On track to be largest mall operator

by **Cals** Mon 14 Apr 2014, 00:32

Published: Saturday April 12, 2014 MYT 12:00:00 AM
Updated: Saturday April 12, 2014 MYT 7:18:38 AM
BY THEAN LEE CHENG
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WHEN Sunway Group Bhd purchased land in Johor in 2012 and 2013, there were comments that it was “wrong product, wrong timing”, because soon after that, anti-speculation measures were introduced.
With a combined acreage of 1,800, Sunway Group will be among the largest landowners in Johor. But the group is not just interested in increasing its land bank. They are currently brainstorming on how to build a Nature Capital to leverage on its natural landscape comprising a meandering 7km river, jungle and sea front.
It is set to be the largest shopping mall operator in the country in the next few years with about 5 million sq ft of net lettable area when all its malls are completed.
The group currently has three malls – Pyramid in Sunway, Giza in Kota Damansara and Carnival in Seberang Prai. It plans to build four more malls, and extend its Pyramid mall further.
It is building an outlet mall in Ipoh, the likes of Johor’s Premium Outlet, Velocity in Kuala Lumpur and is currently refurbishing Putra Mall, which it bought at a 2011 auction for RM522mil. There were no other bidders.
Founder and chairman Tan Sri Jeffrey Cheah says that unlike other developers who build and sell, Sunway builds, operates and creates value for the group and the people.
“We have built our brand through CSR (corporate social responsibility),” he says.
Unlike the Lim family from the Genting group who built a casino on the highlands, Cheah built a theme park in a mining hole 50 storeys below ground level.
The patriachs of both families raised eye-brows during their time. Both faced skepticism. Both made good their vision to succeed. Cheah prefers wholesome family entertainment.
During a partnership agreement to bring new attractions to Sunway Lagoon, Cheah beckoned his daughter Sarena to take pictures with Nickelodeon characters SpongeBob SquarePants and Dora, the Explorer after all the formalities were over.
He is currently planning the group’s third theme park in Johor and will make the best of the natural landscape comprising a river, jungle and sea front. He is also planning the Iskandar Mall. The competition will be great because mall operators from the Klang Valley will also be there – among which is the IGB Group. Using the same template which brought him so much success in Bandar Sunway, Cheah says Sunway Iskandar will also have various components such as education, hospitality, theme park, retail, residential, commercial and healthcare.
It is only when these pieces of puzzle come together that the story will be complete, he says. But Sunway Iskandar will have two noteworthy elements – access to Singapore via the proposed southern access and possibly one of the largest auxilliary police forces.

Security & accessibility
Says Cheah: “Security and accessibility will be our number one consideration. This will differentiate us from the rest.”
It will not be as densely populated as other parts of Iskandar and he will introduce only a few hundred units at a time.
Cheah declined to say how long it will take to complete Sunway Iskandar, with an expected gross development value (GDV) of RM30bil but says he has been developing Bandar Sunway, about 800 acres, for about 30 years now and still continuing.
Its first phase in Iskandar will be Lakeview Precinct, a mixed integrated township with landed and high-rise residences, designer offices, serviced residence and boutique retail.
The group plans to launch properties to the tune of RM1.7bil this year. More than half of this will be from its Klang Valley developments.
To be sure, the property scenario this year is not all that rosy as a result of various anti-speculation measures which kicked in early this year. More measures may be in the works to cut household debt.
Says Cheah: “It (anti-speculation measures) will be a challenge for developers, but it is a good move. So we will build in Medini (691 acres) first.” Developments within Medini enjoy the incentives introduced by Iskandar Regional Development Authority, which include a 10-year corporate exemption and 100% foreign ownership. It is also exempted from the latest regime of Real Property Gains Tax which many consider as more stringent than previously.
On the flood of retail space in the country, Cheah answers in the affirmative. In a separate email, the group’s joint managing director Sarena says both Putra and Velocity will be “fully tenanted when they are operational in December 2014 and 2015 respectively.”
“Retailers have responded favourably and confidently to these two mall locations,” says Sarena. Her father has also been the number one sales man for the group. He is talking to brand owners for his Ipoh outlet mall.
But why Ipoh?
“The (North-South) highway. I have (The Lost World of Tambun) theme park and theBanjaran Spa there. About 1 million cars use that highway. You just need to turn down from the highway and five minutes away, you will be at the outlet mall. I have already talked to brand owners,” he says.
Cheah is used to skeptics and he has his share of challenges during the 1997/98 Asian financial crisis. As for his future goals and development plans, he says: “We will improve on our mistakes ... I plan to inspire before I expire.”