Dr Lee Ville.
For Dr Lee Ville, it’s all about balance.
“Surgeons get called up at 3, 4am,” he said, smiling at thememory. “I didn’t see how that would be very healthy in the long run.”
A graduate of Penang Medical College, Lee had alwayswanted to be a doctor since secondary school. But during his housemanship, the “balance” simply wasn’t there. He found that he enjoyed surgery (“I like to be hands-on”) but beyond that, the hours were getting to him. So when his father invited him to join the family’s properties business, he decided to give it a shot.
Today, Lee is the director of New Bob Group of Companies,which has a diverse portfolio in property development and management; its subsidiary, New Bob Realty, was the first real estate agency in Penang. Under his guidance, the company is determined to help potential homeowners achieve a semblance of balance in their lives by pushing the development of eco-friendly properties that make full use of the natural environment while being energy efficient. Lee sat down with Penang Monthly to chat about the property landscape in Penang, and where the industry is headed.
The Manor's roof garden.
What’s your take on the property industry? Why the boom?
Well, I think the boom is really only over the last three years, in terms of big shifts in price. Up until 2008 or 2009, property prices were going up at a rate of five per cent to 10% a year. Then in 2009 and 2010, you started seeing a 30% increment. Perhaps Penang has been a victim of its own success – under the new state government, Penang has been doing very well and has suddenly become a very interesting place for a lot of people to come in and invest. Even the KL developers have started taking notice. Look at Mah Sing and IJM – they have focused a significant number of their groups’ GDV (gross development value) here. Recently, Singaporean developers and Chinese investors have also expressed interest in being more involved in Penang’s development projects.
How has New Bob positioned itself in the last few years?
Over the last half year, you could see a slowdown in comparison to 2012. I think there was a drop of over 1,500 property transactions, as opposed to the third quarter of 2012. I think now is the time when developers would be able to differentiate their products. What we’re doing now is we’re focusing more on green developments. Locally, it’s not that well-promoted. The public doesn’t really care if the house is “green” or not. As long as the price is right, they’ll buy it.
But we believe that if we want to be a responsible, sustainable developer, we have to provide this option to our clients. More developers are going into green development in Penang.
So what’s the demand like for green buildings in Penang? Compared to non-green
The Manor's living hall.
For the moment, there is really no difference in demand. Costs of water and energy are relatively cheap in our country. But we believe it will pick up. Electricity tariffs have increased and people are complaining about 20% price hikes in their bills. People will start looking at more energy efficient options.
Over the last few years, people have focused more on aesthetics than function. Everyone likes to have windows all over the place because it looks fancy having glass facades on all sides. But we’re starting to see a design shift. You won’t see windows on all sides now, only the north or south sides. Not only do you avoid direct heat from the sun, you will also have true cross ventilation from the natural wind directions.
So I think this would eventually become… I wouldn’t say a trend, but a necessity in terms of design in the future. Studies have shown that not only are green buildings more comfortable, they are 30%-60% more energy efficient with an increase resale value of 7.5%. We’re trying to be a market leader in providing these types of designs and ideas now.
Do you get green incentives from the government?
Not enough. Development charges are RM15 per sqft. The incentive is if you have a Green Building Index (GBI) Goldcertified building, charges are at the old rate of RM5 per sqft. Commercially it’s RM7 versus RM21. That’s the incentive from the state government. Federally, we don’t benefit much. And this is only for the island. On the mainland, there’s no added benefit1.
But for our projects, we have not used GBI because, unfortunately for Penang, some of the requirements are based on US standards and are more product-centric in their ratings. One of the things they look at is public infrastructure – whether the property is right next to an LRT or bus station. We don’t have a lot of those around (chuckles). You can put a lot of green features in a building, but if you don’t have the infrastructure, you just can’t meet the standards.
We’ve gone with (Singapore’s) Greenmark and (Malaysia's) GreenRE instead. In my opinion, they are more holistic in their ratings and place more emphasis on passive design-centric approaches. Since April 2008, Singapore requires all new buildings to be Greenmark-certified. The Singapore government does give incentives to developers who achieve a “Greenmark Gold Plus” rating in their projects. I think that’s how you have to start from the beginning – incentivise people. Once it becomes apparent to people that green buildings are more energy efficient and more comfortable, then even without the incentives people will go green. It only makes sense.
Can you run through your current green projects?
For residential projects, we have the Lim Mah Chye, a four-unit bungalow, which will be going for Greenmark Gold. We have one in Codrington, a three-unit bungalow, which will be going for Greenmark Gold Plus. Then we have one that’s launching in June over on the mainland, River Tropics, an 18-storey condominium, which will be going for Greenmark Gold. So that’ll be our first project on the mainland. We’re going to be the first on the mainland with a Greenmark Gold certification for condominiums. There are incentives for Penang Island developers to go green, but not on the mainland. Costs on the island are so high, but costs on the mainland are going up as well. Hopefully there’ll be incentives in the future.
How quickly is the property industry developing on the mainland?
It’s actually developing very quickly. A lot of local developers have moved their projects over to the mainland – previously, there were hardly any high rise projects, but this year, there are easily 12 or 15 high rises in Bukit Mertajam alone. We’re now looking at landed terraces going at RM600,000-RM700,000, semi-detached houses at close to a million ringgit, and bungalows going for over a million ringgit on the mainland in prime locations. Condominiums are priced at RM300,000- RM400,000.
People have been talking about a bubble for years. Is there a bubble?
A bubble is very easy to pinpoint in hindsight. There really are no indicators of when a bubble will burst. I do see a slowdown in terms of high end launches, properties that are RM3mil-RM5mil may slow down. But in terms of affordable products in the range of, well, if you want to call RM400,000-RM600,000 affordable, we have been lacking that product in the market for a very long time. There’s a huge demand for it but no supply. There’s no bubble there. So it depends on the price range. And I believe incoming supply has been dropping – it’s not as if we’ve been having an excessive supply of properties over the last few years.
I read an issue of Penang Monthly where the state plans to build 20,000 affordable houses by 20202, but even with that, we’d still be short of up to 50,000-100,000 units. I believe the state government is coming up with a new affordable housing policy, so hopefully that can address that situation.
But at the moment, it’s not feasible for any developer to go into the affordable range due to existing policies. Because Penang is density-limited, we can build up to 120 units per acre. That alone is not enough. Other states are already looking at plot ratios, where you can just build the required number based on the size (of the land), whereas now we have to build 30 units regardless of the size. That’s why you see luxury condos at 4,000sqft, or even 6,000 or 10,000. Because the number is fixed, you have to build big if you want a reasonable profit. So hopefully with the new policy, it will allow developers to build more small units. I think that will benefit everyone. If the state government is serious about affordable housing, we will see smaller sized units at affordable ranges.
1 There are no development charges on the mainland.
2 See “New housing policies to help Penangites cope” in our February 2014 issue.