to Singapore for work daily. In fact, residents here can simply walk to the CIQ and hop on a bus that will take them to a transport hub in Singapore," he says. "At 55-storeys, the serviced apartments will be able to command a good panoramic view of the Straits of Johor and JB city."

Tan Ka Leong, director of CH William Talhar & Wong (WTW) Johor Baru, concurs with Samuel that major tie-ups have helped Iskandar Malaysia and Johor Baru's real estate market grow. He adds that infrastructure projects and other developments in recent years have also contributed to its growth. Roads such as the Eastern Dispersal Link Expressway, Iskandar Coastal Highway, Second Pasir Gudang Highway and Senai-Desaru Highway, as well as completed projects such as Legoland and Johor Premium Outlet and ongoing developments like Pinewood Iskandar Malaysia Studios augur well for the region.

Ka Leong says transaction values in the sub-sale market for high-rise residential products — condominiums, apartments and serviced apartments — have experienced growth since 2008. "At some popular developments, the transaction values have increased 25% to 65%."

He cites the example of Molek Pine in Taman Molek where the average transacted price rose 65% to RM420 psf in 2012 from RM250 psf in 2008. Another development, Sri Samudera, achieved a 55% increase to RM460 psf from RM295 psf during the same period.

Meanwhile, Ka Leong says the rental market is improving as there is limited new supply in the market right now. "The rents of existing high-rise developments within easy reach of JB city is in the range of RM2 to RM2.60 gross psf, depending on the location and condition. The rental yield is between 5.5% and 6.5% on average."

He anticipates future projects to be priced higher, at RM800 psf to even RM1,000 psf, thanks to the growing demand for property in the region.

This story first appeared in The Edge weekly edition of Mar18-24, 2013.

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