For someone who is overseeing the launch and development of seven projects with a total gross development value of RM900 million by the end of the year, Andaman Property Management Sdn Bhd sales and marketing director Datuk Vincent Tiew looks surprisingly relaxed.
Clad in a simple black suit, Tiew is a picture of calm as City & Country interviews him at Andaman Group’s sales gallery recently. He admits that the workload in the months ahead will be huge, but also reveals that Andaman is planning a company trip to Europe after its final launch of the year in December. Tiew, whose motto is obviously “work hard, play hard”, says: “We will be treating everyone to a Manchester United game. We’ve already booked some seats behind the goalposts!”
The slew of new launches comes on the heels of Andaman’s three launches in the first half of the year, namely [email protected] CBD, which consists of 86 four-storey shops with a GDV of RM220 million; Taipan [email protected], Perak, which comprises 67 two-storey shops (GDV: RM50 million); and Diamond [email protected], Selangor (30 four-storey shops with a GDV of RM120 million).
By December, Andaman would have launched 10 projects for the year. While most of the projects are of moderate size, their GDV adds up to a substantial amount: RM1.29 billion. This puts Andaman Group’s property business, which was established in 2005, on the path to achieving some RM3 billion worth of project launches by the end of the year. So, why so many launches this year, especially when more and more developers are holding on to their landbank to ride out the global economic turbulence. On top of this, there is the upcoming general election and the unveiling of the national budget.
But Tiew chuckles and asks, “Why not now?” He says developers have two major challenges at this juncture : selling their projects while the cost of materials and land continues to rise, and getting bankers to provide financing for their buyers. “Surprisingly, we have more bankers on board now to support us with different packages. This, coupled with our affordable prices of below RM500 psf, will be our competitive edge.” Of the seven projects that Andaman is set to launch over the next four months, four are in Perak. They are spread across the silver state’s capital of Ipoh and small towns such as Sungai Siput, Pantai Remis and Slim River.
The rest of the launches will be in the outer fringes of Klang Valley such as Diamond [email protected], and the integrated small office versatile office (SoVo) project in Bangi. The RM110 million development in Bangi will house the group’s first SoVos. Meanwhile, Scott [email protected], a leasehold condominium project, will be the Andaman’s first in Johor. The group also has “a few” project launches planned for 2013, but Tiew declines to provide any details except to say that Andaman will be launching a 200-acre township development in Bidor, Perak.
Since its inception in 2005, Andaman has been active in promoting the guaranteed rental return (GRR) concept and has carved out a niche in providing affordable student housing. Andaman Property Management is now managing 1,000 GRR units in the Klang Valley, which have been leased out to various private and public education groups. “We plan to double this figure by the end of next year,” says Tiew.
Under its GRR contracts, the developer will continue to fulfil its rental tenancy obligations upon the completion of the units. The management and maintenance of the units will fall under Andaman Property Management. When City & Country brings up the public’s sometimes negative perception of GRR offerings, Tiew is quick to explain that Andaman’s target is different. “We have formulated a successful plan of focusing on student housing. The risk is minimised. After all, education is a recession-proof industry.”
To clear further doubts, he says Andaman usually launches GRR developments only after it has successfully inked a contract with an education group. Casa [email protected], the group’s first GRR development that houses 500 apartments, is leased out to Taylor’s College Subang Jaya, Inti International University, Sunway University College, Monash University Sunway Campus, SEGi College Subang Jaya, Pantai College of Nursing and Health Science as well as Cilantro Culinary Academy to house their students.
In the development, a 682 sq ft apartment that was launched at RM166,800 in 2006 is going for double the price now while rents start at RM1,500. In two subsequent developments — Cova Villa and Cova Square in Kota Damansara — the group entered into an agreement to lease out a total of 400 units to the students of SEGi University College Kota Damansara and the International University College of Arts and Science (IUCAS).
When Andaman’s 232-unit Casa Residenza, also in Kota Damansara, and 416-unit [email protected] City Plaza (a joint venture with Ecofirst Consolidated) in Seri Kembangan are completed by the end of the year, they will be leased out to SEGi College Seri Kembangan and Universiti Putra Malaysia. A total of 850 units at The [email protected] Cyberjaya, to be completed by end-2013, will be leased out to Multimedia University (MMU).
“For Diamond [email protected], we will be teaming up with Universiti Putra Malaysia again to provide accommodation for its students,” says Tiew. The 288-unit project is coming up on leasehold residential land and has a gross development value of RM120 million. It is scheduled for launch in September at an indicative average price of RM425 psf. All the units (built-up: from 771 to 1,527 sq ft) come fully furnished. Andaman is undertaking Diamond [email protected] with the Selangor State Development Corporation .
Recently, Andaman invited Robert Kiyosaki, the popular author of the Rich Dad Poor Dad series of financial self-help books, to speak to buyers as part of its Buyer Loyalty Programme. In his talk at Andaman’s headquarters, the best-selling author, investor, businessman and motivational speaker proclaimed that the world economy will collapse by 2016. “I think it will be the biggest financial collapse in world history. [Economist Richard] Duncan is saying the world economy will collapse in five years. I say 2016 while some others say 2025, but it’s coming down,” he was quoted as saying in a recent news report.
When asked if he shared this sentiment, Tiew is surprisingly candid: “Well, we do foresee a slowdown. Personally, I believe there will be a glut in the residential sector. More than half of the homes in the Klang Valley will be unoccupied in five years’ time.” He also acknowledges that there have been too many residential launches in the past few years and that most of them will be completed around the same time. There is already an oversupply of condos, he points out.
Looking beyond the Klang Valley
This is why Andaman is focusing on building outside the Klang Valley and tying up with educational institutions on the GRR platform, Tiew adds. The group is also steering away from the Pearl of the Orient and the Land Below the Wind. “We will not be building anything there [in Penang and Sabah] in the foreseeable future as there are too many players crowding these states,” observes Tiew.
Moving forward, Andaman hopes to consolidate its position in Perak and Johor, and to also move into the largely untapped markets of the east coast, such as Terengganu and Kelantan. In terms of landbank, the group only has a total of 100 acres in Kuala Lumpur, Johor and Perak. “We don’t like to leave our acquired land idle for too long. We are already working on the project plans and hope to launch developments worth RM1 billion in GDV by the end of next year,” says Tiew.
So, will Andaman be venturing overseas anytime soon? Yes, says Tiew, adding that the group is excited about the potential of the Philippines, Myanmar and Cambodia and that it is already talking to several parties on potential joint ventures. “Andaman is going into these ventures within the next three years. We will be using our own funds and are looking at commercial projects, such as malls or perhaps hotels.”
Getting listed, however, is not part of the ambitious group’s plans. Tiew puts it simply: “At Andaman, we like the way things are run now. Getting listed would mean that we will have the public scrutinising our every move. We would need to get everyone’s approval before going on any future Europe trips!”
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 921, July 30-Aug 5, 2012
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