Strengthening fundamentals and pushing boundaries

This article first appeared in City & Country, The Edge Malaysia Weekly, on December 21, 2020 - December 27, 2020.

Kiara Bay is UEM Sunrise’s 73-acre flagship waterfront development in Kepong

An artist’s impression of Phase 1A of Senadi Hills in Iskandar Puteri ... It has seen a take-up rate of 75% since its launch in July

An artist’s impression of Aspira ParkHomes ... the final phase was launched in 2Q2020

Wong receiving the award from The Edge Media Group publisher and group CEO Datuk Ho Kay Tat

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No. 6 (Joint Ranking) | UEM Sunrise Bhd
  2020 2019
Overall 6 5
Quantitative 4 5
Qualitative 4 5

To say 2020 has been a difficult year is an understatement. Battered by the ongoing Covid-19 pandemic, many businesses have struggled while others have shuttered. While not spared, UEM Sunrise is gradually regaining its footing, thanks to its efforts in reviewing its strategies and reassessing what would be given top priority in the new normal.

For financial year 2019 (FY2019), the property developer achieved RM1.1 billion in sales and RM2.9 billion in revenue, up 42% from FY2018. In September this year, the developer announced that it had achieved more than RM400 million in sales and bookings in less than two months since the launch of its “The Happy Chase” campaign.

Chief marketing officer Kenny Wong believes the way forward is to go back to the basics and strengthen its fundamentals. In an email interview, he shares with City & Country UEM Sunrise’s plans and strategies to sustain and build the business in uncertain times.

City & Country: How have the past 12 months been for UEM Sunrise?

Kenny Wong: We started 2020 on a strong note with our brand transformation and the launch of our “Find Your Happy” tagline, which is now an essential part of the UEM Sunrise brand. It represents the company’s efforts to be known as a customer-centric company — one that puts the customer at the core of all we do and seeks to deliver happiness to its stakeholders in a way that makes sustainable and commercial sense, beyond the conventional bricks-and-mortar approach.

However, we can’t ignore the impact of the prevailing market conditions, particularly business and household sentiment. The increasingly challenging market in recent years was exacerbated by the Covid-19 pandemic. The scale of the challenges that we are facing is unprecedented. This is the time to really live up to our new core values — CHIEF (Caring, Honest, Involved, Engaged and Fun-loving) — which were launched in February. I believe in the talents at UEM Sunrise and our collective commitment, capabilities and energy to push ahead.

In 4Q2020, we unveiled our 294-unit condominium Allevia and announced an extensive enhancement to our customer loyalty programme Trésor to expand our customer base and align it with the company’s ‘Go Digital’ strategy. Our latest offering, the 924-unit KAIA Heights at Equine Park in Seri Kembangan, Selangor, will be launched in 1Q2021.

We have to be very much aware of the situation on the ground. The overhang has been prevalent in the industry for the past few years. Nevertheless, there are still areas of demand that need to be served. Using granular insights and analyses, we strive to deliver products that will meet the targeted segments’ needs while remaining aggressive in our inventory monetisation efforts.

What initiatives or changes has UEM Sunrise made to sustain the business this year, particularly during the Movement Control Order (MCO) and Conditional MCO (CMCO) periods?

This period is about defending our top line, transforming our delivery engine, weathering the storm, pushing boundaries and looking for new opportunities. These four main pillars will be key for us to be a competitive organisation in the near mid and long term. A clear and targeted launch portfolio is very important, which means keeping to our philosophy of E.V.E. (Exciting, brings Value, Easy to Own) as part of the DNA of every single UEM Sunrise development. We have to develop the right sales funnel so that we have visibility in terms of revenue, and to look for landbanking opportunities. Transforming the delivery engine is about operational excellence. We must be the best at what we do across the whole chain. To weather the storm, we have to be disciplined in being cost-efficient and ensuring sustainable returns. We have exercised prudence in our spending and have a very strong discipline in managing our finances, as proved by our healthy cash flow. The MCO and CMCO have provided us with the opportunity to go back to the drawing board to review our strategies and reassess what would be the top priority in the new normal.

What are your strategies to grow the business in 2021 and beyond?

We are going back to the basics and strengthening our fundamentals. These include maintaining our financial discipline, clearing our inventories and timely and targeted launches in the right market segments. We will continue with our landbanking efforts to rebalance our portfolio. We must be prepared now so that, when the market is ready, we can push off from the starting blocks and launch immediately.

It is more pressing than ever to go back to the core, which is the customers. The fundamental reason we are in this business is to keep our customers happy. We are taking the step of transforming ourselves from being a traditional bricks-and-mortar property developer to a full-fledged real estate player by being customer-obsessed, among other things. We will be faced with a new business and living environment in the future. In addition to customer feedback, we must study and learn from our experiences and adopt these lessons when planning for the communities of the future.

Overseas customer engagement will continue to be challenging in the short to medium term, with the border restrictions, owing to the pandemic. Some of our luxury launches, which would usually attract the attention of high-net-worth foreign customers, will have to be moved further down the calendar as we market our products priced below RM800,000.

How will you mitigate the risks brought on by the pandemic?

We continue to ensure that our marketing and branding campaigns focus on communications and promotions that are sensitive and relevant to the current situation. This will be done primarily through digital and/or online channels. However, we note that buying properties may not be a key priority at present for most people. Although we have plans, the uncertainty of the full impact of the pandemic, combined with the CMCO and subsequent recovery period, will make us more careful and cautious in our plans.

Our success in mitigating the risks hinges on our ability to be agile and proactive in tackling these new challenges as we face the future with confidence. To drive this change, UEM Sunrise will need to continue to be innovative. We need to look at new ways of doing business and remaining competitive in line with the many things that are happening in the business environment. The MCO has demanded that we be a lot more agile, disciplined and innovative. While ensuring financial discipline, we continue to transform our customer experience journey through technology. In a sense, this is a blessing and has helped us reduce our carbon footprint.

UEM Sunrise has been monetising its landbank in Johor. Will this continue into the new year and what is the company’s strategy for the market there?

Our exposure in Johor and the southern region is relatively large. We are aware of what is required for our development plans and the strategies to push against the headwinds while defending our position as the No 1 developer in Iskandar Puteri. We need to balance the portfolio better and evaluate partnerships, particularly for new business ventures.

We want to be a bit more asset-light when it comes to generating income. We’ve reduced our exposure in Desaru, leaving us with about 220 acres, and are refocusing more on Puteri Harbour. We have also acquired the retail assets in Puteri Harbour under the branding of Marina Walk and have plans to improve the assets’ overall design and secure the right tenant mix to increase vibrancy and footfall to make it the heart of Puteri Harbour.

We have also continued with selective launches in Johor. In 2Q2020, we launched Senadi Hills in Iskandar Puteri. We also launched the final phase of the popular Aspira ParkHomes, located less than 10km from Senadi Hills.

Although we will conserve cash and be prudent in our spending, we are mindful of potential opportunities. We should not prevent ourselves from securing strategically located landbank that offer a quick turnaround with the capacity to create the needed sales funnel. There are many ways to generate revenue and profit without having to burden our balance sheet, such as partnerships, joint ventures or joint development agreements.

UEM Sunrise recently achieved sales take-up of more than RM400 million, following the launch of “The Happy Chase”. Why do you think the campaign was successful in these uncertain times and will there be more of such campaigns in the future? How will the company capitalise on the ongoing Home Ownership Campaign (HOC)?

We capitalised on the interest that was building among our customers once we were in the Recovery MCO phase and saw very encouraging take-up in a few of our projects. The first of the two towers of Residensi AVA has a take-up rate of 70%. Residensi AVA is the first phase of Kiara Bay, our 73-acre flagship waterfront development in Kepong. The landed-homes project Frischia in Serene Heights Bangi and Phase 1A of Senadi Hills in Iskandar Puteri have seen 89% and 75% take-up respectively since their launch in July.

We enhanced the government’s HOC, culminating in UEM Sunrise’s “The Happy Chase” campaign. The campaign addresses concerns faced by house buyers and promises exciting rebates, attractive rewards and easy entry. We are aware that there is pent-up demand from buyers. Because we were able to address their concerns through our campaign, we were able to regain much of our market position.

We use social media as the key platform to stay engaged with home buyers. Content is what fuels social media. Owing to the changing habits of Malaysians, however, we needed to transform the role of social media from being merely a content hub to a medium that offers connectivity, information and entertainment. We will continue to curate more unique campaigns to capture the interest of homebuyers.

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

The problems of affordability, oversupply and high household debt levels were made worse with the economic uncertainty caused by the Covid-19 pandemic. The only thing that we can control is our laser-like focus on our customers and anticipating their needs and demands. Unwinding these legacy issues will take years.

The recovery will take time and the country will need to have a strong road map that must be executed well in this coming decade. In the long term, bolstering consumer sentiment is the key. People, investors and industry players must have hope in what the future holds. Offering market incentives to boost the economy is futile without policy certainty. Specifically, there needs to be continuity in commitment to catalytic projects so that they attract investment opportunities and high-income jobs sustainably. We need to focus on a common higher purpose.