Tan Sri Tan Seng Leong (BCB Bhd): Look out for signs of recovery

WITH an academic background in building and construction management, Tan Sri Tan Seng Leong began his journey in real estate development in the early 70s before starting his own business in 1978.

The 60-year-old developer founded BCB Bhd in 1988 and has been its group managing director since then.

Before venturing into the Klang Valley, the Johor-based developer had focused on Johor, particularly Batu Pahat and Kluang, where Tan made a name for himself with BCB. It is today the largest property developer in Batu Pahat and Kluang — the second and third largest towns in Johor.

Besides residential projects such as Taman Bukit Perdana, Evergreen Heights and Bandar Putra Indah, the developer also built BCB Plaza and Prime City Hotel in Kluang, and U-Mall in Skudai.

In 2010, BCB ventured into the Klang Valley and developed Concerto North Kiara, a luxury condominium in Kuala Lumpur, and the high-end gated and guarded bungalow township Home Tree in Kota Kemuning, Shah Alam, Selangor.

TheEdgeProperty.com: Building and selling homes — what was it like then and now?

Tan Sri Tan Seng Leong: I began my career in the early 70s and went through the ups and downs of the property market over the past few decades.

In my observation, 1969, 1979, 1989, 1999 and 2009 were the economic down cycles. However, those years were also when the market saw sharp rebounds after bottoming out.

Understanding market cycles and noticing signs of the next downturn are important to developers. I started studying the market since I was young. The Investment Clock, which was published in London’s Evening Standard in 1937, has become one of my main references on the economy.

According to the Investment Clock, signs of a market slowdown can be seen when share prices and commodity prices start to dip, when overseas reserves start falling and when a tighter monetary policy is implemented.

Knowing these signs could help business owners make better decisions and adjust their development pace until the next economic upcycle.

For instance, during a slowdown, I will look for opportunities to accumulate landbank at a better price or use the time to convert existing agricultural land into development land. When economic conditions improve, I will start to build and sell products.

From my observation, the Asian Financial Crisis in 1997 was the worst time ever for the market. It was a long recession. Even though it was a tough time, economic stimulus measures were taken and they worked.

There is talk that compares the current market condition with the 1997 crisis, but I do not think the Asian Financial Crisis will repeat itself. The market will continue softening but it will not go down too much. For instance, even though sales have slowed, property prices have not shown a significant drop as cost of land and building materials continue to rise.

Notably, according to the Investment Clock, when property price growth slows and interest rate cuts occur, it could be an indication of the next rebound.

Other signs that the market needs to watch out for are improving share and commodity prices, coupled with the increase in overseas reserves as these could signal the start of an economic recovery.

How many homes have you built?

I started my first project — Taman Kurnia in Kluang — back in 1978 and till now I have developed more than 5,000 acres of land and built more than 50,000 homes.

BCB Bhd’s footprint expanded from Johor (Kluang, Batu Pahat and Pontian) to the Klang Valley in 2010 with our luxury condominium Concerto North Kiara in Kuala Lumpur and the high-end gated and guarded bungalow enclave Home Tree in Kota Kemuning.

What was your most memorable project and why?

The most memorable project for me was a privatisation project in Kluang, Johor which I undertook back in 1992.

It was a very challenging project because the planned town centre was in a mess as there were 500 squatters staying on that piece of land. We talked and negotiated with the squatters by giving them two options — cash compensation or a discount deal on the new houses. The negotiations were successful and we pursuaded the squatters to move.

With the land cleared, we drew up plans to bring in more amenities such as bus and taxi terminals, commercial projects and a stadium, making it the commercial centre of Kluang.

Today, the 90-acre transformed Kluang town centre remains the commercial hub of the town with robust business activities.

Buyers are getting younger. How do you engage them?

When it comes to buying properties, the younger generation has different thoughts, needs and budget. Developers need to understand their needs and preferences — the layout, landscape design and facilities — so we can offer them the right product at the right pricing.

Developers also need to disseminate information about their products through social media to catch the young buyers’ attention.

What are your investment tips for first-time homebuyers?

Simple tips — know your budget, buy in areas with good growth potential, and be realistic about your investment goals.

I bought my first house back in 1977 when I was still an employee in a local construction company earning about RM1,000 a month.

It was a single-storey terraced house in Kluang. The price was about RM30,000 at that time. I sold off the house at RM70,000 two years later.

I remember it so clearly because the money I earned from selling the house became my capital to start my career as a developer in a joint-venture company.

How key is social media to your business — are you on social media?

Nowadays, more buyers than ever are taking advantage of the latest technology and online tools to search for properties. A decade ago, smartphones didn’t exist but today it’s hard to imagine life without them.

As a result, developers have to constantly adapt to new technologies in both construction of projects as well as marketing strategies to attract young buyers.

My company and our projects are on social media. On our Facebook page, we constantly post the latest information on our company, the neighbourhood where our projects are, as well as the latest events, to connect with friends and family of clients.

Your property outlook for 2016/2017?

The market condition remains uncertain with banks being cautious in lending while buyers take a wait-and-see approach to look for bargains. However, there are opportunities for developers as there will always be genuine buyers looking for good properties.

At BCB, we take a conservative approach during a market slowdown by going for smaller scale developments and launching new products that cater to market needs.

When written in Chinese, the word “crisis” is composed of two characters, one represents danger and the other represents opportunity.

Despite the dampened market condition and consumer sentiment, there are always opportunities for developers to explore and build their fundamentals to success.

Besides researching and analysing economic cycles, we must have the foresight to see future possibilities and the courage to make brave decisions. Bill Gates is successful because he has both — the foresight and the courage to try.

What is your aspiration for the Malaysian property sector?

My aspiration for the Malaysian property sector goes back to the fundamentals of what BCB stands for — Building Communities and Beyond.

It may seem like a simple tag line, but think deeper and it means more. It is a simple phrase. But for it to work, we need the involvement and concerted effort of all in the organisation to show that BCB is worthy for our purchasers in all aspects.

● Tan Sri Lee Kim Yew (Country Heights Holdings Bhd): Land is the key to accumulate wealth

● Tan Sri Liew Kee Sin (EcoWorld): Achieve greater heights by embracing technology

● Tan Sri Lim Kim Hong (I-Bhd): Well-planned projects less affected by negative factors

● Tan Sri Lim Kang Hoo (Iskandar Waterfront Holdings Bhd): Act on opportunities from the HSR link

● Tan Sri Lim Hock San (LBS Bina Group Bhd): The keys to success are product, location and pricing

● Tan Sri Leong Hoy Kum (Mah Sing Group Bhd): The ability to adapt to change is crucial

● Tan Sri Mohamad Salim Fateh Din (MRCB): Malaysia’s property market will continue to be dynamic

● Tan Sri Eddy Chen (MKH Bhd): We need more liveable homes

● Tan Sri Ong Leong Huat (OSK Property): Build homes according to buyers’ wants and needs

● Tan Sri Lim Soon Peng (Titijaya Land Bhd): Affordability — key to homebuyers’ needs today

● Tan Sri Danny Tan Chee Sing (Tropicana Corp Bhd): Engage customers through social media wisely

This story first appeared in TheEdgeProperty.com pullout on Aug 26, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.