A medical doctor dabbling in real estate? Why not, after all, he’s got the potential to take real estate in Penang to the next healthy level.
Dr Lee Ville has achieved things most people could only dream of in their 20s – he became a medical doctor by qualification; a director of the most prominent real estate company in Penang, the New Bob Group, the founder of ERA Malaysia; a licensed auctioneer and an active member of REHDA Penang – the man is an over-achiever to say the least.
His success isn’t the typical rags-to-riches story that tugs at your heartstrings, but the tale of a man who has braved risks by making a complete turnabout in his career in order to shoulder a family legacy. Unlike the many failed succession stories out there, he took on the family empire and brought it to greater heights.
The 36-year-old Lee is a brilliant man. He was top of his class from the start of his formal education, and later on, fuelled by his love for education, decided to pursue medicine as a career. “I viewed medicine as one of the most highly respected professions, plus it was a challenging degree to take up. That’s why I made the decision to pursue it – I relished that challenge,” explains Lee.
All of his hard work paid off when he graduated with a medical degree from Penang Medical College (in collaboration with National University of Ireland) and started his housemanship at Penang General Hospital for a year in 2003.
During that period however, the man reached a significant crossroad that could potentially change the course of his life – he was torn between continuing on his medical path and making a complete switch of career. It was around that time that his father, the founder of New Bob Group, decided that he needed to scale down on his workload. “At that time, I saw a great opportunity in the real estate industry and I believed it was the perfect time for me to venture into my family business. So, I gave myself a year to familiarise with the industry before deciding that it was meant for me.”
“He who wills the end, wills the means” – Lee didn’t let his lack of experience in business discourage him. Determined to manage the business better, he went to obtain an MBA in General Management from the University of South Australia. A decade later, he became one of the most prominent figures in the Penang’s real estate sphere; during which he put in motion the global francise and Asia Pacific’s biggest real estate agency, ERA Malaysia.
“When I first embarked on the real estate industry back in 2004, I saw a lot of room for improvement. So I reached out to ERA in US and Singapore, an international brand that provides international training and development to real estate companies, as I felt they had the system that suited us best,”.
Conversation with Dr. Lee Ville
APR: Who is the brainchild behind the expansion and diversification of the New Bob brand?
I would say it’s my father, Dato’ Leslie Lee. Prior to his involvement in the real estate business, he was involved in various other businesses such as the telephone, renovation, etc. He was wiling to try new things as long as it makes business sense. Naturally, that translated into how he runs the company.
When I first joined the company in 2005, New Bob Group was already an established pioneer company in Penang. Coming from a professional background, one of the things that I noticed needed to be addressed was to have a more professional system in place. That was when we started to introduce a more systematic professional training through our strategic tie-up with ERA.
The property development sector has taken a backseat since the financial crisis in 97/98. Only recently we decided to revive it and started a few small development projects. The Manor (3 units), Preston Oaks (4 units), and the light industrial factories named The Gates (19 units). And now, we are moving to hospitality and green condominium project, River Tropics, which will be one of our biggest projects to date. In 2014, The Manor and Preston Oaks won several green awards in Malaysia.
APR: You acquired your auctioneer license in 2002 and have been conducting auctions ever since. In your experience, what are the challenges faced by auctioneers?
In general, auctions in Malaysia are a relatively new activity compared to developed countries such as Australia. Auctioned properties in Malaysia are usually properties that have been repossessed by the bank due to default or turned over to the bank willingly. Therefore, in some way, it simply involves taking advantage of a below-market value sale through auctioning. Conversely, in developed countries, auctioning is viewed as a way to fetch a higher price in a competitive market where people come and bid actively for the property. In Penang, the problem that we often face as auctioneers is the continuing issue of syndicates trying to intimidate genuine buyers from bidding.
APR: Has the current downturn contributed to a rise in foreclosed properties so far?
Although I’ve not been doing auctioned cases recently, there is definitely an increase in the number of foreclosed properties due to our economic situation at the moment. But of course, only selected properties and selected locations are always hot.
APR: How would you describe the real estate scene in Penang now? Did the recent fall of ringgit attract more foreign investors?
The real estate scene in Penang has obviously weakened over the past 1 year. This is due to the current economic and political situation, as well as the global softening. Foreign investment in Penang has always remained very low; report shows that foreign investment made up less than 3% of the total transactions for the Penang market in 2014. Of course, certain projects are able to attract more foreigners than others.
Will the fall of the ringgit against the USD attract more foreign investment? Yes and No. In the current economy, purchasing properties in Malaysia is definitely affordable. However, if they buy when the ringgit is low, and sell when the ringgit has improved, they won’t be making much money – unless the current situation can prolong for the next 5-10 years. Obviously, we believe that with time, the ringgit will strengthen. To date, investors who are buying properties in Malaysia are mainly those who are looking at Malaysia as a second home destination. Lately, we’ve noticed quite a few from the UK.
APR: Are there specific things to improve on in terms of the density and high number of condominiums in Penang, as well as the large number of vacant units?
Previously, developers who were developing in Penang built a number of high-end condos. This complies with our development policy which looks at limited density per acre (the number of units per acre). For example, if the developer is only allowed to build 6 units per acre , they are more likely to build 6 bungalows instead of 6 terraces as bungalows can fetch a higher price. Thus, I believe there’s an ongoing discussion currently within the state local council on tweaking certain policies, and perhaps looking at plot ratio versus density.
Plot ratio can be explained through the following simple calculation:
Assuming your plot ratio is 3 to 1 for an acre of land.
Therefore, 40,000 sq ft of land = 120,000 sq ft worth of units. It will then heavily depend on the creativity of the developer. If they want to build merely 30 units, each unit will have to be 4,000 sq ft which translates to a low density project. On the contrary, if they want to make it affordable , each unit will have to be 1,200 sq ft where they can build 100 units for the project. However, our current policy does not allow us to do so. Of course, different areas will have different density. With plot ratio, a developer would be able to build more units at an affordable price.
Penang island is an established housing area, with a lot of infrastructure built in since 50 years ago, some even older, up to 100 years. So, we are limited by that constraint in terms of expanding our infrastructure. We are only able to cater to more people with high density projects, but can the infrastructure cater to it? Thus, I think it’s about finding the right balance between managing traffic congestion and the higher number of units at more affordable prices.
A large number of vacant units belong to foreign investors based overseas. But like I said, it’s only 3%. A lot of them would have to be Malaysian owners who are not residing in Penang. I see nothing wrong if they treat their properties in Penang as their holiday home.
However, we should look more into offering affordable housing that caters to the local market. In my opinion, the only way to achieve that is to increase the density or rather the plot ratio. Land price is there, the variable is based on the market price. Therefore, if we can build more units and the land costs are the same, we can definitely bring down the cost.
APR: Any comments on the affordability issue of property in Malaysia, and specifically in Penang?
Our state government and the federal government are both looking into the affordable housing policy in Penang. A study needs to be done to ascertain how much supply is needed for low-cost or low-medium cost properties as there is a shortage of them. The average Malaysians should be able to afford affordable housing with prices starting from RM200,000. I believe this issue can be addressed with the new affordable housing policy.