City & Country: Tropicana’s most prestigious project yet

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TROPICANA The Residences, touted by developer Tropicana Corp Bhd as its most prestigious project to date, is to be unveiled on March 21, in a spectacular regional launch across six countries, namely Malaysia (Kuala Lumpur), Singapore, Indonesia, Hong Kong, Taiwan and China (Chengdu and Shanghai).

“We decided to hold a global launch because we received many enquiries from people in those countries after we had the preview at the end of January,” says senior general manager of business development and sales and marketing Ung Lay Ting.

“We have registrants and bookings in these countries. We would like to celebrate our launch with them,” she adds.

The developer is keeping the details of the launch under tight wraps. “[The launch party] is on a very big scale, and the first ever done by Tropicana. It may even be the first such party in KL. It’s supposed to be a surprise. Even the management is unaware of our plans,” Ung says with a laugh.

The gleaming mixed-use development will come up on a 1.28-acre freehold parcel along Jalan Ampang. The site was previously occupied by Bok House, a historic Palladian-Baroque-style mansion built by tycoon Chua Cheng Bok of luxury marque distributor Cycle & Carriage fame.

Tropicana — then known as Dijaya Corp Bhd — had acquired the parcel from the late businessman’s estate for RM123 million, or RM2,200 psf, in 2009. This was close to the old benchmark of RM2,588 psf paid by Sunrise Bhd (now UEM Sunrise Bhd) for Wisma Angkasaraya nearby.

Now, property tycoon Tan Sri Danny Tan is intent on making his mark at this coveted KLCC location with The Residences, which will comprise 353 units of luxury serviced apartments spread across 55 storeys sitting atop the 24-storey W Hotel. The building is designed by international architectural firm Skidmore, Owings and Merrill.

Units will have built-ups of 710 to 1,604 sq ft and layouts of one, two and three-bedroom. Most of the units have built-ups of 710 sq ft, 728 sq ft and 1,114 sq ft. Average prices are RM2,500 psf while the maintenance fee is RM1 psf. However, Tropicana will waive maintenance fees for a year from the handing over of the units, which is slated at the end of 2017.

There will also be four penthouses with built-ups of 2,928 to 2,973 sq ft. The four-bedroom penthouses, which will be on the 52nd floor, are currently not for sale, says a sales representative.

Who are Tropicana’s potential buyers? “We are looking at ‘rising stars’, those who want an exciting life and enjoy metropolitan living,” says project executive director Daniel Teh. There is still demand for these types of residences.”

In addition to regular fittings, the units will be furnished with built-in wardrobes, kitchen cabinets and appliances, storage cabinets and other loose furniture such as a dining table and chairs.

While Tropicana takes great pains to stress that The Residences is distinct from W Hotel, the interior will nevertheless be designed to complement the hotel’s eclectic appearance.

The 53rd floor houses facilities such as a saltwater infinity pool, Jacuzzi, aqua gymnasium, gymnasium, steam room, forest lounge, yoga zone and landscape deck. “It will offer panoramic views of the city, including the neighbouring Petronas Twin Towers,” says Teh.

One of The Residences’ most remarkable features is its extensive security system, which will offer six levels of security, including electronic access control, CCTV, security alarm, guard tour and car park.

Tropicana will also be introducing the X-Base security system to Malaysia in this development. The system generates a series of unique quick response (QR) codes for visitors. Residents will register their visitors with the management, which will then issue a QR code for the latter to enter the parking lot. After arriving at reception, the visitors will be issued with another QR code that will allow them access to the specific unit.

To ensure greater privacy and security, the entrances of the hotel and residences will be separate. The former will be accessible from the main road while the latter is more discreetly tucked to the side of the building.

To deliver a “five-star” level of service at The Residences, says Ung, Tropicana will grow its property management team. While the group explores growing its property management business, it will still be focused on what it does best — building landed homes and integrated developments with a strong concept.

At The Residences, Tropicana will offer three types of residential services, namely concierge, housekeeping and a home care programme.

Teh and Ung_TropicanaTypical concierge services will include arranging for air (including private jet) and ground transport, as well as reservation assistance for golf, spas, restaurants and tours. There will also be an information centre for dining, entertainment and shopping assistance.

Concierge services offered on a pay-per-use basis will include floral arrangement orders, newspaper, mail and magazine delivery, laundry and dry cleaning, and mail, packing and shipping.

The housekeeping service will be offered entirely on a pay-per-use basis. The home care programme — which covers home monitoring, cleaning and inspection of interior home spaces, forwarding of mail and packages, and meeting with contractors who may be required to make repairs — is covered by the standard maintenance fees.

The Residences is within walking distance of a number of schools and institutions of higher learning, medical centres, malls and other attractions. For instance, within a 1km radius are the Petronas Twin Towers, Suria KLCC, Avenue K, Kuala Lumpur City Centre Park and Northwood University. Within 2km are Fahrenheit 88, Lot 10 Plaza, University of Nottingham and Prince Court Medical Centre.

Meanwhile, details on W Hotel are scant. Previous reports have indicated that there will 153 rooms. A representative of the Starwood Group says there is no other information on the hotel, other than that it will open its doors next year.

Seeking trophy assets in a competitive market

While The Residences is coming up with a host of luxurious features and has the benefit of having the first-ever W Hotel in Malaysia to further burnish its address, it is also coming up in a crowded market of luxury high-rise homes in the city.

There is a significant supply of properties coming onto the market, according to CH Williams Talhar and Wong Sdn Bhd’s (WTW) recently-released Property Market Report 2015. The report says as at end-2014, there were 31,402 units of luxury high-rise homes, mostly in the KLCC, the Ampang/U-Thant area, Kenny Hills, Mont’Kiara, Sri Hartamas and the Golden Triangle.

There were also fewer transactions for luxury condominiums and prices dipped 6.1% to RM1,070 psf. “Condominiums that were completed in 2013 were still experiencing low occupancy rates [in 2014] although all units were fully sold. Moving forward, the completion of ongoing construction is expected to exert more pressure on the existing condos/serviced residences, resulting in a decrease in average occupancy rate in 2015 and a more competitive rental market, one that is favourable to tenants. This year is expected to be a similar lacklustre year as 2014, due to the stringent lending regulations and the implementation of GST [Goods and Services Tax] in April, when some buyers will be cautious over their decision making,” said the report.

Even when the field of competing properties is narrowed, there is still a fairly substantial incoming supply. WTW managing director Foo Gee Jen tells City & Country that over the next two years, more than 2,000 units of new comparable luxury high-rise homes — including branded residences — will be entering the market.

How can a luxury residence set itself apart? Zerin Properties Sdn Bhd’s head of private wealth and real estate Terrence Yap says the buyers — mostly local businessmen and entrepreneurs, with some foreigners — are looking for trophy properties and have high expectations to match.

“They will be expecting high-quality finishes and top-notch services. Concept and design are equally important. Not-offered-before facilities can be the talk of town and bring the brand or image to a new level,” he says.

However, as these branded residences will most likely be owner-occupied, it is unlikely that the owners will seek to rent them out to generate income or be concerned about the cost of maintaining the unit, says Foo. “These properties were acquired for their own use or as holiday homes, so they are unlikely to be rented out. There is limited demand and the tenant’s market is a niche market. Low yields of 1.5% to 2% are expected on these branded high-rise residences,” explains Yap.

“The purchasers are mostly high-net-worth investors with deep pockets, so even with lower occupancies, we don’t foresee any issues in collection of service and maintenance charges,” he adds.

Deep pockets would be needed to withstand the current poor market sentiment that has led to poorer occupancies. According to Yap, overall rentals have taken a hit after crude oil prices fell to record lows. “Some tenants were asked to leave within days and we have noticed an increase in vacancies in some developments in the past two months,” he notes.

Tropicana aims to have 50% of its buyers coming from China, Hong Kong and Singapore. Ung believes that Malaysia — especially in the city centre — is still a very attractive proposition given that properties here are among the most affordable in the region. For instance, residential property investment website Global Property Guide indicates that luxury properties in the KLCC average US$2,616 per sq m compared with Hong Kong’s US$20,660 per sq m and Singapore’s US$17,709 per sq m. The currently weak ringgit only enhances the attractiveness of Malaysia’s luxury properties, says Ung.

“If you compare us with our neighbours, KL is still cheap … and while the ringgit is weak, it’s just a fact, we aren’t taking advantage of that,” Ung notes.

However, DTZ Malaysia managing director Eddy Wong notes that the currency’s strength is but one factor in a foreign investor’s decision-making process. “The lower ringgit will definitely make Malaysian properties more attractive to foreign purchasers, but whether there will be an upsurge in foreign buying also depends on several factors, such as whether the product’s value proposition is compelling, whether it is situated in a premier location with good accessibility to amenities and so forth,” he says.

WTW’s Foo concurs, noting that concerns over inconsistent property investment policies at the state and federal levels are their greater concerns. However, the continued weakening of the ringgit will eventually deter investors as it may result in a devaluation of their investments, he adds.

Meanwhile, Zerin Properties’ Yap notes that locals currently account for about 75% of buyers of luxury homes in KLCC. “We saw an increase in local participation in most KLCC apartments. We also saw a trend of locals buying to stay instead of for investment and rental purposes. That has pushed up demand for selected developments such as Suria Stonor, Dua Residency and Park Seven,” he says.

While transactions are muted, leading to a differential of 5% to 10% in asking prices, the outlook for the market is still fairly positive, says Zerin Properties CEO Previndran Singhe. “We are still very optimistic on branded and luxury properties in the next few years. Prices will continue to climb given the scarcity of land. The market may be soft in the short term but we must also look at the potential in the longer term. Land prices have gone crazy in KLCC with most asking prices at above RM3,000 psf and developers are still looking to purchase. We are confident prices will remain strong. In the medium term, yields may be low. This is similar to the situation in developed countries, but it will be offset by capital appreciation.”

 DTZ Malaysia’s Wong is also optimistic. “The outlook for branded luxury properties over the medium term is positive. The fastest-growing economies are located here in Asia, and the demand for luxury properties will surge with the increased affluence,” he says.

“On Malaysia as a preferred destination, KL is an awesome city for many. Other than Singapore, we have the best infrastructure in Southeast Asia, and we are first in terms of quality of lifestyle! Many foreigners come here not just for the real estate fundamentals, such as the flexibility to buy landed and high-rises and ownership of freehold properties, but also for the quality of life and much lower cost of living,” says Previndran.

“I am not so concerned about future supply due to the lack of land in the KLCC vicinity. Moving forward, product quality and management levels will determine the success of any condo,” he says.

 

This article first appeared in City & Country, The Edge Malaysia Weekly, on March 23 - 29, 2015.