This article first appeared in City & Country, The Edge Malaysia Weekly on December 20, 2021 - December 26, 2021

Owing to its conservative approach to property development along with very low gearing, UOA Development Bhd has achieved this year’s top ranking for The Edge Malaysia Top Property Developers Award for the very first time. It also takes the top spot in the quantitative list. 

Having been in the property development industry for more than 50 years, managing director C S Kong possesses a wealth of knowledge and experience that has helped UOA through possibly one of the toughest seasons in the company’s history. One of the key strategies used to shore up its position has been the implementation of cost-

efficiency initiatives. It has also kept its gearing very low, having paid off all loans last year. 

For its FY2020 ended Dec 31, the group achieved revenue of RM844.6 million, down from RM1.104 billion a year ago. The reason for this dip was slower sales and the absence of new project launches. Furthermore, “the temporary suspension of construction activities during the Movement Control Order (MCO) period also resulted in a delay in progressive revenue recognition”. 

While the future is still murky, Kong bides his time and keeps a conservative approach for now. Here is an excerpt from an interview with Kong as he speaks candidly about the company’s plans and what to expect from the group in the near term. 

C S Kong: I think with this pandemic, not many companies can really perform well. I think we can say that FY2020 results were good because it was carried over from previous years. But during these two years, we have suffered because of slow sales and also our hospitality side has been badly hit. So, I think this is the worst year we have ever experienced in business.

Despite the challenges in the property market, UOA’s financial performance for FY2020 was decent and the company recorded a profit after tax of RM391.3 million while dividend per share was 15 sen. 

Although there were no new project launches in FY2020 due to the uncertainties caused by the pandemic, the sales of Aster Green Residence was encouraging and construction work commenced for Komune Living & Wellness in Cheras.

It was to sit tight and keep looking at reports — like on the vaccine, there are many types of vaccines, and which country already has methods to overcome the virus — we, as management, need to be able to use the information to gauge whether there is hope for the future. Basically, you need to sit tight and observe. 

But despite the market environment being challenging, we took some action to manage the situation. These included things such as voluntary pay cuts, staff reduction and deferment of new hires, implementing a rotation of two teams to work from different locations to reduce the risk of infection and avoid potential business disruption, swift application to Miti (Ministry of International Trade and Industry) for permission to restart construction work based on the SOP requirements and implementation of SOPs at offices and workers’ quarters in an effort to minimise the risk of infection.

In the meantime, we needed to plan and so, we presumed that this pandemic will go, and then we thought about how to enhance the company. For example, we have a piece of land in Bamboo Hills, which is 16 acres. We will try to make it like another Bangsar South. We are not doing anything fancy. What we want to do is create an environment where people feel that they love to be there. That is why we are doing an F&B area first. We must make sure there is a lifestyle element. Like what we did in Bangsar South, we created a lifestyle, so that people feel that this is the place to come to. 

Last year, we mentioned a medical building. Fortunately now, two big listed medical groups have shown keen interest to sign on with us. Once signed, we will go ahead. It will be the largest specialist healthcare centre in Kuala Lumpur, called Bangsar South Medical Centre. 

Also, we noticed that there is a lack of smaller units in Bangsar South, so we have Laurel Residence for the working class people with small families. We feel that Bangsar South is already mature and a lot of people would like to enjoy the lifestyle we have created here. It will consist of two 42-storey towers.

As for the aged care project, we want to build something where you want to go and live, and you feel that it has the lifestyle that you want. It is called Komune Living & Wellness, in Bandar Tun Razak. It will be Southeast Asia’s largest co-living and wellness hub with a holistic living environment. It will have a co-living hotel, senior care facilities and a medical wellness centre offering health, wellness and care services. There will also be confinement services and a kindergarten as older people love to see kids. There will be traditional Chinese treatments provided as well. 

There will be lots of activities, where you can meet your children, your friends. It is like a club. There will be things to do such as dancing, karaoke, tai chi and so on. And we will also create a heated pool for the residents. It is costly, but we want to encourage people to learn how to swim.

If you don’t have income, you have no money to pay your loan. So the bank does not know what to do with you. You will always be stressed about how you are going to pay off the loan. With this pandemic, do you think that your revenue is going to increase? You may suffer more losses. For example, those with hotels, and those who borrow money, will think of selling if they don’t have deep pockets. We have been offered many hotels for sale. If you don’t have a good reserve, during a crisis, you are going to suffer. 

For me, I see rich people when they have good access to banks, and they borrow money and the banks give them the loans. But when there is a crisis, they don’t know what to do. So, they have to let go of their assets and some have gone bankrupt. I have seen this with my own eyes.

I have been working for 50 years. I have seen many people go bankrupt. Some are still okay. It all depends on how you conserve your money. For example, people say we have revenue, we make 30% to 40%, why do you want to have so much? Put the money in development, you make more. But there is always a limit to your capability. Don’t think you can make money here and there, but good management is very important.

To ensure long-term business sustainability, we will focus on the following areas — maintain a positive operating cash flow, respond to market needs, ensure sufficient landbank for present and future developments, diversify project locations for better risk management, improve on resource efficiency, and deliver value-added properties with quality. 

In terms of sustainability, we focus on improving costs and operating efficiencies, which are key to our business continuity plan to mitigate the effects of the pandemic amid the current challenging market environment.

The Covid-19 pandemic has further pushed the need for us to take an agile business resilience approach to manage the impact on our business operations. Different initiatives have been used to support our business as we go through the crisis towards a sustainable recovery.

Numerous process automation initiatives have been implemented as part of our digitalisation plan to progressively use more technology to improve our business processes, and operational and cost efficiencies. The initiatives, which were accelerated by the Covid-19 pandemic, are also aimed at contributing positively to our sustainability efforts by encouraging paperless adoption and reducing our carbon footprint.

Besides the medical centre and Laurel Residence, we also have LivHomes in Sri Petaling. We are aiming for these to be affordable, below RM500,000, with units at about 800 sq ft. It will be freehold and part of the LivHomes Collection that is for urban homeowners searching for their dream home in a strategic location at an affordable price.

Despite the reopening of economic activities after months of lockdown, it will take many months for consumer sentiment to go back to pre-pandemic levels, and the property development sector to see a recovery.

The disruptions caused by the pandemic have led to us scaling down new project launches and lowering the level of transactional activity in the company’s project portfolio owing to the cautious outlook of buyers. This contributed to a slowdown in sales in a soft property market. 

So, we are reevaluating our new project launch plans and focusing on market-driven products with attractive price points to better position our upcoming developments. 

We also hope that the Budget 2022 announcement on measures such as the elimination of the Real Property Gains Tax for the sale of properties after the sixth year, and the allocation of RM2 billion through the Housing Credit Guarantee Scheme to facilitate loans for those without proof of steady income, will help stimulate and boost sales in the property market. 

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