We continue to focus on Melaka because it has one of the lowest property overhang nationwide. The state’s real estate sector is healthy.” — Richard

Melaka has seen positive economic growth, thanks to the state government’s push for economic and social development in areas such as industrial, housing, tourism and trade.

While efforts have been stymied somewhat due to the pandemic, in the longer term, the spillover effect from concerted efforts will create more jobs, increase the population and bolster the purchasing power of the people. Ultimately, this will benefit all economic sectors, including property.

Teladan Setia, a prominent property developer in Melaka that was established in 1997, is determined to be part of the state’s growth by contributing to the housing needs of the local population. Established by the late Datuk Teo Poh Boon, the firm is now managed by his son, managing director Richard Teo Lay Ban.

Over the past two decades, Teladan Setia has built up a strong and loyal customer base, so much so that the children of those who bought into its earlier projects are now themselves looking for homes built by the developer, Richard highlights.

“Melaka has a very close-knit community whereby word of mouth triumphs over any marketing efforts. To strive in this market, we ought to first earn the trust of the locals, then people will refer you to their friends and relatives.

An artist’s impression of Bali Residences, which is located in Kota Syahbandar, close to Jonker Street

“Good quality products and having in-depth knowledge of the demand of the locals are what have set us apart over the past decades. These are the most crucial ingredients to strive in the Melakan property market. 

“I think we’ve done a good job of delivering quality houses, since we have served numerous repeated customers, some from the same family across a few generations. The majority of our clients are locals.”

The developer’s key milestones and developments over the years include its maiden project in 1997, Taman Seri Selendang. The 26.9-acre residential area has a gross development value (GDV) of RM43.5 million. There are a total of 294 terraced and semi-detached houses as well as 44 shopoffices, which were fully sold.

In 2006, Taman Cheng Setia, was its first with a GDV of more than RM100 million — RM115 million to be exact. The 51.7-acre development offered 534 terraced and semi-detached houses and nine shopoffices.

In 2011, Teladan Setia did its first high-rise project — Tropicana Residences — on a 1.9-acre tract in Taman Sentosa. All 140 units of the 14-storey tower, which has a GDV of RM49.8 million, were taken up.

“The successful launch and high take-up rate of the Tropicana Residences project signifies the potential of high-rise residences in Melaka. Premised on that, we continued our expansion plans in the high-rise segment with another landmark project in 2014. We unveiled the Atlantis Residences in Kota Laksamana, a 40-storey serviced apartment project with a GDV of RM603.9 million, making it the biggest development in the company’s history thus far. To date, we have developed projects worth more than RM2.1 billion in GDV,” says Richard.

As Melaka’s economy grows, Teladan Setia must be ready to ride the expansionary economic wave that will come, says the MD. He points out that the state government has tabled a budget of RM520.86 million for 2021, involving operating expenditure of RM445.86 million and development expenditure of RM75 million.

Moreover, the state is seeing an increase in investment inflows and is planning to create a new economic corridor to attract high-impact investments. 

The swimming pool at Atlantis Residences, which has a GDV of RM603.9 million

Expanding the business

Before Richard joined the family business, he worked as an associate systems engineer at Sony Systems Design International Pte Ltd in Singapore. His family was from Johor Baru, so he grew up and received his education in the island republic and did not plan to return to Malaysia.

However, his father — a consummate property developer in Johor — decided to branch out to Melaka, where land was cheap. He asked his son to help out temporarily by setting up Teladan Setia. However, Richard’s interest in property development grew and he decided to stay on.

Over the years, building residential products has become the company’s forte. Richard believes that it will continue to develop such products moving forward, with the majority of them priced between RM400,000 and RM500,000.

Over the years, Melaka’s property market has progressed steadily. Richard believes that it will see more positive growth in the future.

“We continue to focus on Melaka because it has one of the lowest property overhang nationwide. The state’s real estate sector is healthy,” he says. 

Melaka recorded only 926 overhang units, compared with the national average of 3,450 units as at September 2020. Overhang units are products that have been completed but not sold after nine months.

Richard points out that the property sales conversion rate in Melaka is high. According to the National Property Information Centre (Napic), of the 3,492 residential units launched in 2019, some 1,911 were sold within 12 months, giving the state a sales conversion rate of 54.7% and making Melaka one of the best performing states in Malaysia.

Moreover, there is a steady supply of houses in Melaka, which will help meet the demand for housing as the state further develops and more jobs are created.

With such statistics, some may wonder why more developers are not entering the market. Richard cites the 60% bumiputera quota as a high barrier to entry for developers outside the state. This has protected local developers such as Teladan Setia, which knows the market well and is able to cater for the needs of the population.

“The main problem for some developers is that they get stuck with certain projects, so they cannot sell and cannot move on to the next project. But for us, we have been able to clear almost all of our stock, including the bumiputera lots. That is why we have always maintained a healthy cash flow and can keep buying land bank to expand the business,” says Richard.

To fund its expansion, Teladan Setia is aiming for a listing in March. Part of the proceeds will be used to acquire more land. Richard sees the listing as a bonus that will provide the developer with increased credibility among banks and investors.

Taman Desa Bertam, located to the north of the city centre, will offer 2-storey terraced and semi-detached houses

Ongoing and future projects

The company has several ongoing projects at the moment. There is Bali Residences, a mixed-use development comprising 830 serviced apartments within two 38-storey towers and 18 retail shops in Kota Syahbandar, which is close to Jonker Street. The built-ups range from 477 to 3,174 sq ft with prices starting at RM350,000.

There is also Taman Desa Bertam, located to the north of the city centre, offering 2-storey terraced and semi-detached houses. The former has a built-up of 2,835 sq ft and goes for RM438,800 while the latter has a built-up of 3,279 sq ft and is priced at RM568,800.

Meanwhile, Taman Belimbing Setia is an exclusive 1-storey bungalow development near the Melaka government’s administrative area. The built-up of the units is 1,725 sq ft while prices start from RM418,800.

One project that is still being planned and is expected to be launched in the second half of this year is Taman Bertam Heights, says Richard. The project sits on about 160 acres and will comprise terraced and semi-detached houses. 

Richard points out that some components of the development will be gated and guarded and stratified while others will be individually titled. The stratified component will offer facilities such as a swimming pool, gym and security guards.

“Gated and guarded developments are coming up in Melaka. Although it is more expensive, Melakans are willing to pay a premium for such facilities,” he says.

The developer currently has about 240.8 acres of land held for future projects, 74.6 acres of undeveloped land bank and is in the process of acquiring another 145.2 acres for future developments. Most of the land is located near completed or existing projects in Melaka.