Names sell and developers capitalise on the craze

The use of the ‘Damansara’ brand has been effective in redeveloping areas into af uent townships

by MARK RAO / pic by HUSSEIN SHAHARUDDIN

Prices of residential properties have always been associated with locations, including its proximity to the city, public transportations, schools and hospitals.

That mechanism has somehow been redefined by developers by associating their “sellable” brands into integrated property projects while attaching the projects with names of ultra-urban settlements, although they are not related by location.

Developers who have been branding these places were sometimes taken in by the appeal of having the name Bangsar or Damansara attached to their building or address.

Projects backed by renowned developers and lucrative names have fetched 30% higher prices on average in the market, partially contributing to the property glut in Malaysia today.

Zerin Properties executive for mergers and acquisitions Danny Gan said the strategy has been effective for property developers looking to sell homes at a higher price. “Integrated developments with a master plan and backed by a well-known developer can command higher pricing in the market,” he told The Malaysian Reserve (TMR).

“Developments that meet these criteria can usually fetch 30% higher property prices on average.”

This is readily attested by the redevelopment and re-branding of several projects in Kuala Lumpur (KL) and the Greater Klang Valley in the past.

Formerly, Kampung Haji Abdullah Hukum, the KL Eco City now, sits on a 25-acre (10.1ha) piece of land with projects worth RM7 billion in total gross development value. The integrated development was launched by property developer SP Setia Bhd.

Kampung Kerinchi was redeveloped and renamed Bangsar South by UOA Development Bhd, bringing in towering office buildings and high-rise residential properties with the price tag resembling the ones in Bangsar — an ultra-urban neighbourhood town.

The bustling commercial and residential development was reversed to be known as Kampung Kerinchi earlier this year.

Roots of Kampung Haji Abdullah Hukum and Kampung Kerinchi were linked to Indonesian pioneer Abdullah Hukum, who came to KL in the mid-1850s from Kerinchi, West Sumatra.

Meanwhile, the ongoing development of KL East by Sime Darby Property Bhd is leveraging on a similar strategy as it capitalises on its proximity to KL city centre despite its Selangor postcode.

The history of Mont Kiara and its gentrification of Segambut Dalam provides a useful case study as property prices in the area are among the highest in KL today.

Segambut Dalam was predominantly on agricultural land before property tycoon Datuk Alan Tong Kok Mau purchased 40.47ha of land in the area in the 1990s which would be developed into the affluent Mont Kiara project we know today.

Non-landed and landed properties in the area are currently selling 59.4% and 73.5% higher than the KL average of RM620 per sq ft and RM4,392 per sq ft respectively, according to EdgeProp.my.

The price gap is more evident compared to property prices in the neighbouring Segambut which sells at RM264 per sq ft for non-landed property and RM1,686 per sq ft for landed properties.

The use of the “Damansara” brand by different developers

has also proven to be effective in redeveloping areas into affluent townships with property prices from these projects selling above average.

There are more than 30 neighbourhoods, roads and landmark buildings in KL and Selangor that bear the name “Damansara”. This includes Mutiara Damansara, Damansara Utama, Damansara Jaya, Damansara Kim, Damansara Damai, Kota Damansara, Ara Damansara, Damansara Perdana, Sri Damansara, Plaza Damansara, Medan Damansara and Damansara Town Centre.

Damansara Perdana used to be an Orang Asli village until developer MK Land Saujana Triangle Sdn Bhd bought most of it over and started developing it in 1996.

Ara Damansara, an affluent residential township in Petaling Jaya, is located along Jalan Lapangan Terbang Sultan Abdul Aziz — a 299ha township that was first developed in 1999 by Sime Darby Bhd.

Mutiara Damansara soon joined the fray in 2001 and comprises 355 acres of housing and commercial land which were predominantly developed by Boustead Holdings Bhd.

In the city centre, the KL City Hall assists the Federal Territories Ministry in the naming of areas and roads through a committee, to confer local names.

The committee is represented by government agencies, as well as private and nongovernmental organisations.

The naming of areas, new developments and streets within new developments can be proposed by the developer, and the committee will take into consideration the rationale for the naming and whether to approve it.

Exorbitant pricing and the influx of similar “high-end” projects have contributed to the property glut faced today as 40% of the 166,888 unsold residential units as of the second quarter of 2018 were priced above RM500,000, the National Property Information Centre reported.

According to Gan, affordability remains a major factor behind the property overhang in Malaysia today, with Johor housing the highest overhang followed by the Klang Valley and Penang.

“Developers’ goal is to sell properties to make income. The question now is, how do these developers adapt to today’s market conditions,” he said.

Institute for Democracy and Economic Affairs senior fellow Dr Carmelo Ferlito told TMR that rebranding is a marketing strategy used by developers to attract buyers, and it works on the supply and demand dynamics.