SIMPLE PHILOSOPHY: Company only undertakes projects that promise its buyers guaranteed rental return
PROPERTY developer Andaman Property Management Sdn Bhd, under the stewardship of managing director Datuk Seri Vincent Tiew, has become quite the game changer in the industry in a very short time and there is plenty of success to prove that its formula going forward is a good one.
"Our vision and philosophy as a developer is simple. We think like a buyer or real estate investor. We want our buyers to make money," said Tiew matter-of-factly.
"So, you won't see us pricing properties high. This ensures attractive returns to buyers," he added.
According to Tiew, when buyers come over to collect their keys, they realise the amount of money that they've made, and they "take their keys smiling".
Since the company started eight years ago, right up to the end of this year, Andaman Property is bang on target to achieve its total gross development value (GDV) target of RM3 billion.
It's indeed a remarkable feat for a non-public-listed company to make such a big amount in such a short time.
In the thinking department, besides wearing a housebuyer's hat, the company also wears the developer's hat quite proudly.
For a start, the company only undertakes projects that promise its buyers guaranteed rental return (GRR).
Many factors go into making Andaman Property's GRR promise a reality. The company has developments all over the country and takes studied and considered risk in all its projects.
"We don't take loans to finance our projects. With very low gearing (i.e. no loans taken to purchase land) there's less risk and less pressure on the developer. And there is more return on investment (ROI) because we save on interest rates. In the past eight years, the price range of Andaman Group condominiums have been below RM600 per square feet (psf). We are comfortable with this segment because, like I said earlier, there is higher yield and higher ROI," said Tiew.
The most remarkable revelation is that the company does not keep any landbank. This is contrary to some land-obsessed developers who constantly acquire lands and later sit on them like the fabled giant goose that laid golden eggs.
"Part of our strategy is not to keep landbanks. Our operational style is to purchase a piece of land, acquire all the necessary approvals, get the land conversions in order, and launch the project within 12 months," Tiew said.
"In fact, we started without any landbank," he said.
The land purchases are strategic and the company hits the ground running once the deal is sealed.
"You won't see Andaman Property in 'developer congested' areas as these are not considered priority areas.
"We don't go to places with no fundamentals and which are purely speculative. Look at the KLCC area for example; within the immediate surrounding area, there are around 6,000 condominiums and quite a number are not occupied. The fundamentals that we look at are rental yield, construction cost, replacement cost and land cost," the 38-year-old said.
Andaman Property's first project - Casa Subang in Selangor - which it undertook eight years ago and comprised 555 apartment units in two blocks, is proof of the company's philosophy and strategy points.
The development was sold out within four months. Casa Subang promised GRR to the buyers and Andaman did it by negotiating with colleges and universities in the area for tenantship. Buyers had immediate tenants for their properties as the universities and colleges like SEGi University College USJ, Monash University Malaysia, Sunway University, Taylor's University and Pantai College Of Nursing & Health Science inked agreements with the developer for student accommodation.
The units in the first project, with a GDV of RM142 million, were sold at below RM300 psf and this was the start of Andaman Property's GRR drive.
"We have never looked back since," Tiew said proudly.
This alliance with institutions of higher learning is a crucial component to the company's success so far.
Thus, the developer leases back the property from the buyers and clearly specifies three items on the lease agreement: how much the rental is per month; when will the rental starts; and the duration of the tenancy.
"The yield is always eight per cent," Tiew said.
For this purpose, the management pays close attention to staff allocation to move things forward.
Andaman Property has a team of 30 employees who handle sale of the properties and a 20-strong leasing team who handle negotiations with colleges and universities. The company has 150 employees in total.
The uncanny ability to sniff out upcoming property hotspots is part of the company's strengths.
Three years ago, Andaman Property ventured to Cyberjaya.
Tiew said there were fewer than six active developers in Cyberjaya then but today, he said, there are more than 20 developers there.
"In Cyberjaya, we have developed The Arc@Cyberjaya, which comprises 1,000 units of apartments and four blocks of commercial offices. We will hand over the keys to the buyers at the end of this year. Buyers bought the fully furnished units at below RM400 psf. But our neighbour (another developer) is launching an apartment project, semi-furnished, at RM670 psf," said Tiew.
The company is eyeing Bangi as the next hotspot.
During the interview, Tiew was very frank about where his company stands and the kind of products it sells.
"We are fair in delivering what we have promised - good condominiums with good specifications. We maintain good standards of construction and our customers' feedback is that the projects are very well done," he remarked.
From mid-2013 till end-2013, Andaman Property will be launching seven projects (one - Taipan @ Slim River - was launched in June). The combined GDV of these seven projects are estimated at RM700 million. The projects are in locations such as Bandar Baru Bangi, Larkin, Rasah and Pantai Remis.
Next year alone, the company has set itself a target of achieving RM1 billion in GDV.
It has also now set its sights beyond Malaysia.
"Among the countries in Southeast Asia, we have targeted Myanmar as the location of the next property boom in Asia."
At the moment, foreigners can't buy properties in Myanmar and local demand itself and local prices of apartments are higher than that in the KLCC area - around RM1,000 psf.
"We have already positioned ourselves to be joint-venture partners as soon as the law there allows for it or permits are given. We are already at the starting line and on second gear in Myanmar. Our partners are the landowners in Myanmar. The first half of next year should see changes as the condominium law has been on the president's table for more than half a year," he revealed.
Tiew is himself an impressive man. As a child, he was enrolled in two schools simultaneously: a Chinese national-type school and a national school. He recalled having a 45-minute window between the morning and afternoon sessions.
As a child, he never gave it much thought and even now, it is not a big deal for him. He brushes it aside as something that was normal. The reason his parents had him registered in two different schools was so that he would be fluent in Mandarin, English and Bahasa Malaysia - which he is!
At the age of 21, he got his MBA with distinction from the University of Newcastle and he then went on to obtain a PhD in Marketing and Management.
Armed with sound knowledge and a positive outlook on life, Tiew is set to take Andaman Property to great heights in the coming years.