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White knights to the rescue
12/06/2006 The Star By S.C. CHEAH

Although the last recession is behind us and several new developments are in full swing, there are still many abandoned projects, some more than a decade old, littered throughout the country.

Between 1990 and December 2005 the Housing and Local Government Ministry identified 261 abandoned housing projects with a total of 88,410 units, involving 58,685 purchasers for properties worth RM8bil.

It was reported that 87 projects were revived and completed by some white knights. Of late, more white knights have entered the fray, some making a name for themselves.

S.C. CHEAH takes a look at three such projects – an integrated project in Kuala Lumpur, a serviced apartment in USJ and an abandoned hotel in Klang.

WHILE most developers start a new development from scratch, Bluestone Group Malaysia (BGM) prefers to do it the hard way by reviving abandoned projects.

All its current three projects (gross development value in brackets) in the Klang Valley, namely the Puteri KL (RM200mil), Taragon Yap Kwan Seng (RM34mil) and Taragon Puteri Cheras (RM26mil) were formerly abandoned projects. The last two will later be renamed Puteri YKS and Puteri Cheras to reflect the Puteri brand name.

The Puteri KL was formerly Menara Li Foong that had been left uncompleted for more than a decade, while Taragon Yap Kwan Seng was bought for about RM5mil from a financial institution after the original developer failed to service its loan.

The 3.3-acre freehold land where the current Taragon Puteri Cheras stands was originally meant for 300 apartment units to be developed by the Li-Foong Group, which is also the developer of the adjacent Venice Hill condominiums.

K.H. Sim

Taragon Puteri Cheras will have 141 private town villas and duplex units in three- and four-storey blocks within a gated and guarded community with 24-hour CCTV and guard patrol. The prices are from RM155,000 to RM338,000.

BGM is confident of completing the project by December 2007, about 14 months ahead of schedule.

BGM managing director K.H. Sim said the company had completed piling works for Taragon Yap Kwan Seng, which was due for completion in June 2007, also 14 months ahead of schedule.

''We’ve done almost 80% sales. We are going to do up a show room using an actual unit to give people some ideas on what they can do with theirs. It will also serve as a model for contractors to follow,'' he said, adding that the units were very reasonably priced from RM368 psf for a 3+1 bedroom, 1,800 sq ft unit.

Although the price had risen to about RM438 psf, Sim said it was still way below the prices of other condominiums in the vicinity, some of which were priced from RM700 psf to over RM1,000 psf.

''All our bedrooms come with attached bathrooms. The master bedroom has a jacuzzi that can seat two persons. Other high-priced apartments do not have attached bathrooms for all their bedrooms. We are also looking at something big in Kuala Lumpur,'' said Sim, who was sourcing more land and properties in good locations to invest in.

Sim said it was more difficult to rehabilitate an abandoned project than start a new one as the former involved many problems and issues. These may include clearing legal and financial matters like litigation and compensation.

The building structure will also have to be properly inspected and may have to be re-designed. ''There is also the marketing issue of whether the new product follows the market trend and whether people are prepared to buy. Then, there is the stigma of abandoned projects. Banks are also quite reluctant to finance such projects,'' Sim said.

Despite the many obstacles, Sim feels all parties concerned should play their part in helping to revive abandoned projects as an uncompleted property is of no use to anyone. Besides being eyesores, they have become breeding grounds for mosquitoes, rats and snakes, and even haunts for criminal activities.

''Reviving an abandoned project can help a lot of purchasers who have to continue to service their loans. Local councils can perhaps lower their assessment rates.

''Instead of building something new, one should try to finish the project. When you start a new building, capital is not deployed in a very efficient way as such funds could be better used elsewhere. It is better to clean up the mess so that banks can go back to the business of lending money, as it is not in the business of holding assets,'' he said.

He added that a revived project could also generate revenue in terms of assessment for local councils as well as create jobs for contractors, suppliers and others.

Sim, who is BGM’s major shareholder, has extensive experience and knowledge of Malaysia’s property market. He has developed residential townships, golf courses, resorts, shopping complexes and industrial parks.

He has an engineering and accountancy background and has held senior positions at Colliers, Talam/Europlus Group and the Kayman Group.

BGM was established in 2003 and is in the business of property development, investment and real estate management services. It is also aligned to the international Bluestone Asia Group that focuses on property investment, development and fund management in Asia Pacific. The group is also part of the Allstones Group that specialises in real estate development and investment in South-East Asia.


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