A curious Sime-Sunrise tie-up that makes sense

By Sharen Kaur
Published in NST, January 27 2010

IN AN industry where partnerships are rare, the tie-up between Sime Darby Property Bhd and Sunrise Bhd is interesting.


Big developers are not fond of working together because land is not something they can easily replenish but tie-ups are not uncommon if it serves their objectives.
In this case, the deal looks like a good fit.

Sime Property and Sunrise will work together to develop a RM1 billion project in Bukit Jelutong, Selangor. They will start next year and the development will span seven years.

Sime Property is known for its townships like Subang Jaya, USJ Heights and Ara Damansara to name a few.

Sunrise, on the other hand, has a good brand when it comes to high-end development with projects like Solaris Dutamas, Solaria Mont' Kiara and Plaza Mont' Kiara.

The biggest motivation for Sime Property is that it would be able to learn how to develop a thriving commercial and high-end property cluster.

"Bukit Jelutong has zero content for commercial. If you want to extract much higher value than what the location is worth, then clearly Sime may want to bring in Sunrise which could add value," said Kenanga Investment Bank Bhd head of research Yeonzon Yeow.

Sime Property may also be able to do the project faster with a partner. The second important factor is that the joint venture project could open up a new customer base for Sime Property.

While Sime Property caters to the middle to upper income group, Sunrise's customers are mainly those in the high-income bracket as well as foreigners.

And as for Sunrise, the deal gives it access to new land.

The group is looking to expand outside of its traditional geographic area in a bigger way as it has only 32ha left in Mont' Kiara.

Bukit Jelutong may be the best option for Sunrise as the township, launched in 1995, is a respectable address in one of Shah Alam's affluent neighbourhoods. The terraced houses are one of the highest priced in Shah Alam, analysts said.

Zerin Properties chief executive officer Previndran Singhe believes the project by Sime and Sunrise will do well.

"Sunrise has got a skill in product development. They did Solaris very well. Sunrise will analyse the market before they do anything.

"They are a trusted brand and have a good following. Whether they are in Mont' Kiara or Bukit Jelutong, they will have ready customers. It's about time Bukit Jelutong has a Sunrise brand," he said.

On what may be in store in Bukit Jelutong, Yeow said Sunrise could introduce a combination of Solaris Mont' Kiara and Solaris Dutamas, which, despite its expensive offerings, sold well in Mont' Kiara.

The only concern now, as the head of Sime Property put it, is whether the two companies have the "chemistry". That is likely to be something that would interest their rivals.

-ENDS-