This article first appeared in City & Country, The Edge Malaysia Weekly on June 13, 2022 - June 19, 2022

Mitraland Group CEO Chuah Theong Yee’s remark that the company has survived a few financial crises and the Covid-19 pandemic because of luck is perhaps an understatement.

“We have seen a few crises over the years and managed to survive them. I think we have been very lucky. This is why we always take a more conservative approach to management and product planning,” Chuah tells City & Country in an exclusive online interview, at which Mitraland chairman Datuk Johan Ariffin was also present. 

Founded by Chuah in 1998, Mitraland launched its maiden project Desa Permai in Bandar Sungai Long, Selangor, just two years after the 1997 Asian financial crisis. The landed residential project was well-received — even completed and handed over eight months ahead of schedule.

A year after the global financial crisis of 2008, Johan was appointed chairman of Mitraland. The company had launched its then biggest project, Kiara 1888. The residential project in Mont’Kiara, Kuala Lumpur, received an overwhelming response even during the recession, Johan recalls.

Kiara 1888 was also awarded the Malaysian Institute of Architects (PAM) Gold Award for Multiple Residential (High Rise) Project in 2012.  Since then, Mitraland has grown from strength to strength, earning international accolades along the way for projects such as Cascades in Kota Damansara, 16 Quartz in Taman Melawati and Gravit8 in Klang, Selangor.

“From day one, we undertook calculated risks that catapulted Mitraland to where it is today. The business philosophy helped us stay afloat and survive [the Covid-19 pandemic],” Johan says.

While he is grateful that the worst seems to be over, he does not deny that the past two years have been very challenging for the company, in that it had to deal with unprecedented events due to the nationwide lockdown — which at various phases restricted access to workplaces and potential buyers, and even halted construction.

“The uncertainty had also put many people’s plans to purchase big-ticket items on hold, and banks were stricter about giving out loans.

“Take The Tresor [the fifth residential tower at Gravit8, the company’s mixed-use development in Klang] as an example. We launched 416 units in March 2021, and it is now 72% sold, not too bad considering the difficult year we had. However, we have lost several bookings. For every sale made we lost two, or some 600 potential customers. In other words, for every unit we have to sell three times. Otherwise, we could have moved on to our last phase launch already,” Chuah says.

Despite the hiccups, Mitraland exceeded its sales target last year. Not only did it achieve total sales of RM273 million, exceeding the target of RM269 million, the company also managed to complete and hand over Phase 2B — Andaman and Ashino — of Gravit8 ahead of schedule in 2021.

“We met our sales target despite the challenging year. We are grateful that our team adapted to the fluid situation, performed well and achieved the targets despite poor access to the banks during the MCO [Movement Control Order], multiple lockdowns as well as our partners and bankers contracting Covid-19,” Johan shares.

Asked about the key to the company’s overall performance, Johan and Chuah attribute it to its core strategy — be flexible, versatile and nimble.

“Our strategy has always been to keep our projects and land bank [moderate] in size. We never overgear or borrow more than what we can chew because that limits our flexibility in this ever-changing market. When you have high borrowings, you will need to give up some control in terms of product type, pricing and timing to launch. You cannot afford to not launch even though the timing is not perfect because you have bills to pay,” Johan says.

Mitraland’s business strategy has proven to work for the company over the past 24 years since it was established.

“We fully intend to continue with the existing strategy of having moderately-sized projects in great locations. Location is still the golden mantra, no matter what kind of development. We are not ashamed to say that we don’t just buy any land and keep; we want to be safe and have a different sort of appetite from the bigger players with strong holding power,” Johan shares.

This year, Mitraland will be focusing on Lake 6 Entrepreneurs’ Park II (Lake6 II), an industrial property project in Puchong, and Phase 3 of Gravit8.

Located in Taman Meranti Permai in Puchong, Selangor, Lake6 II is an extension of Lake 6 Entrepreneurs’ Park, which was completed in 2014, with a gross development value (GDV) of RM208 million. To recap, Lake 6 Entrepreneurs’ Park comprises 70 units of 3-storey corporate factories that were priced at RM1.8 million when they were first launched. Today, the average transacted price in the secondary market for a factory there is RM3.8 million, according to Mitraland.

As for Lake6 II, the 6.8-acre leasehold project will offer 49 units of 2- and 3-storey standalone and semidee factories within a guarded business park, over three phases. The units will have land size ranging from 8,700 to 10,400 sq ft and built-ups ranging from 6,900 to 9,400 sq ft. The selling price starts from RM4.7 million.

Launched early this year, the first phase of Lake6 II comprises 24 units of 3-storey semidee factories. Units were snapped up within days of the launch. 

Following the successful first phase of Lake6 II, Mitraland plans to launch the second phase, comprising 18 units of 3-storey semidee factories, in 2H2022. Phase 2 is currently open for registration. Meanwhile, there are seven semidee and standalone factories in the third phase, which will be launched in the near future.

“The original plan for the Lake6 II site was for residential development. However, what happened in the last two years has prompted us to review the plan. We think industrial properties are in greater demand now compared to residential, so we switched. This is in line with what we have mentioned earlier — to be nimble and flexible,” Chuah says.

Lake6 II is well connected within a prime industrial corridor in Puchong. It is linked to more than five major highways in the Klang Valley — namely, the Federal Highway, Damansara-Puchong Expressway, North-South Highway, Shah Alam Expressway (KESAS) and South Klang Valley Expressway — as well as the country’s primary international transit points, such as the Sultan Abdul Aziz Shah Airport in Subang, Kuala Lumpur International Airport and Port Klang.

“The location of Lake6 II is a given. Furthermore, extra thought went into the design to ensure the units are flexible enough to accommodate all business forms. Each unit comes with a high ceiling volume of two or three storeys to maximise their vertical storage capacity and efficiency,” he shares.

While the residential segment remains Mitraland’s bread and butter, Chuah and Johan say the company will be more focused on the industrial property segment in the near future.

“We are positive about the industrial sector due to the rapid growth of e-commerce in Malaysia. The market has proven itself with the recent success of the first phase of our Lake6 II. We are currently exploring more possibilities in the industrial sector.

“In fact, we are in talks with a few landowners, and in the midst of concluding a deal that involves a piece of industrial land in Klang. If all goes smoothly, we will launch another industrial project this year with an estimated GDV of RM200 million,” Chuah reveals, adding that the company is unlikely to launch any residential project this year.

Commenting on the risk of oversupply in the industrial segment, Johan says the team is well aware of the risks and, hence, is keeping each industrial project “bite-sized”.

“It is true that every opportunity has a window, but no one knows how big and long it is. Everyone is rushing to build factories and warehouses now, so [the opportunity] may not last very long when [more] supply flows into the market. However, we are not launching a 500-acre industrial project, and we will not do that because that could mean losing our flexibility. Again, our strategy is to keep our projects small,” Johan says. 

Lake6 II is one of only two industrial projects by Mitraland at present, and Johan believes now is the time to find a healthier balance in terms of product types.

“In the past 20 years, we have focused heavily on the high-rise residential segment. While that remains our core, it is also important to have a healthy mix of products so that we don’t put all our eggs in one basket,” he says.

This is also why Mitraland has been actively looking at potential land bank for landed residential development for the past two years.

“More than 60% of the national property transactions are landed residential, which is still the go-to product if the price and location are right. However, land price is key because we want our projects to be market-driven, not cost-driven. So, if the land cost is reasonable, we will launch landed residential properties in the near future ... maybe not in the Klang Valley, due to the high land cost. We are looking at states like Negeri Sembilan,” Chuah shares.

With a GDV of RM1.3 billion, the 15.6-acre Gravit8 is an ongoing project comprising residential and commercial components — including serviced apartments, a shopping mall, retail shops and offices.

“There are seven towers in total at Gravit8, which originally consisted of five residential towers, a hotel tower and an office tower. The office and hotel are part of Phase 3 and we are in the midst of reviewing it,” says Chuah. “The hotel component will be converted into serviced apartments, which we plan to launch in 2H2023.”

As for the office tower, the company plans for this to be purpose-built for a single client as its headquarters. “If we can find the right match, we will go ahead with this. If not, we will probably hold on for a while.”

In addition to launching The Tresor in March 2021, the developer also handed over Andaman and Ashino at Gravit8 in August last year. Prior to that, it had handed over Nordica and Adria in November 2019. All of the five residential towers are part of the Phase 2 development, while Phase 1 consists of 22 shopoffices.

The Tresor is a 2.75-acre freehold project in Gravit8 with a GDV of RM240 million. It will comprise a 29-storey tower with 344 serviced apartments, 72 park homes (units with garden terrace) and 25 shops.

Priced from RM516,800, The Tresor will offer units with 1+1 to 3+1 bedrooms with built-ups ranging from 551 to 1,206 sq ft. The units are expected to be completed in 2024.

“We always put ourselves in the buyer’s shoes and review our designs from time to time. We have seen that demand has changed in the past two years and realised that it is not necessary for units to be big, as not everyone can afford them. Hence, the plus one (+1) rooms are a big plus point as they offer potential purchasers additional space for work or study,” says Chuah.

Mitraland is also looking to upgrade the facilities at Nordica, Adria, Andaman and Ashino. Currently, the team is in talks with a locker company to provide parcel storage lockers in the residents’ compound.

In terms of location, Gravit8 enjoys high visibility from KESAS, adds Johan.

“Our location is near Klang’s west and south ports. Many international shipping companies have their HQs in Klang town, which is quite far away from the ports. However, Gravit8 is the middle point and it is a vibrant development with a growing population. Gravit8’s retail component and the lake park draw visitors, especially during the weekends. This makes Gravit8 a great location for HQs,” Johan notes.

According to Johan, Gravit8 currently has a population of about 3,400 spread across the four completed residential towers. Meanwhile, the shopoffices were completed two years ago, and are 81% sold. Gravit8 is home to the Orbix International School and business operators such as KFC.

“We foresee that Gravit8 will continue to thrive and be the place for fun, leisure activities and a meeting point for Klang folk and of course, the surrounding communities too, with the lake park and existing and future commercial components as the main focus,” Johan shares.

Going forward, he expects that the overall property market will have a clearer direction in the second half of this year.

“We hope for a real uplift ... If you don’t feel good, you won’t commit to a big-ticket item. We believe that once the feel-good factor comes in, the overall property market will see the light at the end of the tunnel,” says Johan.

Meanwhile, Chuah has set a company sales target of RM300 million this year. “Depending on the economy, we hope to achieve RM400 million next year and RM500 million for 2025 via a balanced portfolio of high-rise, landed residential as well as industrial developments in the Klang Valley,” he concludes.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.