MPSB Holdings may be a new kid on the block but the Penang-based niche developer is looking to launch three projects with an estimated total gross development value (GDV) of RM200 million on the island within the next 18 months. This follows the good response to its maiden project — Mansion One in Jalan Sultan Ahmad Shah (Northam Road) — 85% of which has been sold since it was first previewed in July 2011.
Mansion One is the first hotel-cum- residential development in Penang. The 31-storey project has a GDV of RM300 million and is expected to be completed by 2Q2014.
MPSB plans to hold a preview of its next project, a low-density residential development called D'Mansion in green-lung Bukit Dumbar, in mid-January. It has an estimated GDV of RM60 million.
The boutique residential project, on a less than one acre freehold residential plot, is just two minutes from the Penang Bridge, MPSB Holdings director Terrence Lim tells City & Country.
He adds that the 20-storey condominium will only have 50 units with sizes starting at 1,400 sq ft. It is within walking distance of the Jelutong market. Lim says the units will cost slightly below RM600 psf and will come with high-quality finishing. Construction is expected to commence in March 2013.
There are also plans to launch two more projects — a townhouse in Teluk Kumbar and a mixed development near Bayan Baru.
The developer acquired the 31-storey Northam Tower (the site of Mansion One) in 2008 via Magna Putih Sdn Bhd, which was incorporated as an investment holding company in 2002. MPSB Holdings was established earlier this year incorporating Magna Putih and Mansion Properties Sdn Bhd, the company set up to develop D'Mansion.
"Northam Tower was a non-performing office block with an occupancy rate of only 30% when it was acquired. The location itself is excellent but the product was wrong in its concept, tenant mix and colour of the building. We decided that the hotel residence concept — something we usually see in Hong Kong, Singapore and Kuala Lumpur — would be more suitable. In fact, we hit 75% bookings within six months of launching Mansion One.
"We started refurbishing Mansion One once the acquisition was completed in 2010. Its commercial structure (substructure and superstructure) was retained as it is doubly strong compared to residential structures. We also retained it to avoid causing any possible damage to the heritage house across from our project. We have maintained it at 31 storeys, whereby the ground floor until Level 10 and Level 30 will be the hotel while Levels 11 to 28 will be residential suites," says Lim, a computer engineering graduate.
There will be 200 hotel rooms, averaging 400 sq ft. Plans are for a four-star hotel, with an average room rate of RM250, slated to open by 3Q2014.
The developer signed a general management term agreement with an international serviced residence operator last month to manage the building.
The residential component offers a total of 306 suites with one to three bedrooms and built-ups of 580 sq ft to 1,300 sq ft. Lim says the average price of the units starts at RM650 psf or RM400,000. The units are unfurnished but there are options to upgrade.
"You can't find anything below RM1 million in Jalan Sultan Ahmad Shah but our smallest units are selling for RM400,000. Small units are not that common in Penang yet. It's very expensive to buy a property in Penang but properties are still the best investments in terms of security and capital appreciation," Lim says.
"The location of Mansion One is excellent and that's why it has been very well received. It's just a 15-minute walk to Gurney Drive and a two to three-minute drive to George Town or the iconic Komtar. We're close to Gurney Drive but not that close that you end up in a jam once you enter Gurney Drive. Our hotel and residence concept is one-of-a-kind in Penang. Our residents will be able to use all the facilities in the hotel as well as the laundry and housekeeping services (chargeable)," he adds. All the units offer uninterrupted views of the sea or the city.
According to Lim, more than 70% of the buyers are Penangites. "The thing about Penang properties is they are what we can call, 'evergreen'. Yes, the hot spots are Kuala Lumpur, Johor and Penang but you don't see property prices dropping in Penang. They could stay stagnant for a year or 18 months but they never drop. One of the reasons is that most buyers are locals. Penang people are very savvy investors," says the Kuala Lumpur-born Lim, who has been living in Penang for the last seven years.
Lim has been involved in property development since 2003. Prior to that, he was in the telecommunications industry for eight years. "I felt that I was travelling too much so when the opportunity came, I decided to join my friend's father's property development company. The opportunity to be a shareholder in Magna Putih came along a few years ago and I agreed to be a part of it.
"Being in the property industry has been exciting. The business concept, whether it's computers or property, isn't that much different. For example, in computers, you have input, processing and output. For property development, input is when we have a piece of land we want to develop. Processing is where the design work and concept come in and the output is the house when it is completed. The processing part is very important as it differentiates one development from another, how you impress your buyers. It's your value add that makes your product different from the rest," he explains.
Commenting on the property outlook for the coming year, he says: "I think we will see a correction in the property market but not a slowdown. Not a drop in prices but correction in the number of transactions and, even then, not a significant number. You won't see weakened demand for properties in Penang, but qualified buyers, according to bank qualifications, may be fewer."
The biggest challenge faced now, he says, is getting loans approved. "Banks have become more stringent in approving loans. It used to take about 10 days but now the fastest is three weeks," he adds.
This story first appeared in The Edge weekly edition of Dec 31, 2012-Jan 4, 2013.