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Saturday, March 7, 2009

Building a city

CYBERJAYA, the information and communications technology city once regarded as an out-sourcing hub, is fast emerging as a hub for data centre and disastrous recovery in the Asia Pacific region.

Some of the multinational corporations that have already set up data centres in the area are HSBC, DHL and Dell.

Cyberjaya, launched back in 1997, has 4.3 million sq ft of office space as of last year, up from just 2.6 million sq ft in 2006.

Another one million sq ft of office space for ICT companies and data centre is expected to be ready this year which has been fully booked.

Cyberjaya’s master developer, Setia Haruman Sdn Bhd’s chief operating officer Lao Chok Keang attributes the achievement to a combination of factors – reliable and high-speed connectivity of up to 10 gigabytes per second (which meets ICT companies’ requirement) and dual source from Tenaga Nasional Bhd’s (TNB) supply and an uptime of power supply of up to 99% (near uninterrupted power supply). Over and above that, it also has standby generation sets.

In addition, Lao points out that these top notch facilities are available at very competitive pricing, compared with double the cost in Singapore.

Whilst the world is grappling with an economic crisis, Lao says the city has yet to feel the pinch as investors, MNCs and government agencies are still flocking to Cyberjaya.

“Even after Lehman Brothers’ went into bankruptcy last September, seven local companies and MNCs announced their plans to set up offices in Cyberjaya. They include the Los Angeles-based award winning visual effects company Rhythm and Hues Studio, KRU Studios Sdn Bhd, Hewlett Packard, Verizon Communication Inc unit Verizon Business, Dublin-based Experian, British-based RBC Dexia and Panasonic,” Lao says.

However one deal failed to go through; the company came close to sealing a 15-acre land deal with US insurance giant, AIG for its data centre and share services centre before it went into trouble last year.

“Besides US and Europe, a lot of companies in Singapore and Hong Kong are relocating to Cyberjaya. At this moment, we are facing some backlog as a lot of companies are looking for huge space of over 30,000 sq ft but we can’t supply that. They have to wait for about a year for someone to buy the land and build for them,” he says, adding however that smaller space of about 1,000 sq ft is still available.

But that’s a good problem.

Land sale

Lao is not too worried about the drop in property value in Cyberjaya amid weak market sentiments as Setia Haruman is the sole supplier of land totalling some 7,130 acres.

The Government acquired the land more than 10 years ago and through the government-linked company, Cyberview Sdn Bhd has assigned all the land rights to Setia Haruman under a development agreement signed in 1999.

In due time, Setia Haruman will have to reimburse to the Government the land cost that has been paid by Cyberview, which amount to over RM1bil. Setia Haruman has sold about 1,138 acres of land to-date.

He says over the last 10 years, Setia Haruman has adjusted upwards its selling price by around 5% annnually.

In the last three years, the company has sold about RM500mil worth of land to investors each year to be developed for lease or sale purposes.

Major purchasers include Cyberview, EMKAY Group, Prima Properties Group, UEM Land Bhd, Ascendas of Singapore, Glomac Bhd, Malaysia Road Transport Department (JPJ), Bank Negara, Bernama and Volunteers of Malaysian People (Rela Corps).

In recent months, it sold about RM200mil worth of land, including to UEM Land (98 acres for RM102.5mil), EMKAY (25 acres for RM52.3mil) and Rela Corps (9 acres for RM23.5mil).

As such, Lao is confident that Setia Haruman will be able to maintain its revenue and profitability this year.

“We expect Cyberjaya to be fully opened up in 10 years; but this does not mean it will be fully developed by them, as the city will still have pockets of land available for further development, such as in Shah Alam,” he says.

One-stop city

The ultimate plan is to promote Cyberjaya as a complete integrated city – a place for people to live, study, work and play.

Located about 20 minutes drive from Kuala Lumpur, it is free from the much-dreaded traffic jam and has an attractive environment.

“Kuala Lumpur is getting congested nowadays and property prices can cost more than RM1,000 per sq ft, while prices at Cyberjaya are still below RM100 psf.”

He says some senior executives from Kuala Lumpur have bought bungalow lots in Cyberjaya and the next step would be to convince them to move their corporate headquarters to the city.

“They have chosen Cyberjaya as their residence. So, there’s no reason why we cannot attract corporate headquarters here. Over the next five years, we will actively promote Cyberjaya as a place for headquarters,” he says.

Setia Haruman is not the only promoter of Cyberjaya. Government agencies such as Small and Medium Industries Development Corporation (Smidec) and Malaysia’s embassies worldwide are also doing their part.

Others such as Cyberjaya’s anchor investors or long-term developers such as Quill Group of Companies and Prima Properties Management Sdn Bhd, which have also helped draw reputable MNCs and organisations such as DHL, BMW, HSBC, IBM, CapitaLand and the World Health Organisation in as tenants.

Lao says a lot of large companies opt for Cyberjaya because of its ready infrastructure and talent pool.

“It is easy to recruit staff here, as we have two universities – Multimedia University and Limkokwing University of Creative Technology – producing a lot of information technology graduates and creative people. And that is why KRU Studios, and Rhythm and Hues Studio have set up shop here,” he adds.

Currently, there are about 36,000 workers in Cyberjaya and Lao hopes to double the working population every five years.

“This year, we plan to spend about RM210mil in development expenditure, of which RM150mil will be for infrastructure such as roads and drainage system, water reservoir, water treatment plant and opening up of new land.

“Another RM60mil will be used for construction of CBD Perdana 2 this year – a commercial project comprising 32 retail outlets and 92 corporate office suites, with a gross development value of RM210mil,” he says.

By The Star (by K.C.Law)

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