IJM’s Rimbayu project well received

WHEN IJM Land Bhd launched phase one of Rimbayu, it generated a lot of interest surprisingly because Rimbayu is located after Kota Kemuning, off the Kesas Highway from Subang Jaya.

About 18,000 registered, 2,000 came for the balloting, four times the total units available for sale. Its second phase, to be launched in July/August, will also be sold via the balloting process. There are two things to note from this.

The first is the strong interest for a township project, far though it may seem. Rimbayu is located about 20km from Summit in USJ, Petaling Jaya. Kota Kemuning is about 15km from Summit.

The second thing to note is the huge appetite for landed housing, which seems to be located further out from established areas.

Phase one was sold at RM270-RM280 per sq ft with an absolute price of about RM580,000.

The previous landed housing offering was Glomac Bhd's Lakeside in Puchong which also generated a lot of interest. Phase 2 Rimbayu, like phase one, will be a non-strata guarded development. Gated and guarded landed strata may be in phase 3, IJM Land Bhd group managing director and chief executive officer Datuk Soam Heng Choonsays.

He is also of the view that property prices will be taking a breather this year.

“Then only will it (property cycle) run a bit longer. If prices go up 0.5%, it will be more sustainable,” he says.

Nonetheless, he has noticed that cycles are getting shorter nowadays, unlike before.

“Cost of funds will remain low and the Government will not increase interest rates. So mortgage rates will remain attractive. Malaysia has a young population, so the buying should continue,” he says.

Rimbayu is a township development, offering bread-and-butter housing, which is one of IJM Land's property development forte. The other type of residential it does well is niche housing, says Soam. An example of this would be its resort-like residential project The Light in Penang.

Rimbayu and The Light will be two of four core projects the company will be focusing on in the immediate term.

Purchasers of Rimbayu are from Subang Jaya, Kota Kemuning, Puchong and Klang with 70% of the buyers expected to be owner occupiers, Soam says.

The distance aside, its main selling point would be its green concept. Comprising about 1,900 acres, the township will take 10 to 15 years to complete, depending on the economic situation, says Soam.

There is another tract of land of about 200 acres next to it. Higher end housing has been proposed there, but IJM Land's chief focus will be on the larger tract for now.

To provide better access, Soam says the company will be spending millions to improve connectivity via internal roads. The group has also proposed to build a new West Coast Expresseway linking Banting to the northern state of Perak.

The other developer in that area is Dijaya Corp Bhd, who acquired 1,172 acres. This means that in time to come, landed units will be located further out, away from the main established areas.

Rimbayu will have about 10,000 households when completed. As a comparison, Desa ParkCity has 473 acres and when completed, it will have 7,000 households, although Desa ParkCity is not a township. Rimbayu is about four times the size of Desa ParkCity. About 10% of Rimbayu will be commercial space. Conventional shophouses, a shopping complex, a community mall, serviced apartments and condominiumes will be added later on.

“We will get better value if we bring in the masses and then put in the commercial elements,” he says.

This is the strategy the masses first, followed by commercials the company is having for its Penang project The Light.

Commercial projects for The Light is in the final stages of design today. Land reclamation has just completed and physical construction is expected to start in 2014.

Light Collection

The company launched its residential developments a couple of years ago. Its Light Collection III residentials, launched in late 2012, is about 70%, of which 90% were sold to Penangites.

“The Penang market is vibrant. Property prices will hold,” he says.

Collection III comprises 20 duplex townhouses facing the sea and 170 units of condominium suites. Sea-fronting units with private jetty is priced between RM1,000 and RM1,200 per sq ft compared with non-sea front units at about RM800 per sq ft.

Collection IV will be launched next year comprising 19 units of sea-front villas.

There are currently two main mixed development projects in Penang The Light and E&O's Seri Tanjung Pinang.

Soam says there is no competition between them as both projects are on different locations with The Light next to the Penang Bridge.

On Penang prices today, he says there is no bubble.

“The situation on the island is very much like that of Hong Kong and Singapore,” he says. Hence, prices should hold, he says. Hong Kong and Singapore property prices have increased cosiderably the last several years and are among the highest in the region.

While interest is expected to continue to be vibrant in Penang and the Klang Valley, there may be some doubts about Johor. There is certainly a lot of interest there but yield is missing.

Nonetheless, IJM's foray into Johor started in the 2003 and chances are, it would have accumulated land there years ago before the current price hike.

The company also has several developments in southern Johor. Its three largest land bank would be the 1,188-acre Sebana Cove, 200-acre Nasa City, next to Taman Kempas Indah and 250 acres in Mount Austin. It bought Sebana Cove development, north of the proposed refinery and petrochemical plant in Pengerang, in 2008 from the Arab Malaysia group.

Sebana Cove is where landed housing and resort living converge while mass market housing will be suitable for the Johor Baru market, Soam says.

“Sebana Cove will be a resort development with landed housing, a golf course and a marina. We expect a community of expatriates to be there (as a result of the developments in Pengerang).”

Besides the expected growth in Pengerang, the other factor is Singapore, says Soam. The company will launch Nasa City projects, next to Kempas towards the later part of this year and Sebana Cove next year.

While the property developer has a number of ongoing developments in different states, its Pantai Sentral Park project is expected to generate much interest in the Klang Valley.

The 58-acre project is next to YTL Land's Pantai Hill Park and is close to 200 acres of green lung in Bukit Gasing. This will be a mixture of low and high-rise commercial and residential development with a GDV of RM3bil. MRT Line 2

That value will be boosted if the proposed Mass Rapid Transit Line 2, which passes through Pantai Dalam, materialises. On the company's longer term focus, Soam says IJM Land will like to diversity abroad.

“The foreign exchange rate is in our favour so it is a good opportunity for us. London is a transparent market and we can see the margins,” he says, referring to their £300mil London investment near Tower Bridge.

They are planning to launch it at the end of this year.

“We are looking for further developments there. We don't want to go in a rush, we want to cherry pick,” said Soam.

Soam say they will have 300 units with a mixture of one, two and three-room units. The company also has investments in China and Vietnam.

“For the longer term, we would like to diversify abroad, but for the immediate term, we will focus on our local projects here as 95% of our contributions are derived from within Malaysia,” says Soam. - The Star