From handbags to property

KENNY Tan is a successful entrepreneur, brimming with ideas and unafraid to take risks. Proof of his capability and tenacity is the fact that his handbag business thrived during the Asian financial crisis, when so many other businesses crashed.

Today, the 45-year-old brings those same traits to his role as CEO of Link (THM), a boutique developer of several luxury homes in Bukit Timah and Holland Road and several office blocks at Mohamad Sultan Road.

His latest coup is the clinching of a project worth $1 billion in gross development value (GDV) in Iskandar Malaysia, and it has the potential to catapult him to major property developer status.

A striking symbol of his success is the Rolls Royce Ghost that he drives to his office building on Chang Charn Road. Ensconced in the black calf leather sofa in the spacious office for an interview with The Edge Singapore, Tan does not come across as fashionable, but the first impression belies his keen sense of fashion trends and creativity.

His successful foray into property development was born out of his talent for trendspotting, while his creativity and track record as a developer was what helped Link (THM) win the bid for the Media [email protected] Iskandar project in the flagship zone of Iskandar Malaysia in southern Johor.

As Tan tells it, it took him 2½ years to decide to get a piece of the action in Medini even though it is just across the Causeway. Every two weeks during that period Tan dressed down t-shirt and Bermudas, and drove a SUV to Johor to keep abreast of developments there. In fact, the road to Iskandar Malaysia started in 2004, when he was still a fashion bag retailer.


That was when Tan noticed the upswing in Hong Kong's property market. With his fashion retailing background, he knew that Hong Kong was always one step ahead of Singapore in fashion trends and he applied the same approach to the property market. "So, when I saw property market moving in Hong Kong, I decided to invest in Singapore and it paid off in 2005 when Singapore started to recover," he says.

Tan acquired several plots of land in Bukit Timah and Holland Road and focused on building landed properties. He started by redeveloping detached and semi-detached houses. In 2008, he bought two rows of shophouses en bloc in Ban Guan Park. He subsequently redeveloped the site into four bungalows and sold them for $10.5 million to $11 million each within 4½ months of their launch. The second phase of the development will be launched soon and he still has 703,800 sq ft of landbank.

Emboldened by his success, Tan ventured into government land sales and won the tender for a 66,483 sq ft site on Mohamad Sultan Road. Instead of building a massive tower on the site, like most developers would have done, he built six smaller office blocks which he named Sultan Link. His strategy was to give small and medium-sized enterprises that do not need a lot of floor space naming rights to the building they occupy. This will provide them with more visibility. "Naming rights give them brand [recognition] and for Link, a premium on rental income. We leased out 100% [of the development] in six months," he says.

Building heft

He sold his success with Sultan Link to Global Capital and Development (GCD), the main concessionaire of Medini, which covers 908ha in the southwest of Iskandar Malaysia. Media [email protected] Iskandar is located just outside Pinewood Iskandar Malaysia Studios, which is scheduled for completion next year and forecast to generate more than 3,000 jobs.

The 5.9 ha plot gives Link (THM) a gross floor area of 2.7 million sq ft, made up in equal proportions of residential and commercial units. The area is big enough to build a Vivo City (Singapore's largest shopping mall) but again, Tan is eschewing a mammoth project in favour of a cluster of smaller buildings. "A lot of developers will build a complex the size of VivoCity, but I am concerned about sustainability," he says. "A lot of developers are building shopping complexes in Johor."

Tan's proposal is for seven residential and SOHO (small office/home office) towers and seven food and beverage zones, with each having a country theme. His plan is to leverage on the authenticity of the food and cultural ambience in each zone to draw tourists and repeat customers. The country themes at Media [email protected] Iskandar will also provide an extension to moviemakers using Pinewood Studios to film, for example, the Malay kampung, Little Japan or Chinatown. The other countries to be represented in the zones are the US, South Korea, India and a European country. "When you are dining there, you might have a chance to see film stars in action," Tan says. "And you might want to come back tomorrow to try Malay food or Western food. So, [GCD] felt that we were different from other developers, and that we had a good story."

Tan's track record may be impressive and his creativity engaging but the Media Village project is much bigger than the projects he has undertaken and is in a different country. Does he have the financial backing and the execution power to carry him through?

Tan says his company did not only build the Sultan Link office blocks but is managing them as well. He says retail is not his forte but he will engage an international company to manage the Media Village or sell the development to international funds. He has already received an unsolicited offer from a group of Chinese investors to buy three of the residential blocks and enquiries from international funds interested in the commercial components of the project.

He claims three banks, two Malaysian and one from Singapore, are willing to finance the project. And as far as the delivery of the project is concerned, he says he already works with Malaysian companies in his projects in Singapore, and does not anticipate difficulties working with them on their home ground. With margins expected to be double that in Singapore owing to the lower cost of land, construction and labour, Tan looks set to score a success in Malaysia this time.


Since the 1990s when he left his father's handbag shop in People's Park Complex, Tan has enjoyed a string of successes. "We were badly paid. My salary was $1,800 in the early 1990s and we had to work from 10am to 10pm," he says. Tan's job included sending family members to work at their shop and for that he was given a car. By October 1994, there were five of them working there — too many for the shop to support. Tan decided to strike out on his own with his wife and sold his car to raise $27,000.

All the years working for his father had given him the opportunity to make contacts with luxury goods suppliers such as Cartier, MCM, Montblanc and Dunhill. So, he decided to set up his own handbag distribution business in a rented shophouse on Smith Street. "The whole office set up and renovation cost only $1,730. The table and chairs were new but everything else was second hand. The display cabinets and carpets were all used. I carried them back and laid the carpet myself. The fax machine cost $50," Tan says.

Initially, the business was run by just Tan and his wife Jolin. She managed the business in Singapore, going from shop to shop with her samples. Tan went knocking on doors in Sumatra after convincing several brand owners to let him be their distributor on the Indonesian island. He barely spoke Malay but did not let his language handicap get in the way of exploiting an area that was overlooked by distributors based in Jakarta.

"Sumatra took its supplies from Singapore, so, I took the opportunity to go in," he says. All went well until the Asian financial crisis in July 1997, which hit Tan's business in Singapore immediately. The impact on Indonesia was delayed and Tan recalled seeing his revenue grow from about $500,000 on average per month to $2.5 million between July and December, when the Indonesian market also caved in.

Cutting losses

A quick decision to cut his losses in Indonesia and head for Japan saved Tan's business. He spoke more Japanese than Malay and was already distributing handbags, apparel, watches, and shoes in Japan, so, it made sense for him to head for the only country in Asia untouched by the crisis. He bought stock from Singapore and Hong Kong distributors who had nowhere to sell their goods and brought them to Japan. "The crisis became an opportunity for me. In three months, I managed to recoup my losses. I enjoyed that business all the way to 2001," he says. "Those were my three golden years."

He also went into original equipment manufacturing in China for the Japanese market and broke into the pachinko business. At the time, pachinko players could only exchange their winnings for cash at a loss of 50% in the black market or for soft toys. Tan hit upon the idea of supplying designer goods to pachinko parlours and managed to get into 800 of the 1,100 outlets in the country. Japan, which previously contributed 30% to his business, became his sole business. Tan's streak of good luck earned him the monicker Ang Beh (which means red horse in Hokkien or a horse that is sure to win in a race).

Tan is now mulling his next move, which is to float Link (THM). The company has a net worth of $100 million and a GDV of nearly $300 million in its portfolio. With his track record, it would be foolish to bet against his next success.

This story first appeared in The Edge Singapore weekly edition of Mar18-24, 2013.

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