WHILE most developers are holding back their launches, United Malayan Land Bhd (UMLand) is swimming against the tide with a selection of launches in southern Johor, such as UMCITY in Medini Iskandar Malaysia, the second phase of Suasana Iskandar serviced apartments, the Viridea residential project, mixed-use development The Waves and a new residential project in Bandar Seri Alam.
One of the most important projects is the RM1.2 billion UMCITY, which is slated to be completed by 3Q2018. The 5.03-acre integrated development has five components — serviced apartment project Shama Medini, a retail space with lakefront F&B outlets, a Grade-A office block, a 198-room OZO hotel and branded serviced apartments called Citadines.
In October, UMLand will launch its buy-to-lease Shama Medini serviced apartments, which will see buyers lease back their units for a guaranteed rental return.
“The owners will enjoy 6% guaranteed rental return for the first five years of the leaseback scheme. The next five years will be a revenue-sharing model, in which 45% of the rental revenue will be shared by the owners,” explains UMLand group CEO Datuk Charlie Chia Lui Meng.
The Shama brand may not be familiar to most Malaysians and Singaporeans, but Chia says it is known in many parts of Asia for its luxury lifestyle serviced apartments. Shama Medini will be the brand’s 11th property and the first in Malaysia.
Shama Medini will offer 196 units of fully furnished apartments within a 20-storey tower. The units, which have built-ups ranging from 583 to 2,015 sq ft, are available in four layouts — studio, 1-bedroom, 2-bedroom and 3-bedroom. The average selling price is RM1,300 psf.
Like all other Shama-branded serviced apartments globally, Shama Medini will be managed and operated by Thailand-based hospitality assets management company, ONYX Hospitality Group, which is well known for its Amari brand of hotels in Thailand and the Middle East.
Besides receiving rental yield, owners can enjoy a time-sharing benefit of 14 days’ stay, whether at Shama Medini or participating Amari properties for seven days each time.
UMLand held an exclusive preview of Shama Medini in July, which saw the attendance of about 80 registered and invited guests. Chia is happy with the initial response. More events, such as roadshows and seminars, will be organised in the coming months, he says.
After Shama Medini’s launch, UMLand will release Citadines to the market early next year. The buy-to-lease project will also be managed by ONYX Hospitality Group.
Commenting on Malaysians’ perception of property investment, Chia says although the buy-to-lease concept is not new in Malaysia, local investors prefer to own and manage properties themselves.
“Compared with keeping the money in the bank, [the] 6% rental yield is attractive. Property is always a better choice for investment. It’s even better if someone can take care [of it] for you and give you a guaranteed return,” Chia explains.
The serviced apartment and hospitality segments in Iskandar Malaysia are seen to be enjoying good demand. UMLand executive director Dennis Ng foresees increasing demand for hotel rooms and serviced apartments that cater for long-stay tourists.
“A lot of tourists now come in a family of five or six. They may not want to rent too many rooms. Some of them would like to have their own kitchen and living room … a serviced apartment takes care of all these requirements,” Ng explains.
He adds that the depreciation of the ringgit has encouraged local and Singaporean travel agencies to change their plans. Instead of arranging for tourists to stay in Singapore, they are now putting them in Johor Baru’s four and five-star hotels or serviced apartments. This is three times cheaper than in Singapore.
“The four and five-star hotels are always full; UMLand’s Somerset Puteri Harbour’s serviced residences are fully occupied on most weekends. This shows that there is great demand for hospitality properties,” Ng says.
He is optimistic that both UMLand’s serviced apartments will enjoy high occupancy owing to the increasing number of tourists as well as office employees. “People who are working in Pinewood Iskandar Malaysia Studios stay at Somerset Puteri Harbour. When there is a film production, it will bring in 5,000 to 7,000 people, further pushing up the demand for serviced apartments,” he adds.
Familiar territory
Since 1961, UMLand has established itself as a reputable developer of township and luxury high-rise condominium projects. It is also well known for its buy-to-lease expertise, with the 2013 success of Somerset Bukit Ceylon, Kuala Lumpur, under its belt.
Somerset Bukit Ceylon is also the first Somerset brand in Malaysia. “Because of the good brand name [Somerset], during the first five-year period, the owners who chose the corporate leaseback scheme have been enjoying an average 12% per annum rental yield, which is very attractive,” says Chia.
Somerset is a brand under The Ascott Limited, the world’s largest international serviced residence owner-operator and a wholly-owned subsidiary of Singapore’s CapitaLand Ltd. The Singapore company was a substantial shareholder of UMLand before the latter was taken private by Tan Sri Syed Mokhtar AlBukhary in 2012.
Chia says Somerset Bukit Ceylon has been renamed Seri Bukit Ceylon and is managed by A Best Group, a Japan property management company. As most of A Best Group’s clients are Japanese, Seri Bukit Ceylon is now another hotspot for Japanese tourists. It has an average occupancy rate of more than 70%.
Opportunities
UMLand’s office segment is also seeing demand. Ng explains that as Medini is a special economic enclave that offers investors a number of incentives, it has attracted many multinational companies (MNCs), such as Hershey Co, Huawei Technologies and international consulting firm Frost & Sullivan.
The incentives include a 10-year corporate (tax) exemption for approved companies, no property sales restriction for foreign ownership, no Real Property Gains Tax (RPGT) and reduced income tax for qualified knowledge workers.
Ng says MNCs are looking for Grade-A offices in Medini but there is limited supply. Thus, UMLand soft-launched its office component in UMCITY in May. Half of the 200,000 sq ft office space has been taken up.
“The average selling price is about RM900 psf. Surprisingly, 50% of the buyers are Japanese, the remainder are locals,” Ng says. “We are now applying for MSC status for the office block; if approved, it will be in high demand.”
Looking at the positive feedback from buyers, UMLand’s UMCITY is well-positioned to meet the growing demand for hospitality and office products in Iskandar Malaysia.
This article first appeared in Property, digitaledgeWeekly, on August 17 - 23, 2015.