Friday, March 1, 2013

Rise of the Kuala Lumpur branded residences

Rise of the Kuala Lumpur branded residences

The Business Times
MARCH 01, 2013

Expect a new style to residential living in Kuala Lumpur in the coming years, given the number of branded residences in the property construction pipeline.

St Regis, Four Seasons, Ritz-Carlton, Banyan Tree, Harrods - all international brand names, well-known and trusted by the well-heeled, are soon to be established in the Malaysian capital.

Take the Four Seasons Place, co-owned by Singaporean tycoon Ong Beng Seng and his Malaysian partners Syed Yusof Syed Nasir and Selangor Sultan Sharafuddin Idris Shah.

Media reports say the 231-room Four Seasons hotel will price its 242 private residences at between RM2,500 psf and RM3,500 psf. A groundbreaking ceremony was held last month for the 65-storey building, coming up next to the prestigious Petronas Twin Towers in the city's most expensive KLCC area.

But because of a five-year delay, Four Seasons Place will be completed only in 2016, giving the KL Sentral-located St Regis Kuala Lumpur a two-year headstart as the city's first branded residence.

Launched in 2011, 65 per cent of St Regis' 160 apartments (sized between 820 sq ft and 4,253 sq ft) have been taken up, its buyers - mainly Malaysians - paying upwards of RM2,500 psf. "We are targeting the really high net-worth group," remarked Carmen Chua, chief executive of One IFC Sdn Bhd, the developer of the international hotel-managed branded residence.

Even so, the pricing is arguably among the lowest for a branded residence of that class given St Regis and Four Seasons' insistence on consistency in quality, standards, and security across their establishments.

Ms Chua said that One IFC pays 5 per cent of gross sales to St Regis for its support and services. But by the same token owners can expect an average 30 per cent premium in capital value and rental because of the bespoke nature of the establishment.

"If you run out of milk at 3 am, you can call up the hotel and it will send some up to you," she assured, quick to stress that not all branded residences provide this level of service. For example, some are not even attached to a hotel or managed by one.

Some developers have taken to combining some of the aspects of branded with serviced residences.

For instance, Eastern & Oriental's 200-suite E&O Residences will form part of its 457-unit St Mary Residences in Kuala Lumpur. Another developer, Ireka, has indicated it will team up with Urban Resort Concepts (URC) for its upcoming The Ruma Hotel & Residences. URC operates the PuLi hotels which has its flagship in Shanghai, and will manage the Kuala Lumpur establishment as well as market it overseas in places such as China, Hong Kong, Singapore and Indonesia, according to Ireka senior vice-president of sales & marketing Judy Loo.

The Ruma's serviced apartments (200 units) will retail at just under RM2,000 psf when launched next month while the hotel suites (253 rooms) will be priced at about RM1,000 more psf, the latter sold by way of a sale and leaseback agreement. Ms Loo described the hotel room leaseback as "an innovative and unique way to differentiate our product".

Even within serviced apartments, developers are "upping their game". Standalone residences or those by developers that have branded themselves well over the years tend to appeal more to discerning buyers. These include SP Setia and Bandar Raya Development Bhd (BRDB) while UEM Land's acquisition of Sunrise for its expertise in the condo segment is also paying off.

In the ever-popular suburb of Bangsar, Zerin Properties chief executive Previndran Singhe considers BRDB a king of sorts. Even so, the developer of the high-end condominium One Menerung and Bangsar Shopping Centre appears to have outdone itself in its latest Serai development. Launched at the end of last year, the super-luxurious project defies conventional wisdom in that its 121 apartments are sized from 4,000 sq ft to penthouses of 12,000 sq ft - even as many extra large units elsewhere remain unoccupied.

Whether it is because Serai will be built on possibly the last vacant lot in the suburb, starting prices of RM5.6 million have not deterred buyers. Already 60 per cent of the units have been snapped up - the most popular being those of 6,900 sq ft - mainly by Klang Valley locals, some of whom intend to move out from bungalows.

Johore developments

BRDB also has plans for Johore. In Residential North - a development comprising prime waterfront residential properties such as canal homes and villas, semi-detached and super-link houses and apartments - it will go into a joint venture with state-owned UEM Land.

The efficacy of going to the market with a familiar brand name was amply demonstrated at Somerset Puteri Harbour - a 132-unit serviced apartment project jointly launched by UEM Land and United Malayan Land in early 2012. Singaporeans formed the bulk of buyers who, under a leaseback agreement, will have their units managed by The Ascott Group.

The largest landbank owner in Iskandar Malaysia, UEM Land is also rolling out Gerbang Nusajaya, a mixed commercial development, along with a "high-end low density eco-themed" project called D'Estuary.

UEM Land's managing director Wan Abdullah Wan Ibrahim expects stronger interest from local and foreign buyers now that the Iskandar Malaysia special economic zone approaches a tipping point. "We anticipate the physical property market will remain resilient in 2013 supported by the population growth trend and higher growth forecast, as well as influx of liquidity," he said.

Impending developments - UEM Land-Ascendas Land's integrated tech park in Gerbang Nusajaya, billionaire Peter Lim's proposed Motorsports City, and a wellness township jointly developed by Khazanah Nasional and Singapore's Temasek - could give further impetus to construction and pricing.

Property players maintain that the pace of building in Iskandar has not been overzealous, and that the master planning has been sustainable.

With high-end apartment launches in Iskandar already hovering around the RM1,000 psf mark - a sign of the rapid price increase over the past two years - Zerin Properties' Mr Singhe foresees "a more gradual inch up in prices".

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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