Share
Nearly a decade after Lexis Hibiscus 1 entered the Guinness World Records for having the world’s most overwater villas in a single resort, Malaysian developer Kuala Lumpur Metropolitan (KL Metro) Group is doubling down on Port Dickson with a RM1.6 billion sequel.
Its latest project, Lexis Hibiscus 2, will add another 910 overwater villas and 800 sky pool suites to the beach destination located about 1½ hours’ drive from Kuala Lumpur.
The developer is betting that demand for resort-style investment properties and regional tourism to Malaysia will continue to grow.
The project also reflects KL Metro’s confidence in Port Dickson as a resort and investment destination, following the success of Lexis Hibiscus 1 and continued demand from both local and foreign buyers, says its managing director, Low Tak Fatt.
Over the weekend of May 16 and 17, a KL Metro team was in Singapore to showcase the project to potential buyers.
Another potential Guinness World Record resort in the making
Spread across 80 acres (32.4ha), Lexis Hibiscus 2 will feature overwater villas arranged in the shape of a giant hibiscus flower — Malaysia’s national flower — continuing the signature design concept established by the first phase.
Construction has already commenced at Lexis Hibiscus 2 and is expected to be completed in four years. Low believes the larger development could once again earn the resort a place in the Guinness World Records.
The upcoming development builds on the success of Lexis Hibiscus 1, which set a Guinness World Record in 2017 with its 522 overwater villas arranged in the shape of a hibiscus flower.
It also set another record for the most swimming pools in a resort, with 653 pools in total. Besides the overwater villas, Lexis Hibiscus 1 includes 117 tower suites. Construction began in 2011, and the resort was fully sold and completed by 2016.
“When we first launched Lexis Hibiscus 1, prices started from about RM500,000,” says Low. “Today, resale prices are almost double that.”
Fifteen-year leaseback arrangement
KL Metro had offered buyers of Lexis Hibiscus 1 a 15-year leaseback arrangement with rental yields of about 6%. The developer is extending a similar scheme to buyers of Lexis Hibiscus 2.
The villas are leased out as hotel rooms and managed by hotel operator Lexis Hotel Group.
The developer will assist owners with rental collection and the management of recurring charges, says Low.
Prices in the latest phase range from RM850,000 to RM1.2 million, with all units sold fully furnished on a 99-year leasehold tenure.
The latest phase will also feature upgraded luxury finishes and fittings.
The two-storey villas comprise one unit on each floor. The lower-floor unit spans 858 sq ft and features two en suite bedrooms and a private pool. The upper-floor unit is slightly larger at 872 sq ft, and likewise comes with two en suite bedrooms and a private pool.
According to the developer, buyers will also enjoy 10 complimentary nights’ stay at the resort each year. At the end of the initial 15-year term, owners may choose to renew the leaseback arrangement for a further 15 years. Alternatively, they may opt out of the scheme by giving three months’ notice.
Based on the buyer profile of Lexis Hibiscus 1, around half of purchasers were Malaysians, while the other half came from about 60 different countries.
Most of them were from the Asia Pacific region — including China, Hong Kong, Taiwan and Singapore. There were also buyers from the UAE and South Asia, including India, Pakistan and Bangladesh.
‘Hassle-free investment’
Based on Low’s observations, about 97% of buyers at Lexis Hibiscus 1 opted for the 15-year leaseback scheme. Only 3% chose not to participate, as they intended to occupy the units themselves.
“The majority of them are quite happy to let us manage the villas for them,” he says. “They don’t want the hassle of managing the property themselves.”
According to Low, the developer has been offering resort units under a 15-year leaseback scheme for the past 20 years, beginning with its flagship project, Lexis Port Dickson, in 2006. The scheme applies across all its hospitality developments — five of which have been completed, with two currently under development, including Lexis Hibiscus 2.
“In Malaysia, many legal documents are in Bahasa Malaysia,” says Low. “It can be difficult for foreigners to understand them. So we help buyers handle things like sinking fund deductions and insurance premiums. Basically, we are offering them a hassle-free investment.”
Before founding KL Metro 30 years ago, Low began his career as a lawyer. During that time, he handled numerous disputes involving buyers taking developers to court over misrepresentation, unfulfilled rental guarantees or incomplete projects.
“I saw many buyers suffer, and there was very little they could do,” he recalls.
From construction to five-star resorts
KL Metro Group started in 1996 as a medium-sized contractor undertaking infrastructure, earthworks and building projects. The company ventured into property development in 2002.
“Since then, we have focused on property development and are no longer involved in construction,” says Low.
The developer had initially signed a joint-venture agreement with the Melaka state government in 2010 to develop Lexis Hibiscus 1 there. However, soil tests later revealed that the site was unsuitable for such construction.
“That’s how we ended up in Port Dickson in 2011,” says Low. “Port Dickson already had several land parcels earmarked under the master plan for overwater villa developments.”
While the beaches along Peninsular Malaysia’s east coast — such as those in Terengganu — are famous for their powdery white sand and clear blue waters, they are also exposed to monsoon conditions and are therefore unsuitable for overwater villa developments, he explains.
By contrast, Port Dickson benefits from its location along the west coast and its proximity to Kuala Lumpur. “It forms part of a broader tourism route that includes Kuala Lumpur, Melaka and Genting Highlands,” says Low. “We are also largely free from natural disasters like typhoons and earthquakes, which makes it safer for overwater villa construction.”
Partnership with Lexis Hospitality Group
When KL Metro first ventured into the hospitality sector, the company recognised that it lacked hotel management expertise. It therefore partnered with Malaysian hospitality operator Lexis Hotel Group, formerly known as Legend Hotel Group.
Their first collaboration was Lexis Port Dickson, formerly known as The Legend Water Chalets. The project comprised 280 overwater chalets and 112 tower rooms. It was launched in 2003, completed in 2006 and fully sold.
This was followed by Grand Lexis Port Dickson, featuring 323 pool villas. The project was completed in 2009 and also fully sold.
The partnership later expanded to include Lexis Hibiscus 1 and now Lexis Hibiscus 2.
The group’s other completed hospitality assets include Lexis Suites Penang, a 222-suite development completed in 2016, and Imperial Lexis Kuala Lumpur, a 275-unit luxury hotel and serviced apartment project completed in 2023.
Besides Lexis Hibiscus 2, the group’s other hospitality project under development is Royal Lexis Kuala Lumpur, which will comprise 371 suites and 147 hotel rooms within a 66-storey skyscraper.
Low says the group’s portfolio of completed hospitality projects has welcomed 11.2 million tourists from 186 countries over the past two decades. About 52% are domestic tourists, while 48% are international travellers.
Tour groups, fixed itinerary
Since its inception, Lexis Hotel Group has built strong ties with overseas tour agencies, particularly across Hong Kong, South Korea, Taiwan, Japan and China.
“These tour agencies continue to work closely with Lexis Hotel Group today,” says Low.
Over the past decade, Lexis Hotel has also expanded into newer markets, including the UAE, South Asia and, more recently, Russia.
Tour groups typically follow a fixed itinerary when visiting Malaysia, particularly those on four-night, five-day packages. “They usually spend the first night in Kuala Lumpur,” says Low. “The next day they visit Melaka, but instead of staying overnight there, they continue to Port Dickson and stay at Lexis Hibiscus 1.”
The following day, tourists typically head to Genting Highlands for its casinos, entertainment offerings and cooler climate, before returning to Kuala Lumpur for their final night.
“The reason this route works is that Melaka, Port Dickson and Genting Highlands are all within easy reach of Kuala Lumpur,” says Low.
Limited supply of upscale resorts in Port Dickson
At Lexis Hibiscus 1, tour groups account for about 35% of guests, while another 35% come through online bookings. Meetings, incentives, conferences and exhibitions (MICE) account for about 15% of occupancy.
The remainder includes long-stay guests, such as expatriates working on projects in Port Dickson, including those in the oil and gas sector.
Most guests, both local and foreign, typically stay one to two nights, reinforcing Port Dickson’s appeal as a short getaway destination.
Low believes Lexis Hibiscus’ success in Port Dickson stems from limited supply amid strong demand for upscale resort accommodation. He points to its room rates listed on Booking.com, which range from above RM900 to RM1,600 a night — rates that he says are often higher than those at some established luxury hotel brands in Kuala Lumpur.
“If a product is unique, and there is strong demand but limited supply in the market, then it’s going to succeed,” says Low.
..........
EdgeProp brings you another month of data-driven insights, exclusive interviews, and market commentaries. Subscribe now for your free copy!
