De Centrum City – An Urbanised Knowledge Community

 

Property Insight talks to Dato’ Kenny Chong, Managing Director of Protasco Berhad about his plans for De Centrum City.

There is a buzz about town, a township called De Centrum City, that caters to a sizable population, consisting of residential, commercial, educational and modern lifestyle attractions, and is all set to redefine the urban landscape of the Southern Corridor of Kuala Lumpur. Property Insight chatted with Dato’ Kenny Chong, Managing Director of Protasco, to get a feel for the Group’s plans in 2016.

Our first impression of Dato’ Kenny is that he is an easy going, personable, and very eloquent. There are no airs about him and he seems most comfortable in his own skin. After chatting for almost an hour, it seemed that we may have forgotten we were in the middle of an interview. That’s how comfortable he tends to make you feel. We asked him his thoughts on a few of the Group’s projects.

 

PI: The city’s land size is over 100 acres and will be developed over 15 years or so.

Can you explain the stage to stage process?

Dato’ Kenny: We have put in quite a bit of effort to develop a master plan over the last couple of years, the plan has changed a few times but I think we’ve got it this time around, but again, no guarantees that it will not change. We went through quite a tedious process of looking at the different types of components that we thought might affect the market here, however, that may change over time too. We looked at the potential sub division of plots and we divided the 100 acres as per what we intend to build and develop eventually in this parcel, and of course we have to accommodate our education sector. I think we have struck a balance, we have residential properties that will be launching in the first quarter of next year and we started residential developments about five to six years back plus we also have a mixed development on the commercial plot that is Gallerie De Centrum. So yes, we are planning a 15 to 20 year development duration and as per our previous plan it is still a GDV of around 10 billion ringgit.

 

Tell me why a purchaser should buy into your project?

Protasco Berhad is a diversified group. However, in terms of professional expertise, we are especially good in the technical and engineering side of things. Again we are pretty up there in the infrastructure sector, I would say that we are one of the ‘bigger’ companies in Malaysia with six different sectors across the group. There is the maintenance sector, the construction sector, property development, trading, education as well as engineering and services. We have across- the-board expertise, so I can safely say that we have the capability to execute projects successfully. We are now looking at building high end developments. We are making sure that our products are balanced. Apart from walkability, we are promoting sustainability and connectivity, so we want the entire development to work around the people within the community. Our urbanism concept is one that drives a modern life style back to nature, and sustainability. Living in a modern environment but away from the hustle and bustle.

 

I’ve read many of your interviews and you keep using the phrase ‘long term developments’ with regard to De Centrum City. What exactly does this mean?

We have a 100 acre parcel which forms our development playground, with a total GDV of 10 billion ringgit. The land is fully paid off, and our entry level was pretty low when we acquired the land more than 15 years ago. So we are able to plan our development in phases and also have the liberty to change and be dynamic with our master plan, that is one reason we use the word ‘long term development’, we are dragging it to 15 years to have the flexibility to relook at our market and adjust accordingly. Doing this also enables us to ride out sluggish and slow market conditions, similar to how we strategized for 2016. Let me give you an example. Let’s say you have invested  100 to 200 million on a land bank somewhere. You are not going to sit on it for the next 20 years, you have to develop the land now. Again, as we have invested in the capital from day one, we want the capital to come back as soon as possible. Hence, the reason we are able to plan out the entire development phasing while stretching it out more in the long term.

 

What is your land bank strategy?

That is a very good question. You see, Protasco is not solely a development company, as mentioned earlier, we have six main core divisions and property is just one out of six, so putting all our resources into one basket is not our management and corporate strategy. We have our 100 acre parcel and we have developed about 15% to date, so we are still looking at another 80% – 85% land that is ready for development. We are not looking to do low dense landed developments, but rather we are looking at mixed and high rise developments and mid to high end developments for this parcel of land. So the GDV will come in at a minimum of about 400million per parcel. We do have parcels in east Malaysia as well, but again we are looking at what to do with it because our focus now is strictly here. Having said that, we are also looking at increasing our land banks and our sound long term plan still applies. We are looking for small development parcels such as boutique parcels. Currently we have about 5 to 6 projects in JB that we are looking at. At the same time we are working on a government housing project within Putrajaya and that is a development project as well.

 

How many students do you think you have in the area to date and how will they complement De Centrum City?

IUKL itself has about 4500 students, I would say easily half of them are residing on campus, then again we also have UNITEN and UPM students that reside here. I would say, easily a population of no less than 20,000 students in a 5 to 10 kilometre radius. If you take a walk through Mines and IOI city mall, you can see that the students dominate retail vibrancy in those malls, be it entertainment, fashion or F&B. We have a neighbourhood mall here in De Centrum and we believe that there is an instant need for something of this size within the area. If we go by the student demographics, most investors or buyers want to invest here because they know that there will always be a constant demand for student housing. However, that could be a barrier too, and we will cross that bridge when we come to it. I mean, it is common knowledge that student properties don’t command a very high price. So far we have managed to hit the balance and a lot of it has to do with the product itself and the strategy that has been put in place. I think we have found the right balance.

Like I said earlier, De Centrum and IOI complement one another. The first thing people ask before buying our Unipark condo block C and D was, ‘what our student numbers were’. So I believe yes it does bring a lot value to us, but we need to manage the market perception of what student population mean to a township.

Are you saying that this might put people off your Rimbawan residencies?

No, not at all, we are not UPM, we don’t have 15-20 thousand students to manage. We have about 4500 students and only half of them are residing on campus. Also, I need to mention that our student demographics show that we are very multi-racial, so again that brings in quite good cultural racial vibrancy within the development. We have planned it so that even though you get that vibrancy, the university is comfortably tucked to one side. You will not see students roaming all over the place. Rimbawan is targeting a different market, it is more for families that want to migrate from north to south. Families that want an upgrade.

 

I like the idea of a (knowledge community) and you mentioned this may be a first of its kind, tell us what you mean by that?

Well I wouldn’t say it is the first, obviously if you look at Sunway with Sunway College and Monash University it is a big success. But if you look at the size, I think we can be considered one of the first ones to incorporate the education hub into our development and we have planned it well. Also, there are a number of start-up companies, technology incubators and other amenities to support an entrepreneurial ecosystem here.

 

you mention ‘new urbanism’ quite a bit, what exactly do you mean by that?

We knew what we wanted to do with each individual parcel, we knew how we wanted to connect each individual parcel, we knew what kind of community we wanted to capture but we struggled with the word for it. We wanted to have a balance between an urban modern life style residency coupled with an old school community based residential area, so that is why we kept the word urban and we wanted it to relate back to the community factor. And that was how the phrase, new urban concept, was formed. New urbanism promotes a few things, connectivity, walkability, quality of life, and also sustainability.

Currently our offices are spread out over 100 acres, our back bone infrastructure for high speed wireless broadband is already in place. To be fair, Gen-Y isn’t just about having free Wi-Fi etc., I think what most of them are looking for would be a place they can call their own, a liveable place, or a hangout place. We believe that we can cater for most of Gen-Y’s needs here, but we are not going to over-look families. Besides, developers like IOI, with their shopping malls and other facilities, already offer quite a bit to the community at large, infrastructure wise.

 

Seeing that there is a new pricing strategy involved with Rimbawan, what value do you add to your purchasers?

We wanted to dislodge ourselves from the developers that have launched before us and of course we were inching towards the mid to higher range market as well. If you have seen Rimbawan’s montage, it is about upping our game. There is always the right product and the right pricing strategy involved with that product, so with Rimbawan, we think we have struck a very good balance between product quality, the extended facilities that we are providing and the environment that surrounds the development which in turn, offers an improved quality of life.

 

What is your outlook for 2016?

I foresee 2016 being a great year for Protasco. Since 2013 we have been locking in a growth rate of about 10% to 20% and we expect to hit those figures in 2016 as well. We are seeing growth across all major sectors, on the property side, we have a few launches planed out for 2016. We may not be growing exponentially, but we are still recording decent growth rates, so yeah, it’s going to be a good year.

I do believe that the general public and most developers are already well informed. However just to add my 2 sen I’d like to say that 2016 will be a relatively sluggish year for the property industry and the construction sector, but we in Protasco believe that there is always the right product for the right market. There is no right time to launch, you can always strategically plan your launches and ensure you deliver good quality products for the correct market. I believe the market will adjust itself, and we can definitely expect the market to improve over time.