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Friday July 27, 2012

Niche developers

By Joy Lee
[email protected] Photos by Brian Moh

It IS common knowledge that land, particularly large parcels in strategic locations, is getting scarce. And while most property developers scramble to pick up any large available tracts, there are some that are content to focus on smaller sites.

F3 Capital Sdn Bhd, a real-estate investment group, is looking at opportunities to develop smaller strips of land on the fringes of Greater Kuala Lumpur.

The developer has found a niche in unlocking the value of pockets of land banks belonging to government-linked companies.

F3 Capital chief executive officer Vignesh Naidu said it intends to remain as a niche developer.

Right fit: (from left) Vignesh, Low and Quah are working to bring F3 Capital to another level of growth.

“The focus has always been to be small. We wanted to go into development with limited capital, but at the same time be very focused on a niche, which is trying to develop smaller pieces of land within the Klang Valley.

“This is within our capacity. Also, we have knowledge of the market and we want to go into an area where we know what the market needs,” he said.

F3 Capital started out as a development management consulting firm, providing end-to-end consultation to property developers. However, the company saw an opportunity to move into property development in 2002 when GLCs started to unlock small pieces of their land banks.

It acquired a 0.77ha piece of freehold land from Telekom Malaysia Bhd in Bandar Menjalara, Kepong. Its maiden project on the site, Menjalara 18 Residences (MJ 18), turned out to be a big hit.

The 248-unit condominium, completed in 2009, has seen a 100% appreciation in value since, jumping from an average of RM220psf to RM450psf currently.

“Although previously we were mainly giving advice to clients, we know what it takes to be a developer. We are aware of the risk issues, the pros and cons of a development, the cost, and how to run the project.

“When we did consulting, we went quite in depth, in terms of operations, finance, project management, marketing and all that. Back then, we were like a developer, but not a developer,” Vignesh explained, adding that going into property development was a natural progression.

Vignesh, together with chief operating officer Kevin Quah and chief financial officer Low Kim Lan were hard at work completing their other projects.

Other projects in the pipeline for F3 Capital include the second phase of MJ 18 on an adjacent 1acre site. The project has an estimated gross development value (GDV) of RM95mil.

There is also a mixed commercial development on a 1.42ha plot in Bandar Baru Selayang with a GDV of RM180mil slated to take off after obtaining necessary approvals by year end.

Currently, F3 Capital has a total GDV of RM630mil under development over a period of four years.

“That will translate into annual revenue of about RM150mil a year. That means we have grown multi-fold over the years,” Low noted.

F3 Capital had average annual revenue of RM20mil some four years ago. Low added that revenue is expected to grow this year as more projects are launched this year.

Most of F3 Capital’s projects are expected to be completed by 2015 and the group is looking at the possibility of replenishing their land bank for future projects.

Vignesh noted that the government is moving more aggressively to monetise most of its land in the Klang Valley and Greater KL area and he expects more tenders to be out in the second half of next year.

“We want to participate in that. With our track record and experience, we feel we have an advantage to participate in the tenders. And again we will focus on small niche developments. We want to identify land that we can add value to,” Vignesh said.

He added that the ideal plot of land would have the best possible plot ratio with high GDV value so the group could bring about the best concept for that development.

Local developers are still upbeat about the property market in Malaysia and Vignesh said demand for property is expected to grow substantially from 2015 onwards once the multiplier effect of government projects start filtering into the market.

“We are also preparing for that. We want to remain hands-on. We don’t want to grow too big too fast. We want to remain in touch with the market,” Vignesh said.

Apart from developing successful projects, Vignesh also believes that F3 Capital’s projects could be a catalyst for change in the surrounding areas.

“We want to bring change to an area and upgrade the living standards of the area like we did with Menjalara. So there is also a socio-economic agenda there as well,” he said.

Vignesh explained that prior to MJ 18, Kepong was very much tailored to medium-income earners, but MJ 18 changed the standard of the area.

“Kepong has not seen anything like this before. It is very much medium-income driven. We are trying to bring in the concepts of Damansara and Mont Kiara, but something affordable for that area.

“At that time, we felt it was ripe for Kepong to have that kind of development.

“We wanted to be the catalyst for an upgrade outside the Desa Park City area. So we made that change and the market caught up. This is reflected in MJ 18’s value appreciation,” he said.

F3 Capital is looking at setting the standard again with its latest project, Univ360 Place, a small-office-flexi-office (SOFO) mixed commercial development in Serdang South.

The project, on a 1.62ha site, has a GDV of RM230mil. Univ360 is expected to be completed by March 2015 and the SOFOs have seen a 60% take-up rate so far.

“There is a lot of infrastructure developing here. It is a new growth area.

“We want to be a catalyst to what is happening here. That is how we position our developments,” Vignesh said.

Quah added that F3 Capital’s projects are tailored for the population of the area.

“Each property location has its own characteristics such as demographics, profile, population and things like that. These characteristics help us develop a marketing plan for the area,” Quah said.

Most of F3 Capital’s projects were targeted at first time or younger buyers. F3 Capital is working with financial institutions to offer convenient payment solutions for buyers interested in owning a property.
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