PARAMOUNT Corp Bhd, a property developer that also operates KDU University College, is not often in the news but Tuesday's launch of its first integrated project, Paramount Utropolis in Glenmarie, Shah Alam, may start changing how the market views the company.
Paramount is mostly known as a township developer, with a record that goes back to the 1970s but as senior management points out in recent reports, with land getting scarcer and more expensive nearer to urban concentrations, integrated projects will become the norm, at least in the Klang Valley.
Group chief executive officer Chan Say Yeong says the move to develop more integrated projects is in line with market needs and to stay relevant.
“We've been modest in the past because the type of properties we were offering in Kemuning Utama (in Shah Alam) and Bandar Laguna Merbok (in Sungei Petani) sold by itself without too much fuss,” he toldStarBizWeek.
But Chan, who formerly headed Singapore-based CapitaLand Ltd's Malaysian operations, says times are changing and the company will need to change to meet the demands not only of property investors but also of its students.
He says five to 10 years ago, investors may have been happy with the company being under the radar but not any more.
“With the changes in the market, the way we deal with the media and even the way we deal with our investors will be pretty much different, because now they want a more robust Paramount,” Chan adds.
The launch of Utropolis will be the beginning of a new focus in development as the company looks for a niche in central Klang Valley's highly competitive property market where integrated projects with residential, retail, office and hotel components have been sprouting in recent years.
However, Chan is convinced there is a niche which the company can exploit. In the case of Utropolis, 10 acres of the 21-acre freehold project has been set aside as a new campus for KDU University College, which will relocate from Petaling Jaya's Section 13 when it is ready in the first quarter of 2015.
“University metropolises are unique in that they always stay relevant, seldom grow old or become unfashionable, in fact most university metropolises gain in stature and eminence as the universities mature. It is this same essence that we want to capture at Utropolis. We want to create a neighbourhood and a community inspired by learning,” he says during the launch of the project.
Utropolis is also a play on the words “university” and “metropolis”. The campus will eventually cater to 7,000 students and have facilities such as lecture halls, classrooms, library, a 500-bed student village and other amenities.
Paramount's executive deputy chairman Datuk Teo Chiang Quan considers the launch of Utropolis as a historic milestone for the company as for the first time, its property project will be anchored by a campus of the education arm.
“This is a first for our business and our brand,” he says at the launch, adding that the project is a perfect example of the synergies of its two businesses and a reflection of how the company is evolving and embracing change.
Teo says the company is looking to bring the quality of its education offerings to life in new and significant ways. “The design of the new campus for KDU University College places great emphasis on experiential learning, creating an environment where learning can happen anywhere, in the classroom and beyond,” he says.
Other integrated projects in the pipeline includes the 5.18-acre leasehold Section 13 land, which will be redeveloped when KDU University College relocates to Glenmarie while in Klang, the company is planning to launch another integrated project on 29.16 acres of freehold land along Jalan Goh Hock Huat.
“The future is looking very bright for the company, the property development division has a combined gross development value (GDV) of RM7bil to RM8bil on current landbank,” Teo says.
Meanwhile, Chan says the investment in the new campus, to cost around RM500mil, and the launch of more integrated projects with new ideas and innovative designs will show investors how the company is transforming.
“We're not too worried that we're considered a quiet company as our investors have been quite patient with us. They'll be rewarded in the longer term,” he says.
Chan says township development will continue to form the bread-and-butter earnings of the company. The company recently launched the first phase of the 520-acre freehold Bukit Banyan township and will soon be launching the first phase of the freehold 50.01-acre Sejati Residences in Cyberjaya.
What's in store at Utropolis
The entire project, which will take seven years to complete, will have a GDV of RM750mil to RM800mil. Besides the campus, the remaining 11 acres will comprise 1,051 units of serviced apartments spread over six blocks and 418 units of small office home office (SoHo) units.
There will also be 50 retail lots in a 120,000 sq ft retail centre, which will not be for sale as the company prefers to keep the units for recurring income.
The serviced apartment units are sized 690 sq ft, 900 sq ft and 1,100 sq ft with studio, two-bedroom and three-bedroom combinations that will be progressively launched. According to management, units will be sold from RM550 psf to RM650 psf.
Two blocks of serviced apartments comprising 414 semi-furnished units will be officially open for sale by March (with a soft-launch in February).RHB Research Institute Sdn Bhd analyst Loong Kok Wen expects the project to sell well as the first two blocks is being offered at around RM580 psf to draw buyers and the developer's followers to the first phase.
“We think the pricing is attractive, as UOA will be launching its Kencana Square's SoHo at RM800 psf (before discounts and non-furnished) and Dijaya launched the first phase of Tropicana Metropark serviced apartments at around RM600 psf in November last year,” she says in a report.
Loong says the units will be able to attract buyers with investment purpose in mind as the main draw is the new campus and the student population cachement.
“The GDV is likely to be revised upwards, as the current RM800mil is based on an average pricing of RM500 psf, which we think is rather conservative. Prices for the subsequent phases are expected to catch up with the neighbourhood,” she adds.