Description of Subject Property

Discuss About The Selangor Leading In Malaysia Economyonomy.

The land is situated on Jalan Pelabur B 23/B 40300 Shah Alam, Selangor Darul Ehsan. The subject property is situated along the south-eastern side of Lebuhraya Kemuning Shah Alam also known as LKSA highway and north-western side of commercial shop lots road within Persiaran Jubli Perak. Geographically, it lies about 5.5 kilometres to the south of the City Centre Sultan Salahuddin Abdul Aziz Mosque of Shah Alam. The subject property can be accessible from Shah Alam or Klang via Lebuhraya Kemuning Shah Alam or Taman Sri Muda exiting Persiaran Sultan making a U-turn and turning into Persiaran Perusahaan. The subject property should be on the left following the route. The approximate location of the subject property plan is attached in Appendix.

The property is located in Kota Kemuning along the Klang river. The property is a residential project complete with bungalows, public parks, a club house and a lake in the middle of the development. The subject property under the zoning of agriculture plan at 7. Surrounding Type of Development.

Table 1 Land Title Details

Strength

• The strength of the project is that the the reputation of BCB Berhad developers. Real Estate properties require and inherent level of trust and BCB Berhad has a brand value of being trusted brand having completed multiple projects.
• The project is located in one of the busy areas of Selangor which has a high density of population. The property has accessibility to a host of public amenities and leisure centres. The accessibility of the project is increased by the fact that it is surrounded by several highways.
• The property also has easy accessibility to several business districts, which enhances the value of the property.
• Shah Alam is the City Centre of Selangor Darul Ehsan and have high urban population with easy accessibilities. The superior transportation and other infrastructures surrounding the subject property makes it more accessible. The subject property has ready access to taxi and bus services as well as transits from Klang or Subang by Shah Alam Komuter station (KTM) line at the stop of KD11. Also, its proximity access to Federal highway, KESAS highway and LKSA highway makes it a stable business hub. The subject property has its connection coming from Taman Sri Muda and Uptown Shah Alam allowing independency of the market at Seksyen 23. The subject property in Seksyen 23 is located in the middle of Seksyen 18, Seksyen 19 and Seksyen 24 surrounded by both commercial and residential areas. Other nearby areas including Bukit Rimau, Alam Impian and Taman Sri Muda provides diverse and large catchment area with favorable suburbs for business opportunities.

 Weaknesses

• The property is flanked by other residential projects, which could be the competition.
• The property only offers high value Bungalows which makes the turn over period longer.
• Given that there are virtual no vacant land blocks available in the vicinity of the property, it would be difficult to expand the project.
• There are a few challenges that may affect the operation and financial situation of the subject property. The property can only be accessible with a one way access which located just in front of the road while the sub-roads are to be accessed from Aeon Big Seksyen 23 or even Taman Sri Muda. This condition discouraged business opportunities because of the inconvenience of one way access to the subject property. Although there is a KTM line for accessibility of the subject property but people will have to access from the KTM line to the subject property which would need approximately 15mins of walking. This could discourage movement of people to the subject property especially on a hectic sunny day.

Opportunities

• The economy of Selangor has been improving by leaps and bounds.(Surendra 2017) As the economy improves, the demand for housing, especially high value housing is also, expected to improve.
• There is a need to improve on the public transportation and making it two ways accessible to increase the traffic crowd. Nearer transportation and two ways accessible can boost the market surrounding the neighbourhood and increase the catchment of customers to the subject property. Similarly, marketing should be done widely in social media or even road side advertising to boost the financial situation of the subject property.

Threats

The property market in Selangor is expected to remain soft year, with several properties having witnessed a dip in value in the last year. (Leng 2017) In 2017, roughly 21% of the new projects in Selangor remained unsold. This could create a liquidity crisis, especially since the property has high value bungalow lots. (Ling 2017) 

It is highly expected that, owing to a slowdown in the receipts from buyers, Bridging Finance may be required.  Bridging Finance would be a good option as it would allow the Company to gain some time until low interest, long term financing is secured. Ideally, in a Bridging Finance, the repayment is made against every unit sold. (Malayan Banking Berhad 2014)

Selangor is on the richest states in Malaysia and is well developed as a business hub. Hence, the housing market, too, is well developed. The housing market is Selangor is expected to take a down turn in 2018. The Housing market of Selangor comprises of cities as well as independent townships. The market was previously dominated by high end housing projects but the government is trying to incentivize the mod range projects as well. (Global Property Guide 2018)

1. Requirements: The firm must be a private limited company registered with relevant regulatory authorities and with the Construction Industry Development Board
2. Submit required documents: Certified photocopy of Memorandum & Article of Association, Business Registration, Form D, Form 9, Form 24 & 49. Company and Holding Company profile, Profile of Directors / Main Shareholder, photocopy of each Director’s Identity Card, latest 3 years of Audited Financial Accounts / Statements for Company and Holding Company, certified true copy of latest management accounts, latest 6 months of Bank Statements from other banks, a photocopy of Sales and Purchase Agreement (if applicable), photocopy of land title, cash flow projection (for the specific development to be financed with assumptions), breakdown of the development cost and Gross Development Value (GDV), list of past, current and future projects / development, required information such as project description, awarder, contract period, contract amount (where applicable), valuation report (if available), Feasibility Study and Market Study on the project, photocopy of the land title to be developed and location map (if available), photocopy of all approvals granted pertaining to the project such as building plan, advertising permit, etc. (if available).
3. Terms and conditions apply. All application is subject to the Bank’s credit assessment.

Table 2 Bridging Capital Rates

An outline development brief including a schedule of proposed users and justifications for the proposed scheme with reference to their commercial viability.

Initial SWOT Analysis

This development will be a mixed development which consists service apartments and shop lots which surrounded by green landscaping. The proposed users of this mixed development will be first home buyer and family surrounding Klang at the same time also trying to attract foreigners to invest and purchased our development. The reason of focusing on foreigner is due to the increase in foreign investment in Malaysia especially the foreigner from China.

A layout drawing (block plan) that clearly identities the layout of proposed users, density, access, landscaping, footpaths, access and car parking provision. A brief statement should be attached justifying your design.

In the current market, the supply is above the demand. Vacancy rates in housing projects are high, all over Malaysia, not just in Selangor. (Ling 2017). This has led to a decrease in the new housing projects. It would be a good idea for the Company to hold on the additional construction that may be in place, until demand picks up gain. The outlook for 2018 looks soft, which may imply that there could be a liquidity crisis if the units are not sold fast enough. A Bridging loan is suggested since it will help maintain liquidity and prevent the Company from selling off assets will a loss.

The median price for a 3000 sq, ft or above bungalow is in Kota Kemuning as a city in RM 512/square ft. (Property Advisor 2018). The price has dropped by over 2% in the last year. (Propertyguru.com 2018) The prices have been on a negative trend since 2014 in Malaysia and several estates in the area around the proposed property. However, in Shah Alam, prices have seen a rising trend, especially since the beginning of 2018 with listing prices asking for prices consistently over RM 850 per square foot (This estimate is based on listing price). (PropertyGuru.com 2018)

The price trend has generally been negative, in Selangor, in general, owing to high vacancy rates. (Leng 2017) However, given a strong and growing local economy, housing prices in Selangor would be expected to fall slower than in other regions of the country, given the growth in the economy. Hence, in the allowing Malaysian housing market, Selangor is one of the safest bets.

The design objective of this property development was to be able to provide the customers with modern luxurious homes but one that retained it’s closeness to nature.

• Sustainability:  Sustainability is ingrained as an objective within this project. Hence, almost all the free space is exclusively landscaped.
• Private Space: The homes are built within a gated and secure community and provide the customers with their own private and quite within a bustling city. Hence, the construction is low density with just 55 units within an area of 71.6 acres. The development is entirely landscaped.
• Modern Homes: Another objective of the development is to provide high value homes for high spending customers. The homes should cater to the lifestyle of a busy working professional and ensure that the feeling of safety and exclusivity is highlighted in the design and amenities. Hence, the design integrates sophisticated security features as well as a guarded entrance. For the well being aspects, there is a public park, an exclusive community space in the middle of the development, club houses complete with a modern gymnasium etc.
• Community Design integrated with individuality: The design ensures that each house maintains a minimum distance from the other and has it’s own spacious backyard and parking space. To make the customers feel like a part of the community, there is an open space within the center that serves as the town center within the community itself, where members can gather and interact as a community. It also, has a small park within the development which serves as public park for the members of the community. The management team of the property will conduct several events for the community throughout the year.

The proposed development is 7.61 acres meant for strictly residential use. Approximately one fifth of the total units I,e 11 units will be along the Klang river. All of these will be the larger ones of Type A.

Bridging Finance

The end use allocation is strictly residential. The property contains a public garden in the midst of the property which is meant for recreational purposes. This garden could also be leased out to members of the community for their personal events.

There will be 55 units of two types viz: Type A and Type B will be a part of the project. Out of these 28 will be Type B units and 27 will be Type A units.

Each building will contain two or three storeys above the ground level. There are two types of buildings proposed in this Property

• The larger ones, Type A have a unit size of 4607 square feet and a build up area of 5168 square feet.
• Type B will have a build up area of 3924 square feet and will have a unit size of approximately 4424 square feet.

The landscape consists of a lake and plenty of open spaces for the community intertwined within the spaces. The density of the property is kept low.

Table 3 List of Comparable Properties in and around  Kota Kemuming Seksyen 31

The average price is RM 644.637.

At the average price, the total cash flow for type of Bungalow are as follows

Table 4 Sales Revenue Per Bungalow

The project is estimated to be completed in the following phases. Phase 1 is May 2020- April 2021, Phase 2 is May 2021- April 2022, Phase 3 is May 2022 to April 2023.

The Total Expected Sales are as follows: (Please note that these are sales revenues do not include taxes because the taxes will be deducted at year end)

Table 5 Expected Sales Revenue

Expected Profit and Loss are as follows (Excluding Taxes, Interest and Depreciation)

The firm is look at Bridging Capital for Payment . In the future, the firm will look at duper annuation funds and Real Estate Investment Trust for funding. (Malaysia REIT 2018) Due to the soft prices, the firm does not wish to take risks by taking loans. The firms will identify these REITs before the End of May.

Given below are the topmost REITs in Malaysia:

Table 6 The Top Performing REITs in Malaysia since 2016

The Company will utilize several marketing channels in order to reach out to it’s consumers. The property is being presented a luxurious, modern lifestyle and not just a home. The target audience is the urban, high income, middle aged customer with a family. Hence, the messaging will be subdued and highly customized. The firm will engage in advertising by contracting billboards (although billboards are channels with a mass appeal, the messaging is subtle and limited). A few select financial newspapers will be chosen to carry the advertisements for the property.

The plan will hold off from radio and local television advertising, since these are mass information channels and carry a risk of presenting the property development in the wrong way. Instead sponsorship of luxury and lifestyle based events in the local community will be used. Some of these may include events at the Selangor Turf club, events at the World Fashion Week at Malaysia etc.

The plan is also, to identify one exclusive marketing channel to engage with consumers face to face without a sales pitch. Hence, a event along the lines of World Urban Forum (UN-Habitat 2014) will be conducted within the city. This will help generate press coverage for the property exclusively as newspaper and television press would be invited to cover the event.

The proposed Marketing budget is RM 275000 per year for the next five years. Apart from this, a specialized event to be conducted along the lines of World Urban Forum will have a special budget of RM 200000. Apart from the in-house marketing team, a marketing consultancy firm will be scouted and contracted within the next 45 days. It is important to note that this budget does not include the funds spent on creating marketing materials that are already being used such as the website, brochures etc.

Table 7 Marketing Plan

Table 8 Marketing Budget

References

GLOBAL PROPERTY GUIDE (2018). House prices static in Malaysia. [online]. Last updated 19 March. https://www.globalpropertyguide.com/Asia/Malaysia/Price-History

LENG, Tan Ai (2017). Prices fell in these five Selangor housing estates. [online]. Last updated 29 September. https://www.theedgemarkets.com/article/prices-fell-these-five-selangor-housing-estates

LING, CS (2017). Imbalances in the Property Market. Independent Research and Analysis, Kuala Lumpur, Bank Negara Malaysia.

MALAYAN BANKING BERHAD (2014). Bridging Loan / End Financing. [online]. https://www.maybank2u.com.my/en/business/sme-banking/financing/project-contract/bridging-loan-end-financing.page

MALAYSIA REIT (2018). Malaysia REIT. [online]. https://mreit.reitdata.com/

PROPERTY ADVISOR (2018). Property Price vs Property Size Analysis. [online]. https://propertyadvisor.my/previewTransaction

PROPERTYGURU.COM (2018). Kota Kemuning. [online]. https://www.propertyguru.com.my/selangor/kota-kemuning

PROPERTYGURU.COM (2018). See How Prices Have Been Trending In Shah Alam. [online]. https://www.propertyguru.com.my/areainsider/shah-alam

SURENDRA, Emmanuel (2017). Selangor Leading In Malaysia’s Economyonomy. [online]. Last updated 8 September. https://www.imoney.my/articles/selangor-lead-economy

UN-HABITAT (2014). Kuala Lumpur to host World Urban Forum in 2018. [online]. https://unhabitat.org/kuala-lumpur-to-host-world-urban-forum-in-2018/