Thursday 28 Mar 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on December 21, 2020 - December 27, 2020

No.4 | UOA Development Bhd + Best in Quantitative Attributes
  2020 2019
Overall 4 3
Quantitative 1 1
Qualitative 5 6

As a sign of how Covid-19 has affected everyone, the interview with UOA Development Bhd’s managing director C S Kong had to be conducted over Zoom. Still, Kong’s enthusiasm, down-to-earth outlook for the property market and plans for the company have not wavered.

He believes that, overall, UOA Development has performed well, considering the pandemic and government measures to curb the spread of the virus since March this year. The group recorded a profit after tax of RM147 million for the first half of 2020 compared with RM185 million for the first half of 2019. This was partly due to lower revenue progress recognition as construction activities came to a temporary halt during the first phase of the Movement Control Order (MCO).

The group suffered a casualty, however, as it had to shutter its Invito Hotel & Residence. It also implemented pay cuts across the board, with Kong taking no salary for three months. Nevertheless, the group continues to soldier on and keep its feelers out to gauge market demand and needs.

Kong highlights the dilemma he and his team face in developing products for the future. Owing to Covid-19, there is a need for larger spaces so people can work from home without distraction, but this would mean increased costs and prices. How will the company sell these higher-priced products, if the virus has been brought under control by the time they come onto the market?

Plans include a new food and beverage venue, surrounded by greenery, to give patrons a respite from the hustle and bustle of city living. There is also an integrated wellness facility that takes care of the needs of people of all ages.

Below is an excerpt of the interview.

City & Country: Describe UOA’s performance over the past 12 months and some of the key highlights.

C S Kong: We are quite fortunate that, before Covid-19, we had a lot of projects ongoing, so we are reaping the fruits of what we had done before. We recorded a profit after tax of RM147 million for the first half of 2020 compared with RM185 million for the first half of 2019. So, profit-wise, we are not so bad. But I think it will be difficult to maintain that because we have fewer new projects in the future, so revenue will be down. Still, we are coming up with some projects that will cater for what the market needs.

We launched The Goodwood Residences in Bangsar South and Aster Green Residence in Sri Petaling. We learnt that the type of project you want to build must be attractive to the people living nearby. Or if you are doing something out of a catchment area, it must be very special and niche.

For Aster Green Residence, launched in October 2019, we are doing quite okay even though it is surrounded by projects by other developers. The take-up is about 70%.

Take-up at The Goodwood Residences is slow because of the sizes (built-ups of 947 to 2,002 sq ft), but the units will be well-received once it is completed because there are not many projects with larger units. It is situated in Bangsar South, so people will see the convenience, facilities and amenities nearby. We are quite confident that, once it is completed, it will do well. Because of Covid-19, people are still hesitating to commit to buying into the project.

Our hospitality arm was affected by the pandemic and one of our hotels, Invito, had to be closed down. It was painful, but we had no choice. The other two hotels we have are still surviving.

The government needs to look into how it can save all industries. If Covid-19 continues for another year, many industries will suffer or close down.

How has the company evolved since the start of the pandemic?

The first thing we had to do was to bring down the cost of doing business. Before the pandemic struck, we had already gone into digitalisation, such as introducing virtual showrooms and an online appointment booking system as well as digital marketing via social media platforms.

UOA Development looked into each department to see where to save costs and also impose salary cuts, including myself — I did not take a salary for three months. Thankfully, UOA doesn’t have too much debt and has some savings. So, we can get through this time.

Can you give us an update on your ongoing projects and other businesses?

One upcoming project is Komune Living & Wellness in Cheras, which is adjacent to Taman Tasik Permaisuri. It is not far from Kuala Lumpur and will be an integrated wellness hub. It is designed to create a holistic living environment and will have a co-living hotel, senior care facilities, and a medical wellness centre that offers comprehensive health, wellness and care services for better community living. It should be ready to welcome residents and visitors by end-2021. It will be one of Southeast Asia’s largest co-living and wellness hubs.

We are going into this area of senior care because of the service we will provide. You can get a maid but, sometimes, the maid can cause more problems for the employers, like running away. And the fees are very expensive. So, I thought, why not have a place where there are common helpers who are well-trained, especially to take care of dementia patients? So, this is something we will do and to give back to society.

Meanwhile, the occupancy rate of the hotels UOA Development manages as at 3Q2020 was 50% for Komune Living in Bangsar South and 40% for VE Hotel.

We are going ahead with building a medical centre. We are talking to the authorities and, being quite positive about getting the approvals, we have put in our application. Last year, we had the plan for the medical centre but we didn’t know how to go about it. Now, we are moving forward with a well-known medical group, and we will disclose who it is in due time. The start of construction is planned for either year-end or early 2021. The medical centre will be located near The Horizon tower, with direct access from the Duta-Ulu Kelang Expressway (DUKE).

We have two projects in Bangsar South in the planning stages. We have not been building small units in Bangsar South, except for South Link Lifestyle Apartments, with built-ups of 452 to 1,130 sq ft. There is a need for smaller units, so we will have such a project.

We have developed only 60% of the saleable area of Bangsar South so far. We are still left with 40% to develop.

How has the slowdown in the office market affected Bangsar South and what is being done to help tenants?

So far, we are quite okay. The majority of the tenants are international companies and, since Covid-19 started, we have not had many requests for a reduction in rent. In fact, during the MCO, we secured new tenants.

[To be successful with offices,] you have to be generous in your space. We emphasise the importance of green and open space so you don’t feel you are in a concrete jungle. The other thing is the integrated development — you need to have components that people like. For example, food is very important, as well as transport and medical facilities.

As for the office market, there is so much talk about working from home. I remember over 20 years ago, I was also concerned about that, with people saying you don’t need to come to the office to work but you can work from home. After a while, people found that the efficiency and productivity were not there. Eventually, the idea of working from home disappeared. So I think this scenario will happen again. If the economy is good, then the demand for offices will be there.

What are your future plans?

We have Bamboo Hills in Jalan Ipoh, a F&B area which covers 16 acres. During this pandemic, I think food outlets are doing okay. People cannot go too far out of the country for a holiday.

So, we need to provide an F&B venue in a forest environment. In Singapore, there is Dempsey Hill (an F&B and lifestyle venue). We have carved out one-third of our land to create something like the Dempsey Hill concept, where you eat in a resort environment surrounded by greenery.

The remaining two-thirds of the land will be for residential and commercial components. It will be like a mini Bangsar South.

We also have 16 acres in Cyberjaya. Because of Covid-19, we don’t know what the best plan for it is for now.

What needs to be done to spur the recovery of the economy and property market?

We should allow foreigners to buy property in Malaysia. There are limitations, where foreigners can buy only property priced from RM1 million. Now, developers don’t build properties worth over RM1 million. Maybe for foreigners buying property in Malaysia, there should be a limited tenure of, say, 60 years. This will help stimulate the economy. Let the foreigners buy property, because they cannot take it away.

Another thing is education. This is the time of digitalisation. In China, for example, they emphasise computer studies. If you want a country to be progressive, you have to be advanced, you need to have the technical people, you need well-trained people so that you can be ahead of other countries. And that productivity is not so dependent on foreign workers. So, an emphasis on education in artificial intelligence, robotics and digitalisation is needed. Then people will want to invest in the country, because there will be a pool of very capable people. Education is the most important of all [factors] to spur the economy and property market.

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