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The landscape in Johor Baru was very different when S P Setia Bhd first ventured there in 1997.
There was no Iskandar Malaysia then, no major highways being built in the city, and the concept of townships was rudimentary. Small local players dominated the property development sector.
Johor Baru was hardly a small town even in 1997, says Datuk Chang Khim Wah, the executive vice-president of S P Setia’s Southern and Northern Property Divisions.
The town then already had a certain degree of sophistication and that was something that the developer considered when it ventured into Johor and introduced a new concept of development, he says.
Dressed in the company’s casual blue and red uniform, his mood was as sunny as the weather outside the cozy lounge in Setia Tropika’s show village when he sat down with City & Country to talk about the growth of its business in Johor over the years.
S P Setia’s first project in the state was a 1,515-acre township called Bukit Indah located in Iskandar Malaysia, with a gross development value (GDV) of RM4.7 billion. The first phase comprised 1,000 units of 2-storey terraced houses priced from RM180,000. From the start, the developer took a different approach by building a 20-acre town park and a show village, offering potential house buyers the chance to experience living in the development before they pay their deposit.
“This was the brainchild of our group president and CEO Tan Sri Liew Kee Sin, and we have since been acknowledged as the pioneer in building large-scale show villages and town parks,” says Chang.
The developer also did not follow the traditional way of building shops facing the main roads and next to residential homes. Instead, it opted to create a centralised commercial area facing the town park and separated from the residential component.
“This benefited the residents in that they did not have to put up with commercial traffic disturbing their peace. It also improved security in the residential area. Having a centralised commercial district enabled a multitude of businesses to thrive alongside each other, resulting in Aeon Jusco, Tesco, McDonald’s and other retail and commercial businesses setting up shop there,” says Chang.
Despite worries that the new kid in town would get a poor reception, the project created a buzz and properties started selling. Chang acknowledges that being a public-listed company and having a strong track record helped it break into the new market.
Expanding presence
Following the success of Bukit Indah, S P Setia saw the potential to the east of Johor Baru, in what is now known as the Tebrau Corridor, because of its large population catchment. In January 2001, it launched the 888-acre Setia Indah, which has a GDV of RM1.8 billion.
It was during a period when property market conditions were quiet that the developer introduced precinct style living at Setia Indah, with only one entry and one exit point into and out of the township. Setia Indah also has a Balinese-concept town park, which has become a hallmark of S P Setia’s township developments.
“At that time, there was a good catchment of business people and professionals living in Tebrau but there was not many new developments. We saw the potential and went in. Our success with Setia Indah opened up the Mount Austin/Tebrau corridor, which is now a thriving hotspot in Johor Baru,” says Chang.
Bukit Indah and Setia Indah not only built up a strong reputation for the developer but also a strong customer base in Johor.
“When we launched Setia Tropika in 2005, a lot of our residents in the previous two townships upgraded and moved to the new township. From Bukit Indah and Setia Indah, we have gathered a good combination of upgraders, referrals and potential buyers,” says Chang.
By the time the 740-acre Setia Tropika in Kempas was launched, S P Setia’s township concepts and designs were being emulated by other developers. To keep ahead and create something fresh, the developer introduced tropical modern homes in gated and guarded precincts, setting a new trend in Johor Baru.
Setia Tropika, which has a GDV of RM3.2 billion, set a premium pricing for its 2-storey terraced homes. These were launched from RM220,000 onwards, which was considered very high in Johor Baru at that time.
Walking around Setia Tropika, it’s easy to see why residents were willing to pay a premium to live here. With wide open spaces, beautifully landscaped grounds, tree-lined streets and carefully designated precincts, it feels like a world away from the congested city.
To further support its premium pricing strategy, S P Setia invested upfront in infrastructure improvements and built a dedicated interchange to the North-South Expressway.
This is not the first infrastructure development S P Setia had invested in. When Bukit Indah was first launched, the Second Link to Singapore was being constructed and the developer took the opportunity to build the dedicated Bukit Indah Interchange linking it to the Second Link.
“One of our strengths is that we build the infrastructure to all our developments. This enhances the value of the development and improves accessibility,” says Chang. Properties have also shown good capital appreciation. For example, 2-storey homes launched at RM200,000 in Phase 1 of Bukit Indah are now selling at RM380,000, while the 2-storey shops launched at RM360, 000 are now going for RM700,000. Newer homes such as the 2-storey cluster homes in Bukit Indah launched about two years ago at RM350,000 are fetching RM700,000 on the secondary market, while 2-storey shops launched at RM800,000 are seeing subsale prices of RM1.5 million.
Setia Eco Gardens
The developer set another milestone in 2008 with the unveiling of the 949-acre, RM3.5 billion Setia Eco Gardens in Iskandar Malaysia, featuring the eco concept inspired by the award-winning Setia Eco Park in Shah Alam, Selangor.
“We wanted to take the eco-DNA we had created with its focus on sustainable development and adapt it to the mass market with our 2-storey eco homes priced from RM330,000,” explains Chang.
Since its launch, the development has won several awards, including Best Masterplan Development at the Fiabci Malaysia Property Awards in 2008 and the international Fiabci Prix d’Excellence in 2009.
The 28-acre Eco Greens comprising a town park and the famed Eco Gallery in Setia Eco Garden was awarded the Fiabci Prix d’Excellence Awards 2012 for Best Purpose-built/Specialised Project on May 15 in St Petersburg, Russia. The Eco Gallery, a sales and community learning centre with a unique vertical green wall, has a Singapore Building and Construction Authority Green Mark Gold Award.
Continuing its Eco series, S P Setia launched the 259-acre Setia Eco Cascadia in December last year, next to the now mature Setia Indah township. To Chang’s delight, many of the buyers came from families who had bought their first homes in Setia Indah more than a decade ago.
“The good thing about the Iskandar Johor market is that there is a good balance of homeowners and investors in a sense that the majority of our houses are lived in. In all our townships, we try to ensure that the number of residents is strong, as it also helps to sustain the commercial component,” he says.
“When it comes to buyers, Malaysians working in Singapore is still a very big group with strong income. But Iskandar has also brought in a lot of businesses and investments, which increases the migration and employment rates. For example, new medical centres and universities will bring in staff members and students. That means more people will be looking for homes, and supporting commercial activities. We can see that the quality of homebuyers are climbing. Everything adds up,” says Chang.
A new business
The government’s promotion of Iskandar Malaysia has opened a new business segment for S P Setia.
“The promotion has generated much interest among Singapore-based industrialists and businessmen. So we seized this opportunity to launch Setia Business Park, a green business park next to Setia Eco Gardens,” says Chang.
Launched in April 2010, 70% of its 300 units of detached and semi-detached factories have since been sold. Calling it a “very Setia development”, Chang says it revolutionised the concept of industrial parks in Johor Baru.
“What makes us different is the new eco-friendly way of approaching industrial parks as a green business venture. The development is organised in precincts and is gated and guarded, much like our township developments. It also has good IT infrastructure.”
The business park is seeing business from multinational companies from Germany, Japan, the US and most of all, Singapore.
“A lot of Singaporean companies are being forced out of their own country due to the high cost, so they come here. We have a good mix and we see the potential so we will be growing this segment of the business,” says Chang.
Plans are underway to launch Setia Business Park 2 this year in the Tebrau Corridor. Chang says roads are being built to connect to the North-South Expressway to improve accessibility and reduce congestion at the Kempas Interchange.
Growth in serviced apartments
Chang notes that there has been a shift in lifestyles which has led to a change in how locals view homes. He recalls how talk of launching serviced apartments five years ago was met with scepticism. Much has changed since then.
“People today no longer think only of landed properties as their homes. We also find that investors would go for serviced apartments more. In the last two to three years, we have successfully launched about 1,600 units of serviced apartments in Johor, including Sky Loft Premium Suites in Bukit Indah and Sky Garden Residences in Setia Tropika,” says Chang.
Soon to be launched sometime this year will be Setia Sky 88, located in the heart of the city centre with a view of the JB-Singapore Causeway. Describing it as an iconic structure, Chang says the project, comprising three towers, is set to be the highest residential development in the city at 56 storeys. It has an estimated GDV of RM450 million.
As for what the future holds, Chang says the target is to grow as much as possible.
“We will continue to look for any opportunities where there is good catchment,” says Chang.
For FY2011 ended Oct 31, S P Setia’s projects in Johor Baru contributed sales of RM954 million to overall sales of RM3.29 billion. For the first five months of FY2012, the Johor developments have already sold properties worth RM408 million.
“Our remaining landbank in Johor stands at 1,178 acres with an estimated remaining GDV of RM9.75 billion, which will enable us to continue to strongly grow sales for many years to come,” says Chang.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 911, May 21-27, 2012
