Small can be beautiful

  • Business
  • Saturday, 18 May 2019

Good potential: Woon says the 15 acres hold great potential because of its location near the Bandar Ainsdale toll.

AT the height of the property market surge, Jane quit her marketing position to team up with friends to build a high-rise residential project.

In her previous job in a property development company, she saw how buyers queue up the night before the launch to select their units.

The sales gallery would be milling with people on the launch day. It was an all-day long party which continued into the next day. Everybody was happy – the buyers, their panel of bankers and the developer.

Come 2014, the slowdown in the property market began.

This is the sixth year of that slowdown. But just as Jane, a newcomer to the property development sector, bemoans her fate, there are other small unlisted companies which are prepared to take the plunge even in a weak market.

WB Land Sdn Bhd general manager Kevin Woon says the company is building Frontiercity @ Bandar Ainsdale, near Seremban.

WB is short for Woon Brothers and the company has about 100 employees.

Their first project is Frontier Industrial Park in Desa Cemerlang, Johor – a joint-venture development with Singapore-listed CSC Holdings Ltd and Triplestar Holdings Pte Ltd, both of which are Singapore-based.

Commercial project Frontiercity @ Bandar Ainsdale is WB Land’s second project. The company bought 15 acres near Seremban from the Sime Darby group in 2017, almost three years into the slowdown.


As of March 2019, 90% of the groundwork had been completed.

“We chose Negri Sembilan because we see so much potential in this piece of land. It is located beside the Bandar Ainsdale toll along the North South Expressway.

“We considered the road infrastructure in the surroundings. Whether they are leaving or entering Bandar Ainsdale, they have to pass by this parcel we are developing,” said Woon, whose father is one of the founding brothers of WB Land.

Frontiercity @ Bandar Ainsdale is divided into quadrants with an enrichment centre being the focal point of the development. Above it will be a sports centre that can accommodate 10 badminton courts.

There will be 133 units of two-storey retail shop and about 800 car parking bays on that 15 acres.

Already, WB Land is reaching out to operators to have a presence there.

“Whether the market is good or bad, if you have a good product, it will be sustainable. WB Land always looks at the viability of the project from the perspective of the end-user. “We have our own project manager and supervisors. What is important is project management. It is important to keep all these (expertise) in-house. The actual execution is sub-contracted out,” he says.

As part of its market research, WB Land took up space in two adjoining shoplots, removing the dividing wall to have a sales gallery in one and a cafe in the other.

“We want to do things differently. We noticed that cafe customers would walk over to check out the retail model of our development.

“So they become the subject of our survey to help us plan our trade mix in our development,” says Woon.

He says the company would like to build in the Klang Valley but it has to be cautious.

Small through the decades

Another boutique developer who chose to remain small through three decades of property development says there are two fundamental features of the property market many fail to see.

The source, who was trained as a valuer before venturing into property development, has an ongoing landed residential project in Cheras, Kuala Lumpur.

Known as Tiara Hills, it comprises more than 100 units of semi-detached and linked units. It has a gross development value of RM300mil.

The company bought the land in 2013 when land prices were high. It then sub-divided and surrendered the land for infrastructure. The semi-detached units are fully sold, while the linked units are 70% sold. Had it been a good market, all would have been sold, he said.

The first fundamental issue is... the property market is subject to cycles.

“Previously, the slowdown tended to last two to three years. The current one is longer.

“Secondly, although it is known as the property market, it is actually a series of sub-markets comprising residential, industrial, commercial, strata projects, lower and middle end segments and so on. One segment may do well, while another may not.

He continues: “In a way, it is like the share market but it is not the share market. In the equity market, there are many shares from different sectors. The financial sector may do well, but another sector may not. Likewise, one sector may do well in the property sector, but others may not. So that is a fundamental point,” he said.The other important issue in the property market – as in the stock market – is the herd mentality.

He recalls Malaysia’s super bull run between 1993 and 1996. The FBM KLCI rose steadily after the 1986 recession and by the end of 1996, stock prices peaked. The Asian Financial Crisis came in 1997.

When all and sundry – from housewives to students – begin to buy stocks and apply for initial public offerings (IPOs), that’s a red flag.

Likewise in the property market. Some years before the 1997/98 crisis, listed companies from different sectors entered the property development business.

The source says the sector attracts listed companies as well as other brave souls like Jane because they thought they have identified a niche.

He elaborates: “The overall property market may be weak but a small developer may decide to take the plunge in a downmarket because they have identified local demand.

“Small developers do not build township because the upfront infrastructure cost is high. So the small niche developer goes into an existing township or area to make its mark there,” he says.

Property margins

Property development, says the source, also attracts quite a lot of contractors, although property development is different from the construction business.

“Contractors, having undertaken jobs from developers, may be unhappy with their margins. They think the developer is having better margins and so they want a bit of that. So the grass always seems greener on the other side.

“They will be profitable if they are able to identify the correct market.

Many enter the business because they think there are lots of money to be made from property development. But there are two elements to that profit.

First, as a developer, there is the profit he makes, the fruits of his effort and the risk he takes.But the bigger element is the appreciation of the land while the developer is in the process of building on it. Of course, there can be a depreciation too. So, it is the land-holding element which makes money, the source said.

To many who have entered the sector, it is just another business, the source said.

But there is also that theoretical aspect to this sector which must be viewed holistically from the customer’s perspective.

“You are an agent of change (in their lives),” the source said.

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