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ON FRIDAY
FEBRUARY 6, 2015
NORMANHIU/THESUN
PHOTOCOURTESYOF B.I.GPLOTS SDNBHD
Land
scape
>Exploring land investments
T
AN
Hwa Chuan stumbled across
investing in property and land some
15 years ago. His, is a story that I
believe you should hear from him
alone. Aman who speaks about his “work”
with sincerity and passion, he spares some
time to share his knowledge on the subject
he is known for – investing in land.
LOVE FOR LAND
Says the B.I.GPlots Sdn Bhd director, quick
and sharp: “It is rare that you hear of one who
goes directly into land investments. It is
advisable to first gain experience by investing
in condos, residentials as in link houses and
such, shophouses and then land. But I know
someone whowent into land investing
directly …my aunt,” says Tan. “She bought a 3
ft x 6 ft plot in Semenyih, at the price of
RM36k or RM2,000 psf,” he jokes, easing into
the serious topic of investing in land, a
venture that is suited for those with an
appetite for risks and returns.
A specialist in land mergers and
acquisitions, Tan expounds the myth that
land investment is only for the big players.
He, himself, learnt the ropes of the industry
by first registering for a two-day basic
property course. He also attended seminars
on property and land investment and grew
his knowledge. Tan developed his interest
and knowledge further until it became a
passion. “I loved land, especially learning
about mergers and acquisitions. I enjoyed
the negotiations with the land owner and
raising funds from the developers or funders.
Today, I play the role of a business
development specialist in land investment or
development. In my position, I go out to visit
sites with CEOs and chairmen of
development firms. I consult and advise
them on land mergers and acquisitions. I also
prepare feasibility studies, cash-flow
projections and conduct deal structuring,”
explains Tan.
He then cites names of some local real
estate tycoons and says, “Whether their
businesses were diversified or purely in
property, people like Tan Sri Jeffrey Cheah,
Tan Sri Francis Yeoh, Tan Sri LiewKee Sin
and Tan Sri Leong Hoy Kum (amongst many
others), have turned empty lands into pots of
gold.” He also mentions founder and
chairman of China’s Country Garden Yang
Guoqiang who went from rags to riches and
Hong Kong’s Li Ka-Shing whose fortune
turned around for a whole lot better when he
went into real estate.
WHY LAND INVESTMENT?
Here are some reasons why Tan suggests
one should think about investing in land.
1) It requires much less maintenance
compared to investing in condos or landed
properties, etc.
2) You have the power to leverage on your
land investment as you have the option to
get between 50% to 70% loan from the
banks.
3) Moreover, if you negotiate well, you don’t
even need to come up with money to
invest in land.
Tan expands on his third point, explaining
howone does not need to fork out anymoney
to invest in land. “If you buy agricultural land,
the banks can give you a 50% to 60% loan.
There are ways to go about this, where you do
not have to come upwith the balance 50%or
40%down payment.” He finally says, “It’s all
inmy book –Make BigMoney via Land”. A tip
fromTan – “
It all boils down to howyou
structure the deal
.”
Looking at other asset classes, investment
patterns and returns may differ hugely in
comparison, so are the risks, says Tan. “Each
carries its own set of rules and policies, and
their ensuing returns. No two are the same.
Each requires necessary study and analysis
for any investment towork. Although I ama
big fan of land investment, I won’t hide the
fact that it is still a risky venture like any other
investment. The key to success in this game
is, knowing when to enter andwhen to exit.”
GOOD LAND DNA
A perfect example would beMont’ Kiara, a
township best known for its high-end
condominiums and affluent expatriate
communities, not tomention commercial
centres, office complexes and international
schools. “Before all this took place, Segambut
Dalam, as it was known, was only a village
made up of squatters with no proper road
access,” shares Tan. He hails the vision of
Datuk Alan Tong, then founder and chairman
PART1
of Sunrise Berhadwho acquired 12 parcels of
land totalling 100 acres at RM2 per sq ft back
then. “Today, the price of land there is
approximately RM400 plus per sq ft, an
appreciation of about 200 times more or a
constant 30% appreciation per annum, far
higher than our 3% to 4% annual fixed deposit
earnings,” explains Tan, almost instantly
coming upwith the figures.
Sowhat DNA constitutes good land so as
tomake good profit from it? Tan shares a few
criteria which include:
a) International appeal – “The presence of
three international schools spurred the
growth of Mont’ Kiara. This growth goes
hand-in-handwith the teachers, the
students and family population.”
b)Matured townships – “Buy land adjoining
tomatured townships. InMont’ Kiara, it
was already a catchment area for potential
buyers with surroundingmatured
townships like Segambut, Jalan Ipoh,
Damansara Heights and Sri Hartamas.”
c) Branded developers – “The presence of
branded developers (in this case Sunrise
Berhad) attracted other branded
developers intoMont’ Kiara like Ireka
Corporation, Sunway Berhad, Bandar Raya
Developments Berhad, Mah Sing Group
Berhad, etc. This, in turn, will bring
together buyers and followers from the
luxury segment.”
d) Accessibility – “Mont’ Kiara is
conveniently located with easy access via
the Sprint Highway, Penchala Link and
the NewKlang Valley Expressway
(NKVE). It is also strategically located and
gives quick and smooth access to KL city,
Petaling Jaya and other populated
centres.” Tan also mentions Taman
Melati which saw a new era when it
became more accessible with the opening
of the Middle Ring Road 2 (MRR2).
e) Facilities and amenities – “Banks, malls,
schools, supermarkets and hypermarkets,
etc. Look at Kota Damansara today,
after the re-branding exercise, PKNS
managed to attract Sunway Berhad,
Mah Sing Group Berhad, Tropicana
Corporation Berhad, See Hoy Chan
Group, Paramount Corporation Berhad …
prices of condominiums in Kota
Damansara have risen remarkably, even
during the Global Financial Crisis of
2008.”
In his book, Tan states that there are many
ways to skin a cat. “With real estate, there is
also a quick way to determine if you should
go ahead and purchase that piece of land.”
Follow our column next week to learn of
Tan’s views. If not, he says: “Buy my book.”
“Traffic jams are only trouble to road
users. In terms of real estate, it is a
positive sign of value appreciation.
With the influx of population and better
accessibility once theMRR2 opened,
TamanMelati experienced traffic jams,
hence, new business opportunities,
new property projects, and property
appreciation. So, nowwhen you look
at heavy traffic, do you seemadness
or magnet?”
– Tan Hwa Chuan
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