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14/06/2014

Chang pledges to work with the environment instead of against it

AT 50, most people would be thinking of slowing down. In Datuk Chang Khim Wah’s (pic below) case, he has never felt more energised and empowered.

The president and chief executive officer of Eco World Development Group Bhd has valid reasons for feeling this way. He has been given the mandate to grow what may well be the fastest expanding property company in Malaysia and last week, he mapped out the environment-ecology route he planned to take.

Eco World may be one of the few property development companies that is going to work with the environment instead of against it.

It will be a challenge because other companies have tried and for some, going down the environment route became their first and last. If Eco World truly makes ecology and the environment part of its DNA, it will help to change the perception most developers have with regards to environmental protection. And the route it takes will be keenly watched because it is working towards having more than 4,000 acres by October.

Chang says he and his team are going to get a handle on this “new philosophy” by going into three stages – design, construction and post-delivery.

As for Tan Sri Liew Kee Sin’s role as non-independent non-executive director, Chang says the company will “pick his brains and thoughts”.

Chang says Liew has taken a back seat, preferring to mentor small groups by imparting his experiences.

Chang and his team will have a short learning curve as most of them were previously from S P Setia Bhd.

Prior to this, Chang has not outlined with clarity the strategy he will take and market watchers have questioned how much more upside he can create considering the high base he is starting from.

Within the span of a year, Eco World has launched a series of rather high-profile promotional events for its Johor and Klang Valley properties. It has a sales target of RM2bil for the financial year 2014 (FY14) and RM3bil for FY15.

“Our years of experience will be our foundation. That will form the basis from which we are starting out today but Eco World is going further,” he says.

“We will build on our vision of eco-living, which includes tree transplanting and protection of water ways, but we will not be seeking after (internationally acclaimed green standards) just for the sake of it.”

It will embrace the environment instead of working against it. The internal processes are within its control, but the external may not be.

Chang says the company will formalise a lot of the processes which were previously done on an ad hoc basis.

“We are fine tuning, creating new and refreshing ideas and the team is brimming with new ideas… What we used to do on an ad hoc basis will now be part of standard operating procedures,” he says.

Beginning with the design stage, Eco World will take an inventory of what the land already offers. This includes the land topography, contours and vegetation. All developers do this but they will consider these factors in greater detail.

“We used to do bits and pieces of this (sustainable development). Today, it will be part of our philosophy. The objective to take this (environmental-focus) route is to multiply stakeholders’ value. We will try to create a blend of the natural and the architectural environment. We will keep waterways as natural as possible.

“The second stage would be fine tuning of construction procedures. This may not be part of eco-living but it will contribute to better living,” he says.

The third stage encompasses post-delivery measures which include the building of communities.

The profit and environment elements are opposing forces. Developers considered it cheaper and quicker to cut down age-old trees rather than to build around them. Trees often become “victims” because transplanting is costly and the survival rate is dicey. Several developers have gone into green housing projects.

Gita Bayu in Seri Kembangan by Yee Seng Heights Sdn Bhd, Sierramas in Sungai Buloh by Tan & Tan Developments Bhd and Valencia by Gamuda Land Bhd are among them. But Chang plans to take the environment-focus by making it part of their company profile, much like some developers are known to build only high-rise projects, others for affordable housing.

They have been big on replanting in EcoBotanic in Johor, their first landed project. Within the 325-acre project, a total of 1,000 trees, aged between 10 and 20 years, have been transplanted. They will consider the time value of money in trees as the bigger they are, the more expensive it would be if they were to buy them.

Up to 70% of those transplanted are forest species. From previous experience, the survival rate was about 50% but they have improved this to 90% by root-balling, coupled with other procedures. Tree transplanting has saved the company RM2mil.

Up to 16%, or 52 acres of its 325-acre project EcoBotanic will be open or green spaces with a distinct hierarchy between the formal garden, the linear garden, precinct part and green streetscapes.

Having been in property development for 20 years, he believes the eco-theme will set them apart from their peers.

He also sees the need to excite shareholders, lenders and stakeholders’ expectations, “regardless where we were from and where we are going.”

On the rather hasty manner with which the company has amassed its land bank, Chang says on the contrary, nothing was done hastily but “many opportunities” came knocking. “Many land owners offered valuable choice pieces of land,” says Chang.

It was simply not possible to ignore some of these offers, he says. The acquisition of Focal Aims Holdings Bhd came with about 2,500 acres in Kota Masai, Johor. The response from the market “spurred them to plan even faster”, says Chang.

“It was not that from Day one, there was this plan to have a GDV of more than RM43bil. The shareholders subsequently acquired a good stake in Focal Aims Holdings Bhd (before it changed its name to Eco World Development Holdings Bhd in December, 2013). This again led us to expand further.

“We have always worked fast and the support (given to us) helped,” says Chang.

With the sales and marketing in motion, the next course of action would be to build revenue and profit in the next two to three years, he says.

The broad spectrum of products they have launched, or plan to, is indicative of that strategy.

The company is leveraging on the interest in Johor. Their launches – condominium projects, several landed properties and a business park – represent “a broad spectrum” to weather the times and seasons.

“We see a lot of growth in services and manufacturing sectors in Johor. They will set up businesses within our business parks. The Causeway and the second link are always jammed, indicating strong economic activities. We will concentrate on landed properties, business parks and commercial such as shop offices. We also have a high-rise project next to EduCity.”

According to the National Property Information Centre, Johor is one of two states which recorded high single-digit improvements while all other states saw a drop in the number of transactions in 2013.

With 4,433 acres and a GDV of RM43.5bil, there have been some doubts how the relatively new company is going to fund its projects. Chang says its April corporate exercise, expected to conclude in October this year will help. That exercise involves shareholders contributing RM1.3bil via a subscription of new shares, raising of RM788mil via a proposed rights issue with warrants and RM634.4mil under a proposed private placement.

“That is good enough for now to cover operating costs and expanding our land bank,” he says.

He says this amount would be sufficient “for now” depending on how aggressive it is going to be and the opportunities that come along, says Chang.

If a statement on Bursa Malaysia last month is any indication, the company seems eager to spread its wings abroad and has set its sights on Sydney, Australia.

Eco World was offered 1.18 acres in Parramatta, New South Wales 2150 by Eco World Development Sdn Bhd (EW Sdn Bhd) at purchase consideration of A$28mil, on the same terms and price as secured by EW Sdn Bhd. The vendor is Menara Parramatta Pty Limited.

Located at 76-82 & 100 Church Street, the property is expected to be redeveloped into a mixed residential and commercial development. It is located on the southern fringe of the Parramatta commercial business district retail precinct close to the Westfield Shopping Precinct, Railway Station and Bus Interchange.

The plan, if approved by the board, will see the relatively new company, launch about 300 units of apartments next year.

Says Chang during the Invest KL event: “Australia is a good place. At the moment, we cannot think of a specific city that we want to go into but once the right opportunity comes along, we will know it.”

He says the company has “a team specialising in international developments” but ultimately, the company will concentrate on Malaysia.

“There is good infrastructure all around (the site). Once we built the apartments, the response will be very good because it’s a well-developed and populated suburban centre with a good economy.” “It’s a good time to be here (in Eco World),” he says.

 

By Thean Lee Cheng & Cheryl Poo
Source: www.thestar.com.my