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|November 11th, 2008, 09:32 AM||#11|
PROUD 2 B MALAYSIAN
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another shopping mall - Citta StripMall@Ara Damansara
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Not another mall! Can you blame folks for shaking their heads in disbelief at the news of yet another mall taking up precious space in the Klang Valley? But for the team behind Citta, a new strip mall coming up near the suburb of Ara Damansara off the Subang Airport Road in Subang, the question is not whether we need another mall but rather what kind of mall we need.
To cut through the “mall fatigue”, one has to come up with a new concept which meets people’s needs so that it isn’t just another mall, says Allan Soo, managing director of Regroup Associates, the retail consultant for Citta.
Puncakdana Sdn Bhd, in partnership with SEB Asset Management — one of Germany’s largest real estate fund managers with about €11 billion (about RM51 billion) of real estate assets under its management — is developing the RM280 million open concept retail precinct. Of significance is the fact that this marks one of its first investments in Malaysia.
SEB is investing RM280 million (the end- value of the development) in a 70% stake in the Citta project or at RM670 psf on the net lettable area of 424,467 sq ft.
In an email interview, Barbara Knoflach, CEO of SEB Asset Management, says Citta is its first joint venture with a local Malaysian developer.
“We like the passion and sincerity displayed by the Citta team, as well as the significant experience of the project team. As a retail concept, we feel that Citta is a mall that is different in positioning and provides a unique offering, different from the ordinary shopping centres that are currently available in Malaysia. We believe that the location and catchment of the mall is good and will continue to improve as the area becomes more established as a quality residential location,” says Knoflach.
SEB, she adds, is working on making more investments in Malaysia. “We see Malaysia as a country with good potential from a real estate investment perspective. Foreign restrictions and rules governing the ownership of real estate are more friendly compared with many other countries in the region, and basic infrastructure is well-provided. In terms of real estate fundamentals, we think Malaysia is well-positioned to see good steady long-term growth,” says Knoflach.
SEB currently has investments in Japan, China and Singapore.
In light of the current turbulent global economy, Knoflach says: “We will continue to diversify our portfolio and manage our downside risks to make sure that we are not vulnerable to large volatility from any one single market, sector or investment. We are a conservative long-term investor and we hope that by being well-capitalised, despite these uncertain times, and by retaining the flexibility to react to new opportunities, we will be able to invest in good properties that will deliver good returns for us in the long-term.”
SEB is a North European financial services group with core markets in Scandinavia, Germany and the Baltic States of Estonia, Latvia and Lithuania.
It also has local presence in other Nordic countries like Poland, Ukraine and Russia. As at Sept 30, 2008, the group’s total assets amounted to about €237 billion while funds under management were about €122 billion.
SEB Asset Management, based in Frankfurt, is the specialist real estate and securities investment house in Germany for the SEB group under its wealth management division, which has about €121 billion in assets under management.
The chairman of SEB, Marcus Wallenberg, was appointed to the board of directors of Temasek Holdings on July 8 this year.
So, what is unique about Citta? According to the developer, this is a “convenience-based” strip mall with a low-density plot ratio of less than two spanning a large eight-acre footprint. When completed, the horse shoe-shaped five-level building, comprising three retail floors, a basement car park and a rooftop, would offer some one million sq ft of gross floor area.
“Everyone knows that shoppers seldom visit the higher floors, so why go any higher than three floors? According to the law of diminishing returns, the higher you go, the higher the cost as well,” says Soo of the design.
Not surprisingly, Puncakdana’s managing director Mah Siew Sian and his team were initially sceptical when the idea of a strip mall was first presented to them. Not only that, why another mall when the long-established 1 Utama with five million sq ft of retail floors was not far away?
“After sleeping on it (the proposal), and with more research and analysis, it began to make sense. We are building something that bridges the gap between a shopping centre and shophouses. It is managed like a shopping centre but with the convenience of a shophouse,” Mah tells City & Country.
With Citta, the emphasis is on convenience and focus on the family, from parents to baby, especially families from a catchment area of almost 70,000 households within a 10-minute drive of the strip mall. The anchor tenant is the car park, says Soo. In a strip mall, all shops front the car park to allow customers to just park and walk in. “You can just park at a carpark bay nearest to the shop you are interested in and walk in,” he says. Although common in the US, strip malls are not as common here. One local example could be the retail centre in the gated and guarded Desa ParkCity development in Kuala Lumpur.
There are 1,200 parking bays in total, including 400 bays taking pride of place over four acres in the heart of the development, says Soo. Although yet to be finalised, the rental rates may be from RM4 psf to RM10 psf or an average of RM5 psf. The tenant mix will again be family and convenience-oriented, offering a mix of high and medium-end products focusing on food and beverage, family and children products and services, health and wellness and convenience shops such as grocers, chemists and others. Although fashion would not be the main focus, there will be room for boutiques offering trendy yet inexpensive fashionwear.
Food and beverage will also be key and right now, Soo says, he has been getting fat from identifying the “best food” he could find to operate outlets here. “We will be signing up some core tenants before the end of the year,” he says.
The rain tree
The car park may be the anchor tenant but the “chief resident” would be a mature and shady rain tree, which will be Citta’s signature landmark, says Soo. In fact, Citta’s logo takes inspiration from the rain tree, which will eventually make its home here.
“We are now looking for the right tree so we could transplant it here,” says Soo, adding that the tree was chosen as a symbolic environmental reminder that we are losing our trees to concrete and thus the need to appreciate the environment.
The target is to open Citta in 2H2010, when the current economic slowdown is expected to be over. “We will open just as the recession has turned,” says Soo.
Citta’s site is part of a 15-acre plot in what is known as Parcel B of Parcels A–F totalling 60-odd acres of land alienated to state statutory body Yayasan Selangor. As the landowner, Yayasan Selangor has partnered Puncakdana to build several projects in Parcels C and D. On Parcel C now are two condominium projects — Puncak Nusa Kelana and Puncak Seri Kelana. The latter was completed in 2001, comprising 619 units on 6.5 actres with a GDV of RM95 million, while the former, comprising 468 units with a GDV of RM90 million, was completed in 2003.
On the 15-odd-acre Parcel D is the Dana 1 Commercial Centre comprising 152 units of shopoffices (completed in 2007) and an office tower under construction which will eventually serve as Symphony House Bhd’s headquarters. There is a remaining 2.5-acre plot for future development on the Dana 1 site.
Puncakdana has so far completed properties worth RM360 million in gross development value (GDV) in this area while the developer’s remaining landbank here will take another 10 years to be developed, including Citta.
The developer is, however, facing a challenge with the development of Citta. The site is currently literally “under water” and some residents in the area have come to accept it as “their lake”. The hoardings have come up and the developer has begun filling the lake, sparking protests from some quarters who want the “lake” to be saved.
According to the developer, the so-called lake which sits on private land isn’t really a lake. Mah says: “The land is lower than the road and the surrounding developments, which is why it has collected water. Now we are discharging the water and raising the land. It is not a lake and we have explained this and briefed the residents about the site and our plans for it.” Piling work is expected to start next month, with construction taking about 24 months.
What’s next after Citta? Mah says there are plans to build five blocks of offices with a GDV of RM600 million on the seven-acre plot adjacent to Citta. “The offices will eventually provide the daytime population to feed Citta,” he says.
Asked about the competition from the retail projects planned for the area, by other developers, Mah says Citta’s open concept and focus on family and convenience are unique. Besides, “there would not be more of this kind of mall around here simply because for this concept to work, you need space,” he adds.
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