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Orando Holdings sticks with differentiation tack

You forecast, buy the land and wait for the returns to come in — Eng

ESTABLISHED in 2000, Orando Holdings Sdn Bhd ventured into property development in 2003. According to managing director Datuk Eng Wei Chun, during the preceding three years, he and his team focused on acquiring land and property deals for development.

Orando has since completed five projects, namely Taman Yarl, Sri Angkasa Homes, Vistaria Residensi, Sky Vista Residensi and Villa Vista @ Cheras (see table).

On July 9, it officially launched its sixth development, Villa Crystal, a residential condominium located in Segambut between Mont’Kiara and Desa ParkCity.  “There has been a take-up rate of 50%, including bookings and S&P [sales and purchase] signing. If you’re looking at S&P signing alone, it’s about 30%,” says Eng.

Situated on a 3.5-acre freehold parcel and consisting of two 38-storey blocks with 414 units, Villa Crystal has a gross development value (GDV) of RM310 million. On offer are eight types of units with built-up areas ranging from 1,155 psf to 1,614 psf and priced from RM589,050 to RM1,214,010 (about RM505 psf). Kitchen cabinets and air conditioning units are included in the purchase price.

Each block has four elevators. The three-tier security system requires visitors to register at the guardhouse before being escorted in by the resident they are visiting. Also, residents do not have access to other floors.  

Unlike its previous projects, each unit at Villa Crystal comes with a multi-purpose yard. The 150 to 200 sq ft space can also be turned into an extra bedroom, music room or a wine cellar.

Eng got the idea by observing the lives of modern young families today. “Young families have all these extra activities, and condos have limited spaces,” he explains. “They can renovate this extra area for any sort of activity.”

To offer a better ambience, the ceiling is a foot higher than the usual 10ft. “The ventilation is better, and the high ceiling gives that added grand effect,” explains Eng.

Why the added features? Eng’s answer is simple. “It was all from observation. I observed the area and the community there, and what was lacking. Of course, there were also market surveys and analyses done by consultants. It all boils down to understanding. Understand society and you will understand the market. Understand the market and you will understand how to reap the returns.”

Eng endeavours to keep all his developments different. For example, each unit at Sky Vista comes with an infinity pool and a sky garden. Villa Vista has only two units on each floor and Villa Crystal has the multi-purpose yard.

“Yes, there are other developments in the area but what we hope to bring to the table is the difference in our designs,” says Eng.

Villa Crystal offers a podium car-park with 1,000 parking lots. Bigger units are allocated three car lots while the rest have two each.

Why Segambut?

Eng explains that the area has potential as it is mature. “There are a lot of old houses, so there’s bound to be a huge demand for newer, better quality accommodation. “We’re the first in the market for that area in terms of that additional multi-purpose yard. So far, purchasers have been happy with this added feature.”

The Villa Crystal parcel was purchased at market price two years ago, and cost less than RM300 psf. Eng believes in keeping things simple. “You forecast, buy the land and wait for the returns to come in.”

He adds that with increasing land prices and the soon-to-be implemented Goods and Services Tax (GST), it is not conducive to build landed residential properties. “Land prices are increasing. And based on history, they are not going to drop … If they do, then that’s something to worry about. But costs of building materials and labour are going up, not to mention construction costs. So if you build a landed property, it is sure to cost a lot of money. Who can afford that?” says Eng.  

He notes that owing to the dry spells and water shortages, developers may face a slowdown in construction. However, he believes that Villa Crystal will be completed on schedule, three years down the road. “So far, we have always been able to complete our projects on, or ahead of, time. Never had to delay yet, so hopefully, we won’t have to,” says Eng.


Work philosophy

Eng has a simple work philosophy. “It’s a Swiss watch philosophy. There are so many other brands to choose from. One can even get a regular watch without a brand; you will still get the same function. But Swiss watches are preferred. Why? Because of their quality, the status accorded to the buyer and the appreciation in value. The same goes for a house.”

He says that this is what Orando Holdings strives to offer its customers. “We require all building materials to be SIRIM-approved or we don’t use it.”

Eng explains that Orando’s developments have seen good appreciation value, thanks to the quality they offer. “Take, for example, our first development six years ago, Vistaria Residensi, which is located in Taman Kobena, Cheras. It’s a 21-storey low-density condominium with 128 units. When we first launched it at over RM300,000 each, it was considered expensive. Now, the value is RM690,000. Even the rental yield is between 5% and 8.6%. Another example is Sky Vista, also located in Cheras, at Taman Pertama. This is a 27-storey condominium with 206 units, which was launched three years at over RM600,000 each. Today, the sub-sale price is more than RM800,000,” says Eng.

Future plans

For now, Orando is looking for pockets of land abroad.  Eng reiterates that Orando has no plans to develop landed residential projects. He is not even looking to build his own construction company as he feels that the company’s main focus should continue to be in property development.

“I was a contractor before. I had my own company and I sold it to a public-listed company. I don’t see the point of standing in the hot sun supervising the work when I can concentrate on designing better quality buildings. Besides, a large company is a big commitment and I’m comfortable with where I am now.”

He foresees that the property development industry will continue to grow in the next few years.

orando_holdings_developments

“Property is still the best investment. You can choose to either hold it or sell it. You cannot lose with property. Three years down the road, property values may go up. At the moment, Bank Negara [Malaysia] has come up with policies to prevent a property bubble. But a bubble will indeed occur, because our population is young and will continue growing. With this, there will be more demand for housing,” explains Eng.

“One industry has already experienced a bubble, and that is the automotive industry. People are paying high prices because they have no choice. After a few years, car values will decrease. So basically, you’re paying for future scrap metal. This is why it’s a good thing that the government is looking to improve public transport.

“It’s better to save money for a house instead of buying a car.”

Eng does, however, see a potential oversupply of housing, but he stresses that its effect will depend on the location of the development.


This article first appeared in The Edge Malaysia Weekly, on July 28, 2014.

 

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