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Monday, November 12, 2007

Brick and mortar challenge


Raja Mohd Azmi Raja Razali broke out in a wide smile as he extended his hand and I thought he looked a little different — it had to be the missing AirAsia cap!
Until June this year, Raja Azmi was the CEO of Fly Asian Xpress Sdn Bhd (FAX), now renamed AirAsia X — the world's only long-haul low-cost airline and an extension of AirAsia. In fact, he was one of the pioneers behind AirAsia, Asia's leading low-cost airline.

So what's the brick-and-mortar story?

Board and key management of Mainstay Development.

Raja Azmi is now the executive chairman of Mainstay Properties Sdn Bhd and Mainstay Development Sdn Bhd. It takes a while to associate the bubbly Raja Azmi with the scale model of a hybrid commercial complex called space u8 that takes centrestage in the developer's modest shop-office, located in Kuala Lumpur's Taman Danau Desa.
But listen to him talk shop and one cannot miss the passion and the must-succeed philosophy that must have been honed in the five years he worked alongside childhood friend and airline maverick Datuk Tony Fernandez, a man known for his ability to successfully change the business landscape.

"Based on the enquiries received, we do not see a problem in selling the project, but we want to make sure it works beyond sales. We cannot just 'tembak'. The [project] concept has to work... We cannot go half-way. We must show our commitment; we cannot just sell and 'cabut'. Either be there all the way or no way!" says Raja Azmi emphatically on space u8, his debut project.

The freehold stratified project, coming up in the Shah Alam hot spot of Bukit Jelutong, embraces what the developer calls the SUMO (shop unit mall office) concept that combines business and leisure under one roof. In all, there are 58 units of four-storey shop office (46 intermediate, eight end and four corner units) with one four-storey anchor (84,000 sq ft) on an 8.39-acre tract. space u8 will be soft launched next month.

The architectural design has managed to capitalise on the odd-shaped plot to come up with shop offices with dual frontages, most of which afford a view of an internal courtyard, designed to let in natural lighting plus regulate the temperature, helped by natural air flow (see accompanying story).

How did Raja Azmi, an accountant by profession, end up a developer? What does the once executive vice-president and group chief financial officer of AirAsia know about brick and mortar?

It all started very quickly after he called it a day at AirAsia, Raja Azmi tells City & Country in an interview inevitably peppered with fond references to Tony Fernandez and his relentless journey to success. "I don't want to be a billionaire. Tony has a vision of AirAsia being the biggest airline in the world. Tony is a one of a kind; we are lucky in Malaysia we have a Tony. I have worked with a number of CEOs but Tony is something else...

"Tony is on a rocket and he has to have people who are 100% with him. It's very intense, not easy. Our yardstick is global — we want to be the world's best. The first five years were growth years and I was there right from the start. But I now want to have a bit more time for myself..."

Raja Azmi may have thought he had cleared his plate, but it is fast piling up again.

The space u8 site is part of 20.8 acres that he and his partners, introduced by their mutual friends, acquired from Guthrie for RM59.2 million. Besides the 8.39 acres (RM36.5 million) for space u8, the rest is industrial land. "Originally, it started off with me as an investor. But as we got along, it became more and more exciting and I found myself getting more involved. Initially, I wanted to be a director but now, my partners have put me as executive chairman. It is exciting in some ways as my input 'boleh pakai' for finance, marketing, networking and so on," he says.

"I am optimistic the project will work. Why? Because we have done our homework. We believe the concept is right for the area. There is a good feel about the project. Selling the units is not a problem, but it is what happens after that..."
Raja Azmi is right on the mark. While a project needs to boast unique selling points, a credible developer, who is in for the long term, has to create and build value. What good, after all, is a commercial project that is all sold out but is lifeless?

His partners and key management team, who offer different types of experiences in both construction and property development, are totally in sync. The multi-disciplined professionals onboard include Zakaria Meranun (chairman of Atrium REIT Managers, manager of Malaysia's first industrial asset-focused real estate investment trust) and Hasnan Saaidin, with over 14 years of experience that extend to projects like the Petronas Twin Towers and Precinct 20 Putrajaya.

As for the pricing, the space u8 units are tagged at an average of RM330 psf. This works out to about RM2.97 million for a 4-storey block or between RM393,000 and RM1.4 million for a stratified floor. The developer will be running the courtyard space. The rate for maintenance, primarily for the common walkway, staircase and lifts, has not been fixed but the developer says it will be the market norm.

A question-and-answer session with Raja Azmi reveals what this new kid on the property block is made of, life after AirAsia and how he puts to use the guiding principles that have been inculcated at AirAsia.

City & Country: What do you know about property development?
Raja Azmi: The price of the land must be right. When it comes to property, it is about location, location, location. I like the land because I stay in Shah Alam (laughs), because there is a premium attached to the Bukit Jelutong address.

Did it take you long to decide on becoming a developer?
It is all about people — having the right people with chemistry and who have the ability to work. We are a professional organisation; not an Ali Baba. We want to do this well. A property is a property, you sell to maximise value. This is our first project and we have to get it right!

What parallels can be drawn from property development and AirAsia?
It is not dissimilar — it requires teamwork, a single objective. There is also the similar feeling that the project will not fail... the vibes are right. Timing is important — AirAsia might not have been so good had it started five years later or two years earlier. When we first started, there was uncertainty as to how AirAsia would pan out but there was deep confidence that it would not fail. We went through the model and the financials. I have a similar feeling that space u8 will not fail. space u8 is a concept development and it has what the market needs. AirAsia has the right key people who are clear about what they want to do. The vision is clear. The key people execute it with passion and commitment. These people are professionals, chosen based on merit. space u8 also has all the expertise required — from construction to pricing and marketing. The team worked very fast. We have a single objective. We want to ensure that it will not merely be launched with a bang. We want people to go there. We are not a fly-by-night developer. The basic business fundamentals would apply in both (AirAsia and property) — giving the market what it wants.

How do you look at the property market?
We have gone through cycles. Some say the cycle is coming to an end. The government is pumping money into the economy with the promotion of the Iskandar Development Region, North Corridor Economic Region and East Coast Economic Region, so I don't think the market has peaked. My only worry is the US or China...

Property development's about track record, credibility...
We want to build credibility. We have the expertise and are sincere. We have to think beyond racial lines and stuff like that. We have the right people for the right job — whoever is best for the job, gets it. We have a very good team here. We are focused.

What's next after space u8?
It is too early to tell. But we are looking. We are here for the long term. We have been looking at a couple of prospects. A joint venture would be easier but we have to find the right one. This will probably be in the Klang Valley, but not Shah Alam.

Your plans for the industrial land in Shah Alam?
We are holding it for the moment. We are looking at the possibility of custom building it... Zakaria , one of our partners, is chairman of Atrium REIT managers, so there is some synergy that we can look at. Atrium is basically into industrial properties.

Do you miss the pace at AirAsia?
The five years were intensive but fun. If you are not in AirAsia, you will not get that experience. You are able to change the landscape — you only read that in books! It was a chance of a lifetime. The company has to move on, the successors are in place, so let the next echelon take over. But Tony must be there! I want to enjoy life a bit.

Any sense of emptiness after AirAsia?
Sometimes I miss the intensity (laughs). Five years is a long time... it was the best experience of my life. It's tough. Overall, I am happy. I never knew the kind of business opportunities out there. People think I have a lot of money but I don't have so much... I've got time! Now I can say that! (more laughter).

What other businesses are you now in?
I am involved in start-ups... Masterskill (M) Sdn Bhd (a nurses training college) is going through an exciting phase, we want to get it listed next year. Then there is Gemilang Maintenance Services Sdn Bhd, which is a facilities management company with a contract to manage federal government buildings. Again, there is no reason why we cannot move to the next level of business. My role is to facilitate that move and hence allow more people to be rich, hopefully. I am still a shareholder of AirAsia X and AirAsia. I'm cool! I'm lucky. I'm blessed. My way of giving back is to try make other people richer.

What is life after AirAsia?
You live only once. I have five children aged between 22 and eight. And one wife (laughs). My eldest son, aged 19, is in AirAsia's cadet pilot scheme — I nominated him but he has to go through all the tests before he can qualify. I wanted to be a pilot before but [couldn't because] I needed glasses. Those days, you needed 2020 vision before you could fly a plane and I ended up an accountant. Now my son can live my dreams... At least I worked in an airline; that's as close to an aircraft as I can get! I have thought of getting flying lessons... Who knows?

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