What can we expect from EcoWorld in the days ahead? How will it keep its chart upward-moving amidst the persistent turbulence? Eco World Development Group Bhd (EcoWorld) CEO and president Datuk Chang Khim Wah shares his thoughts in an interview (excerpt edited for clarity) with EdgeProp.my.
Not putting all eggs into one basket
EdgeProp: Developers say market adaptation and staying resilient are key to success in this market. What exactly is EcoWorld’s roadmap?
Chang: We are also adapting to the market like all the other developers, but I think we are lucky [in the sense] that we always have constant self-evaluation of our business, whether it is for this year, the next year or the following year.
EcoWorld Development is on a strong footing
We started out targeting aspirational and upgraders’ market. As you can see, 55% of our launches in 2015 were actually priced from RM600,000 to about RM2 million. The properties we launched that time targeted aspirational homebuyers.
In 2016, we saw an increasing number of first-time homebuyers. [We realised then] this was a segment we couldn’t neglect; hence we started developing our designs and products in that segment from 2018 until last year.
Compared with 2015, only 14% of our products were priced below RM650,000, but now we are doing about 30% of that. When we did that, we actually expanded our reach to the young people as well.
In designing the houses for the young homebuyers, it’s not just about reducing the price, but also designing houses that suit their needs, from layout to infrastructure and amenities within the township.
For buyers looking for landed homes, we have the Co-Home projects in Eco Grandeur and Eco Horizon. Co-Homes offer 2-storey landed homes sharing the same footprint, one at ground level and the other one floor above.
So you can buy either the first floor or ground floor, or buy both and lease out one. There is an element of innovation there, because it is not just about the affordability but what suits the lifestyles of homebuyers today.
Meanwhile, ErgoHomes at Eco Forest township in Hulu Langat, Selangor are terraced homes built in a cluster format but sharing a private garden. Priced from RM600,000, it offers a different type of communal living.
While focusing on first-time homebuyers, we have not neglected the aspirational product segment as 40% of our products are designed for upgraders.
Other than residential properties, EcoWorld’s portfolio includes commercial developments, such as business parks, which offer industrial properties. On top of this, we also provide a one-stop service to assist owners in setting up their businesses in our business parks, such as in getting the relevant approvals for tax rebates and grants.
Meanwhile, we also have integrated developments, for instance, the 19.4-acre Bukit Bintang City Centre in the heart of Kuala Lumpur. This is a joint-venture project with UDA Holdings Bhd and Employees’ Provident Fund.
Digitalisation the way forward
EdgeProp: What is the impact of the pandemic on EcoWorld’s digital footprint?
Chang: I think this pandemic has really accelerated our digitalisation methods. We see the need to get all the systems in place as soon as possible.
One of the things about the pandemic is that you lose touch in the physical sense with a lot of people. But as a developer today, it all comes to giving better customer service.
The teams have to work on engaging the customers. In this day and time, paperwork should be the last thing on our minds, but we still need to do that because they are also critical. But if we automate and digitise more, we can push more.
I know everybody is doing it today but at EcoWorld, we have been pushing digitalisation since 2017.
Currently, 80% of our sales come from social media leads and 80% of our sales are also closed within 30 days.
That momentum is very important for a public-listed company because like us because we have to report our numbers by quarters, so we cannot afford to be inefficient.
Going online has also helped us in streamlining our processes and trained us to be agile. This has worked to our advantage as we don’t waste too much time or manpower during the process.
The early adoption of technology has enabled us to react faster during the pandemic times. Even when we couldn’t reach people physically, we could still reach our buyers via social media platforms.
We have learnt along the way what kind of content and language could gauge buyers’ attention, especially the young first-time homebuyers.
Owning a house is not a one-off sale. As young buyers grow older, they will have different needs, such as for bigger houses. It’s a journey to grow together with them.
EdgeProp: Everyone is now talking about digitalisation. How different is it for EcoWorld?
Chang: Digitalisation is not just about the front end of the social media platforms, it is also about the back-end processing – the efficiency of closing sales and collecting data. So when our customers walk in, we know the price range they are looking at and the design they want.
It is not just getting the data for one project and then producing the same type of units for every other township. This is because every region and township has its own peculiarity which holds it together.
So, when we create a product, it is not just from the imagination of our architects but also from the data collected from the homebuyers to suit the needs of that particular corridor and to match the gap in the needs.
Creating a sustainable built environment responsibly
EdgeProp: Homebuyers nowadays look beyond getting their keys from developers, expecting the latter to help resolve any arising issues. Your comments?
Chang: When we first started, we made a very critical decision to focus on strata landed townships. At that point in time, a lot of people were talking about gated-and-guarded townships but nobody implemented them properly as per the Strata Management Act 2013.
We wanted the environment of the township, including the landscape and security, to be maintained at a high level. To achieve this, community engagement is crucial and a developer plays an important role in helping them build the relationship and rapport to manage the township together into the future. That journey is not easy.
EdgeProp: Is this more relevant now as people are forced to stay at home more?
Chang: The built environment really makes a difference, now that people are at home more. A lot of people may not realise this, but actually the pandemic has made a lot of people more appreciative of where they stay.
They look at things they want to improve, like you need a workspace to work from home, which is why the design of the house matters.
Most of our residents are really happy to be living in our homes because they really appreciate the security. Last time, when we talk about security, it is just about preventing break-ins but today security means so much more than that. It is about your personal well-being and that calmness in your heart. I think post-pandemic, there will be huge changes in what people want in a home.
The dynamic evolvement of EcoWorld’s DNA
EdgeProp: How has the DNA of EcoWorld changed over the years?
Chang: Our vision is Creating a Better Tomorrow. In simple terms, it’s just about making everybody’s life better.
During the design stage, it is not just about the house but also the overall environment, and how it will turn out, and trying to fit in the development with the law of nature. We have also done master planning whereby all residences are away from the commercial precincts for privacy purposes.
The amenities are sandwiched in between so that everybody will find it very convenient and connected. That was how we planned our township developments in the early days.
Today, we are also looking at the township planning from young homebuyers’ perspective – their psychographic view, where it evolves around their likes and lifestyle as well as their needs.
Some of them like sports, some like shopping, some have children and aging parents, so we started looking into the lateral view as well. So, the DNA has evolved horizontally and vertically.
For instance, Eco Grandeur’s bicycle park has attracted the enthusiast bikers in that area. This is the result after our analysis during the township planning.
The team behind the scenes
EdgeProp: Behind the sterling numbers are people who work very hard. What is the impact of the current lockdown on the team?
Chang: Building a team in the last two years has been a test for every organisation, as we do not know when the pandemic will end.
As it went on, we realised that not only businesses, but the way we managed the workforce also changed and everyone has to adapt to that.
We cannot think of revenues and profits like the old days. Yes, it will come one day, but it has to be managed in a very, very different way. This year, in our annual report, we keep stressing on resetting and reinventing. The pandemic may last another 12 or 18 months, we really don’t know.
So, first things first. The workforce needs to be reset. Every business, not just EcoWorld, has to undergo cost rationalisation.
Our team is made up of more than 70% Gen Y and Gen Z, and they have never faced a recession. For a lot of them, this is the first real crisis in their working lives. So, what we had to do was to make it very clear and to explain the situation to everybody. The objective of going through the next two or three years – we have to make sure we meet the revenue, profit and cost ratio.
It is important to be transparent and explain the situation to the staff before we take cost-cutting measures, such as adjusting the salaries during pandemic times. Today, our team is even prouder and stronger compared to the last five years because we’ve gone through tough times compared to the earlier years.
The Chairman (Tan Sri Liew Kee Sin) has spent a lot of his time doing Chairman sessions. You have to spend a lot of time at the town hall to communicate with everybody and to keep reminding them to work more efficiently.
We also try and give more encouragement to the young team by trusting them, so there are opportunities for the young people to learn more by giving them more responsibilities. We can’t do it without the team, definitely.
A clarion call on sustainability
EdgeProp: What is the one thing the pandemic has taught EcoWorld?
Chang: During this pandemic, one thing is quite clear for us – sustainability – in everything, coupled with corporate responsibility. Definitely every company and every organisation needs to make money. I think the responsible way of doing that is very, very important.
In 2017, we launched this initiative of establishing a three-tier governance structure to oversee, review and approve EcoWorld’s sustainability strategies, policies and initiatives.
It is not just about having one person in charge of creating a green environment. Just yesterday (June 24), during our board meeting, we spent a good 45 minutes discussing Environmental, Social and Governance (ESG) on the back end because that is really our responsibility.
It’s not just about planting more trees or saving energy, but it is also about how we can engage the community. It is about how we engage supply chains and suppliers so they can also do their work more responsibly.
Even for our staff, it is about how we should engage them and set up their career paths and what the organisation roadmap is moving forward. Even for our financiers, we need to show them how we can help them to be sustainable so they can continue to support us as well.
Our Sustainable Committee is directly under our Chairman (Tan Sri Liew Kee Sin) with all our general managers being part of it. We are learning every day. We realise there’s actually a lot more we can do and we are achieving it step by step.
We deal with a lot of stakeholders – from contractors to suppliers – that we need to influence. It is not an overnight process, but the most important thing is to have the roadmap in place and to learn more while we set our KPIs (key performance indicators) every year.
EdgeProp: Would the sustainable agenda push up property prices?
Chang: The cost factor and survival is really the key right now, which is why we need to take baby steps. It is about how we can work downstream with our contractors and consultants.
It has to be one step at a time, it cannot change overnight. So it’s not an easy thing to do now and we probably wouldn’t want to venture too much out to disrupt the businesses now because everyone is very busy trying to get vaccinated and their businesses restarted.
However, internally, we can work on some of the ways we can achieve these goals. We probably have had a good start to it, because we have managed to organise it in the way we want, but this is only a beginning journey for us.
EdgeProp: What do buyers want post-pandemic?
Chang: Although homebuyers are becoming more aware of the location and pricing of homes, I think there will be an increasing emphasis on innovation and design practicality of a home post-pandemic, as now they are spending longer time at home. As cliché as it sounds, the devil is in the details.
Ventilation and natural lighting have always been one of our key concerns. Most of our houses have higher floor-to-ceiling heights to promote them. Also, we’re very aware of the sizes, openings and locations of windows.
EdgeProp: What is next for EcoWorld?
Chang: We will maintain what we are doing on our social media platforms to push sales and to continue pushing our digitalisation efforts towards greater efficiency. With that, we hope to get the results right and to keep up the momentum.
We also want to continue to balance our business and ESG at the same time – building our future revenue and our balance sheet, and to reward our shareholders as quickly as we can.
With 19 ongoing projects, we are also looking to improve them by finding new amenities so we can attract people to come in and enjoy the things we build.
EdgeProp: What is your outlook on the market? We know a lot of it would depend on the economics, and when the Covid-19 pandemic subsides. How do you see the market?
Chang: We believe the buying will continue. We still see a lot of new, young homebuyers in the market. We are also seeing a very strong stream of people looking to invest in industrial properties, including end-users and manufacturers.
We believe that after the Movement Control Order (MCO), whether it’s phase two or three, we will continue to see the market sustain. We will be optimistic
And then let’s see how the pandemic goes on, but hopefully it will end soon, and we can look at even better growth. We have to be prudent during this time while we are growing. It is all work in progress.
Undaunted by reduced margins
EdgeProp: A recent analyst’s report said, EcoWorld’s 1H2021 gross margin dropped 1.3% pts y-o-y to 19%, largely due to additional incentives given to purchasers to accelerate inventory monetisation.
Chang: Definitely our margins have dropped due to several factors. Firstly, when you participate in the HOC, you need to give a 10% discount and with the campaign ongoing until the end of this year, it will squeeze us a bit.
As we venture into homes which target first-time homebuyers, we are also reducing our product premium so it will hurt us a bit as well. But of course, that is offset by the volume.
With ongoing cost rationalisation and expectations of better margins in upcoming launches, we don’t see that as an issue. This is because we’ve done most of the heavy lifting in our projects where we have spent most of our upfront money on getting the infrastructure ready to go forward.
When the population of a township increases and activities get robust, the marketing strategy will be different as the township moves to the maturity stage. If we still have land to develop, some of the premiums will fall on these projects.
EdgeProp: What are your expectations for the 3Q results since things have slowed down considerably again during the Full MCO?
Chang: We just have to abide by the government regulations and operate at 60% capacity. In the meantime, what we can do is to continue engaging with our customers on our social media platforms, and to continue to sell online. Although things have somehow come to a halt, we are still getting end-financing from banks, etc.
EdgeProp: What is your typical day like now?
Chang: Wake up, Zoom meetings, sleep and more Zoom meetings (chuckles). We try to organise a lot of things in this downtime. Quite frankly, we have a lot of our people strategising plans to move forward. We don’t know why, but it seems like we are busier than before. But it’s okay. We still have time to spend with our families and I get to do more running these days (more chuckles).
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