It is business as usual,” says Dinesh K Nambiar, managing director of Lend Lease Projects (M) Sdn Bhd, of the company’s recent rebranding. Formerly known as Bovis Lend Lease in Malaysia, its name was changed following a global rebranding exercise that is aimed at implementing a unified brand.
Lend Lease, the Australia-based global property and infrastructure company, was founded by Dutch engineer Dick Dusseldorp in the 1950s. Since then, Lend Lease has expanded to Europe, Asia, the Middle East and the Americas, delivering over 10,000 projects worldwide. It had a market capitalisation of A$5.1 billion as at June 30, 2011.
The Malaysia business started as the project management division of property consultant CH Williams Talhar and Wong in 1978 before becoming WTW Bovis in 1995 following a merger with UK-based Bovis Group. After Lend Lease acquired Bovis in the late 1990s, it was renamed Bovis Lend Lease.
“Our brand has changed from time to time but our core competence remains the same. With Lend Lease, we have gone on to become a much bigger business,” says Dinesh.
Growing in Asia
According to Rod Leaver, CEO of Lend Lease Asia Holdings Pte Ltd, Asia contributes about 10% to the company’s turnover compared with 60% from its Australian business.
“It’s really taking the business from where it has been for a long period of time, and trying to emulate the success of the Australian business in Asia,” he remarks.
Leaver, who used to helm the Australian business, is no stranger to this part of the world, having lived in Kuala Lumpur in the early 1990s. He calls his return to Asia an “exciting opportunity”.
“In Australia, we are No 1 or 2 in every sector we operate. That makes it harder to grow the business to scale as we are coming off a high base.
“There is a wonderful opportunity in Asia for our fully integrated business. We look at each of the countries we operate in and appraise what the opportunities are.”
Aside from Malaysia, Lend Lease operates in Singapore (established in 1973), Japan (1988) and China (1993). It also has projects in other countries, such as Taiwan, but on a smaller scale.
Even though Lend Lease offers end-to-end property services — from conceptualising a project to asset management — it also identifies opportunities in each of its business segments, such as project management, construction and investment management.
“For example, in China, it’s about shopping centre development as the Chinese government wants to turn its nation of savers into consumers. Two other areas that will be strong there are senior living due to the ageing population and urban regeneration as the government looks to urbanise some 300 million people,” explains Leaver.
Partnership with government
While Lend Lease is in the midst of building the right model and strategy for Malaysia, a particular area of interest is partnership with the government, considering that Lend Lease has strong and trusted relationships with governments around the world.
In the UK, Lend Lease is constructing the Athletes Village for the upcoming Olympics and holds two of the largest urban regeneration projects in Australia — Barangaroo in Sydney and Victoria Harbour in Melbourne. It is involved in the construction of the World Trade Center Memorial and Museum in the US as well as a joint venture with the US Defense Force to build military housing.
“We also restored the Statue of Liberty, which is amazing for an Australian company to be given the contract,” remarks Leaver.
With the Malaysian government’s focus on building a high-income nation by 2020, Leaver believes Lend Lease’s experience and access to global capital, which includes seven sovereign wealth funds and about 160 pension funds, can be assets to the government’s effort. Lend Lease’s work with governments is in financing structures catering for long-term investment to create social infrastructure.
“That is why I think Lend Lease can participate in the debate to find out what’s the right model for Malaysia. This can be in the form of a public-private partnership such as what we did in the UK for the development of schools,” says Leaver.
He stresses the need to develop the right model as solutions that work in other countries might not be applicable to Malaysia.
“While we have a lot of skills and scale in Australia, we don’t have the skills in Malaysia as yet, but that doesn’t mean we can’t bring our knowledge and see how the industry develops.”
Widening spectrum of expertise
The base business of Lend Lease in Malaysia has been and will still be built around project management. However, the new integrated model has grown its spectrum of services.
“The integrated model has allowed us to take the business to the next level by bringing our global knowledge to Malaysia. We have the ability to originate a project and fund, develop and manage it,” comments Dinesh.
A case in point is the Setia City Mall (SCM) project. A joint venture between property developer S P Setia Bhd and Lend Lease’s Asian Retail Investment Fund, it is located in the former’s 4,000-acre Setia Alam township in Shah Alam. This is Lend Lease’s first project in Malaysia that utilises the integrated model.
“We are involved in the master planning, the concept design and we are the project manager. We are also working with the S P Setia’s leasing team to fill the space and we have a team in place to manage the asset once it’s completed,” says Dinesh.
Lend Lease, which prides itself on being a community builder, sees SCM as a project that will activate the community in Setia Alam.
“Setia Alam doesn’t have a sense of place because the township is still new. A shopping centre plays an important role in defining how a community comes together. It is about interaction and it should be seamless,” explains Dinesh.
Taking this into account, the development will include a park next to the shopping centre as well as outdoor and indoor facilities for children. SCM has leased out over 95% of its net lettable area of 740,000 sq ft with its tenants including Parkson department store, Golden Screen Cinema, Fitness First, Zara, Guess and the maiden Urbandfresh supermarket. It is scheduled for completion in mid-2012.
“SMC is a good example of how two parties with different skills can come together to form a complementary partnership. Our international capabilities and S P Setia’s expertise and knowledge of the local market ensure we have the best of both worlds,” says Leaver.
Lend Lease Projects has seen impressive growth in the past 18 months as it continues to secure larger projects. An indication of its growth, says Dinesh, is the growing head count, which has increased by about 20% in the last 18 months.
Lend Lease Projects’ contract/project management portfolio has a total construction value of RM5 billion to RM6 billion.
“The construction market is very busy at the moment and we expect to see our growth increase by another 10% to 15% in the next 12 months,” says Dinesh.
Aside from SCM, Lend Lease is also the project manager of Platinum Park, a high-end condominium development in Jalan Stonor by Naza TTDI Sdn Bhd, and KL Eco City, a joint venture between S P Setia and Kuala Lumpur City Hall, among others.
“For the immediate future, we are looking at two opportunities on the back of what we have accomplished with SCM. Beyond that, we are looking at PPP and commercial projects, which we are still in the mist of developing a strategy for,” explains Dinesh.
While Malaysia is ranked very high as a place to do business, regulations and transparency remain a challenge as in most countries in the world, says Leaver.
“Considering the amount of money that’s going to be spent on Malaysia in the next 10 years, I think what is needed is long-term investment. Long-term investors want transparency, stability and regulations, and a non-speculative market. Stability is critical to drive changes here, especially in this global economy.”
For Malaysia, its focus on building a high-income nation is an advantage, which Leaver believes will help draw investors.
“There are many opportunities around the world and in some markets, better buying opportunities. So, once investors leave, the question is, how long will it take for them to come back? I think the fact that there is an absolute aspiration of where the government wants to take the country is half the battle won.”
However, there is always a risk in the face of global economic uncertainty, although this comes down to how susceptible an economy is to external influences.
“I think Asia is extremely well positioned. China is unstoppable and I think it’s going to drive the Asian economy. Obviously, its growth rate will start to slow but it will still be very large,” says Leaver.
Looking at the movement of investment capital, Leaver notes that funds are being channelled into Asia, predominantly China. There is a limit to investment in Singapore as it has such a small land mass and while Japan is still seen as a safe haven, there is no growth there.
“The opportunity for Malaysia is to create an investment market for long-term foreign capital. If you want to get the economy moving, you need activity and activity requires capital,” Leaver points out.
Environmental protection and safety
There are other issues that need to be addressed to gain the competitive edge in a volatile economy and changing world. Among them are environmental protection and safety.
Lend Lease has long prided itself as being an uncompromising advocate and practitioner of safety in construction. So much so that the company withdrew from countries where the level of expected safety could not be met.
“Safety is non-negotiable at Lend Lease. We have global requirements. Whether it’s a site in Sydney or Klang, the level of safety must be the same,” says Dinesh, who admits that there were concerns when Lend Lease set the standard of safety in Malaysia.
To Leaver, it is about education, which is difficult in Malaysia due to the large number of inexperienced and uneducated foreign workers.
“These workers just don’t understand why safety is important, so we put in a lot of time and effort to educate them, and making sure they take this knowledge to the next project. It’s a never-ending challenge but it’s a challenge in many parts of the world, not just Malaysia.”
Dinesh sees different levels of safety in the local construction industry where one site can uphold the highest level of safety and right next door, the practices are shocking.
“When safety is compromised, many things are affected. Efficiency suffers, time is lost and quality is compromised. Here, we have the law but we don’t have an operating benchmark. There needs to be more focus on this.”
Despite the concerns and challenges, three of Lend Lease’s projects have won the Gold Medal awarded by the Malaysian Society for Occupational Health and Safety in the past four years, which Dinesh believes is proof of its commitment.
Sustainability has always been integral to Lend Lease’s approach to business. Leaver believes that in moving forward, environmental protection as well as environmental legislation are critical issues that should be addressed.
“In sustainability, there are two ways to achieve lower greenhouse gas emissions — through lower energy consumption and building buildings to last longer. Not to be overlooked is the protection of the country’s rainforest. The beauty of Malaysia is not only in its cities and people, but also in its greenery.”
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 886, Nov 28-Dec 4, 2011
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