Property Investory
How to Party Your Way to Pandemic-Proof Success With Ricky Phoon
September 5, 2021
Ricky Phoon is a daring developer and runs Melbourne-based company BEKL. With a depth of experience in finance, negotiation, development management and acquisitions, Phoon’s experience has been instrumental in the delivery of a number of complex and high-end luxury projects, including a $25 million luxury mansion in Toorak, a $40 million luxury apartment in Hawthorn and the management of a $70 million lifestyle hotel development in Carlton.
Join us on this episode as we discuss how 2020 slapped him in the face, but he has invigorating plans to get him back on his feet— the social butterfly isn’t going to let a pandemic keep his business from taking flight! We’ll talk about his laser-sharp focus on the student accommodation market and his determined plans to get it to snap back. We also delve into his entrepreneurial family’s life in Hong Kong, where the property market is a rapid roller-coaster but occasionally lets you off to do some shopping... followed by some more shopping. Plus, hear how one of his early businesses bubbled over as he took off like a shot before learning to walk!

Timestamps:
00:47 | Development Now
03:21 | The Snap Back
05:59 | Shop ‘Til You Drop
12:05 | Phoon Learnt Everything From Scratch
13:16 | Party Hard, Work Harder
18:42 | BYO Networking
20:29 | The Hong Kong Dream
21:44 | From the IT Bubble to Bubble Tea

Resources and Links:

Transcript:

Ricky Phoon:
[00:12:15] When I was in Hong Kong, there is actually no way I can learn property, to be honest. You can learn property as a normal buyer, right? It's like you buy and sell because Hong Kong apartment market is quite crazy, like a roller coaster. But you won't be able to expose yourself as a developer. 
 
**INTRO MUSIC**
 
Tyrone Shum:
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.
 
I’m Tyrone Shum and in this episode, we’re speaking with Ricky Phoon, a Melbourne-based developer who has delivered upwards of $140 million in developments in the last 8 years. After growing up in bustling Hong Kong, he now proudly calls Australia home and shares his plans to extend that feeling of connectedness to incoming students.
 
**END INTRO MUSIC**
 
**START BACKGROUND MUSIC**

Development Now

Tyrone Shum:
Phoon is one to watch in the property development space, with his strong trajectory and innovative approach to each project.

Ricky Phoon:   
[00:00:47] My role is really about development management. So I will plan out the strategy for the company. We'll be the problem solver when there's anything comes up to me and no one knows what the next step should be. And I pretty much spend a lot of time on negotiations, either on acquisitions, on contract terms, or even for bargaining on fee proposal.

[00:01:24] I always want the best team. But it can come at a big cost, right? So I'm just hopeful that I can get a really good bargain. That's what I want.

Tyrone Shum: 
He describes his business, BEKL, as a family-owned private office. Although you may not have heard of it until recently, it’s far from a new venture for Phoon.

Ricky Phoon:   
[00:01:54] It has been in the market for a long time, actually. But we have rebranded ourselves from MSM Property to BEKL for two reasons. One is just want to set the image right, because MSM property was created by the father of our other two directors. And back then we are like a investor rather than a developer. 

[00:02:20] So about three years ago, we have rebrand ourselves. And we have set ourselves to become a developers. Previous development has involved in student accommodations, apartment, etc. And also some office. Everything we changed to BEKL, then we have focused a lot more on creating more income generating assets. So we still do our personal combinations. But then we do a lot more on hotels or similar accommodations or service apartments. So that's what I'll share the is at the moment for the next five years as well.

The Snap Back

Tyrone Shum:  
The student accommodation market is BEKL’s main focus, even during the COVID-19 era.

Ricky Phoon:    
[00:03:21] It doesn't impact the development part, it actually impacts the existing asset that we have. So definitely we have heavily hit because there's literally no overseas student here. So that give us a big slap in the face! But in saying that, we're still hopeful, and very positive on the student market, mainly because we know that this education market is a big piece of Australia. So unless you're telling me that Australia as a country, changing their strategy of not allowing the student is just impossible, because we've got all the good Unis and good schools here. We still think that the student market is going to come back and going to be like a V shaped kind of comeback.
 
[00:04:06] So that's why we never stopped. So we still have development happening. We're still trying to acquire more sites and bring in more student accommodation offering to the market.

Tyrone Shum:   
[00:04:17] Is that also the reason why you've also divested it out to hotels as well, because you know that the tourism industry will also pick up as well, eventually?

Ricky Phoon:   
[00:04:26] Tourism market, we have been really positive. COVID actually never stopped us at all. So the fact that I think when Victoria came to the first lockdown, we actually transacted one site for a hotel as well. So we didn't stop. We just keep buying site for hotels. It may change a little bit of the offering. So we may not follow the traditional hotel offering to the market, we just blend it in with some mixed use, just to diversify the risk. But we didn't actually stop on our acquisition. 

Tyrone Shum:   
[00:05:04] And did you get better deals, then, I guess during that time? Because the market had uncertainty that whole time?

Ricky Phoon:   
[00:05:10] Everyone asked me the same! In short, no, I didn't get a better deal, but I got an easier deal. Because normally, we need to fight with a lot of different developers an awful lot for a good site. What we experienced is it's become a lot more sensible. So the prices are reasonable. We don't have to keep bidding for a much higher price, but we're still paying for the market price. So at least we don't have to fight too hard.

Shop ‘Til You Drop

Tyrone Shum:    
Phoon grew up in Causeway Bay in Hong Kong, before moving to Singapore and then eventually to Australia.

Ricky Phoon:   
[00:06:03] I spent my teenager time in Hong Kong, mainly. But my family and my grandparents came from different places of Asia— Singapore, Malaysia, Hong Kong, Indonesia, and Thailand. So I actually did spend a little bit, about two to three years in Singapore, before I came over to Australia. And then I basically just permanently stayed in Australia.

[00:07:39] I think, to be honest, childhood was not that exciting, because I actually never had any comparison with the other country and all that, right? But what I do notice, it's actually very convenient. You just get down to your apartment and there's grocery stores everywhere, shopping centres everywhere. Shopping is mainly your main event all the time. Other than that, to be honest, Hong Kong is really, really small. So other than shopping, it's only... shopping!
 
[00:08:17] But on the other hand, is I do notice when I was following my parents and all that, because it's so small, people really have to think really hard to create opportunities or find an opportunity. So yeah, that part do inspire me a lot when I grew up. Watching how all my uncles and how do they do the business, how did they create opportunity with different people and all that. So yeah, that do actually affect me quite a lot when I grew up.

Tyrone Shum: 
He explains the typical occupation in Hong Kong, though to the casual observer you wouldn’t be able to tell.

Ricky Phoon:   
[00:09:22] On the face, you probably seeing them working for someone in a corporate environment and all that. But behind the scenes, they still create, they're trying to look for some opportunity to start their own business and all that. So in Hong Kong, to have your own business is actually quite common.

Tyrone Shum: 
Phoon attended the average Hong Kongese schools throughout his childhood, where he learnt a not-so-average language.

Ricky Phoon:   
[00:10:02] I just go to normal schools, because it's pretty common that what you do. The only reason for anyone would like to go to international school, mainly because they actually came from overseas. So if your parents actually migrated to Hong Kong, then you probably will go to international school, or your parents from day one already prepared to send you out. It's only these two scenarios that will happen. In my case, because I already came from a quite diversified background, my parents just don't think there's a need. In fact, she actually sent me to a primary school that helps me to learn my Mandarin. Because it's actually quite uncommon for Hong Kong to speak fluent Mandarin.

Tyrone Shum:   
[00:10:52] That's right. Mostly Cantonese.

Ricky Phoon:   
[00:10:54] I speak fluently. But thanks to my parents, because they sent me to the primary school that teach 100% Mandarin.

[00:11:16] To be honest, we didn't actually expect that. Just purely because my parents came from Indonesia, if they don't speak Mandarin, I won't be able to communicate with my relatives.

Tyrone Shum:  
Phoon’s parents were in a wide variety of businesses as he grew up, each one being completely different to the next.

Ricky Phoon:   
[00:11:51] They're in all sorts of business. They were in foreign exchange, they were in a hydraulic business. And at one point, they were in autopass injections.

Phoon Learnt Everything From Scratch

Tyrone Shum:   
[00:12:05] Wow. That's a very, very, very broad business. I'm curious, when did you learn about property development? 

Ricky Phoon:   
[00:12:15] Much later. Because when I was in Hong Kong, there is actually no way I can learn property, to be honest. You can learn property as a normal buyer, right? It's like you buy and sell because Hong Kong apartment market is quite crazy, like a roller coaster. But you won't be able to expose yourself as a developer. 

[00:12:34] Only when I came to Australia, working for few years, and then there's an opportunity for me to start to get into it. And then I learnt it. So actually, a lot of people think that I'm a finance background, property background, I'm not. I'm actually a marketing background. I really learn everything from scratch, learning from the foreman on the construction site, and then bit by bit learning from different bankers, architect, and this is how I learn property. 

**ADVERTISEMENT**
 
Tyrone Shum:
Coming up after the break, we’ll hear about Phoon’s first business he opened in Australia...
 
Ricky Phoon:
[00:15:09] When I say I wasn't a very good student, just purely because I do spend a lot of time to create my own business, being foreign and grew up in Hong Kong. 

Tyrone Shum:
The innovative and effective way he got the business off the ground...
 
Ricky Phoon:
[00:18:42] And from there, obviously, within the building, I start to get some business. But then at the same time, referrals starts to comes in. So that's how I start to generate more leads.
 
Tyrone Shum:
He delves into the other venture he tried his hand at and why it wasn’t the failure he thought it was.

Ricky Phoon:
[00:23:57] But another big lesson to learn that I was trying to walk too quickly, I tried to expand to Sydney. And obviously, the business around there is very different from Melbourne. The communication and culture is so different, that I don't really get the hang of it. 

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.
 
**END ADVERTISEMENT**

Party Hard, Work Harder

Tyrone Shum:  
Coming back, Phoon dives into the time in his life where he decided Australia was the place he wanted to be.

Ricky Phoon:   
[00:13:16] I actually left Hong Kong pretty early. I was a student, studying in Singapore, and then I studied in Australia. And then I worked in Australia. So I only worked in Hong Kong for a very short period of time after I graduate, because my parents want me to go back and help with the business for a little bit. But I still decide I wanted to stay in Australia. So at the end, I quit a job quickly for mojarra and come back to Australia. 

[00:15:09] I'm not a good student, just so you know! I loved to party a lot, and I still do. When I say I wasn't a very good student, just purely because I do spend a lot of time to create my own business, being foreign and grew up in Hong Kong. So actually, I came up to Australia, I think, when I was doing my year one in uni, I've started running an internet cafe in Chinatown. So that's why I actually have spent way more time in the business than at school. 

[00:15:50] But luckily, the degree I was doing is actually marketing, so the business experience actually helped me a lot, because when you have a real life experience, everything on a textbook becoming sensible, rather than you try to hard swallow whatever your lecturer was trying to teach you, and you really don't know whether it's actually useful. I think that actually becoming more meaningful for me.
 
[00:16:39] It's where the IT sector start to boom. It's pretty early. So back then we were talking about 56k modem, 33.6k modem.

Tyrone Shum:   
[00:16:49] You do remember it, too!

Ricky Phoon:    
[00:16:57] They make so much sense. Because you want a speed connection, and you're happy to go out and use Internet. That's where my first business is.

Tyrone Shum:   
[00:17:07] Wow, that's amazing. How long were you running that business for?

Ricky Phoon:   
[00:17:14] One year, roughly for one year. And then it got evolved, actually. So from there we becoming a Internet Service Provider. Because it's the same mechanism. So I realised that, okay, the student wanted to have the internet connection at home. And back then we were talking about ratio, right? So one modem, you are offering to 11 people. So when I will try to offer it to seven people, suddenly I'm becoming a quality service. 

Tyrone Shum:   
[00:17:40] I can start to see where the themes are coming from, where the student market came in.

Ricky Phoon:   
[00:17:47] That's how it is. So from there, that'd be further involved in becoming a multimedia company. I think that was my first encounter to property as well, because I was dealing with some big projects with the property developers. So we create website, we create back then the city room, the multimedia presentations, and all that for them, to show that to the investors or potential buyers and all that. So that is probably my very first encounter on about property market. 

BYO Networking 

Tyrone Shum:  
When he jumped into the student market, he got the property developers on board in an unusual but highly effective way.

Ricky Phoon:   
[00:18:42] I was actually a fairly socialised person. I still remember when I first tried to introduce myself, what I did was actually— as I said, I love party! So actually, we [had a] move in party for myself to the office building and I invited every single tenant in the building and come and join the party. It was a networking event to myself. And from there, obviously, within the building, I start to get some business. But then at the same time, referrals starts to comes in. So that's how I start to generate more leads.

Tyrone Shum:   
He decided against building a portfolio of properties in favour of what he’s doing now.

Ricky Phoon:   
[00:19:46] Back then, I wasn't really looking at other sectors as yet. Just purely because I was still too young. I don't understand that and if I earn some money, I'd rather spend it all, than actually spend on a property, right? No saving, try to spend as much as possible drained up, right. That's what I do. Well, I wasn't actually paying attention to that. But I just realised that the property investor, actually, do have big dollar to spend in terms of media stuff, they are definitely not one of my big client back then.

The Hong Kong Dream

Tyrone Shum:    
[00:20:20] Wow, that's interesting, because then that's how you obviously go, ‘Wow, this would be an industry to potentially tap into that,’ right?

Ricky Phoon:   
[00:20:29] Not at that time to be honest, it's actually came from my parents. So when I was young, still in Hong Kong, I was told all the time that eventually, if you want to get to the top, finance and property sector is where you need to be. But to be honest, finance is quite a big game and property, same thing in Hong Kong. It's a very small circle game. In Hong Kong development is only controlled by less than 20 people.

[00:21:02] In Hong Kong it's probably like a dream, rather than the things that you can really touch. But Australia is actually quite different, right? Because the government control a lot. And therefore, you are on a quite fair environment to choose whether you want to become this or that. So I do think that in terms of property, you give us a lot more opportunity in Australia.

From the IT Bubble to Bubble Tea

Tyrone Shum:  
The whole process with the Internet service provider lasted about three years in the early 2000s.

Ricky Phoon:   
[00:21:52] The reason that we stopped is actually the IT bubble burst at that time as well. We are not actually leveraging from this bubble at all. But it's just that the market suddenly heavily impacted by the bubble burst financially. And will the company actually cutting down their budget. So normally media exposure, and all this kind of budget is the first thing to get affected when you have to cut costs. So that got affected a lot, so that's how the business was ended.

Tyrone Shum:   
[00:23:23] Did you ever choose that you wanted to go out and maybe work for someone to gain experience? Or did you keep running businesses alongside?

Ricky Phoon:   
[00:23:03] During those periods, I never thought I will work for someone, because you can see that when I was studying, I started my own business. Now, I don't know how to work for someone. It's not in my concept.

Tyrone Shum:   
[00:23:14] In your genes. 

Ricky Phoon:   
[00:23:16] It wasn't. But after I came back, so when the multimedia business finished, I was involved in a bubble tea business.

[00:23:31] It was a good business, it was really cool. Because there was not popular back then, is actually not popular at all. There's only one shop in Melbourne. And that's it. Other places you can have is actually go to restaurant and have it. So then I go to Taiwan, I go to Singapore, bring the supplies in, bring the education in and start to educate. So the bubble tea business was really good, when I was in that. 

[00:23:57] But another big lesson to learn that I was trying to walk too quickly, I tried to expand to Sydney. And obviously, the business around there is very different from Melbourne. The communication and culture is so different, that I don't really get the hang of it. I will say that I actually failed on that. It was fruitful. I earnt a lot of money through that process. But then the business didn't sustain. And it just happened that at the same time, my parents asked me to go back to help out because there was another disaster happening in China when they're having a trade war. So yeah, that's the time when I need to go back as well. So the business wound up and I had to go back to Hong Kong. 

Tyrone Shum:   
[00:24:41] You’re definitely a true entrepreneur. You've tried so many different types of businesses, you know, even before he got into property developers! 

Ricky Phoon:   
[00:24:49] It's probably because of the marketing background that I have. So marketing can fit in everywhere. So it doesn't really matter which sector, which industry I'm in.

Tyrone Shum: 
Bubble tea wasn’t very popular when Phoon tapped into the market, so where did the idea come from?

Ricky Phoon:   
[00:25:08] There's a brand called Happy Cup in Melbourne. And I was talking to them, and they were selling 1,000 cup a day, because they were the only one, they were so popular. That's how I started to pay attention to this business. I talked to different restaurant owners to get some understanding on whether it is profitable and all that. 

[00:25:31] And then the next thing I realised is actually the retail lease is actually very, very expensive. To me, I think it's a bit risky, if I just jump in like this. But I don't want to give up on this market. So I just changed my mind and from doing retail business and to a wholesale business. So I become an importer of this business. And then I help others who dare to take the risk to create a business.

Tyrone Shum:   
Following on from that, he went back to Hong Kong with a plan that didn’t exactly pan out as expected.

Ricky Phoon: 
[00:26:28] I was originally saying that I guess I don't really want to go back to Hong Kong at all. So I was telling them that I will go back for three months and try to revive the business and then I'll come back. But then I take it too far, that the business back to normal and expand quite a fair bit. Then I ended up staying there for three years.

[00:27:09] I was helping my father helping my uncle. So my father is actually in passing injections. So originally they were doing toy business with US. But then what happened and the order was not there. And then they change the model becoming disposable cutlery and utensils and all that. So it took me a bit of effort to convince my dad because he thinks the cutlery market is so small. And also think that the market is so small, but I just convinced him by I can bring you a big order that I can assure you, you will not have enough machine to handle my order, which I didn't.

[00:28:07] I think we had actually one discussion and my father was saying that he wanted me to explore the rice cooker market. I don't like it, because how often do you change your rice cooker? And I think cutlery, you use it every day and you dispose it, right? So and therefore it's proven that this is a more sustainable business that my father should have got in. And he did. And then with my uncle is basically just helping on communications just because of me being staying in Australia for quite a while. So it's easier for me to help the company to communicate with European. My uncle's business actually is a bridge between China and Europe back then. I would love negotiation. There's a cultural impact doesn't really turn out quite well. So I was flying in and out very often, on a daily basis. 

**OUTRO**

Tyrone Shum:
Ricky Phoon’s story continues in the next episode of Property Investory. We’ll hear about the chance encounter that led him to his next venture...
 
Ricky Phoon:
[00:01:15] I come to another person, there's some communication problem between the store manager and this person. And I'm trying to help because I'm quite a busy body, right? When I see something not right and I think I can help I'll go in and help. 
 
Tyrone Shum:
The mysterious case of the missing room...
 
Ricky Phoon:
[00:07:08] The plan was not coordinated properly. So there was some changes happen. And this is a big lesson to learn for any new developers when they're doing houses, is that you can't fully trust your design person, we need to check it as well. 

Tyrone Shum:
He delves into why a 40-storey high rise in Melbourne is yet to see the light of day.

Ricky Phoon:
[00:10:47] Normally, in an ideal world, you will expect your permit can be up in one year or max one and a half years. But with this particular scenario, it has been waiting for five years, it's not taking off.
 
Tyrone Shum:
And that’s next time on Property Investory.