ANDAMAN Property Management Sdn Bhd’s leaseback GRR (guaranteed rental return) scheme for its projects, which offers rental returns from the student housing market, is a hit with property buyers.
The company’s recent property developments such as Arc @ Cyberjaya and Academia @ South City Plaza in Seri Kembangan has seen a take-up rate of 95%, according to Andaman Property Management Sdn Bhd head of sales and marketing Datuk Vincent Tiew.
The freehold Arc @ Cyberjaya, with 1,000 apartment units, is located next to Multimedia University (MMU) while the leasehold Academia @ South City Plaza has 416 apartment units leased to Universiti Putra Malaysia (UPM).
Depending on the development, Andaman Property’s leaseback GRR schemes with a minimum 8% per annum can be offered in up to six, 10 and 25-year packages.
Rental rates are reviewed and adjusted for inflation and other factors, once every three or four years.
As an example on the return on investment a buyer can expect, Tiew cites a typical 913 sq ft unit at the Arc @ Cyberjaya.
“Let’s say the purchase price is RM351,500. An 8% rental per annum would be RM28,120. After deducting maintenance fees and contribution to the sinking fund, net rental per annum would be RM25,348 which means a net rental yield of 7.2% per annum.”
The Arc @ Cyberjaya and Academia @ South City Plaza also comes with fully furnished units.
Tiew says units are furnished with sofas, dining tables, wardrobes, mattresses, water heaters and refrigerators.
“Students can move in once the project is completed.”
“With a GRR scheme, our property buyers are assured of a committed rental yield and tenancies immediately after their units are completed. This is unlike other developments, where once they are completed, suddenly you have a few hundred or thousands of units available for lease or sale – what will happen?” asks Tiew.
He also points out that Andaman Property is different from other property developers that offer GRR schemes.
“For one thing, we do not target rental returns from expatriates or tourists. Also, before we launch and sell our developments, we already have leasing arrangements with colleges and universities. This is why we can confidently offer GRR schemes with a minimum 8% per annum.”
Tiew adds that there is virtually no business risk with such arrangements.
“It is risk free, with recurring and attractive returns. Our products cater to short, medium and long-term buyers. We want to change the buyer’s mindset. Here, the developer is your tenant. In turn, the colleges and universities pay the rentals to the developer. The universities would have collected the rentals from students before commencing their semesters.”
While buyers can opt to sell units under a GRR scheme, the new owner would need to continue to honour the existing tenancy agreement with Andaman Property.
Tiew also points out the advantages of leasing the units to Andaman Property.
“Andaman Property provides comfort to our buyers. Anyone who has leased out their units would be familiar with certain problems – trying to get good rentals, collecting rentals especially from students, the management and maintenance of a unit where damages are concerned.”
Selected units by Andaman Property also offer a DIBS (developer interest bearing scheme), where buyers service no interest during the construction period.
With a DIBS, investors can potentially reap capital gains by selling their properties quickly after taking vacant possession.
The Arc @ Cyberjaya units are sized from 900 to 1,200 sq ft, with prices ranging from RM350,000 to RM450,000.
With a gross development value of RM600mil, the development will also have four commercial blocks and is due to be completed by the end of 2013.
Facilties will include a swimming pool, gym, 24-hour security, a squash court and a sports centre with 15 badminton courts.
Meanwhile, units at Academia @ South City Plaza are sized from 500 to 1,300 sq ft, with prices ranging from RM200,000 to RM500,000.
It has a GDV of RM120mil, and is due to be completed in end 2012.
“There are UPM buses to transport the students. Within south City Plaza, there are also educational institutions with about 3,000 students today. These include International College of Health Sciences, SEGi and Akademi Antarabangsa Clipso.”
Tiew says unlike some property developers, Andaman Property does not cater to first home buyers or owner-occupiers.
“Most, if not all my buyers, are those who already own one or two properties. We cater to investors who want better returns than what is offered by fixed deposits or bond funds. Our buyers also invest to hedge against inflation and the rising costs of construction.”
The Andaman Group, which is involved in coal mining, security guard services as well as travel and tours, started its property division in 2005.
Completed projects in Selangor include the Casa Subang serviced apartments @ USJ and Cova residential and commercial developments in Kota Damansara.
“Our first project was Casa Subang in 2006 where we also offered the GRR scheme. We have more than 500 units leased to several institutions of higher learning.”
According to Tiew, Andaman Property has 1,200 completed units under the GRR scheme.
“We work with institutions of higher learning such as Pantai College of Nursing and Health Science, Monash, SEGi, Inti, Taylor’s, Sunway, Cilantro Culinary Academy and International University College of Nursing.”
Another ongoing project is Casa Residenza in Kota Damansara, with 357 units leased to SEGi and other colleges.
Casa Residenza is due to be completed in end 2012.
The company is also building a new university tower block for SEGi in Kota Damansara.
Other ongoing projects include 182 units of Taipan shop offices in Ipoh with a combined GDV of RM165mil, as well as Diamond Square @ Serdang with 30 shop offices and 228 condominium units.
With a GDV of RM160mil, the shop offices have been sold out while the condominium units are due to be launched in the first half of 2012.
The company is also involved in a RM500mil joint development with Perbadanan Kemajuan Negeri Selangor in Bangi to build 86 units of shop offices on 13.6 acres.
Meanwhile, Andaman Property will also be participating in the Star Property Fair, which is scheduled to be held from Nov 25 to 27 at the Kuala Lumpur Convention Centre.
The fair will showcase the best of properties from some of the top developers in the country, and will be open from 11am to 7pm daily at exhibition halls four and five.
Tiew says Andaman Property experienced a fantastic response at the Star Property Fair in Penang in July.
“We hope to do equally well this time.”
Did you find this article insightful?