EARLY this year, a bank approached Datuk Seri Vincent Tiew about an idle 7.8-acre freehold parcel in Ipoh’s high-end enclave of Tiger Lane.
“When you mention Tiger Lane to Ipoh folk, the first thing that comes to their minds is, that is where the rich live,” says an enthusiastic Tiew, who is managing director of Andaman Property Management Sdn Bhd.
The developer seized the opportunity to buy the parcel and is building a 529-unit high-end condominium, Upper East, on it. According to Tiew, this development will be “the best luxury condominium in Perak”.
“The land was left idle for more than 10 years. The previous owner had planned to build houses on the site, but construction never took off. Then, the bank went looking for a white knight,” he recalls.
Tiew believes that Andaman was not the first developer the bank approached as there are several established players in the state.
“Logically, Perak developers would be more familiar with the Ipoh property market. Tiger Lane is a coveted address as this is a high-end residential area in the heart of the city,” he says.
As the majority of the developments in Tiger Lane are landed, Tiew believes the reason developers passed up on the offer was they could only see landed homes there.
“I would say [the properties in] Tiger Lane are 95% landed, and it’s where Perak’s who’s who, including Tan Sri Michelle Yeoh’s family, live. There are two successful high-end developments in Tiger Lane — The Enclave and The Thompson. Local developers might not dare to compete with them,” he says.
The Enclave is developed by Rimbunan Raya Sdn Bhd while The Thompson is by Taiko-Straits Developments Sdn Bhd. Both projects comprise semi-detached houses and bungalows. The Enclave is located across from Upper East and The Thompson is adjacent to the latter.
Tiew says currently, there are no high-rise apartments or condominiums built on more than five acres in Ipoh.
“From the very beginning, we knew we wanted to build the best luxury condominium in Perak. The larger land size gives us an advantage as it allows us to put in better facilities and have larger layouts,” he says.
The four ‘P’s
Known as a developer of affordable properties ranging from shoplots to landed homes, Andaman is making its first foray into the high-end segment with Upper East.
Comprising five blocks, Upper East offers built-ups of 1,162 sq ft, 1,507 sq ft and 1,787 sq ft. Tiew says Andaman is selling the units for an average of RM450 psf, which is below the market rate in Ipoh. The project has a gross development value of RM330 million.
“There are four ‘P’s in play here. Two are already in the pocket. The first P is the place, which is fantastic. I can safely say you will never find another parcel of land of this size in Tiger Lane again. This is prime land, and prestigious as well,” Tiew says.
The second P, he says, is the price. Based on the company’s study of notable condominiums and apartments launched, built or being constructed in Ipoh in the past five years, Tiew says the average market price for a property in Tiger Lane is RM600 psf.
“We never had the intention to sell at market price. With our price, we already have an advantage. One of the reasons we can sell at below market rate is because we bought the land at a very low price as we were the white knight. The price was 10 times lower than that in the Klang Valley, so we can offer a better product at a lower price,” he says.
The third P is the product. The developer’s idea is to adopt the concept of the high-end condominiums of Mont’Kiara in KL.
According to Tiew, most of the apartments and condominiums built by local developers are on small parcels of land and the number of units is limited.
“Many Perak developers build too few units per development. Some have fewer than 60 units. A good number of the developments in Ipoh offer club membership worth RM10,000 or RM20,000 instead of providing facilities. So, if you want to use the swimming pool, you have to drive to the clubhouse,” he says.
“They build fewer units because of the market condition, demand and, most importantly, land size. But how can they position their development as high-end when they don’t even have a decent-sized swimming pool or even a pool at all?”
This is where Upper East is different, asserts Tiew. Andaman is building 68 units per acre, making Upper East the development with the largest number of high-rise units in Ipoh.
“With that land size and more units, we have a lot of room to play around and provide residents with the best possible facilities. They will be three times better than our nearest competitor in terms of quality and type,” says Tiew.
Among the facilities are an Olympic-sized swimming pool, yoga deck, tennis court, two squash courts, sauna, Jacuzzi, reflexology path, sky gym and European-inspired party lawn and pavilion.
To create a resort-like setting, Andaman has hired Singapore-based Site Concepts International Pte Ltd to carry out landscaping on 2.5 acres at a cost of RM4 million. Site Concepts, which has offices in China, India, Vietnam and the Philippines, has done work for Hard Rock Hotel in Bali and Sun City in Suzhou, China, among others.
The façade of Upper East will be finished with spray tile painting, which Tiew stresses will ensure that it looks new for at least five to seven years. Each unit will come with Kimgres tiles, plaster ceilings, eight-foot-tall doors, fibre optics and two parking bays. There will be multi-tier security and closed-circuit TV coverage along the perimeter fencing and other strategic areas.
“What we have done is transfer a luxury condominium in Mont’Kiara to Ipoh, but at less than half the price,” says Tiew.
The last P is promotion
“We offer free legal service and that’s all. There are no other discounts or rebates. We are already selling at more than 20% lower than the market rate. RM450 psf is the kind of price you get 16km away from Ipoh. Then, there’s the freehold residential title. More than 50% of high-rise developments in Ipoh city centre have leasehold commercial titles, which means the utility bills are higher,” he says.
Andaman took a more personalised approach to promotion by holding previews with high-net-worth customers of banks.
“We did several rounds, and each round, seven out of 10 made bookings. About 60% of our units are already booked. When we build something of this standard, buyers will respond to this kind of personal approach. None of them asked for a discount. If we had given discounts, I believe it would have had a negative impact,” says Tiew.
The development was designed to cater for people of “more mature age” and this proved to be the case as the majority of those who have booked is above 35 years old, he says.
“The design was never meant to be colourful like the SoHos in the Klang Valley, which are meant to attract the young. Some 95% of those who booked units are from Ipoh, and interestingly, more than 10 units were booked by Perak developers and bankers. Upper East is for people who appreciate quality and prestige,” says Tiew.
However, he will not say Upper East is better than the best in the Klang Valley.
“We are not better. All these features are quite common in the Klang Valley, but in Ipoh, they are very new. I’m not building an MK11. If I’m selling at RM450 psf, I will be giving you RM550-to-RM600 psf kind of finishes. I can’t give you finishes like those of a more-than-RM1,000 psf residence.”
MK11 or 11 Mont’Kiara is a high-end condominium in Mont’Kiara developed by UEM Sunrise Bhd.
Different options for different needs Andaman places emphasis on the detailing of the project, says Tiew.
“We studied what the market needs, we didn’t go headlong into building what we wanted. That is why we have three sizes to cater for different needs,” he says.
The 1,162 sq ft units are for small families, the 1,507 sq ft dual-key units are for extended families and the 1,787 sq ft units are for big families.
“The dual-key concept is not new in the Klang Valley, but again, it is new in Ipoh. The attached studio unit is a spacious 300 sq ft and comes with its own bathroom. You can rent it out or use it as a study. You can even use it as the master bedroom as it is bigger than the actual master bedroom,” says Tiew.
Andaman also took into consideration what the locals are accustomed to when it designed the 1,507 sq ft units.
“Most of the well-off people in Ipoh are used to staying in spacious bungalows or semi-detached houses. A 1,162 sq ft unit would be too small for them. At the same time, we can’t build something too big like a 2,800 sq ft unit. We found 1,507 sq ft to be the ideal size,” says Tiew.
As for the largest units, he likens them to a 2-storey house in a condominium. As with a typical 2-storey house, the living room, kitchen and a bedroom are downstairs while the remaining bedrooms are upstairs.
“We don’t build the duplexes only on the higher floors. They start from the lowest level in each block,” says Tiew.
“Another thing is that the condos will have different orientations. If you want a unit facing the west with a swimming pool view, we have it. Or if you want a north-facing unit, we have that too. So, there’s something for everyone.”
Should the buyers choose to rent out their units, he estimates the rent to be around RM2,000 per month for an unfurnished 3-bedroom, 1,162 sq ft unit. “This amounts to RM24,000 per year. So, they will get a comfortable minimum return of 4.6%.”
Upper East will be officially launched on Dec 14.
According to Foo Jee Gen, managing director of C H Williams Talhar & Wong, while there have been more high-rise condos and apartments coming up in Ipoh, they are still limited.
“I won’t call it a total shift to condo living. It’s more like the developers are looking at a different segment of the market. In the past few years, prices of condos and apartments have risen 8% to 10%, and we expect the trend to continue,” says Foo.
At present, he adds, most of the condos and apartments are developed by established Perak companies, and many of them are small projects.
“The buyers are predominantly locals … the exception is The Haven Lakeside Residences as it offers guarantee rental returns and is marketed outside Ipoh,” he says.
The Haven was the maiden project of Superboom Projects Sdn Bhd.
Foo does not expect a sharp increase in the number of condos and apartments in Ipoh as there is still ample land for landed homes, which are the preferred choice of the locals.
Condo king and beyond
“We want to position ourselves as the condo king in Perak,” declares Tiew boldly.
Andaman is already planning several more condominiums in the state, but Tiew declines to reveal more details. However, he says, the concept of the new projects will depend on the location and the size of the land.
“With Upper East alone, we are already ahead of local developers in terms of quantity and GDV. Overall, we have done very well in Perak since the launch of our first project, Taipan @ Ipoh Cybercentre, in 2010. In three years, we completed and sold 400 shops and registered sales of RM300 million. That’s quite an achievement in Perak. Most developers in Perak do sales of RM50 million to RM80 million per year, and we are doing three times that,” says Tiew.
At present, Andaman is in the midst of handing over its commercial development, Taipan @ Slim River.
Despite the slowdown in the property market, Tiew maintains that Andaman’s sales were not affected and expects its performance to continue into the new year. In fact, he says, Andaman is so confident that it is targeting sales of RM1 billion in 2015.
“We are already wrapping up our launches this year and so far, we have done a comfortable RM550 million in sales. For 2015, we must push ourselves to hit RM1 billion.”
According to Tiew, since its inception, Andaman has kept the prices of its products at RM600 psf and below, which has given it an advantage in the market. The developer also does not keep landbank, so as not to incur holding costs.
“This strategy is reflected in our tagline, ‘Generating value, creating wealth’. We want buyers to make money from day one. We don’t sell high even with the Goods and Services Tax coming in [in April 2015]. We believe 2015, which coincidentally is our 10th anniversary, will be our golden year. We have so many things lined up and our upcoming projects are in pretty good locations,” says Tiew.
“Our strategy has always been having the launch within 12 months after acquiring the land, and we don’t take loans. Being a private company gives us more flexibility to take on different projects. Public-listed companies have to answer to the shareholders and pay dividends, and they have set profit margins, which are typically around 18% to 25%. For us, we are perfectly comfortable with 15%. All these factors have enabled us to sell our products at a lower price.”
Moving forward, Andaman will continue to develop the range of properties it has been putting on the market all this while.
“We have some commercial and high-rise projects coming up in Johor Baru, and are planning a substantial amount of high-rises and some landed properties in the Klang Valley.
Andaman is also looking at overseas ventures. While many Malaysian developers are flocking to countries like Australia and China, Andaman is setting its sights on Vietnam and Myanmar. It opened a property management and architecture firm in Myanmar two years ago.
“We are seriously exploring Ho Chi Minh City in Vietnam. We had looked at a couple of deals, but luck was not on our side and we couldn’t conclude them. The Vietnam property market is a bit cautious at the moment, but we think there are opportunities there as well,” says Tiew.
“We know who we are and what we can do. If we go to China, we will go nowhere. Thailand is too volatile, we are not comfortable with the business and political environment in Indonesia, and we are not in the league of companies developing in Singapore.
“If I put in RM1, I want returns of RM3 to RM5. So, of the countries in Southeast Asia, we feel that Myanmar and Vietnam can give us that kind of returns.
Myanmar now is like the 1970s and early 1980s of Malaysia, there are good opportunities there.”
How Andaman will fare in the coming years remains to be seen. One thing is certain though, it is aiming high and big.
This article first appeared in City & Country, The Edge Malaysia Weekly, on November 24 - 30, 2014.