Dr Lee Ville

Managing Director of New Bob Group. The name New Bob Group of Companies reflects the success story of a company which started business under the name of Bob Agency. The local presence and reputation which the company has built is a fulfillment of the corporate dream born in Penang in 1959.

We asked Dr. Lee, how he landed himself in this industry. “I’ve always been exposed to real estate growing up as my family has been involved in this industry ever since I was born. Upon completing my housemanship in Penang Hospital, I was at the crossroad of deciding what is next for my life. At that time, I saw a great opportunity in the real estate industry and decided to venture into my family business. I’ve also wanted to have a change in my career and I believe it was the perfect time for me to make such a decision because at that point of time, my father also wanted to scale back on his workload. Hence, I gave myself a year to be accustomed to the industry before deciding that it was meant for me and here I’m being 10 years in the real estate sphere,” he said.

How does Dr. Lee juggle between work and family?

“At this current age, it’s easier to juggle between family and work. During our parents’ time when there was no internet, they can be seen working on the phone checking on how things were progressing in the office and such, even during holidays. But today, with the existence of internet, we have e-mail. Should we want to look at the progress of our projects and etc, we can directly view the site pictures via smartphone as everything can be sent on the spot via application such as watapp. We are literally very connected in real time about what is going on despite not physically present. Thus, I think this is what differentiate us from our parents’ time. And I believe that’s one of the reasons why I  made the switch in my career. Although it’s a relatively challenging industry, there’s a better flexibility of time.” Dr. Lee’s inspiration would be his parents.”They came from poor families with 10 siblings, and my mom lost her father at the tender age of 2. Back then, my grandmother needed to work as a maid to bring up the family. This year marks another milestone for New Bob, celebrating its 55th Emerald Anniversary. For half a century, New Bob has been in the forefront of the real estate industry in Penang. I think my parents have been inspiring in the sense that they’ve come from nothing. Hence, to grow the business to what it is today is obviously not an easy journey, and extremely challenging. As a whole,I’m always inspired by them.

What are your thoughts on the outlook of the current property market in Penang?

Recently, the government has introduced various cooling measures such as the removal of DIBS, and increasing of RPGT where there’s a foreign limit for purchases (Previously was RM500k to RM1mil for RPGT. Penang state government had increased it to RM2mil for landed properties, RM-1mil for high-rise, and above RM1mil for mainland properties). In addition, there is a 2% levy introduction to curb speculation if buyers sell properties within the first three years, and the term loan limit reduce by Bank Negara from 45 years to 35 years. All these cooling speculations are supposed to slow down the transaction, but I believe Penang will continue to remain optimistic for the year 2014 due to the supply and demand factor where we are facing scarcity of land, plus rising land cost.

Over the past  6 years, places for some areas in Penang have increased at least 3-5 times. The recent opening of the second Penang Bridge is another contributing factor towards the hike in prices. According to a figure released by NAPIC, there are 100,000 houses completed nationwide, however we have 140,000 new household formation which clearly depicts a 400,000 discrepancy between the supply and demand in the country. Apart from that, we have also been encountering rising land cost in the past few years. Due to the significant increase of cost, we have to absorb higher compliance cost from the government. Moreover, the upcoming GST implementation (next year), increase in labour cost, and utilities charges would further contribute to the increase in construction cost.

Besides that, I also believe some of the property launches over the past few years/recently have yet factor in a lot of these increments into the prices. Therefore, the prices are still reasonably priced. Property investment or for home use are bound to remain the number 1 choice for people in terms of where they spend their money. It’s a very stable industry compared to the stock market. People still invest in Penang. Over the years (since 2008), Penang has grown by leaps and bounds with it being recently listed as the UNESCO Heritage.

We also have the Georgetown Festival which was recently reported by New York Times as the “Top Asia Festival to Attend” in Asia. Having that held in Penang will attract various local tourists from other states, as well as international tourists to Penang. I believe when they come here, they will fall in love with the beauty of Penang and enjoy our better quality of life, lower cost of living and better family environment.

What are your biggest challenges as a property developer?

One of the biggest challenges is the rising land cost. Over the years, land prices have reached astronomical value. With that, it is challenging for property to meet affordability or the price that is within the reasonable range. Moreover, we also have witnessed an increase in compliance cost, meaning cost that is incurred by developer to complete the project. Compliance cost has been significantly increasing in the last few years as well as the delay in getting our plans approved.

If we buy a land at a high cost, it would take ages to get it approved which translates to a longer time for developers to sell that particular project. During this period, we have to absorb the holding cost interest rate which may take years. In Penang, the fastest period to get approval is 9 months while some developers may need up to 3-4 years. Thus, if  we were to hold our project this long, it definitely involves the high cost that we have to bear by holding that specific land.

Also, I think our current guidelines from the council requires some areas that are opened to interpretation, although they are being revised from time to time. These technical interpretations may sometimes delay our time in getting our plans approved. It will pose as a challenge, should we unable to meet certain conditions because it is interpreted differently from their side than what is interpreted from our consultants’ side. Literally, any developers’ main target is to get all our plans approved within the shortest timeframe in order for us to launch our project the soonest time in securing a reasonable price. Hence, if we are to hold it longer, it will force an increase in the cost along with other factors coming in such as gst, and the never-ending increase of utility charges over the years. So our primary challenge is to get it approved as soon as possible, and catch the market at the right time.

Not only that, the Bank Negara policies of removing DIBS/reduce of term loan limit also poses as a challenge. Looking at the nett income, the rejection rate has increased tremendously. Thus, although there’s a demand for the properties, loans are not approved for these purchases due to the new guidelines. And these are genuine buyers.

The other challenge would be the shortage of construction workers. We are not able to get skilled labours at a reasonable price. Most of our local talents have been attracted to go to other countries for construction. Our country is currently facing a shortage of skilled labours, which will contribute to the quality of the construction.