THIS development had two things working against it initially – it was previously a quarry land and its not-exactly-glamorous Kepong address.

Beating these odds is developer Perdana ParkCity, a company owned by timber-based Samling group which acquired 473 acres of the part-rubber part-quarry land for RM200mil (or less than RM10 per sq ft) in 1999 from Danaharta during a depressed market.

It’s been seven years since its first launch of strata titled terraces Nadia at RM548,000 a unit. At that point, there were many sceptical buyers who were yet to warm up to the idea of paying service charges for landed property. However, home prices have spectacularly risen two-fold since.

The development’s most striking feature is its 43-acre lake and park right in the centre.

Perdana ParkCity director of marketing and sales Susan Tan says almost all its launches have takeup rates of 80% within the first three months. Of the 2,000 units launched, 1,500 have been delivered. Expatriate families make up 6% of the area.

Jobstreet Corp Bhd chief financial officer Greg Poarch, who bought his Adiva unit in 2004, says he’s seen nothing like it elsewhere in the country. “It’s got a Southern California kind of atmosphere. The whole environment is so peaceful and relaxing.”

Greg Poarch bought his Adiva unit in 2004 and stays with his wife Nancy, daughter Lee-Ann and poodle, Gracie.

What drew him to settle there? He says it was the gated security feature and the community environment with lots of green spaces.

“It’s not like living in a city at all. Pricing may be premium but it’s worth it,” he says.

The project’s most expensive terrace is Zenia which is going for around RM1.3mil per unit in the secondary market which was launched in 2005 at RM890,000 apiece. In August, its clubhouse will be ready. Also, Desa ParkCity has a design, build and lease agreement with Sime Darby Medical Hospital in which the latter will start constructing a secondary private hospital by early next year. Construction of an international school will also begin next year, where enrolment will start in 2012.

Sri Tanjung Pinang

Set against the backdrop of sun, a grand view of the sea and a hill in Penang island, Eastern & Oriental Bhd (E&O) has built a mammoth waterfront project.

E&O acquired the rights to reclaim the land from the then debt ridden UEM/Renong group in 2003. Reclamation of the headland in phase 1 totalling 240 acres has been completed. The company is now working closely with the authorities in planning the layout of phase 2, totalling 740 acres.

E&O executive director Eric Chan says Sri Tanjung Pinang (STP) is the largest and first city-based international class seafront masterplan in Malaysia. He says it is different because it has international appeal.

“The place is well-organised with beautiful landscaping and big spaces. It is also close to the sea which I love. I’m staying here till I die!” remarks former agronomist Dutchman John Pater who has travelled all over the tropics studying coffee and cocoa during his career.

An artist’s impression of the Sri Tanjung Pinang waterfront project.

A friend had recommended STP to Pater’s wife Anita, who had fallen in love with it at first sight and purchased it before telling her husband.

“It’s so pretty. We love the high ceilings and all the details. Once the marina is completed, we’ll get to do a lot more fine dining and shopping,” says Anita who is resident committee chairman for STP.

With that, some say this location is an extension of the new “millionaire’s row” along the bay from Gurney Drive. STP terraces are presently yielding rental yields of 9% to 10%. “Our buyers are mainly locals, about 90%. Our subsequent launches have seen a lot of repeat buyers,” says Chan.

Two weeks ago, E&O launched the second last phase of 28 terraces at STP at RM1.1mil per unit and were sold out within hours.

Direct sea-fronting intermediate units were priced at RM1.52mil, a new record for Penang and arguably the most expensive link house in Malaysia in a new township. Terraces in STP were first launched in 2005 at RM735,000, when homes built on reclaimed land were still not well accepted.

Chan adds that there are four factors which have contributed to the success of STP terraces.

“We’ve got a prime address with easy accessibility. We’re landed and freehold. Our craftsmanship is innovative and there’s quality design. Lastly, the proven track record and branding of E&O as a developer of premier properties also helps,” says Chan.

A milestone for the project is when it completes its marina by June 2010 which will include food, beverage and retail outlets.

Participant of the Malaysia My Second Home Programme Thomas Alexander Craig Cameron from the United Kingdom, moved into his STP unit in March this year because his Malaysian wife wanted to be close to her family.

“We thought STP homes were so much better than anything else we saw in Malaysia. I have stayed in the UK and France. This is so far the best,” he gushes.

Phase 2 of the multi-island development will be of international quality with a 5-star hotel and boutique resort, a championship golf course, marina beach clubs and seafront residences with private berths.

Once completed, Chan says it will be comparable to world class waterfront communities such as The Palms in Dubai and Sentosa Cove in Singapore.

Mutiara Damansara

In less than a decade, Boustead Holdings Bhd has raised the profile of Mutiara Damansara (MD) as one of the most sought after addresses in the Klang Valley.

The development’s most striking feature is its bustling commercial centre; it is home to large retailers Ikea, Ikano, Tesco and in a few years time, Kidszania, a theme park for kids. Luxury auto marques such as Lexus and Mercedes-Benz have grand showrooms there.

Mutiara Damansara is built on former plantation land acquired by Boustead Propeties from the Government.

“With the entrance of big retail players and multinationals, property values literally skyrocketed,” says Hall Chadwick Asia chairman Kumar Tharmalingam.

Being next to well established TTDI and Bandar Utama, it was rather easy for Boustead to rake in the sales. In fact, it could well be the only developer that has sold all its terraces using the balloting system. Boustead launched its first terrace homes in 2000 at RM350,000, which has since doubled to RM680,000 in the secondary market.

In 2007, MD launched its most expensive terraces at RM1.2mil. These homes are now priced at around RM1.6mil.

Dr Tan KK, a doctor with private hospital group, chose to buy a unit in MD because of its nice mix of terraces, semi-ds and bungalows. MD also has better density and more space.

“It is suitable for families. Inside the neighbourhood, you feel secure because of the secured parameters and exit points. And just outside, you get a well designed mall with lots of good eateries and night spots for families,” he explains.

Boustead Holdings Bhd’s director, Datuk Ghazali Mohd Ali says that emphasis is on low-density and semi-guarded housing with excellent infrastructure and access.

Presently MD has 5 access roads with plans for a sixth access soon to cater for the up-market commercial traffic.

Moving forward, Ghazali says the focus will be on its corporate and entertainment lots.

“We are going to build a hotel, tentatively named Royale Bintang Surian Hotel, located behind Cineleisure,” says Ghazali.

Boustead will complete construction of the hotel within 18 months.

Ghazali says that the conference facilities will boost daytime traffic to The Curve and nearby developments, which are already experiencing peak traffic during weekends and at night.

Duta Tropika

Duta Tropika, Sri Hartamas by SP Setia Bhd is an exclusive, low-density community with only 138 residences comprising courtyard and garden villas on 13 acres.

It was launched in 2005 at a developer’s price of RM1.5mil to RM1.8mil. Today, these cluster homes have almost doubled, and are now being transacted at an average price of RM3.05mil.

SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin says that back in 2006, concept projects were not really heard off.

“On top of the design which captivated our buyers, Duta Tropika also offered a gated and guarded development that was not common then. The development also came complete with a clubhouse with pool, gym, hall and children’s playground. Coupled with good maintenance, this has led to the prices the properties being what they are today,” says Liew.

Some Duta Tropika courtyard houses can be seen on the left of Tan Sri Liew Kee Sin.

Liew says SP Setia always believes in adding value to its products as this is the key in attracting buyers. “Must-haves would depend on the surrounding area. In Duta Tropika’s case, Sri Hartamas’ selling point is that it’s adjacent to Mont’Kiara. Several years ago, this would not have been an ideal prime spot but when you add value to the development and assure customers that you will follow through with your plans, this is what attracts them,” he says.

Liew cites the example of SP Setia’s flagship Bandar Setia Alam. When first launched, many perceived that distance was going to be an issue.

Today after more than 5 years since its launch, Setia Alam is selling at an average of 25% more than the surrounding developments.

“We feel this has to do with the fact that we pumped in RM150mil for the exclusive interchange among many other amenities that we have since put into the township,” he says.

As land in prime areas become more scarce, Liew sees prices going up.

“It’s not so much that terrace homes are the more preferred abode but like I mentioned before, it has to do with the scarcity of land that it is not possible to indulge in larger homes and bigger land areas,” he says.

Niche Development

Just minutes after taking the North Klang Valley Expressway from Kuala Lumpur to Sungai Buloh, one travels past the gated and guarded resort themed residential enclave Valencia.

Selectively, some of its terraces have surpassed the million ringgit mark.

Developed by Valencia Development Sdn Bhd (a wholly-owned subsidiary of Gamuda Bhd), this development houses 714 homes including 224 garden and hillside terrace houses.

The terraces were launched in 2002 at an average price of RM650,000. Today, property agents familiar with that area say there have been a few terraces transacted above RM1mil

“Its not broad based but there have been some transactions. Its the gated community appeal,” says a property agent covering the SierraMas vicinity.

Meanwhile, located in Federal Hills, or Seri Bukit Persekutuan, off Jalan Travers, sits another million ringgit private residential estate by the IGB group.

Among its myriad of homes, 38 units of its 3½-storey townhouses, Westbank Terraces were launched in 2003 priced from RM1.3mil to RM1.96mil

Today, the townhouses are asking for RM2.33mil or RM613 per sq ft. Based on its developer price, the town houses are also yielding rental rates of 6% to 7%.

There have also been million ringgit transactions of old terraces in Jalan Terasik Bangsar, and off Lorong Maarof in the Bangsar Shopping Complex vicinity.

The Star – 1st August 2009

Driving home this point further is the Sri Tanjung Pinang project in Penang developed by Eastern & Oriental Bhd (E&O) launched two weeks ago; it managed to sell all its intermediate terraces and the highest price achieved was RM1.52mil.

Talks with realtors and industry experts reveal that one of the first million ringgit terrace in a new location was spotted at Kuala Lumpur’s Desa ParkCity (DPC) in 2008, followed by Petaling Jaya’s Mutiara Damansara (MD) in early 2009.

Noteworthy is that this rising trend has persisted despite the global economic recession which has led to a slowdown in Malaysia’s economic growth.

How to build a million-dollar link home

In the distant past, seven-digit price tags were exclusively reserved for super prime areas such as Damansara Heights and Bangsar.

Today, such premium prices are being fetched in areas which have historically never been deemed prime.

Metrohomes Sdn Bhd director See Kok Loong says credit should go to the three developments – Desa ParkCity, Mutiara Damansara and Sri Tanjung Pinang – for turning non-prime land into an address that home owners want to be associated with.

These developments share some common features – they involve an area large enough for a master-planned neighbourhood. This, says an industry observer, is key as it avoids having developments that conflict with each other within the same development, for instance heavy traffic commercial development in a low density residential section.

Secondly, these developments have dominant lifestyle themes such as sea-front or lakeside living. Having a lifestyle-driven commercial development such as a marina or box-concept shopping malls (for example warehouse-type one-stop shop Ikea, Ikano and Tesco) quite clearly increases the appeal of a property project.

In addition, the market seems willing to pay premium capital values and monthly service charges for units that are more spacious in low density and secured neighbourhoods with club facilities such as pools and gyms.

The gated appeal

KGV-Lambert Smith Hampton’s director of valuation Anthony Chua explains that price appreciation of terraces in Mutiara Damansara and Desa ParkCity has been faster than the more established Bandar Utama, largely because they were one of the first to introduce the gated community scheme.

“Older terrace estates are not designed to be gated and have too many entry points. The developer offered the buyer a lifestyle concept, whether it’s sea fronting or lakeside living,” says Chua.

Hence, the buyer gets the best of both worlds. They get to stay in a landed property, but enjoy condominium facilities.

For that reason, the price appreciation for intermediate terraces in these areas have been remarkable, far surpassing the national average of 3%. Desa ParkCity has seen prices go up by 14% per annum, Mutiara Damansara 10% pa and Seri Tanjong Pinang by 12% per annum while the units in Bandar Utama have appreciated by merely 5%.

Managing director and regional head of equity research at AmResearch Benny Chew says properties in these areas have reached prime area status. “Most of the developer’s land in these prime areas are getting very limited, hence the effective physical supply is lessening. This mismatch will cause prices to increase.”

HwangDBS Investment Management Sdn Bhd Head of Equities Gan Eng Peng says there will come a time when we can no longer expect to buy a terrace house for under RM1 million.

“As in more developed countries like Singapore or even Thailand, land prices in the city center start range from RM2,900 to RM4,900 per square feet (SGD1,200 at current exchange rate) compared to KLCC properties that are deemed expensive at RM 900- RM1,500 per square feet (psft),” he says.

Gan says that if a developer were to launch terrace houses today with decent security thrown in within central Klang Valley, there will be very strong demand.

“High terrace houses prices are not deterring buyers,” he says.

New cycle?

See says this could be the start of a new property cycle for landed property.

“Personally, I feel the property market is driven by government policies and interest rates. The low interest rates will drive housing. None of the owners are selling. Everyone seems to have holding power. Besides, low cost of funding allows the owners to refinance,” he adds.

He says these homes will set the new benchmark pricing for upper-middle class demand, as old-school developers cannot offer features like a clubhouse and security.

Meanwhile, Chua sees such terraces easily appreciating by 5% to 7% per year. Due to the continuous huge pricing gap between semi-detached and bungalows compared to terrace houses, Chua expects to see more such million ringgit houses coming on board.

Gan explains that the typical investor’s largest asset class tends to be properties, followed by banking deposits and investments.

“If there is no inflation in properties and no million dollar terrace houses, it would be disastrous for the economy. Because that would mean no wealth creation for the typical investors/household largest asset class. Without wealth creation from properties, consumers are less willing to spend. Banks will be less willing to lend as their collateral does not appreciate. Generally, a healthy economy requires higher property prices,” he says.

The Star – 1st August 2009