IN the nine years since Selangor Dredging Bhd (SDB) began focusing on property development, it has carved a name for itself as a developer of innovative, high-quality and niche developments. It has launched more than RM3.3 billion worth of properties to date. Listed on Bursa Malaysia in 1963, SDB is also involved in the property management, leasing and hospitality businesses.
But the journey to get to where it is now was no walk in the park, as its managing director Teh Lip Kim will tell you.
A woman on the go, Teh waltzes into the room with the same purpose and determination that she applies to her work as head of the company. Teh was only 28 when she joined SDB as executive director in 1996. Two years later, she took over the company from her late father and SDB founder Teh Kien Toh.
Teh had her work cut out for her as her succession coincided with what she calls the company's lost years. SDB was turned around through perseverance, hard work and the ability to be different.
And it all started with a tin mine.
The move from tin mining to property development
SDB is celebrating its 50th anniversary. The company was incorporated as a tin mining company in 1962 when Kien Toh formed a partnership with Chan Keong Hon. Both men came from Chinese immigrant families with a history of tin mining. This was during the days of dulang washers and palongs.
Chan was given a mining lease after his involvement in the fight for Malaya's independence. Due to the size of the lease, Chan and Kien Toh decided to use a tin dredge. In those days, tin dredges were all owned by British companies, so SDB became the first Malaysian company to have its own tin dredge.
In 1967, SDB's first dredge was commissioned and it was then the world's largest. Because tin mining was labour-intensive and the dredge was a substantial investment, a decision was made to run the dredge round the clock.
To facilitate this, a village was built around the tin dredge. Workers were given housing and basic amenities such as water and electricity. The village, known as Kampung Selangor Dredging, still stands today in Dengkil, Selangor, and is home to some of the former tin mining workers and their families.
A second dredge was commissioned in 1973 and as with the Dengkil site, a village was built. At the peak of the tin mining years, about 1,800 workers and their families lived in the village. Today, the site has become a tourist attraction known as Paya Indah Wetlands.
The tin mining industry began to slow down in the 1980s. In 1983, in a bid to diversify its business, SDB started the construction of Wisma Selangor Dredging in Jalan Ampang in the Kuala Lumpur city centre. The building was completed in 1985 and today, it remains one of the most sought-after office spaces in the city centre with consistent occupancy of close to 100%.
The tin mining business, however, went from bad to worse and in March 1992, SDB ceased its tin mining business.
From there, SDB went into a variety of businesses, including manufacturing steel rims for cars, sand dredging, timber and diamond mining in Africa. However, all these were investments and SDB had no operational control. As a result, it lost money.
It was at this stage that Teh took the helm of the company.
"Starting from the late 1980s, we sort of lost our way. We wanted to invest in other businesses because we didn't know what else we could do," she recalls.
To make matters worse, when Teh took over the company in 1998, it was also the start of the Asian financial crisis.
"We had money coming in from Wisma Selangor Dredging but time was really against us. We had just completed Hotel Maya [in Jalan Ampang] in 1997 but we had borrowed a lot of money and the interest rate at the time was about 17% to 18% a month. So, we were losing about RM1 million a month. All of our investments were strained. Whatever money we made drained away like water in a broken pail," recounts Teh.
She then made the decision to close and sell some of SDB's businesses that were not profitable. It was time for some soul-searching. Employees were reduced from several hundreds to between 30 and 40.
"We had to ask ourselves what we really wanted to do. In 2003, I decided that SDB was going into property development." Teh felt that property development was a natural progression for the company as it was already in the property business with Wisma Selangor Dredging. Personally, Teh saw this as an opportunity to challenge herself.
"I wanted to come up with something unique. I wanted our product to invoke an emotional feeling in our customers. I didn't want it to be just a product but a living experience."
Learning from mistakes
Steering the then 41-year-old company in an entirely new direction must have been daunting, especially when the person behind the wheel had no experience in the field. Teh, who had a Bachelor of Science in Accounting and Economics and a Master's in Shipping, Trade and Finance, took the challenges in her stride. In fact, her lack of experience in property development helped her because she came into the industry with no preconceived notions.
"We were basically starting from the ground up again. It's true I didn't have any experience in property development and construction to speak of. I would say it comes down to our willingness to learn new things. We should also have the ability to wonder and meet challenges head-on. Even though the company has made good progress in the last nine years as a property developer, I can tell you that I'm still learning every day and still looking for ways to improve on a daily basis," remarks Teh.
Her team had to learn the ropes fast — from what to look for when buying land to coming up with concepts for projects.
"Timing is also important. Back then, we didn't know how long it would take for the authorities to issue the necessary approvals and we had to make sure the approvals were ready in time for our targeted launch."
SDB's maiden residential project was the 20-acre AmanSari in Puchong. Comprising 142 bungalows and semi-detached homes, it had a gross development value (GDV) of RM120 million. The development was successfully launched in November 2004.
Nevertheless, Teh admits that mistakes were made in the early years, particularly in Singapore. "I wanted a mature market where we could test our capabilities and to see if we could compete in Singapore. If we could compete, it would give us more credibility and help our branding. It was also a good training ground as the Singapore market is very different. It made us less rigid and more adaptable. The Malaysian market could not give us the GDV that Singapore could because of the exchange rate."
The developer acquired its first plot in Singapore in 2006, which was later developed into the 17,000 sq ft Jia in Wilkie Road. Jia has a GDV of S$55 million (RM132 million) and comprises 22 low-rise condos. The project was launched in 2008.
"Our first project in Singapore was very testing because we built what we thought the market wanted, which turned out to be wrong. The units were too big and Singaporeans couldn't afford to buy an apartment for over S$2 million at the time," says Teh.
"For our second project [Gilstead Two], we had to knock down the sales gallery twice. But we learnt a lot from our experience and we continue to improve. Seven years later, we have launched five projects in Singapore and managed to carve a name for ourselves there."
SDB faced another hurdle when the world financial crisis hit in 2008. At the time, it was working to launch the five-acre Five Stones condominium in SS2, Petaling Jaya.
"It was a make-or-break time for us. Banks were pulling back, we couldn't get the financing and the mistakes we made in Singapore exacerbated the situation. There was a lot of pressure everywhere but in the end, we pulled through. There will always be challenges but at the end of the day, we need to know how to persevere, to learn and to be disciplined," says Teh.
The RM414 million Five Stones, which comprises 377 units, was launched in 2009 and was fully sold within six months.
Unique selling proposition
In an increasingly competitive environment, differentiating your company from the competitors is not an easy task. Teh believes that for SDB, it boils down to three things — product, customer experience and delivering what was promised.
"The first thing we do is come out with the concept. We look at the site and understand the surroundings and the people living there. Then we create something different. We want to complement rather than compete with what they have," she says, citing the 8.9-acre Windows on The Park in Cheras South as an example. The development, which comprises 540 high-rise condos in an extensive park-like area, has a GDV of RM431 million. It was launched in July 2012.
"The area surrounding the site is filled with landed homes, so we decided to do high-rise living in a park-like environment. The park creates better liveability," explains Teh. SDB is also working on a clean air index that will measure the air within the development.
Customer experience is another important factor, stresses Teh. "From the car park to the unit itself, it should invoke an emotional response in the person living there. It must remind them of how lucky they are to have a place like this that they can't find anywhere else."
When it comes to the units, Teh believes SDB excels in spatial planning. "We know the relativity of space very well. The rooms are proportionate to each other."
In the end, delivering what was promised is the key.
"Signing the sales and purchase agreement is the beginning of the relationship. When we finally hand over the product, we need to make sure we deliver what we said we would," says Teh.
SDB has a Home Owners Support Team that helps owners find tenants or undertake renovations and such to make buying its products easier. It also has a 36-month defects liability period, which is more than the required 24 months.
"All these are our unique selling propositions. It's what we stand for and part and parcel of our customer experience. There is sincerity in what we do. It is our brand," says Teh.
The road ahead
The group has projects worth about RM1 billion in GDV in the pipeline this year in Malaysia. At present, there are no projects planned for Singapore as the company observes the effects of the cooling measures implemented by the government.
Ready to be launched in the second quarter of this year is the 8.85-acre [email protected], which will comprise seventy-nine 2½ and 3-storey superlinks.
"We are looking at commercial developments this year, mainly SoHos. We want to come out with more innovative products. It'll be something that people know they can't find elsewhere and they want it now. Each of our products will feature something different. Whatever we come up with has gone through a lot of thought and I believe that every single product should be able to stand on its own two feet," says Teh.
She, however, notes the restraint of buyers in the current environment, especially with the general election just around the corner. "The banks are also being very selective when it comes to lending and rightly they should. But I would say that we stand a good chance because whatever we sell is very different."
And while the journey has been tough, the company has finally found its place in the task of building homes.
This story first appeared in The Edge weekly edition of Feb 18-24, 2013.