“We don’t have a crystal ball and we don’t read the market. We go in and hope that our track record and location will give us the heads up,” says Bandar Utama City Corp Sdn Bhd director Datuk Teo Chiang Kok. Words of wisdom indeed but also reflective of the developer’s recognition that while you can’t predict the future and some things are beyond your control, there is a degree of comfort in knowing that everyone else is in the same boat and as such, to be ahead you’ll need to rely on your strengths.
For Bandar Utama, this means competing on quality, delivery, design, location and its track record; strengths that have helped the developer secure its position as one of the Top 10 developers in The Edge Top Property Developers Award 2009.
While it has retreated to the 10th spot — from seventh in the 2008 edition of the awards — Teo is nonetheless pleased that Bandar Utama is still in the Top 10. His delight is understandable; it’s been a challenging few years, starting from the sharp increase in the price of building materials at the beginning of 2008. “We were in the midst of active tendering at the time and we had to bite the bullet… but life goes on because everyone is also working from the same cost base — we were all in the same boat,” he says.
Then came the retreat in consumer confidence stemming from the global financial crisis that began in the middle of last year. Like many developers, the less-than-encouraging investing sentiments in 2008 and for the better part of 2009 led it to defer some of its launches but unlike many, it had the opportunity to do so given its build-then-sell approach. The deferment, however, has had an impact on the company’s financial performance.
“Our work-in-progress assets have grown but our revenue and profits in 2008 reflected the lesser sales,” says Teo. Bandar Utama’s revenue in 2008 fell from RM388.95 million in 2007 to RM346.49 million in 2008, while profits retreated from RM160.42 million in 2007 to RM131.55 million in 2008.
Within this challenging environment, however, there have been a few bright spots: prices of building materials have now fallen from the highs of early 2008, allowing the developer to continue its construction activities. “We’ve been busy… the global financial crisis has been a blessing because of the lower building materials prices and we’ve been able to get the labour that we need,” says Teo.
What’s more, the breathing room as a result of deferring some of its launches has allowed the developer to review some of the components in the Bandar Utama township’s masterplan as well as plan for more environment-friendly features in its upcoming properties.
“The Bandar Utama masterplan was done in 1988; over time we have had to fine-tune it, so we took this opportunity to review it and respond to market demands,” he says of the initiative that began in mid-2008. The review meant that instead of link houses originally planned, the developer is now building detached villas within a gated and guarded enclave.
“Over the last 20 years, the expectations of residents have increased and many residents are upgrading from link houses to bungalows. Furthermore, having a gated and guarded development is important to buyers these days,” says Teo.
Given the signs of economic recovery and a return of consumer confidence, Teo is keen for the developer to speed up its construction activities to take advantage of the upturn. “For the past four to five months, the mood has been more positive and we’ve been getting many enquiries about our launches,” he says, adding that after a two-year hiatus the developer is keen to accelerate construction to accommodate launches in 2010.
Apart from the 212 units of gated and guarded villas at BU5 that are slated for launch at end-2010, the developer is also busy with the construction of its condominium development, 9 Bukit Utama. The 911-unit condo with a gross development value of RM1 billion was to have been offered for sale this year, but the developer decided to delay its launch until market sentiments improved.
“We will also be undertaking a massive renovation of the old wing of 1-Utama,” he says, adding that the renovation will be undertaken in stages. “We’ve actually started the renovation in small ways, especially in
the non-visible sections like the mechanical and engineering systems and in installing more energy-efficient equipment.” He discloses that the refurbishment will see more retail space added to the 15-year-old shopping centre.
In addition, construction of 1 First Avenue is well underway. The 25-storey purpose-built office tower with a let lettable area of 550,000 sq ft is expected to be completed by March next year, boasting several green building features, some of which are a first in the country.
Being frugal pays off
For Teo, going green is more than a catchphrase or clever marketing; rather, it is a conscious effort on the part of the developer to reduce its carbon footprint. “We’re proud that we’ve had green features in our masterplan from the time we started without realising that it was going to be an important aspect of the development.” These features include the creation of green buffer zones between the main roads and the residential areas, the creation of large central parks and the creation of a neighbourhood concept so that residents need not drive to access amenities. “Back then, we also incorporated a whole network of bicycle and jogging tracks within the development,” he says.
The impetus towards being environment-friendly, he says, comes from having a frugal background. Teo wears this frugality like a badge of honour, pointing out that many of the green features and initiatives are a result of the company’s focus on keeping costs down. “At the onset, we took a corporate decision to own and operate all our commercial properties. The main cost is energy; that’s why, managing an energy-efficient system is important to us. From the get-go at the old wing of 1-Utama, we were the first to use a chilled-water storage air-condition system that uses off-peak idling electricity supply. Today, all our commercial properties use off-peak power,” says Teo.
“We’ve also installed efficient transformers, pumps and chillers and we’re also changing all our light fittings from halogen to LED, which will save between 30% and 40% in energy costs.”
Bandar Utama’s emphasis on green building features is especially apparent in 1 First Avenue, its office tower currently under construction. Besides a North-South orientation to minimise sun heat penetration, the Eastern and Western ends of the building are shielded from the morning and afternoon sun by the juxtapositioning of services areas such as toilets, M&E rooms, staircases and balconies. The developer is also installing high-performance low e-glass to reduce solar heat gain by 25%. The helipad also boasts a grassed roof garden for heat insulation.
In addition, at the central command centre — which oversees all the commercial properties at Bandar Utama — the developer has installed a sophisticated building automation system to monitor and optimise energy usage.
Teo is especially excited about plans to convert sewage into clean energy using an environmentally-safe bio-digestion process. “I was appalled when I found out that the 120 restaurants at the mall and the restaurants and banquet halls at the hotel generate three to four tonnes of waste everyday. With this pilot project, we will use this waste along with the sewerage waste and, through a bio-digestion process, convert it to heat pellets that can then be used to dry the next batch of waste. The excess heat can also be used to boil the water for the hotel’s needs and run the steam generator for the air-cond chiller,” he says. Installed at a cost of RM7 million, the plant — the first of its kind in the country — is slated for commissioning in November.
These green building features, he points out, are a plus when marketing commercial space. “Multinational corporations are in particular conscious about whether a building [they are to occupy] has green features,” he says, adding that besides Bandar Utama being recognised as a MSC Malaysia Cybercentre, the developer is also applying for the Malaysian Green Building Index certification, beginning with 1 First Avenue.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 776, Oct 12-18, 2009.
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