This article first appeared in The Edge Malaysia Weekly on December 6, 2021 - December 12, 2021

PASSIONATE about sustainability, Sime Darby Property Bhd group managing director Datuk Azmir Merican is raring to go on the company’s plans to reinvent run-of-the-mill terraced homes, and ultimately, put out its first sustainable township – potentially as early as 2030.

The company, which has built more than 100,000 homes in Malaysia over the years, wants to build homes and townships to fit the future, he says.

“We took a look inside, and at how we build, and realised that there are a lot of things that can be done differently. We’ve been building the Malaysian terraced home the same way for [almost] 50 years. What can change? What materials could be more sustainable? What designs would be better? What spaces need to change?” Azmir shares in a recent interview with The Edge.

“You’ve got working mothers, fathers and children all in the same space. We are not going to go to work or the office every single day of the week any more. And then you have technology coming into the home. So, how does the home of the future cater to all of this?”

While rivals could also be thinking along the same lines, Azmir believes SDP can set itself apart by coming up with original and relevant solutions for communities and townships.

“[For example], in townships of the future, what we see is that you would generate your own electricity. Today, we can generate electricity but we can’t store it. So, why shouldn’t homes come with batteries? I don’t think any property developer has talked about building homes with batteries,” says Azmir.

In seeking innovative ideas, SDP recently partnered with the Malaysian Institute of Architects (PAM) to organise the Concept Home 2030 competition, which drew interest from 170 professional architects. The winning entries are expected to be made known in January.

When asked how soon Malaysians could expect to see the first sustainable township from SDP, Azmir says: “I think we’ve got to sit down and design. We’re talking about 2030. The first thing is to make sure that we can get our net zero target out, and then plan a really sustainable township going forward.”

He talks about future townships with urban farms and micro forests, among other things — all of which would go some way in reducing carbon emissions. According to Azmir, property developers can embark on such initiatives now as, more than ever, people appreciate any efforts aimed at reducing carbon footprint.

“Sustainability has finally — and I think it should have been sooner — gotten the attention it deserves. If you look at property developers, they are not the greenest of guys. If we are to be honest and true to our ourselves, and if we think of ourselves as a force for good, we can make tremendous change,” Azmir says.

“If we don’t have to pull out so much from the current infrastructure, and if we can generate things at source and be more circular by reusing waste and generating our own electricity — even 20% — that will move us. As we go along, 20% will become 40%, which will then become 60%.”

Below are excerpts of The Edge’s virtual interview with Azmir.

The Edge:  In your view, is the worst over for the group?

Azmir: I’d like to think so. With over 90% of the population now immunised and many countries including Malaysia and the UK accepting that the pandemic is now endemic and part of the new norm, we are optimistic of a recovery in the overall economy and thereon, the property market from this point onwards. In particular, the Battersea Power Station (BPS) project in which we are 40% shareholders shows significant promise, with crowds returning back to the development for the summer, completion of Phase 2 and extension of the Northern Line to the new BPS station. Nevertheless, we continue to be prudent and exercise due cost control throughout the group.

How has the take-up of your properties been of late?

Let me put it this way — we are a township developer. In our townships, we know what people want and what they like. We took the time during the pandemic to be doubly sure of what we are launching. So, launching the right product in a township that we know well, gives us an advantage. Our launches have done really well, with a healthy take-up rate averaging over 80% for those launched since the beginning of the year.

Last year, there was talk SDP dropped prices to appeal to buyers…

I know that somebody wrote that we dropped prices and we wrote back to clarify that we did not.  We didn’t drop prices. The sensitive part is that we have existing buyers and if we drop prices, it will also affect them. We are quite conscious of this. There are developments, especially high-rises, where we give additional discounts, but we did not drop prices for the whole development. These were only during promotional periods when there were additional discounts to move these units.  That’s what we did, but we never had a problem where we had to drop prices to move units.

Is it too early to say the property market is recovering?

You have landed homes, high-rises, different kinds of products. For SDP, in our townships, we know what the market wants, how many units the market wants and how many units we should sell in a year.  We don’t want to overflood the market because that will create a supply issue. You need to have the demand.  We are quite careful with how many units we put out there so that we can sustain pricing, which is important for our own profitability. Talking about the larger context, it is a question of supply and demand. There is supply, especially high-rises. We do less of that, so we have less of that problem. So, the market in general is different depending on the type of products you have.

Are home prices on their way up, especially with the rising cost of raw materials?

For us, homes in the RM500,000 to RM700,000 range sell quite well. For now, we are sticking to this price range because we know the formula works. While developers like SDP are facing some headwinds in terms of [rising] commodity prices, we are working on ensuring home prices remain affordable for the short to medium term. That said, we must acknowledge that properties priced at RM600,000 and above are also snapped up during this period, as shown by the take-up rates of our products in the City of Elmina and Serenia City. At the same time, we must also take into consideration homebuyers looking for products priced at RM500,000 and below. This is where SDP proactively looks at design-to-cost principles for its products to make sure they meet the price expectation demands of its customers.

Is now the time to buy more land?

Right now, we are focusing on our own land bank. We are not actively searching for land, but if there is strategic land, then of course we will look at it. We are currently reviewing our land-bank portfolio and will [look] at any upcoming development or monetisation opportunities along the way.

Can you guide on SDP’s dividends, moving forward?

We’ve already declared dividend [of 1 sen a share] at the half-year. We will wait for the full year before deciding on the next payout. Pre-Covid-19, our payout policy was a minimum of 20% of Patami (profit after tax after minority interest).

Does SDP have a net zero target?

We do. We are working on it. We have quite an ambitious target, which I hope to communicate quite soon.

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