8990 Holdings eyeing Malaysian foray?

One sidelight of the Asia-Pacific Economic Cooperation (Apec) summit was a one-on-one between Malaysian Prime Minister Najib Abdul Razak and mass-housing developer Januario Jesus Atencio, CEO and president of 8990 Holdings, the country’s No. 1 low-cost housing developer, and the topic was affordable housing. 

That meeting was crucial and it could mean a big business opportunity for 8990 Holdings as it could enter the Malaysian housing market. This is predictable, given the innovative thrusts of 8990 Holdings in the Philippine local market that allowed it to trail-blaze an enviable record in the housing industry such that it emerged numero uno in just a decade of operations.

We remember about a year ago when we interviewed JJ regarding the entry of Malaysia’s state investment fund, Khazana Nasional Berhad into 8990 Holdings, that it was the Philippine firm’s innovative housing business that made the Khazana Nasional buy 8 percent of the company.

JJ also intimated to us that it is possible the company could enter the Malaysian housing market, especially since it was not the way the Philippine firm was a “disruptor” in the business but it was the social dimension of the company’s business model that caught the interest of Khazana Nasional as well as TPG, one of the biggest equity funds in the world, which also invested in the firm.

A Google search of Malaysia’s affordable housing market revealed that the government had come up with a so-called My First Hope Scheme, a financial tool meant to help Malaysians have a house, given the speculative rise in the housing industry. That government tool allows those earning below 3,000 Malaysian ringgit, which is equivalent to more than P30,000, to get 100 percent of the loan to buy a house.

What is interesting here, and which is right up the alley of Atencio’s business model, is that those earning below 3,000 Malaysian ringgit, do not have to pay the usual 10-percent down payment. For comparison, Malaysia’s middle-class housing units range anywhere from Malaysian ringgit 100,000 to 220,000 or from P1.1 million to P2.4 million, as against 8990 Holdings affordable housing offering of between P400,000 to P1 million.

Given the innovative thrust of the Philippine company, it is not far-fetched to assume that 8990 Holdings could make a big splash in the Malaysian housing market, especially since Khazana Nasional is an equity holder. That gives the entry of 8990 Holdings an added push.

One possible innovation that 8990 Holdings could bring in into Malaysia is the low down payment of 2 percent that the company asks of its housing clients. This low entry point is one market innovation that 8990 Holdings put forth and the reason for this is its proprietary technology in the assembly of houses that takes just eight days. This means huge savings that the company gives back to the borrowers of its housing units.

There is also its own-funding concept whereby the company takes the financing requirements for the housing loans. Here, Khazana Nasional could play a perfect role since it has the money to boost the affordable housing segment in Malaysia. What is really interesting here is that the affordable housing units in Malaysia cost about 49,00 RM or more than P500,000, which is almost as much as that obtaining in the Philippines.

It was the social impact of the low down-payment program that a great multitude of Filipinos could afford that caught the attention of TPG Capital and Khazana Nasional.

Imagine allowing a prospective homeowner to move into 8990 Holdings’ various housing projects, with just a 2-percent down payment? That has never happened before but that is what the company did, and with great success.

And to top it all, the monthly amortization that’s asked of its clients amounts to just the transportation costs that the new homeowners would spend were they to rent a home near their place of work. It just tweaked the amortization schedule a bit and that was it. And that is precisely where the Philippine company could enter the Malaysian market.