This article first appeared in City & Country, The Edge Malaysia Weekly on November 11, 2019 - November 17, 2019

Having been in the property development sector for close to 20 years, IJM Land Bhd managing director Edward Chong is highly perceptive and discerning of the way the market turns. He shares his views during an interview at Wisma IJM in Petaling Jaya.

Once a banker, Chong joined the property sector after the 1997 Asian financial crisis. “The whole market was difficult, regardless of industry. If you compare today with then, I would say we are a bit more fortunate today. But every period will have its challenges as people’s preferences change.

“If I do development like how it was done 20 years ago, I’ll go out of business. Consumers today think differently and value different things as people are now exposed [to many things]. We have to know what people want to move forward,” says Chong.

A familiar face at The Edge Malaysia Top Property Developers Awards, IJM Land — the property arm of IJM Corp Bhd — has built a diverse portfolio of affordable to luxury offerings.

It currently boasts a sizeable land bank of 3,828 acres in Penang, Pahang, Johor, Sabah, Sarawak, Selangor and Negeri Sembilan as well as in the UK and China, which has a gross development value of over RM40 billion.

The following is an excerpt from the interview.

City & Country: What has kept IJM Land busy last year and how had the year been?

Edward Chong: Over the past couple of years, we have been focusing on understanding what customers want and making sure that we are offering products that are relevant to them. It is challenging, but at the same time, it’s rewarding as I think we are bringing improvements to the lives of people.

If you look at our launches over those years, the encouraging take-up rates are a testament to what we have been doing. All non-bumiputera units have been substantially sold. For example, at Savio @ Riana Dutamas, which was launched about a year ago, more than 90% of the 1,018 units have been taken up. To sell over 900 units is not an easy task in the current market.

Is the company still on course to launch RM1.7 billion worth of properties in FY2020? What are the upcoming launches?

We are definitely on target. Given the size of our land bank, we have the flexibility to move things around, but the key is getting it right. I may have lined up 10 projects, but if we find that along the way consumer preferences have changed, we will swap the projects quickly. That is the advantage we have.

Our land bank of 4,000 acres can comfortably sustain our operations in the next 10 to 15 years. In terms of land banking, we are not in a hurry. We also have the liberty to do joint ventures for pocket-sized developments of two to three acres as it gives us flexibility.

In Malaysia, we are planning to launch Senjayu in Jawi, Seberang Perai, next year. We believe there is still demand for terraced houses. Meanwhile, we will continue developing our townships in the Klang Valley, Johor, Seremban and Sandakan.

How optimistic are you of the market today and what are some of the opportunities you see available?

The market is quite stable and we are definitely not on a downward trend. The market has consolidated well and we are seeing some signs of improvement. I don’t expect it to turn around drastically ... we are seeing slow growth, which in the long run is sustainable. As a developer, we don’t like the market to go up and down like a yo-yo. We would rather have slow and gradual growth.

I think the Home Ownership Campaign (HOC)  is certainly helping those who are thinking of buying a property. I won’t say that it will push people to buy when they don’t want to. There is definitely [an increase in take-ups] but we cannot say that it is due to the HOC alone. Even with the HOC, if the product is not right, it won’t sell. As a developer, we must make sure that we are building what the market wants.

What would you say is the key to navigating the current market?

The key is to build the right product in the right location and at the right price point. We usually offer decent 2 and 3-bedroom units with built-ups of 800 sq ft upwards — these are the products people want. We see things in the longer term and we have been working hard to make our buildings more efficient, reduce wastage and enhance productivity in terms of site management. This way we can pass on the savings to our consumers.

On top of understanding what the people want, we must ensure our cash-flow position is healthy. We have to continue to test the market and control our cost to achieve a [desirable] take-up rate. When buyers see a strong take-up, they will know that the project will be completed. That takes away the element of risk from them.

In those days, people would walk into the sales galleries. But today, we have to reach out to them. That’s where social media, digital advertising and agents come in. We have to continually engage with the customers and find out what they are looking for.

What are the main issues in the industry that you hope to see addressed?

As far as the industry is concerned, the key issues are the same. For example, various costs, including infrastructure cost, are wholly borne by developers. They are also required to build a certain number of affordable homes. Those days, cross-subsidisation was more manageable as the requirement for affordable housing was less. Over the years, the requirement has increased and the construction cost has risen a lot, which means the cross-subsidisation will have to be higher. If the government can help reduce some of that, it will be good for the industry.

On the bumiputera quota requirement, we are hoping for a more transparent release mechanism. We don’t have an issue with the quota, but the time taken to release it should be more transparent because all this adds up to higher development costs.

What are your future plans and strategy for the company and what will be the main focus?

The key for us over the next couple of years will be to diligently manage our cash flow and make sure that our products are the right ones for the market.

We will need to look at new areas of business such as retirement and wellness products. We need to constantly evolve to find new things that people are looking for but are not readily available.

We will probably also look at the [knowledge-based] economy, such as the digital economy and areas of artificial intelligence, to find out what types of space these industries are looking for. For example, they may not want the typical office space but rather something more flexible. More people may work from home going forward and we need to find out how to tweak our products.

How are your overseas projects doing?

The first phase of our London project (Royal Mint Garden) with 256 apartments is being completed and will be handed over this month. We won’t be launching the second phase soon, given the Brexit scenario. We are not too concerned as we have sold over 90% of the first phase. We believe the opportunity for the second phase will be good as there are very few sites that can be developed in our location, so there won’t be an oversupply. Also, the second phase will be facing the new Chinese embassy that is coming up. This will give us good reason to market some of the products to the Chinese.

One of the challenges we faced with our London project was building on top of a railway line — something that is not commonly done. Those days, people are sceptical that we can deliver this project. Now that we are completing the project without having to stop the train even for a second, we have established a good reputation in the market and among the rail authorities and the mayor’s office. They have even told us they have got a lot more sites that we can actually look at. We went through some difficulties, but now, we have learnt the ropes and this is going to open a lot of doors for us.

IJM Land has projects nationwide and in the UK. Any plans to expand beyond these areas?

The long-term plan has always been to have more exposure overseas.

While Malaysia will still be our home base, we need to grow a base that is bigger than Malaysia, which has a population of only about 30 million. We need to expand our business and the UK is definitely a market we will continue to be in.

We have been eyeing the Australian market for some time, but currency exposure is always a risk. So, now is actually a good time to look at it seriously.

IJM has been in India for 20 years now and will continue to explore the market there. Vietnam and Indonesia are also markets we can look at. Such expansion needs time as it takes a number of years to really understand the people and their cultures.

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