This article first appeared in City & Country, The Edge Malaysia Weekly on November 14, 2022 - November 20, 2022

No. 9 (Joint Ranking) | OSK Holdings Bhd

OSK Holdings Bhd, property development, CEO Ong Ghee Bin, chief operating officer Seth Lim and their team were all smiles when City & Country arrived at the group’s sleek, brand-new Shorea Park show gallery in Puchong. It is our first in-person interview since the country began transitioning to the endemic phase of Covid-19.

A whirlwind of industry chatter and catching up later, we finally delve into the latest updates and accomplishments of the property arm of OSK Holdings Bhd, which has secured a position in the Top Property Developers Awards of The Edge Malaysia Property Excellence Awards 2022 for the second time.

Despite its encouraging growth, Ong maintains that the group remains prudent and modest about its strategic plans and launches to ensure its steady, long-term growth. “We intend to remain focused on our Vision 2030 targets [to be the top developer]. Our overall growth has always been steady and sustainable. For now, we will focus on delivering projects priced around RM500,000 for first-time homebuyers in prime locations,” he says.

Ong also highlights the group’s “Prop-Con” model, which sees an amalgamation and collaboration between the group’s property arm and OSK Construction, its construction arm. “This model has worked tremendously for us. Our projects are being handed over ahead of schedule.”

Ong also tells City & Country about OSK Property’s overall plans in the coming financial year, and how it mitigates the current risks and challenges. The following are excerpts from the conversation.

Ong Ghee Bin: The market has picked up since FY2021, albeit not at the same levels as pre-pandemic days. No matter what the situation is, there will always be a level of demand for homes because it is a necessity.

At the end of December 2021, there was a rush of pent-up demand to take advantage of the HOC (Home Ownership Campaign). When the HOC ended, market sentiment slowed down during the first two months of 2022. With the current improvement in Malaysian economic sentiment, after the country began moving into the endemic phase, businesses have started to regain traction and see an increase in business activity.

Overall, looking at what we have been doing for the first nine months in 2022, we expect to do better than last year. However, it has yet to reach pre-pandemic levels. We will continue to work hard and push ahead for the last quarter of 2022 to achieve our group sales target for the year.

As at June 30, 2022, the group had recorded revenue of RM641 million compared to the RM592 million achieved during the same cumulative period in the previous year. In the same review period this year, OSK Property also registered RM221 million in profit before tax.

Our key strength lies with the synergistic partnership between OSK Property and OSK Construction, known as Prop-Con, which was initiated in 2017. It has benefited us, especially in trying times like these. It has enabled us to maintain our competitive edge in the property development market today.

The Prop-Con initiative enables us to increase our efficiency in terms of construction speed, methodology, material wastage controls, as well as cost management to ensure operational excellence.

This initiative has also benefited us on the product quality front where we have consistently delivered products with Qlassic scores of 75% and above for landed projects and 80% and above for high-rise projects over the past few years.

With the partnership in place, along with a well-planned foresight on design standardisation and material acquisition planning, we can manage the fluctuations in costs, and yet are still able to deliver high-quality and competitively priced products ahead of schedule.

To be in line with market demand, we have aligned ourselves to developing value-oriented and essential homes for home seekers. Our aim is always to deliver products that suit the needs of our customers, to ensure a high level of satisfaction and suitability in their daily lives.

Our customers are able to enjoy the benefits that we offer: a quality home that is reasonably priced, has a great location and comes with lifestyle facilities that are well designed to fit the modern community.

In addition, we have done more market research to cater to what [the market] wants and needs; for example, we have included lanais, balconies and home offices in our newer projects because of our customers’ feedback, especially with the changes during the pandemic and the transitioning to endemic phases.

The main challenge that we are facing today is the shortage of manpower, which has caused a spike in workforce costs because of the supply squeeze; approvals for foreign labour have slowed down as well and there have been wild fluctuations in the cost of construction materials … Geopolitical instability has played a major factor in these challenges.

The current hike in interest rates in the US and Malaysia, resulting in the ever-increasing cost of construction; the disruption in the supply chain of materials; and the weakening of the ringgit have posed very challenging business conditions.

We have also faced challenges in the approval process for our projects, where some launches had to be delayed and launched slightly later. The approval process for foreign labour and the supply of manpower have improved. We expect the supply of labour to normalise in the coming months.

We are cautious and will plan based on market forecasts and what we observe happening on the ground. OSK Property remains very market-driven, where we focus on fulfilling the needs of our customers.

Internally, we have set ourselves a long-term plan known as Vision 2030, where we continuously improve on our Prop-Con initiatives along the way, to ensure that any shortfall and gaps are met in the process.

Our main strategy is the expansion of our existing townships in ensuring the continuity and growth of the group. We also have several high-rise and mixed-use developments in the pipeline to further strengthen our foothold in delivering reasonably priced products to home seekers in Malaysia.

The landed homes in our townships Iringan Bayu, Seremban, and Yarra Park, Sungai Petani, have been our best performers. It is still evident that home seekers have a preference for landed townships.

Having said that, for our high-rise developments, products that are value-focused and priced competitively, such as MIRA in Shorea Park in Puchong, have also sold tremendously well, sitting comfortably in the affordability range of a large percentage of Malaysians.

Moving into 2023, we believe affordability is a key factor in designing our products, where reasonably priced products will be the focus for home seekers, especially for first-time homebuyers.

We have been actively looking into expanding our land bank, especially for medium and large tracts of land surrounding our Iringan Bayu and Yarra Park townships. The expansion allows us to tap into the convenience and accessibility of the existing townships.

This year, we acquired two new parcels of land in Sungai Petani at 39.1 acres and in Seremban at 49.8 acres, in line with our township expansion plans.

This will further enable us to strengthen the positioning and branding of our townships as we push forward into building sustainable townships in line with the government’s and financial institutions’ push into developing green and environmentally responsible projects.

With the Prop-Con initiative in place, as well as a well-planned foresight on design standardisation and material acquisition planning, we are able to manage the fluctuations in costs and yet are still able to deliver high-quality and competitively priced products ahead of schedule.

We are confident in the foresight of our think-tank team to ensure that the decisions we make today will benefit us in the years to come.

Bulk material acquisition planning, another Prop-Con effort, will ensure that all our projects are well-supplied and can continue with minimal disruption. We are also working very closely with our contractors to ensure that manpower, be it local or foreign, is always at an optimum level to ensure that our projects can be delivered on time.

In addition to this is our vertical integration within the group, where the synergy between our companies also plays a key role in our effort on cost management.

We are happy to say that during these uncertain times, we managed to ensure that all the products that we launch fit the needs of our customers. As such, our completed balance stock is one of the lowest in the industry at less than RM10 million.

So far, our launches in FY2022 have performed rather well: LEA by the Hills in Taman Melawati, Selangor; ANYA, the second phase of Shorea Park; and Rubica in Butterworth, Penang. The phases that were launched beforehand [in the respective new developments] are sold out.

We also have new phases in Iringan Bayu and Yarra Park, which predominantly target first-time homebuyers.

Internationally, the first phase of our Melbourne Square project is already completed. It comprises two residential towers and a commercial podium, with a 90% take-up rate [for the first phase] so far.

The group is supportive of the green and sustainable initiatives set out by the local government as well as financial institutions pushing for a greener tomorrow.

We are working with our supply chain to move towards sustainable construction such as the use of eco-friendly materials and renewable energy sources for our upcoming developments. Implementation of green technology in our developments will also be ramped up — such as solar panels, high-efficiency light bulbs and rainwater harvesting systems — to enhance the level of sustainability in the developments. All these steps are taken to lower our carbon footprint, hence contributing to the preservation of the environment.

Acquiring green and sustainable certifications by accreditation bodies such as Green Building Index (GBI) or GreenRE also ensure that our developments are of the high standards required to be a certified green development, which allows customers to access a lower cost of borrowing through green home financing supported by many financial institutions.

A part of our ESG (environmental, social and governance) efforts also include the solarisation of our sales galleries, where three of our sales galleries - Iringan Bayu, Sungai Petani and Shorea Park - have been equipped with solar panels to reduce dependence on the national grid for our energy.

We plan to raise the number of trees in our townships to further increase the absorption of carbon from the atmosphere. We are actively building awareness about sustainability and ESG among our customers by providing bins for the collection of recyclables to educate people on the importance of green initiatives and the positive effects for future generations.

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