The client is a Government-Linked Company in Southern Malaysia, with primary business in property development and asset management. The project is one of the client’s flagship brownfield developments situated at a border city with approximately 250 acres in size. In order to revitalise the business ecosystem and boost the real estate market of the city, the client wishes to transform its central business district into a sustainable international business district that can attracts international, regional and local business communities.
It is with this objective, the client decided to engage a multi-disciplinary consultant team to prepare a Development Blueprint and Business Plan to guide the operationalization of this strategic initiative. The scope of work also includes the operational strategy of a Special Purpose Vehicle (SPV) as the implementation body for this initiative.
FULL STORY
The project site is strategically located at country border, right next to the main country entry point and has close proximity to an international airport and port. There are also plans for light railway transit (LRT) and bus rapid transit (BRT) surrounding the city. This has given it the perfect connectivity and accessibility at local and international levels via multiple travel mode.
However, more than 70% of the buildings within the city are obsolete and not in good conditions. Besides, a huge portion of the city is now being used for institutional buildings and green spaces which create minimal economic value. These have prevented the city from monetising the people traffic and potential business activities that would contribute to better land value.
As part of the effort to revitalise the city, the client had commissioned a master plan study to study the weaknesses in the city planning and identify the possible areas for improvement. However, the recommendations were centered around the physical planning, without appreciation on the business, economic and operational aspects.
The client realised there is an imperative need to re-strategise the master plan and focus on the business aspects that could ensure the long-term sustainability of the development. It is with these circumstances we were engaged by the client to devise a business-focused masterplan, together with the operational strategy for implementation. Our team comprises of real estate business strategist, township management expert, urban planner, and marketing specialist.
KEY OUTCOMES
The team begin with a detailed review on the current-state of the city from multiple angles, including economic ecosystem, social profile, infrastructure connectivity, real estate performance, art, heritage & cultural assets, as well as the local authorities’ services level. This assessment provided a comprehensive analysis that showed the critical challenges faced and some possible areas for improvement, as well as several business opportunities for property developments.
This followed by an internal benchmarking on various successful CBD township development around the world, focusing on border-town cities that have good connectivity to neighbouring countries. The benchmark looked at the city planning policy, transit options, unique selling points and key attractions across various city components. Then the team conducted a detailed comparative analysis to identify the commonalities and key success factors in these cities. The result is a list of possible strategies that can be adapted into the project.
Subsequently, the team proceed to design customised business strategies that leverage on the city’s physical characteristics and heritage elements. Various business components were proposed to be included in this new master plan, taking into consideration the uplift in footfall upon the completion of LRT and BRT. This goes parallel with the physical planning by our urban planning team which looked at the placement of various business components and buildings across the city by evaluating on their physical compatibility and synergy. The recommendations also include the land utilisation ratio, plot ratio, floor areas and other critical planning parameters.
This followed by a city-level financial feasibility assessment which look at the investment from the perspectives of master developer and township manager. The consultant had developed a detailed 30-year financial model for property development project, which include the financials for developing and operating each business components proposed. A separate model was developed to simulate the financials for a township manager SPV that would deliver all township management services on-behalf of the local authorities. This is to determine the viability for the client to take up the roles of township manager in order to guarantee the services standard for all citizens and city dwellers. The model had simulated the CAPEX and returns under different capital structure scenarios to ascertain the optimal financing strategy that can maximised the economic benefits for the project owner and investors.
The final phase of the project was the formulation of a corporate structure which will enable a smooth implementation of the development and businesses proposed. Various operation options such as land sales, building sales, build-and-lease, strategic joint-venture and operator contract for the development were being identified and evaluated to inform the client on the suitability and viability of each option by business components. By the end of the project, we prepared a time-phased implementation plan that would guide the client through the project implementation process.
Important Notice:
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