‘Developer consolidation makes sense’

We have too many developers, maybe in the hundreds. In 1 awards ceremony alone, you can find about 30 being nominated, says UEM Sunrise MD


IT IS more prudent for property players to consider consolidation as part of their growth strategy as there are just too many property developers crowding the market.

UEM Sunrise Bhd MD and CEO Anwar Syahrin Abdul Ajib (picture) said while this shows that people are passionate about the industry and lauded that many have benefitted from the industry with the creation of beautiful townships and designs, there is a need for the government to look into sustainability, licences and issuance.

“If I put myself as an observer, it (consolidation) should happen. We have too many developers, maybe in the hundreds. In one awards ceremony alone, you can find about 30 being nominated.

“Do not give the licences easily. Otherwise, we will soon be killing each other,” he said at the company’s media familiarisation trip in Desaru, Johor, recently.

Presently, there are over 90 property companies listed on the Bursa Main Market.

Anwar Syahrin added that while he does not have an ideal figure of property developers for the industry, he said the matter revolves around a delicate balance.

“We do not want the big institutions or the government-linked corporations (GLCs) to crowd out the market. It will stifle entrepreneurship in terms of in the property sector and we do not want that.

“Of course, we want to see entrepreneurs grow and do well. We talk to a lot of them and we are very excited. So, for us, it is finding that balance which I think only the policymakers can do,” he said.

When asked if it was the right time for the industry to consolidate, Anwar Syahrin replied: “It makes sense.”

“I think every company will have to review its strategy and there must be synergy in order to consolidate. There is no point consolidating just for the sake of it and to be big.

“We must really go through the exercise of looking at what each of us has or does not have. Synergy is important. A lot of consolidations or mergers do not work because they were too big,” he said.

In September this year, Axiata Group Bhd and Telenor ASA mutually agreed to end discussions for a proposed non-cash merger of their Asian telecommunication and infrastructure assets.

They had in May announced their intention to combine their Asian operations to create an internationally merged company, in response to rising data monetisation cost, heightened competition and the need to increase capital expenditure despite flat revenue growth.

The proposal also involved plans to merge Celcom Axiata Bhd and Digi.Com Bhd to become Malaysia’s largest mobile operator.

Nonetheless, Anwar Syahrin noted on the heavy lifting which companies must go

through if consolidation were to proceed. “We got to see if there is a culture fit, the likeliness of success and so forth. We are one of those who have done it already — UEM Land Bhd and Sunrise Bhd — and we have done it well, but it was not easy. We had to integrate the culture and it took us

many years.
“I think only in the past one or two years

that we started seeing real integration within the organisation,” he said.

“It’s simple things like working together, standardising processes, standard operating procedures and trusting each other. It is a long process but at the strategic level, we must be very clear and don’t limit the ability of that organisation to grow.”

Anwar Syahrin added that the agility of an organisation is very important in today’s age of business, to manoeuvre into new markets.

“To weather this kind of storm, you must have the stamina to stick through at least 12 to 18 months. So, there are a lot of factors that you need to think about; it’s not straightforward,” he said.

UEM Sunrise became the talk-of-the-town in the local property world recently after it was reported that UEM Sunrise and Eco World Development Group Bhd (EcoWorld) are expected to seal a deal by year-end to merge, via a share swap to form one of Malaysia’s largest real estate companies by market value.

However, UEM Sunrise said it has not made or received any corporate proposal on a potential merger with rival property developer EcoWorld.

This is the second time news on the UEM Sunrise-EcoWorld potential merger surfaced in recent months after it was first surfaced back in September this year.