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Saturday, April 14, 2012

Going up the property value chain

High-profile projects like the KL Metropolis and Platinum Park are taking Naza TTDI to the next level of the property sector.

AUTOMOBILES often pop up in people's mind when Naza Group is mentioned. It's understandable given its history and position as the country's largest private car company.

There is, however, another part of the group's business that's fast catching up. The sprawling group years ago added property development to its portfolio of companies and it's looking to create the same type of awareness for that side of the business when it comes to name association.

Its ambition to get involved in bricks and mortar instead of just nuts and bolts came by way of an acquisition in 2004.

That year, Naza Group's unit, Ekspedisi Nikmat Sdn Bhd bought over TTDI Development Sdn Bhd from Danaharta. That was the first step and ever since then, that property business has slowly been manicured and groomed into Naza TTDI Sdn Bhd.

TTDI Development, formerly known as UDA SEA Park Development Sdn Bhd, was a joint venture between SEA Park Development Sdn Bhd and the Urban Development Authority (UDA) that turned 286ha of rubber estate land into the highly-acclaimed Taman Tun Dr Ismail (TTDI) township during the 1970s.

Today Naza TTDI is making waves with a number of high impact projects, notably KL Metropolis and Platinum Park, that will take it to the next level of the property value chain.

Naza TTDI deputy executive chairman cum group managing director SM Faliq SM Nasimuddin says these projects will showcase the company's branding to a broader market and build a higher profile for the company.

He is confident that Naza TTDI will be able to record RM1bil in sales this year. Last year, it recorded sales of RM655mil.

Faliq says that although the group's automobile business is the main growth driver and is doing well, its property division is also growing into an important contributor to the group's bottomline.

“Naza TTDI is probably one of the largest privately-owned property developers in the country today and our vision is to become one of the top ranking property players within the next five years,” he tells StarBizWeek.

However, he says the company, being a private entity, does not want to expand too fast but prefers to grow steadily and systematically.

“What is important is that we have the right projects to meet an annual growth target of 10% to 15%, and a strong balance sheet.

“We want to make sure that any project we bring to the table will be of quality and will be ahead of schedule. That's why, first and foremost, we place great importance on building up an exemplary team with the right resources and expertise,” Faliq says.

Expressing his satisfaction with the company's performance thus far, he does not discount a listing of the property outfit in the future, but notes that the timing must be right to reap the right value from any listing exercise. The probable timeframe for listing is in the next three to five years.

“Our internal track record has been quite strong, and we already have in place the necessary corporate governance and performance standards required of a listed company,” he says.

Signature projects

One of the most touted projects by Naza TTDI is KL Metropolis a 75.5-acre mixed development comprising residential, commercial, retail, office towers, exhibition and convention, and arts and culture facilities.

Positioned as Kuala Lumpur's international trade and exhibition district, the development has been master planned by renowned international architect firm Skidmore, Owings and Merrill, famed for developments such as London's Canary Wharf, Burj Al-Khalifa in Dubai, and Singapore's Marina Bay.

The master plan of KL Metropolis, launched last October, shows that KL Metropolis will be based on sustainable development principles that promote the preservation of the environment as well as meeting the needs of the working and living population of the area.

According to Faliq, KL Metropolis is designed to the Green Building Index requirements and will be among the most environmentally sound mixed-use communities in the country. The development is also aiming for MSC Cybercentre status.

“It will be the first registered LEED for Neighborhood Development (LEED-ND) project in Malaysia. LEED-ND certification is an internationally-recognised green rating system that incorporates the principles of smart growth, urbanism and green building, that meets accepted high levels of environmentally responsible and sustainable development,” he explains.

Expounding on details of the master plan, he says it is designed in a manner where it can be implemented and developed in a series of manageable phases.

“This will encompass a new generation of buildings, with sustainable architecture and energy efficient engineering that is sensitive to the environment and directly improves the quality of life and productivity of their occupants.

“The RM15bil development will stretch until 2025 and will need a lot of our attention. We are talking to a few developers as well as retail and hotel investors to become partners for the various components in KL Metropolis,” he adds.

Naza TTDI's unit which is developing the project, TTDI KL Metropolis, signed a privatisation agreement with the Government and Syarikat Tanah dan Harta Sdn Bhd to develop the Matrade Centre for the Government at a cost of RM628mil.

Designed to promote year-round events, Matrade Centre on 13 acres will have a gross floor area of 1 million sq ft and net lettable area of 600,000 sq ft. The completed building is to be handed to the Government by end-2014.

Faliq says another major component of KL Metropolis will be the shopping mall which will be designed to allow future “horizontal” expansion after the gestation period is over.

“The retail component will be one of the key plays in KL Metropolis and will herald a new shopping experience with some key unique features,” he explains. Another of its high visibility project is Platinum Park, which is located on nine acres in the Kuala Lumpur City Centre vicinity.

Designed by Foster + Partners, the nine-acre project comprises three Grade A office towers, two luxury service apartment towers and one hotel cum luxury service apartment tower. There will also be 150,000 sq ft of retail space and a 1.5-acre park.

The first office tower, Felda Tower will be handed over in mid-2012 while the second tower, for a government-linked company, is due for completion in late 2013. The third tower for the Naza Group, Naza Tower, is to be completed in the second quarter of 2014.

The project with gross development value of some RM4bil is due for completion in 2016.

Spreading its wings

Naza TTDI has 1,300 acres of landbank 500 acres in the Klang Valley and 800 acres in Penang that the group feels have a potential gross development value of over RM20bil combined.

Faliq says Naza TTDI is looking to expand its market presence outside of the Klang Valley to other fast-growing markets such as Penang and Sabah.

The company owns 800 acres in Bertam on the mainland of Penang which it plans to start developing around end-2013.

As for Sabah, Naza TTDI is keen to explore opportunities in Kota Kinabalu.

He says the new airport in Kota Kinabalu and the many attractions there have contributed to a surge in tourist arrivals from various countries including Hong Kong and South Korea. Foreigners from those countries are keen to invest in properties there.

On whether Naza TTDI harbours any overseas ambition, Faliq says: “TTDI is a brand we can take overseas, but this will not be happening so soon. We are studying a number of opportunities.”

The markets being looked into include Singapore and the other Asean countries.

Faliq says being creative and having unique selling propositions to offer property buyers are very important criteria to succeed in the highly competitive property development sector.

“Creativity, functionality and quality are part of the value propositions of our projects whether it is a township, business park or retail development. Moving into the highly sought after Kuala Lumpur City Centre vicinity and other major integrated developments will offer the opportunity for us to do even better in those areas,” he explains.

Having completed more than 15,000 residences and commercial units spanning over 1,650 acres, the company has established a good development track record and sound fundamentals.

“The Naza TTDI brand is synonymous with quality, early delivery and proven capital appreciation in the secondary market,” he says.

Faliq says the company has to be vigilant on the challenges in the property business that include growing competition, getting hold of the right landbank for its projects, having to face an oversupply situation of high-rise residential projects and office space and rising cost.

According to him, the surplus in the high-rise residential market comprises mainly over-sized units of more than 2,000 sq ft while supply of more average sized residences is still limited.

To gauge the market's preferred size of residential property, a survey was conducted in Singapore last year, and the results show that the majority still prefer smaller units mainly for the reasons of affordability and easier maintenance.

“Demand is stronger for residences of average sizes of 600 sq ft to 1,500 sq ft which are still in short supply. This is the market we are targeting at,” Faliq says.

The company will also have larger units in the range of 2,000 sq ft or bigger but this will only account for about 30% of its projects.

Naza TTDI's portfolio of completed projects include Section 13, Shah Alam and Laman Seri semi-detached and bungalows.

Another TTDI project is Laman Seri upmarket semi-detached and bungalows enclave and Laman Seri Business Park commercial development in Shah Alam.

It successfully built the Giant Hypermarket within a record six months as well as constructed the Shah Alam Malawati Indoor Stadium in 1998 for the boxing event of the Commonwealth Games.

The company has two ongoing township developments TTDI Alam Impian, a 208-acre township development in Section 35, Shah Alam; and TTDI Grove Kajang, a 118-acre township in Kajang. These projects are the company's “bread and butter” which can cushion the company against a market downturn.

Another upcoming project set to kick off in mid-2013 is TTDI Puchong, a RM1.2bil mixed development on 53 acres in Puchong.

It also has some pocket developments at its two TTDI townships in Kuala Lumpur and Shah Alam the RM137mil TTDI Ascencia and RM207mil TTDI Adina.

By The Star

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