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Two serviced apartment
projects in KL resuscitated
29/06/2004
theedgedaily.com
Two abandoned serviced apartment projects in Kuala Lumpur (KL) that were
initiated in the mid-1990s are being revived, offering a ray of hope to
their investors, while expanding the supply of such buildings in the city
centre.
One of them, formerly undertaken by Instangreen Corp Bhd, sits on a 1.5-acre
freehold site on Jalan Tun Razak. Known as Tristar previously, the project,
which is only about 30% built, is now is in the hands of LBS Bina Group Bhd
(which has taken over the listing status of Instangreen) and has been
renamed Golden Avenue.
The second project, formerly known as CN Gallery, is on Jalan Imbi. It was
developed by Metro Jelita Sdn Bhd, which had gone into receivership
following the 1997/98 financial crisis. Urban Shift Sdn Bhd is reviving the
project, which has been renamed Nas Pavilion.
Both developers tell City & Country they are confident of strong demand for
the respective serviced residences, citing the city address as the main
lure. They also see young professionals and corporate figures being drawn by
the convenient location as well as potential good returns on investment.
Golden Avenue
While Tristar was to comprise serviced apartments in one block and offices
in the other, Golden Avenue will instead feature 739 freehold serviced
apartment units in two high-rise tower blocks.
The units are available in varying sizes and designs. There are 212
studio-type units with sizes starting from 305 sq ft, 506 1-bedroom-type
units from 391 sq ft, 12 2-bedroom-type units from 766 sq ft and nine
3-bedroom-type units that measure 1,332 sq ft. The units are pegged from
RM153,000 to RM727,000 each or an average of RM500 psf.
At the end of May, the developer opened up 367 serviced apartments in the
23-storey Tower B for a sales preview. To date, about 10% of the units have
been booked.
"A few of the buyers are previous Tristar unit owners. The rest are new
purchasers comprising working singles and companies that are investing in
the place to house clients and business partners visiting KL," offers LBS
Bina Group Bhd managing director Datuk Lim Hock San.
Close to 70% of the 300-odd planned serviced apartment units had been sold
by the previous developer before the project stalled in 1996. When the units
were launched in the mid-1990s, the apartments were pegged from RM500 psf.
To attract buyers, the LBS Bina Group is offering a guaranteed rental return
based on 5% on the selling price for the first two years. For those wishing
to lease out their units for a longer term, they can apply to extend the
leaseback option.
While details are pending on a tie-up between LBS Bina and a hotel operator
to run part of the serviced apartments as a hotel, the developer has worked
out a minimum of 6% rental return annually for the third and fourth years
and a minimum 7% for the subsequent two years. The project is expected to be
ready in 21/2 years.
Through its subsidiary Maju Kepunyaan Sdn Bhd that is developing the
project, LBS Bina is working to woo those who had bought Tristar units.
These buyers, however, have to first abort the previous sale and purchase
agreement before they can buy a "fresh" unit from Maju Kepunyaan.
For Tristar buyers who want out, they will be compensated based on a plan
drawn by Pengurusan Danaharta Nasional Bhd. They will get LBS Bina shares,
irredeemable convertible unsecured loan stocks and cash.
As half of the Tristar buyers were from East Malaysia, the developer went on
a two-day roadshow early this month to Kuching and Kota Kinabalu to promote
Golden Avenue. Lim says a number of previous buyers registered their
interest to take up units in the revived project.
"We have not really started marketing these units yet. We are sort of just
reintroducing the development to the market. We are still working out some
strategies and are looking at selling to corporate clients as well. All this
will be finalised in a month or so, and will be followed by an official
launch in about two months," he explains.
Besides the serviced apartment units, there are also 16 retail units and
space for a restaurant and a food court. Occupying over five floors of
podium, this space is for lease only.
Lim is confident that Golden Avenue will do well. He sees the project's
appeal in its city location, guaranteed rental return offer and the fact
that the units come fully furnished.
Located along the main Jalan Tun Razak thoroughfare and close to Putra World
Trade Centre, the project is near the monorail and Putra light rail transit
stations in Titiwangsa.
"We are talking to hotel operators to run the place as serviced apartments.
Levels 16 to 18 have been reserved for owner-occupiers to ensure privacy for
them," says Lim.
Nas Pavilion
Originally planned to comprise two office towers and a block of hotel atop a
retail podium, the site of the former CN Gallery at the junction of Jalan
Imbi and Jalan Sultan Ismail will now feature three serviced-residence
blocks. The retail element, however, has been retained.
The change in plans for the 1.35-acre freehold tract by first-time developer
Urban Shift Sdn Bhd, has been prompted by the glut in office space.
In January, the developer put on the market some 428 serviced residences in
its 29-storey North Tower and 31-storey South Tower. At press time, 85% have
been sold. The units not taken up are sized from 615 to 1,371 sq ft, pegged
from RM221,700 to RM550,060, based on an average of RM350 psf.
Last month, the developer opened up the final and 21-storey block comprising
68 units of duplex serviced residences. At press time, 30% of these have
been sold. Units priced between RM501,744 (1,288 sq ft) and RM786,760 (1,828
sq ft), or about RM400 psf, are still available.
Of the buyers, 15% are from Singapore, Indonesia and Australia, says Vincent
Ng, chief executive officer of sole marketing agent Kim Realty. Most of the
foreign buyers are investors, with the rest intending to stay there or want
a place for their children studying here.
Unlike Golden Avenue, Nas Pavilion does not offer guaranteed rental return.
Ng reasons: "We feel we don't have to. As it is, we are pricing the units
below what we think the market here can take."
Ng expects leased units to fetch 10% to 12% in returns annually: he
calculates that a fully furnished RM198,800 unit with 608 sq ft in built-up
will be able to command a minimum rent of RM2,500 while the 3-bedroom unit,
costing RM555,060, will be able to secure between RM4,000 and RM5,000 in
rent.
According to Ng, 500-sq-ft serviced units in a nearby development is
commanding monthly rents ranging between RM2,500 and RM3,000. The bigger
3-bedroom units of projects in the fringes of the city are said to be
commanding about RM5,000 in rents.
The developer opened up 317 retail units for sale last month and to date,
half of the units have been taken up by a mix of investor-type purchasers
and business owners for personal use. Ranging from 129 to 868 sq ft, half of
these units, pegged from RM137,000 to RM2.4 million, have been sold.
The revived project is expected to be completed by early 2006, Ng says.
Sitting in the commercial hub of KL, Nas Pavilion's neighbours include
Berjaya Times Square, Sungei Wang Plaza, Lot 10 Shopping Centre and Grand
Plaza Parkroyal Hotel.
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