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property developersBEST

The methodologyHow the companies are ranked

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THE WEEK OF SEPTEMBER 22 | 2003THE EDGE

RANKING COMPANY SOME SIGNIFICANT PROJECTS*

1 IGB Corp Bhd Mid Valley Megamall, Sierramas, Desa Kudalari

2 SP Setia Bhd Taman Bukit Indah (Johor),Pusat Bandar Puchong, Duta Nusantara

3 IOI Properties Bhd Bandar Puchong, IOI Palm Garden Resort,Bandar Putra Senai (Johor)

4 Bandar Raya Taman Permas Jaya (Johor), Sri PenagaDevelopments Bhd Condominium, Tivoli Villas Condominium

5 MK Land Holdings Bhd Damansara Perdana, Damansara Damai,Bukit Merah Laketown Resort (Perak)

6 Sunway City Bhd Bandar Sunway, Pusat Bandar Seberang Jaya(Seberang Prai), Sunway City Ipoh (Ipoh)

7 Sime UEP Properties Bhd Subang Jaya, UEP Subang Jaya, Ara Damansara

8 Island & Peninsular Bhd Bandar Kinrara, Taman Setiawangsa,Desa Mutiara (Penang)

9 (tie) Sunrise Bhd Mont’Kiara, Seremban Forest Heights(Seremban)

9 Pelangi Bhd Taman Pelangi Indah (Johor),Taman Perling (Johor), Taman Sutera (Johor)

*Unless stated the projects are located in the Klang Valley

TOP 10

Malaysia‘s Best PG2-4 | Innovative IGB PG8-9 | SP Setia walks the talk PG10-11 | IOI Properties: Maximisingprofitability PG12&14 | Bandar Raya Developments: The quiet one... PG16-17 | MK Land in for the long haulPG18-19 | Sunrise: Delivering on quality and customer service PG19-20 |

COMPANY

Asia Pacific Land BhdBandar Raya Developments BhdBCB BhdCountry Heights Holdings BhdDijaya Corp BhdFACB Resorts BhdGlomac BhdGold Bridge Engineers & Construction BhdHong Leong Properties BhdIGB Corp BhdIOI Properties BhdIsland & Peninsular BhdLand & General BhdMalton BhdMetro Kajang Holdings Bhd

COMPANY

MK Land Holdings BhdNegara Properties BhdParamount Corp BhdPelangi BhdPetaling Garden BhdPK Resources BhdSelangor Properties BhdSHL Consolidated BhdSime UEP Properties BhdSP Setia BhdSunrise BhdSunway City BhdTalam Corp BhdUDA Holdings BhdWCT Engineering Bhd

TOP 30 (in alphabetical order)

The Edge ranks Malaysia’s top players —from the consumer’s perspective

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2 • THEEDGE MALAYSIA | CITY & COUNTRY | SEPTEMBER 22, 2003

Malaysia’s best| BY SREEREMA BANOO |

What does it take to be a topproperty developer as faras the consumer is con-cerned?

Should the title go toone which churns out huge profits sell-ing hundreds or thousands of conven-tional housing units each year? Orshould a developer that builds fewerhomes but which showcase quality, in-novation and creativity be the moredeserving one?

In short, are quantitative attributesalone enough to place a property de-veloper in high regard by the market?Or are qualitative attributes just as, ifnot more, pertinent?

Results of The Edge’s inauguralRanking of Top Property Developers inMalaysia confirm that from the per-spective of a property investor, the topdeveloper has to have both sets of at-tributes — and in large doses.

The ranking, which covered allproperty development companieslisted on the property sector of theKuala Lumpur Stock Exchange andseveral property development arms oflisted companies, was based on fivequantitative attributes — group pre-tax profit; revenue; size of sharehold-ers’ funds; gearing; and cash positionfor financial year 2002 — and fivequalitative attributes — product qual-

ity; innovation and creativity; valuecreation for buyers; image; and exper-tise. (See Page 6 on the methodology.)

While data for the quantitative at-tributes were taken from publishedsources, judging of the qualitative at-tributes was carried out by a distin-guished panel comprising the Interna-tional Real Estate Federation (Fiabci)Malaysia Chapter president KumarTharmalingam, Real Estate and Hous-ing Developers’ Association of Malay-sia (Rehda) president Datuk Jeffrey Ng,Bandar Utama Development Sdn Bhddirector Datuk Teo Chiang Kok, BukitKiara Properties Sdn Bhd executivechairman Datuk Alan Tong. The Edge’svote was given by City & Country edi-tor Au Foong Yee who also moderatedthe three-hour deliberation.

As results of the ranking show, onlydevelopers that display strongly bothquantitative and qualitative traits weregiven the thumbs up. Thus, the win-ning names are no stranger to theproperty development fraternity andproperty investors and would-be in-vestors alike.

That’s why some of the top devel-opers interviewed were also not sur-prised at the findings, and neither weremembers of the judging panel.

The top 10The make-up of the top 10 developersreveals a mixed bag of players, some

armed with decades of experience, oth-ers relatively new contenders. There arethose who started in one location,carved out a strong brand name andhave remained in the same location.Others managed to stamp their markin the Klang Valley although theystarted operations elsewhere.

Size-wise, there are relatively mod-est-sized companies as well as hugecorporations with shareholders’ fundsexceeding RM1 billion. As for theirproducts, given the characteristic andstate of the Malaysian property mar-ket which is largely dependent on theresidential subsector, it is no surprisethat the thrust of the top 10 propertydevelopers lies in the housing seg-ment. Some focus on niche, high-endmarkets, others build homes for themasses, while there are those who alsobuild commercial, retail and leisureproperties. Many may not even con-sider one of the 10 to be a true-bluedeveloper, given its thrust in themanufacturing sector.

While we examine the success sto-ries and focus of some of the top de-velopers (see stories beginning on Page8), we also take a closer look at someof the attributes that can make or breaka developer. These attributes, besideshelping a developer’s bottom line, alsostand it in good stead, be it in the boomor bust years.

Image, branding and track recordIt is unanimous. Members of the quali-tative attribute judging panel and topdevelopers interviewed by City &Country rate image, branding andtrack record highly. They see thesetraits as instrumental for developers towin new buyers and keep existingbuyers loyal.

One developer that prioritisesbranding is IGB Corp Bhd, ranked Ma-laysia’s top property developer. Groupmanaging director Robert Tan is thefirst to attest to the importance ofbranding. IGB is responsible for the de-velopment of the successful MidValleyCity in Kuala Lumpur as well as theinnovative and high-end housing en-clave Sierramas in Sungai Buloh (de-veloped by Tan & Tan Developmentwhich, following a corporate restruc-turing exercise, has since come underthe IGB stable.)

The group’s reputation for timelydelivery, Tan feels, has branded thedeveloper as one that is reliable amongprospective buyers. “This was seenfrom the last property downturn in the1980s… when there were many un-completed projects around, we pridedourselves on completing our projectand delivering them on time.”

SP Setia group managing directorDatuk Liew Kee Sin echoes Tan’sthoughts on the importance of image,branding and track record for timely

EDITOR-IN-CHIEFHo Kay Tat

EDITORAu Foong Yee

([email protected])

SENIOR WRITERSreerema Banoo

WRITERHazatul Syima Haron

ADVERTISING &MARKETING

GENERAL MANAGER(REGIONAL)

Edward Stanislaus(02) 9699 8339

GENERAL MANAGER(MALAYSIA)

Chandran Ravi(012) 267 1000

ASST MANAGERSAlison Lim

(012) 212 3442

John Joseph(012) 288 3952

EXECUTIVESHeidee Dato’ Hj Ahmad

(019) 388 1880

Sharon Lee(017) 873 8139

Koo Ping Ping(012) 213 5876

Shirley Chin(012) 226 2321

Debbie Joseph(012) 206 9344

Lau Tuck Hoong(012) 375 7035

COORDINATORAznita Anuar

(03) 7660 3838 ext 602

We welcome yourcomments and criticism.

Send your letters toThe Edge, PO Box 8348,Pejabat Pos Kelana Jaya,

46788 Petaling Jaya,fax: (03) 7660 8568;

e-mail:[email protected]

Pseudonyms are allowed butplease state your full name,

address and contact number(tel/fax) for us to verify.

Qualitative attributesRANKING COMPANY

1 Sunrise Bhd2 IGB Corp Bhd3 Sime UEP Properties Bhd4 SP Setia Bhd5 Bandar Raya Developments Bhd6 MK Land Holdings Bhd7 Sunway City Bhd8 Pelangi Bhd9 Island & Peninsular Bhd10 (tie) Dijaya Corp Bhd

Negara Properties Bhd

Quantitative attributesRANKING COMPANY

1 IOI Properties Bhd2 SP Setia Bhd3 IGB Corp Bhd4 (tie) Bandar Raya Developments Bhd

MK Land Holdings BhdSunway City Bhd

7 UDA Holdings Bhd8 Sime UEP Properties Bhd9 Talam Corp Bhd10 (tie) Island & Peninsular Bhd

Malton Bhd

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THEEDGE MALAYSIA | CITY & COUNTRY | SEPTEMBER 22, 2003 • 3

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delivery for a developer to be suc-cessful. Besides keeping buyershappy, SP Setia also generatesgoodwill through its charitable ini-tiatives, namely, the SP Setia Foun-dation. The foundation — aimed atless fortunate primary schoolchil-dren — has been a boon for the de-veloper’s image, Liew concedes.

“People see the things that we doand they say ‘he is a good guy’, sopeople will buy from him [SPSetia],” he says candidly. SP Setiaemerged second in the ranking.

Admittedly, there are developerswho do a better job at image build-ing. But as Bandar Utama Develop-ment’s Teo points out, some devel-opers may not be high profile but atthe end of the day, the test of thepudding is in the eating — develop-ers must deliver on their promises.

There is a trust or bond betweenthe buyer and developer, a link Sun-rise can surely attest to. Sunrise BhdCEO Datuk Michael Yam says 60 percent of the buyers of its latest launch— Mont’Kiara Aman — are repeatcustomers while 25 per cent are re-ferred buyers and the remaining 15per cent, new buyers.

The teamDoes an emphasis on track recordmean no room for new kids on theblock? Teo begs to differ. While he

concedes that a new player is handi-capped in not having a track record,having onboard an experiencedteam can put the company on par,if not ahead, of companies that havebeen in the market for a long time.

This brings us to another im-portant winning attribute in a de-veloper: the expertise or manage-ment team of a company. IGBCorp, SP Setia and MK Land Hold-ings (ranked fifth), for example,make no secret of the value theyplace on talent and dedication intheir employees. Thus, their em-phasis on staff benefits and train-ing programmes.

MK Land, for one, subscribes tothe philosophy of “training, trainingand retraining” its employees. Ex-ecutive chairman Tan Sri MustaphaKamal Abu Bakar says the idea is tohave knowledgeable staff on boardwith five consistent traits: trustwor-thiness, competence, loyalty, open-mindedness and integrity.

That said, there is no mistake

that highly ranked property compa-nies recognise the importance of theteam and that teamwork — or lackof it — can make or break a com-pany. SP Setia’s Liew notes that be-cause quality control is crucial,every team member, from theproject designer to the site supervi-sor, has to share the same philoso-phy. “That is, to be the best in allthey do,” he says.

Teamwork is also critical whena company wants to go forward, asin the case of Sunrise (ranked ninthwith Pelangi Bhd). Yam says whileits founder Datuk Alan Tong estab-lished the core values of the com-pany, when he cashed out in 1997,the company was still at an embry-onic stage. Taking the company for-ward — whether in product or geo-graphical diversification — dependson the entire team.

While there is no doubt that Sun-rise has grown from strength tostrength, it is worth pointing out thatthe developer’s core competencies

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— emphasis on quality and cus-tomer service — have not changed.

Still, a change in top manage-ment is likely to be eyed with someconcern initially, as in the case ofBandar Raya Developments (rankedfourth) when control changed hands(the deal was completed last Octo-ber). In response, Bandar Raya CEODatuk Jagan Sabapathy has stressedthat there has been no change in thegroup’s philosophy, which is tobuild quality developments, and cre-ate envied communities and visionfor the future. Jagan goes on to saythat the group has a good historyand is in the pink of health. Its goal:to raise the benchmark and setstandards in the industry.

Innovation, innovationand innovation?While location helps in ensuring thesuccess of a development, keencompetition and scarce land, espe-cially in the Klang Valley, are pres-suring developers to innovate to dif-

ferentiate themselves in the market.Innovation, for example, in producttypes or marketing strategies, is evi-dent in almost all the developersranked in the top 10.

In the case of IGB Corp — cred-ited for being the pioneer in condo-minium living and serviced apart-ment development — innovation isessential given its limited landbank.SP Setia, on the other hand, pridesitself on innovative marketing strat-egies — it was the first to offer ashow village with about 20 housesfor prospective buyers.

Whether borne out of a need tosurvive in a challenging market orto remain in pole position, innova-tion is certainly an ingredient thatexcites many property players andobservers.

Fiabci Malaysia’s Kumar believesthat while location is an advantage,“the trick is to create somethingnew”. He sees this strength not onlyin some top property developers, but

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Location is an important consideration for developers, whether for aretail development like Mid Valley Megamall (left) or a commercialdevelopment like IOI Corporate Square (above)

Deliberating on the qualitative attributes. Thejudges are (clockwise from far left) Ng, Tong, Au,Kumar and Tan

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also in some younger and smallerones. “Look at Gita Bayu… it was for-merly abandoned land and now ithas been turned into a fashionableaddress, or even the Hartamas areathat was once considered dangerousand today, it is an upmarket million-ringgit location.”

Innovation can be used to ad-vantage, especially if the developeris a relatively young one. In thisrespect, Teo sees a tendency forsome larger developers to remaincomplacent and consequently benon-innovative.

IOI Properties group executivedirector Datuk Lee Yeow Chor of-fers an interesting insight. There is,he feels strongly, a limit on theamount of innovation on the partof a developer. A more importantconsideration would be practicalityor durability and the ability of thedesign to stand the test of time.While IOI Properties (ranked third)may not be considered the most in-novative developer around, it doesmonitor customer preferences andrespond to changing demands.

Does size matter?There are two schools of thoughtwhen it comes to deliberating on acompany’s size or financialstrength. Rehda’s Ng believes that

while in good times, the advantagesof having financial muscle may notbe evident, the reverse is true dur-ing tough times. “In difficult times,a developer with financial strengthwill be able to hang in there [interms of] covering land costs oroverheads,” says Ng, who is alsothe managing director of Asia Pa-cific Land Bhd.

Teo does not see an issue in the size

FROM PAGE 3 of a developer. Rather, the strength ofa developer in on its products.

Tong agrees. “Big does not meanthe best… we have seen that evenif there is a recession, big compa-nies may not necessarily escapefrom the effects of recession.”

There are those who place im-portance on size. IGB Corp’s Tansays with size, come exposureand to an extent, branding.

IOI Properties, too, sees benefitsin size. Thanks to its financial mus-cle, the developer does not need toborrow. Its reserves can be utilisedto cover the infrastructure cost at theinitial stages of a township’s devel-opment. Its financial strength, Leeadds, has also enabled the group tomake quick decisions and acquiresuitable landbank.

What is interesting about IOI

Image, branding, track record rate high

Developer Sunrise has grown from strength to strength and is synonymous with the Mont’Kiara address E

Properties is that despite its size, it isstill entrepreneur-driven (with a coregroup of experienced senior manag-ers) and has a relatively flat organi-sational structure that allows forquick decision-making.

Ultimately, while there are ob-vious benefits to having largeshareholders’ funds, the advantageof size relates to what the com-pany does with it. This has shownup in the ranking — some devel-opers which are financially stableand strong, backed by sizeableshareholders’ funds and significantturnover, did not manage to makeit to the final 10. Why? Quantita-tive attributes alone are notenough to set them apart from thecompetition.

Rehda’s Ng encapsulates it suc-cinctly when he says: “At the endof the day, the success of a devel-oper depends on the buyers. Whatis important to a buyer? Qualitycan put the developer ahead of thecompetition as will innovation tokeep buyers loyal to the brand.Similarly, wealth creation will doso as well.”

At the same time, it looks likemere qualitative attributes alone willnot place a developer ahead of eve-rybody else. A top property devel-oper has to have both top quantita-tive and qualitative attributes.

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The ranking of the top developers in the country reveals a mixed bag of players, from those who are focused on a particular area like Pelangi Bhd in Johor (top left), to those who have made a name forthemselves outside their initial home base like Island & Peninsular Bhd (top right). There are also developers who offer a range of properties from leisure to housing like Sunway City Bhd (bottom left) whilesome focus on housing such as the likes of Sime UEP Properties Bhd (bottom right).

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T he research for The Edge’s Ranking ofTop Property Developers was carriedout between June and August 2003 onall the 86 property companies listedunder the property sector on the Main

and Second Boards of the Kuala Lumpur StockExchange. Data was sourced from variouspublished sources. All data considered is forthe 2002 financial year (FY).

Besides the 86 companies, we also ap-proached high-profile privately owned devel-opers (Bandar Utama Development Sdn Bhd,See Hoy Chan Sdn Bhd and TTDI Develop-ment Sdn Bhd) and the property developmentsubsidiaries of listed companies for their re-spective data. However, only the subsidiariesof four companies — WCT Engineering, RoadBuilder Holdings, Ireka and Paramount Corp— responded, bringing the total number ofcandidates to be ranked to 90.

ShortlistingThe ranking process entailed several steps.First, the shortlisting. Companies had to fulfiltwo criteria — a minimum shareholders’ fundof RM250 million plus a minimum annual rev-enue of RM100 million per year for the pastthree consecutive years (2000-2002). Thirtycompanies passed the test.

Quantitative attributesThe next stage of ranking involves the ap-plication of five quantitative attributes.These are: Shareholders’ funds; revenue ornet sales; earnings before interest, tax, de-preciation and amortisation; gearing (totalshort- and long-term debt divided by share-holders’ funds); and cash or near-cash forFY2002.

Qualitative attributesThese are: Product quality (service, finish,timeliness); innovation and creativity (prod-uct and marketing); value creation for buy-ers (capital appreciation); image and mar-ket perception (credibility, management

style, effectiveness); and expertise (manage-ment, experience).

Points awardedA maximum of 10 points were awarded foreach quantitative and qualitative attribute,10 being the highest and one the lowest.

The application of the quantitative at-tributes was straightforward, being based onthe available data.

For the qualitative attributes, points wereawarded on a consensus basis by a five-mem-ber judging panel following deliberation onthe respective developer. The entire processtook three hours.

The judging panel comprised the Inter-national Real Estate Federation MalaysiaChapter president Kumar Tharmalingam;Real Estate and Housing Developers’ Asso-ciation of Malaysia president Datuk JeffreyNg; Bandar Utama Development Sdn Bhddirector Datuk Teo Chiang Kok; Bukit KiaraProperties Sdn Bhd executive chairmanDatuk Alan Tong and City & Country editorAu Foong Yee.

Ng, who is also managing director of AsiaPacific Land Bhd, abstained in the deliberationand awarding of points for the company.

Note: While we will be the first to concedethat the ranking exercise may not be perfect,it has been carried out with the best of inten-tions. The property development sector, as anengine of growth of the economy, has playedand is expected to continue playing a signifi-cant role in the shaping of the country’s eco-nomic health. This is besides the sector’s ful-filment of the nation’s housing needs. Giventhe onus placed on the sector, we thereforefeel the need to sieve through the multitudeof players to identify the country’s top prop-erty developers, as perceived by the generalproperty-investing public. We have also takenthe opportunity to highlight some of their suc-cess stories. Feedback and suggestions are wel-comed. — Editor, City & Country

PICTURES BY KENNY YAP/THE EDGE

Kumar Tharmalingam Datuk Jeffrey Ng Tiong Lip

Datuk Teo Chiang Kok Datuk Alan Tong Kok Mau

Kumar Tharmalingam graduated from theUniversity of London with a degree in EstateManagement and is a Fellow of the RoyalInstitution of Chartered Surveyors. He has practisedas a valuer, was managing partner of Debenham,Tewson, Tharmalingam & Aziz (1978 to 1986) andset up the First Malaysia Property Trust — a jointventure between the Bank of Commerce andAustwide, Australia (1987). He joined TaipingConsolidated Bhd in 1992 and was responsible forthe development of the JW Marriott Hotel andStarhill Centre before he left in 1998 to be thedirector of Hall Chadwick Asset Recovery Sdn Bhdthat restructures and rescues property companiesaffected by the economic downturn in the region.Kumar has attended and presented many papers— on property crisis management, the time-shareindustry, restructuring of property companies aswell as environmental issues affecting real estate— at international seminars.

President,The InternationalReal EstateFederation (Fiabci)Malaysian Chapter

Ng is also managing director of Asia PacificLand Bhd, a position he has held since 1992.An economics graduate from MonashUniversity, Melbourne, Ng worked with aninternational auditing firm in Australia beforereturning to Malaysia. He then headed theinternal audit department of the Federal HotelsGroup (1981 to 1984) before moving on togather experience in the finance, corporateplanning and executive management ofbusiness operations in the property and hotelindustries. Ng is a member of the Institute ofChartered Accountants Australia, MalaysianInstitute of Accountants and the MalaysianInstitute of Certified Public Accountants. He isalso vice-president of Fiabci Malaysia and amember of the Board of Director of theConstruction Industry DevelopmentBoard (CIDB).

President,Real Estate andHousing Developers’Association Malaysia(Rehda)

An electrical engineer by training, Teo has beeninvolved in property development for about threedecades. He has undertaken a multitude ofprojects including high-rise commercial and officecomplexes, shopping centres, industrial andhousing schemes. These include the ongoing andpopular Bandar Utama township in Petaling Jaya.A past president of Rehda, Teo is also deputypresident of Fiabci Malaysia. He sits on theadvisory board of the Association for Shoppingand Highrise Complex Management.

Director,Bandar UtamaDevelopmentSdn Bhd

Tong has dedicated more than three decadesto the cause of real estate development inMalaysia. After graduating from the Universityof Sydney in 1959, he worked in Australia for ayear before joining the then architect’sdepartment of the Municipality of Kuala Lumpur(now City Hall). In 1964, he started his ownarchitectural practice and four years later,founded Sunrise Sdn Bhd, a propertydevelopment firm. Tong was elected the stateassemblyman for Bandar Klang in 1974 and heserved two terms. Upon retirement from activepolitics in 1985, he resumed stewardship ofSunrise which was listed on the Kuala LumpurStock Exchange in 1996. Tong cashed out thefollowing year, just months before theeconomic recession that swept the region. Aftera brief hiatus, he returned to the propertydevelopment scene as executive chairman ofBukit Kiara Properties Sdn Bhd. Tong is a pastpresident of Fiabci Malaysia (1994 to 2000)and Fiabci deputy world president for Asia-Pacific (1997-1998).

Executive chairman,Bukit KiaraPropertiesSdn Bhd

Au Foong Yee

Editor,City & Countryand havenThe Edge

THEmethodology

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How the companies are ranked

The judges

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Innovative IGBBeing ‘one step ahead of the rest’ puts developer on top of ranking

ing, based on quantitative and qualitative at-tributes, sees IGB Corp emerging at the top.

Strengths such as innovation were alsoborne out of the need to survive in an ever-challenging market.

Tan would be the first to agree that thereis no question as to the importance of inno-vation, for example, to the success of thecompany. “With the limited landbank that wehave, we need innovative ideas to sell theproducts. To survive, we have had to comeup with new ideas,” he says.

Like all new ideas, some have taken timeto be accepted and digested by the market.In the case of Sierramas in Sungai Buloh,for example, he recalls the time when theupmarket housing development was first of-fered in the mid-1990s and the resistance tothe fence-free community living concept.But it soon caught on.

Today, the gated and guarded communityliving concept has been replicated by otherdevelopers, which in turn have reaped suc-cess from the innovation.

W ith upmarket niche housing de-velopments under its belt and areputation for innovative ideas,IGB Corp Bhd has had an illustri-ous history. The developer has

been credited with a number of milestones inthe country’s property development scene —from being the first in the country to intro-duce the concept of condominium living tobeing the first to offer the gated and guardedcommunity living concept.

These achievements — be it the first con-dominium, Desa Kudalari; the first servicedapartment development, Micasa; or the firstgated and guarded development with a com-munity living concept, Sierramas — havestood the developer in good stead.

IGB Corp group managing director RobertTan acknowledges as much, pointing outthat these innovations have given the de-veloper “an edge” over other players.

A recent testament to this leading positionis the findings of The Edge Ranking of TopProperty Developers in the country. The rank-

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“Our aim is to be innovative and to setstandards for others to follow [but] sometimesit does not pay to be the pioneer because oth-ers will follow and profit from it,” Tan sayswith candid humour.

Besides innovation, the developer alsoplaces an accent on quality but beyond merelyquality of the finished product, there is alsoemphasis on property management and after-sales service.

Towards this end, the developer estab-lished Condo Services Sdn Bhd back in the1980s. It is responsible for the property man-agement of strata properties until the stratatitle is issued and the units handed over tothe management corporation.

On top of this, the developer also has acomplaints bureau that handles all problemsand complaints arising from any of IGBCorp’s developments. These initiatives havehelped to create trust among buyers andowners that the company can be relied on.

Indeed, the group’s long-standing presencein the market is indubitable, as is its track

record. Listed on the Main Board of the KualaLumpur Stock Exchange in 1981, it was in-corporated as a private-limited company in1964, and then converted into a public-lim-ited company in 1975. It changed its namefrom Ipoh Garden Sdn Bhd to Ipoh GardenBhd on conversion before assuming its presentname in 1984.

The group started business way back in1965, building houses in Ipoh. In the 1980s,it diversified into the hotel and resorts sec-tor with the development of the Pan PacificHotel, Pangkor.

In partnership with the New WorldGroup of Hong Kong, the group went on todevelop the Renaissance Hotel and NewWorld Hotel located in the heart of KualaLumpur.

IGB, through Mid Valley City Sdn Bhd,and in partnership with Kuala Lumpur CityHall, has completed development of MidValley City. Phase 1 of the developmentcomprises the Mid Valley Megamall —Asia’s largest retail, food and entertainment

Tan: Our aim is to be innovative and setstandards for others to follow

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centre; six blocks of 17-storey office tow-ers; 30 units of signature offices; and a 4-star business hotel.

The group held a series of well-receivedproperty launches in 2002 — Sri BukitPersekutuan, Seri Maya, Sierramas West andKundang Jaya — all achieving impressivetake-up rates ranging from 70 to 90 per cent.

Last year, the group finalised its ration-alisation exercise with Tan & Tan Develop-ment Bhd. The merger should spell moreexciting years ahead for the group.

Property market observers see IGB Corpreaping benefits from the merger. To some,for a time, IGB Corp had “disappeared” fromthe property development radar screen andmuch of the innovative developments thatare credited to the merged entity of todaywere really thanks to Tan & Tan Develop-ment.

This is something the IGB management iswell aware of. Taking advantage of Tan &Tan’s experience and reputation in creatinginnovative lifestyle properties, the group is E

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Top and above: The fence-free community living of Sierramas first received resistancein the mid-1990s but the concept has now caught among other developers

Left: Mid Valley Megamall is one of IGB’s most well-known projects

Top left: Desa Kudalari is acknowledged as the first condominium development in KL

poised, naturally, to focus on niche high-endcondominiums, townhouses and bungalowdevelopments.

Ready for the futureThe group has limited landbank but it doesnot discount the possibility of acquiring

As for commercial developments, whileconceding that the market is fraught withchallenges — competition in the retail seg-ment being one — the trick lies in beingwhat Tan calls “one step ahead of the rest”.

While its track record and brand name areassets, of equal importance is the team.

pany for more than two decades, some sinceits early days in Ipoh.

Recurring incomeWhile he is reticent about gazing into thegroup’s future, Tan nonetheless sees moreof its turnover in recurring income. For now,half of the group’s revenue is contributedby recurring income from the retail andserviced apartment segments.

Explaining the path chosen, Tan says itis part of the group’s long-term growth ob-jectives. “Size is important but when youreach a certain size, income has to comefrom [other sources] in order to grow.” Withproperty development being dependent ontiming, location and its relatively long ges-tation period, projects that create recurringincome become the obvious choice.

For the first six months ended June30, 2003, group revenue stood at RM200.5 mil-lion. Gross profit, meanwhile, stood at RM77.3million and pre-tax profit at RM58.6 million.— By Sreerema Banoo

With the limited landbank that we have, we needinnovative ideas to sell the products. To survive, wehave had to come up with new ideas. — Tan

more land or venturing into joint ventureswith landowners. “We have to see what isavailable and in what locations,” says Tan.

Granted, there is no sure-fire way to suc-cess but Tan sees the key in innovation. Thegroup will go for niche housing markets andrely on its branding.

“Teamwork is important… there is a lot ofcommunication and discussion and we en-courage the staff to be innovative andproactive,” Tan offers.

With the emphasis on the team, it isunsurprising that many of the senior man-agement employees have been with the com-

Mcc_8n9_465.pmd 9/18/03, 12:39 AM9


SP Setia walks the talkAims to be the best through superior service, quality products and innovative marketing approaches

industry group in Asiamoney’s second corpo-rate governance poll carried out this year. Thepoll surveyed 120 Asia-Pacific companies from10 industry groups.

SP Setia was incorporated in 1974 as aprivate limited company involved in invest-ment holding, property development, build-ing construction and wood-based manu-facturing. It was listed on the Second Boardof the Kuala Lumpur Stock Exchange in1993 and successfully moved to the MainBoard three years later.

The group’s existing projects are atPusat Bandar Puchong, Bukit IndahAmpang, Putrajaya, Setia Indah and BukitIndah (the latter two in Johor). It madeits move into the high-end market withthe launch of Duta Nusantara in SriHartamas in October last year. Over 60 percent of the total available units were soldwithin the first two months of the launch.To date, all 42 bungalow units and 115semi-detached units (out of 136 units of-fered) have been sold, representing totalsales of RM320.96 million.

In March last year, the group purchased3,930 acres of land in Shah Alam for aboutRM597.3 million from See Hoy Chan Planta-tions Sdn Bhd. Known as North HummockEstate, the land has been earmarked as thegroup’s next flagship development project inthe Klang Valley. The developer has set aside

Liew singles out innovation in marketing as a crucial ingredient in being a leader in the property sector

800 acres of land to be developed into a mixeddevelopment township called Setia Alam. Thefirst launch at the township is slated for nextmonth.

Quality is a prioritySharing his thoughts on the attributes that de-fine a leading property developer, Liew be-lieves quality is essential.

“From the time the land is purchased tothe time we sell a product, quality is very im-

portant,” stresses Liew, adding that even ifthe product in question is a low-cost home, itmust be of quality. The basic things shouldbe there: The roof does not leak, the toiletworks and the parquet does not pop up. For ahigh-end unit, quality is seen in things likethe detailing, finishes and concept.

For Liew, every team member has a role

to play. Reiterating the importance of team-work, he reasons that the action of one de-partment, for example, will impact on the per-formance of another or the company as awhole. If the design, for instance, is not doneproperly, it will affect product quality and thecompany’s ability to sell at a particular price.

It is thus not surprising that the sense ofbelonging and teamwork is inculcated at thecompany. In an industry where quality con-trol can make or break the finished product,

the developer emphasises supervision.Liew recognises that the best designs mi-nus supervision and exacting standardswould render a product that will not meetcustomers’ needs. “We inculcate loyaltyand we make sure that everyone sharesthe same philosophy — that is, to be thebest in all they do.”

Perpetuating quality control impactspositively on the bottom line. For exam-ple, should there be defects, the cost ofrepair can come up to between 5.0 and10 per cent of the contract sum.

As testament to the fact that the companywalks the talk, Liew says SP Setia has com-piled a list of defects in its projects. The exer-cise that took years to complete was aimed atfinding out “what went wrong from the de-sign stage to construction and to not repeatthese mistakes”. The result is a set of guide-lines that is followed to a T to reduce defects.

We inculcate loyalty and wemake sure that everyoneshares the same philosophy,that is, to be the best in allthey do — Liew

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“To be the best in all we do” is SPSetia Bhd’s corporate vision. Butmore than an expression on paper,

the developer is determined to live by thesewords — in terms of product development,quality of service and innovation in market-ing. “We make sure that everyone, includingthe CEO, lives by it,” says none other than SPSetia’s group managing director and CEODatuk Liew Kee Sin.

Articulating the developer’s aims, Liewsays at the top of the list is delivering supe-rior customer service and satisfying customerneeds as well as enhancing shareholders’value, while being a responsible employer andgood corporate citizen. And fulfilling theseaims means the developer is able to remaincredible, stay ahead of the competition andoffer quality products.

Given these objectives and principles,Liew’s near nonchalance at the news of thecompany being adjudged one of the top threedevelopers in the country is unsurprising. InThe Edge Ranking of Top Property Develop-ers, SP Setia came out second.

Indeed, accolades must be something thedeveloper is familiar with, as it has won theNational Award for Landscaping for its BukitIndah and Setia Indah townships in Johor in2001 and 2002, respectively.

On top of this, SP Setia is also the onlyMalaysian company to come out tops in its

Mcc_10n11_465.pmd 9/17/03, 11:40 PM10


Staying aheadThat said, Liew concedes that the markethas become increasingly challenging, thebiggest challenge being the ability to buythe right land at the right price. Construc-tion costs being similar industry-wide, theprofitability of a company hinges on thevalue of land.

Given these challenges and the largenumber of players in the market, how thendoes the company stay ahead?

Liew singles out innovation in marketing asa crucial ingredient in being a leader. He is also E

particularly proud that the developer is the“first to start a show village” that showcasesanything between 15 and 20 houses — from a1-storey terraced house to a bungalow.

While the target market for the two typesof properties may differ, creating show unitsfor the entire range of products offered alsocreates a good impression for the prospectivebuyer. “One who is buying a 1-storey terracedhouse will certainly look at the bungalow andbe impressed,” he says. A show village alsoallows the developer to illustrate the lifestyleand landscaping promised.

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In this vein, the launch next month forSetia Alam will coincide with the completionof its show village and 20 showhouses thatare now being built.

Another crucial ingredient in the recipefor success is the developer’s image andbranding. Be it the developer’s track recordin delivering on time or goodwill creationthrough charitable initiatives, branding isessential.

Going forwardViewing the future with optimism, Liew sees

SP Setia as the biggest property player inthe next five to 10 years. Whether in termsof profitability, market capitalisation, share-holders’ funds or social contribution, he isconfident the company will be ahead of therest of the pack. To achieve this, again it allboils down to the product and the belief thatthe company can truly be the best in allit does.

For the first six months ended April 30,2003, SP Setia registered group revenue ofRM367.4 million and a pre-tax profit ofRM83.4 million. —By Sreerema Banoo

SP Setia sees quality as essential and has strived towards projects likeDuta Nusantara in Sri Hartamas (below and right)

Left: The town park at Bukit Indah, Johor, that garnered the developer accoladesfor outstanding landscaping

Above: The developer prides itself on being a pioneer in creating show villages asa marketing tool, like this one for Bukit Indah 2 in Johor

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CONTINUES ON PAGE 14

S ize is not necessarily an as-set, especially when thereare many layers of bureau-cracy that hamper a companyfrom responding quickly to

changes in the market. And for theproperty sector that calls on the de-veloper to be fleet-footed in satisfy-ing changing market trends and eco-nomic cycles, size can sometimes bea hindrance.

One property developer that hasnot let its size get the best of it —but has instead used it to its advan-tage — is IOI Properties Bhd. Andsizeable it is, with shareholders’funds of RM1.48 billion (at the closeof its financial year ended June 30,2003) and a market capitalisation ofRM2.178 billion as at Sept 16. Butdespite its size, it is still an entre-preneur-driven company, saysgroup executive director Datuk LeeYeow Chor.

Lee attributes this quality to theteam of experienced senior manag-ers — most of whom have been withthe company for an average of 10years — and a relatively flat organi-sational structure that enables the de-veloper to implement changesquickly. “When we see a trend we

IOI PROPERTIES:Maximising profitabilityDeveloper uses size and financial strength to its advantage

opment over a longer period of timelie at the heart of the company’sthrust and philosophy. The reason-ing behind this is simple: The scar-city of land, especially in the KlangValley.

In this respect, the target of thecompany then is not to sell themost number of properties but tomake the most it can from eachproperty it markets. “Our aim is notto achieve 100 per cent sales in theshortest period of time because thismeans we have not optimised theprofitability per acre of land… ouraim is to maximise profitability peracre. This is achieved through goodland use, planning and by keepingabreast of changes in the market.

“We never aim to achieve thehighest turnover but to be the mostprofitable property developer and toconsistently do so,” adds Lee. Thecompany’s earnings before interest,tax, depreciation and amortisationattest to this. In 2000, it stood atRM205.9 million while in 2001 and2002, it was RM199.6 million andRM240.7 million, respectively.

It is partly its financial strengththat sees IOI Properties ranked asone of the top three property de-

the good entrepreneurial vision ofthe company chairman,” he says ofTan Sri Lee Shin Cheng, his father.

Illustrating his point, he pointsout that back in 1989 when the com-pany decided to embark on a devel-opment at Puchong, the area did nothave the infrastructure and roadnetwork that it does today. The ad-dress too was synonymous with aworking class population. Today,much has changed. Not only isPuchong a favoured address in thesouthern Klang Valley growth corri-dor, the intervening years has seen

Lee cites the team of experienced senior managers and a relatively flat organisational structure as IOI Properties’ strengths

many developers flocking to thearea.

Lee also credits the company’ssuccess to its understanding of themarket. The senior managementadopts a hands-on approach thatsees most of them — from the chair-man to the executive director —present at almost all propertylaunches. “This allows us to hearfirst hand what the customers say...we are able to see their demeanourand know what they are looking for[in a property],” he explains of thepractice.

It is through these sessions thatthe developer is able to keep a fin-ger on the pulse of the market asit does not conduct market or fea-sibility studies, as is the norm fordevelopers.

Meanwhile, by stretching theduration of its projects, the devel-oper is also able to get a feel ofthe changing demographic profileand thus tailor its products accord-ingly.

Lee illustrates this point using itsBandar Puchong development. “In

can implement changes [quickly]…the key is speed. For example, in1998, we took six months to changethe layout and launch affordableapartments in Puchong and thuswere able to capture customers whowere wary of higher-priced units.”

Of course, size does have itsbenefits, Lee acknowledges. “Interms of financial resources, weare lucky that we do not have toborrow and we have a certainamount of resources to help usbuild the infrastructure for a town-ship as well as enable us to makequick decisions [such as] acquir-ing suitable landbanks.” Needlessto say, having the financial mus-cle also allows the developer theflexibility to stagger its launches asit can bear the holding costs, andthis in turn allows it to maximiseprofitability.

Maximising profitability and theability to sustain or stretch a devel-

velopers in the country. The EdgeRanking of Top Property Develop-ers, based on 10 quantitative andqualitative attributes, saw IOIProperties coming out in the thirdposition.

IOI Properties is involved inmixed development projects. Someof the major projects undertaken sofar include Bandar Puchong and IOIPalm Garden Resort in the Puchong-Putrajaya Corridor and Bandar PutraSenai in Johor Baru.

Finger on the pulseThe developer’s almost dogged de-termination to maximise profitabil-ity has meant that even through theboom-and-bust property cycles ofthe 1980s and late 1990s, IOI Prop-erties managed to keep its headabove water and stay profitable,says Lee. “It is because we are fo-cused on what we do… we havebeen able to identify land thanks to

Our aim is not to achieve 100 per centsales in the shortest period of timebecause this means we have notoptimised the profitability per acreof land… our aim is to maximiseprofitability per acre — Lee

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‘Practicality has to be a priority’1990, we launched compact houses with 1,400sq ft in built-up to cater to the low-incomegroup and younger couples. Thanks to thegrowing affluence of the population and big-ger families, there is a requirement for morespace [consequently the built-up for thehomes have increased],” he says.

Practicality the priority, not innovationInterestingly, while The Edge ranking ofproperty developers saw IOI Properties tak-ing the top position in terms of quantitativeattributes — comprising size of sharehold-ers’ funds, turnover, pre-tax profit, cash po-sition and gearing — the developer did notmake it to the top 10 when ranked basedon qualitative attributes alone. The qualita-tive attributes comprise product quality, im-age, value creation, expertise and innova-tion (see Page 2).

Lee is first to acknowledge that the devel-oper is not synonymous for being innovative.“I do not see us being ranked the most inno-vative developer,” he says, although the de-veloper does monitor consumer preferencesand respond to changes accordingly.

Apparently, the stance is intentional onthe part of the developer. “There has to bea limit to how innovative one can be be-cause one has to look at how practical or

durable the product is and whether it canstand the test of time. Some designs, for ex-ample, look good on the outside but are atthe expense of interior space,” he adds.

Practicality on the other hand, he empha-sises, has to be a priority.

leak… the house should work and createminimal disturbances to the owner.”

Going forwardIOI Properties traces its beginnings to 1975when it was incorporated as a private-limited

Location is important for the developer and it has been able tosecure land in strategic locations, the IOI Resort Putrajaya (top

and right) being one of them. Puchong is the site for the IOIMall (left and centre). The area initially did not have the

infrastructure and road network that it does today but hasseen many changes over the years.

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There has to be a limit to how innovative one canbe because one has to look at how practical ordurable the product is and whether it can stand thetest of time. Some designs, for example, look goodon the outside but are at the expense of interiorspace. — Lee

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Likewise the developer’s aim is not to de-liver the highest quality but rather, what Leecalls the best value for money. “Quality isoften a cliché and is misunderstood…rather, we aim for the best workmanship,”he says. In the case of a conventional 2-sto-rey terraced house, the end product shouldnot present the buyer with any problems.“The windows, for example, should not

company then known as Lam Soon Huat SdnBhd. It was converted into a public companyin 1985, changing its name to Lam Soon HuatDevelopment Bhd before assuming its presentname in December 1994.

The first project, Taman Lam Soon Huatin Kajang, was successfully completed in1977. Since then, Lam Soon Huat successfullydeveloped various other projects in the Klang

Valley, the more prominent being TamanMayang and Taman Mayang Jaya in PetalingJaya.

In 1993, as a result of a rationalisationand restructuring scheme involving LamSoon Huat and IOI Corp Bhd, the companyemerged as the property arm of IOI andchanged its name to IOI Properties Bhd tobetter reflect its new identity. IOI Proper-ties was listed on the Kuala Lumpur StockExchange in 1985.

Going forward, Lee sees the companymaintaining its “good entrepreneurial fore-sight” when acquiring land. While in the pastthis foresight has been credited to the chair-man, Lee Senior, today it is the shared respon-sibility of the senior management.

Recognising that the scarcity of land andthe high price of land mean a greater chal-lenge in maintaining the same level of profit-ability, the company will explore joint-ven-ture opportunities. “In spite of our size, wewill also have to continue to be market drivenand respond quickly,” he says adding that thedeveloper also has to be more sensitive to theincreasingly sophisticated and wide-rangingconcerns of buyers.

For the financial year ended June 30, 2003,IOI Properties registered a group revenue ofRM494.5 million and notched a pre-tax profitof RM240.3 million. — By Sreerema Banoo

FROM PAGE 12

Mcc_12n14_465.pmd 9/17/03, 11:43 PM14


K nown for its role in shaping the high-end residential enclave of BukitBandaraya in Kuala Lumpur’s eliteBangsar, Bandar Raya DevelopmentsBhd is not exactly a pure breed prop-

erty developer, many may say.Though it sits in the property sector of

the Kuala Lumpur Stock Exchange (KLSE),the group enjoys significant contributionfrom its manufacturing arm.

In 2002, subsidiary Mieco Chipboard(56.28 per cent owned) accounted for about47 per cent of the group’s turnover(RM351.5 million) and 46 per cent of itsgroup pre-tax profit of RM89.1 million. (Ofthe RM351.5 million revenue, RM50.5 mil-lion came from a one-off disposal at bookvalue of a 247-acre commercial tract inSeremban 2.)

It is no secret that Bandar Raya intendsto take Mieco Chipboard to greater heights.Two months ago, Mieco Chipboard unveiled

BANDAR RAYA: The quiet oneBangsar-based developer will channel expertise to build mid-priced homes in Johor

a RM300 million plan to expand its chip-board plant in Kuantan, an investment thatwill triple its production capacity to 940,000cu m. In the process, it will rank as one ofAsia’s three largest chipboard producers.

Besides this, Bandar Raya’s Bangsar Shop-ping Centre generates some RM25 million inyearly rental.

Bandar Raya’s official stand, however, isthat it does not expect manufacturing to over-take its property development division. Bothdivisions, CEO Datuk Jagan Sabapathy says,are core to the group with their contributionequal in percentage.

In the longer term, however, because ofenhanced earnings from new projects, theproperty division’s contributions are expectedto grow at a faster rate vis-à-vis the manufac-turing division, he says. Bandar Raya cameout fourth in The Edge Ranking of Top Prop-erty Developers.

Indeed, more exciting times are in store for

the group’s property development arm which,for one, is now paying more attention to me-dium-cost properties in the Klang Valley.

Along with many property developerswho have wised up to the potential perilsof expansive land acquisition, Bandar Rayais eyeing land boasting strategic addressesor those whose owners are keen on jointventures.

Though Bandar Raya is synonymous withexpensive Bangsar, the group is no strangerto medium-cost homes — it has been devel-oping the 1,400-acre Bandar Baru PermasJaya in Johor Baru since the late 1980s. Thefreehold township is 75 per cent built.

And the group will continue to build ex-pensive homes. Its expertise will be chan-nelled to mid-price range products, Jagansays, adding that the group’s 400 acres of un-developed land in Johor have been earmarkedfor the purpose.

Bandar Raya turns 40 next year and has

been listed on the KLSE since 1968. Thecompany is relatively low-key so, when anew prospective controlling shareholdershowed up 18 months ago, both the corpo-rate and building fraternities, sat up andtook notice.

Datuk Mohamed Moiz J M Ali Moiz hadproposed to buy, through Ambang Sehati SdnBhd, a controlling stake of 32.75 per cent inthe company from Multi-Purpose HoldingsBhd (MPHB) at RM2.25 per share (the mar-ket price at the time was RM1.80). The dealwas completed last October.

Mohamed Moiz is no stranger in the cor-porate arena. He first emerged in the lime-light in 1999 when his privately held Effec-tive Capital Sdn Bhd was tasked to ensurethe orderly migration of shares of Malaysiancompanies that were frozen on Singapore-based Central Limit Order Book (CLOB).

He is the nephew of Akbar Khan AliKhan, a low-profile businessman instrumen-

Bandar Raya has established a solid reputation for its condominiums like (clockwise from above) Sri Penaga, Tivoli Villas andBangsar Puteri

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tal in helping Dr Chan ChinCheung restructure the MPHBgroup after the group’s substantialshareholder Datuk Lim Thian Kiatexited in 1999.

Despite the change at the top,there has been no change to BandarRaya’s philosophy, which is to buildquality developments, and createenvied communities and a vision forthe future, Jagan stresses, addingthat Mohamed Moiz is a firm be-liever in creativity and innovation.“We’ve got a good history and weare in the pink of health. Our goal isto raise the benchmark and set astandard in the industry.”

Bandar Raya was incorporatedas a private-limited company in1964, converted into a public-lim-ited company and then listed on theKLSE in1968.

Its shareholders’ funds stand ata strong RM1.3 billion with a lowdebt ratio, an enviable position thatJagan attributes to the group’s abil-ity to take advantage of the goodtimes and ride out the bad. “Wedon’t make a lot of noise, we’re thequiet boys and we let our products,such as Tivoli Villas and our newprojects Palmyra Bangsar andBangsar Hill, speak for them-selves.”

Calling Bandar Raya “quiet” isprobably an understatement; itsslow-and-steady plus diversifiedroute is mirrored in its activities.For years, it has confined itself toits “home base” in Bukit Bandarayawhere it has established a solidreputation for its condominiums(like Sri Penaga, Tivoli Villas,Bangsar Puteri), commercial prop-erties and landed homes.

Last year, the group unveiledPalmyra Bangsar and Bangsar Hillthat are being developed on whatare probably the few remainingpockets of prime land in Bukit Ban-daraya.

The 11-acre Bangsar Hill projectoffers exclusive gated communityliving with 31 resort-style bunga-lows. Palmyra Bangsar offers 60luxury and spacious apartmentunits, each of which comes withthree parking bays.

In all, the group sold 58 homeslast year, all of these in Bukit Ban-daraya. Though minimal, it is a sig-nificant jump from the 17 units(seven condo units in Bangsar and10 houses at Taman Serdang Raya,Seri Kembangan) sold in 2001.

Besides selling the 58 homes,the group sold its 247 acres of com-mercial land in Seremban 2 NewTownship in Negri Sembilan lastOctober for RM50.5 million.

The decision to cash out, Jaganexplains, was prompted by changesin the development plan of theSeremban 2 New Township as wellas the development of neighbour-ing Seremban 3.

Meanwhile, market conditionshave forced the group to put on hold

plans for a mixed-development pro-ject on a 100-acre tract in Rawang,Selangor.

Three-pronged approachOn the group’s philosophy, Jagansays it has its sight on three aspectsof the business — to be forward-looking; to generate greater returnsfor shareholders; and to look afterthe well-being of its staff.

“I’d like to think [the] productsof Bandar Raya so far have been in-novative, enduring and of goodvalue. In fact, we’re moving nowtowards creating stylish yet sexyproducts such as Palmyra Bangsar.What we are trying to do is to de-liver products that reflect trends tocome,” offers Jagan, adding that re-search shows that Malaysians arenow more affluent, and demandmore space, comfort, greenery andconveniences in their homes.

Last year, the group paid outsome RM3.43 million in dividends,a sharp drop from the RM5.15 mil-lion in 2001 and RM8.58 million in2000. Jagan attributes the decline toan overall difficult operating envi-ronment in the property sector andBandar Raya’s servicing outstandingloans plus a desire to strengthen itscash position (which totals RM208.8million as at Dec 31, 2002).

Bandar Raya, Jagan assures, isworking towards improving share-holder value. This is being done byexpanding sustainable profitabilitythrough strategic land acquisitionsand growing its manufacturing op-erations.

On its human resources, thegroup believes in attracting new tal-ent while retaining the existing andexperienced employees whom itconsiders its assets. This is to en-sure that the group has the requiredresources to achieve its goals ofgrowth.

One person who has beenaround for a long time is sales man-ager Vera Lee, 52. Bandar Raya hasbeen her employer for 28 years —she joined the company at the ageof 24 in 1975 as a telephone opera-tor-cum-receptionist-cum-typistclerk before rising to her position.

The competitionJagan does not argue that size doesmatter when it comes to boostingcompetitive edge. He is referring tothe huge landbank that plantation-based developers like Sime UEP De-velopment Sdn Bhd, Golden HopePlantations Bhd, IOI Properties Bhdand Guthrie Property DevelopmentHoldings Sdn Bhd have.

So what is the recourse? “Wecapitalise on what we have by of-fering the right product with theright quality and pricing. For exam-ple, our 10 acres of undevelopedland in Bangsar will probably yieldRM500 million to RM600 million insales.”

For now, Bandar Raya’s land-

bank, totalling 851 acres and withan estimated gross developmentvalue of RM4.5 billion, will keep thegroup busy for the next seven to 10years.

They are in the heart of KL (13acres around Capital Square),Bangsar (20 acres), Jalan Duta (sixacres), Mont’Kiara (12 acres),Permas Jaya (300 acres), Rawang(100 acres) and Johor (400 acres).

As land prices rise, space plan-ning becomes more pertinent and thethrust is reflected in Bandar Raya’sproduct design. In Palmyra Bangsar,for instance, the design maximisesspace usage both internally and ex-ternally.

Ties with BangsarLest anyone think that Bandar Rayalooks set to soon disassociate itself

with Bangsar, they couldn’t be fur-ther away from the truth. The grouphas been in Bangsar for over threedecades and will, Jagan stresses,continue to have a presence there.

Its pockets of landbank in Bang-sar add up to about 20 acres and fornow, it is looking at developing of-fices and apartments on a 10-acreplot behind the Bangsar ShoppingCentre (BSC).

BSC accounts for 94 per cent ofthe group’s gross rental income. Af-ter a major refurbishment and ret-rofitting exercise and a new tenantmix, it has been able to enjoy nearfull occupancy.

Promotional activities like Fri-day night traditional cultural per-formances, the popular SaturdayInternational Bazaar and SundayJazz Fiesta continue to attract pa- E

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We don’t make a lot of noise, we’re the quiet boys and we let ourproducts, such as Tivoli Villas and our new projects PalmyraBangsar and Bangsar Hill, speak for themselves — Jagan

trons and shoppers.The group also intends to re-

sume development of the CapitalSquare project next year. BandarRaya has already invested RM300million in the 13-acre project whichground to a halt in 1998 during therecession.

Confident the project will dowell, the developer says the designwill be changed to render the prod-ucts more palatable to the market.While the initial plan was to goheavy into retail, the thrust now isinto building smaller, signature of-fices which will add up to about50,000 sq ft, 150,000 sq ft of retailspace and about 150 apartmentunits.

Rest assured that the market willhear more of Bandar Raya the devel-oper. — By Hazatul Syima Haron

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MK Land in for the long haul

I n just three years, MK Land Holdings Bhdhas more than stamped its mark on thelocal property development scene. Andgoing by the philosophy-backed vision ofthe group’s founding duo Tan Sri

Mustapha Kamal Abu Bakar and Datuk P Kasi,the market is definitely going to hear more ofthe group.

It was a Sunday afternoon when City &Country caught up with MK Land executivechairman Mustapha Kamal and his long-timebusiness partner Kasi, the executive director,at the group’s headquarters in its flagship de-velopment of Damansara Perdana, Selangor.

While MK Land may be “young”, those driv-ing the group are no new kids on the block.Between them, Mustapha Kamal and Kasi have49 years of experience in property develop-ment. MK Land came out fifth in The EdgeRanking of Top Property Developers.

Mustapha Kamal has this to say of thegroup: “It would be wrong for me to say weare just a property developer. In reality, weare in the business of selling promises to ourcustomers. It is our job to fulfil the promiseby delivering the properties based on what wehave promised in terms of quality, timelinessand service. “

The statement effectively encapsulates thevision Mustapha Kamal and Kasi have etchedout for MK Land. Their goal: That MK Landranks, not far from now, as the market’s firstchoice developer in terms of both quality prod-ucts and services; achieves a market capitali-sation of RM6 billion by June 2007; and be-comes one of Malaysia’s top 15 public-listedcompanies.

There is no mistake that MK Land has cov-ered a lot of ground since it appeared on theradar screens of investors in 1999 following areverse takeover of Perfect Food IndustriesBhd, a company with a mere paid-up capital

Relatively young developer aims to become property supermarket

of RM19.9 million and was then listed on theKuala Lumpur Stock Exchange (KLSE) Sec-ond Board.

Later that year, the group acquired threemajor projects from the Emkay group headedby Mustapha Kamal — Damansara Damai,Taman Bunga Raya and Bukit Merah Lake-town Resort — for RM603.5 million througha share swap.

With that strategic move, the group’s paid-up capital ballooned to RM1.174 billion, thuspaving its way onto the KLSE Main Board.Today, MK Land boasts a market capitalisa-tion of some RM2.3 billion, or just about athird of its target of RM6 billion which it hasset for four years from now.

The working pairThe Mustapha Kamal-Kasi pair controls MKLand, owning 55.26 per cent and 29.39 percent equity stake, respectively. The KLSE,however, requires their combined interest of84.65 per cent to be trimmed to 75 per centby the end of this year.

A common interest in MK Land is not theonly thread that binds the duo. Rather, this isone “marriage” that has been tried and testedover the years. Mustapha Kamal, 53, first metKasi, 44, in the early 1980s. Though he startedhis career as a civil servant, in 1977 MustaphaKamal became the managing director of ShahAlam Properties Sdn Bhd (SAP). Six yearslater, in 1983, he went on to form the Emkaygroup to venture into property developmenton his own.

It was in 1980 that Mustapha Kamal firstmet Kasi who was then an assistant architectat a private firm. Kasi subsequently lecturedat Institut Teknologi Mara before he startedhis own practice in 1985. It was in 1992 whenthe duo joined forces. Their first project to-gether: the 1,600-acre Bukit Merah Laketown

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in northern Perak.Those familiar with the pair say Mustapha

Kamal, with his “people’s touch”, sets the di-rection and policies while Kasi labours over theplanning as well as the financials, such as cost-ing. So, if on the surface, they differ signifi-cantly in style and mannerism, they have man-aged to successfully complement each other.

This year’s results best everMK Land has not disappointed in its latest re-sults. For the year ended June 30, 2003, thegroup netted a significantly higher pre-taxprofit of RM255.4 million. This is more thana 40 per cent jump from the RM177.2 million(annualised) for the previous correspondingperiod. (The group had changed its financialyear-end calendar from Dec 31 to June 30.)

The improved performance had come on

the back of a 20 per cent higher group turno-ver of RM860.8 million, against the RM718.2million annualised for 2002.

Significant contributors to the better set ofresults are the Damansara Perdana, DamansaraDamai and Cyberia projects. DamansaraPerdana topped with RM303 million in sales,followed by Damansara Damai (RM105 mil-lion) and Cyberia (RM102 million).

In fact, 2003 is the best ever year for MKLand.

The 750-acre Damansara Perdana, whichwill have a gross development value of RM8.1billion, is now 25 per cent developed and isexpected to be completed in eight years. Themake-up of the township, strategically situatedin a fast-growing address in Damansara, mir-rors MK Land’s move from affordable homesinto the higher-end market. This is in line withthe developer’s desire to be known as a builderof medium- to high-cost properties.

The township has, so far, gone down wellwith the market and the developer is optimis-tic that the good reception will continue in itsforthcoming launches.

Growing from strength to strengthWhile property development will no doubtremain the group’s bread and butter,Mustapha Kamal and Kasi see a need to di-versify, within the context of the property sec-tor, its income stream. Recurrent income fromproperty investment is definitely going to getmore attention.

With a staff strength of over 1,700, thegroup is now into property development ac-tivities and investment with its interestsstretching from the resort type (Bukit MerahLaketown, Langkawi Lagoon and TaipingGolf Resort projects) to affordable housing(Damansara Damai in Selangor and TamanDamansara Perdana in Selangor is MK Land’s flagship

project

Those familiar with MK Land’s founding duo say Mustapha Kamal (left) sets thedirection and policies while Kasi labours over the planning and financials.

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From left: Among MK Land’s interests are resort-type developments like the Bukit Merah Laketown project. Damansara Damai was one of three major projects thedeveloper acquired from Emkay.

SUNRISE: Delivering on quality andcustomer service

S unrise Bhd chief executive officerDatuk Michael Yam has a hearten-ing story to tell when elucidating thecompany’s thrust on quality andcustomer service. The story, in a

nutshell, is how a long serving employeewanted to leave the company following histransfer to another site. The employee’s de-cision to leave was not so much because hewas unhappy about the transfer but that thenew site was not of the same standard interms of quality and customer service em-ployed. Yam believes the story captures thepriority placed on quality and customerservice shared by all employees and showsthat on these two attributes Sunrise has in-deed “arrived”.

To say that the developer — synonymousfor its condominiums in Mont’Kiara, KualaLumpur — is focused on quality and cus-tomer service is an understatement. “It is thebasic principle in the survival of a company,”he says, noting that what many developersfail to realise is their existence in the serv-ices industry.

Beyond merely selling homes, Sunrise ac-cording to Yam, sells a lifestyle. “In a sense,there is even a snob value attached to theproduct as it has to meet the most sophisti-cated needs,” he says of the buyer profile

that is not only well travelled but also welleducated and will not settle for second best.

Customer service that includes aspectssuch as property management is equally im-portant to the developer. Ask any propertyobserver and his first reference to Sunrise andits developments in Mont’Kiara would be thehigh standard of property management. Thistrait has not only served to translate into en-viable capital appreciation and high yields —of more than 12 per cent a year — and, natu-rally, repeat buyers.

Testifying to the latter is the response toits latest development Mont’Kiara Aman con-dominiums that has notched sales of 60 percent. Of the buyers, 60 per cent are repeatcustomers, 25 per cent referred buyers andthe remaining 15 per cent new investors.These statistics are telling as Sunrise’s previ-ous developments had registered on average40 per cent and 30 per cent, respectively, re-peat and referred and new buyers.

The developer’s strengths in terms of qual-ity and customer service were also affirmedby the results of The Edge Ranking of Top Pro-perty Developers. Sunrise is tops in terms ofqualitative attributes and ninth overall top per-former. These attributes include product qual-ity, value creation for buyers, innovation

CONTINUES PAGE 20 Yam: Sunrise products have to meet the most sophisticated needs

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Company has made these two points a priority

Bunga Raya in Bukit Beruntung as well asupmarket brands like Damansara Perdana inSelangor and Cyberia.

Though not a plantation-backed group, itboasts a sizeable landbank of 5,500 acres —all of which have been approved for develop-ment. Of these, 630 acres bear the KL-PetalingJaya address. If plans unfold as scheduled, theentire landbank will be developed in the next15 years, reaping potential gross developmentvalue of RM18.6 billion.

Away from property development, MKLand manufactures the popular “Julie’s”brand of biscuits. However, at press time thegroup is in negotiations to cash out in orderto concentrate on property development andrelated activities. The move is despite the factthat the manufacturing arm did well last year.For the 18 months to June 2002, the subsidi-ary suffered a loss of RM1.47 million. But forthe 12 months ended June 2003, it posted apre-tax profit of RM2.7 million.

Says Mustapha Kamal: “We are lookinginto various sustainable projects that willbring in stable and recurring income like prop-erty investment, rental of commercial proper-ties and construction activities such as build-ing highways and other infrastructures.”

The move makes sense. This would be inaddition to the group’s new conviction thatfocusing on building affordable homes in greatvolume, as it once did, is not quite enough toget it to where it aspires.

So, moving with the times, MK Land hassince shifted to building a basket of productsthat range from low-, medium- to high-costproperties. In short, MK Land aspires to be-come a “property supermarket”. By this, Kasiexplains, it simply means that the group is ableto develop any type of property, be it low orhigh-end housing to hotels or resorts. After all,the group has proven that it is able to “movefrom one area to another” — it has a presencein Kedah and Perak besides Selangor.

Mustapha sees in MK Land one organi-

sation where the learning process neverstops. Rather, the group will continue toevolve and gather skills and expertise sothat it can stay innovative in both productdesigns and concepts.

What also matters is the group’s strongbusiness planning culture. Specific targets areset and standard operating procedures havebeen put in place, with emphasis on priori-ties and decision-making based on the visionset. An example of this would be to quit chas-ing a prospective land buy if the price isdeemed too high.

Competent staffBusinesses are all about systems and people,and this is recognised by both MustaphaKamal and Kasi. Thus the group’s mantra:People manage systems which in turn provide“know why and know how”. Systems thenproduce the business and profit.

The group’s philosophy is also abouttraining, training and retraining for its staff.

The general idea, explains Mustapha, is tohave on board knowledgeable staff. But be-ing knowledgeable alone is not quiteenough. Staff must have five consistent cha-racteristics — trustworthiness, competence,loyalty, open-mindedness and integrity. Inreciprocation, the group invests in the staff’swelfare, which includes the provision ofsporting facilities and kindergartens, amongother things.

The group also has in place a performance-based reward system. Staff are given a target,budget, authority and general duties list sothat they know and understand what is ex-pected of them. If the target is achieved, theywill be rewarded accordingly, otherwise, theywill be sent for further training, says MustaphaKamal, who adds that it is not the company’sculture to lay off staff.

To his mind, the achievement of thegroup is a sum total of the effort made bythe individuals, the teams and the manage-ment.

“The sum total of the individuals willmake or break the teams. The sum total ofthe teams will make or break the manage-ment. The sum total of the managementwill make or break MK Land.”

One way to prevent what Mustapha calls“cracks in the group’s makeup” is to conductpractical tests to ensure its staff have the ex-pertise demanded. For example, a clerk ofworks may administer a simple practical testto see if the construction workers know theproper way to mix cement.

Going forwardQuality is a key word in MK Land. As summedup by Mustapha Kamal, the group intends tobe a long-term player. “Short-term gain is notour aim.” — By Hazatul Syima Haron E

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Building upon the brandFROM PAGE 19

and creativity, image and expertise.Sunrise is no stranger to acco-

lades, having received the first,third and fourth prizes in the 2002Kuala Lumpur City Hall LandscapeCompetition (Condominium andCommercial Category) and Fiabci(The International Real Estate Fed-eration) Malaysia award of distinc-tion in 2001 and 1997 for residen-tial development. The company ob-tained MS ISO 9002:1994 certifica-tion for condominium developmentin 1994 — the first and only suchaward granted in the country. It wassubsequently upgraded in March toMS ISO 9001:2000 certification fordesign and development of condo-miniums.

Building on core strengthsYam has been at the helm since1997 and he attributes the develop-er’s ability to maintain high stand-ards on quality and service to itscore strengths — intellectual capi-tal, organisational capital, thirdparty relationship capital and hu-man capital.

Take property management. Be-ing competent and providing highlevel property management servicesentails finding the right people forthe job followed by having the rightsystems in place that in turn are ad-hered to. In terms of third-party re-lationship, the developer also capi-talises on its good relations withsuppliers, vendors and contractorsto get things done quickly.

It is indeed a credit to the prop-erty management standards that see

values of properties in its stablegrowing. The Edge/Regroup Associ-ates Klang Valley Housing PropertyMonitor (March-June 2003) seesprices at Mont’Kiara Pines (Sun-rise’s first condominium in Mont’-Kiara) of RM308 psf — 14 per centhigher than the corresponding pe-riod in 2001. Similarly, prices atMont’Kiara Sophia seem to havereached new highs at RM460 psf inthat quarter — an 18 per cent ap-preciation from the correspondingquarter in 2001. Market sources saya 2,000 sq ft unit at Mont’KiaraSophia was recently sold at RM600psf.

Besides quality and customerservice, equally important to thecompany is the ability to be innova-tive. “When our buyers [and pro-spective buyers] go to first-worldcountries, they see innovation andexpect the same here,” Yam says.So, what the company does is tem-per such innovation to suit the localenvironment.

“For example, does everythingthat is electronically operated offerthe best service? I say ‘no’ becausethis may be applicable in developedcountries where labour costs arehigh but here we can have both,”he says of the use of security accesscards into the properties as well asthe employ of guards at the lobbyand entrance to the property.

Key to brandingYam recognises that branding is notachieved overnight and requires theright ingredients. On top of that, hav-ing a recognised and respected brand

should not be the be all and end alleither. The brand name must be builtupon and must be consistent.

Now in its 35th year, Sunrise wasincorporated in 1968 as a private-limited company and was convertedinto a public-limited company in1993, and changed its name to itspresent form. It was listed on theMain Board of the Kuala LumpurStock Exchange in 1996. The com-pany’s founder, Datuk Alan Tong,sold his entire stake in the companyin 1997.

Nevertheless, property market

pointed CEO in 1997. “We had toswitch from a singular approach toa teamwork approach,” he recalls,reiterating the importance of a com-pany driven by a team rather thanone personality.

Still, the going has not beensmooth from the start, what with thefinancial crisis hitting the region afew months after Yam took over thereins of the company. Besides tightcredit and high mortgage rates, hewas also faced with visibly shakenconsumer confidence and generalfear and uncertainty.

company’s landbank in the area nowstands at 60 acres. On top of this, thedeveloper is also negotiating withlandowners in the area to enter intojoint-venture developments.

“We will continue to look forland in prime locations, even rela-tively tight sites as our track recordhas proven that we are able to cre-ate quality lifestyle products even onsmall parcels,” he says. The devel-oper is also on the lookout for landin Penang.

While the developer’s image isvery much that of a condominiumdeveloper, Yam does not see this asa handicap. The key when diversi-fying its product is ensuring that itscore competencies are carriedthrough.

Besides ongoing developments inMont’Kiara, the developer also hasa 480-acre freehold development inSeremban — Seremban ForestHeights. Launched in April 2001, thefirst phase comprising 115 units of2-storey terraced houses has beenfully sold. Conceding that exportingthe brand name is not easy and pro-spective buyers need convincing,Yam says it was only when the con-struction reached the roof level thatsales took off.

In the next six months, Sunriseexpects to offer more bungalow lotdevelopments in Mont’Kiara, Se-puteh and Seremban Forest Heights.For the financial year ended June30 2003, Sunrise’s group revenuerose by 5.0 per cent from RM166million to RM174.2 million. Grosssales, meanwhile, stood at RM531million. — By Sreerema Banoo E

Developments in Mont’Kiara like Plaza Mont’Kiara have made the company synonymous with this address

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Sunrise is no stranger to accolades,having received prizes in the 2002Kuala Lumpur City Hall LandscapeCompetition and Fiabci Malaysia awardof distinction in 2001 and 1997 forresidential development

observers maintain there still existsa perception that equates Sunrise toits founder Tong. On this, Yam takesa philosophical view, equating Tongto the “first runner in a relay racethat has passed on the baton to thenext runner”.

“He [Tong] established the com-pany’s core values… but going for-ward, the company has to be drivenby teamwork,” Yam says. In fact,this was one of the first things un-dertaken by Yam when he was ap-

“Before we could even map outthe direction for the future, the bighurricane came… attention was onconsolidating and whether companycould hold itself,” he says of thatchallenging period.

The way aheadGoing forward, Yam sees the com-pany maintaining its presence inMont’Kiara. “Mont’Kiara will be ouranchor for the next seven to eightyears,” he says, disclosing that the

Mcc_20_465.pmd 9/17/03, 11:53 PM20

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