Serviced apartment boom in Klang Valley

 02/08/2004 The Star

MOTORISTS travelling along Jalan Tun Razak in Kuala Lumpur must have noticed two large banners with the words “Golden Avenue Serviced Apartment” hanging on the uncompleted Tristar Service Apartment project.  

The Tristar project, undertaken by Instangreen Corp Bhd, was about 30% completed (with more than 80% of its 700 units of apartments and offices sold) before it got into trouble. The uncompleted structure next to an LRT and monorail station had become an eyesore over the past few years. 

The LBS Bina group, in reviving the project recently, became one of the latest reputable developers to jump on the serviced apartment bandwagon.  

The freehold Golden Avenue comprises 739 units of serviced apartments in a pair of 20- and 23-storey blocks atop an 11-storey car park and a five-storey retail podium. The fully furnished units, with sizes ranging from 305 sq ft to 1,452 sq ft, are priced from RM153,000 to RM727,000. Purchasers get 5% guaranteed rental returns for the first two years and free five-day stay per year. 

LBS Bina assistant general manager Christina Kaw said the Golden Avenue's units were priced around RM500 per sq ft (psf) compared with between RM400 psf and RM600 psf for some serviced apartments in the city. 

She said Tristar had an office tower and a serviced apartment tower. “However, we have converted both towers into serviced apartments as we feel that offices are difficult to sell. We are giving a wider range of layouts,” she said, adding that response had been encouraging since the soft launch about a month ago.  

Another project that has been revived is the former CN Gallery, now renamed as NAS Pavilion, which was launched on Jan 9 this year. Strategically located next to the Berjaya Times Square and a stone's throw from a monorail station at Jalan Imbi, it will have 438 units of furnished serviced residences with prices ranging from RM198,800 to between RM568,680 and RM1.6mil for the nine penthouses. Sales have been quite good. 

One can expect more of such projects to be revived. Everyone seems to be pretty gung-ho over the improved economy and many developers have been launching and reviving serviced apartment projects in the city and the outskirts. Certain stalled office and hotel buildings also have the potential of being turned into serviced apartments. 

The current serviced apartment boom is reminiscent of a similar boom prior to the last recession that hit this country in the middle of 1997. Keen competition has forced developers to woo buyers with lots of goodies, including hefty discounts and themed concepts. 

The Golden Avenue serviced apartments will be built on the abandoned Tristar project.

There seems to be some haste in launching these projects with the Housing and Local Government Ministry planning to legislate such developments, as they do not fall under the ambit of the Housing Development Act (HDA). 

As if in anticipation of new laws that might affect their projects, some developers have included conditions in their sale & purchase agreement (SPA) to protect themselves. These include having the purchaser refunding to the developer any additional fees, expenses, charges or taxes as a result of the coming into force of any laws, by-laws, rules or regulations after the execution of the SPA. 

Developers of serviced apartments feel that legislating serviced apartments would not prevent projects from being abandoned. “You can have the Housing Development Act but all it takes is for an ingenious developer to mess things up. What is more important is to have a responsible developer,” said one developer. 

Although there is no requirement for a HDA project account for serviced apartments, developers feel that buyers should not be unduly worried as lending banks imposed strict rules. 

“The banks impose an escrow condition on the project's finances. They want to be a signatory to a project account to ensure that all income and expenses are properly verified. They also want to know the sales update. 

“Banks are very careful on whom they lend to these days and they want to have a say,” said Masteron Sdn Bhd general manager Alex Tan. 

Klang-based Titijaya Group has a project account for its e-Tiara serviced apartments in Subang Jaya and its SPA is very similar to the normal SPA. More than 90% of its 304 units had been sold since its launch in May.  

So who else are into the serviced apartment business? Well, practically everyone from big names to unknowns. 

The Choy Fook Onn & Sons Realty, through its unit Utararia Development Sdn Bhd, is creating a Japanese garden with a large Koi pond in its Koi Tropika serviced condominium in Puchong. 

Its Phases 1 and 2 had been fully sold. There are two 10-storey and two 20-storey condominium blocks and two shop office blocks. The units are priced from RM115,920 with built-up areas of 846 sq ft to 1,188 sq ft. The phase 3 block launched in April was about 80% sold early this month.  

Many buyers were attracted by the 10% rebate and free items, including a parking bay worth RM5,000, imported kitchen cabinet, lighting fittings and fixtures, two air conditioning units, iron grills at the entrance and dry yard, plaster cornices for living, dining and rooms, water heater, shower screens for bathrooms, ceramic tiles for dry yard, and ceiling fans for two bedrooms. 

The Mayland Group has several serviced apartments in Kuala Lumpur. These include the Windsor and Waldorf Tower luxurious serviced apartments at Sri Hartamas that boasts a 60,000 sq ft Balinese-themed sky garden cum clubhouse, The Tower downtown serviced apartment opposite to Capital Square and the Park View serviced apartment opposite the KLCC. 

The Heritage serviced residence (next to the Mines Resort City) in Seri Kembangan also drew a lot of interest. The studio unit is priced from RM159,990 where 90% of the first block was sold within three weeks of launch late last year. 

There are several new serviced apartments in Petaling Jaya. They include the Millenium Place smart serviced apartment in Section 14, where the units are priced from RM179,800, Sunway City Group's high-end furnished serviced suites in Bandar Sunway and the 60-unit Perdana View boutique serviced residence in Damansara Perdana. They have been reported to be selling well. 

Among the new ones in Kuala Lumpur are the 900-unit Berjaya Times Square Service Suites, UMLand Bhd's 247-unit Seri Bukit Ceylon serviced residence, Goldhill Group's 38 Bidara (from RM488,888) and its newly launched 176-unit Goldhill Gardens in Jalan Raja Chulan where a one-bedroom unit is priced from RM398,000. Units come with free items like car park bay, designer kitchen and wardrobe worth RM100,000. There is also the proposed 240-unit Casa Mutiara (from RM100,000), Sri Acappella near Giant Shah Alam, and the Amcorp Serviced Suites, off the Federal Highway. 

The proposed RM3bil Pavilion Kuala Lumpur, a world-class integrated commercial development, will feature a luxurious serviced apartment apart from a six-star hotel, shopping and entertainment mall and a corporate office tower. 

However, not everyone is turning their commercial land into serviced apartments. TTDI Harta Sdn Bhd recently launched two condominiums in Taman Tun Dr Ismail. The Residence condominium sits on residential land while The Plaza condominium is on commercial land. Both are priced at around RM260 psf and buyers get two free parking bays.