Klang’s commercial sector plays catch-up
Aliff Yusri 
Property players such as KSL Holdings, KM Land Group and SP Setia have committed to Klang as a lifestyle and commercial destination

WHILE Klang has attracted its fair share of developer interest in recent years, the district has yet to fully move beyond its roots as a port town on the outskirts of Kuala Lumpur and surrounding satellite townships.

However, the steady rise of various commercial hubs as well as improving connectivity factors such as the closure of the Batu Tiga toll and extension of the Klang Valley LRT (light rail transit) network through the area, is gradually transforming the outlook of the former Selangor state capital.

Domestic players which have committed to the area include Khoo Soon Lee (KSL) Realty Sdn Bhd, the KM Land Group and SP Setia Bhd, bringing with them long-term strategies to evolve Klang into a commercial and lifestyle destination in its own right.


Demographics of development

Despite a growing population of more than 860,000 and mean household income of RM8,606 in 2016, the district remains associated with social issues, as uneven economic development leaves workers in the plantation and manufacturing sectors marginalised.

Klang is the country’s fifth largest administrative district by population, according to the Department of Statistics’ 2010 census figures.


Upcoming LRT connectivity will go a long way towards addressing Klang’s image as a distant outskirt of Kuala Lumpur, says Fernandez

“Klang has also suffered from an image issue. People tend to disfavour the location or generally perceive it to be a place far away and close to the ports. If you are in the maritime and logistics industry, then you live in Klang,” says PropertyGuru Malaysia country manager Sheldon Fernandez.


“But the LRT line 3 will change things, serving to rejuvenate the area. Klang has a colourful and rich historic past, and the LRT and other developments will allow this story to flourish within a modern context,” he adds.

The LRT3’s proposed alignment includes 25 elevated stations and one underground station from Bandar Utama to Klang. The Johan Setia station in Klang, located near Bandar Bestari, will form the western terminus of the line. The line is expected to be operational in 2020.

Klang’s potential is reflected in subsale prices for commercial properties in the district, which have risen steadily from a median of RM116.04 per sq ft (psf) in Q1 2008 to RM209.59 psf in Q1 last year, according to the Valuation and Property Services Department, aside from a dip to RM113.62 psf in 2011.

This commercial growth is supported by healthy transaction prices in the residential subsale market over the same period, from RM78.33 psf in Q1 2007 to RM287.50 psf in Q1 last year.

However, growth in both segments has slowed down in recent years as cooling measures, rising land and material costs and dampened purchaser sentiment take their toll.

In addition, many developers are adopting a wait-and-see approach as the next general election draws near, with launches delayed until the socio-political dust settles in the second half of the year.

“We’re seeing a correction phase for the property market, and have adjusted accordingly. Prices per square foot around Bandar Bestari have averaged around RM500, but we’re currently pricing at around RM470 psf,” says Patrick Khoo, project director of KSL Realty, a wholly-owned subsidiary of KSL Holdings Bhd.


Best foot forward

Primarily known for its flagship KSL City Mall development in Johor Bahru, KSL Holdings ventured into the Klang Valley in May 2012 with the debut of Bandar Bestari in Klang.

The 181.3ha township will feature over 8,000 residential and commercial units when completed, with a projected resident population of 14,000. To-date, 348 units have been delivered, with about 90% of these handed over for an estimated current population of more than 1,390.

“We anticipate the coming year to be a stable one and while a lot will hinge on the outcome of the next few months, demand remains steady in key segments across the market, which means developers must strategise to target these demographics,” says Khoo.

“Klang remains family-oriented, with an emphasis on landed homes and growing scope for other property types such as SoHo [small-office, home-office] suites and studios. We’re currently holding back our apartment launches, because we feel there’s currently an oversupply of properties in this segment in Klang.”

This is reflected in the product mix of Bandar Bestari, also known as Canary Garden. Situated along Sungai Air Hitam off Jalan Klang Banting, the township primarily offers semi-detached and cluster homes, along with two and three-bedroom serviced apartments in its Maple Residences launch.

Aside from upcoming launches such as KSL Avenue and Ridgewood Phase 2 (see sidebar), the developer is also rebranding its upcoming KSL City Mall 2 as KSL Esplanade. Khoo shares the change was made last November to reflect the development’s riverside pull factors while avoiding dilution with other city malls in the Klang Valley.

Slated to be one of the largest malls in Klang by gross floor area (2.5 million sq ft), it shares the distinction with Aeon Bukit Tinggi Shopping Centre, which measures more than 2.1 million sq ft. While KSL acknowledges the heated competition in the Klang Valley’s increasingly crowded retail segment, some analysts see this as less of an issue for Klang.

“There is the belief that there is an oversupply of retail malls in the Klang Valley. But this may not necessarily apply in places outside of the urban centres of Petaling Jaya, Kuala Lumpur City Centre and so on,” says PropertyGuru’s Fernandez.

“Malls are usually conceptualised and planned for the long term, such as 10 to 20 years, so the injection of a mall into the area has merit, given the growth in the local population, urbanisation of the area and surrounding vicinities, and the level of property development taking place,” he explains.


Differentiation factors

The “make-or-break” factor for upcoming malls such as KSL Esplanade, according to Fernandez, is the quality of anchor tenants and operators. These must be in line with the needs of the immediate community, while offering a strategic mix of dining, lifestyle and entertainment options.

Addressing the issue, Khoo shares the developer is finalising tenancy agreements which include 55,000 sq ft for a leading cinema chain, 50,000 sq ft for a children’s playground operator and 30,000 sq ft for a grocer as well as 20,000 sq ft spaces for three international apparel brands.

“We plan to focus on lifestyle tenants because while Klang has a sizeable population, it still has room to improve in that department, which is why residents head to places closer to Kuala Lumpur to enjoy themselves,” says Khoo.

In addition, KSL has commissioned landscape architecture studio WDI Design Sdn Bhd to design the third and final phase of Bandar Bestari’s 21ha French gardens. The gardens run along the banks of Sungai Air Hitam, with the third phase adjacent to KSL Esplanade itself and scheduled for completion by year-end.

Khoo shares that WDI’s priority in designing the riverside park is to create synergy between the mall and the gardens themselves, encouraging visitors to interact with both spaces instead of keeping them segregated. In addition, a link bridge is planned to connect KSL Esplanade to its commercial hub, KSL Avenue.

He cites the prevalence of retail projects throughout the Klang Valley with underutilised “secret gardens” as a factor in deciding this approach, stressing the need to increase footfall between components with amenities such as bike rental shops and LED displays, with the possibility of bike-share solutions in the future.

One Kesas is positioned as a central commercial hub for Klang with a unique Thai wholesale retail concept

Centralising commercial spaces

Retail consultancy Dynamic Trends Resources (DTR) Sdn Bhd echoes the need for retail developments to differentiate themselves in the crowded segment, which is estimated to see 25 million sq ft of incoming supply by 2020 in Kuala Lumpur and Selangor alone.

The DTR Group is the retail consultant for KM Land Group’s upcoming RM300 mil One Kesas commercial hub off the Shah Alam Expressway (Kesas Highway). The development comprises 407 commercial units, including 32 three and four-storey shoplots, 17 retail/factory outlets, 94 alfresco shoplots and 264 boulevard shoplots.

Commercial and lifestyle spaces in Klang are currently scattered, says Kee


“The beauty of Klang lies in its culture of communal celebration. However, commercial and lifestyle spaces in the area are currently quite scattered. What we want to do with One Kesas is to bring these spaces together under one roof,” says KM Land Group director William Kee.

The 5.87ha development also features a three-storey 70,000 sq ft wholesale mall with a unique wholesale retail concept, along with banquet facilities. Its location affords it a ready catchment population of over 150,000 residents from townships within a 3km radius as well as 200,000 road users per day.


One Kesas is targeting a monthly footfall of about 15,000 visitors, says Hew

“One Kesas does not compete with surrounding retail centres such as KSL Esplanade and Aeon Bukit Tinggi, but complements them. We have positioned it as a wholesale city for Thai products such as snacks, beauty accessories and cotton products, which is sufficiently different from the typical retail mix to stand on its own,” says DTR Group director Ivy Hew.


“We’re targeting a footfall of about 15,000 visitors monthly, as the wholesale city will cater for individual purchasers as well. One Kesas’ wholesale component is scheduled for launch by the third quarter, with a current uptake of about 10% for its commercial shoplots.”

Aside from capitalising on Thailand’s popularity as a shopping hotspot, KM Land Group’s approach also leverages on Klang’s logistical pull factors.

Port Klang is home to 95 shipping companies and agents and more than 70 freight and transport companies, accounting for nearly 50% of Malaysia’s maritime container trade in 2013, making it a hub for wholesale distribution.


Thai collaboration

In realising its wholesale concept, the developer also partnered with the Thailand-based Southern Entrepreneur Development Association and Merccorp Co Ltd to bring the One Tambon One Product (OTOP) programme to Malaysia.

A entrepreneurship stimulus programme developed in Thailand, OTOP selects one product from each of the country’s 7,255 tambons, or sub-districts, to receive formal OTOP branding towards local sales and international exports.

Other key partners in the One Kesas commercial hub include Ace EdVenture, which will operate a private tutoring centre with an emphasis on creative realworld skills for students aged 12 to 17 years old, as well as Artisan Eco Hotel, a crowdfunded budget hotel with a focus on sustainable hospitality.

Developed by PKK Hartanah Sdn Bhd, a subsidiary of KM Land Group, One Kesas represents a joint venture with Selangor Industrial Corp Sdn Bhd, a subsidiary of the Selangor State Development Corp.

Klang’s growth potential and connectivity factors are undeniable. However, it remains to be seen whether the retail rejuvenation strategies favoured by players such as KSL Holdings and KM Land Group are sufficient to elevate the district to city status.

KSL rebranded KSL City Mall 2 as KSL Esplanade to highlight its riverside pull factors

KSL focuses on central region

KHOO Soon Lee (KSL) Realty Sdn Bhd has kept a relatively low profile since the launch of its RM110 mil Ridgewood project in Bandar Bestari, Klang in the second quarter (Q2) of 2016.

However, the developer remains committed to its projects in the central region, with a number of commercial and residential launches in Klang and Ampang planned for this year.

“For 2018, we’ve set a revenue target of RM100 mil in the central region, with minimal contribution from unbilled sales in 2017. This is broadly equal to KSL Holdings’ 2017 revenue of about RM500 mil, with the central region contributing 20% of that figure,” says KSL Realty project director Patrick Khoo.

Towards this end, Khoo and his team are planning the launch of KSL Avenue, a 1.21ha commercial hub within Bandar Bestari, as well as Phase 2 of Ridgewood, following the strong uptake of Phase 1.

Comprising 24 semi-detached units and 56 cluster homes with built-ups from 2,777 to 3,306 sq ft, Phase 1 of Ridgewood is currently 80% sold, with Khoo targeting full uptake by Q2 this year.

Meanwhile, KSL Avenue is envisioned as a complementary commercial and lifestyle hub for Bandar Bestari. Signed tenants include McDonald’s and Family Mart, which finalised their agreements in June and November last year respectively.

The project will be developed in two phases. The first phase, comprising 0.2ha, includes 5,000 sq ft spaces dedicated to McDonald’s and Family Mart, and is targeted for completion by the fourth quarter. Meanwhile, the second phase will encompass the remaining hectare and is scheduled to begin development in Q2 next year. 


Trio’s the charm

KLANG’s potential is underlined by the entry of leading developer SP Setia Bhd into Bukit Tinggi last February with its RM571 mil Trio by Setia integrated development.

The development, located on a 2.22ha site off Jalan Langat, takes its name from its three planned towers. The project offers 914 serviced apartments, 42 commercial units and a retail podium. The 46-storey Tower A has been launched with a total of 426 residential units and is positioned as the tallest tower in the township once completed.

Trio by Setia is notable for being a high-rise development in a district primarily known for housing estates, with the move demonstrating the developer’s confidence in Klang’s prospects and changing demographics.

“We are targeting first-time homebuyers and young adults seeking lifestyles near Bukit Tinggi, Banting and Klang,” says SP Setia divisional general manager Paul Soh.

“If you look around the area, you’ll find the focus is on terraced houses, with little acreage left over for new landed properties.

“The next generation of purchasers is looking for something with reasonable value, so the majority of our units are 1+1 layouts, suitable for those just entering the market.”

In line with its target market, the project features a unique facade inspired by the undulating terraces of paddy fields throughout Southeast Asia, while offering amenities such as a wading pool, community garden and gymnasium in its facilities deck.

It offers three layouts with built-ups of 656, 915 and 1,216 sq ft, with prices ranging from RM412,000 to RM737,000 at launch. Tower A has a current take-up rate of 70%, with anticipated completion of the whole development by the fourth quarter of 2021.


This article first appeared in Focus Malaysia Issue 270.