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It is common to read about foreign developers investing in popular locations such as the Klang Valley, Johor and Penang, given the more vibrant business environment and investment opportunities there.
However, Singaporean developer Hatten Group Sdn Bhd is proving that taking the route less travelled can be rewarding. In 2004, it took over an abandoned project in the heart of Melaka and turned it into the biggest mall in the state. The development, known as Dataran Pahlawan, was redesigned and completed in 2007. The mall is now a major attraction in the historical city, drawing millions of visitors each year.
Hatten Group is continuing to strengthen its presence in Melaka, and has embarked on its next major development — Hatten Square, a mixed development opposite Dataran Pahlawan, consisting of retail podiums, suites and a hotel. Next on its plate and currently in its planning stage is a high-end condominium, just 2km from Hatten Square.
The Dataran Pahlawan project was undertaken with a locally-incorporated company, Lianbang Ventures Sdn Bhd. Following the completion of the project and for branding purposes, the Singapore developer decided to consolidate its Malaysian businesses under a single umbrella and incorporated Hatten Group Sdn Bhd in 2008 for this purpose. Hatten means growth and development in Japanese.
Apart from Lianbang Ventures, some of the companies under the group are Emerald Accord Sdn Bhd, Fuyuu Development Sdn Bhd and Hatten Asset Management Sdn Bhd.
Young head
The group is helmed by 26-year-old Colin Tan, who is the founder and managing director. Though his name may not ring a bell to most Malaysians, Singaporeans would be familiar with his father, Datuk Dr Eric Tan, who is popularly known in the island republic as the “Property King of Geylang”.
The elder Tan, who is adviser to the Hatten Group, got this moniker for his property projects in Geylang and his 30-year involvement in property development in the island state. However, the younger Tan indicated that his father wanted to keep a low profile, and declined to give further details about Eric Tan and his business ventures in Singapore and Malaysia.
The Hatten Group has three core businesses comprising development, investment and management. Even though Tan is young and has a background in finance, he claims to have more than 10 years’ experience in the property industry. School holidays, he says, were spent doing site inspections and understanding plans for his father’s earlier developments. Among some of the residential projects Colin Tan was involved in were Wing Fong Mansions & Courts in Geylang, Ebony Mansion in District 15 and Garlick Avenue in Disctrict 10 in Singapore.
Says Tan: “We already had plans to come to Malaysia to look for land for development. So, we looked at a few sites in Kuala Lumpur, Melaka and Ipoh and found an abandoned project in Melaka. It was then 15% completed and located on a prominent site, opposite Mahkota Parade in the city and in front of the A’Famosa. Besides, Melaka is a comfortable driving distance from Singapore.”
Planned as a bazaar by the previous developer, Hatten Group transformed Dataran Pahlawan into a mega mall. Tan says the company took over in 2004 and managed to come up with a new concept for the building, which, with a net lettable area of 150,000 sq ft, is more than five times larger than the earlier one.
“The project was located within the Melaka Unesco World Heritage site, so there are regulations that the building cannot be of a certain height or block A’Famosa. So, we built a basement and ground level shopping mall,” says Tan. He adds that at the beginning, the plan was to develop and sell Dataran Pahlawan, but the group later decided to retain some space for its own use.
The previous developer, he says, had difficulty selling the units; it managed to sell only 5%, or 150 units, for about RM600 psf. After Hatten Group took over, it has sold some 16% of the net lettable space for between RM1,500 and RM2,000 psf, and will keep the remainder for recurring income.
Tan says the occupancy rate for Dataran Pahlawan currently stands at 90%, while total footfalls to the mega mall in 2008 was 11.5 million. “With a mall size of gross 1.5 million sq ft, we are considered relatively low on footfalls. We want to achieve a target of 15 million footfalls by 2010,” he adds.
New initiative
Hatten Square is the group’s second project in the historical state. The 22-storey development will be the tallest building in Melaka, with over 200 retail units, 490 serviced suites and 260 standard hotel rooms. Tan points out that Hatten Square is outside the Unesco heritage site boundary, and is thus not limited by stringent height restrictions.
The hotel, to be named Hatten Hotel (with room rates of about RM260 a night), marks the developer’s foray into hotel development and management. The retail units, he says, are expected to fetch rents of between RM8 and RM30 psf.
The RM150-million Hatten Square is divided into two phases. The first phase, currently under construction, consists of a carpark and retail podiums and is expected to be completed by year-end. The second phase comprising a tower for its hotel and suites will be ready in June 2011.
A total of 340 out of 490 serviced suites had been put up for sale since its launch in April this year, and according to Tan, 80% were sold within two weeks. Units were priced at between RM180,000 and RM280,000. Tan says current transactions are from RM220,000. The remaining 150 units will be launched next month.
“About 75% of the buyers were professionals from Melaka. We are offering guaranteed rental returns of 6% for 15 years,” he adds. Tan says the 6% return is “feasible” as it is supported by buoyant tourist arrivals. According to him, in 2008, there were 11.5 millions tourists in Melaka.
“Besides, the rental return schemes are signed with the developer and not the management. Therefore, in terms of asset worth, we definitely guarantee the buyers’ returns,” says Tan. He believes that having such a strategic location in the city will further boost the scheme. Tan confirms the group has kept a substantial portion of the properties in Hatten Square, totalling about 60%.
Meanwhile, Hatten Group is planning to build high-end condominiums with full facilities, just 2km from Hatten Square. While further information was not available at press time, indicative prices of the units are said to be at least RM500 psf.
Lofty goals
Hatten Group, though new, has set big goals for itself — to get listed and become one of the top 10 largest property development and management groups in Malaysia by 2020. “We plan to get listed in Singapore within the next three years,” says Tan.
Asked how he was going to achieve this lofty goal for a relatively young company, Tan explains: “Acquiring and reviving abandoned projects throughout Malaysia, acquiring strategic pieces of land around Malaysia and Singapore and starting our own chain of hotels.”
In line with this strategy, the developer is looking at a few parcels of land in the country to build hotels. The group has built up a landbank in Ipoh and about 100 acres in Melaka. “We will focus on good quality high-end developments and look for more land. We will always be looking at market needs and continue to cater to the niche market,” says Tan.
Though some may see Tan’s ambitious goals as mere bravado, Hatten Group’s successful turnaround of an eyesore in the heart of historical Melaka and its lineup of other projects is an indication that this property upstart may bloom into a major player in the coming decade.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 773, Sep 21-27, 2009.
