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Sabah had an eventful year in 2011 with rising investments, improved trade relations and an oil discovery off its west coast, about 100km from Kota Kinabalu. The find is poised to make oil and gas the next growth industry for the state.
In line with the economic growth of the state, Kota Kinabalu’s property market is thriving, say reports by Rahim&Co. Local buyers are growing more sophisticated in their preferences, an indication of which is the strong sales of condominiums and gated and guarded residences.
While the economic projections for Malaysia this year are less than bright, Rahim&Co is optimistic about the growth of the Kota Kinabalu property market. And set to enhance it is
S P Setia Bhd’s Aeropod in Tanjung Aru, opposite the Kota Kinabalu International Airport and about 3km from the city centre. The 60-acre leasehold mixed-use development includes the redevelopment and modernisation of the existing Tanjung Aru railway station, which is a part of the 134km Tenom-Tanjung Aru line. Formerly known as the North Borneo Railway, it is the only operational rail transport system in Sabah and was built by the British in the late 1800s.
With a gross development value of RM1.6 billion, Aeropod comprises retail offices, SoVo (small office/versatile office) units, F&B pods, a lifestyle mall, boutique hotel, three and five-star hotels and serviced apartments.
The seeds of S P Setia’s maiden project in Sabah and Sarawak were sown in 2007 when the state government asked the developer to submit a proposal on how to modernise and redevelop the train station, says Wong Tuck Wai, the developer’s divisional general manager for property commercial development.
“The premise is simple. We will bear all the costs of modernising and redeveloping the train station, which covers about 18 acres, and we take the remaining 42 acres for our own development. In essence, it is almost like a privatisation project.”
A development agreement was signed in early 2008 and Aeropod was one of the first projects to come under the Sabah Development Corridor (SDC), which was created to transform Sabah into a gateway for investment, trade and tourism and create job opportunities, among others. Launched in early 2008, SDC entered its second phase last year and has, to date, accumulated investments of RM57 billion, almost four times the target value set in 2010.
Adopting S P Setia’s development philosophy of LiveLearnWorkPlay, Wong believes the comprehensive mix of commercial and residential developments will enhance the people’s lifestyle in Kota Kinabalu.
“Our theme is ‘Your passport to international life’. It alludes to the positioning of Aeropod as the gateway to Kota Kinabalu and an international lifestyle and workplace. It is also a gateway to Sabah as Kota Kinabalu itself is the gateway to Sabah. The state is big on tourism and anyone flying into Kota Kinabalu will have to pass Aeropod,” he explains.
Pushing the envelope
The concept and design of Aeropod is new to Kota Kinabalu, states Wong. He says he observed the fondness of the locals for retail space regardless of their viability in terms of design and demand.
“I noticed that these retail spaces usually have two levels — one on the ground floor with frontage and the second activated by corridors. That is poor typology for retail space as the shops on the upper floor normally do not do well.”
S P Setia is leveraging this local preference but is giving the design of the retail space an innovative touch. “We want to push the envelope by bringing in four levels of retail space for our offices. We are not doing this so we can swipe every sen on the table, but to give value that can be seen over the four levels,” explains Wong.
The 8-storey retail offices, which will be sold en bloc, offer four levels of offices on top of four levels of retail units. The ground floor will have frontage of either the main road — Jalan Kepayan — or the redeveloped train station. There will be a streetscape on the second level facing the car park and a centre court on the third floor.
“The third level will be prime due to the centre court where you will have the dining pods, landscaping and activity area,” Wong points out.
A mini-mall with a net floor area of 138,655 sq ft will run through the centre of the development, enabling people to come in through the main road and walk across to the train station in the back.
“We promised the state tourism body that the mall will showcase the best of Sabah’s products, but these will be juxtaposed with other popular brands so that it does not turn into another Central Market. It will not be a high-end mall, yet it will be a new concept in Kota Kinabalu,” remarks Wong.
Care has been taken to ensure seamless connectivity between the different components through a network of covered corridors, link bridges, pedestrian walkways and landscaped decks.
Aeropod will also serve as the new transport hub of Kota Kinabalu, like KL Sentral is to Kuala Lumpur.
“It has the same concept as KL Sentral because this train station will serve the whole of Sabah, and there will also be a light rail transit station here. We are going to build the new train station, then demolish the old one, which currently sits in the front of the development. With all this in place, the future is bright for Aeropod, which will become a transport hub with S P Setia’s brand of LiveLearnWorkPlay,” Wong enthuses.
The developer held a preview of the 26 blocks of retail offices in early January and has since sold 80% of them. Their average size is 12,000 sq ft and prices start at RM8.8 million.
The five storeys of SoVos (170 units) and the 4-storey retail lots (23 units), which sit below the SoVos, are expected to be launched by mid-year. The sizes of the SoVos are from 315 to 1,220 sq ft while those of the retail lots range from 985 to 1,830 sq ft.
Construction is expected to commence in 2Q2012 and completion is expected in 8 to 10 years.
Aeropod was launched on Feb 25.
Full confidence
Wong strongly believes Aeropod will succeed, even without robust growth in Sabah, for a few reasons. First, Sabah, being an oil palm state, has seen a windfall in the past few years.
“A lot of people in the oil palm industry have made a lot of money and I find that Sabahans are very protective of their homeland. They would want to plough back money into Sabah if given the opportunity, and Aeropod offers them investment-grade properties that are normally offered in the Klang Valley,” says Wong, adding that capital appreciation in Kota Kinabalu is the highest in Malaysia currently.
The discovery of oil in Sabah’s waters also bodes well for Aeropod. As the oil and gas industry blooms, companies related to the industry will be looking for office space.
“These companies do not operate out of the backyard; they need a corporate presence and Aeropod can offer them that. Our offices and apartments will fit in nicely with the growth of Sabah. I think it comes down to this — there are people with money but no investment-grade properties to invest in except in the Klang Valley. Aeropod offers them the opportunity to do just that and it’s on home turf,” says Wong.
The developer is also targeting foreign buyers, particularly for its serviced apartments. Wong notes that Kota Kinabalu’s close proximity to Hong Kong, South Korea and Japan compared with Kuala Lumpur gives the state an added advantage.
“Again, Sabah is big on tourism and there are already participants in the Malaysia My Second Home programme buying properties in Sabah as a holiday or second home, especially the Japanese. One main target are the Chinese from China. Kota Kinabalu is short haul for them and they are looking to invest overseas. The number of Chinese tourists coming to Kota Kinabalu has grown exponentially. There will come a time when the Chinese will outstrip the Koreans and Japanese in tourist numbers,” says Wong.
The Sabah tourism board reported total tourist arrivals of nearly 2.1 million from January to September 2011. The target set by the Ministry of Tourism, Culture and Environment for 2011 was 2.63 million tourist arrivals and tourism receipts of RM4.704 billion.
The state tourism sector is expected to exceed its current 10% share of the state GDP within the next five years. Aeropod will be an important component driving the growth of Sabah, he adds.
“The state government is very particular about Aeropod; they still hold regular steering committee meetings on this project. And in terms of investment, Peninsular Malaysia developers like us are contributing and feeding the state economy.”
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 899, Feb 27-Mar 4, 2012
