Saturday September 8, 2012
A place to have fun and live in
I-BHD's City of Digital Lights, which opened its doors in 2009, has never failed to attract visitors. On average, it receives 90,000 visitors a week or about five million visitors per annum. Group executive chairman Tan Sri Lim Kim Hong recalls that the traffic jam at the entrance to i-City that stretched some 10km when it was first opened and parking was free.
Subsequently, I-Bhd charged RM3 per entry into the car park and the jam had eased to about 5km and now it costs RM10 per entry. He says the traffic buildup is now mainly during weekends, public and school holidays.
“I-City has become a landmark in Shah Alam. We're now a crowd puller,” Lim says. The soon-to-be developed mega shopping mall known as CityMall and Water World@i-City, which is opening its door in November, are set to attract more visitors.
I-Bhd will be announcing its joint venture with a shopping mall manager in two weeks which will help manage its CityMall. The mall will be built on 14 acres in i-City.
“We will make the announcement in two week's time. It will be an agreement with a mall operator,” group chief executive officer Datuk Eu Hong Chew tells StarBizWeek.
He says the “regional mall” with an estimated gross development value (GDV) of RM500mil, is scheduled to open in 2015 and investors are said to be conducting their due diligence exercise at the moment.
Last year, I-Bhd entered into a 30:70 joint venture with Everbright International China to co-develop 30 acres in i-City. The development will be done in two phases. Phase one involves 14 acres with a GDV of RM1.5bil and will comprise a giant shopping mall and 2 million sq ft of mixed residential, Multimedia Super Corridor (MSC) offices and educational institute.
The second phase has a GDV of RM2bil involving 16 acres.
“Everbright will be the contractor and builder of the mall. They will fund the construction and act as a financier cum contractor,” Eu says, adding that CityMall will have a lettable area of one million sq ft.
Eu says i-City will introduce some food and beverage outlets fronting Sungai Rasau as the Selangor government plans to upgrade the river. Once completed, there will be a 1km river frontage beside i-City.
Meanwhile, a six-acre Water World@i-City will premier to the public in November just ahead of the year-end school holidays. The water park will be a new boost to I-Bhd's leisure business, which is already a major cash generator for the company.
Lim says a tornado ride, the first of its kind in South-East Asia, will be a major attraction for the water park.
“Many do not realise we are not just a property developer but one of the few listed companies who have gone into the leisure business. We have invested RM30mil in leisure and theme park attractions so far.
“This year we are investing RM25mil in the Water World. Our plan is to invest RM100mil in the theme park in three to four years,” Eu says.
While I-Bhd's tourism element may not be huge, it is already getting a decent number of visitors to its theme park, various rides and attractions. Currently, Snowalk and the digital lights are the main attractions which draw people to i-City.
“Our track record so far is we have managed RM1 turnover for each RM1 of investment. We invested RM30mil this year in the theme park and expect RM30mil revenue. This is based on actual historical performance. We did not plan for it this way.
“For every RM1 of turnover we receive 30%-35% in terms of profit. We think we should be able to continue this. We reckon we should at least get RM100mil from our theme park yearly after it is completed,” Eu says.
I-Bhd embarked on the leisure business several years ago to provide the company with a recurring income stream once the development of i-City is completed in about 10 years.
Since the launch of City of Digital Lights, revenue from the leisure segment has grown from RM2.8mil in 2010 to RM17mil last year.
As at June 30, I-Bhd's efforts at enhancing its tourist attractions at i-City are paying off as profits have more than tripled year-on-year to RM7.61mil from RM2.24mil previously.
“When everything is complete, recurring income will come from the investment properties namely the mall, hotels and carparks. The theme park is separate as it is not under property development,” Eu says.
As it realises its need for repeat visitors, Eu says, I-Bhd will add new attractions every year to draw in the numbers. Last December, it brought in seven theme park rides and so far this year it has launched the 10,000 sq ft children's gym.
“At the moment we are still about 90% night in terms of visitor arrivals. We hope that by next year when the Water World is open it will be two thirds night visit and one third day visit,” he says.
Acknowledging that it has not done much marketing, Eu says it will be conducting more marketing once its Water World is open.
“A lot of the crowd comes by word of mouth. But once we finish the water park, there will be a critical mass for us to promote to. A lot of shopping malls would like to have an entertainment component. The difference for us is that by the time we open our mall, we already have a proven theme park,” Eu says.
Moving on, three hotels from luxury four star to boutique hotels are in the pipeline as long-term investment.
“At the moment there are three planned four-star, three-star and boutique hotels. The latter two we may manage ourselves although we haven't finalised this. However, for the high end one, we will probably get an international hotel operator,” Eu says.