Out of the comfort zone

Paramount Corp Bhd, the developer of the Bandar Laguna Merbok resort township in Sungai Petani, Kedah, and Kemuning Utama in Shah Alam, Selangor, has moved into non-residential properties, in line with the group’s decision to diversify its products.  

“It is time for us to move away from the comfort zone of only building landed residential units to become a more diversified developer,” says Ricque Liew, who took over as managing director of Paramount Property Development Sdn Bhd (Paramount Property), a wholly-owned subsidiary of Paramount Corp, from Jan 1 this year, succeeding Ong Keng Siew who is now the Group’s chief executive director.

Liew, who was formerly executive officer at Paramount Property, says the decision to diversify, made at its 2007 AGM, was a turning point for the group.

“This is part of our business strategy, to venture into something apart from residential. We have since identified opportunities to penetrate the commercial sector in Selangor through our proposed development in Section 13, Petaling Jaya, and our maiden industrial project called the Surian Industrial Park in Kota Damansara,” says Liew who has been with the group for more than 30 years.

Another wholly-owned subsidiary of the Group, Supreme Essence Sdn Bhd, is developing Surian Industrial Park, a 13.21-acre leasehold tract converted into an industrial park that will offer 38 units of 2-storey semi-detached industrial units. Soft launched in mid-January this year, Surian has an estimated gross development value (GDV) of RM135 million and is expected to be completed by end-2011.

Liew, also a director of Supreme Essence, says the group acquired the land for RM28.8 million in 2008. “We said ‘yes’ to the acquisition within a few months as we had earlier identified Kota Damansara as one of the areas for potential business development as  it becomes more mature,” he says.

Located within the vicinity of the Selangor Science Park, Surian is a stone’s throw from the Sun Suria Industrial Park and a few minutes’ drive from Segi College, Tropicana Hospital and the Selangor Golf Club.  It is also not far from shopping centres such as The Curve, Tesco, and Ikea.

“We chose Kota Damansara mainly due to its location. It is accessible via several highways like the LDP, the NKVE, Sprint highway and Batu Tiga-Sungai Buloh road. Besides, the proposed Kota Damansara-Cheras LRT is also in the pipeline,” says Liew.

Surian will feature a funky and modern facade. Each unit can serve as a corporate office, showroom or warehouse. “It incorporates a boutique concept on the outside with practical industrial features inside, as each unit comes with full height glass panels. Buyers can turn the upper level into a warehouse, the ground floor into a showroom, and the back as a corporate office,” he adds.

Prices range from RM3.08 million to RM5 million. Each unit has a private lift designed to carry loads of up to 1.5 tonnes and dedicated car parks that can accommodate a maximum of six cars and two lorries for each unit.

Liew says each lift will cost the developer more than RM100,000. There are two unit sizes to choose from — 5,876 or 6,276 sq ft — with land sizes varying from 9,343 to 22,798 sq ft.

Viable strategy

In light of the downturn, Paramount Property is offering attractive financing packages to Surian buyers, including a zero interest payment scheme during the construction period and a deferment of instalment package of up to five years. It will also bear all legal fees arising from the S&P agreements.

“If you are buying a property in 2009 at current prices, the capital appreciation expected to be realised in 2014 will serve as a good investment opportunity. In addition, the money can be utilised to invest in other business purposes, such as, buying manufacturing plants and machines,” says Liew.

“We are banking on our location and contemporary design. We have achieved a take-up of 55% since launching Surian in January,” he says, adding that it is targeting upgraders, local owner operators, small to medium size operators and retailers.  

“This project is well received partly due to the limited supply of such properties. Purchasers so far comprise companies in the supply chain management, electrical and electronic parts assembly, furniture and fittings, construction, training, software and even beauty and spa services,” he adds.

Section 13

In Section 13,  PJ, the Group plans to develop two 18-storey office towers on a 5-acre leasehold industrial land, with an estimated  GDV of RM400 million. Liew says the Group has applied to the Petaling Jaya City Council for a development order last November. However, a decision on the land use from industrial to commercial is pending.   

“If everything goes smoothly, we will be launching the project in 2013,” he says, adding that one of the towers will be leased out for recurrent income, while the other tower will be for sale by tender.

Residential challenge

Within the 525-acre freehold township of Kemuning Utama in Shah Alam, the group is undertaking the development of Indah Residences, Indah Residences 2, Indah Elite, Indah Elite Phase 7B and Prima Impian.
“Sales of our residential products have slowed as buyers have become more cautious due to the economic slowdown. Moreover, there is higher supply and more choices when it comes to residential projects, and all these will put extra pressure on developers in terms of competition,” says Liew, adding that the group will continue to launch residential units, but  fewer units of them.

Despite the intense competition, Liew is confident of good response to the latest Phase 8C1 of Kemuning Utama which offers 108 units of 2-storey terraced houses with a built-up of 2,100 sq ft, scheduled to be launched in June this year.

Indah Residences 2, which was launched in August last year, comprises 145 units of 2-storey terraced houses (built-up: 2,104 sq ft), with prices from RM353,000 onwards, of which 60% have been sold.
The group will also launch 20 units of 2-storey shop offices (Phase 8D) in October this year, followed by four more launches, from 2010 until 2013, of 2-storey terraced houses with built-up of 1,540 sq ft. On top of that, low-medium and medium cost apartments will also be launched.

Moving forward, Liew says Paramount Property will continue to scout for good landbanks in prime locations for potential developments to take place.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 746, March 16-22, 2009.