City & Country: Cover Story: Adding depth and scale to Ara Damansara

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WHEN Amir Salleh joined Sime Darby Brunsfield Holding Sdn Bhd (SDBH) as its chief executive officer 2½ years ago, going to lunch was a boring affair.

“Back then, Oasis Square, where SDBH’s office is located, was just starting to get populated,” he recalls. “We had only two eateries to choose from, so after a while, you get tired of eating the same thing. And a lot of the offices were not occupied.”

Today, this part of the 85-acre integrated Oasis Damansara development in Jalan Lapangan Terbang Subang, Ara Damansara, has changed to a point where SDBH — a joint venture between Sime Darby Property Bhd and Brunsfield Corp Sdn Bhd — has to deal with massive traffic congestion during peak hours.

Ara Damansara was predominantly developed by Sime Darby Property.

Work on Oasis Damansara, which is registered as an entry point project under the Economic Transformation Programme, had begun about seven years ago.

“We have 12 parcels here and so far we have developed three, comprising the 16-acre Oasis Square, Oasis Gallery and Sime Darby Plantation’s headquarters,” says Amir.

While he is encouraged by the progress of Oasis Damansara, Amir feels the brand can be developed further. He acknowledges that there have been visitors to the area who did not know it existed.

“As we start to roll out the other parcels, it will give us the opportunity to strengthen the Oasis Damansara brand and to increase its meaning to the general market and investors. The main thing is to come up with well-planned developments with good facilities that cater for the needs of the residents, the working population and the visitors.”

Citing a 2010 report by CB Richard Ellis (CBRE) Malaysia, Amir says Oasis Damansara has an estimated captive market of 434,000 people or 99,000 households within a 10-minute drive.

At the time, there were 54,000 office workers, 84,000 industrial workers and 24,000 private college students in the surrounding areas. The office population is expected to increase by 46,000 in a few years.

“Ara Damansara has been developed as a residential enclave and is recognised as a well-developed township. Now, we have Oasis Damansara, which is geared towards lifestyle. We are trying to get more of these parcels developed to resonate with the people who come to the area.

“So, building a sustainable and liveable township that will increase the interest of residents, visitors and investors in Oasis Damansara and Ara Damansara is important to us to build the brand,” says Amir.

According to JS Valuers Research & Consultancy Sdn Bhd executive director Chan Wai Seen, Ara Damansara is a popular area for landed residential properties.

“This is attributed to its strategic location in Petaling Jaya, freehold tenure and large development area, which is ideal for well-planned mixed-use developments,” he says. “Developments in Ara Damansara have also benefitted from the spillover from nearby established areas, such as Petaling Jaya, Tropicana and Kelana Jaya. Ara Damansara is also easily accessible via the Federal Highway and the New Klang Valley Expressway.”

Striking a balance in Ara Damansara

Oasis Damansara, Amir says, has been designed as a high-density development with more commercial than residential offerings.

“This will provide depth and scale to Ara Damansara. To a large degree, Oasis Damansara is the commercial hub of the area. We have residential components but it’s the commercial offerings that make it unique in a predominantly residential township,” he points out.

On average, Oasis Damansara will consist of 70% commercial offerings.

“Ara Damansara is a relatively new location for office developments and has the potential to be a suburban commercial area, similar to the commercial areas in Bandar Utama and Mutiara Damansara. Nevertheless, it is imperative that the proposed offices are complemented with attractive amenities, such as public transport and shopping centres,” says Chan.

He also feels that having green features and being MSC-compliant will give the office developments a competitive advantage.

Currently under construction is Oasis Corporate Park, comprising the Meritus office towers, Centum office suites, Medalla serviced suites, Centro lifestyle centre and a hotel. The 10-acre development was launched in 2012.

Amir highlights that about 60% of the Meritus units — with a built-up of between 5,635 and 10,866 sq ft and priced from RM3.6 million — have been taken up. Priced RM563,800 onwards, the 703 to 5,245 sq ft Medalla serviced suites are 90% sold while 92% of the 739 to 1,597 sq ft Centum suites have been sold at RM573,800 onwards.

Also underway is the two million sq ft Oasis Autocity, an integrated complex for Sime Darby Motors that aims to establish itself as a one-stop automotive gallery.

“The complex will house all the brands of the company’s partners, including Land Rover, Porsche and BMW. We started construction in the middle of the year and expect to finish in 2017. This will be quite an exciting development in the area and will provide more visibility and focus to the motor division,” says Amir.

Next to be launched, possibly in January 2015, is Oasis Rio, which will comprise residential, commercial and retail components. Comprising two towers of serviced apartments, an office tower and a retail podium, Oasis Rio will be different from the other developments in Oasis Damansara as it leans towards residential properties.

“We are tracking the market at the moment and we will try to price the residences accordingly. Prices have been encouraging in Ara Damansara. We are looking at both investors and owner-occupiers,” says Amir. “Having said that, owner-occupiers are critical to the activation of the place. Given how the market is moving, we will be targeting a large percentage of owner-occupiers.”

JS Valuers’ Chan notes that as developments in Ara Damansara mature, the newer ones have been limited to high-rises comprising serviced apartments, offices and retail shops. He also attributes the rise in the number of high-rises to increasing land cost and higher prices of landed properties.

He adds that other than Medalla, notable high-rise residences launched in the area in recent years include Ara Green Residences by HSB Development Sdn Bhd, and G Residences @ Ara Damansara and Jazz Residences by HCK Capital Group. Then, there is H20 @ Ara Damansara by Titijaya Land Bhd; Urbana Residences by Weida (M) Bhd; Eve Suites by SM Land Group; Verde @ Ara Damansara by Villamas Sdn Bhd; Maisson by Newfields Property Management Sdn Bhd; and The Potpourri by See Hoy Chan Sdn Bhd Group.

“When completed, these projects are expected to contribute about 6,000 serviced apartments and condos to the area,” says Chan. “Earlier developments were sold at RM450 to RM700 psf. Now, most of the high-end serviced apartments are being sold at about RM650 to RM1,000 psf, up more than 50% from 2010 to 2014.”

Oversupply concerns

Given the projected number of incoming high-rise residences, isn’t SDBH worried about oversupply?

“We are tracking the launches of similar products in Ara Damansara and will take into account market conditions and how they will affect future developments,” says Amir.

However, he believes SDBH has an advantage over its competitors because Oasis Damansara has scale. “We plan to use our scale to create something that will be different from what the other developers in the area produce. There are prominent developers here with interesting developments coming up but most of them are standalone projects.

“Ours are integrated, so while the others tend to be purely residential developments, we have retail, hotels, offices and residences. This will offer more interesting prospects to owner-occupiers and investors.”

According to Chan, the prices of high-rise residences in Ara Damansara are expected to consolidate and stabilise, depending on their features and the economic situation. “Occupancy of the new serviced apartments and condos will improve because Ara Damansara is a popular residential address. The completion of the LRT station will help enhance the attractiveness of the area. Notwithstanding this, any economic slowdown or crisis may trigger a correction in this segment in the area.”

Also on the list of projects to be launched is Oasis Central, which, thanks to the LRT extension, will be located next to an upcoming station. Comprising office, retail and residential components, it will be positioned as a transit-oriented development, given its close proximity to the station.

“We are in discussion with Prasarana Malaysia Bhd to see how we can collectively make Oasis Central a well-planned, well-conceived development, so our respective developments will complement each other,” says Amir.

“With the Subang Airport just down the road, we are seeing more activity in the area. Ara Damansara is being re-evaluated as an attractive place to live and work. The ongoing construction of the mass rapid transit line is causing some congestion but I think people can see the long-term benefits. This has help drive interest and demand in the area.”

Capitalising on the movement

While the proposed Oasis Mall is still in the preliminary stage of design and conceptualisation, Amir is excited about its prospects. The mall will be sandwiched between Tesco Ara Damansara and Oasis Square. “We are excited about the design elements and sustainability. The mall is next after Oasis Sentral and Oasis Rio, so we’re looking at 2016 to start construction. It’s still in the early stage but we are looking at a gross size of more than 700,000 sq ft,” says Amir.

Acknowledging the competitiveness of the shopping mall segment, he remarks, “We have to create something unique that will be a magnet for visitors to Oasis Damansara. It’ll be more a lifestyle mall. I know every developer says that but we will really try to be different.”

JS Valuers’ Chan concurs, “ To ensure the success of the proposed shopping mall, it is highly imperative that it adopts an attractive concept and distinguished retail mix, taking into account the existing and incoming shopping complexes within and around the area.”

As shopping malls belong to a specialised market, SDBH is looking at working with suitable partners on asset development and subsequent management of the mall. “It’s crucial to get the right tenant mix and operator to enable us to continue to add value to the asset,” says Amir. “Jalan Lapangan Terbang Subang is a thoroughfare with people using it to get to the Federal Highway, Shah Alam and areas like Kota Kemuning and the city. I think there will be a reasonably large movement of people in this area eventually and the mall will capitalise on that. Of course, the neighbourhood is a key market we are targeting.”

According to Amir, Ara Damansara has a middle to upper-middle-income population. The CBRE report puts the average monthly household income in the area at RM8,300. “We have engaged with the residents and those who have offices here. It is quite a balanced community in terms of socio-economic standing. We have received positive feedback from the residents on the development of Ara Damansara, including Oasis Damansara, and on what we have planned.

“What we want to do now is to improve by providing a more commercial element and eventually driving up values for everyone in Oasis Damansara and Ara Damansara.

“I understand Keretapi Tanah Melayu Bhd (KTM) is looking at activating its komuter line on the airport side. If so, we will have KTM on one side and the LRT on the other, along with the airport and several highways and we will find ways to leverage this connectivity. We will look at ways to connect all the various developments.”

The present and future connectivity of the area is helping SDBH in the current market slowdown. “I think all developers are affected to some degree but we have been fortunate. Our products seem to be attractive to the market, which is partly driven by the perception that connectivity and facilities will improve in the near future,” says Amir.

If everything goes according to plan, he expects Oasis Damansara to be fully completed within 8 to 10 years.

“While work on Oasis Autocity has just begun, some components in Oasis Corporate Park, such as Centum, will be completed next year. And we are working on rolling out Oasis Rio and later Oasis Central. As we continue to develop, values will continue to rise, which will be better for the residents and the company.

“A lot of people are expecting challenging times. We are watching the market very closely and getting our plans and parcels ready so we can build when the time is right,” says Amir.

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This article first appeared in City & Country, The Edge Malaysia Weekly, on December 15 - 21, 2014.