LAST Monday, Franklin Street in Melbourne was abuzz as kompang players and lion dancers readied themselves at the entrance to SP Setia Bhd’s new sales gallery.
Malaysia’s biggest property developer launched its Fulton Lane property that morning, which is presently just an empty parking lot across the street, but by 2014 will be home to two high-rise apartments.
If the turnout was any indication, buyer interest is intact. Corporate-types and well-heeled guests packed the gallery showcasing SP Setia’s maiden venture into Australia.
With this property, the developer is hoping to attract those who seek proximity to Melbourne’s many amenities; Queen Victoria market, RMIT and La Trobe University are some of the places in walking distance to it.
Sandwiched between two streets, the one-acre, A$470mil gross development value project will comprise a 29-storey tower facing Franklin Street with 291 apartment units, and a 45-storey tower facing A’Beckett Street with 409 units. Connecting the two blocks is a retail podium that rises to nine levels. SP Setia president and CEO Tan Sri Liew Kee Sin says the first tower has sold about 80% of its lots and the second tower, the taller of the two, about 30%.
The first tower was bought by mostly Malaysians – at its preview sale a few months ago, 70% was snapped up within three days. The second tower is targeted at local Australian buyers as well as those from Indonesia, Singapore, Brunei, and Hong Kong. In a few weeks, SP Setia will head to China to market it there. Buyers for the first tower are investors and owner-occupiers while the second tower will primarily be owner-occupiers.
The project is expected to fetch a margin of 20%, comparable to developments in other major cities in emerging markets.
Fulton Lane’s apartments, which come with one, two and three-bedrooms, start from A$365,000. Facilities include a garden terrace, gymnasium, indoor heated lap pool, a lounge cum reading room, two areas for barbecue, and a theatrette.
The “lane” in its name is not accidental – SP Setia plans to create a lane between Franklin and A’Beckett Street to mimic Melbourne’s “laneway culture”.
And no wonder - the city’s lanes and alleys are its claim to fame, where tourists and locals flock to savour Melbourne’s coffee and cuisine.
SP Setia’s venture into Australia has also enabled it to pick up on that market’s best practices, Liew says. For one, environmental sustainability is a prime concern there, and being a developed country, Australia also operates more transparently.
This, Liew points out, is something SP Setia can learn from.
But even as Australia prospers from a mining boom, there is relentless talk of oversupply in the housing market.
The Australian Bureau of Statistics recently released data showing that new construction of apartments in Victoria for the March quarter this year hit 5,168, the second highest on record. Similarly, a report out last week from the Housing Industry Association found that new home sales were down 14% in the third quarter, and suggested the drop in house prices may accelerate.
CB Richard Ellis (M) Sdn Bhd executive director Paul Khong says Melbourne’s property market is currently “toppish” due to the supply from various new projects.
“It has been a popular destination for foreign buyers investing in Australia especially for education purposes, but the prices have already moved up quite a bit over the last 24 months,” he tells StarBizWeek.
“We expect residential prices in Melbourne to be flattish and do not see any drastic oversupply that may cause a major dip in capital values.
“We expect capital values to stabilise as we see good support on the tenancy side,” he says, adding that residential yield is about 4% to 5% and anticipated to stay at that level.
Nonetheless, Melbourne is widely acknowledged as Australia’s fastest growing city, its population boosted by students and emigrants.
The State Australian Cities report by an Australian ministry says the population in Melbourne grew by 605,000 to 4.077 million over the past 10 years and is projected to rise to five million by 2027 at the current growth rate.
SP Setia is probably hoping for that outcome as it is in the midst of planning for an upcoming project in South Yarra, also in Melbourne, which sits on 2.23 acres and may accommodate up to 329 apartments.
A property analyst thinks that Fulton Lane can count as SP Setia’s first successful foray overseas.
“Their project in Vietnam is not making money, the Singapore one has yet to take off, and they’ve given up on the China joint-venture. So it (Fulton Lane) is good news,” he says. - By John Loh (The Star)
SP Setia Australian venture pays off
F&N partners with Singapore’s FCL to develop Section 13 land
Fraser & Neave Holdings Bhd (F&N) and its subsidiary, Vacaron Company Sdn Bhd (VCSB), will team up with with FCL Centrepoint Pte Ltd (FCLC) from Singapore to develop two parcels of leasehold land in Section 13, Petaling Jaya.
AmInvestment Bank Bhd told Bursa Malaysia yesterday that pursuant to the shareholders agreement, F&N and FCLC would each have 50% equity in VCSB to develop the land which is now occupied by Premier Milk (Malaya) Sdn Bhd and F&N Dairies (M) Sdn Bhd, both of which are subsidiaries of F&N.
The proposed joint venture (JV) between F&N and FCLC via VCSB, being the owner of the land measuring 554,264 sq ft, was to undertake a proposed mixed development project comprising hotel, offices, shopping mall, retail properties and residential properties. According to the SSA, FCLC agreed to subscribe 500,000 ordinary shares in VCSB for RM500,000 cash for the 50% stake.
“The company is unable to disclose the specific details of the proposed development as VCSB has yet to obtain the relevant authorities's approval for the proposed development and building plan,” it said.
The proposed JV is expected to contribute positively towards the future financial performance of the F&N Group.
However, it is conditional upon approvals obtained from shareholders of F&N at the forthcoming EGM and any relevant authorities, if required.
Meanwhile, during the commissioning of the F&N Dairies plant at Pulau Indah yesterday, CEO Datuk Ng Jui Sia said the RM350mil plant was completed ahead of schedule and ready for commercial production early next year.
“The plant will replace our dairy manufacturing facility in Petaling Jaya and this new plant will have an initial planned capacity in excess of 14 million cases annually,” he said.
On the current flood situation in Thailand, which had affected F&N's dairies operation in that country, Ng said production capacity at the Petaling Jaya plant had been ramped up by an additional 20% to cater to the needs of the Thai and Indochina markets until the situation returned to normal. The Pulau Indah plant is the second greenfield canned milk plant after its RM250mil dairy plant in Rojana, Thailand, which was officially opened last June. - By Edy Sarif (The Star)
