Starting this thread because I wanted to share my views and feedback on this project.

Previously, there were 2 thread created by forumer @hoe_blackout but he has removed it after I revealed the potential risk behind the project. Not wanting to let my effort go down the drain, I've decided to capture share my views on the whole project by creating my own thread. This is the original post of the thread:


Attached thumbnail(s)

My take on the project and the concept:

I stay in PD and feel that although there has been quite some development in recent years, such as the PD Waterfront project (with names like McDonald already in operation with Starbucks and Kenny Rogers coming soon), I still feel that it will be hard for these type of investment (GRR for hotels/resort).

Chances to flip is very hard as the market is very small, especially if you are looking at PD itself. And if the contract is not renewed after the first 3 years, what are you going to do?

Bear in mind, its 3+3+3, that means the 2nd 3 year contract renewal is subjected to the 1st 3 years operations. Will you be able to sell it after that? If no, then you would have to rent it out on your own. For a resort/hotel, that means you will be very busy as interested parties would most probably be short term guest (a few days only).

You would be lucky if you get a guest that wants to rent for more than 3 days (what's there in PD?!?!?)

While the returns for a short term/daily rental might be ok, it will also be very time consuming and energy sapping. Unless you have a few units, and also a maid to do the daily housekeeping once guest check out, I would prefer to avoid such investments.

There are many GRR schemes in Port Dickson (most of the resorts/hotels are sold based on this scheme) and a handful of them only are barely surviving, others are close to being dead.

And more importantly, on the developer:

Splash is developed by TANCO HOLDINGS BERHAD. So far, for the past 3 quarters for Financial Year 2013, the company has been making a loss of RM10million!

To make things worse, this company was once a PN17 (financially distressed) company few years back.

http://www.thestar.com.my/story.aspx?sec=b...iness%2f8760719

http://www.propertyguru.com.my/property-ne...ater-theme-park

Please do your due diligence before investing in this project.

For me, it is not feasible at all since the concept is hard to sell and it is a product of a very problematic company.

Apart from this, anything good in PD/Lukut ?

TANCO??? I thought they bankrupt? They are the DEVELOPER for BANDAR COUNTRY HOMES @ Rawang. But they abandone the township development after few years establishing Bandar Country Homes. They have a good concept for BCH but fail to execute it properly. i remember when i move in in year 96, there is hype about supermarket being built but guess what.... nothing is being done. Recently, i heard they are bankrupt and sell all the land in BCH to supplier and other party to get more capital for the company. I'm not sure how true but, the so called Supermarket is now being construct for ECONSAVE. hmm... since 96 until now. a total of 17 years. i don't think it's under the initiative of TANCO.

besides, BCH has a club house previous which is operated by TANCO under DutaPalm Resort. the whole club went into drain. Now, the club house is vacant for some times. i think at least 2 years vacant. i'm not against TANCO or Against the SPLASH Project. but i just wanna share out my disappointment on TANCO developer and at the same time, alert some investor.

i might be wrong. but for potential investor, pls do your own research. You may come to BCH @ Rawang to view the leftover of TANCO. BCH is coming up and booming now. but not because of TANCO. it's because of Anggun, Emerald Project and surrounding project such as Saujana Rawang and M Residence which is nearby BCH Township.

Thank you for sharing, very interesting points that I myself wasn't aware, about BCH.

Just like you, my main objective is to share what I know, especially regarding the developer, in hope that other investors don't fall victim to TANCO.

PD Waterfront service apartments would be a better bet.

Bro what u think of similar hotel project with GRR in Melaka. Would Melaka be a better bet especially if the location is quite central like in taman Melaka raya? Walking distance to dataran pahlawan n main mahkota parade

TQ for sharing, guys

Incidentally, I am quite familiar with Malacca too since I travel there every week, for work related stuff.

Malacca's property scene is much more active, with more volume. I am guessing you are referring to Straits Residence? My response will always be, 'What's next once you get back the property?' or 'What's next if they don't extend the contract anymore?/Only for the first 3 years?'

Worth to highlight that it will be a real challenge to handle it on your own, especially if the rent is for short term only/a few days. The high ROI (6%) that developer is offering is based on the daily rental model, which will yield higher returns but at the same time, take much more effort since there is housekeeping and so on.

Unless you have a few units and have the time, and also a maid, I think it's better to look at other opportunities, it's just not worth the hassle, in my opinion. Market/demand for rental will be there, but are you up to it to do the dirty work on a daily basis?

Meet guest, collect deposit, record details, pass to them the keys, collect back keys, check suite condition, do housekeeping.
That's one complete cycle.

Just wondering given the demand for accommodation in Melaka, are there agencies that will rent in bulk from owners and then manage like a hotel business? Believe got demand will have supply...??

For Straits Residence case, believed that it has the lowest entry for a strategic location GRR project in Melaka compared to all the others like the Shore, Hatten, 99 Residence etc. The 300+ sq ft unit was selling about RM220,000 with GRR contract for 6 years (not 3). The rest entry level are above RM300,000 although bigger unit size but since the purchaser is not staying does not really matter.

So after 6 years if all GRR honoured, the carrying cost is only RM140k. One year 14 days free stay also worth RM2800 assuming RM200 per nite. In year 2020, believed a pigeon hole in center of Melaka should be worth more than that...if can find a agency to continue to manage renting out better still

What say u, sir?

You have to remember, it will still be very hard because there is simply not enough volume, if done by agency.

Let's take some numbers so that it's clearer. Straits Residence will be managed professionally for 6 years, with 300 units, 6 full time front desk staff, and 10 full time housekeeping staff. If there is an agency, and let's say they manage to secure 10 units, they will still at least need 2 full time runners (equivalent to mobile front desk staff) and at least 2 housekeeping staff. Cost per studio unit to serve is already high. Plus, what track record do they have? I'm assuming there are such agencies around and already in operation, no doubt about that. But they are most probably small ones with no solid track record. Those that are good at it, will have grown to be the management companies of hotels and resorts that we know of.

Another thing that you need to take into account when doing ROI for GRR investment product is the cost to refurbish. If I'm not mistaken, the cost of refurbishment is equivalent to 1 years rental! That means, for your 6th year, you will not be receiving any rental at all.

Thus, your ROI = [(rental per month * 12 months * 5)/ (12 months * 6)] / cost of your studio unit. This will work out to be just under 5%, and not 6% as claimed by the sales agent.

I'm a sucker for details, so pick up all this points, besides personal experience. I have a GRR property too but its for students and in KL.

You are right, in 2020, that pigeon hole in centre Melaka should be worth much more than what it is selling for right now. But again, to remind you, liquidity is not really there, relative to properties in KL, Penang or JB. That's my only real concern, where your money will be stuck and might not able to roll when you want to.

i already book that unit

Which unit u booked ar?

So Hattan square and other grr in Melaka can't buy?
Pd all lost hope already

what about projects such as Elements which has the same scheme? Guaranteed returns for the first few years. Elements is a shopping mall by the way, developed by Hatten. Will shops be more promising compared to a pigeon hole?

And, thx for the heads up on the Splash Park project. But if it can really pull through, it would be a nice place to visit someday. =)

for investor, must be ready for exit strategy. So any sub-sale buyer or not ?

GRR is attractive as this property type which is resort/ hotel is consider high risk, thus, must be high enough to cover risk.

I have 2 unit bayu beach resort for sale..850sft..2bedroom 1 bathroom..facing pool and sea..grr or can own stay..rm220k nego..1 night can rent minimum rm300 and rm500 for peak season..

The propose highway linking PD to klia also cant help PD?

The main attraction is the free beach. The increase inflow can improve more pisang goreng, nasi lemak stall only. How much potential u expect from these biz activities?