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  • I-Bhd Looks At Setting Up REIT
  • An artist’ s impression of i-City. I-Bhd is targeting to own 30,000 car park bays in the entire 29ha i-City development upon completion in 2020.

    SHAH ALAM: As I-Bhd’s business profile evolves to focus more on property development and investment, one of its strategies is to possibly establish a real estate investment trust (REIT) with its current and future car park assets.

    Deputy chairman Datuk Eu Hong Chew said the group’s business plan was to keep all the car parks within i-City for long-term investment and recurring income. Only the i-Residence car park bays would be sold together with the condominiums.

    I-Bhd is the master developer of i-City, an information communications technology (ICT)-based urban development.

    “I think by the time we complete the i-City development, we would have sizeable investment properties for a REIT,” he said at a briefing recently, referring to the planned offices, serviced residence, hotel, mall components and the car parks that go with them.

    Eu said Malaysian REITs usually had RM3bil to RM4bil worth of investment assets. He also noted that in other countries, car parks were REIT-able assets.

    The group, which was initially an ICT company before venturing into the leisure business, is targeting to own 30,000 car park bays in the entire 29ha i-City development upon completion in 2020.

    Currently, there are 1,500 car park bays in i-City. By 2015, there would be a total of 8,000 car park bays after the development of its serviced residence i-Suite.

    Eu said each of the car park bays were valued at RM30,000 now due to the high revenue they could potentially generate.

    “All the car parks in i-City are managed as one business entity. We would continue with this business model even when the Best Western hotel and shopping mall opens,” he told StarBiz.

    The revenue from car parks at i-City currently stands at an average of RM300 per bay per month, largely driven by visitors frequenting the theme park and its various attractions.

    “At the same time, an analysis of our i-SOHO buyers’ profile seems to suggest that our i-SOHO would be more of an office unit with overnight living rather than a residential unit used as an office.”

    As for the mall targeted to be opened in 2017, Eu said the group expected a revenue of RM10 per car, with 2.5 turnarounds per day for each bay. That would mean an average of RM25 per bay per day or RM750 per month.

    The 1.5-million-sq-ft Central Plaza, a joint-venture project with Thailand’s Central Group, will have 5,000 car park bays, translating into an estimated monthly revenue of RM3.75mil.

    Taking into account the car park value, which had previously not been factored in, I-Bhd has revised upwards its gross development value (GDV) for i-City from RM5bil to RM7bil.

    In the second quarter of this year, the group will be launching its maiden development outside i-City, Grand i-Residence in Kuala Lumpur City Centre, and the next phase of the serviced residence i-Suite @i-City.

    The projects boast a GDV of RM820mil and RM500mil, respectively.

    Grand i-Residence will have 442 fully-furnished luxurious residential units with an average selling price of RM2,200 per sq ft.

    Prior to 2013, the cash cow for the group was its leisure division, which contributed 48% of its revenue, and the property division, which contributed 37%.

    In 2013, the property development division was expected to contribute about two-thirds of the revenue, with the leisure segment accounting for the balance.

    The group’s 2020 aim, however, is to restructure its revenue streams to have more recurring income. It targets 50% group revenue from property investment, 25% from property development and 25% from leisure.

    On the tougher property sector outlook, given the central bank’s tightening measures and rising cost of living, Eu said I-Bhd’s business strategy has been built to withstand the negative effect of any property cycle.

    “Our strategy is to ensure that we have a significant recurring revenue stream. In this respect, we have been beefing up our leisure business as well as our investment property portfolio,” he said.