I like property development because you are leaving your mark on this world that people can enjoy and look forward to," says Mulpha International Bhd's executive chairman Lee Seng Huang.
Lee, who is in his late thirties, helms one of the most recognised companies here, which today has a presence in Malaysia, Vietnam and Australia.
Mulpha International was listed on the Kuala Lumpur Stock Exchange in 1983, and has been involved in a diverse number of businesses. But in the last few years, under Lee's leadership, it has offloaded non-core assets to better focus on high-end property development, property investment and property-related businesses.
"Mulpha International is becoming more of an investment house — you could even call it a hedge fund, and what we do is we invest in businesses and companies that are involved in certain sectors," Lee explains.
"What we have been trying to do is simplify Mulpha International's business. We have got rid of all non-core assets like the trading businesses, crane hire business and even an industrial paint business in China.
"All this leads to a further simplification of the business, which allows you to hire the right people to focus on a particular field, rather than trying to find someone who is a jack of all trades and master of none."
The restructuring exercise is at its tail end. One of the remaining assets to be disposed of is a 1,000-acre tract in Sepang, Selangor, for low to medium-end products, which no longer fits the company's plan of developing high-end products.
The group recently purchased 6.41 acres adjacent to the Tropicana Golf & Country Club in Petaling Jaya, from Tropicana Corp Bhd for RM116.1 million. Its property division, Mulpha Land Bhd, has plans for a mixed-use development, with an estimated gross development value (GDV) of RM700 million.
"We are reactivating Mulpha Land and rationalising all our developments under the company. Mulpha International will be an investor in Mulpha Land," says Lee.
Mulpha Land was a "sleepy" company, but has become more active, thanks to projects like Enclave Bangsar, which features seven exclusive bungalows with a GDV of RM94 million, he explains.
Lee clarifies that the massive Leisure Farm project in Iskandar Malaysia, Johor, will not come under Mulpha Land, as it is too big and will swallow it up. Mulpha Land will be positioned as a high-end branded developer.
"We will bring our international expertise to the local development scene," Lee says. "A lot of people probably don't realise how 'international' Mulpha is, and we are trying to bring that experience and knowledge to the Malaysian market by offering high-end aspirational products and creating a brand out of them."
Moreover, new blood has being injected into both Mulpha Land and Mulpha International, says Lee. "We have changed management and hired younger people like Ghazi Yeoh Abdullah [executive director of Mulpha Land]. The team is also being reinvigorated.
"Mulpha International too has hired new people. Previously, Australia had its own management team, and there was very little cross-pollination between the group's businesses. Now with some management changes, the group is more integrated. So in the future, people will understand that Mulpha International is not only a Malaysian company, but also a large developer overseas."
The head office will still be in Malaysia, he adds.
Mulpha International's 1,765-acre Leisure Farm development in Johor, is beginning to bear fruit. "We are accelerating [the development] at Leisure Farm, which has been going slowly for many years, deliberately because we didn't think the market was right. Now we see that the market and pricing are there," says Lee.
In July, 10 pre-selected bungalow lots at Leisure Farm brought in RM50 million via a tender process. The reserve price ranged from RM2.03 million to RM6.93 million (RM115 psf to RM150 psf).
"Previously, people didn't appreciate the scarcity of land at Leisure Farm. They thought it was an endless resource because the development is very large," Lee says.
"By putting lots up for tender, they will realise that there are not many remaining lots left at Leisure Farm. And it is a rare product — in the entire Iskandar Malaysia, there are no one-acre lots. This could be the Damansara Heights, the Bukit Tunku or the Nassim Hill [in Singapore] of Iskandar.
"So I came up with the plan, with our marketing people. Let's keep it exclusive. We don't really want to sell undeveloped land, as we want to sell developed products. But we still get a lot of requests for bungalow lots, so we are balancing that — every year, we will release an X number of lots and people who have registered can tender for them. It is a much more transparent system as well, because it is the fairest way to sell."
At the close of bidding on July 28, all the lots had been sold. There were 30 bidders, and half of the successful bidders were Malaysians.
"We chose 10 lots from different precincts, to give buyers variety," says Mulpha International's deputy CEO Ronn Yong. "The one-acre lots are the most prime, and we are the only development with 'Good Class Bungalow' or GCB status, which is a Singapore-based standard for similar bungalows in prime areas such as District 9 and Orchard Road."
In the future, Mulpha International plans to build and sell products and not sell bungalow lots anymore, he adds.
Meanwhile, thanks to the "Iskandar effect", property values are increasing across the board in the region. Lee believes that as conditions improve, values could go up even further.
"I have seen it before in Shenzhen and Hong Kong," he says. "The key was getting the Malaysian and Singaporean governments to work closely together. That was the missing ingredient before. But once they started working together, the development of Johor sped up.
"Shenzhen used to be very cheap compared with Hong Kong, but now property prices there are a third of those in Hong Kong. "
New launches at Leisure Farm in October include its Bayou Creek Precinct 7B, which comprises 17 canal-front bungalows and 40 eco-themed semi-detached houses. Also to be launched at the end of this year or early next year, is the Bayou Gardens project, which will feature waterfront semi-detached homes and superlink villas.
Mulpha International's resort development Sanctuary Cove — the group's other big property development in Australia's Gold Coast, is a significant project. It is a 1,171-acre integrated residential resort that includes two world-class golf courses, four harbours and 15 restaurants and cafés.
Lee says the group will continue to launch bungalow lots at the development. Meanwhile, there is a joint venture to build a medium-density product with Sunland Group — an Australian company that developed the Versace Hotel in Gold Coast, at the entrance of Sanctuary Cove.
"Gold Coast has gone through a tough period," Lee says. "Post-global financial crisis, there was a correction, but a lot of the distressed stock has been sold. The banks have sold the loans, and the funds that bought the loans have sold the products. So the market is clear now.
"The overhang is down to a few hundred units in Gold Coast, and Brisbane is picking up strongly. As a result, I think Gold Coast prices are starting to climb and we've seen enquiries, demand and transactions come back very strongly compared with the past few years."
Mulpha International is also active on the retirement-home front via FKP Property Group. "We are streamlining FKP," says Lee. "I think FKP is a very misunderstood company because it has such large retirement and development portfolios. Investors are confused — do they invest in this company because of the retirement or the development portfolio?
"I think the market is better served by a clearer strategy. So the new CEO has put in a plan to divest the entire development portfolio, to make it a pure retirement play."
In June, Lee stepped down as interim CEO to make way for Geoff Grady, after a 10-month search for a new chief executive. Grady, who has had a long relationship with Mulpha International, joined the company's Australian arm in 2002 and was chief executive of Sanctuary Cove. He then joined FKP in 2009 as chief operating officer.
Lee says the retirement portfolio, worth more than A$1 billion (RM2.9 billion) in direct and indirect holdings, will eventually be put into a real estate investment trust (REIT).
Australia is currently undergoing much uncertainty because of economic and political issues, but Lee expects this to be resolved and anticipates steady performance in both the residential and retirement sectors of the property market.
"Australia is going through a difficult time in terms of the cost base, which is very expensive. There's also uncertainty over the change in prime minister, which has unsettled people in general," Lee says.
"But with the currency pulling back, interest rates at a historical low and talk that they might come down some more, I think the residential market will strengthen, and in turn the retirement sector, because the retirement market follows the residential market."
Besides property development, the Group — through its subsidiary Mulpha Australia Ltd, acquires, develops and manages a range of property and lifestyle investments, including hotels, a hotel school, commercial developments, a car park, and a winery and vineyard operation.
Property market overview
Lee is bullish about the Malaysian property market. "Malaysia is relatively cheap in the region. For our level of infrastructure, comfort and development, we are cheaper than the Philippines, Indonesia and Thailand. And we have good products. I think there is a lot of upside to come. Demographics are in the country's favour, with a young population getting into the property market."
Even with the new banking guidelines by Bank Negara Malaysia, where there is now a maximum tenure of 35 years for financing the purchase of residential and non-residential properties, Lee does not see the market cooling off too much.
"[The market will be affected] a little, but it is healthy in the long term," he opines. "You want controlled growth; you don't want a crazy bubble like in America, where with no money down, you can buy as many houses as you want. I think it is very prudent and wise of Bank Negara to control this before it got out of hand."
As for the Australian market, Lee says it is a good time to buy property there now, with interest rates so low.
"Sydney's residential market is cheap and has not risen in the last 10 years, while other markets like Perth is reliant on the mining boom and will be subdued. Brisbane is bottoming out and starting to pick up aggressively, while Melbourne is relatively weak.
"But the most affordable is Melbourne, in terms of dollar per sq m. It is just that the whole market is a lot cheaper, but it will come back strongly. In Australia, with interest rates so low, it is cheaper to buy than to rent."
By the look of things, Mulpha International is all set to continue its steady growth within Malaysia and Australia.
Leisure Farm's product launches this year
Leisure Farm in Iskandar Malaysia, Johor, has two launches slated for the end of this year. The first to be launched is Bayou Creek Phase 7b in October, which will see 57 units up for sale — 40 semi-detached houses and 17 bungalows.
The built-ups of the semidees start from 3,720 sq ft and the indicative selling price from RM2.55 million, while the built-ups of the bungalows start from 4,120 sq ft and the indicative selling price from RM3.59 million. The project's estimated gross development value (GDV) is RM180 million.
According to Ronn Yong, deputy CEO of Mulpha International, Phase 7c is slated for launch in 3Q2014 and Phase 7d, six months later. "Balloting will be conducted due to demand," he says.
Bayou Creek Precinct 7 has an estimated GDV of RM800 million and sits on 57.24 acres. The precinct is divided into four sub-phases and will have 332 residential units. Phase 7a, launched in 2012 and sold out, offers 96 units — 46 bungalows and 50 semidees.
The second project that will be launched is Bayou Gardens residences, which will feature cluster homes along the canal, Yong says.
No GDV is provided at the moment as the project is still in the planning stage. However, Yong highlights that units will come fully-furnished with a built-in designer kitchen with hood and hob, wardrobe in all bedrooms, ceiling fans and energy-saving light fittings, as well as an alarm system. The cost of the fit-out will be around RM150,000.
This story first appeared in The Edge weekly edition of Aug12-18, 2013.
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