Tuesday, October 11, 2016

3.1 The problem of innovation in housing

A study has confirmed what many have suspected all along – that people or organizations don’t really like new and creative ideas. What they like are the beneficial outcomes of new and creative ideas; actually trying to implement new ideas for the first time is hard, risky and for most, out of their comfort zone. I found this out the hard way.

This is especially true for housing development. It is a long-term venture that is fraught with pitfalls that can bankrupt companies. Most developers, especially the long-established ones, take the view that they already know how to make money. They stick to the model that works for them and make do with small tweaks to designs that are known to work.

In Malaysia, as in most other countries, the housing industry involves many players. There are many steps in the delivery process, and at each step, many parties may be involved, starting with the land-owner, land broker, developer, town planner, architect, various sorts of engineers, the main contractor, sub-contractors, banks and financiers, local authorities, various government departments, utility companies, estate agents, sales and marketing people, and not forgetting the house-buyers.

The developer is perceived as the main mover in the value chain, but the housing market is very fragmented. No developer controls more than 10% of it. Success in any particular geographical location is no guarantee of success in another location: the local knowledge and standing of the developer are absolutely critical. In addition, developers would often complain that they are at the mercy of the approving authorities. The housing industry is also very highly regulated, and the power to delay or veto a proposal is dispersed amongst many approving bodies. 

Some developers may have been impressed by the Honeycomb idea, but had serious worries about that the construction cost may be higher, about the project feasibility and concerning the marketability of the new houses, but, most importantly, about whether the plans could be approved. We had gone a long way in addressing the first issue through number-crunching analysis, and the second through market studies. But the potential problem of getting approvals was particularly difficult to overcome. 

So I’m particularly indebted to Dato’ Abdul Rahman of Mudra Tropika Sdn Bhd and the Johor State Government, at that time helmed by Tan Sri Ghani Othman, who backed a Honeycomb layout for the redevelopment of land that had dilapidated government quarters in an old part of Johor Bahru called Nong Chik (figure 1). 

Figure 1 Nong Chik location plan
The site lies along the hill slope between Jalan Kolam Air to the west which runs parallel to Sungai Chat and Jalan Abdul Samad which passes along the ridge of the hill to the east.

Just a few kilometres from the centre of the city, the neighbourhood had a history stretching back to when Johor Bahru had only just become the capital of the State of Johor. This land was granted by Sultan Abu Bakar to a businessman of Yemeni descent in the late 19th Century and the kampong that grew on it adopted the nickname of its founder.

The client was especially keen to develop something special on this site, both to do justice the historic and commercial value of the site and to establish the reputation of his new housing development company (figure 2). 

Figure 2 Nong Chik layout plan

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