From industrial to wellness concept projects

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AFTER developing two industrial projects, Johor Baru-based DB Hartanah Sdn Bhd is hoping to make a bigger name for itself with a hotel and wellness centre project in the Nusajaya flagship zone B of Iskandar Malaysia.

The project, known as DB Medical & Wellness Centre, is located beside Columbia Asia Hospital and comprises a hotel and medical office suites. The freehold parcel, measuring 3.2 acres, was acquired earlier from UEM Land Holdings Bhd.

There will be 40 office suites known as medical suites catering specifically for medical and healthcare service providers and a 3-star 18-storey hotel tower offering 180 rooms. The medical suites will be housed over five floors, including a basement, with an average built-up of close to 2,000 sq ft each. Prices start from RM1 million.

Features will include stretcher lifts and disabled-friendly toilets.

The development was previewed in December 2012 and officially launched on Feb 23. Some 40% of the medical suites have been taken up, including all lower ground suites.

The hotel component will be managed by the developer with help from a hospitality management company that will provide training for employees, says DB Hartanah director David Lee.

Lee has 24 years of experience in property development. He graduated from university at age 24, after which he served in his family's property development company in Johor.

Lee is looking to attract Singaporeans and medical tourists. The medical office suites, he adds, will be suitable for young doctors looking to set up their own clinics.

"If they don't have the capital to start, we don't mind looking at leasing our medical suites to them on a long-term basis," Lee tells City & Country.

Transition

According to Lee, he does not look at the gross value of a development but at the company's long-term sustainable growth.

"As a business person, you would want to sustain your company," he says. "A conservative developer will only look to acquire land and sell it quickly, only looking at the GDV (gross development value) of a project with returns of 30% to 40%. But at the end of the day, you still need to buy a new piece of land. What I'm doing is to build a sustainable company."

Formed in 2005, DB Hartanah started with industrial projects but the long-term strategy Lee has in mind is to retain components of his developments for recurring income.

The developer's first industrial project in Tampoi, Johor, comprised 56 units of terraced warehouses and 12 semi-detached factories on 10 acres of freehold land. The units, with built-ups of 1,800 to 10,000 sq ft, were sold at RM300,000 to RM2.4 million.

The development had a GDV of RM40 million and has since been completed.

In 2009, the developer built eight semi-detached factories and two detached factories with offices on a three-acre site in SiLC, or Southern Industrial and Logistics Clusters — the industrial park in Nusajaya. The project is now wholly leased to an Australian company and nets a rental income of RM140,000 monthly.

"The country is developing fast," Lee explains. "It is only natural for a developer to move on from just being a land acquisition-based property developer. I will acquire land, but at the end of the day, I will own an office tower or hotel for recurring income. Land is also becoming scarce, especially in prime areas," he says, adding that even in Nusajaya, the prime sites have been taken up by bigger players.

Future development

With a revenue-sustaining strategy in mind, Lee has already drawn up plans for another integrated hotel and wellness development on a 13-acre site that it is acquiring just opposite DB Medical & Wellness Centre.

"The project shares a similar concept to a retirement village but of course, due to cultural sensitivity, we will not call it that.

"Ten per cent of the land will be allocated for a commercial component while 30% will be for a hotel. The rest will be for wellness condo units. We will provide heated swimming pools, a medical consultation office for the residents, food and catering as well as hotel-like facilities such as a shuttle service," he says. The wellness condo occupants, he adds, will have access to the hotel's services.

The plan is to offer wellness condo units with sizes of 800 to 1,200 sq ft, targeted at retirees aged 65 and above.

Lee adds that purchasers don't have to pay any maintenance cost and in the event that they don't want the units, these can be sold back to the developer to be refurbished and resold to the next generation of purchasers.

This is made possible, he explains, by taking a percentage from the sales and purchase amount and putting it into an equity fund that will generate a return of 5% to 6%. The returns will be used to maintain the unit.

Lee says he has already attracted the interest of some Japanese investors. "The Japanese say they would like to stay here for three months when it's winter in Japan. We will operate the condos like a hotel when the owners are away and rent out the units for the purchasers." He is also looking to attract Singaporeans and the Chinese.

The developer is looking to acquire land in Medini in Iskandar Malaysia next.

"Medini is starting to get expensive but I believe there is a lot more room to grow there," Lee says.

This story first appeared in The Edge weekly edition of Mar25-31, 2013.