Share
 |
| Chao: I’ve worked 50 years in this business and never once have I lost money. With any development, it is a matter of how long you hold it. |
SEVEN years after its last project, Cheuk Nang (Holdings) Ltd is returning to Malaysia to complete its RM2 billion project in the heart of Kuala Lumpur. The top Hong Kong property developer is controlled by playboy tycoon Cecil Chao, who in recent years made headlines not so much for his real estate deals but his HK$500 million (RM212 million) prize that awaits the man who wins the heart of his eldest child and only daughter, Gigi.
The fact that she has been married to a woman for the past two years and more than 20,000 suitors from all over the world have failed to woo her only makes him more determined. “I may even double the money for any man who can woo Gigi,” he told City & Country in an exclusive interview just before New Year’s Eve.
The spry septuagenarian, whose 71.64% stake in Cheuk Nang alone is worth almost US$300 million (RM984 million), was in town to watch the Miss Tourism International pageant. Apart from pleasure, it was an opportunity for Chao to take care of unfinished business in Kuala Lumpur.
Cheuk Nang, through its unit Martego Sdn Bhd, will develop a “five- or six-star” residential project on three parcels of land measuring 2.67 acres, located off Lorong Perak and facing Menara Kuala Lumpur and KLCC Park. The freehold project — unofficially named Cecil Chao Centre — comprises four towers of upscale residences.
Previous plans to build serviced apartments, office towers and a hotel were scrapped in favour of high-rise homes with more modest built-ups. The parcels’ commercial status was converted to residential as the difference in premium between commercial and residential land was RM4 million.
The development order was finally granted in 2009, allowing Martego to build three 50-storey blocks and a 36-storey block with 879 units. Typical units will have built-ups of 600 to 2,241 sq ft. About 80% of the units in the first three towers will have built-ups of below 1,600 sq ft, says Knight Frank Malaysia associate director Herbert Leong. The firm is the exclusive marketing agent of this project.
Martego will launch two 50-storey blocks first, scheduled for April or May, and the third block, about six months later. The company will hold on to the 36-storey tower, which will house 46 units whose built-ups have yet to be confirmed.
Prices for units in phase one, which will face Menara Kuala Lumpur, will start tentatively from RM1,500 psf. Meanwhile, prices for phase two, which overlooks KLCC Park, are not fixed yet.
Call it foresight or pure luck, the delay proved timely for Cheuk Nang as it hopes to ride the wave of investors who prefer smaller units in the city.
Cecil Chao Centre will feature lush landscaping and generous water features with state-of-the-art security. Facilities include swimming pools, changing rooms, squash courts, yoga rooms, a gymnasium, nursery, playground, games room, function room, library and 3D movie theatre.
Currently, 85% of the substructure is completed, with plans to start on the superstructure next year.
 |
| Cheuk Nang, through its unit Martego Sdn Bhd, will develop a “five- or six-star” residential project on three parcels of land measuring seven acres, located off Lorong Perak, Kuala Lumpur |
Chao bought the land more than 25 years ago, before the Selangor Turf Club was moved to Sungai Besi in 1994. “We were introduced to the then mayor of Kuala Lumpur City Hall. He said, ‘Come here, we will assist you with a project.’ So I stayed for a few days and had a chance to look at the piece of land that we are now developing. Even though it was in the middle of the city, there were not as many buildings as now,” he recalls as he gestures at the concrete jungle.
While he declines to reveal the cost of the land, it is understood that he acquired the the 2.67 acres for RM283 psf. In comparison, the latest benchmark prices are RM3,300 psf, set by Singapore developer Oxley Holdings Ltd when it paid RM446 million for a 3.11-acre parcel to Loke Wan Yat Realty Sdn Bhd in November. A few weeks later, KSK Group Bhd bought 3.1 acres in Jalan Conlay from Singapore-based UOL Group Ltd for RM568 million or RM3,299 psf.
Other notable transactions of late include KAF-Seagroatt & Campbell Bhd buying a 0.78-acre freehold plot in Jalan Kia Peng and Changkat Kia Peng from its subsidiary for RM82 million (RM2,396 psf) on Sept 17, and Tropicana Corp Bhd selling a piece of commercial land measuring 1.44 acres to GSH Corporation Ltd for RM132.43 million or RM2,100 psf on Nov 29.
“After buying the land, I went home and forgot about it,” Chao says. However, in a South China Morning Post report from 1998, he was quoted as saying that the development was postponed due to currency controls instituted after the Asian financial crisis of 1997-98, which would have reduced the value of the project.
It was worse back home, where the markets roiled. Property prices plunged over the next five years and the market ground to a halt when credit dried up.
“We saw the real estate market in 1997. We thought there was no hope for it … that prices would drop to zero. It looked like an unsolvable situation,” he recollects.
However, the consummate entrepreneur saw opportunities where others saw risk. “A bad market to me is always an opportunity. It is always the best time to make money. During this time, the banks will call you up to offer loans. That is the time when people don’t have money, but if you are ready, you can make the best and most successful investment.
“I’ve worked 50 years in this business and never once have I lost money. With any development, it is a matter of how long you hold it. It is a question of how liquid you are, especially in Hong Kong where the market has big ups and downs.
“I believe real estate is like, in fact, even better than, antiques. Values will always go up. It is better than keeping cash or [investing in] the stock market. In the stock market, you must choose your counters carefully.”
He finally dipped his toes into the Malaysian market with Parkview, a 41-storey serviced apartment block comprising 417 units with built-ups of 745 to 1,754 sq ft, completed in early 2006. The project was jointly developed with Mayland Bhd, whose founder Tan Sri David Chiu himself heads Far East Consortium Ltd and Kosmopolito Hotels International Ltd, which are both listed on the Hong Kong Stock Exchange. About three-quarters of the units were sold when they were launched a few months later while the rest were rented out.
While Chao continues to have faith in Hong Kong real estate, he nevertheless has branched out beyond its shores — besides Malaysia, he had ventured into Macau and China.
“There is promise in China. Shenzhen, which is near Hong Kong, is a city with rapid growth. It used to be unsafe — in fact, I was once kidnapped there when I was younger, but as a young man I had the strength to fight back!” he says with a chuckle.
On whether Iskandar Malaysia — the “Shenzhen of Malaysia”, which has in recent years drawn many deep-pocketed Chinese developers to its shores — is on his radar, Chao feels that Johor still has a long way to go.
 |
“I went to Johor in the early days and was offered good, huge pieces of land to build multi-purpose projects, but I chose KL, because KL was relatively undeveloped. Johor is still a step behind KL, although Johor has the advantage of being closer to Singapore,” he says.
Cheuk Nang’s Kuala Lumpur project will keep Chao occupied for a while as out of two million sq ft of gross floor area, Cheuk Nang and Mayland have only sold 300,000 sq ft via their Parkview project.
“We want to see the money come back first ... I don’t have another 25 years! When you are young, you need to borrow money and take risks, but at my age, I don’t want to … don’t have to do that,” says Chao.
“We are making reasonably good profits here, although not as much as in other countries. So we are not paying too much attention to our investment in KL, but now, we have to move ahead and we want to do something that you will be proud to see, with good quality and good design.”
“Unreasonably cheap”
Chao is perplexed by what he deems the “unreasonably cheap” prices of the local real estate.
“Malaysia’s property is unreasonably cheap by international standards. It is an Asian country that is financially ahead of many of its neighbours, but its prices are below that of its neighbours, which is unreasonable. You can afford to hire Filipino and Indonesian maids but your residential prices are below that of the Philippines or Indonesia, let alone South Korea or Japan. I understand that the prices have gone up quite a bit, but you’ll have to let it go ... because socially, you have been cared for so well by your government that you don’t want to buy homes as much as in other countries like Hong Kong, China, Singapore. There, people prefer to own homes, and not just rent them.
“There is no country where you can get a 90% to 95% loan from the banks and at a low interest rate too. You have all this and yet some don’t want to buy ... So I feel that it is a bit unreasonable,” he says.
Nonetheless, Chao feels that Malaysia is able to catch up economically, at least with Singapore. Hopefully, local real estate prices will move in tandem, too.
“Singapore has a small population, but they are clever and aggressive. They are well managed. I don’t see why Malaysia is not as good as Singapore. You have more resources, more land … you can do better than Singapore. I believe someday you can be at least as good as Singapore.”
Chao’s heir: It’s in the air
Cecil Chao has ambitious plans to loosen his grip on the reins “by 10%” each year over the next decade. Despite his age, he is finding it hard to let go. He is still searching for the right person to succeed him — and that person does not necessarily have to be part of his clan.
“I cannot decide who will be the next CEO yet. I am still looking for the right person. Some people have worked for me for a long time. I have to look at this, even if she [Gigi] just stepped in,” he says.
Currently, two of his three children — Gigi, 33, and Howard, 29 — are executive directors of Cheuk Nang (Holdings) Ltd.
Chao has high hopes for his beloved daughter, especially when it comes to her role in Cheuk Nang. “Gigi is an intelligent girl and there are still things I am trying to teach her, and I hope someday she will become an [more] important part. She is already an important part of the business,” he reveals.
Gigi joined the company in February 2011 as senior project manager, and since April that year, has been executive director.
Meanwhile, Howard has been with Cheuk Nang since 2006. He is in charge of the marketing, sales and leasing and property management of the group’s properties and the development projects in China. Howard and his girlfriend — “a smart girl working with UBS [financial services company]”, says Chao — recently became parents.
However, he is not certain about his youngest son’s part in his company at present. Roman is currently pursuing his education.
“I need to make sure we don’t lose anything, like Nina and Teddy Wang [almost did],” he says emphatically.
The late Nina, nicknamed Siu Tim Tim (Little Sweetie) by the Hong Kong public for her pigtails, colourful clothes and Scrooge-like spending, was Asia’s richest woman with a net worth of an estimated US$4.2 billion. The widow of Teddy, she helped turn their Chinachem Group from an agriculture and chemical concern into one of Hong Kong’s leading real estate developers.
After she succumbed to cancer in 2007 at the age of 69, her alleged lover, bartender-turned-feng shui master Tony Chan, produced a will naming him the sole beneficiary of her staggering estate. The Hong Kong government then sued him for fraud. Hong Kong’s High Court ruled that the will was a forgery and he was sentenced to 12 years’ imprisonment. Nina’s wealth is now held in trust by the Chinachem Charitable Foundation, which owns the group.
Chao’s friendship with Nina spanned decades. As kindred spirits — they were born on the same day — he must feel a profound need to prevent a similar occurrence.
This article first appeared in The Edge Malaysia Weekly, on January 6, 2014.
