MKH’s high-rise ambition in Kajang

KUALA LUMPUR: MKH Bhd has planned huge, integrated high-rise developments in Kajang with a total estimated gross development value (GDV) of RM2.48 billion, according to its latest presentation to investors.

Such high-rise projects in the “satay town” are seen as an aggressive gambit by MKH as they form 64% of the company’s total future GDV of RM5.43 billion. This outweighs its other landed projects in Kajang, Semenyih as well as its high-rise offerings in other more central locations such as Serdang, Bangsar and Melawati.

Property market observers took note of MKH’s high-rise ambition in Kajang where the company intends to capitalise on the two upcoming mass rapid transit (MRT) stations in the vicinity. However, there is a concern the Kajang market, which has been traditionally for landed residential properties, is relatively untested for integrated high-rise developments, unlike in the hot spots of the Klang Valley.

It is difficult to gauge at present the market response to such properties in Kajang as the MRT has yet to be in place. “Fund managers will be more convinced when initial launches become successful,” said a financial executive familiar with MKH.

MKH plans to develop serviced apartments, SoHo (small office/home office), office towers, retails and hotels in Kajang worth RM2.48 billion in GDV. Of this total, some RM400 million worth of offices, hotel and retail components under the MKH City project will not be sold, but are for the company’s investment properties portfolio.

Analysts expect MKH’s high-rise offerings to potentially set the price benchmark for future multi-storey properties in Kajang town, which will be connected to the Sungai Buloh-KL-Kajang MRT line.

The first such project, MKH Boulevard, with a GDV of RM172 million will be launched within the first half of 2013. The project comprises 308 SoHo serviced apartments above the 30 three-to-six storey shops at the podium block. The price of the SoHo,  yet to be disclosed, could range from a low of RM300 to a high of RM400 per sq ft, depending on MKH’s aggressive test of the market, said a property observer.

“Several elements are in place for the project to be a success, and if the price is right, there will be healthy demand among consumers. It appears that MKH Boulevard has ticked the location box, given its proximity to the upcoming MRT stations,” said a property analyst.

According to MRT Corp’s website, one of the stations will be at the Kajang town centre, near MKH Boulevard. The second MRT station will be located along Jalan Reko, further away from the town centre but is close to another MKH project Reko Avenue.

MKH, which developed Metro Point Complex in Kajang, has plans for huge integrated high-rise developments in the ‘satay town’.

MKH is taking a step-by-step approach with its high-rise launches as the MRT stations are expected to be completed only in 2017. After MKH Boulevard, the company’s next integrated high-rise project, Reko Avenue, will only be launched in its 2017 financial year ending Sept 30 (FY17). Reko Avenue has a GDV of RM180 million, comprising 576 serviced apartments and 41 shops.

The launch dates for MKH’s other integrated high-rise projects in Kajang were not mentioned during the presentation, although they are expected to be rolled out after FY13 and within a seven-year time frame. They include the RM400 million GDV MKH City project, the 33-acre, integrated high-rise commercial project in Kajang 2 with an estimated GDV of RM1.3 billion, as well as 1,500 serviced apartments also under Kajang 2 with a GDV of RM430 million.

MKH’s scheduled launches are seen as moderate for FY13. Apart from MKH Boulevard, the company plans to launch landed residentials in Kajang, Puncak Alam, Semenyih and high rises in Bangar next year with a total GDV of RM524.2 million.

According to the presentation, MKH registered total unbilled sales of RM430.5 million as at June 30 compared with RM398.3 million as at end-March this year.

This article first appeared in The Edge Financial Daily, on Nov 16, 2012.