Identifying a niche market

This article first appeared in City & Country, The Edge Malaysia Weekly, on November 6, 2017 - November 12, 2017.

We have to do a market study on how many projects are coming onto the scene. From there, we can plan our strategy.” — Kong

UOA Development alternate director Stephanie Kong (third from left) with The Edge Media Group publisher and group CEO Ho Kay Tat, president of the Malaysia-China Business Council and prime minister’s special envoy to China Tan Sri Ong Ka Ting, EdgeProp.my managing director and editor-in-chief Au Foong Yee and City & Country editor Rosalynn Poh

The Sphere is a lifestyle hub that will offer F&B outlets and supermarkets

The Bandar Tun Razak development will feature multi-generational homes that are elderly friendly

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No. 6 – UOA Development Bhd

Upon stepping into The Straits Estate — one of the food and beverage outlets in UOA Development Bhd’s V E Hotel & Residence in Bangsar South — we are warmly greeted by the company’s managing director, C S Kong. He is bursting with energy, his cheerful mood not in the least bit affected by the rainy morning.

Kong could not be more pleased because UOA Development has been ranked among the top 10 in The Edge Malaysia Top Property Developers Awards for the fourth year, after appearing on the list in 2013, 2015 and 2016.

Since its inception in 1987, UOA Development has established a track record for completing and delivering its residential and commercial projects on time. One of its most notable and noticeable developments is Bangsar South City in Kuala Lumpur.

UOA Development strives to develop and invest in properties, products and services that are consistent with the community, environment and government requirements, says Kong. Not surprisingly, this year marks the developer’s maiden venture in affordable housing, which will be located in Selayang, Selangor.

“The government encourages developers to build affordable homes and do their social duty to the country. We definitely support this, which is why we ventured into the segment. We have received more than 300 registrations so far and we are waiting to see how many qualify,” says Kong.

On the company’s growth for the next 12 months, Kong says he can only hope for the best as the Malaysian property market is going through some tough times. “We hope we can maintain last year’s results but in view of market sentiments, I think it is unlikely. We won’t even know this year’s results until March next year. At this juncture, we can only try our best to achieve whatever we can.”

Other than affordable housing, UOA Development also has a number of ongoing and upcoming projects, and since last year, it has made big plans for its hospitality division.

In the interview below, Kong talks to City & Country about the company’s developments and its plans for the future.

City & Country: What is your strategy to grow your company in the current soft market?

C S Kong: We have to pay more attention and do a market study on how many projects are coming onto the scene. From there, we can plan our strategy. There are quite a number of projects coming up and from what we know, it is very alarming. In the past, the projects had bigger units but now, the units are getting smaller. In Singapore, at one time, the same thing happened. I think that is what the Malaysian developers are doing now.

But there might be too many small-unit projects now and I am not sure whether the market will be able to absorb them. We have to do an in-depth study on this because anything that is oversupplied is always scary.

Please tell us more about your upcoming projects

We have a list of upcoming projects and for the interest of the readers, I would like to talk about South Link. South Link is a high-rise development in Bangsar South with over 1,400 units; it is a smaller type of housing.

We find that in this location, there is demand for this kind of project because of the rental market. Bangsar South, being a commercial hot spot, sees many young people, particularly expatriates, working around here and they need accommodation. Moreover, we have signed a memorandum of understanding with government agency Malaysia Digital Economy Corp to set up a digital and games hub in Bangsar South.

So, we feel there is a market for such a project. We will try to launch it by the end of this year so that it will help us show good results next year.

UOA Development is focused on Bangsar South. Is there any reason why?

It is because we have created an ‘integrated city’, where there is infrastructure and amenities for the convenience of the people who live and work here. It is a self-sufficient place and it took almost 10 years to create that sort of ambience and atmosphere. To me, ambience is having plenty of space and greenery.

We were supposed to build a shopping complex that would have created a few hundred million ringgit for us. But we felt that it would destroy the ambience and so we decided to forgo the gross development value and aborted the plan.

The food outlets here are doing well and we notice more people are coming here for lunch. We have created that sort of atmosphere and we feel that we should continue to do so. So, instead of the shopping complex, we are building a lifestyle hub called The Sphere, which is about 75% complete. It will comprise F&B outlets, a supermarket and convenience stores. We also hope it will become a place for young people to mingle.

What is the progress of your Jalan Ipoh project?

The components will, more or less, be similar to those of Bangsar South City — things to make a city work. We learnt a lot from Bangsar South City, making some mistakes along the way, and now, we want to make things better with the Jalan Ipoh project by transforming it into a hot spot to invest in and stay.

This is a 30-acre parcel, half the size of Bangsar South, and it is in the proposal stage right now. It is going to be very exciting and we are planning to unveil the project in 2019.

As this is the digital age, we are looking into making the place suitable for the new generation to live, work and shop in. We are working with an international architect to come up with a proposal.

There is an MRT station adjoining this piece of land and we want to capitalise on public transport and see how to benefit the people living there. We are consulting with a Japanese company on the concept.

For this project, we have put in quite a fair bit of money and so far, we have not got any returns. Yet I think it is worthwhile to plan for the next generation.

Is there any update on the Bandar Tun Razak project?

A lot of people in Malaysia have been talking about aged care but no one has really done it on a large scale. Compared with Australia, Taiwan and Japan, we are lagging far behind … I think Japan is very advanced in this.

This is a market that people can explore and that’s what we are doing right now but not much on aged care. Rather, it is on providing the space and convenience, a multi-generational home that is elderly friendly.

It will be a one-level home with sliding doors and wheelchair-friendly toilets. People with elderly parents can stay there and if any of the family members falls down and is wheelchair-bound, they can still use the place because everything is so elderly friendly. Some units will have dual keys and there will be a park next to the project. There will also be medical centres nearby that are open 24 hours.

We don’t want to call it an old folks’ home or aged care home. We call it a multi-generational home because the young and the elderly can live there together. It also caters for retired people. The market now is not mature enough for a development that caters purely for elderly people.

Last year, the company diversified into hospitality. How is it doing so far?

We are quite satisfied and we are going to expand it. One of the upcoming projects that we have is South Point — a 630-room hotel with a lot of space for conventions.

From what our two hotels are indicating, occupancy rates are high at 70% with good feedback from customers. They are surprised that there is such a good quality hotel in this area.

We are also seeing good returns on the convention and function rooms. So, we feel it is a good direction for us to go in hospitality. We may build more hotels beside the one that I mentioned just now.

We have plans to go overseas and set up a hospitality real estate investment trust (REIT) in maybe five years. This is the direction we are headed for.

What are your plans for the future?

Our plan is to identify a niche market and see what is lacking or in demand in the market now. For example, hotels … we are doing it but we also have to identify what is lacking in this industry. What we see lacking are hotels with smaller rooms, conveniently located and with attractive pricing. It is the same when it comes to building residences, retail outlets or shopping malls.

These are the things I think of when I look at the future — something that the market needs but doesn’t have. Then we would become a pioneer. This is the idea for the company to go towards in this market.