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Saturday, February 18, 2012

The merging labours of UEM-Sunrise

At the outset, the acquisition and merger of Sunrise Bhd into UEM Land Holdings Bhd early last year looked like a simple, straight forward corporate exercise that went without a hitch.

But behind the scene, many man hours have been expended to ensure a smooth integration and transition for the 1,000-strong staff in the enlarged property group.

Wan Abdullah: ‘We got to know each other’s DNA before proceeding to the various issues.’

UEM Land Holdings Bhd managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim concedes that the integration and transition phase is not without its challenges and there are a range of issues that needed to be looked into.

“When the acquisition of Sunrise was completed, we did not want to rush into things because both companies have got good offerings and their own unique selling propositions.

“The old UEM' is principally a township developer and a government-linked company, while Sunrise, led by Datuk Tong Kooi Ong, is a well known brand for its luxurious condominiums and high-rise integrated projects.

“We got to know each other's DNA before proceeding to address the various issues ranging from human resource matters to alignment of systems and procedures,” he relates to StarBizWeek.

With each side having about 500 staff, the enlarged UEM Land saw its staff number doubled to 1000.

The realignment and consolidation of its human resources involve the redeployment of staff, job scope and responsibilities, and a uniform reimbursement and reward system, among other things.

A new organisation structure emerged with the right candidates brought in to head the various departments, Wan Abdullah says.

He adds that the redeployment of staff in the two companies has resulted in better synergy and operational efficiency. A good example is the redesignation of Sunrise chief operating officer (COO) Lum Tuck Ming as the group COO of UEM Land.

With Lum on board as the UEM Land group COO, Wan Abdullah says it has freed up his time from having to handle the daily routine operational and project matters, to focus mainly on more important strategic decisions for the medium to long term growth of the company.

With regard to staff remuneration, he explains that Sunrise adopts the seven good years scheme where staff will be rewarded based on their performance over a seven-year period, while UEM Land uses the short-term and long-term reward system.

“We opted to retire the Sunrise scheme and paid off the staff, and replaced it with a new remuneration scheme that covers terms of employment, salary structure, and other benefits. The new scheme will be presented to the board for its approval later this month,” Wan Abdullah notes.

The system and work procedures also have been streamlined and unified to ensure uniformity.

Wan Abdullah says UEM Land is still undergoing a major shift in its work culture with the adoption of the Sunrise matrix system that requires staff to be seconded to projects from the start to their completion. Previously, UEM Land employs the central support department system.

“This major shift in our work culture will no doubt result in higher accountability and responsibility among our staff,” Wan Abdullah says.

There are also many synergistic benefits that can be tapped and one of the more obvious will be the enhanced skills and branding advantage that Sunrise brings with it.

With 35 years of involvement in high-rise developments and its success in building up Mont'Kiara into a renowned luxurious residential address, Sunrise's expertise seems to be the missing jigsaw puzzle to “complete” UEM Land as a more competitive player armed with a full set of skills in township and point block high-rise developments.

In particular, Wan Abdullah and his team are eager to tap the vast opportunities with the opening up of land for development by the Federal Government and state authorities.

Armed with its newly acquired skills, he says UEM Land is more confident to pursue these projects either through the direct acquisition of land or through joint ventures. Besides the Klang Valley, it is also looking out for opportunities in Penang and Kota Kinabalu, Sabah.

Regionally, UEM Land has set its sights on India, Vietnam and Cambodia.

Contrary to what has been predicted by some naysayers that there will be mass resignation of staff following the takeover of Sunrise, Wan Abdullah says there was no such occurrence.

“The key people at UEM Land and Sunrise are still with us today.

“There will be a lot of scope and opportunities for all our staff. In fact, the Sunrise team members are excited that they now have the opportunity to get involve in integrated township development. They used to have landbank of around 150 acres which are market-ready, but now they are part of a company with combined landbank of more than 9000 acres,” he says.

UEM Land still has 9000 acres undeveloped land in Nusajaya, Johor, and according to Wan Abdullah Nusajaya will be going into “tipping point” towards the end of this year.

“When that happens, the demand structure for our property products in Nusajaya will evolve like never before.

“This will coincide with the completion of the coastal highway in the first quarter this year; BioXcell and Marlborough College in the third quarter; Legoland, Indoor Theme Park and Traders Hotel in the fourth quarter,” he explains.

By The Star

Perak developers unhappy with new premium rate system

RECENT media reports suggest that Ipoh is experiencing an upswing in property developments but developers are unhappy with the new premium rate system imposed.

According to San Chak Chun, honorary secretary of the Perak chapter of the Real Estate and Housing Developers' Association Malaysia (Rehda), there are some significant property projects in Perak, particularly Ipoh, but recent developments in the state administration have been of great concern to developers.

“The Perak government should be more sympathetic to the property development sector as it is the locomotive' for economic growth in the state,” pointed out San, 65, a lawyer by training. He is concurrently a committee member of the Perak Chinese Chamber of Commerce and Industry as well as the Associated Chinese Chambers of Commerce and Industry, Malaysia, involved in monitoring issues related to property and housing development and legal affairs.

“The property sector plays a vital role in more than 140 industries and trades in the economy,” explained San. “It is, in fact, the lifeline for people from all walks of life. Property development creates many job opportunities for locals as well as foreigners.

“But the cost of doing business for property developers has been on the rise since the state government changed its method of calculating the conversion premium from nett saleable area to gross area of a housing scheme which saw a 100% increase in the premium rate payable by the developer even for his own land. The capital contributions charged by the National Water Services Commission or SPAN (Suruhanjaya Perkhidmatan Air Negara) is another burden.”

Rate of premium payable by the developer is 10% of value of land per square meter for commercial property, and 1% of value of land for residential development. The capital contribution to SPAN has different charges. If the service reservoir is built by the developer, then the top bracket charge is RM1500 per unit for houses costing above RM500,000.

He also cited that the Department of Civil Aviation's imposition of a height limitation on the construction of high-rise buildings within a 5km radius of the Ipoh airport was another problem. Such buildings were restricted to a height that should not exceed 130m above sea level.

“This had practically stunted the Ipoh city centre and rendered the development potential of land within that radius comparatively restricted.”

On bureaucratic red tape, San stressed that the local authorities should reduce the approval time for all stages of development application.

“That means, from planning to implementation. Although, the one-stop centre concept has been implemented but the resultant effect still needs much improvement.”

Assessing the property industry in Perak, particularly the commercial segment, San revealed that there were several new budget hotels currently being constructed. But there was a lack of four-star and five-star establishments.

“There could be an oversupply of budget hotels as many entrepreneurs are turning their shophouse premises into such ventures.

“But Perak has no proper convention centre nor big enough exhibition venues to hold conferences or expos of international standards,” he highlighted.

“There is already an oversupply of shops and such commercial properties in various parts of Ipoh and towns in outlying areas.

Many such properties have also been converted to swiftlet farms,” said San, referring to the backyard industry of breeding swiftlets for their edible nest.

Residential property

For residential property developments, San said projects within Ipoh city and nearby towns were still selling well, with prices going up 20% to 40% for double-storey terraced houses.

“A standard two-storey linked house in Ipoh city is selling about RM390,000, whereas in other areas and in suburban localities, such a property can now fetch RM240,000 and upwards.

“For semi-detached houses, the current price is about RM800,000 for a unit with a built-up space of 3,500sq ft and a lot size of 45ft by 80ft.”

In the ranking order of “saleability,” the demand for residential property is for single-storey terraced and double-storey linked-houses followed by single-storey and double-storey, semi-detached houses plus medium-sized bungalows.

For reasons of accessibility and convenience, such properties should be within a radius of 10km from the city centre where most business activities are located.

However, San lamented that wasn't much interest in industrial property.

Many units of such developments were still vacant or turned into swiftlet farms. Comparatively, property prices in Ipoh were still quite affordable for working couples with two incomes. There was still a market for such developments.

By The Star

SC declines ruling application by joint offerors of SP Setia

PETALING JAYA: The Securities Commission (SC) has declined a ruling application sought by the joint offerors of SP Setia Bhd, which they will not appeal.

However, the decision has no material impact on the joint offer made by Permodalan Nasional Bhd (PNB) and SP Setia founder Tan Sri Liew Kee Sin for the rest of the company’s shares.

“Notwithstanding the above, the terms and conditions of the revised offer remain unchanged as per the notice,” SP Setia said in an announcement to Bursa Malaysia.

Last month, PNB and Liew became joint bidders for the property giant, raising the offer price to RM3.95 per share and 96 sen per warrant, up from RM3.90 and 91 sen before.

SP Setia added that the offer document for the revised offer would be despatched within two days after it had obtained clearance from the SC.

The company had told the stock exchange on February 10 that it applied for a ruling with respect to the concert-party relationship of the joint offerors with one another and with various other persons that was submitted to the SC on January 25.

By The Star