Gadang (6)

Capital 21 Is Approximately 60% Sold

Publish date: Fri, 17 Oct 2014, 09:19 PM 

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Few days ago, I visited Capital 21's sales office in Tampoi, JB.

Approximately 60% of the units had been sold.

(1) Location

Capital 21 is surrounded by residential properties. Similar to One Utama in PJ.

(2) Details of the Mall

The name of the project is Capital City, comprises of the Mall (Capital 21), SOHO and Hotels. Just to recap, the Mall is the most important component and accounts for the bulk of the GDV. Please refer to my past 5 articles for further details.

(Capital City's model. The big flat stucture at the bottom is the mall, Capital 21.

The tower blocks above are SOHO and hotels, which are to be launched and completed at a later stage)

The Mall building (at the bottom of the model) comprises of 11 levels :-

(a) Level 1 (Mall Ground Floor) - Retail units to be retained by developer for rental income;

(b) Level 2 (Mall Upper Ground Floor) - Retail units for sale (Theme America);

(c) Level 3 (Mall First Floor) - Retail units for sale (Theme Europe);

(d) Level 4 (Mall Second Floor) - Retail units for sale (Theme Oceania);

(e) Level 5 (Mall Third Floor) - Retail units for sale (Theme Asia);

(f) Level 6 (Mall Fourth Floor) - Retail units for sale (Theme Africa);

(g) Level 7 to 10 (Car parks); and

(h) Level 11 (World Museum) - Not for sale. Visitors pay entrance fees.

(3) Sale Price And Affordability

Ground Floor - Not for sale.

Upper Ground Floor (Theme America) - RM3,400 to RM4,400 psf.

First Floor (Theme Europe) - RM2,800 to RM3,200 psf.

Second Floor (Theme Oceania) - RM2,800 to RM3,000 psf.

Third Floor (Theme Asia) - RM2,600 to RM3,000 psf.

Fourth Floor (Theme Africa) - RM2,000 to RM2,400 psf.

With the pricing as set out above, how many ordinary folks like you and me can afford to buy ?

It is actually very affordable.

This is because the size of the majority of the retail units ranges from only 100 square feet to let's say 400 square feet (of course there are bigger units. For example : hypermarket, etc).

For example : for a 100 square ft unit, even at RM3,000 psf, the sale price is only RM300,000. This is a price many people can afford.

That explains why Capital 21 receives such strong take up rate upon launching.

Even at 400 square ft, many people nowadays can afford a RM1.2 million price tag.

In addition to the above, the developer provides rental guarantee of 7% and 8% for year 1 and 2 respectively.

For example, if you purchase a RM500,000 unit, you don't need to worry about getting a tenant. The developer will identify the tenant for you and pay you RM35,000 and RM40,000 for year 1 and 2 respectively (iiregardless of whether it can get the tenant for you).

You can make use of the rental income to service your bank borrowings to finance the investment for the initial two years (and maybe sell the unit at year 3 for capital gain ?).    

In my opinion, the rental guarantee scheme as mentioned above will remove a significant amount of risk for the buyers. This definitely has made it easier for the buyers to arrive at a decision to invest.

(4) Take Up Rates

As mentioned earlier, Ground Floor is not for sale.

Upper Ground Floor (Theme America) is approximately 32% sold.

First Floor (Theme Europe) is approximately 46% sold.

Second Floor (Theme Oceania) is approximately 64% sold.

Third Floor (Theme Asia) is approximately 62% sold.

Fourth Floor (Theme Africa) is approximately 76% sold.

Overall, approximately 60% of the units had been sold.

5. Concluding Remarks

Capital 21 was launched in December 2013. Within less than one year, the project has managed to  secure buyers for approximately 60% of its units. 

This level of take up rate provides me with great comfort. Now I don't have to worry that the developer will not be able to secure financing from banks to complete construction.

By the time the mall is completed in 2017, the developer should be able to sell more of the units (easier to attract more buyers as construction makes further progress).

Recently, there are a lot of concern on the softening of property market in Iskandar Development Region. However, in my opinion, the Capital 21 project is already more or less in safe territory. 

It seemed that our invetment theme for Gadang is very much intact.

Have a nice evening.