Are you part of the 'Commdustrial' Trend yet?
Teras Eco Sdn Bhd’s Senibong 88 is an innovative concept that capitalises on the growth potential of the southern region
With proper foresight and planning, one can never go wrong in the real estate business. The industry itself has always been a stable segment in the Malaysian economy; land prices have generally remained steady while selected hotspots have seen significant appreciation over the last few years.
The recent economic downturn might have made some buyers, investors as well as developers wary about upcoming development projects. However, with due diligence, a developer can rise above the quagmire with a unique proposition that caters to the needs of present and future building development trends.
Coined by Teras Eco Sdn Bhd, ‘commdustrial’ is one of the latest development trends to emerge. The concept is one where commercial and industrial real estate converge in one space.
A NEW DIRECTION
Teras Eco’s journey began about four years ago as a small enterprise. It soon caught the eye of Acoustech Bhd, a manufacturing company specialising in the OEM audio production for MNCs. The management of Acoustech realised the need to diversify their income stream to include businesses which will provide stable long term returns. Thus, the chairman Leong Ngai Seng together with Board of Directors made the decision for the company to undergo an extensive corporate reshuffling to eliminate non-productive business segments within the Group and to venture into new areas. With a new focus, the company decided to venture into the property business to garner stable better returns and bigger profit margins. Another reason for the restructuring, according to Leong, is because the currency fluctuation affects the value of its raw material more severely than the property segment.
As with any expansion, careful consideration was placed on acquiring the right developer to ensure the sustainability and success of the business long-term. The directors found Teras Eco appealing because of its vision, mission and a strong, dynamic and young management team. According to Acoustech Bhd’s Group General Manager Tee Kuan Hong, the company gauges the needs of buyers by studying the market in detail. They are able to create a sustainable business model by matching the needs of buyers with the supply of new properties in the market.
This was what attracted the directors of Acoustech to the developer, which led to the acquisition of Teras Eco in August 2015. Subsequently, JM Cemerlang Sdn Bhd, which has land bank in Johor, was also added to the property portfolio of Acoustech.
The entire Teras Eco team was actively involved in Senibong 88, its flagship project; from discussing the value of the product to providing feedback on issues such as land location, property types, potential buyers and target investors to the directors.
Tee says, “Teras Eco provides a one-stop solution for everyone’s needs. In order to achieve this, the entire value chain of the company, ranging from project management, sales, marketing to construction and administration staff was involved in the whole development process, from planning to launching.”
The reason for this is because Tee believes that his company’s ecosystem represents the ideas and voices of their consumers. Having assembled its dream team, Teras Eco is in pursuit of creating value added lifestyle products across all generations and in return help its buyers and investors realise their dreams.
Over the years, Iskandar Malaysia has transformed the landscape of Johor. The growth of the economic zones within the southern region in particular has created quite a buzz. Some of the factors that are driving this growth include the establishment of an education hub, medical hub, industrial hub and increase in tourism related activities.
Driven by the success of business investments and job opportunities at Iskandar Malaysia, the region has seen a population growth of 28% over the last six years, from 1.3 million in 2010 to approximately 1.8 million last year.
The mature population living in the area favours Teras Eco’s project Senibong 88, which consists of 45 units of industrial lots spread over 20 acres of prime real estate at the heart of Permas Jaya. Located between the Johor Bahru East Coast Highway and Pasir Gudang Highway, Senibong 88 offers easy access to the Johor Bahru City Centre, Singapore, Port of Tanjung Pelepas and Senai International Airport.
Surrounded by reputable projects, the development is capitalising on offering a unique proposition to the residents of Permas Jaya. Tee says, “Offering the right product to the public is crucial as we are able to bring new perspectives to the existing real estate landscape.”
Long gone are the days when industrial lots are considered dirty and only built for the specific purpose of catering to manufacturing businesses. According to Richard Ong, Acoustech Bhd’s executive director, the population growth within Plentong, Masai and Permas Jaya places them in a unique position to attract a variety of businesses to Senibong 88.
Branded as The Entrepreneur Park, Senibong 88 offers 24-hour security with 30 units of street CCTV, patrolling services and two guardhouses, thus creating a safe haven for businesses to operate. To further transform the landscape of the industrial lots, Teras Eco has included an outdoor gym and jogging track within the fully landscaped garden setting.
The Entrepreneur Park encompasses a balanced lifestyle; merging work, relaxation and healthy living all in one. Providing an avenue for working adults to workout and have a place to unwind after work offers the perfect work balance environment.
The concept of the project allows a flexible usage of the space without restricting the space to only manufacturing businesses. The high ceiling and spacious area can be converted to create a mezzanine.
Unlike shop lots with limited parking space, the development’s additional 2,000 sqft of land provides ample parking for shoppers. With 3,000 sqft of ground space, businesses can easily utilise the floor area according to their needs instead of having to cram everything in shop lots that usually have only half the ground space.
The inimitable offering has drawn various investors; from law to architecture firms. Incidently, Teras Eco would be relocated to Senibong 88. After all, what better way to boost the confidence of investors and the public than by utilising their own creation to highlight the strength of their product.
To tap into the catchment of younger entrepreneurs, Teras Eco is currently in talks with several food and beverage outlets, including coffee houses and a Japanese/international buffet. For investors, the attraction of the project lies in the dual functionality of the space, coupled with the potential appreciation in terms of value and rental makes it a good proposition.
The rental rate per sqft for a project that is solely a manufacturing site is between RM1.00 and RM1.20, while a commercial property rate is RM1.50. What this translates to is business owners are open to endless possibilities in terms of being creative with the space.
PROSPECT FOR INDUSTRIAL
Although Johor is currently experiencing a lull in the residential property market, especially in terms of high-rise developments, there has been a steady flow of multinationals expanding or relocating to the state for several reasons. Firstly, Singapore’s land scarcity is pushing manufacturers to the closest available area to conduct business; and Iskandar Malaysia is the best choice due to its great accessibility to both sea-ports and airports.
Furthermore, the weaker Ringgit and Iskandar Malaysia’s proximity to Singapore is an attractive proposition for MNCs. Examples include Frost and Sullivan, which is currently operating in Iskandar Malaysia. Coca-Cola is making the moving from Tuas to Iskandar Malaysia as well.
There are also numerous affirmations by Korean, Chinese, Russian, United States, Italy and Japanese MNCs to open services and facilities within the region. Tee says, “Teras Eco is focused on the industrial sector at the moment to capitalise on the spillover effect from manufacturers moving from Singapore to Iskandar Malaysia.”
Currently there are quite a number of industrial lots operating as commercial lots within Iskandar Malaysia, however, none are purpose built as a commdustrial hub. As a pioneer of this concept, Teras Eco’s rational behind creating such a hub is to challenge the traditional notion of an industrial development, which is usually gazetted far away from the catchment population.
Senibong 88 capitalises on its close proximity to Plentong, which has about 500,000 residents living in the surrounding area. Ong says, “One of the advantages of a commdustrial hub is its ability to attract both businesses and people because of the wide range of services and facilities that it can offer.”
Creating an avenue for entrepreneurs to be innovative and creative by offering boutique hotels, art gallery, gym, coffee houses and restaurants within a building structure typically associated with industrial manufacturers is different from the norm, which automatically creates a buzz regarding the development.
BRANDING THE WAY FORWARD
As a relatively new player in the property industry, Leong states that one of Teras Eco’s main challenges so far is branding. He elaborates, “It takes about two to three years to complete a project, one project would not be enough to satisfy buyers. They need to look at several to have the confidence to go for subsequent projects by the developer.”
To ensure that Teras Eco stands out in terms of product delivery, Leong emphasises on the services the team provides for buyers from beginning to end. He says, “From providing service with a smile to solving all the issues that buyers have as swiftly as possible, our main priority is to cater to their every need. That will help ensure the buyers’ interest in coming in for future projects.”
Capitalising on the spillover effect in Iskandar Malaysia is Teras Eco’s biggest goal over the next five years as they position themselves as a reputable and sustainable developer. And one of the growth area that has been identified is Pengerang.
The state government has realised the importance of creating a workforce related opportunity in order to increase population growth. Therefore, Teras Eco’s industrial and commercial projects will certainly fit into the plan of the Johor state government.
MNCs such as Petronas and Samsung are attracting skilled expatriate workers to the Pengerang oil and gas refinery. As a relatively new area, Pengerang has a shortage of commercial lots, thus Teras Eco has undertaken joint venture projects with the state government to cater for the shortage.
TARGETING THE RIGHT MARKET
Tee points out Teras Eco’s other areas of interest, which include Batu Pahat and Kluang, as the outskirts of Iskandar Malaysia would be the next area to grow considering the upcoming electric train project. The developer believes in working together with the government in joint venture developments that cater to the mature population in locations such as Masai to ensure the wholesome growth of the entire Iskandar Malaysia region.
Besides Iskandar Malaysia, Teras Eco also harbours interest in venturing into the Kuala Lumpur property market and the state of Melaka. Touted as one of the best tourism sites in Malaysia, the developer believes the strong economy, coupled with adequate basic amenities and greenery makes Melaka a great location.
Ong sums it up by saying, “When times are slow, sales will be affected. It is up to us to expand on businesses that can give us recurring income. We may look into the hospitality segment to complement our business. Nowadays, developers do not build houses; they build homes. That is why bringing in a hospitality arm may help strengthen our branding efforts.” By increasing public awareness of the brand, the developer would be in a better position to reach out to the buying public.
Tee says: Location! Location! Location!
Location is very crucial; buyer’s accessibility to the product plays a huge role.
Focus on the products that the developer has to offer, and analyse the sustainability and concept of the products.
Besides the reputation of the developer, the quality of the product and after sales service are also important factors to consider.