This article first appeared in City & Country, The Edge Malaysia Weekly on December 19, 2022 - December 25, 2022

Driven by market fundamentals and big data, Australia-based property developer Exal Group (Malaysia)’s strategy for its maiden venture in Malaysia — the 31-acre SÓL Estate in Kuching, the capital of Sarawak — has proved to be successful. Since the launch of the first phase in September, 70% of the project has been sold.

“I am a big believer [in the fact that] we always need to be driven by market fundamentals, [by] looking at the current trend and new things that we can bring to the market to address the demand. I believe a lot of [the overhang] is not surplus but a mismatch of demand and supply and I don’t want to make the same mistake. Therefore, we [engaged a survey company] to conduct a big data survey … We received a 400-page report and from there, we had a clear idea [of what we should develop].

“The study shows that roughly 1,100 landed houses are needed in Sarawak every year but the market only supplies 500, so there is an undersupply and it is a fundamental demand. Also, we want our first project in Malaysia to be a landed project [for derisking]. We were offered [the chance] to do a high-rise project [in Sarawak] but turned it down,” managing director Albert Ko, a Sarawakian, tells City & Country in an interview in Kuala Lumpur recently.

With a gross development value (GDV) of RM356 million, SÓL Estate is a joint-venture (JV) development with landowners Tan Sri Yee Ming Seng and Datuk Barry Tan.

In total, the project — which will be completed by 4Q2027 — will have 269 landed homes, consisting of 82 duplexes and 187 courtyard homes in a gated-and-guarded community.  It will have three acres of greenery and its facilities will include a water maze, twilight pavilion, community farm, orchard forest, outdoor fitness area and basketball court.

The development will have a maintenance fee of 10 sen psf excluding sinking fund. According to Ko, sinking fund will be paid as and when it is needed at about RM3,000 for courtyard homes and RM5,000 for duplexes.

With 269 units, it is the largest project in the vicinity, Ko notes. It may be considered a small project in KL but in Kuching, it is a big one because most projects here have fewer than 100 homes. 

“Courtyard homes are like terraced homes ... typical terraced homes in Kuching are about 1,500 sq ft [in built-up but] ours are from 2,244 sq ft. Also, terraced homes have the connotation that every unit on the same row has the same design but ours have different designs,” he says.

Duplexes, meanwhile, are larger versions of semi-detached homes. While semi-detached homes are typically 2,500 sq ft, the duplexes in SÓL Estate will have built-ups from 3,619 to 4,096 sq ft.

The houses are designed by Australian architect DKO Architecture and the greenery by landscape architect Landart.

The first of three phases of the project — offering 42 duplexes and 32 courtyard homes — was launched in September. 

Ko explains that “SOL” is Latin for sun.

“Our manifesto is that everything is centred around you, just like the planets are centred around the sun. It is the same in our development, where the residents are in the centre of it all. It includes how we design our facilities and landscape. The facilities are centred around the residents. The sun is not alone; it is part of the universe. So are the residents; they are not alone, they are part of a community,” he says.

Exal Group’s sales director Brandon Chua says the courtyard homes are priced from RM928,000, while the duplexes are from RM1.7 million. 

“Our buyers are all Sarawakians. They comprise those currently living in Sarawak as well as those residing in other places such as Brunei and Singapore,” Ko says.

He believes that the project’s pricing is below market value, a notion shared by its customers who have visited other properties. 

“We believe in leaving some money on the table for the buyers. It is our first project, so it is about our reputation. We would also like to think of ourselves as a new-generation developer, where we build trust … we make money, the buyers also make money, and from there, we build a following.”

Exal Group has been targeting millennials aged 20 to 40 in search of lifestyle living, an offering that is in line with the company’s concept of “aspirational living”. With the help of the data from the survey and focus groups, some 85% of SÓL Estate’s buyers are millennials.

“From the data, we know the market fundamentals …  The top 25% of the population has a median household income of RM11,000 and above and we are just targeting the millennials in this group. Also, Asian parents always help their kids buy houses. There are also successful young entrepreneurs and for them, [they] work hard and aspire to live better, so our homes are also aspirational ... The job is not done yet but everything is showing that we are on the right track,” Ko says. 

The developer has also conducted focus groups with agents to understand the market demand and, hence, designed the homes according to the findings. From there, it came up with a design with a double-volume ceiling in the living room that is also connected to the external area.

Such a design, he explains, blurs the boundaries between outdoor and indoor living, and is new to the Kuching market. The back lanes in the project are also usable passageways.

Ko emphasises that a house is not an investment, but a shelter that is ultimately driven by the needs and wants of the people. Hence, customer experience and best practices are important.

“It is going back to basics. [For example,] we use a modular approach for the interior, which means that the design is robust enough for different people to use in different ways. We are also giving a 10-year roof-leak warranty,” he says.

“Internally, we limit the investors to below 30% [of the buyer portfolio]. It is something I learnt from Brisbane because if a place is mostly tenanted, the tenants do not always take care of it. Also, they do not fit in the demographic. It is tempting [to sell to investors] but this is for the long term.”

The development of SÓL Estate came with challenges. Ko says that the land consists of mainly peat soil, and extra efforts had to be made to surcharge the land. Nevertheless, the problem has been solved, and as Phase 1 received a good response, Exal Group plans to launch Phase 2 in 3Q2023.

Established in 2016 by Ko and fellow Sarawakian partner Bay Yeo, Exal Group is an Australia-based property development company, with projects in Perth. The group’s projects in the pipeline are valued at more than RM3 billion.

These projects include Waterford Purpose-Built Student Accommodation located next to Curtin University and Wungong Cell H, in Perth.

Before the establishment of Exal Group, Ko was involved in real estate, property investment, engineering and project management. He is also the founder of The Make Over Guys East Malaysia. 

“I emigrated to Australia in 1993, and I have been doing property development since 2012. Bay and I decided to work together, so we set up Exal. It comes from the word ‘exalted’, which means the state of jubilation. Happiness is joy and we hope to bring joy to the community of our homebuyers,” Ko explains.

“All our projects are in Perth but we think it is not so wise. Since both of us are from Sarawak and we know the fundamentals, we know the state has a lot of opportunities. [Therefore,] we decided that our first overseas trip would be to Kuching. In Malaysia, we only have an office in Kuching that has 20-plus people.”

He reiterates that Exal Group is not driven by the bottom line, but by passion. It focuses on how it can bring in a lifestyle that can better the community. 

“We are not selling houses; we are selling a community, a lifestyle. That’s the one thing we try to educate the market on. [For example,] the concept of SÓL Estate is ‘aspirational living’, which is about celebrating life’s successes with one another. As you come home, it reminds you that you have achieved something in life and you have a taste [for] fine things. It is the identity it brings. The facilities, activities and community in SÓL Estate are not something that’s available in Kuching now. It is the experience,” he explains.

He adds that with regard to overseas ventures, it will focus on Malaysia, in Sarawak and Sabah.

“SÓL Estate is part of a mixed-use development. In the surrounding area, there are still 50 to 100 acres of land available. We are in talks with the master developer [for land banking]. Our JV partner also has a land bank in Sarawak. We have been approached by some companies in Sabah, and we are considering them as well. We don’t plan to come to West Malaysia,” he says.

At the moment, some 90% of Exal Group’s revenue is contributed by its Australian projects, with the remaining 10% from Malaysia. Ko says that, ultimately, in five to seven years, it hopes the ratio will be 60:40 for Australian and Malaysian projects respectively.

The desired ratio can be achieved by doubling the GDV of its annual launches in the next five years, pending its land banking and approval from the authorities.

“[Again,] we are fundamentally driven and need data to support what products are needed and then we deliver those products profitably. It is a balancing act,” he says.

“For me, I am a firm believer that if you help people to get what they want, then you will get what you want. Therefore, I am not here to stay for a short period and make all the money. Our focus is on better ways of living, beyond buildings. As long as we stay true to our beliefs and focus, our competition is ourselves and our vision.”

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