Sunway plans to inject RM2bil worth of projects over the next three years

CURRENTLY managing commercial or non-residential property assets valued at over RM6bil that is also a source of recurring income for the Sunway Group, the property investment division of this conglomerate is expected to further strengthen its portfolio via another RM2bil worth of projects to be completed within the next three years.

Sunway Group property investment division generally manages, upgrades as well as develops the non-residential properties for the group that includes hotels, resorts, hospitals, universities, offices, shopping malls and theme parks.

As opposed to the residential development division of the group that provides essentially trading income, Sunway's property investment division develops and maintains the non-residential assets that could also be injected into real estate investment trusts (REITs) via its listed vehicle, Sunway REIT, provided it gets the right valuation and fetches the appropriate price.

Sunway Group property investment division managing director Datuk Ngeow Voon Yean explains that out of the RM6bil worth of properties it manages, about RM4.8bil have been injected into Sunway REIT.

Some of the non-REIT assets are hotels in Penang, Phnom Penh and Hanoi, Sunway Resort Theme Park and Lost World Hotel in Tambun, Ipoh. Some of the REITs asset are Sunway Pyramid shopping mall, Sunway Putra Place, Menara Sunway and Sunway Resort and Spa. The property investment division manages the assets under Sunway REIT.

Listed on local exchange in 2010, Sunway REIT's total assets under management reached RM4.95bil after the acquisition of Sunway Medical Centre (SMC) at the end of last year.

As at the third quarter ended Sept 30 2012, the property investment division and property development division contributed about 45% and 55% of revenue respectively to Sunway Integrated Properties, the property arm of Sunway Bhd.

Sunway Bhd current landbank of 3,569 acres has an estimated gross development value (GDV) of RM45.3bil.

Excited over the upcoming projects already in the pipeline for the group, Ngeow admits that he is very busy and confident of the prospects of the RM2bil projects banking on positive economic climate moving ahead.

One of the main projects Ngoew is passionate about is the Pinnacle. With a GDV of RM350mil, the office building is the last jigsaw puzzle piece that completes the Sunway Integrated Resort City, an integrated development now worth in excess of RM10bil.

Ngeow says the Pinnacle, which will have a net lettable area of 580,000 sq ft, is scheduled to be completed early 2014.

“In the Sunway Integrated Resort City, we already have hotels, shopping malls, convention centre and theme park. The Pinnacle will inject an office component to the city as every integrated development always has a commercial aspect attached to it such as KLCC and Suntec City in Singapore,” he says.

Although Ngeow admits that there will be a lot of office space hitting the market, the Pinnacle is the only grade A green office building within the area and should attract interest from multinationals.

“There is also a trend of people shifting their focus from Kuala Lumpur city centre to its fringe as the former is becoming too dense for some businesses,” he says.

The building has received the provisional BCA Green Mark Award (Gold) from Singapore's Building and Construction Authority, and the certification from Malaysia's Green Building Index.

In addition to this, Ngeow says the division is also working on Sunway Pyramid Phase 3 with GDV of RM340mil that entails the development of a 27-storey integrated four-star hotel and retail component, which consists a 19-storey hotel tower with 401 rooms and three-storey retail complex with 70,000 sq ft of rentable retail space that should be completed in 2015.

Next, according to Ngeow, is the Sunway Velocity, a mixed development south of Kuala Lumpur that is flanked by Jalan Peel and Jalan Cheras.

Expected to be completed by end-2015, V-Retail, part of the Sunway Velocity project, will boast more than one million sq ft of retail space. The project is a mixed-integrated development with an estimated GDV of RM3.2bil is expected to be completed in 2018.

Apart from this, Ngeow says they are also working on an expansion of Sunway University.

The new university building, which will be completed in 2014, is a 12-storey tower block providing 880,000 sq ft that can accommodate 9,000 undergraduate and graduate students.

On whether these assets will be eventually injected into REIT, Ngeow says it will all depend on the valuation and price of the assets when they are completed and what is the best value they could fetch for the group as a whole.

“You can clearly see that what we are doing is very symbiotic. For example, in the Sunway Integrated Resort City, the hotels will attract interest in the shopping malls and vice versa,” he says.

“Besides serving the local community here, there also a significant element of tourism in this integrated city. This resort has been drawing attention in the aspects of leisure tourism, corporates and also the MICE (meetings, incentives, conferences and exhibitions).

Besides the development, Ngeow says the division is also busy upgrading and refurbishing all the hotels under its wings as well as Sunway Medical Centre.

“As we are managing and upgrading all these assets, the division actually forms quite a big chunk of the group's total employees that stands at about 12,000,” he says.

On a longer term, Ngeow says Sunway is also involved in some massive projects in Iskandar Malaysia that is still in the planning stage. “Once these projects take off, it will take the group to a different and new level.”

It was reported that Sunway's latest land acquisition of 311.63ha last December in Iskandar Malaysia could transform it into one of the largest landowners in the high growth area with a total of 623.2ha and an estimated GDV of RM25bil.

The company has signed a subscription and shareholders' agreement with Iskandar Asset Sdn Bhd to purchase the land for RM412.7mil.

Regionally, Ngeow reveals that the division is eyeing for some commercial development in Tianjin, China as the group is now busy with residential property there.