Looking at more integrated developments

This article first appeared in City & Country, The Edge Malaysia Weekly, on July 31, 2017 - August 06, 2017.

One of Sunway Property’s most anticipated projects, the 17-acre Sunway Serene in Kelana Jaya, is scheduled for launch in the third quarter of this year

Mixed-use development Sunway GRID in Sunway Iskandar Johor has a GDV of RM400 million

Sunway Subang in Kampung Melayu Subang comprises 45 units of 2½-storey terraced factories

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IT is a busy Monday morning and the meeting room on the ground floor of Menara Sunway comes alive as Sarena Cheah walks in, looking resplendent in white. The courteous managing director of Sunway’s property development division (for Malaysia and Singapore) greets a rather surprised young intern and everyone else in the room before settling down for our interview.

“As you can see, we are bringing in more people, and encouraging new blood. And we hope all our staff members, especially the young ones, will be with us for the long term,” she says, giving the intern a quick nod.

“In terms of our work culture, we would like to embrace innovation and big ideas. We would also like to hire more mixed nationalities.

“I believe our work culture is exceptional. The next step is to put Sunway Property on the map. Our ads have graced billboards abroad, one appearing on the UN building in New York recently. We have hosted several regional and international events, such as Asia’s Next Top Model and National Geographic, at our developments, especially Sunway City. On November 1, we will host The Sustainable Summit 2017 by The Economist at Sunway Resort Hotel & Spa at Sunway City. We would like for the ‘Sunway’ brand to be recognised everywhere in the world.”

Established in 1974, Sunway Property is known for its community-driven, integrated townships and developments, including Sunway Resort City, Sunway Geo, Sunway Velocity, Sunway Montana, Sunway Gandaria and Sunway Iskandar. The property division of conglomerate Sunway Bhd has an extensive portfolio of properties in the Klang Valley, Ipoh, Penang, Johor and also in Singapore and China.

“In terms of our developments, we do leverage Sunway Group’s expertise. We manage our own hotels, university and medical centres in our townships, so that everything is in sync and the residents are assured of quality while other developers may not have the same luxury. It is about creating the locations and then being able to justify the prices,” says Cheah.

 

Company performance and land bank

It is evident that longevity and sustainability are important to the company. “For now, we are focusing on our strengths. Our business has always been diversified. It allows us some flexibility to zoom in on our ongoing projects and explore options for upcoming ones,” Cheah stresses. “The slower market has enabled us to recalibrate and figure out what we should do next.”

Sunway Property performed consistently in 1HFY2017. For the quarter ended March 31, it posted a profit before interest and tax of RM153.1 million on revenue of RM1.091 billion. The company also had about RM1.4 billion in unbilled sales as at March 31.

“Sunway Group’s operating performance has been commendable across most of our businesses despite the challenging business environment. In our latest quarterly results, our property investment division recorded higher rental contributions and higher occupancy at the group’s portfolio of investment properties, and better performance following the opening of new attractions at the theme parks, including the Nickelodeon Lost Lagoon. We also saw strong performances by our construction, healthcare and building materials divisions,” says Cheah.

The company owns about 3,301 acres of land bank with an estimated gross development value (GDV) of RM50.5 billion and development period of up to 15 years. They are located in the Klang Valley (808 acres, RM13.1 billion), Johor (1,800 acres, RM30 billion), Penang (187 acres, RM3.2 billion), China (10 acres, RM600 million), Singapore (5.2 acres, RM1.6 billion) and elsewhere (collectively 491 acres, RM2 billion).

“Over the past year, we acquired some land in Kelana Jaya for our upcoming development, Sunway Serene, and also in Singapore,” says Cheah. In September last year, Sunway, jointly with Hoy Hup Realty Pte Ltd, won a bid for 21,015 sq m in Sengkang in the city state for RM725 million.

“We are still looking for opportunities abroad, particularly in the UK and Australia. We shall continue to look, focusing on land that is suitable for standalone developments and immediate launch. We will also look at new transit-oriented developments, leveraging our prior experience in building integrated, mixed-use developments that are in close proximity to public transport, particularly in the Klang Valley,” says Cheah, adding that the company will concentrate on specific products in the current economic climate.

“In terms of our range of products, our strategy for this year is to focus on those [both residential and commercial] that are priced between RM750,000 and RM1 million. To us, affordability depends on the location of the products. For example, Sunway Gandaria in Bandar Baru Bangi has units that are priced from RM500,000, so it really depends. In this economy, we would prefer to review our products before pushing them into the market.

“We constantly monitor the market and will only launch products that are in demand. Our focus will be more on developing integrated developments. We want to ensure that when we build, there is also a conducive ecosystem that supports our community’s growth. This is especially important when people are cautious about purchases.”

 

Sunway Serene and upcoming launches

Cheah reckons that Sunway Serene is one of the company’s most anticipated projects this year. “This lakefront development has many unique selling features — the units have bungalow and semi-detached house layouts. We are targeting families and upgraders in Kelana Jaya and Petaling Jaya.

“It is a regeneration project as we have transformed a waste pond in Kelana Jaya into a lake garden. So far, the response from nearby residents has been good.”

Scheduled for launch in the third quarter of the year, the 17-acre Sunway Serene is a modern residential development with two phases. Phase 1 has a GDV of RM2 billion and features two 52-storey towers with 900 units (built-ups of 892 to 1,788 sq ft) priced at RM732,000 onwards. It is due for completion in 2021. Details of Phase 2 are still being finalised.

Sunway Serene is located in the heart of Kelana Jaya and is close to nearby amenities such as the Subang Golf Club, Paradigm Mall and Sunway City. The development is accessible via Lebuhraya Damansara-Puchong, the Federal Highway, New Pantai Expressway, New Klang Valley Expressway (NKVE) and Shah Alam Expressway.

It is also located near the Setia Jaya BRT and KTM stations, and the Glenmarie and Kelana Jaya LRT stations, and boasts a 15-acre lake garden and 1.2km jogging track around the lake.

“Sunway Serene is open for registration and to date, we have seen a lot of interest and expect the project to be successful,” says Cheah.

Sunway Property will also be launching other projects in the Klang Valley and Sunway Iskandar. “We have an upcoming, industrial development called Sunway Subang in Kampung Melayu Subang. It is located in a mature neighbourhood, and has easy access to major parts of the Klang Valley via Guthrie, Jalan Lapangan Terbang Subang, the NKVE and Federal Highway,” says Cheah. Sunway Subang has a GDV of RM150 million and is set to be launched at the end of August.

Spanning a 6.5-acre leasehold tract, Sunway Subang comprises 45 units of 2½-storey terraced factories, with an indicative price of RM2.5 million. “The development has provisions for budget cargo lift and structural loading of 6kN/m2 at its mezzanine floor and first floor. We are looking at the possibility of commercial usage. More details will be revealed closer to its launch date.”

At Sunway Iskandar Johor, Sunway Property will be launching Sunway GRID later this year. Spread across 5.2 acres, the mixed-use development has an estimated GDV of RM400 million and starting prices of RM350,000 (residential), RM890,000 (shop units) and RM690,000 (office spaces). It has direct access to the Coastal Highway Southern Link (CHSL).

On the challenging market in Iskandar Malaysia, Cheah says, “We remain confident that integrated developments will do well and contribute to the overall growth of Iskandar Malaysia in the coming years. Sunway Iskandar offers key components such as educational institutions, leisure hot spots, healthcare and recreation. Residents moving into their homes in the future will have ready amenities to live, learn, work and play with their families. The soon-to-be-completed CHSL is expected to provide excellent connectivity for the residents and business owners in Sunway Iskandar, with a driving distance to Singapore of about 5km.”

Apart from that, Sunway Property is looking to launch products in Sunway Valley City in Penang but there are scant details about this. “We have just opened our Sunway Penang regional office in Anson Penang. It is the first GBI Gold certified sales gallery in Penang and we are extremely proud of it. The gallery offers energy-efficient services and has a passive solar design,” says Cheah.

Moving forward, the developer remains optimistic about the property market. “We expect sentiments to improve in the second half of the year after the ringgit has stabilised. Our business strategy will be adjusted accordingly to meet various market conditions,” says Cheah.

“Our strong balance sheet enables the group to capitalise on opportunities that may arise in the current uncertain economic environment, especially land bank opportunities. Given Sunway Property’s track record and market experience, we are confident of weathering the challenging business climate due to our diversified portfolio, which gives us a good foundation to see market cycles through.”