V Development to launch build-then-sell maiden project

This article first appeared in City & Country, The Edge Malaysia Weekly, on February 18, 2019 - February 24, 2019.

Construction of the 14 bungalows at Mines Villa has been completed

The interior of the show unit at the development

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V Development Sdn Bhd, established in 2015, will be launching its maiden project — Mines Villa — on Feb 23.

According to director Patrick Tan, the company has adopted the build-then-sell concept for the development. Hence, construction has been completed and the project is expected to receive its certificate of completion and compliance (CCC) before its launch.

Located in Taman Sungai Besi Indah, Seri Kembangan, Mines Villa occupies 2.57 acres of freehold land and comprises 10 three-storey bungalows and 4 three-storey linked bungalows. The project has a gross development value (GDV) of RM38 million.

The units have built-ups of 3,992 to 4,790 sq ft and are priced at RM2.33 million to RM3.64 million each.

The developer is targeting upgraders in the vicinity and has received some enquiries, says Tan. “We are targeting people staying around the area since it is such a small project. Moreover, we are in an affluent neighbourhood with The Mines Shopping Mall nearby.”

According to Tan, Mines Villa is located on one of the last freehold parcels in the area, and it is on elevated ground. One would need to drive up a small hill to reach the development.

“There is a 100m driveway leading to the development. The driveway is beautifully landscaped. This is a very private and exclusive residence,” he says.

It is a guarded development and the developer will subsidise and manage the area for two years. “The project is not gated as it is too small,” he adds.

Apart from the guardhouse, the facilities also include a playground, barbecue pits, picnic tables and chairs.

The development is accessible via the Kajang Dispersal Link Expressway, Sungai Besi Expressway, North-South Expressway and Middle Ring Road 2, and is connected to the upcoming Sungai Besi-Ulu Kelang Elevated Expressway.

Nearby amenities include public transport such as mass rapid transit and KTM stations, shopping centres (South City Plaza and The Mines Shopping Mall), schools (Australian International School and Universiti Putra Malaysia) and hospitals (Columbia Asia Hospital).

 

Gaining market confidence

Mines Villa was initially another developer’s project. Tan says the previous developer had not been doing well and the construction of the project had stalled. When V Development took over, construction was only 20% to 30% completed.

V Development decided to maintain the development plan for 14 bungalows but made minor changes, upgrading and modernising the layout, architecture and façade of the buildings, he adds.

Tan says none of the units at Mines Villa had been sold when the company took over the project. As it was the developer’s first project, it lacked a track record in the industry, hence the decision to adopt the build-then-sell concept.

“The main thing was to gain market confidence. We wanted to show that even though this was our maiden project, we were capable of building first before selling the units. Also, people in the neighbourhood knew that the project had stalled for some time, so when we took over, we needed to convince them that we had the ability to complete the project and eliminate any doubt.”

However, adopting the concept was challenging as the developer had to fund all the construction costs on its own.

“There was a small amount of financing from the previous developer because the land had been charged through a bank. But the construction and all other costs had to be funded internally. It was a major decision but our major shareholders believed we could do it. Not many people would have been willing to put in RM20 million to RM30 million,” Tan stresses.

Mines Villa will probably be the developer’s only build-then-sell project as its planned developments are too big to adopt this concept, he reveals.

While the property market is soft and there will be challenges in selling the bungalows, Tan says, “It is all about location and our location, which is freehold and elevated, has enough plus points to be attractive. In the vicinity, it is difficult to find another exclusive pocket project such as this.”

“We are not competing with Mines itself, which is really high-end. We are actually at the lower end of high-end and we are confident that we will be able to sell the units.”

 

Future plans

V Development was initially named Vivocom Development as it was set up by construction company Vivocom Enterprice Sdn Bhd. It was later acquired by telecommunications towers specialist Instacom Group Bhd, who changed its name to Vivocom Intl Holdings Bhd.

As Vivocom Development is not part of the acquisition, it changed its name to V Development. Subsequently, it was acquired by Datuk Vincent Chia “Coincidentally, the his name also starts with a ‘V’, so the name has stuck,” says Tan.

Mines Villa was not supposed to be the developer’s maiden project, he reveals. “It was to be another project called Tabur Hill Skyvillas in Jalan Melawati,” he says.

“We had purchased the piece of land for Tabur Hill first before taking over Mines Villa and we had applied to build bungalows. However, the plot ratio was changed — the local council had changed its rules — and, as we are flexible, we changed our plan as well.

“Since Mines Villa was already about 20% to 30% completed, we decided to take that up and go ahead with the construction. This was how Mines Villa became our maiden project,” Tan explains.

Tabur Hill is now a condominium project with a GDV of RM300 million. According to Tan, V Development has already obtained the development order and the project is in the planning stage.

Its launch, however, has been delayed for a year or two as it is a high-end development and the current market is not yet ready for it, he says.

The company’s next development, after Mines Villa, will be Residensi Inspiria, Tan reveals. The 900-unit high-rise will occupy the Pasar Besar parcel in Jalan Gombak, Kuala Lumpur.

The development — a joint-venture project, with V Development holding a 60% stake — is under the government’s Residensi Wilayah affordable housing scheme (previously known as Rumawip). V Development hopes to launch the project next month.

The other 40% stake is held by AlmaVentures Development Sdn Bhd, which had planned the development and needed partners for financing. “So, it did most of the planning and obtained the approvals while we put in the money to increase the paid-up and working capital. Construction will be done by us as well,” says Tan.

Three other projects in the pipeline are a 1,200-unit high-rise under the Malaysian Civil Servants Housing Programme (PPAM) in Manjung, Perak; a 374-unit condominium for the free market called Tanjung Ladang in Kuala Terengganu; and a 43-acre mixed-use development in Marang, Kuala Terengganu.

The PPAM project is currently on hold, pending some government decisions, says Tan.

Tanjung Ladang is a riverfront project located 500m from a drawbridge, which is almost completed. The development is located next to an upcoming mall — Mayang Mall — and the units are priced at about RM400,000 each. Tan says it will probably be launched in April.

Meanwhile, the yet-to-be-named Marang project is a joint venture with the local government. It is located along the Marang River, which is the gateway to Pulau Perhentian. The development will comprise shophouses, terraced houses, a serviced apartment and government quarters.

“The whole development will be divided into three phases, and the first phase has been fully booked with 50% of the construction completed. The GDV for the first phase is about RM20 million,” says Tan.

Moving forward, the company will continue to focus on Selangor, Kuala Lumpur, Perak and Terengganu.

“The other place that we will probably look at is Kuching, Sarawak. If we decide to go to Johor, we will look at the northern part such as Muar and Segamat, which is less crowded,” Tan reveals.

V Development recently signed a memorandum of understanding with Japanese developer Daiwa House. Its maiden project is in Johor.

“We have asked Daiwa House to come to KL and we are looking to see if we can do a joint-venture project together. It has put in certain conditions whereby we can only look at the affordable segment and it has to be in the vicinity of the Klang Valley,” says Tan.

For the next two to three years, V Development will be looking at affordable housing. “We want to contribute back to the society. No doubt the [profit] margin will not be as good but we want to help the new government achieve certain goals like helping first-time homebuyers purchase a house,” he adds.

The company will continue developing high-end properties as well but this will depend on their location, he continues.

For now, Tan says V Development is out to prove to the market that it is a reliable developer that can deliver on its promises. It has yet to brand itself as it is still a young company.

“We will start thinking about branding when we finish at least two or three projects. But one thing is for sure, we will focus on affordable housing for the next two to three years. It could be from our own initiative or with the government. We are not looking at anything more than RM500,000.”

As for plans to develop future townships, Tan says the company plans to successfully launch its existing projects first, before looking into developing townships within the next three years.

“We have high ambitions for the company. We have many talented people who can do wonders and plan out very good projects. Our founder, a corporate man who has done many initial public offerings and reverse takeovers, has a vision of taking this company to greater heights and becoming a listed entity,” he says.