Andaman adopts Blue Ocean strategy

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Petaling Jaya (The Star/ANN) - Sometimes staring competition straight in the face just will not get you anywhere. It is then that most tend to look to adopt different strategies to combat competition.

Although it may first come across as unconventional, it could eventually prove to be the best strategy.

Andaman Property Management Sdn Bhd, the property division of Andaman Group, has adopted a Blue Ocean strategy in its property developments.

A Blue Ocean strategy pushes companies to tap into uncontested markets instead of battling it out with fellow competitors.

Sales and marketing director Dr Vincent Tiew says the company often looks for niche markets that give it the ability to monopolise.

The group is launching and developing seven projects over two quarters. The first two projects, namely Taipan City @ Ipoh and Taipan @ Pantai Remis were launched in November.

One project will be launched this month, while two more will be launched in January. Meanwhile, February and March will see one project launch each.

Taipan City @ Ipoh is a commercial development in Perak, which features 40 units of three-storey shops with a total gross development value (GDV) of 60 million ringgit (US$19.63 million). Taipan @ Pantai Remis is a 13.3-acre commercial centre, also in Perak worth 80 million ringgit in GDV.

In December, Andaman is launching another commercial centre, Taipan @ Slim River, which spans 12.7 acres and is worth 80 million ringgit in GDV. Next year in January, Diamond Residence @ Serdang and Westlake @ Sungai Siput will be launched. Diamond Residence @ Serdang is a residential development, which carries a total GDV of 120 million ringgit. Meanwhile, Westlake @ Sungai Siput is an 350 million ringgit GDV township.

Scott Towers @ Larkin Condominium will be launched in February and will mark the first property Andaman is launching in Johor Baru. The total GDV for the condominium project is 120 million ringgit. In March, Andaman will launch the largest and first small office versatile office (SoVo) in Bangi, Selangor. The total GDV for the project is 110 million ringgit.

It is notable that Andaman's seven projects are heavily focused in Perak. Four of the seven projects are located in Perak, while one is in Johor Baru and only two in the Klang Valley.

While most property developers have been focusing their attention on popular areas such as the Klang Valley and Johor Baru, Andaman chose to diversify its developments in terms of location. Tiew says: "We try not to go to overcrowded areas."

Tiew says he prefers to buy land and develop in areas where land is extremely low in price and that would give the company a yield of between 15 per cent and 25 per cent.

Most of its projects are located in different small pockets of land. The company usually buys land that is between 5 acres and 30 acres. Tiew says the company has been able to finance its land acquisition without securing loans. "Without securing loans, we have the ability and the capability to adapt to any situation," he says.

Tiew believes in not leaving the land idle. "Within 12 months of purchasing the land, we will get it ready to be pre-launched or launched," he says.

He adds that this strategy is not really a just-in-time' approach. Tiew says it is all about the product, concept and price.

His efforts to decentralise the types of properties and locations of the properties is so that Andaman's cost can be kept at a low level. "This way, we can sell out fast, at lower prices per sq ft," Tiew says.

At the recent The Star Property Fair 2012, Tiew says the company received reservations for an average of 30 units per property. "This was valued at approximately 18 million ringgit to 20 million ringgit," he says.

He adds that the take-up rate exceeded his expectations. "Of course, now we have to wait to see if their loans get approved," he says.

Tiew comments that the property fair brought in a larger crowd this year but adds the company would like to see a larger percentage of bumi buyers. "It is an important segment to reach as all property developers need to fulfil the bumi quota," he says.

Cumulatively, the company has surpassed the gross development value of 3 billion ringgit over the past eight years of incorporation. Tiew states the company has seen about 750 million ringgit in sales revenue in 2012 and expects to maintain this level next year.

Past the seven launches the company would have done in the first half of 2013, Tiew says Andaman will see more project launches in the Klang Valley in the second half of 2013.

Recapping on the year, Tiew says about 15 per cent of property buyers did not take up any commitments due to expectations of the general elections being held in the second half of 2012.

"Also, the effectiveness of the PR1MA (Program Perumahan 1Malaysia) scheme has yet to be seen. In my opinion, it is because the financing facilities have not been clearly designed," he says.

The PR1MA scheme under the PR1MA Act 2012 was designed to develop cheaper homes, catering to middle-income households of a monthly combined household income of between 2,500 ringgit and 7,500 ringgit.

Tiew expects the property market in the first half of 2013 to be quite slow due to the upcoming general election, as well as any new regulations that may be implemented by Bank Negara, the central bank.

However, he does expect the property market to pick up in the second half of 2013. "With the right products and the right locations, most of our property projects should not face any problems in selling," he says.

*US$1=3.05 ringgit

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