Drawn To The Fringes
Luring the Klang Valley folks
Seri Pajam Development Sdn Bhd may not be a prominent name among the country's leading developers, but people living in the southern fringes of the Kiang Valley may be familiar with this contractor turned developer that has established a reputation for building spacious yet affordable properties. The low-profile company has been involved in property projects in various towns in Negri Sembilan, such as Seremban, Nilai, Mantin and Bahau. Mindful of the spiralling house prices in the Klang Valley, the developer is targeting those considering bigger yet lower-priced homes just outside the country's most affluent area. It is eyeing mostly urbanites with families who are looking to move away from the congestion of the city for a better living environment and a slower pace of life. "In fact, 90% of our properties are sold to people working in the southern part of the Kiang Valley, such as Putrajaya and Cyberjaya," Tey Soo Leng, the finance director of Seri Pajam, tells City & Country. This is not surprising considering that the time taken to travel from Seremban to the Kuala Lumpur city centre is about 40 minutes while it is only about 20 minutes to Putrajaya and Cyberjaya. The founder of Seri Pajam Development, which was set up in 1994, ran construction company Nova Loyal Construction Sdn Bhd for 30 years before that, dabbling in property development through Bukit Maju Development Sdn Bhd. The turning point for the group's property development business came when Bukit Maju won a tender to be the main contractor for Bandar Baru Nilai, which was being developed by BBN Development Sdn Bhd, a subsidiary of public listed Nilai Resources Group Bhd (formerly known as PK Resources Group Bhd). From the experience and confidence gained from its involvement in Bandar Baru Nilai, the group decided to become a full-fledged property developer and set up Seri Pajam. Bukit Maju is still operating via its subsidiary SP Bahau Sdn Bhd, albeit on a smaller scale. Now, the group has its hands full with six ongoing projects with a combined gross development value (GDV) of RM1.52 billion. The projects being undertaken by both Seri Pajam and SP Bahau are Perdana College Heights and Citra Hill in Pajam; Bandar Warisan Puteri in Seremban; Nusa Intan in Senawang; Tiara Heights in Salak Tinggi and Desa Putera in Bahau. Both of SP Bahau's projects are situated in the Bahau district and are mixed-use developments. Its 100-acre Desa Puteri with a GDV of RM105 million was completed in 2008 and is 98% occupied while the 80-acre Desa Putera with a GDV of RM171 mil-lion is still under construction and is expected to be completed in 4Q2012.
Move up or move out? Like in most cities the world over, space is at a premium in Kuala Lumpur. As a result, city dwellers looking for more spacious homes face two options: move up (into condominiums) or move out (of the city). "For example, with RM400,000, one can only purchase a 1,200 sq.ft. terraced house in Subang Jaya. The same amount can buy a 2,300 sq.ft. terraced house here [in Negri Sembilan]," Tey points out. Seri Pajam has tapped into this growing market that seeks bigger space and a more peaceful environment. "Most of our developments are located in the southern part of the Kiang Valley, especially along LEKAS (Lebuhraya Kajang Seremban) and Kajang SILK for better accessibility for our customers," Tey explains. He says people are willing to travel from outside the Kiang Valley to the city centre because "one can get a better living environment for the same price. This augurs well for those who already have or are planning to start a family as most of our homes come with at least four rooms".
The property scene in Negri Sembilan's capital city Seremban, for example, has seen rapid growth over the past few years with development in the Klang Valley expanding southwards, he adds.
Solid track record
Seri Pajam has two completed townships in Negri Sembilan under its belt — Desa Melati Three in Nilai and Vila Suria in Bandar Warisan Puteri, Seremban — both of which are 90% occupied. Its ongoing projects are Perdana College Heights in Mantin, Taman Mulia in Nilai (both to be completed in 1Q2012), Bandar Warisan Puteri in Seremban (2013) and Salak Tinggi in Sepang, Selangor (2014). Seri Pajam's first development in Nilai was Desa Melati Three, a 56-acre township that is located next to Inti College. Ten years ago, says Tey, the first phase — comprising 22ft by 70ft terraced homes — was priced at just RM148,000. Today, these units are going for RM250,000 on the secondary market. Following the success of its first township, the group embarked on Perdana College Heights. The 81-acre site of the project was bought from Country Heights Holdings Bhd when work on LEKAS had stalled. The highway has since been completed. "Values in the project appreciated substantially after IJM Corp took over the building of the highway. Over six years, the price of the 18ft x 65ft terraced houses rose to RM240,000 from the initial selling price of RM148,000," Tey says. He adds that Perdana College Heights is now 80% completed and that the group plans to wrap up the last phase, comprising shop lots, by end-2012. Also set to be completed by year-end is Taman Mulia, a RM110 million, 57-acre mixed-use development, in Nilai. Seri Pajam has launched the first phrase of the 300-acre Nusa Intan in Senawang that has a GDV of RM500 million (to be completed by 2018), which will consist of 1-storey terraced and semi-detached houses with a starting price of RM120 psf. This township is accessible by a road from LEKAS and is sandwiched between two tracts of forest reserve. Tey says the company will also launch 1-storey homes in Nusa Intan for less than RM200,000 in line with the government's call for more affordable homes. Seri Pajam is also preparing to launch the first phase of 2-storey terraced houses in Citra Hill, a 60-acre township with a GDV of RM200 million (to be completed in 2015) in Nilai. Also in the pipeline is Bandar Warisan Puteri 2 in Seremban, a 200-acre mixed-use development with a GDV of RM480 million,which is riding the success of the 300-acre Bandar Warisan Puteri — a joint venture with TH Properties Sdn Bhd that has a GDV of RM500 million. Seri Pajam has already sold 70% of the properties in the latter. Also under construction is a series of semidees and 2-storey terraced houses on 60 acres in Salak Tinggi with a GDV of RM150 million.
Branding Seri Pajam
The company has sought to lift its profile through various branding initiatives. "Much effort and money has been spent on marketing and branding Seri Pajam in the past two years," says Jean Ten, Seri Pajam's assistant general manager (marketing). The launch of Seri Pajam's official site, Facebook page and Apple app for iPhones has been well received by its customers, she adds.T he company now has close to 17,000 likes on its Facebook page. "It is more than just marketing, which is a very one-sided activity. Social media can also help us understand our customers better and gain almost instantaneous feedback and insight," Ten explains. In the past, customers had to travel to the construction site to gauge the status of the development, but that has changed as the group is now posting work-in-progress pictures and announcements online, mostly on its very active Facebook page. Ten says the company's efforts to engage the public via social media has paid dividends — the group has seen increased exposure and confidence in its products. The developer will step up its branding efforts by participating in industry awards and launching mobile apps for Seri Pajam, she adds. Recently, Seri Pajam's construction arm Nova Loyal won an award in the Construction Industry Development Board's Malaysian Construction Industry Excellence Awards for its use of the industrialised building system (IBS). This system is also known as the complete assembly construction system where components are manufactured at factories (on or off site), transported and then assembled into a structure. All of Seri Pajam's properties are developed with the IBS, which has many benefits, the biggest of which is that the construction period can be reduced by 40%. This makes the system much more efficient than conventional building practices. "We have better control of quality and can continue production even in light rain. We need less labour as well, which directly affects construction cost's. This translates into higher margins and affordable prices," Tey remarks. Now the average construction period of most of Seri Pajam's projects is 15 months, which has become a huge pull factor for the developer's target market. According to Tey, many customers are buying the homes for themselves and are eager to move in as soon as possible to save financing costs. He attributes Seri Pajam's affordable prices to prudent financial and resource planning by the group's subsidiaries. They source the construction materials used in their projects from Nova Loyal.
Optimistic outlook Tey is confident Seri Pajam will be able to weather current market uncertainties because he believes demand is still strong for residential properties. "Our upcoming launches are in our townships, hence we are confident we can continue to sell well. Besides, Seri Pajam has a good product mix — we offer homes that start below RM200,000 while our upscale properties are priced from RM1.5 million. Thus, we expect to hit sales of RM320 million by year-end." On future land acquisitions, Tey says the group is in the process of acquiring an additional 200 acres in Seremban with an estimated GDV of RM480 million. Why Seremban? Because Seri Pajam is not planning to venture too far from its comfort zone any-time soon, unless an unexpectedly good offer comes along, he says. However, he adds, the group is eyeing land in the outer areas of the Klang Valley such as Cheras or Kajang.
When asked about possible listing plans, Tey says, "For the moment, being a private company serves Seri Pajam well. Last year was very good for us — we saw a 30% to 40% rise in sales for a total of RM251 million." This is a far cry from the group's performance in 2007 when it made a total of RM75 million. Tey explains that maintaining the status quo is in the best interests of the company's shareholders and stakeholders as they will still have full control of their products and the running of the company. He does not rule out the possibility of listing Seri Pajam in the future, but "only if we want to expand aggressively".