City&Country: The Edge Top Property Developers Awards 2009-- Setting high goals

A different S P Setia is set to emerge with a three-pronged strategy designed to see the company through the current crisis. Its long-term goal is to grow into a regional and international property player.

“Time really flies, and I guess you can say The Edge [which celebrated its 15th year anniversary last month] and I have grown together through the years,” a smiling Tan Sri Liew Kee Sin says as he greets City & Country.

Liew started out as a banker for five years in a local merchant bank, after graduation in 1981, before venturing into property development. He set up his own property development company Syarikat Kemajuan Jerai Sdn Bhd in 1990, which developed Bukit Indah Ampang, and later on, Pusat Bandar Puchong in Selangor. He was appointed group managing director of S P Setia Bhd after a reverse takeover of Syarikat Kemajuan Jerai in 1996. Liew, 51, is now president and CEO of the group.

S P Setia holds the record for retaining the No 1 position in The Edge Top Property Developers Awards for the past four consecutive years, a no mean feat by any account.

The man is calm, composed and inspiring. He is also a living proof of determination, passion and hard work — all essential ingredients for success. “I do not believe people are born leaders. You learn from experiences,” he says.

It is easy to see the source of his conviction. Born in Plentong, Johor, Liew’s father was a lorry driver and mother a rubber tapper. The youngest in a family of four, he spent his primary school years in a Chinese school and later in a missionary school where he first learnt English.

Liew recalls his father encouraging him to study hard and not drop out of school like many of his peers who quit school to help support their families. Liew secured a place in Universiti Malaya, where he graduated with a Bachelor of Arts Degree in Business Administration in 1981. Soon after, he ventured into banking and the rest, as they say, is history.

“I look at the phrase ‘good luck’ differently from most people. To me, it means you have to be prepared and not just wait for luck to come to you. If you are ready and luck comes along, then that is great. If luck comes to you and you are not armed with knowledge and experiences, then it is of no use,” he says.

With knowledge and experience comes confidence. Earlier this year, Liew made a bold move to introduce the unprecedented Setia 5/95 campaign, where one only needs to pay a 5% downpayment to buy a property — no interest on the loan or any other payment was needed until the property is handed over.
The scheme was a hit, propelling sales to RM1.25 billion by July 31. The six-month campaign ended on July 19. So successful was the scheme that some other developers also launched almost similar incentives to woo buyers.

Why stop the campaign, then? “We want to concentrate on building the properties sold. We also want to ensure that the group’s usual high quality standards and timely delivery are met,” Liew explains.

During the campaign, monthly sales averaged more than RM190 million, setting a new sales performance benchmark for the group. “Historically, this was the strongest and most rapid sales performance ever witnessed by the group over a six-month duration. We are pleased to report that as at 3Q2009 ended July 31, we have achieved sales of RM1.25 billion, exceeding our full-year FY2009 sales target of RM1.1 billion by 14%,” Liew says, adding that it has been a good year for S P Setia despite the negativity surrounding
the global crisis.

Opportunities in a crisis
Looking back, Liew says the first three quarters of 2008 were challenging. Extreme cost pressures faced by the construction sector resulted in a slowdown and disruption in work progress coupled with runaway inflation impacted all sectors led by fuel and energy price increased.

“Nonetheless, the group rang up a net profit of RM213.5 million, with revenue totalling RM1.3 billion for FY2008,  thanks to continued strong demand for our properties in the Klang Valley, Johor Baru and Penang. We also achieved RM1.4 billion in total group sales despite the soft market conditions,” he says when commenting on how the economic downturn has affected the group.

To Liew, the current crisis came and went rather quickly. “We cannot compare this crisis to the Asian financial crisis. They are different. This crisis was caused by greed and overspending,” he says.

Besides, this time around, corporate and household balance sheets are strong. Banks are still lending and interest rates are accommodative. Also, jobs appear to be largely intact despite initial fears. The success of the Setia 5/95 campaign is evidence that the market is not as bad it has been made out to be.

“It is not that people have no money to buy. It’s just that they are being more cautious. Other developers that came up with attractive financing packages have also done well, and this proves the point that there is ample liquidity in the market,”  adds Liew.

Ironically, it was the Asian financial crisis that had led S P Setia to where it is today. “The government organised a Home Ownership campaign in early 1999. We grabbed the opportunity to sell as much as we could, raking in sales of RM665 million in 1999 compared with RM185 million in 1998,” says Liew. Strong sales in subsequent years generated the cash flow that enabled the developer to grow its landbank and launch projects.

For Liew, the Asian financial crisis and other downturns in the past decade have shown that the country’s middle market segment to be very robust. “S P Setia is fortunate that it has the breadth and depth of products to meet market needs.

“Although most of our properties are landed homes in townships, the group’s business has expanded to include high-end high-rises and commercial properties over the last decade,” he says.

With two projects in 1997 — one in Puchong and another in Johor — S P Setia has since made a significant presence in Kuala Lumpur, Selangor, Johor, Penang and recently, Vietnam. Its products are categoried into five brands — Setia, Eco, Duta, Commercial and Setia Sky Residences.

Liew sees opportunities in a crisis. “It has been our experience that when others are holding back, there are opportunities to be tapped. We continued with our launches... This has paid off for us and I see our group growing to another level after the current crisis, just as we did after 1998,” he says.

Asked about the competition among developers, Liew says: “We always want to stay ahead of the curve. Competition is very good as it drives you to excel. It makes one aggressive.”

High anticipation
The group’s outlook for the rest of the year is good. “Everyone wants to know if the market is recovering. It is difficult to say as we are not economists. Our earnings margins are likely to remain range-bound over the near term, given the costs to be absorbed by the group from the 5/95 campaign, as well as the knock-on effects of the high construction costs contracted in 2008. Nevertheless, we are confident of prospects, going forward,” says Liew.

On entering Setia Alam, the developer’s  flagship township development spanning 2,525-acre in Shah Alam, signs of development are evident. Among the buildings are a clubhouse and the Tenby International Schools. The upcoming Setia City Mall, expected to be ready in early 2012, will incorporate components of Malaysia’s Green Building Index. Efforts will be made to include these green elements into its future developments.

S P Setia’s Setia Eco Park, situated within Setia Alam, won the FIABCI Prix d’Excellence Awards for Best Master Plan Development in 2007. The group repeated the feat with its Johor township Setia Eco Gardens this year.

Liew says the group will continue to come up with attractive ideas and marketing plans, with the focus on branding. “After this crisis, you will see a different S P Setia emerging. We have come up with our core three-pronged strategy to see us through this crisis. The first strategy is going back to basics, refocusing on our forte of township development. The second and third strategies are to concentrate on brand building and find ways to generate cash,” he adds.

With a presence in Vietnam, it is S P Setia’s long-term plan to grow into a regional and international property player. Liew hopes to see its overseas project contribute 30% to its business in the future.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 776, Oct 12-18, 2009.

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