The Edge, 13 June 2011 – Handling people well the key to success

The Edge, 13 June 2011

It is not often that a family has two Tan Sri, each successful in his own right.

Tan Sri Vincent Tan is well known for his conglomerate Berjaya Group while his younger brother Tan Sri Danny Tan is focused on the property sector with some exposure in the food and leisure and entertainment businesses.

Unlike his older brother, Danny, 56 is seldom in the limelight.

In this rare interview, the Tan family property expert tells The Edge that his success did not come overnight and that he was not born with a silver spoon in his mouth.

He comes from a modest family in Batu Pahat, Johor, and made his way up through sheer hard work.

Property remains a passion for Tan until today.

He does not waste time when he spots a good piece of land in a strategic location. For instance, when he saw an 88.5-acre tract on sale in Subang, he immediately flew to Taiwan to meet its owners to secure the deal.

The man behind one of Petaling Jaya's famous developments - Tropicana Golf and Country Resort - shares with The Edge his rags-to-riches story, philosophy, achievements and dreams, especially with regard to his crown jewel - Dijaya Corp Bhd.

An excerpt of the interview follows:

The Edge: How did you start out in the business?

Tan Sri Danny Tan: I started out with my brother Vincent (Tan Sri) in the reconditioned car business. That was our first business and it was around the late 1970s. Besides doing reconditioned cars, we were also involved in heavy machinery such as Hino trucks. We were

dealers for Toyota and Proton in the early 1980s.

The Edge: When did you venture into property and why?

Tan Sri Danny Tan: We continued with the reconditioned car business even after moving into the property sector. The idea to enter property came from some friends. We began our property business in Johor Baru, where we chose some land and developed a condominium

called UPC Court.

Our other projects included one in Old Klang Road in Kuala Lumpur, where we build some shophouses and condominiums. Vincent and I also developed Bukit Banang in Batu Pahat, which now has a golf course.

The Edge: When did you start going it alone?

Tan Sri Danny Tan: It was when I bought the Tropicana (Golf and Country) Resort land, which was 652 acres, that I started doing things on my own. This was in 1990. Later we bought an additional 400 acres (Tropicana Indah) from PKNS. Altogether, we had some 1,100

acres.

The Edge: How did the name 'Tropicana' came about?

Tan Sri Danny Tan: It was when I went on holiday with my wife. While we were visiting Las Vegas, we came across a hotel called Tropicana. We immediately liked the name.

The Edge: How did you fund the acquisition of the land back then?

Tan Sri Danny Tan: Besides help from some friends, we also obtained loans from Public Bank. So, the venture was partly self-financed and partly through bank borrowings. I remember that before I purchased the land, I did a lot of research to see if it was possible to change

the lease on it from 30 to 99 years.

We also researched the possibility of converting the status of the land from commercial to residential. We bought the first 652 acres for RM60 million. This was quite a lot of money back then and I was just 35 years old. We also invested about RM90 million to RM100 million

in the 36-hole golf course and clubhouse and about RM18 million in the roads leading to the land. We have the biggest clubhouse in Malaysiawith a built-up of about 400,000 sq ft.

The Edge: How was the market's response to Tropicana Golf and Country Resort back then?

Tan Sri Danny Tan: When we first launched the project in the middle of 1991, the bungalow lots were priced at RM32 to RM33 psf. Prices are now about RM380 psf. In fact, when we launch the project, we imposed a condition that the buyers had to be members of the golf

club before they could buy the bungalow lots.

The project was so successful that we settled the bank loan with Public Bank well ahead of time. The bank was very surprised and asked us to slow down redeeming the loan! After we bought the land, we came up with the gated community idea and resort-living concept. We

were the first in Malaysia to come up with this concept at the time and after that, the others followed.

The Edge: What were the challenges back then?

Tan Sri Danny Tan: To me, one of the biggest problems in the initial stage was how to pay back the bank loan. But when we saw the good response, we knew that money would not be a problem.Nonetheless, when we launched the project, sales were a bit slow. But after

we finished the first nine holes, when buyers could see the landscape coming up, they could imagine how their houses would be like. And from then on, the sales shot up.

We were the first developer to launch a project with free helicopter rides. people still talk about that. At over 600 acres, the place was a bit too far for our customers to check out on foot. With a helicopter view, they could imagine the golf course and their bungalows.

Another challenge was that a lot of my friends were sceptical about investing in the project. But those who did buy are very happy men today. Even those who came in at about RM70 to RM80 psf can make money today. As far as I know, all these people who invested in

properties in Tropicana have made their money even though it is leasehold.

The Edge: What is your business philosophy as a property developer?

Tan Sri Danny Tan: My philosophy is very simple. I am pro-resident. If you are my buyer and you stay in my resort, whatever you want to do, I always tell my people to make it very convenient for you. When we started Tropicana Golf and Country Resort, it was a gated

community. In our agreement, we stated that fencing was not allowed. But as people built their homes, they wanted fencing. T We have hey talked to me and I allowed it. We have to be pro - resident. If you want to be difficult, follow the rules and stop them from building

fences, there would be a lot of problems.

We also spent RM18 million just to build the roads down there. There were no roads in those days but we managed to convince the local authorities to let us build the roads leading to Tropicana.

The Edge: How did your recent purchase of the 88.5 acres of freehold land in Subang Hi-Tech Industrial Park come about? And what are your plans for the land?

Tan Sri Danny Tan: When I discovered that the land was up for sale, I flew in my private jet to Taipei to meet the owners. They were very comfortable with us and liked our sincerity.

To me the land is strategically located and is a freehold. One part of it is actually quite close to the Federal Highway, so we plan to work with the other developers in the area to build a ramp from the highway so that accessibility becomes better. We did our research before

we purchased the land. Maybe we can put up an international school there, a hospital and a small shopping mall.

We already have people calling us, wanting to reserve shop units an so on, even though we have just purchased the land. Because of the location, people are very excited. The Subang area tends to be very popular with people because those who purchased properties there

have made a lot of money.

Hopefully, we can start developing the land early next year.

The Edge: What is the main ingredient to be successful in business in general?

Tan Sri Danny Tan: It is dealing with people. The most difficult thing is how to handle people. If you can handle people very well, you are my best asset; a company can progress really well and fast then.

The Edge: What is your dream for Dijaya?

Tan Sri Danny Tan: I have always dreamt of Dijaya becoming a company with a market capitalisation of RM2 billion to RM3 billion. My people used to be very conservative. The company always had a lot of money, but we did not dare buy many properties or land. It was

only in the last few years that I started to change my philosophy and mindset. There are a lot of opportunities out there, but you have to take a bit of risk. If you don't want to take risks, better don't be a developer. If the location is good, nothing can go wrong. The rest of it has

to do with how you deal with authorities.

Tan Sri Danny Tan