Pure Iskandar developer on its way to list on SGX

Singapore

ASTAKA Padu, a pure Iskandar developer that is making its way to the Singapore Exchange (SGX) through a backdoor listing, aims to complete its first mixed-use project by 2020.

It may start acquiring commercial, residential and industrial plots through government tenders in the Iskandar region of Malaysia, where it hopes to entrench its presence.

In a recent interview with BT in Johor, group chief executive officer Zamani Bin Kasim noted that the group's mixed development has made a good headstart with some 60 per cent of the 438 residential units already sold.

The group expects to complete the sale of remaining units by the end of this year. This residential component could be completed by end-2017 and owners would get their keys in February 2018.

The mixed-use project's estimated gross development value of RM3.54 billion (S$1.34 billion), however, may be too large to swallow for the group. To complete the remaining components of the mixed-use project including a five-star hotel, offices and retail shops, the group is looking to rope in joint-venture partners, Mr Zamani said.

According to him, the group may firm up discussions with potential JV partners towards the end of the second quarter. Its completion of a reverse takeover (RTO) of E2 Capital in the second quarter may also present equity fund-raising options for the group.

Mr Zamani pointed out that Astaka Padu is seeking to fill the gap in the market given a lack of five-star hotels, Grade-A offices, and high-end shopping malls in Johor.

"Overall, we believe that Iskandar is moving and what we have right now is just temporary set-back or market adjustment," he said in reference to how recent concerns of overbuilding in the special economic zone and waning demand have caused rival developers to calibrate the pace of their launches.

Mr Zamani maintained, however, that the current housing stock is insufficient given the expected growth of Iskandar's population from 1.7 million to 2.5 million over the next five years.

"The market moves in cycles. What goes down will go up again. You want to be at the point where it goes up," he said. And should the market pick up in the next six months, the group is ready with all the approvals obtained for the project, he added.

It plans to launch the commercial component this year, with the view of attracting companies in Singapore to relocate their back-offices there. The group may strata-sell the office space if there is such demand.

For the hotel component, the group hopes to bring in "a Ritz-Carlton, Grand Hyatt or Marriott". Talks with potential partners are at a preliminary stage, Mr Zamani said.

With over 30 years of real estate experience including four years at UEM Land as senior general manager from 2006 to 2010, Mr Zamani joined Astaka Padu in 2012 when the company was still dormant despite having obtained the 12-acre land site in Iskandar in 2005.

"If we were to do this development back in 2005, people would have said that we are crazy and digging our own grave," he said.

"What made this development possible was the establishment of Iskandar in November 2006," he added. But the tipping point came only in 2012 when foreign investments poured in following the completion of Legoland, Puteri Harbour Family Theme Park and several education institutions.

Now, amid intense competition in Iskandar, Astaka Padu has intentionally gone up-market, making its residential units much bigger and spacious than what its competitors are offering.

Units at The Astaka start from 2,207 square feet for a three-bedder, with only four units on each floor, whereas the majority of units offered by competing projects are said to be in the 600-1,200 sq ft range. A 2,659 sq ft unit at The Astaka is currently selling at RM1,350 per square foot (psf), up from RM950 psf during the pre-launch.

"I'm targeting the top-end. That's why you don't see me in Orchard Road trying to sell," said Mr Zamani. "I don't want to go into the mass market, competing with everyone else moving 500-600 sq ft units."

Astaka Padu has appointed Real Estate Alliance Pte Ltd as its exclusive agent in Singapore and visitations to the show flat in Johor are mainly by appointments.

The current pool of buyers for The Astaka is made up of 60 per cent Singaporeans, 17 per cent Indonesians and 13 per cent Malaysians. According to Mr Zamani, some buyers are the "who's who" residing in Singapore.

Asked why the group has chosen to list in Singapore instead of Malaysia, Mr Zamani pointed out that the group's target market is mainly Singapore.

"It makes sense to list in Singapore as there will be added confidence and the SGX is very strict on compliance," he said. "Also, we are going into the international market. If we go to Bursa Malaysia, it is a Malaysian market."

The group plans to set up an office in Singapore after the RTO is completed. It has shortlisted a few Singaporeans to join its board as independent directors.