HAVING made its name as an engineering outfit specialising in infrastructure, public-listed Protasco Bhd is now looking at becoming a premium property developer. It also aims to capitalise on the developments taking place in Greater Kuala Lumpur, which is expanding very quickly.
"It is a natural progression for us to become a property developer," says co-founder and group managing director Datuk Chong Ket Pen. "Moreover, we have this prime 100-acre parcel, and we believe the timing is right as the area is ripe for development."
The group is looking to turn the 100-acre site in Kajang, Selangor, into a township called De Centrum City. The development will be led by De Centrum Development Sdn Bhd, a subsidiary of Protasco's property arm Protasco Development Sdn Bhd.
The township will comprise residential and commercial components, offices, educational institutions, a convention centre, hotels and entertainment outlets.
According to Chong, the township will also feature covered walkways, due to the Malaysian weather, and a landscaped sky park, so that families can walk and cycle safely away from passing vehicles.
De Centrum, which means "the centre" in French, aptly describes the central location of the township. "De Centrum stands for the central point of expansion in the fastest growing economic corridor in South Kuala Lumpur," says Chong's son, Kenny, who is also a director of the company.
"Greater Kuala Lumpur is expanding at an accelerated rate towards the south and we are right in the path of this growth. As Cyberjaya, Putrajaya, Kajang and Semenyih develop, we will be in the middle of all this activity."
The project will front the South Klang Valley Expressway (SKVE), which is connected to the SILK Highway. It also has easy access to the Besraya Highway and the KL-Seremban Highway. A proposed mass rapid transit (MRT) station in Kajang about 6km away will offer the area more accessibility in the future. The entire township, with a gross development value (GDV) of RM5 billion to RM6 billion, will take 10 to 15 years to develop, says Kenny.
Phase 1 of De Centrum City will be a mixed-use development called De Centrum, comprising SoHos and serviced apartments, shoplots and a mall. With a GDV of RM239 million, De Centrum will be built on 4.6 acres of freehold land. The shoplots have been fully sold since early this year, while the mall will be retained by the group.
The De Centrum SoHo Tower will comprise 192 units (80 studio and 112 duplex) housed in a 12-storey block that sits atop the 3-storey mall. The 447 sq ft studio units, priced at RM213,000 each, are fully booked, while the 768 sq ft duplex units that are still available have a double volume area with a mezzanine floor that looks down on the lower level.
Owners will be able to build across the double-volume space, if they wish, to create two floors. The units are priced from RM386,000 or about RM504 psf. These are bare units with only tiled flooring and bathroom fittings provided by the developer.
The De Centrum Residences Tower will comprise 320 serviced apartments within a 20-storey tower that sits atop an eight-level car park. The ninth level will be the facilities deck, which will have a swimming pool, gym, business centre and café. The built-ups of the apartments range from 574 to 1,022 sq ft, while prices start at RM286,000 or about RM502 psf. There are three configurations — 1+1, 2 and 3-bedroom designs — and 30% of the units have been booked. These units will also come with tiled flooring and bathroom fittings.
"Considering our master plan, central location and excellent accessibility, as well as the fact that this is a mixed-use development on commercial freehold land, they are very attractively priced," says Kenny.
The 3-storey shoplots were launched early this year and all 60 strata-titled units measuring about 21ft by 55ft, with built-ups of about 1,134 sq ft, were sold at the initial price of RM418,000. The units on the ground floor will have dual frontage, where one entrance faces the outside and the other the inside, and will be covered to shield shoppers and customers from the elements.
Under the covered section, there will be a common 5m-wide walkway that connects to the mall and internal escalators. The wide walkway will allow al fresco dining. "The main tenants we hope to attract will be mainly F&B outlets," Kenny says.
To manage the tenant mix of the shoplots, he is proposing a leaseback scheme. If the owners do not take up the proposed scheme, there is also a deed of mutual covenant that stipulates the owners must seek approval from the developer on the tenants they wish to lease their shoplot to.
The mall has a net lettable area of 76,000 sq ft. According to Kenny, it aims to have local fashion brands and basic services such as a post office, banks and pharmacies. The anchor tenant is still being finalised.
The group hopes to achieve a Green Building Index (GBI) certified rating for the mall, says Kenny, adding that since the mall is owned by the developer, it would be able to manage the GBI certification process more effectively. De Centrum is slated for completion by late 2015 or early 2016.
According to Chong, the area is ripe for this type of products. "We feel the area is in need of a mall to cater for the student population and those working nearby, as well as the residents of the condominium that we previously built here."
Chong is referring to the group's maiden project, Unipark Condominium, a 4-acre mid-range condominium with a GDV of RM70 million that is part of an 8-acre tract within De Centrum City. It comprises 320 units housed in two 20-storey towers that were launched in 2007 and have since been completed and handed over.
Phase 2 of De Centrum City is still in the planning stages. Plans include a convention centre, a hotel, offices and an entertainment centre, which will offer a bowling alley and a cinema.
Despite the current global economic situation and looming general election, the father-and-son team seems unperturbed. "The 100 acres have already been paid off," says Chong. "This means we can plan our launches based on the economic situation."
Protasco is looking to expand its landbank . "We are looking for land in Greater KL, which is our core area, and also in Penang and Johor," Chong says. An internal fund of RM40 million to RM50 million has been set aside for these acquisitions. Negotiations are also underway for residential and commercial projects, with GDV of between US$20 million (RM61 million) and US$25 million, in Myanmar.
Having entered property development just five years ago, Protasco Development contributes less than 5% of the group's annual profit. However, this looks set to change in the coming years.
"In the next three to five years, we are looking to increase contribution to about 10% to 15% of group profit. In the long run, with multiple high GDV projects running concurrently, we are targeting a minimum contribution of 40%," says Kenny.
This story first appeared in The Edge weekly edition of Dec 17-23, 2012.
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