Situated a short distance from the Kuala Lumpur International Airport in Sepang lies the laidback coastal area of Bagan Lalang where, on a fine day, the sea laps gently against the shore and beach-goers enjoy the quiet and slow pace of life. This is the location of the Sepang Gold Coast (SGC) development.
SGC is developed by Sepang Goldcoast Sdn Bhd, a 70:30 joint venture between Permodalan Negeri Selangor Bhd and Sepang Bay Sdn Bhd (Sepang Bay). The latter is the local subsidiary of Indonesian property development company Istana Group. The entire SGC project, covering 22km of coastline, is estimated to have a gross development value (GDV) of about RM3 billion, and is slated to be completed in 15 years.
City & Country had the opportunity to take in the vista of its first project in Phase One — the Golden Palm Sea Villas. This gated development stretches about a kilometre into the Straits of Melaka.
Traversing the sea
To get to the Golden Palm Sea Villas, golf buggies ferry visitors to the showhouses, which showcase a resort-like interior with alang-alang roofing imported specially from Bali. Sold as an investment resort property, the sea villa investment package has two options — own use or leaseback. For the former, owners have to pay a maintenance fee and contribute to a sinking fund.
As for the leaseback option, buyers will have their property managed and operated by international hotel operator Swiss-Belhotel International as a bona fide five-star accommodation. Swiss-Belhotel International manages several hotels in the region, including China, Australia and New Zealand. As for returns on their investment, owners will receive a rental return based upon the purchase price of about 8% nett for the first two years.
“The leaseback arrangement is for 15 years. From the third year onwards, the returns will be based on the occupancy rate. Swiss-Belhotel has indicated with confidence that it can bring at least 8% to 12% returns to investors,” shares Steven Yap, Sepang Goldcoast Sdn Bhd’s head of sales and marketing. All the maintenance charges and contributions to the sinking fund will be borne by the developer.
At the moment, the take-up rate of the 366 units is over 90%, with 85% of buyers choosing the leaseback option. Overseas buyers make up the bulk of owners mainly from the UK and Dubai. Unit sizes vary from 570 to 2,422 sq ft, with prices ranging from RM571,815 to RM2,500,696.
The development is modelled after the Palm in Dubai; the only significant difference is that the Golden Palm Sea Villas are built on stilts and not reclaimed land. Inside all the units, which come fully furnished, are fixtures and fittings tastefully selected for the resort feel, aided by the alang-alang roofs. The units do not have any cooking facilities to eliminate fire hazard, especially since the roofs are made of alang-alang (thatched roofing).
Adjacent to the Golden Palm Sea Villas resort is a leisure and recreational area called the Open Resort, which blends the best of resort and residential living. Exact details are still sketchy as plans are yet to be finalised. However, what is certain is that it will be for members only and residents of the resort.
The Golden Palm Sea Villas’ GDV is RM315 million and it is slated to be completed at end-2009. Swiss-Belhotel takes over the reins in January 2010.
The original plans for project No 2 of Phase One were for a serviced apartment block on seven acres called Sea Tropics Village, but the developer is now redrawing and upgrading its plans and concept for the site. “The reason for the change is that we have come up with a superior development concept hatched from a recent prolonged brainstorming session. This concept embraces a resort holiday yet home lifestyle, which was pioneered by Club Med International. We want to go beyond what Club Med has to offer. That’s why we are prepared to revamp the entire Sea Tropics concept to bring together a rich variety of new features, which both local and foreign investors will find it hard not to invest,” says Ho Hok Seng, president of Sepang Goldcoast Sdn Bhd.
Buyers of the serviced apartments have been informed of the changes and so far, no one has pulled out, says Yap, adding that buyers are willing to wait for the new plans to be announced.
However, construction of the last two projects of Phase One, which are also in the planning stages, namely a boutique hotel and apartment buildings, is still on track. “Depending on the authorities and land acquisition, work on the hotel should start in mid-2010 and the apartments in early 2011,” says Yap.
The hotel, with an estimated GDV of RM136 million, will be built on 17 acres, while the apartment building, with a GDV of RM440 million, will be on 22 acres. They will have 500 and 1,500 units respectively.
It is still too early to determine whether the two projects are for rent, sale or investment. “It depends on market sentiments. However, the direction for the hotel will be investment, while the apartments will be more towards own use and investment, due to the low entry rate and smaller sizes,” says Yap.
Infrastructure and safety
At the moment, the Phase One site can be reached via a narrow trunk road, which needs to be widened if it is to meet the expected increase in traffic from tourists and locals. Sepang Goldcoast Sdn Bhd has already obtained the green light from the authorities in 2007 for a highway, but the date for the construction is still being discussed. The whole stretch is estimated to cost RM60 million and would cut travel time from KLIA by half.
As Phase One will take several years to complete, along with other projects coming onstream soon, security of the area becomes an issue.
Currently, a security perimeter is set up around the sales office, restaurants and the main construction site. Later, a division between public and private areas will be created, with specific security measures, although at this time the details have yet to be ironed out. Eventually, the beach front of the development will be turned into a pedestrian area, says Yap. Transport within the vicinity will be aided by buggies and trams.
At the inception of Sepang Gold Coast, there were many who doubted the success of the project. Bagan Lalang residents have seen many developers scouting the area but there were no follow-through plans. However, Sepang Gold Coast Sdn Bhd’s desire to make something out of nothing was strong.
“Very few people actually believed we could do something like this, especially the Golden Palm Sea Villas,” explains Ho. “But we (the management) saw the potential and decided to give it our best shot.” The challenges also didn’t deter SGC chairman Bapak Yanki Regan, who is also vice-chairman of Istana Group, from investing in the project and being fully committed to seeing a dream realised.
The global economic slowdown has not derailed future plans for this development. “What you see now is only a drop in the ocean as Sepang Gold Coast is 22km long. With the momentum we have started, we have received many more partners wanting to come and develop with us. They want to be a part of this development. Even with this slowdown, given one or two years, I believe there will be a turnaround and I hope we will be well-positioned to benefit from it,” says Ho.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 751, April 20-26, 2009