Rhythm Avenue gets its groove back

For many years, a “Home Sweet Home” sign could not be hung up in the apartments of Subang USJ19’s Rhythm Avenue as the development was abandoned in 2001. The project was 90% complete, but the financial woes of the then developer Sanjung Utama Sdn Bhd caused work to stop. The company is a subsidiary of YCS Corp, which was delisted from the Kuala Lumpur Stock Exchange in 2005.

Rhythm Avenue had been planned as a modern serviced apartment-cum-retail/commercial development to cater for the increasingly popular and fast-developing USJ area in Selangor. It was launched in 1998. After it was abandoned, it took the concerted efforts of several people and organisations, such as apartment buyers’ committee chairman Pritpal Singh, former Subang Jaya assemblyman Datuk Lee Hwa Beng, PricewaterhouseCoopers (project receiver) and AmBank (bridging financier) to revive the project.

Rhythm Avenue, which sits on about 10 acres of commercial land, is situated along Persiaran Kewajipan after Summit USJ and near Lebuhraya Damansara-Puchong.

When launched, it offered three blocks comprising 886 serviced apartments, with sizes ranging from 558 to 1,308 sq ft. Tagged at between RM90,000 and RM170,000, the units were quickly snapped up.

Later, an additional tower was built, adding 150 units that were sold for between RM68,800 and RM148,800. All in all, Rhythm Avenue now has 1,036 units.

The 227 retail lots in the development were sold at RM96,000 each in February 2000. All the lots were taken up within one month, according to PA International Property Consultants (KL) Sdn Bhd. Calls to the original developer went unanswered.

A source familiar with the project reveals that the serviced apartments have an occupancy rate of about 45% and the retail units, 60%, with Carrefour as the anchor tenant. Units of varying size are believed to be on the market at between RM150,000 and RM250,000 or higher. Penthouse suites are being sold at RM500,000 or more.

Light at the end of the tunnel
That there would be units for sale or rent or having a commercial mall in operation would have been inconceivable to those left in limbo during the dark period when they did not know if the project would ever be completed.

SM-Mahasalam Land Sdn Bhd was elected turnkey contractor for the revived project, with Sanjung Utama completely out of the picture.

To finance Rhythm Avenue’s revival, each homeowner had to pay an additional 15% over the original prices. About 75% of the buyers contributed and construction resumed in 2006.

The project was finally completed in early 2008, with owners receiving their keys that same year. Currently, SM-Mahasalam Land manages Rhythm Avenue and the mall area, where activity picks up during the weekends.

The remaining 25% who did not contribute to the project had their units disposed of. “Many units were redeemed from the bank and resold. Some were auctioned off for non-payment and some were given to the contractor in lieu of payment,” says Pritpal.

SM-Mahasalam Land’s chairman Richard Tan says it took about RM80 million to complete the project. There are also plans to spruce up the mall and its surroundings at a cost of RM15 million, he adds.

Plans for a new mall frontage and an F&B section with alfresco dining are pending approval from the authorities. The road in front of the mall has been widened to ease traffic flow. To better serve customers as well as the stores, a rezoning exercise is underway.

Loophole closed
Why was the Rhythm Avenue situation allowed to happen? At the time, the Housing Development (Control and Licensing) Act 1966 did not cover serviced apartments built on land with commercial status.  This meant purchasers had to fend for themselves in cases of defaults or if the projects were abandoned. When Rhythm Avenue was abandoned, many buyers had to continue servicing their loans. Those who stopped their instalments were blacklisted by financers. Others were slapped with accrued interest.

Among the affected buyers was Victor Huang, a regional sales manager for Pan Abrasives Sdn Bhd, who says he was attracted by the development’s location and affordable prices. It was tough going and once Rhythm Avenue was completed, he thought of selling his unit but has now decided to keep it for his own use. Pritpal, meanwhile, never imagined that Sanjung Utama’s mother company, YCS Corp, a listed company at the time, would not finish the project.

In 2007, the then Minister of Housing and Local Government Tan Sri Ong Ka Ting, who was concerned about the rights of the purchasers and the plight of victims of abandoned projects, had the Housing Development (Control and Licensing) Act 1966 amended to provide protection for buyers of homes built on commerical land.

“The amendments give the housing minister the power to prescribe, from time to time, the type of ‘housing accommodation’ to fall within the purview of the Act, thereby dispensing with the need to go to Parliament to amend the law each time a housing developer comes up with a new type of housing accommodation by whatever name,” explains Chang Kim Loong, honorary secretary-general of the National House Buyers Association.

This means that the minister can gazette as housing accommodation under the Housing Act “serviced apartments”, “shop-apartments”, “SOHO — that is intended for partial housing” and other types of properties that allow human habitation, wholly or partially, adds Chang.

With the amendments to the Act, the majority of property owners now have protection from wayward developers. “Under Section 10 and 11 of the Act, it is stipulated that the minister may direct the controller or an inspector to conduct an investigation if he has reason to believe that the housing developer in question is carrying on his business in a manner detrimental to his purchasers or has assets insufficient to meet his liability,” Chang explains.

He adds that although there are wide-ranging powers for the housing ministry to intervene and salvage or provide a remedy for troubled projects, enforcement needs to be carried out promptly and constantly.

One positive step was a special task force set up by the housing ministry on March 12, 2009, to revive abandoned housing projects. The high-powered panel is headed by Tan Sri Mohd Sidek Hassan, chief secretary to the government.

While the painful experience that Rhythm Avenue owners had to go through cannot be undone, the changes to the Act and proactive measures taken by the government will provide future home owners some peace of mind.



This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 780, Nov 9-15, 2009.