Pricing gamble pays off
Posted on | April 5, 2007
By SHARON KAM
Datuk Loy Teik Ngan seems pleased with the way his first residential project Flora Murni, has turned out. Developed by Tian Global Sdn Bhd — Tian being a word play on his name Teik Ngan — Flora Murni in Mont’Kiara is its maiden project and Loy’s first foray into residential property development.
“I do feel some satisfaction from it…” he tells City & Country. “Some” and not full satisfaction simply because, on hindsight, the pricing could have been higher.
Recently launched luxury condominium The Matahari, by Maymont Development Sdn Bhd, offered condos from 3,900 to 10,700 sq ft priced from RM2.2 million to RM10.77 million. The Matahari is on 5.2 acres of freehold land in Desa Sri Hartama, near Mont’Kiara.
Sunrise Bhd’s MK 10 in Mont’Kiara offers units of between 3,685 and 4,090 sq ft and priced from RM535 psf onwards. It is already more than 80% sold.
Considering the competition in the exclusive enclave, every developer would want to stand out from the crowd. “Everybody develops nice properties these days. We decided to differentiate ourselves through the pricing. We thought it would be better to sacrifice some upfront profits to draw purchasers,” relates Loy on the reasoning behind the pricing.
They needed to do that because, as Loy puts it, “there were people who were not willing to risk it”. This is understandable since the developer had no track record to show.
On top of that, people still tend to associate the Loy name to the trouble-ridden days of the MBf Group. “People will say, ‘You’re a Loy, MBf project not so good’. You’re a Loy doesn’t mean you’re MBf but the perception is that.”
But the MBf stigma failed to dishearten the eldest son of the late Tan Sri Loy Hean Heong, founder of the MBf group of companies.
“I am quite a realist. After all, life’s like that. But credibility and reliability were my biggest challenges in this project so I was a bit cautious about it,” he admits.
Relentlessly, he kept his focus. “I just wanted to do it. Our focus was to deliver a quality product, not to prove anything or to prove anyone wrong. I did not want to spend time dwelling on what people had to say but it would have been nice if friends believed in you.” And are these people still friends? “Yes!” he says with a laugh during the interview, conducted, where else, but at one of the two furnished units at Flora Murni.
Considering the new developer’s non-existent track record and the MBf stigma, Loy knew Tian Global had to find a way to build up a following.
“We decided to create a following through our prices. People must make money. If they don’t make money, why would they want to go along with you? If we really want to make money, we would just buy up the units and sell them later,” he explains.
It must be working. Since the recent completion of Flora Murni, the confidence of purchasers seems to have soared, with many buyers already asking about Tian Global’s next project. “People must believe that you can deliver the second project,” Loy says. Tian Global is definitely going to stick around for some time.
“One thing about us is that our people do take a personal interest in the project, and this can be seen with this development. It makes a lot of difference when you have people who are enthusiastic about the project. There are definitely improvements we can make. We learn from our experience and we are still learning,” offers Loy, as he points to the design of the staircase to make a point: “We can do this better the next time around.”
Loy first gained an insight into the property development industry in 1987 when he set up Leisure Holidays Bhd. The company successfully ventured into resort and hotel development, club and property marketing services, travel and tours and construction companies during his leadership.
MBf Corp, of which Loy is CEO, developed Leisure Commerce Square, a commercial development in Bandar Sunway, Petaling Jaya, in the mid-1980s and Summerset Beach Resort, an on-going resort development spanning 838 acres in Rompin, Pahang.
Flora Murni is a low-density boutique residential project comprising just 71 units on 3.47 acres of freehold land. The tract, then with agriculture status, was acquired via tender at RM55 psf six years ago. Once owned by MBf Finance, it was later bought over by Kewangan Usahasama Makmur Bhd.
The going rate at that time was around RM45 psf but Loy saw potential in the land. “I was having tea with friends and a real estate agent alerted me to it. We did some very quick calculations and I decided to go for it,” he recalls.
A long and tedious process of land conversion and development approvals followed. It took more than two years just to have the land converted. All the other building and development approvals also took a long time. “Maybe because we are new and inexperienced so we did not know how to go about it. But then, all developers are working in the same environment so I am not going to blame anyone…” he says of the delay.
Flora Murni was eventually launched in 2004 at an average of RM285 psf. “If you look around, everybody else’s prices are higher than ours.”
The project’s two 3-storey 5+5 bedroom bungalows (estimated built-up 5,490 sq ft) are priced at RM2.8 million and RM3.1 million respectively, the 16 2 1/2-storey 5+2 bedroom semi-detached units (4,112 sq ft) are priced between RM1.7 million and RM2.3 million, and a 53-unit condominium (1,615 to 4,424 sq ft) are priced from RM467,000 to RM1.5 million.
All the units have been taken up although the developer has kept seven units to be released soon. Now, with the product ready, a vibrant Mont’Kiara address and a robust property outlook, Loy is toying with a tag of RM500 or so psf.
“When we did this, we asked ourselves what we really wanted. If there is a house here in this price range, would we shift and live here? We saw there were so many high-rises coming up in the area so we decided to sell some landed ones and found that it was a good decision as the landed units sold well.”
Besides the address, one of Flora Murni’s selling points must be its proximity to the Garden International School.
Loy is confident that property will do well this year. For his next project, he is looking at several possibilities but is keen to go into a joint venture with landowners rather than to buy land outright. “We have identified a prospective partner but nothing has been firmed up. It would [have to] be in the Klang Valley so we could manage it closely.”
For sure, Tian Global’s focus would be on smaller boutique projects which “we don’t mind spending some time on”. What he has in mind is maybe a two-tower high -rise with clean lines and where a main attraction would be lots of light and space. “We want to create something that’s nice and value for money. We want people to say, ‘Let’s be the one to buy it because it is value for money’.”
Loy, who is also managing director of the Taylor’s Education Group, derives a different sense of satisfaction from property development than from the field of education. “In education, you don’t really see the result. The students come and go. In property development, you can see and touch the result. There is a satisfaction that comes from seeing, touching and experiencing your own creation physically.”
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