City & Country: Housing demand fuelled by O&G sector

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nasa_city
Nasa City will include Centara Residences serviced apartments, bungalows, a mall and offices

THINGS in Johor and the real-estate market at large may look like they have gone pear-shaped now, but IJM Land Bhd is forging ahead with its biggest township in the southern region — the RM5 billion 1,200-acre Sebana Cove Resort in Pengerang.

The group acquired the development — including its resort facilities — lock, stock and barrel from the Arab Malaysia group for RM120 million, or RM2 psf, in 2009. It has turned out to be a bargain as development land in Johor has appreciated manifold since then, especially those in and near Johor Baru, where certain developers have paid close to RM1,000 psf.

“A few months after we bought it, someone wanted to buy it from us for RM180 million,” recalls IJM Land group managing director and CEO Datuk Soam Heng Choon.

“It was a good deal, but that’s because it was after the global financial crisis of 2008 and Arab Malaysia, like so many people, wanted to degear. It was also exiting the property business, so it made sense for it to dispose of the land.”

Sebana Cove Resort used to be popular with locals and Singaporeans who came for a round of golf or had seafood at nearby Sungai Rengit. While it does have some upscale facilities — a 60.5-acre marina, a Ted Parslow 18-hole championship golf course, a five-star hotel with 24 two-bedroom apartments for longer stays, a clubhouse and townhouses — Soam admits that the project lacks the spark to draw the crowds.

However, that is set to change as the Refinery and Petrochemical Integrated Development (RAPID) project gains traction. RAPID is a part of the 20,000-acre Pengerang Integrated Petroleum Complex (PIPC), which is poised to be a regional downstream oil and gas hub. The complex will have a capacity of 300,000 barrels per day and is expected to be commissioned by early 2019.

Work is already underway at RAPID. Up to 70,000 people will be involved in its construction and when it is operational, it will employ more than 4,000 people.

“Things are moving very fast. Petronas has awarded many packages in engineering, procurement, construction and commissioning. In the meantime, we have received a lot of enquiries from Petronas and other parties involved in the entire project on providing accommodation and housing,” says Soam.

IJM Land has embarked on a massive upgrading of the area, which is estimated to cost RM30 million to RM40 million. “Previously, there was only a two-lane road going into the site. We are now increasing it to a four-lane one,” Soam says. “We are also building a new entryway with a new arch. We are also tearing down the golf club building and rebuilding it, since it is a simple structure. All the hotel rooms are already upgraded, so now we are working on the clubhouse and restaurants.”

The group is also upgrading the 30 units of townhouses built by Arab Malaysian Finance that have remained unsold. “These are for executive-level staff [of PIPC] like supervisors and engineers. We are now refurbishing the units to rent them out, with the intention of selling them eventually. There has been a lot of enquiries on accommodation, so we know there is pent-up demand. They are really fussy about accommodation, so we have to do up the units nicely,” says Soam.

Launch of Phase 1

IJM Land is planning to launch the first phase of its township, Fairway Golf Villas, before year-end. It will comprise 59 villas with land areas of 5,488 sq ft to 13,765 sq ft and built-ups of 2,997 sq ft to 4,415 sq ft. Prices are pegged from RM1.4 million to RM2.2 million.

The villas come with green features such as large windows, rainwater harvesting systems, roof insulation and green tinted glass to reduce heat, porous openings for cross ventilation and sun-shading louvres to minimise glare.

In addition, the homes will also have long balconies that provide views of the golf course and porches that accommodate up to three cars. Some of the villas will also have a pavilion and larger outdoor space.

It will be a gated and guarded precinct with round-the-clock patrols. There will also be an alarm system and perimeter fencing for each villa. The dining rooms and master bedrooms will be installed with panic buttons that are linked to the guardhouse.

Private previews will be held on Oct 16 and 17 here, while an exclusive preview will be held in Singapore on Oct 18 and 19, says Soam.

Future phases of the development will offer cluster homes, semi-detached houses, zero-lot bungalows, bungalows, townhouses, and shopoffices. Also available will be commercial and retail elements.

Sebana Cove Resort will also take advantage of the Shanti forest reserve and river banks of the Shanti and Sebina rivers to provide a more natural setting for its homes. The properties on the river banks and fronting the sea will no doubt fetch a premium. Meanwhile, the rest of the land has been earmarked for mass housing. The township is expected to be mostly low in density, with about five homes per acre. The entire township is expected to take 10 to 15 years to develop.

Strategic move

As the market takes a breather — no thanks to cooling measures in both sides of the Causeway, the tit-for-tat raising of toll rates by Malaysia and Singapore, the oversupply of properties in Johor and falling property prices in Singapore — what prompted IJM Land to launch this year?

“I was at a property talk recently and one of the speakers advised us to ‘sit tight for the next two years’. How can we do that? Even unlisted property players must continue to sell because they have holding costs,” Soam says with amusement.

He also shrugs off concerns over Singapore’s cooling property market and its potential ripple effects in Johor, arguing that prices are still competitive in the state.

“Even after the drop in HDB flat prices, it is still S$1,000 psf [in Singapore]. We are still a lot cheaper if you compare landed homes with apartments, and we are not in Medini or other flagships [that have been] affected by the glut,” he points out.

It should be noted that Sebana Cove Resort is not IJM Land’s first venture in Johor. The group has had piecemeal launches in the southern state, such as its gated and guarded landed residential Nusa Duta scheme in Skudai, Suria Mas Suites in Larkin and Epic apartments in Tampoi. IJM Land had also tied up with JKG (Johor) Sdn Bhd to develop a mixed-use development near Johor Baru.

However, Sebana Cove Resort will be IJM Land’s boldest venture in Johor as the group continues to adopt a conservative stance in the southern state. Still, Soam believes that landed homes are a safer option in the state, as they are more sought-after, especially by owner-occupiers.

According to Soam, IJM Land had initially wanted to market the project as a lifestyle-living option for retirees in Singapore. However, there were no takers because the bungalows were far from other attractions, as the Senai-Desaru highway had not been built yet.

Some may feel that the township is a good distance from Johor Baru, the Causeway and the Second Link. However, Soam notes that the township is very close to the Tanjung Belungkor and Tanjung Pengelih ferry terminals. It is a 30-minute boat ride to the Changi Point ferry terminal, followed by a 10-minute journey to Changi Airport.

“The Tanjung Belungkor ferry terminal has facilities for cars. In fact, Star Cruise luxury liners used to dock here and bring cars,” he says. “When Tan Sri Kong Cho Ha was minister of transport, his ministry had promised that there would be car ferries this year, but that did not happen. So now we are chasing the ministry to do it. We expect the car ferry service from Tanjung Belungkor to Changi Point to start in early 2016.”

Johor Baru is an hour’s drive away via the Senai-Desaru and Coastal Highways. This is almost half the time it used to take via the coastal and trunk roads, Soam adds.

“As we also have water taxis as alternative transport to Singapore, we will not be affected by the toll hikes and imposition of vehicle entry permits [in Malaysia],” he says.

Nasa City

Also on IJM Land’s plate is Nasa City, a 294-acre freehold development near Johor Baru. Located along the North-South Expressway, it is 15 minutes from Johor Baru.

Nasa City is developed by Nasa Land Sdn Bhd, a 50:50 joint venture between IJM Land and JKG Land (JB) Sdn Bhd (formerly known as Aspirasi Ratna Sdn Bhd). JKG Land’s shareholders are low-profile tycoon Tan Sri Robert Tan Hua Choon, Puan Sri Ong Poo Choi, Tan Hua Chan and Tan Ching.

The development will comprise serviced apartments, bungalows, a mall and offices. The Centara Residences serviced apartments will be launched this month. The two 25-storey towers will house 428 units with built-ups of 800 sq ft to 1,000 sq ft. Prices range from RM400,000 to RM500,000, or RM500 psf. The development will come with an infinity pool, wading pool, reflexology pool, barbecue area, children’s playground, landscaped terrace, garden, gymnasium, sauna, changing rooms and water feature.

According to Soam, Nasa Land plans to launch the serviced apartments after the tabling of Budget 2015. Hopefully, the market’s appetite for real estate would have returned by then.

This article first appeared in City & Country, The Edge Malaysia Weekly, on  October 13-19, 2014.