Cover Story: How i-City has changed

This article first appeared in City & Country, The Edge Malaysia Weekly, on July 2, 2018 - July 08, 2018.

The progress of i-City over the years

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The first time I visited i-City in Shah Alam was in 2009 when the first phase of its Cybercentre office suites was handed over. The place was quiet with mostly unoccupied offices and shops, and barely any cars. The atmosphere became a little livelier in the evening when the millions of LED lights in its City of Digital Lights were turned on.

Two years after my last visit in 2016, the 72-acre i-City is a completely different story. In fact, I got lost trying to get to i-Gallery, a place I thought I knew well. Instead, I circled around unfamiliar buildings and roads only to find myself back on the Federal Highway. That is how much i-City had changed.

As always, I-Bhd executive chairman Tan Sri Lim Kim Hong greets us — The Edge photographer and this writer — enthusiastically. His first question: “So, what do you think?”

The idea for i-City was conceived in the 1990s in line with Malaysia’s then new aspiration of becoming a high-income nation by 2020. The 1997/98 Asian financial crisis put a halt to the plan and it was not until 2005 that i-City became a reality for Lim. Back then, it was a RM1.5 billion township with an approved built-up of about five million sq ft. Today, it is a RM5 billion ultrapolis with an approved gross floor area (GFA) of 13 million sq ft.

Nearing completion is Central i-City Mall, a joint venture with Thailand’s largest retail property development and investment company Central Pattana. The mall has a GFA of more than one million sq ft and is expected to have about 350 outlets.

“The mall will open on Nov 15 this year. We are 80% tenanted and we will have three anchor tenants — Village Grocer (40,000 sq ft), SOGO department store (200,000 sq ft) and TGV cinema (60,000 sq ft),” says Lim, adding that SOGO is a joint venture with Central Department Store Thailand.

Best Western i-City opened its doors in 2015 and DoubleTree by Hilton will follow in 2020 with 300 rooms. Lim believes the opening of the latter will shine a new light on Shah Alam as the host of international hotel chains and multinational companies.

The developer has handed over three high-rise residential towers: i-Residence, i-Soho and i-Suite with a total of 2,147 units, which are fully sold. At present, three other high-rise residential towers — Liberty, Parisien and Hyde — are under construction. Together, they offer 1,217 units.

i-City’s journey is far from over. As Lim points out, only 40% of the approved 13 million sq ft of GFA will be fully completed by the end of this year.

According to him, i-City was initially meant to be a knowledge hub and a tourist attraction. But the next phase of its growth will have two new goals — to establish Shah Alam as a major office location to support the vision of the federal and state governments to become a knowledge economy, and to create a private-sector medical hub for Shah Alam that befits its status as Selangor’s capital city.

Recognising too the growing millennial workforce and their approach to work, Lim will be adding a co-working space to i-City’s new 33-storey office tower, Sumurwang Tower, which will also house I-Bhd’s new corporate headquarters. The building will be part of the group’s property investment and is scheduled to be completed in June next year.

“Some people are saying you cannot make money from co-working space but I’m going to invest in this venture with my own money. I’m putting in RM10 million to renovate the interior of the co-working space. It will take up two floors with total space of about 20,000 sq ft. We will look for an international co-working operator to run the place. I want young working people to have a space that appeals to them,” says Lim.

Next up is the launch of a 54-storey serviced apartment project in 1Q2019. Tentatively named Hill 11, it will have a total of 512 units with sizes ranging from 550 to 883 sq ft. It will be opened for registration at the end of the year.

Also scheduled for launch next year is the 51-storey Hill 12, which will offer 474 serviced apartments. Their sizes are 632 and 797 sq ft. At press time, the prices of these developments had not been finalised yet.

In line with the evolving work and living trends of the millennials, Lim plans to introduce co-living spaces within the next five years. As they are digital natives and grew up with social media and the sharing economy, millennials are very adaptable and much more willing to share facilities than the older generation.

The line between business and pleasure seems to have blurred for the millennials to whom experiences and being part of a community are important, says Lim, adding that at the same time, with housing becoming less affordable and apartments become smaller, young people are looking for living spaces that cater for their needs rather than traditional housing.

By 2025, i-City is expected to boast 20,000 residents (25,000 targeted) and 25,000 knowledge workers (30,000 targeted) and some 20 towers.

 

The next five years

Plans are already in place for the next five years of development in i-City. Starting with the Central Park section, which will house two Grade A office towers, a luxury serviced residential tower, Arctic World and two integrated vehicle showroom service centres.

With a focus on small and medium enterprises (SMEs), I-Bhd will be introducing modular offices in the office towers. Lim believes this concept, which is relatively new to Malaysia, will become a part of the country’s commercial landscape in the near future.

He notes that SMEs make up 97% of businesses and account for 65% of employment in the country, making the sector a major contributor to gross domestic product growth. Modular office buildings will enable businesses of any size, particularly SMEs, to gain distinct identities.

The towers will have a “villa” concept, in which each office will have a private double-volume landscaped arrival park; a floating double-volume lobby; a showroom gallery; garden meeting rooms; and a 28m by 8m double-volume staff forum, dining and interaction space surrounded by landscaping.

Each office module can be configured as a flexible semi-detached or villa office of either 2,500 sq m or 5,000 sq m on five levels. Larger companies can take two to three modules of between 10,000 sq m and 15,000 sq m.

The flexibility of the floor plan allows a large percentage of the villa to be subdivided and sublet according to the company’s changing spatial needs. Companies will also have space to place their signage and logos on the façade.

The luxury serviced apartment project will offer 55 sq m studios, which will all face outwards. There will be a sky deck, which at 180m high will offer panoramic views; garden-style changing rooms with sauna; a function room with attached kitchen; a gym; and an AVA/karaoke room.

Smart technology will play a big role in the serviced apartments with intelligent home controls for convenience, such as app-controlled appliances and common facility bookings, and security.

Meanwhile, the integrated car showrooms will be 7m high with a large perimeter frontage at road level. They will come with a lower ground service area designed for future cars, such as electric and autonomous cars. The administrative centre will be located within the showroom along with a coffee and reading lounge for customers.

Lastly, the 3,000 sq m Arctic World will feature subterranean entertainment space. Its basement location will ensure the ground acts as insulation for the cold snow world and enhances its sustainability.

 

The crown jewel

According to the developer, “the most iconic element of i-City” — the 68-storey Jewel — will be launched in phases in the next three to four years. Standing at 350m, it will be the tallest building in Shah Alam and possibly Selangor.

Jewel will be surrounded by two more office towers, an international wellness and medical centre, a medical training centre, three luxury residential towers and a CBD commercial square.

Grade A offices will occupy levels 1 to 50 while a five-star hotel will take up levels 51 to 68. The offices and hotel will be separated by a sky lobby and a sky pool. The lobby will offer a 360° panoramic view of Shah Alam while sitting right on top of the tower will be a sky bar that will feature an LED ceiling.

The hotel will have a large conference facility in an attached podium with pedestrianised links to all F&B outlets and shops in the CBD commercial square and a bridge link to the convention block.

The Grade A offices will have a vehicular arrival plaza with a double-volume lobby at the ground level and another at the elevated CBD Square. The offices will have large floor plates of about 1,500 sq m and high floor-to-ceiling height of 4.5m with a recessed raised floor for flexible cabling and renovation. The offices will also be fitted with sustainable features, such as low E glazing, LED light fixtures, water-saving toilets and waste-recycling chutes, among others.

There will also be a business centre with an auditorium, meeting rooms, showrooms and business lounges as well as a gymnasium and sports bar for tenants.

The medical centre will comprise an outpatient centre with diagnostics/imaging and day surgery facilities; a wellness and rehabilitation centre with a gym, lounge and geriatric lifestyle centre; a medical tower with specialist outpatient clinics; and a medical training centre.

The assisted-living centre will be connected to one of the luxury serviced apartment projects for easy access to the geriatric lifestyle centre and    fast emergency help for elderly residents.

The CDB commercial square is a landscaped pedestrianised deck that will tie all the key components of i-City together — the shopping district with the Central i-City Mall; CBD district with apartments, hotels, medical centre, office towers, education and entertainment districts; and the convention/conference district with DoubleTree  by Hilton Hotel, office towers and apartments.

The square will feature a 5m-wide sheltered path that will abut the parks, playgrounds, F&B outlets and shops. It will also have pedestrianised and bicycle connection to an LRT station.

 

Making a business case

In early 2014, I-Bhd unveiled its 2014-2018 plan as part of its corporate exercise. The plan envisaged three goals for the group’s three core businesses of property development, property investment and leisure by 2018: an annual revenue of RM500 million from property development, a RM1 billion investment property portfolio and the doubling of the leisure segment’s annual revenue to RM90 million.

The developer is confident that based on the results thus far, it will meet the property development and investment property targets by the end of the year. However, the leisure segment will fall short, achieving only about two-thirds of the targeted revenue (see Table 1).

While the 2014-2018 plan did not have any earnings targets, the group was expected to achieve a pre-tax profit margin of 23% from property development in line with land valuation parameters adopted under the master joint-venture agreement between the landowner and I-Bhd; RM100 million potential annual rental revenue by 2018; and no less than a RM20 million per year profit from the leisure segment, assuming that the Leisure Park contribution plateaus as the other businesses expand (see Table 2).

The developers asserts that it has delivered not only from a product-offering standpoint but also financially as profitability has been on an upward trend with pre-tax margins hitting above 23% in the last eight quarters (see Chart 1).

According to I-Bhd, total property development revenue stands at RM1.25 billion. With the total gross development value of i-City still standing at RM9 billion (not taking into account its transit-oriented development status, which now allows higher plot ratios and potentially higher GDV), there is still RM7.75 billion of revenue yet to be recognised, the developer adds (see Table 3).

While the naysayers would question the sustainability of a single-location entity with no future earnings potential after its completion in 10 years, I-Bhd strongly believes that its property investment and leisure-related activities will generate at least RM100 million in net profit in the next decade. With no discernible need for cash, this could potentially be returned to shareholders as dividends (see Table 4).

While the future is hard to predict, there is no denying that i-City has come a long way in a decade.

“Come again next year when our corporate office is ready. You will be allowed into the building with just facial recognition and maybe, you could even be served by a robot,” says Lim gleefully as we part.