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Consider this scenario: You have just set up your own company and all you need is some space to work or have meetings a few times a month. Or perhaps your office is currently undergoing renovations and you just need a temporary office space for a few months.
For the first situation, an attractive option is to work from home and just “rent” an office address or a virtual office in an established area, preferably in the central business district, which would be great for your portfolio and makes a good impression on clients. Ditto if you need office space for a short period.
So, whether you choose to rent a virtual office, where you only use the address with minimal services of mail collection and forwarding, or a hybrid office where you can bring in your own furniture or opt for a furnished office, The Nomad Offices offer these services for lease from as low as RM100 per month.
Within a span of just two years, The Nomad Group has set up The Nomad Offices in five Southeast Asian countries, totalling 142,000 sq ft. This includes offices in Kuala Lumpur, two in Singapore and one each in Ho Chi Minh City in Vietnam, Bangkok and Jakarta.
The Nomad Offices in Klang Valley offer a combined total of 82,800 sq ft of space, The Nomad Group Bhd CEO Hew Thin Chay tells City & Country. In Kuala Lumpur, The Nomad Offices, catering to short-term office needs, are available at The Gardens, MidValley City, Pavillion Kuala Lumpur, Menara Hap Seng in Jalan P Ramlee and Etiqa Twins in Jalan Pinang.
Reinvention
With the impressive growth of The Nomad Offices chain, the reinvention of the company formerly known as Kuala Lumpur Corp Bhd, is well and truly underway. Formerly a financial services provider, the Nomad Group sold off its financial services business and identified the property sector as having good investment potential and stable cash flow.
According to Hew, the rationale for the disposal of the stockbroking business was to exit the increasingly “competitive” stockbroking sector. “We were not a bank-backed stock broking institution that would usually enjoy lower cost of funding, economies of scale, cross-selling potential and strong brand presence. Moreover, the offer was reasonable vis-a-vis the risks involved,” he says. A few of its subsidiaries under the then Kuala Lumpur Corp Bhd were sold to Alliance Merchant Bank Bhd for RM273 million.
Hew says the group was reclassified from finance to the trading services sector on Bursa Malaysia, in 2007. “We first acquired a serviced office operator in Singapore, Central Offices Pte Ltd, which operates in Raffles Place. It cost us S$1.2 million (RM2.8 million), and we took it as a reference to learn as much about the business before starting The Nomad Offices here,” he says.
In its FY2008 ended Dec 31, the group recorded a pre-tax loss of RM5.9 million compared to profit before tax of RM11.8 million a year earlier. This was mainly due to poor market sentiments and additional expenses incurred for rebranding and business expansion.
The group is aggressively expanding its office services network in Southeast Asia and soon to other parts of Asia. An additional 24,700 sq ft of office space will be available in July this year in Jakarta and Manila. It is also looking at Taiwan, Hong Kong, India, China, Middle East and South Korea for future expansion.
The group buys or leases large office spaces for the long term, which it then “cuts and rents” short term — as short as one day but usually on an average of three months — depending on the requirements of its clients. “Our strength is that we are flexible and not bound by a set of rigid rules. For example, if a client wants to change the office layout and configuration, we are more than happy to customise to their needs and price accordingly. This may involve additional renovation, furniture, frequency of cleaning or even concierge services,” says Hew.
He says the company does vet prospective clients before agreeing to accept them but it usually is not a problem if they are in legitimate businesses. “Serviced office providers give you flexibility to move out, expand or downsize compared to traditional office rent where you are tied up for maybe three years,” says Hew on the advantages of utilising serviced offices.
Comparing The Nomad Offices to other existing service offices, he says it is common to find traditional serviced offices (with large space) and recently, shared offices, where a few clients can share one office space with their own dedicated phone lines and workstations. In contrast to these set-ups, The Nomad Offices introduced its “hybrid office” where clients sign a tenancy of more than one year. “A hybrid office is just like a serviced office but clients can move in with their own furniture, but fittings, telephone lines and broadband, for example, are readily available. They just plug in and work,” he says.
Hew believes serviced offices can save between 40% and 60% on costs for companies, on a long-term basis, compared to renting or owning a traditional office.
Largest in Malaysia
Within Malaysia, The Nomad Offices offers a combined total of 82,800 sq ft in six locations in the Klang Valley, with sizes ranging between 400 and 29,100 sq ft.
The Nomad Offices was first launched in November 2007 in Menara Hap Seng, Kuala Lumpur, after the building underwent a major upgrade by owner Hap Seng Consolidated Bhd. With some 13,300 sq ft, the group offers offices of various sizes and services, including virtual offices, conference room and exhibition showcase.
Hew says the group is now the largest serviced offices operator in Malaysia and will continue to focus on its serviced offices network. Its business model, he says, is creating living and working spaces for its customers.
This explains the group’s venture into property investments such as hotel, serviced suites and serviced offices. He says that after more research and case studies were conducted, the group found serviced residences/hotel give 5% to 8% returns, while serviced offices have 20% to 30% returns, depending on the ‘maturity of the office’.
“Returns correspond to risks taken. Hotels, like all properties, tend to earn lower yields compared to other industries, as the risk is relatively lower. As for serviced offices, the higher returns are expected because it takes about one year to reach 80% occupancy or, in other words, a year to start generating positive operating cash flow,” says Hew.
He points out that its serviced offices must be in a Grade A or B building and within the central business district. As in the case of a virtual office, it is all about selling the address.
After establishing its presence in Menara Hap Seng, the group then moved on to open The Nomad Offices in Etiqa Twins, The Gardens in MidValley City, Pavilion Kuala Lumpur and Jalan Ara in Bangsar.
Currently, its biggest serviced office is in Pavilion KL with 30,000 sq ft. Started in September 2008, it is currently 40% occupied but Hew expects 60% occupancy there by mid-2009. He says it takes about a year to achieve higher occupancy, by gaining recognition for its high level of service offered, reliability and location.
In Pavilion KL, the group offers hybrid office models, aimed at traditional office people but with the difference being that these companies can bring their own furniture. “Compared to our other serviced offices, there is more empty space in Pavilion KL. You can bring your own tables and chairs, and just plug and play as there are telephone lines and broadband services. Shared offices are also available,” he says. Hybrid offices require a longer tenancy term of more than one year.
Expanding geographical reach
Moving forward, the group seeks to strengthen its presence in Southeast Asian countries. For the respective countries to “pass the test”, there are certain requirements that need to be met. “It has to be a growing country with strong foreign direct investments and gross domestic product, and whose values are close to our culture,” says Hew.
To expand its network, the group has since set up serviced offices in Ho Chi Minh City, Bangkok, Manila and Jakarta, focusing on fast-developing countries in Asia. Negotiations are also being carried out to expand its serviced offices network to Hong Kong and Chennai, India.
“We are excited about Hong Kong and the rates there are currently falling. We hope to secure a space there by 3Q2009. My team is also in India conducting some market studies there,” says Hew, adding that the group is looking to expand to the Middle East, South Korea, Japan and Australia as well.
The group acquired a services company in Jakarta in February this year and subsequently a building in Jakarta, called Menteng Office Park, for about RM30 million from PT Pulo Mas Jaya. The nine-storey office building is in a prime area “akin to Kenny Hills in Malaysia, a high-end residential area,” as Hew puts it. “We will set up The Nomad Offices within the building, taking up 10,000 sq ft (one floor) and look for an anchor tenant there.” He expects the building to be almost fully occupied, or 90%, by July this year.
The Nomad Residences
Besides working spaces, the Nomad Group also provides living spaces to business travellers via The Nomad Residences. The group owns The Nomad SuCasa, formerly the SuCasa Service Apartments in Jalan Ampang, and The Nomad Bangsar, formerly Bangsar Suria Condominium in Jalan Ara.
It also announced in April the acquisition of City Centre Hotel Sdn Bhd (which owns Novotel Kuala Lumpur), previously owned by Johor-based developer Pulai Springs Bhd, for RM42.7 million.
Novotel Kuala Lumpur comprises a six-storey podium block (including a mezzanine floor) and a 24-storey tower block, with five basement levels. It is a four-star hotel with 291 guest rooms, with a gross floor area of 330,915 sq ft. Hew says it is too early to reveal any plans for Novotel Kuala Lumpur. The group remains on the lookout for hotel and serviced apartments.
Basically, 2007 was a pretty hectic year for the group. It started out with the acquisition of Sucasa Sdn Bhd, the operator and owner of the Sucasa Service Apartments, in February 2007 for RM53 million. Commenting on the previous establishment, Hew says it has the “right location but wrong positioning”. Refurbishment works were carried out, first to convert 50 rooms into deluxe rooms and later, to add 10 more deluxe rooms, due to demand.
“It is on Embassy Row and we decided to make it more up-market. We ended all old tenancies, created a new lobby and seminar facilities and brought in a high-end Energy Spa. We have 60 deluxe rooms and 120 standard rooms. It is one of our proudest achievements so far,” says a beaming Hew.
Now known as The Nomad SuCasa, it is targeted at business travellers, while The Nomad Offices are also available on the lower level of the hotel. Hew says The Nomad SuCasa was recently valued at RM70 million. Room rates are from RM220 a night, with an average occupancy of 80%. A one-bedroom unit at The Nomad SuCasa is 689 sq ft, while a two-bedroom unit is 950 sq ft. It was soft launched on Aug 28 last year.
The group then acquired 1.5-acre freehold Bangsar Suria Condominium at end-2007, for RM34.5 million. According to Hew, the condominium had been abandoned for three years, and the condition was very bad. Renovation and refurbishment works were carried out on the three blocks within six months, costing some RM15 million. Renamed The Nomad Bangsar, it opened in July last year.
Targeting higher-end customers, especially business travellers, occupancy of the serviced condominiums is currently at 85%. A majority of the occupants are French and all units are fully furnished. The monthly rent for a 830 sq ft one-bedroom unit is about RM7,500 while a 1,700 sq ft three-bedroom serviced apartment costs RM11,500 inclusive of utilities, depending on period of stay.
“We have redefined ‘The Nomad’ and it means a group of business travellers who travel from one place to another and are IT savvy. If they bring their family along, they can stay at places like The Nomad Residences in Bangsar, or if alone, we also have studio rooms available,” says Hew.
The Nomad Group also manages Tanjung Bungah Beach Hotel in Penang and is currently negotiating a management contract in Dubai, which is expected to be concluded by year-end. Hew says it is “too premature” to provide more details.
Commenting on the difference between a stockbroking firm and a property investment business, Hew says the hotel industry, serviced offices as well as stockbroking are still basically part of the services industry.
“It is all about reliability and responsiveness to ensure that clients are satisfied. Some of these values were brought along from our previous venture as brokers,” he says. And its attention to such core values seems to be helping The Nomad Group make major strides in its goal of becoming a preeminent serviced office operator in the region.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 760, June 22 - 28, 2009.
For the first situation, an attractive option is to work from home and just “rent” an office address or a virtual office in an established area, preferably in the central business district, which would be great for your portfolio and makes a good impression on clients. Ditto if you need office space for a short period.
So, whether you choose to rent a virtual office, where you only use the address with minimal services of mail collection and forwarding, or a hybrid office where you can bring in your own furniture or opt for a furnished office, The Nomad Offices offer these services for lease from as low as RM100 per month.
Within a span of just two years, The Nomad Group has set up The Nomad Offices in five Southeast Asian countries, totalling 142,000 sq ft. This includes offices in Kuala Lumpur, two in Singapore and one each in Ho Chi Minh City in Vietnam, Bangkok and Jakarta.
The Nomad Offices in Klang Valley offer a combined total of 82,800 sq ft of space, The Nomad Group Bhd CEO Hew Thin Chay tells City & Country. In Kuala Lumpur, The Nomad Offices, catering to short-term office needs, are available at The Gardens, MidValley City, Pavillion Kuala Lumpur, Menara Hap Seng in Jalan P Ramlee and Etiqa Twins in Jalan Pinang.
Reinvention
With the impressive growth of The Nomad Offices chain, the reinvention of the company formerly known as Kuala Lumpur Corp Bhd, is well and truly underway. Formerly a financial services provider, the Nomad Group sold off its financial services business and identified the property sector as having good investment potential and stable cash flow.
According to Hew, the rationale for the disposal of the stockbroking business was to exit the increasingly “competitive” stockbroking sector. “We were not a bank-backed stock broking institution that would usually enjoy lower cost of funding, economies of scale, cross-selling potential and strong brand presence. Moreover, the offer was reasonable vis-a-vis the risks involved,” he says. A few of its subsidiaries under the then Kuala Lumpur Corp Bhd were sold to Alliance Merchant Bank Bhd for RM273 million.
Hew says the group was reclassified from finance to the trading services sector on Bursa Malaysia, in 2007. “We first acquired a serviced office operator in Singapore, Central Offices Pte Ltd, which operates in Raffles Place. It cost us S$1.2 million (RM2.8 million), and we took it as a reference to learn as much about the business before starting The Nomad Offices here,” he says.
In its FY2008 ended Dec 31, the group recorded a pre-tax loss of RM5.9 million compared to profit before tax of RM11.8 million a year earlier. This was mainly due to poor market sentiments and additional expenses incurred for rebranding and business expansion.
The group is aggressively expanding its office services network in Southeast Asia and soon to other parts of Asia. An additional 24,700 sq ft of office space will be available in July this year in Jakarta and Manila. It is also looking at Taiwan, Hong Kong, India, China, Middle East and South Korea for future expansion.
The group buys or leases large office spaces for the long term, which it then “cuts and rents” short term — as short as one day but usually on an average of three months — depending on the requirements of its clients. “Our strength is that we are flexible and not bound by a set of rigid rules. For example, if a client wants to change the office layout and configuration, we are more than happy to customise to their needs and price accordingly. This may involve additional renovation, furniture, frequency of cleaning or even concierge services,” says Hew.
He says the company does vet prospective clients before agreeing to accept them but it usually is not a problem if they are in legitimate businesses. “Serviced office providers give you flexibility to move out, expand or downsize compared to traditional office rent where you are tied up for maybe three years,” says Hew on the advantages of utilising serviced offices.
Comparing The Nomad Offices to other existing service offices, he says it is common to find traditional serviced offices (with large space) and recently, shared offices, where a few clients can share one office space with their own dedicated phone lines and workstations. In contrast to these set-ups, The Nomad Offices introduced its “hybrid office” where clients sign a tenancy of more than one year. “A hybrid office is just like a serviced office but clients can move in with their own furniture, but fittings, telephone lines and broadband, for example, are readily available. They just plug in and work,” he says.
Hew believes serviced offices can save between 40% and 60% on costs for companies, on a long-term basis, compared to renting or owning a traditional office.
Largest in Malaysia
Within Malaysia, The Nomad Offices offers a combined total of 82,800 sq ft in six locations in the Klang Valley, with sizes ranging between 400 and 29,100 sq ft.
The Nomad Offices was first launched in November 2007 in Menara Hap Seng, Kuala Lumpur, after the building underwent a major upgrade by owner Hap Seng Consolidated Bhd. With some 13,300 sq ft, the group offers offices of various sizes and services, including virtual offices, conference room and exhibition showcase.
Hew says the group is now the largest serviced offices operator in Malaysia and will continue to focus on its serviced offices network. Its business model, he says, is creating living and working spaces for its customers.
This explains the group’s venture into property investments such as hotel, serviced suites and serviced offices. He says that after more research and case studies were conducted, the group found serviced residences/hotel give 5% to 8% returns, while serviced offices have 20% to 30% returns, depending on the ‘maturity of the office’.
“Returns correspond to risks taken. Hotels, like all properties, tend to earn lower yields compared to other industries, as the risk is relatively lower. As for serviced offices, the higher returns are expected because it takes about one year to reach 80% occupancy or, in other words, a year to start generating positive operating cash flow,” says Hew.
He points out that its serviced offices must be in a Grade A or B building and within the central business district. As in the case of a virtual office, it is all about selling the address.
After establishing its presence in Menara Hap Seng, the group then moved on to open The Nomad Offices in Etiqa Twins, The Gardens in MidValley City, Pavilion Kuala Lumpur and Jalan Ara in Bangsar.
Currently, its biggest serviced office is in Pavilion KL with 30,000 sq ft. Started in September 2008, it is currently 40% occupied but Hew expects 60% occupancy there by mid-2009. He says it takes about a year to achieve higher occupancy, by gaining recognition for its high level of service offered, reliability and location.
In Pavilion KL, the group offers hybrid office models, aimed at traditional office people but with the difference being that these companies can bring their own furniture. “Compared to our other serviced offices, there is more empty space in Pavilion KL. You can bring your own tables and chairs, and just plug and play as there are telephone lines and broadband services. Shared offices are also available,” he says. Hybrid offices require a longer tenancy term of more than one year.
Expanding geographical reach
Moving forward, the group seeks to strengthen its presence in Southeast Asian countries. For the respective countries to “pass the test”, there are certain requirements that need to be met. “It has to be a growing country with strong foreign direct investments and gross domestic product, and whose values are close to our culture,” says Hew.
To expand its network, the group has since set up serviced offices in Ho Chi Minh City, Bangkok, Manila and Jakarta, focusing on fast-developing countries in Asia. Negotiations are also being carried out to expand its serviced offices network to Hong Kong and Chennai, India.
“We are excited about Hong Kong and the rates there are currently falling. We hope to secure a space there by 3Q2009. My team is also in India conducting some market studies there,” says Hew, adding that the group is looking to expand to the Middle East, South Korea, Japan and Australia as well.
The group acquired a services company in Jakarta in February this year and subsequently a building in Jakarta, called Menteng Office Park, for about RM30 million from PT Pulo Mas Jaya. The nine-storey office building is in a prime area “akin to Kenny Hills in Malaysia, a high-end residential area,” as Hew puts it. “We will set up The Nomad Offices within the building, taking up 10,000 sq ft (one floor) and look for an anchor tenant there.” He expects the building to be almost fully occupied, or 90%, by July this year.
The Nomad Residences
Besides working spaces, the Nomad Group also provides living spaces to business travellers via The Nomad Residences. The group owns The Nomad SuCasa, formerly the SuCasa Service Apartments in Jalan Ampang, and The Nomad Bangsar, formerly Bangsar Suria Condominium in Jalan Ara.
It also announced in April the acquisition of City Centre Hotel Sdn Bhd (which owns Novotel Kuala Lumpur), previously owned by Johor-based developer Pulai Springs Bhd, for RM42.7 million.
Novotel Kuala Lumpur comprises a six-storey podium block (including a mezzanine floor) and a 24-storey tower block, with five basement levels. It is a four-star hotel with 291 guest rooms, with a gross floor area of 330,915 sq ft. Hew says it is too early to reveal any plans for Novotel Kuala Lumpur. The group remains on the lookout for hotel and serviced apartments.
Basically, 2007 was a pretty hectic year for the group. It started out with the acquisition of Sucasa Sdn Bhd, the operator and owner of the Sucasa Service Apartments, in February 2007 for RM53 million. Commenting on the previous establishment, Hew says it has the “right location but wrong positioning”. Refurbishment works were carried out, first to convert 50 rooms into deluxe rooms and later, to add 10 more deluxe rooms, due to demand.
“It is on Embassy Row and we decided to make it more up-market. We ended all old tenancies, created a new lobby and seminar facilities and brought in a high-end Energy Spa. We have 60 deluxe rooms and 120 standard rooms. It is one of our proudest achievements so far,” says a beaming Hew.
Now known as The Nomad SuCasa, it is targeted at business travellers, while The Nomad Offices are also available on the lower level of the hotel. Hew says The Nomad SuCasa was recently valued at RM70 million. Room rates are from RM220 a night, with an average occupancy of 80%. A one-bedroom unit at The Nomad SuCasa is 689 sq ft, while a two-bedroom unit is 950 sq ft. It was soft launched on Aug 28 last year.
The group then acquired 1.5-acre freehold Bangsar Suria Condominium at end-2007, for RM34.5 million. According to Hew, the condominium had been abandoned for three years, and the condition was very bad. Renovation and refurbishment works were carried out on the three blocks within six months, costing some RM15 million. Renamed The Nomad Bangsar, it opened in July last year.
Targeting higher-end customers, especially business travellers, occupancy of the serviced condominiums is currently at 85%. A majority of the occupants are French and all units are fully furnished. The monthly rent for a 830 sq ft one-bedroom unit is about RM7,500 while a 1,700 sq ft three-bedroom serviced apartment costs RM11,500 inclusive of utilities, depending on period of stay.
“We have redefined ‘The Nomad’ and it means a group of business travellers who travel from one place to another and are IT savvy. If they bring their family along, they can stay at places like The Nomad Residences in Bangsar, or if alone, we also have studio rooms available,” says Hew.
The Nomad Group also manages Tanjung Bungah Beach Hotel in Penang and is currently negotiating a management contract in Dubai, which is expected to be concluded by year-end. Hew says it is “too premature” to provide more details.
Commenting on the difference between a stockbroking firm and a property investment business, Hew says the hotel industry, serviced offices as well as stockbroking are still basically part of the services industry.
“It is all about reliability and responsiveness to ensure that clients are satisfied. Some of these values were brought along from our previous venture as brokers,” he says. And its attention to such core values seems to be helping The Nomad Group make major strides in its goal of becoming a preeminent serviced office operator in the region.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 760, June 22 - 28, 2009.
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