TWO developers are executing their plans to develop multi-billion ringgit mixed-development mega projects this year despite a bleak property market outlook.
Hunza Properties Bhd is constructing the RM9bil Penang International Commercial City (PICC), dubbed the KLCC of the north.
IJM Land Bhd is starting construction work for The Light City, a RM4bil integrated mixed-development scheme next to the Penang Bridge, in the third quarter of this year.
The IJM project comprises a 1.1 million sq ft retail mall, two international class hotels, a convention centre, office tower, and two condominiums.
With a gross development value of about RM9bil, the PICC project, located on 17.4ha in Bayan Baru, comprises the PICC Tower, a business processing outsource office, a five-star hotel, a medical centre, a food and beverage boulevard, a lifestyle mall, and residences.
Hunza Group managing director Datuk Khor Siang Gin says the PICC project will take eight to 10 years to complete.
“We are carrying out the residential phase first, to be followed soon by the commercial component.
“Known as Muze, the scheme comprises two towers with 846 residential units, which have built-up areas starting from 1,078 sq ft onwards,” Khor adds.
On whether it is the right time to launch PICC, Khor says that by the time the scheme is completed, the property market and the economic scenario should have improved.
“The short and mid-term outlook is not encouraging, but eight to 10 years from now, we should see improvement.
“If there are no new project launches, the whole economy could come to a standstill.
“PICC will create about 15,000 jobs, generating spillover effects for the local economy,” Khor says.
“We are confident PICC will draw investors to Penang because it is located strategically near Penang Bridge, Penang International Airport and the Free Industrial Zone.
“We also have the right product mix for investors looking to generate long-term recurring incomes.
“Our development is designed to be green, safe and smart with interconnectivity to enhance its appeal to investors,” Khor adds.
IJM Land senior general manager (north) Datuk Toh Chin Leong says construction work for The Light City project was supposed to start last July.
“We have to redesign the project into two phases because of the soft market.
“The first phase of the scheme, now that it is broken into two, comprises a retail mall with a 700,000 sq ft gross floor area, an international class hotel, convention centre and a condominium project.
“The construction cost for the first phase is estimated at RM1.5bil.
“As for the second phase, we will study the market conditions first before making a decision, Toh adds.
“The second phase comprises a 400,000 sq ft retail mall, an international class hotel, and another condominium project,” Toh says.
According to Penang Master Builders & Building Materials Dealers Association adviser Datuk Lim Kai Seng, the two projects would generate RM5bil worth of jobs for the local construction industry.
“We can expect about RM5bil to be generated over a 10-year period as 40% of the total gross development value of both projects would be required for the construction work.
“Another RM1bil, about 20% of the RM5bil, would be required for renovation works.
“The amount generated is substantial, considering the fact it is from two projects only,” Lim says.
According to Malaysia Retail Chain Association president Datuk Seri Garry Chua, Malaysia is expected to have close to 700 shopping malls by the end of 2019 with total net lettable area of 170 million sq ft.
There are 560 shopping malls operating nationwide, while the occupancy for a majority of the malls in the Klang Valley is between 85% and 87%, Chua adds.
Meanwhile, Areca Capital Sdn Bhd chief executive officer Danny Wong says the economy is slowing down, but it is still growing.
Wong adds that the country is not in recession or facing a very bearish situation and expects sentiment to continue improving in the first half of this year.
M&G Real Estate property research head for Asia, Jonathan Hsu, says the retail property outlook remains upbeat even as China maintains tight control on capital outflows.
According to Hsu, the mainlanders are travelling to new destinations in Asia on a more frequent basis for lesiure and shopping.