Hilton boost for i-City development
I-Bhd sees cautious market as opportunity to stay ahead
IN a period when many developers are cautious about the property environment, some see it as an opportunity to stay ahead of the competition.
Property developer I-Bhd, best known for its 72-acre i-City development in Shah Alam, has a number of projects in the pipeline for its freehold ultrapolis.
Among them is its DoubleTree by Hilton i-City Hotel, a four-star, 300-room hotel with a gross development value (GDV) of RM250mil.
According to i-City director Monica Ong, the hotel is slated to be opened in 2019, adding that the Hilton will be the second international hotel chain within i-City. “The hotel will cater to the demand of both the business community and travellers who are attracted to the leisure activities in i-City,” she tells StarBizWeek.
The other international hotel in i-City is the three-star Best Western, which was opened in 2015. A five-star hotel is also scheduled to set up operations in i-City.
“Construction of the Hilton hotel began in 2016 and piling works are in progress,” says Ong.
With the Best Western having an average occupancy rate of around 80%, Ong is confident that the Hilton will receive a similar response when it opens.
“As i-City is an international business hub during the day, and a lifestyle haven at night, it would cater to the demands of the business community and travellers who are attracted to the leisure activities in i-City.”
Game changer
According to Ong, with an average of 90,000 weekly visitors to i-City, the Hilton is set to be a game changer and is expected to set a benchmark for luxury hotels and transform the Mice (meeting, incentive, convention and exhibition) sector in Malaysia.
“The hotel will feature the first 360-degree LED digital canvas in its grand ballroom, supported by state-of-the-art light and sound systems that surround its circumference to provide guests an unparalleled experience.”
With about 11,000 sq ft of function space spread over two floors, the hotel will also have six versatile meeting rooms.
Ong says the hotel will also boast of enhanced technology for guest rooms as well as unique guest room management for improved guest experience.
“Starting at about 300 sq ft, the guest rooms are the largest in the city, and suites starting from about 450 sq ft are also unmatched in size.”
Upon arrival at the lobby, the guest room will be pre-cooled to a temperature of about 25 degrees Celsius, Ong says. As the guest is being transported to the room, the room will be cooled to a temperature of about 23 degrees Celsius.
“Thus as the guest enters the room, a door contact system will be activated, where upon detection of body temperature, the entrancemood lighting system will be switched on and the room curtains will automatically open to welcome guests with a spectacular view of the i-City skyline.
“Stepping out to the hotel balcony, the landscape surrounding DoubleTree by Hilton i-City has an abundance of water features and trees to enhance the ambient of this part of the ultrapolis.”
Ong says the Hilton group has recognised Shah Alam as one of the growth centres in the Klang Valley.
She says the partnership with Hilton Worldwide will enable i-City to leverage on its expertise in providing hotel development and management services.
“The Hilton Worldwide brand is growing in the most vibrant and sought-after destinations around the world, located in strategic tourism destinations such as the Taj Mahal town of Agra, Orlando and Niagara Falls.”
Intelligent homes
The DoubleTree by Hilton i-City hotel will take up 23 levels of a 42-storey tower, while the remaining floors will comprise 200 units of home suites.
The suites, which Ong prefers to refer to as “the service suites above Hilton” (its tentative working name being Converse@i-City), is slated for launch in June.
“The 200 units offered for sale will range from 480 sq ft to 880 sq ft. Price starts from RM480,000 per unit with a GDV of RM124mil,” says Ong.
She says the units will come fully-furnished (similar to the hotel) and be an intelligent home, featuring Internet of Things (IoT) technology.
“The IoT is basically a network of connected things and by incorporating this into our development, we will be the first to feature this innovation,” says Ong, adding that the features would certainly appeal to individuals that appreciate a digital technology lifestyle.
“We plan to complete the units by 2019, at the same time as the hotel. We are targeting young professionals as well as early technology adopters.”
Over the next 12 months, however, Ong says I-Bhd will be completing and handing over 3,360 high-rise units within i-City.
The units are i-SoHo (956 units, fully sold), to be launched by April; i-Suite (825 units, fully sold in the fourth quarter of 2017; Liberty, Parisien, Hyde 1,217 units (over 85% sold) in the first quarter of 2018 and 364 retail units.
“Currently, we have over 1,000 units in i-City that have been completed and handed over since 2010,” says Ong.
Apart from residential units, Ong says the company’s Central i-City Shopping Centre is still on track for launch in October next year.
“The mall will provide a unique landscape to the mix in i-City,” she says, adding that piling works have been completed.
The 1.5 million sq ft Central i-City Shopping Centre project is a joint venture between Bangkok-based Central Pattana Public Co Ltd and I-Bhd, with the former holding a 60% stake in the partnership.
With a GDV of RM850mil, the project is the first international mall development for Central Pattana.
Central Pattana is currently the largest mall owner and developer in Thailand, managing 29 shopping centres with almost 70 million sq ft of gross floor area space.
According to Ong, the Central i-City Shopping Centre is part of I-Bhd’s RM1bil property investment portfolio comprising the 40% share of the mall, world-class data centre, car parks and offices.
Following the tie-up, Central Pattana chief development officer Wallaya Chirathivat says in a statement that the company is confident of replicating its success in Malaysia.
“We have a very strong track record for this type of transformation in Thailand and our experience shows that whenever we open a shopping mall, there are multiplier benefits on the local retail industry.”
Ong, meanwhile, says the development of the shopping mall is in line with I-Bhd’s business strategy of expanding its leisure and investment property business.
This is so that when i-City is fully developed over the next 10 years, the I-Bhd group would be able to enjoy a strong recurring income stream from these two segments, Ong adds.
Main attractions
Spreading over 25 acres, i-City’s tourism component boasts four main attraction themes – City of Digital Lights (with over 1 million LED lightscapes and outdoor theme park rides); SnoWalk (a 50,000 sq ft Arctic environment below 5 degrees Celsius); WaterWorld (featuring the first tornado ride in South-East Asia) and FunWorld (for family-oriented activities and games) with Malaysia’s first Trick Art Museum, the Red Carpet, Malaysia’s first interactive wax museum as the main feature and Space Mission@i-City, which boasts a futuristic aerospace adventure.
Its property development component comprises corporate towers, cyber office suites, service apartments, hotels, data centres and the Central i-City Shopping Centre.
Located along the Federal Highway, i-City is a MSC Malaysia Cybercentre certified development, a world reference site for Cisco’s Smart+Connected Community, endorsed as a tourism destination by the Tourism and Culture Ministry as well as an international park by the Selangor government.
Steady earnings
I-Bhd posted a 54.88% jump in net profit for the financial year ended Dec 31, 2016 to RM66.6mil compared with the same period a year ago on higher sales.
Revenue for the year under review rose 49% to RM383.6mil compared with the same period last year.
For the fourth quarter ended Dec 31, the company’s net profit was marginally lower at RM14.15mil compared with the same quarter a year ago while revenue rose 38.8% to RM102.86mil.
Earnings per share was at 1.33 sen compared with 1.48 sen previously.
In a statement accompanying the company’s 2016 earnings, executive chairman Tan Sri Lim Kim Hong says there is strong demand for properties in i-City despite the challenging economic environment
He says the performance marked another important milestone in I-Bhd’s move towards being a billion-ringgit full-fledged property-based company in terms of equity capital, assets and turnover.
“The group underscored its record-achieving profits in 2016 with RM333mil in new property sales compared with the previous year. We also started 2017 on a good footing with unbilled sales of RM578mil,” he says.
Lim says the property development segment was the largest contributor to revenue last year at RM332mil, or 87%, while the leisure segment generated RM45mil in revenue or 12%.
“We are on track to meet the goal we set at the start of our transformative journey of having a diversified earnings base, in which half would be recurring streams from the property investment and leisure segments.
“This will be underpinned by our aim of achieving RM500mil annual revenue in the property development segment by 2018, an investment property portfolio which would have been built up to RM1bil by then amid the doubling of revenue from our leisure segment,” he says.
I-Bhd’s unbilled sales currently totalled RM578mil for 2017.
Lim says the development of i-City remains the main contributor to the company and will continue to do so for the next few years. As at end-2016, only 10% of the approved gross floor area of i-City has been completed.
He says the ongoing projects in i-City will be able to contribute to the company for the next 10 to 15 years.
According to Lim, since the launch of i-City more than a decade ago, I-Bhd had enhanced i-City to a project with a GDV of RM9bil, compared with the GDV of RM1.5bil at its start.
He says there were still opportunities to enhance the GDV of i-City further.
Lim points out that the planned LRT3 station in i-City would enable the transformation of i-City into a transit-oriented project with a higher plot ratio for the balance of its development.
In a recent research note, PublicInvest Research says I-Bhd’s numbers for 2016 had come in below its expectations, with revenue and net profit at only 76% and 78% of its fullyear estimates.
It says this was partly due to some construction delays, which hampered billing progress, and also the slower rate of approvals for mortgage loans.
“While we conservatively lower our financial year 2017 and 2018 revenue expectations of between 13% and 15% to account for changes in our billing assumptions, net profits are adjusted to a lower 5%-7% on account of better margins.”
Still, PublicInvest Research says I-Bhd is in prime position to profit from the urbanisation of the outer Klang Valley region despite challenges in the property market.
The research house reaffirmed its “outperform” call on the counter with an unchanged target price of 91 sen.
“We continue to like I-Bhd’s value proposition and attractive locations, and see it still being in prime position to benefit from the urbanisation of the outer Klang Valley region (Klang and Shah Alam) despite ongoing challenges in the property market.
“With less than 25% of its GDV crystallised, I-Bhd’s story is only just unfolding.”
PublicInvest Research says I-Bhd’s property investment segment remains a work-in-progress, however, with its current performance affected by the expiry of its Ijarah agreement with Al-Rajhi Bank in late 2015.
“A decrease in visitor count to the theme park affected performance in the leisure segment.
The research house notes that the group’s i-SoHo and i-Suite developments have been fully taken up, while the Liberty and Parisien Towers projects have achieved over 80% sales.
PublicInvest Research also highlighted that the Hyde Towers project, launched last year, is close to being half sold.
“This consistency bears testament to its product value and the market segment it serves, which is still seeing demand,” it says.