Malaysian property developer Mah Sing Group Berhad maiden foray into commercial property development started in 2007 with the aptly named The Icon at Jalan Tun Razak, Kuala Lumpur. The following years each saw the launches of Southgate Commercial Centre and now the group’s latest project StarParc Point. Mah Sing Properties Sdn Bhd deputy chief officer Andy Chua talks to iProperty.com on the company’s plans.

“The vision is to develop Mah Sing Group into a regional developer and in order to be a successful one, there is a need for the group to be involved in commercial projects. The group has gone into the first commercial project in 2007 and since then this segment have been contributing about 50 percent of the group’s turnover,” says Andy Chua, deputy chief officer of Mah Sing Properties Sdn Bhd, the property development arm of Mah Sing Group Berhad.

In 2007, Mah Sing Group launched The Icon, the developer’s first commercial project. Located at the prime area of Jalan Tun Razak, Kuala Lumpur, it is a 20 storey Grade A office development which construction has just been completed at the end of September 2009. The Certificate of Fitness for The Icon has already been issued.

The Icon’s West Wing has been bought up by Koperasi Permodalan Felda (KPF) while the East Wing is sold to Prompt Symphony Sdn Bhd. Prompt Symphony is a special purpose vehicle set up by Altron Corp Ltd and Kuwait Finance House. This puts half of The Icon in foreign ownership.

Second commercial development

Moving on to early 2008, Mah Sing launched the Southgate Commercial Centre which is scheduled to be completed end of 2010. Located at the busy Sungai Besi arterial road and incidentally just opposite the group’s headquarters, the commercial development is close to 90 percent sold for the three blocks which are offered to individual strata holders. Meanwhile, the corporate block which has about 232,000 sq ft of floor space was sold en bloc to KPF.

“Another block at Southgate Commercial Centre called Apex Tower which is slated for en bloc sale has received strong interest and is expected to be sold soon,” adds Chua.

Southgate Commercial Centre spans five modern contemporary designed blocks that is a mix of office suites, corporate towers and lifestyle retail outlets. The entire project has a total net lettable area of 600,000 sq ft. The five blocks at Southgate Commercial Centre are connected by an atrium boulevard that forms an ideal space for specialty retail, boutiques and kiosks.

“The concept of Southgate Commercial Centre’s atrium boulevard is designed towards more alfresco dining. Ground floor retailers are mainly for food and beverage outlets and we are working towards bringing in popular outlets from all over the world like Hong Kong, Shanghai, Taiwan, Singapore and such. We envision that it becomes a dining destination where people will come for the food.”

On the subject of foreign investors in the project, Chua says that more than 20 percent are taken up by them for the stratified units. He added that from the roadshows in London, Hong Kong and Singapore, foreign interests are strong as it is very rare that they are given the opportunity to own office suites in Kuala Lumpur. 

Latest commercial foray

Chua says, “Mah Sing’s third commercial project is StarParc Point which is located at the intersection of Jalan Genting Klang and Jalan Ibu Kota. This particular stretch of Jalan Genting Klang is particularly busy. In addition, the development is on freehold land which makes it a very good investment opportunity. Its surrounding area is mostly leasehold land.

“Buyers get value and visibility from StarParc Point from its freehold status in a generally leasehold area and high traffic volume.”

According to Chua, during the time of the interview (3rd week November) more than 70 percent of the value of StarParc Point has been realised. The total gross development value of the project is RM128 million and the project is scheduled to be launched during the first week of December 2009.

StarParc Point is a mixed commercial project comprises of three-storey shopoffices and six-storey retail offices. On the inside of the development is a Lifestyle Square that is covered with a translucent roof which design lets in natural lighting and cool breeze.

According to Chua, unlike Southgate Commercial Centre, StarParc Point caters to small and medium entrepreneurs (SMEs).

“Setapak is traditionally an area for TAR College where there are a lot graduates who have a tendency to stay in the area even after completing their studies. There is a large pool of young entrepreneurs who will see StarParc Point as a good venue to operate their businesses in a specially-designed modern, conducive, trendy environment,” says Chua.

Chua points out that wired broadband infrastructure are provided for at StarParc Point where CAT5 networking points are installed into the offices there.

Future project

In early November 2009, Mah Sing Group announced that they have acquired a 19.6-acre piece of land in SS9 Petaling Jaya. The developer paid RM89 million for the former factory land of Panasonic Electronic Devices (M) Sdn Bhd.

There are plans by the property developer to develop the land into a commercial hub comprising of shopoffices, semi-detached offices, Small Office Home Offices (SOHOs), retail units and a hotel. According to the announcement on Bursa Malaysia, the gross development value of the project is RM838 million and it will be developed over five years.

Chua reveals that Mah Sing will be having their first retail mall as a part of the SS9 development. “It will not be like a traditional mall, but something more unique and very contemporary. It will be a very ‘now’ type of mall and we are confident that once the design concept is unveiled, everyone will be taken aback,” adds Chua.

He elaborates, “Mah Sing is a premier lifestyle developer and we always look into innovation of lifestyle projects. We go all over the world to study the new projects by premier developers and bring back ideas. For this (SS9) project, we are taking cue from Asia and Europe. More details will be revealed in 1H 2009.”

Green vision

 In the Budget 2010 announcement, the government has backed the Green Building Index (GBI) by Persatuan Akitek Malaysia and the Association of Certified Engineers Malaysia. Tax exemption on the additional cost to ‘green’ a property will be given to building owners or developers who obtain GBI certification between 24 October 2009 and 31 December 2014. Apart from that, first time buyers of buildings with GBI certification from developers will get to enjoy stamp duty exemption.

Chua shares his thoughts on this move, “With the GBI, we will be able to design and build green projects to promote sustainability in the built environment. With the tax breaks as indicated in Budget 2010, we will be benefitted of not only saving long-term operational expenses but also the upfront building cost. The buyers of our green project are also eligible for stamp duty exemption. This can be one of our marketing incentives.”

In addition Chua opines that all developers should implement as much green features into their buildings as much as possible regardless if they try and obtain green certifications or not.

“The SS9 development will be a world-class integrated commercial and the GBI is a main consideration. But it is not determined whether we will go for the GBI, Green Mark or even Leadership in Energy and Environmental Design (LEED). It will be a green project and we will minimise as much as possible the carbon footprint and look into energy efficiency,

“Investors generally look for value-for-money properties, but for foreign tenants might have a directive from their corporate headquarters to only rent offices that are green to fit into their green philosophy. Therefore it makes sense for owners and developers to incorporate green features in their properties to reach a wider net of tenants,” adds Chua.

Into the future

“Mah Sing Group is actively pursuing projects in Vietnam, China, Indonesia and more. It is as long as the opportunity presents itself and the conditions are right. Although we are a fast growing developer, we are also prudent as we do not simply take on high risk projects unless we are very sure that we can manage the risk and give returns to our shareholders,” says Chua.

Currently, the developer does not have any landbank or immediate development projects overseas. On the local front, however, Mah Sing has recently acquired 26 acres land in Selayang, 12.9 acres land in Shah Alam and the aforementioned Petaling Jaya land.

Chua adds, “Again, we are very prudent when it comes to buying land so any land that we buy means that it is very attractive as we would have done a thorough evaluation.”

“Moving on to the next year, we expect the market to pick up and even now we can see that the market is stabilising. Projects like StarParc Point and Southgate Commercial Centre have good take ups, while our residential projects in Penang and the Klang Valley have also seen similar good results.

“Purchasers will continue to have access to good projects. After this cycle of financial crisis, developers will realise that they need to improve their product offerings to the market to capture the market. Mah Sing will continue to innovate and add value to our projects. We will continue to enhance value of our commercial projects and also ensure sustainable yield.

“For example, we already have a retail consultant on board to have a good mix of tenants at the soon-to-be completed Southgate Commercial Centre. This keeps the value of the property high. The same goes for StarParc Point when we introduced bubble lifts and the covered Lifestyle Square so that rain or shine, night or day, activities within the inside of the development will still thrive.

“To sum our outlook for 2010, purchasers should buy property now as prices will go up, so will the economy, material costs, and even loan lending rate. Signs are pointing towards an upward trend,” sums Chua.