Knight Frank Malaysia charts a new course

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THE new year has seen not just a change in leadership for Knight Frank Malaysia Sdn Bhd, which was formerly known as Ooi & Zaharin Sdn Bhd, but also a new direction by being a newly minted member of the international real estate service provider Knight Frank LLP (Knight Frank).

Following the promotion of former executive director Sarkunan Subramaniam to managing director and former managing director Eric Ooi to chairman, the firm was elevated from licensee to full-fledged member of the Knight Frank family after the international advisory, via its subsidiary Knight Frank Asia Pacific Pte Ltd, acquired an undisclosed stake in the company.

"With the liberalisation of the service industry, the Ministry of International Trade and Industry has invited property service companies to open up and allow foreign participation in the equity of local practices, which will help in building their capacity and enlarging their knowledge base.

"In line with that, and also because we have had a licence agreement with Knight Frank for a decade, they wanted to buy into our firm and we have allowed them to come in as partners of the firm. So that is the thrust of our story — we are no longer just a licensee," says Sarkunan, who usually goes by Sarky.

Along with Knight Frank Malaysia’s new status, Sarkunan was invited to join the board of Knight Frank Asia Pacific Pte Ltd and represent Malaysia, the fourth Asia-Pacific country to be represented on the board after Australia, Hong Kong and Singapore.

"When you join the board, you are not just representing your country but also the whole Asia-Pacific business, so it shows the confidence they have in us, and they perceive Malaysia to be a very important part of their entire operations," he says.

"We believe in change. As I mentioned in my speech during our 10th anniversary dinner last year, it’s an important value we hold. Even the change in managing director is important because that is the only way our company can grow. That is the only way to be at the forefront of the business. We need new blood and new ideas," Ooi tells City & Country.

Sarkunan offers an example, which he says is very much a technology-driven solution. "I went to look at a piece of land. You know in the old days, we had to use a survey sheet and measure the connecting distance from the road, check the directions according to the sun. But now, we use the GPS on our smartphones, it’s so easy. The boys use GPS and Google Earth, and then tell us, 'Boss, this is the site’. It’s incredible."

In addition to adopting new ideas, the group is hiring new people, including experienced staff, to pioneer new ventures in the works that are being planned by Sarkunan and Ooi.

The company is moving into international project marketing, residential property management as well as tapping into investments in Iskandar Malaysia. Ooi and Sarkunan believe investing in talent and other resources is crucial to achieve these objectives.

New forays

"Last year was a record year for us. God willing, we will be as successful this year," says Sarkunan. As at end-2012, Knight Frank Malaysia had carried out valuations for RM14 billion worth of properties, compared with RM12 billion the previous year.

The company also transacted RM5.5 billion worth of properties locally and abroad. The biggest chunk of this figure came from brokering Permodalan Nasional Bhd’s acquisition of some prime London assets, namely the Milton and Shire House (£350 million) as well as 90 High Holborn and One Exchange Square (£500 million). In comparison, the company only transacted RM65.8 million worth of mostly local properties in 2011.

The firm also brokered leases and acquisitions of 1.25 million sq ft of commercial space in 2012, almost double the 660,000 sq ft in 2011.

Under its property management business, the firm increased the number of residential units managed by 2½ times to 3,792 residential units from 1,407 in 2011, while its portfolio of commercial space managed rose to 8.1 million sq ft from 7.9 million sq ft.

"We are very established in the areas of valuation, commercial property transactions, lettings and management. Now we have new associates in these areas [international project marketing, residential property sales, management and leasing] because we want to grow these three service lines. These are the areas in which we need to build capacity," says Sarkunan.

Ooi says the firm is looking especially at high-end properties in the UK. "You’ll be very surprised — in the UK, the bulk of transactions comes from residential properties. This is the trend in developed economies, where the wealth has shifted from institutions to individuals in the last 10 years. That’s why you hear about high net worth individuals. For us here, the reverse is true. That’s why we believe there is a huge potential in residential marketing, leasing and management."

However, properties on the home front will not be neglected. "When we started our company, there were some reservations getting into residential property management because the laws were not adequate at the time. But the laws are now better," says Ooi.

"We find that living in high-end condominiums is new in Malaysia and community living is an issue. We can find the best people, the best tools and more, but if you don’t have the best public relations skills, sometimes you can have a problem. But we feel that with our experience in commercial properties, we want to bring that into the residential sector."

To beef up its residential property management team, the firm is currently training graduates in the fields of estate management and also people management, such as those who have studied psychology. "I tell you, my best agent has a degree in psychology, because she can read people!" Sarkunan quips.

Ooi notes that this will take time, however, as there is currently a lack of talent in the market. "Not to say that some of these graduates don’t have the right qualifications, but sometimes they are not taught the right things. So it takes time to train them. On average it takes three to four years, starting from an executive level to being able to run a condominium. Of course, it helps to have good software and standard operating procedures."

"We are only into our second year [in residential property management], so we need to look at the business, rationalise the properties we are managing and the people working for us. If we can do property management the right way, I think there is huge potential. There is a huge spillover effect because you can then move on to doing other agency work like leasing and subsales ... then you also have a big database of potential buyers," says Sarkunan.

Currently, the residential property management team is less than half the size of the commercial property management team of about 90 people strong.

Iskandar Malaysia

Down south, Knight Frank Malaysia has already initiated its Iskandar Malaysia-specific team, which involves its head office in Kuala Lumpur, its Johor branch and Knight Frank Singapore.

"The Singapore office will work to bring investments into Iskandar, while we will work on providing the products. There are two teams. There is no need to replicate an office in Johor, but we will probably have a special task force in the Johor office," says Sarkunan.

"We are going to get senior people for the front end, to focus solely on looking for investment opportunities and connect them with investors, especially those from Singapore who are mostly looking at land for development. I don’t see any of them wanting to invest in ready-made buildings yet because currently none are yield-accretive," he adds.

Iskandar Malaysia has seen some high-profile land deals inked in the past few months. In December, China’s Country Garden (Holdings) Ltd signed an agreement with Iskandar Waterfront Holdings Sdn Bhd (IWH) to buy 55 acres of land from the latter for RM900 million. The land will be developed into a marina, with a marina club, hotel, serviced apartments, offices and commercial component with an estimated gross development value (GDV) of between RM10 billion and RM18 billion.

Singapore’s Temasek Holdings Pte Ltd and its subsidiary CapitaLand Malaysia Pte Ltd recently signed a deal with IWH to jointly develop a 71.4-acre man-made island off the coast of Danga Bay for RM811 million. The three parties are expected to form an SPV to develop a mixed-use development on the island, comprising serviced apartments, condos landed homes, offices and other retail outlets, over the next few years to the tune of some RM8.1 billion.

In the next five years, the group intends to expand into Sabah and Sarawak, but it has not found a suitable partner yet. "We want a partner who is reliable, trustworthy, competent. It’s not a need-to-have, it’s a want-to-have," says Ooi.

This story first appeared in The Edge weekly edition of Feb 25-Mar03, 2013.