Mitraland unveils first overseas project

EVERYONE is talking about the coming of another economic downturn, locally and globally. Many developers here have either postponed or downsized their launches. Mitraland Group, however, is looking to unveil its first overseas project next month as it believes there is still demand for housing.

Esque South Yarra in Melbourne is set to launch on April 2 in Australia. The project sits on a 5,000 sq ft commercial parcel and will offer 64 apartments and two penthouse units, with built-ups of 818 to 1,829 sq ft.

Mitraland chairman Datuk Johan Ariffin says Melbourne’s prospects convinced the developer to build its first overseas project there.

“We decided to go to Melbourne for several reasons. The main reason was that it has been ranked as the world’s most liveable city by The Economist for several years. This might draw more people to the city and eventually create demand for housing. Currently, it has a population of 5.9 million and there are 100,000 local and overseas migrants [moving there] every year,” says Johan.

Last year, the city topped The Economist’s liveability ranking for a fifth consecutive year. The assessment is based on five categories — stability, healthcare, culture and environment, education as well as infrastructure.

Johan says the student population in Melbourne is also huge at 112,000 people, and the segment is seeing an annual growth of 11%. The bulk of these students may eventually settle down in the city and contribute to the population growth there.

Strong performance

According to Johan, rental growth in Melbourne — at 7% for residential and 2% for retail — has been stable.

“Generally, the absorption rate for projects under construction is 89%. The vacancy rate is below 3% and the interest rate is low. Buyers also come from across the board, including upgraders and downsizers,” he says.

The apartments at Esque South Yarra will have two bedrooms and two bathrooms, while the penthouses will come with three bedrooms and three bathrooms. The block will have 19 levels, including the ground floor and the basement. Each floor will have four units.

The project has a gross development value (GDV) of A$56 million (RM172 million). The units will be priced from A$630,000 to A$1.9 million, or from A$862 psf. Facilities will include a rooftop garden, bicycle storage space and parking bays.

Mitraland CEO Chuah Theong Yee says South Yarra is the second most liveable suburb in Melbourne, and that makes Esque South Yarra the “best of the best” project in terms of location.

“We are in Chapel Street, which is known as a fashion street with various retail malls and amenities in the vicinity. It is just 4km from the CBD (central business district) and it is also easily accessible by trams and trains,” says Chuah.

The development is close to the Royal Botanic Gardens, Melbourne High School, Melbourne University and Monash University, among others.

Another selling point of the project is its design, for which Mitraland has engaged international architect Fender Katsalidis Architects (FKA) and Kate Roach Architecture and Design, says Chuah.

“For this location, the design must be contemporary and bespoke. And because it is our pilot project in Australia, we wanted to do it well by engaging a global architect.”

He adds that FKA has designed several landmark buildings, including Eureka Tower in Southbank — the tallest building in Melbourne and among the tallest residential buildings in the world.

A preview of Esque South Yarra took place in mid-March, and Chuah says 20% of the units have since been taken up. He believes the bulk of the buyers will come from the domestic market as there is demand there.

In its Australian Residential Review — March 2016 report, Knight Frank says the estimated population of Greater Melbourne in 2014 was 4.4 million. The area experienced a 2.2% population growth in the year to June 2014. The Australian Bureau of Statistics projects that the population in Greater Melbourne will reach six million in 2031.

“The value of housing finance commitments in Victoria in the three months to December 2015 grew by 30.2% to A$18.5 million compared with the previous year,” the Knight Frank report says. “Sales transacted in the year to January totalled 53,744 houses (up 17.2% from the previous year) and 40,574 apartments (up 7.9%),” it adds.

The report also notes that rental growth rose 2.2% for houses and 2.5% for apartments over the year to January. Weekly median rents currently reach A$460 for houses and A$410 for apartments. The six-month average total vacancy trend, meanwhile, was recorded at 2.8% in January last year for Greater Melbourne.

Affordability

After the launch of Esque South Yarra, Mitraland will shift its focus back to Malaysia. It is looking to achieve a sales target of RM500 million this year with two more launches, says Johan.

He adds that the company is “cautiously optimistic” about the real estate sector as “people are still buying”. Affordability will be its mantra for the two upcoming launches in the Klang Valley, and he believes it will give young people an opportunity to buy a property.

“We want more young people to be able to own a property. However, we will not compromise on the offering despite the affordable pricing. For us, we resize the property to fit the affordability range. In times of crisis, the most important thing is how we position ourselves because we know that people are still buying,” says Johan.

Mitraland will launch Phase 2A of Gravit8 next month. The phase, with a GDV of RM450 million, comprises two blocks of serviced apartments — Nordica and Adria.

Nordica gets its name from the Norwegian Sea in Norway. The block’s design will have Scandinavian influences and its main colours will be neon blue and viridian green — the colour of the aurora borealis.

Adria is named after the Adriatic Sea in Europe. It will have a Mediterranean concept and its main colours will be red, orange and yellow to emulate the buildings in Venice.

Phase 2A will offer more than 680 units, with built-ups of 631 to 1,046 sq ft. Most of the units will be priced below RM500,000. There will also be a maritime-themed retail mall with a salt-water aquarium.

The development will face an eight-acre lake park reserve and Mitraland will invest in landscaping the lake, says Chuah.

The RM1.3 billion mixed-use development Gravit8 was first launched in March last year. The first phase will comprise 22 three to five-storey shopoffices with built-ups of 4,909 to 18,190 sq ft. These are priced from RM1.83 million to RM5.5 million, and they are 80% sold.

Sitting on a 15-acre freehold site in Jalan Klang Banting, Gravit8 is located next to the Shah Alam Expressway. It is also about a 10 to 15-minute drive from Kota Kemuning and is near two proposed LRT stations, namely Johan Setia and Bandar Botanic.

In the third quarter of this year, Mitraland is planning to launch Trivillion@Kajang East in Semenyih, Selangor. The RM550 million freehold development is located on an 8.9-acre tract next to Semenyih town.

Several educational institutions are within the vicinity of the development, such as University of Nottingham, the Tenby private school and Rafflesia International & Private Schools in Kajang.

The mixed-use development will have 32 three-storey retail shops and 1,400 apartments in three blocks, and will be developed in two phases. Phase 1, with a GDV of RM200 million, will comprise 400 serviced apartments, 80% of which will be priced below RM500,000.

“We try to do something different in every development,” Chuah explains. “We have the lake park for Gravit8, and for the Semenyih project, we will build a 50,000 sq ft sport and entertainment complex. The student population in Semenyih is large but there are no facilities for them. So, we want to build one there.”

Mitraland will own the complex but it has yet to confirm if it will manage the building. The complex will be located on the facilities deck of the apartment towers.

Chuah, who had set up Mitraland right after the 1997/98 Asian financial crisis, says now is the best time to buy a property as developers are pricing their projects carefully. For Mitraland, the more affordable offerings allow the company to target a new market as this group stands a better chance of qualifying for housing loans, he adds.

“We hope that the government will reintroduce DIBS (developer interest bearing scheme) for first-time homebuyers. It is a burden for the young people to have to pay rent and their housing loan at the same time while their properties are still under construction.”

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This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on March 28, 2016. Subscribe here for your personal copy.