KSL to build on brand presence

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KU Hwa Seng, executive chairman of KSL Holdings Bhd, is a man who gets straight to the point. When asked about the company's strategy to grow the KSL brand, he says it will leverage on the group's track record of almost 30 years and continue to build in good locations.

"None of our projects failed — that's the key point," he says.

Hwa Seng, one of the three brothers behind Johor-based KSL, was speaking to the media at the company's office in its flagship integrated development, the 2.73-acre KSL City in Johor Baru.

It is a rare occasion as the brothers are known to be a low-profile bunch. But in a bid to strengthen the KSL brand presence, especially in the Klang Valley, they are willing to make an exception.

Background

KSL was founded in Segamat, Johor, by brothers Khoo Cheng [email protected] Cheng Hai, Hwa Seng and Tien Sek. Cheng Hai is the group's managing director, while Hwa Seng, KSL's executive chainman, runs the business in Johor.

Tien Sek, who is executive chairman, oversees operations in the Klang Valley, together with Cheng Hai's son Patrick.

KSL's maiden development was a row of shophouses in Tenang, Johor, in the 1980s. This was followed by the launch of township Taman Melawati in Skudai, Johor, in the 1990s. Since then, the developer has gone from strength to strength in the southern state.

In 2009, KSL ventured out of its comfort zone by acquiring a huge oil palm plantation parcel in Klang, Selangor, for a mixed-use township development named Canary Garden @ Bandar Bestari.

The 496-acre tract was previously owned by Prospell Enterprise Sdn Bhd and transacted at RM156.5 million or RM8 psf.

At the same time, the group continues to build its bread-and-butter projects in familiar territory.

KSL has three ongoing integrated township projects within the five flagship zones in Iskandar Malaysia — Taman Nusa Bestari (92 acres) in Johor Baru, Taman Bestari Indah (283 acres) in Ulu Tiram, and Taman Kempas Indah (96 acres) also in Johor Baru.

According to Hwa Seng, in view of rising land costs, the company is considering phasing out landed property products in the Iskandar region. It will continue to build affordable and low-cost houses in other parts of the state, such as Segamat, Labis, Kluang and Muar.

The group is also collecting healthy recurring income from its mall and hospitality business in KSL City.Diversification

KSL is slowly shifting its focus to the hospitality and mall management business, while expanding its property development business in the Klang Valley and maintaining its stronghold in Johor.

Besides Canary Garden, it will launch a niche 0.8-acre, low-rise condominium in Jalan Madge in the Kuala Lumpur city centre, by the end of this year.

In a previous interview, Patrick, who is Canary Garden's project director, had said that the group sees the potential to further increase profits with Canary Garden, and is targeting an increase in net profit of about RM20 million to RM30 million, over the next few years.

There are also plans for KSL City 2, which will be larger than KSL City in Johor Baru — which has a total gross floor area of 880,000 sq ft. The approximate GDV of KSL City 2 is RM2 billion.

Canary Garden, which is located in south Klang, will offer mainly mid- to high-end homes and commercial centres.

Upon completion in eight to 10 years, the township will have 18,300 residential and commercial properties, with a total GDV of RM3 billion.

The township will comprise a 90-acre commercial component and a roughly 316-acre residential component. The remaining 90 acres are reserved for facilities and landscaping.KSL City"We hope that our mall and hotel operations will continue to bring in about 30% to 40% of our revenue per annum, in the future," reveals Hwa Seng.

KSL City is located about 10 minutes away from the Causeway and the Johor Baru business district. According to the hotel's general manager, Mahadi Mathana, occupancy rates have been hovering around 78% since its opening a year ago.

He adds that in addition to locals and Singaporeans, the hotel has received guests from Indonesia, South Korea, Thailand and Taiwan.

Johor Baru is no longer a bypass stop for tourists, says Mahadi, adding that the opening of international theme parks such as Legoland, Puteri Harbour Indoor Theme Park and other attractions in Iskandar, has made the town more vibrant.

The hotel offers 858 rooms and suites — namely 596 superior rooms, 229 deluxe rooms and 33 suites. It also has two restaurants and bars, one grand ballroom, eight function rooms and 10 meeting rooms.

Facilities include a mini water park, three electronics golf stimulators, a paintball shooting range, a swimming pool, a gym, a sauna and a health spa.

Besides the hotel rooms, some owners of the adjourning D' Esplanade Residences looked into the option of leasing out their units, which would further add another 1,300 available units for visitors.

KSL City mall, which started operations about 2½ years ago, has a net lettable area of 600,000 sq ft.

Amy Tan, the mall's complex manager, tells City & Country that when the mall first started operations, the occupancy rate was only about 60%. She cites the lack of awareness of the KSL brand as a retail management company, as their biggest problem back then.

"Some people liken KSL City to Times Square or Sungei Wang Plaza [in Bukit Bintang, Kuala Lumpur). I do not mind. After all, they are among the most popular malls in KL and have stood the test of time," she says.

Gradually, KSL City mall managed to attract some international brands such as Korean skincare chain Tony Moly, as well as F&B outlets such as Coffee Bean, McDonalds and Kentucky Fried Chicken.

"We will continue to work on upgrading our tenant mix," says Tan. The occupancy rate now stands at 90%, with the majority of tenants comprising a quirky mix of local brand names. There's even a kiosk offering a durian buffet, to the delight of local and Singaporean visitors.

The anchor tenants are Tesco and MBO cinema, which features cineplexes.

Future plans and outlook

The group currently has a landbank of more than 2,000 acres, which it will gradually develop over the next decade, according to Hwa Seng.

However, KSL is not resting on its laurels and will continue to look for more business opportunities and acquire more landbank in good locations, both locally and overseas. "We are currently studying the overseas markets," he says.

Hwa Seng believes the impact of the central bank's recent measures to curb household debt, should not have any significant impact on the market, as there is still demand for property.

Among other things under the new measures, the maximum duration of property financing has been shortened to 35 years, from 45 years.

Hwa Seng is optimistic about the property outlook in Iskandar Malaysia and believes it will continue to improve, with the government's initiatives to spur growth.

This story first appeared in The Edge weekly edition of Sept 2-8, 2013.