SUNWAY Bhd is looking to expand its presence in Malaysia, but first it plans to launch about RM1.5 billion worth of projects.
These launches are expected to take place in the second half of this year, says Sarena Cheah, who was appointed joint managing director of Sunway's property development division on May 1, together with Ong Pang Yen.
Much talked about is Sunway's entry into Iskandar Malaysia, Johor. Sunway Iskandar spans 1,800 acres and has an estimated gross development value (GDV) of RM30 billion. Also in Johor is the group's 88-acre Sunway Lenang Heights, which has a GDV of RM230 million.
These projects and others will be overseen by Cheah — who has 18 years' experience with the group, and Ong — who started working for Sunway in 1993. Together, they bring diverse yet complementary experiences to the table.
Cheah, who is the daughter of Sunway Bhd founder Tan Sri Jeffrey Cheah, has worked in finance, sales and marketing, as well as strategy and corporate development. Ong served as a residential engineer of the Seberang Jaya Town Centre and was involved in the group's overseas investment projects. In 2010, he was promoted to COO of the international property development division, and later to managing director.
Since 1974, Sunway has grown to encompass numerous businesses. Besides property development, it is involved in trading and manufacturing, quarrying, building materials, healthcare, education and information technology. One of the group's most well-known projects is the 800-acre Sunway Resort City. The farsightedness of Jeffrey Cheah transformed a former tin mine into a bustling and viable township with residential, educational, medical, commercial and other components.
Another feather in the group's cap will be the elevated and dedicated Bus Rapid Transit (BTS) system. Public buses will travel on an elevated platform to ferry passengers within the township to and from a proposed USJ LRT station and a KTM station next to the Federal Highway. The BTS is expected to serve some 500,000 residents, including the estimated 50,000 students around the Bandar Sunway, Subang and USJ areas.
Cheah and Ong stress that for the rest of this year, they will be focusing on the group's projects in Malaysia. They talk to City & Country about their plans for the property development division, their roles and how they will deliver quality products. Below is an excerpt from the interview.
Why are there two managing directors?
Sarena Cheah: We will have a better understanding of our different consumer markets. More importantly, we work well together. I have worked with Ong for the past 15 years on projects overseas and locally as well. We complement each other very well and I think it is a very good partnership to move the division to the next level.
Broadly speaking, the sales, branding and growth side will be more my area, although both of us will be accountable [for decisions made]. For the technical and operational side, Ong will look into that.
Ong Pang Yen: Certain areas, maybe, I am more suited, like dealing with contractors and site visits, but for areas like customer and product development and what the younger generation wants, then we can draw on Sarena's strength. So our roles are complementary.
Some quarters will say, "Ms Cheah, you are in your position because of your father Tan Sri Jeffrey Cheah. What is your response to this?
Cheah: I am very proud to be Tan Sri Jeffrey Cheah's daughter. In fact, he is my idol. From his attitude and can-do mentality to his perseverance; I have learnt a lot from him. So I don't want to be detached from that. Now, if people think that I am here because of him, that's fine with me but more importantly, it is what people see me do. I've been with the Sunway Group for 18 years now; I have worked [in different areas of the group]. To me, I want to develop my credibility and respect with my staff and colleagues first. This is key, because I need to work with them. I have to earn their respect.
Ong: The public perception of Sarena being where she is because she is the daughter of Tan Sri Jeffrey Cheah is understandable, but it cannot be further from the truth. The results will speak for itself.
How will your collective experience take the property development division to the next level?
Cheah: Specifically on the property side, I think my experience in sales and marketing gives me a better understanding of what consumers want. We have put different products on the market — be it condominiums, landed homes, commercial products or integrated developments; we have seen what people prefer. If you look at our landbank, most of it is located next to public infrastructure or upcoming MRT, LRT and now BRT [Bus Rapid Transit] stations.
Typically, everyone will want to move closer to such infrastructure, so what is it that we can build for them that is liveable, integrated, convenient and safe? That is why we have invested in auxiliary police. Everything comes from the consumer angle first. What does the consumer need? Then, we build accordingly. So having that perspective helps us strategise to be a sustainable development company.
Ong: We are a very eco-conscious developer. I spent some time in China at the Tianjin Eco-City, which is the largest eco-city in the world, and gained some ideas on the importance of conserving energy and water, and reducing wastage, to be eco-conscious.
As engineers, we are working on a property construction initiative. For example, a property developer usually tenders a project out and contractors take over and build. Their roles are compartmentalised and not seamless. So whatever the developer has already designed, the contractor builds. Even if the contractor notices there is a lot of inefficiency in production, like you could save 30% of the materials if you do it a different way, they cannot tell you because it is already contracted out and they will build as you have designed.
With property construction, as Sunway is also into construction, we try to make the process a seamless and continuous one, and not compartmentalise it. By so doing, we can reduce a lot of inefficiency and wastage. In the design, it is to ensure that we don't waste energy or water. So that is the area and angle we are pursuing. We have been doing this for a while but we are constantly improving.
What challenges or concerns do you want to deal with first?
Cheah: The immediate focus in the short to mid-term time frame is to meet our business targets for the year. We are looking at upcoming launches amounting to RM1.5 billion this year. We are expecting to do RM1.3 billion sales. To date, we have done about RM500 million in sales. We have unbilled sales of RM2.3 billion as at March. The focus area this year will be mainly Malaysia.
We are excited with the upcoming launch of Sunway Geo because the BRT will transform the whole township. Sunway Geo is part of South Quay. There will also be an MRT station next to Sunway Geo. We are launching retail units and office suites on top — called flexi-offices, at end-July. Later, we will launch serviced apartments.
Compared to the international market, how is Malaysia's property market doing?
Ong: In Southeast Asia, from the investor's point of view, Malaysia is very attractive. If we look at the livability index for cities around the world, Malaysia ranks high, but as far as the cost of living is concerned, it is generally much lower than Jakarta, Manila, Singapore and Bangkok in this region. So Malaysia is still very attractive as an investment destination for people in the real estate industry.
What new ideas are being explored by Sunway?
Ong: We have been looking into the precast industry for some time. You look at developed countries, where everything is done precast and you just come to the site and assemble. But how well will it fit into the local context is something to be seen, because the weather is different. In Japan, they can build prefab houses very quickly but the materials they use are sometimes very lightweight. Whether they are durable and will last 50 years under our harsh weather conditions is a question mark. We are actually exploring prefabrication with some of these Japanese builders. We are getting a prototype done and it is being tailored to local guidelines.
How will the issue of affordable housing be addressed?
Cheah: There are many ways of looking at the issue of affordable housing. One way is to make sure we are very productive, so we are embarking on a property construction initiative to deal with the issue of inefficiency. Secondly, rising costs and prices are a natural thing happening across the board, so we need to design things properly to meet market needs. This is why we have to work with the banks and the consumers, to give them the right product.
Products near mass public transport are usually smaller in size, thus the designs of such units have to be functional and appropriate to the needs of the consumer. The quality of living is not compromised. That's for integrated developments.
For standalone products, we need to focus on the 'green' part — how to make better use of the space, how to maintain it in a more cost-effective manner and so on. We may need to look at new technologies to see how we can be more productive. Land cost is rising. What else is part of the cost? Construction is about 60% to 70% of the total cost, so that is where property construction is key to managing this area.
What is your forecast for the property market for 2H2013?
Cheah: Property is very much based on sentiment, confidence and availability of financing. So if these three are intact, people feel the economy is stable; there is growth; the Economic Transformation Programme is progressing well; Malaysia is expecting to meet its GDP numbers; and at the same time, bank financing is still okay. I believe the market will still grow because there is inherent demand. The migration rate of people into the urban area is growing, especially with the new public infrastructure. So the market will grow steadily for the rest of the year.
On the property investment side for Sunway, we are going to add about RM2.4 billion worth of new assets over the next three years in Bandar Sunway and Velocity, Cheras. The investment properties — such as the Pinnacle office tower and Sunway Velocity mall, once they are completed, will complement very well the retail and office segments within Sunway Geo and the residences. They are coming into a continuously growing township. The whole value is how everything is integrated together.
This story first appeared in The Edge weekly edition of July 1-7, 2013.
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