Residence Hotels expects business to grow 15pc in 2009

OPERATOR of hotels, lounges and cafes, Residence Hotels and Resorts Sdn Bhd (RHR), expects business to grow by between 10 per cent and 15 per cent next year, as it grows its portfolio of properties under management.

RHR, best known as the operator of Best Western Premier Seri Pacific in Kuala Lumpur, will in 2009 add a hotel in Mecca, Saudi Arabia, a club house, a cafe and a convention centre under its management.



Managing director Rohanna Ramli said that she was cautious on RHR's growth projection for next year given the global economic slowdown.

Revenue in 2008 is estimated to grow by a fifth over 2007.

"We have signed a management deal to operate the Fal Al-Saha Hotel in Mecca starting February 15 2009. It is a four-star hotel located 300 metres from the Holy Haram," Rohanna said.

"We will also operate a Club House in Nusajaya and a Cafe in KL Sentral which are both under UEM. We will also be operating a conference centre which will be ready next year," Rohanna said.

The newly refurbished Best Western Premier is expected to contribute to the higher revenue as the hotel raises rates to between RM230 and RM250 a night from RM205 a night this year.

Rohanna was talking to Business Times following a a signing ceremony between the 560-room Best Western Premier and 1,259-room five star Sultan Hotel in Jakarta.

The parties, represented by Sultan Hotel's general manager Jean Wasser, signed a memorandum of understanding to collaborate on cross-selling between both properties.

The partnership will also entail image building, food promotion and exchange of staff.

Meanwhile, Rohanna said that plans to manage a hotel in Mecca has finally materialised after some eight years.

In the first year of operations, Rohanna hopes to achieve an average occupancy of 70 per cent and a gross operating profit (GOP) of 30 per cent.

Hotel occupancy and rates in Mecca fluctuate depending on the Ramadan, Haj or Umrah period.

According to Rohanna, hotel rates are at their peak during the last 10 days of the fasting month.

"The rates are RM30,000 for 10 days or RM1,500 per person per night ... guests are charged for all 10 days whether they stay one night or all 10. If it is triple, room charges go up to RM4,500 a night," she said.

And in the low season, room rates are about RM200 per night per room.

Following the group's move into Mecca, Rohanna hopes to be able to manage a hotel in Medinah in the future.

Locally, RHR is exploring Kota Kinabalu, Sabah and Penang for future hotel management contracts.

It also manages the Residence Resort Paka in Trengganu; Residence Desa Lagoon Resort in Port Dickson; MAS Golden Lounge in KLIA and Langkawi; MAS Academy in Kelana Jaya; Bank Negara Malaysia's Sri Kijang in Langkawi and Lanai Kijang in Kuala Lumpur.

By Business Times (by Vasantha Ganesan)

iProperty launches luxury property magazine

The iProperty.com Group has launched a regional property magazine, iLuxuryasia.com, to provide an integrated marketing platform for Asia’s luxury real estate.

Executive chairman Patrick Grove said in a statement that the magazine is designed to equip buyers with the know-how to confidently purchase real estate and to make informed investment decisions.

Grove said iLuxuryasia.com also features information such as legal and financial tips and country specific guides on buying procedures.

By Bernama

Thousands in Perak to get freehold titles the easy way

IPOH: Perak’s 149,000 people living in 349 planned and 134 new villages on land valued at over RM1.5bil can now apply for their freehold titles.

The villagers can also expect the titles to be issued between two weeks and a month.

Senior executive councillor Datuk Ngeh Koo Ham said the state government has shortened the process of applying for the freehold titles after the Perak Valuation and Property Services Department assessed the value of the areas.

“We want to make it the simplest possible and quickest process. We don’t want to implement it hastily only to be bogged down by problems later,” he told reporters here yesterday.


Ngeh: Process of applying for the freehold titles shortened.

“Now we can do it within a day, but we ask the public to be patient and give us between two weeks and a month to deliver the titles.’’

Ngeh pointed out that the 20 processes for the application earlier on had been simplified to four steps. The shortened process allowed an applicant to obtain the title within the day itself, he added.

Ngeh said the new process could also resolve problems, such as for those who had paid premium for the last 10 years but still had not been issued with a title or cases of missing files after paying premium for the past 30 years.

“The issuing of freehold titles to the 102,000 in planned villages and some 47,000 in new villages could bring in revenue of between RM300mil and RM450mil for the state,’’ said Ngeh.

On whether the issuing of freehold titles to those living in planned and new villages was against the National Land Code, Ngeh said it was not.

“The state consulted a former Court of Appeals judge and a panel of experienced lawyers on the matter before implementing the move,’’ he said.

By The Star (by Hah Foong Lian)

Axis REIT plans expansion

PETALING JAYA: Axis REIT (real estate investment trust) is eyeing more office and industrial properties in the Klang Valley and Johor next year to expand its existing portfolio of 19 properties.

Malaysia’s first listed REIT expects rental rates to hold steady in 2009 due to tight supply, although it also sees a slower growth rate, says Axis REIT Managers Bhd chief executive officer and executive director Stewart LaBrooy.


Stewart LaBrooy

It was a matter of assessing the right time and opportunities before Axis REIT embarked on its expansion plans, he said, without disclosing the number of properties and their locations.

“Axis REIT has grown from five to 19 properties in the portfolio in three short years,” he told StarBiz in an e-mail interview. “We took the decision early on to grow our fund through acquisitions funded by debt and equity.”

According to LaBrooy, Axis REIT has always held the view that cross-border investments carry much higher risks for a property trust, thus it does not plan to acquire overseas properties for now.

On the outlook for rentals, LaBrooy said Malaysia was fortunately not part of a property bubble that had become evident in Singapore, Vietnam and Dubai, and that the domestic market would be stable.

“We foresee the rentals for industrial and office properties in Malaysia holding steady for 2009 due to the tight supply currently,” he said, adding that much of the industrial and office properties coming onstream in 2009 had been pre-leased.

“For industrial properties, we have seen rental growth of 10% upon renewals in 2007 and 2008, whereas in the office sector, rentals have grown by 15% to 20% over the past 12 months,” he said.

Currently, Axis REIT’s monthly rentals range from RM1 per sq ft for industrial space to RM4 per sq ft for top-end commercial space.

However, Axis REIT expects a slower rental growth rate in 2009 due to the current downbeat economic climate.

Nevertheless, LaBrooy expects Malaysian REITs (M-REITs) to offer investors the opportunity to earn 11% to 13% returns.

“Investors who are taking the opportunity now will be buying prime assets at a discount where the real market prices haven’t moved,” he added.

Labrooy acknowledged that M-REITs had taken a beating, in tandem with the selldown in global markets, including Malaysia’s.

“Despite this, M-REITs are still posting positive earnings growth and with their conservative leverage and attractive returns, they still have a compelling investment story,” he said.

Axis REIT posted its best results since its listing in the third quarter, reporting an earnings per unit of 3.85 sen, compared with 3.75 sen in the preceding quarter.

For the nine-month period, it made 11.36 sen per unit, the highest in the industry.

By The Star (by Rachael Kam)

Mulpha lifts stake in Australia developer

MALAYSIA'S property-to-financial company Mulpha International has raised its stake in Australian property developer FKP Property to 22.8 per cent, Mulpha said today.

The Malaysian firm said it acquired another 43 million FKP shares for RM235.8 million (US$64.83 million) from the open market and by buying new shares issued by FKP.

It owned 37.12 million shares in FKP prior to the acquisitions.

The company said it has obtained the approval of the Foreign Investment Review Board of Australia to acquire up to 37 per cent of FKP shares without undertaking a mandatory general offer.
Under Australian securities rules, the trigger point for a mandatory takeover offer is 20 per cent.

By Reuters

RM200m sought for trade promotions

The International Trade and Industry Ministry is seeking another RM200 million to undertake aggressive trade and investment promotion missions, said its minister Tan Sri Muhyiddin Mohd Yassin.

The allocation, which has been proposed to the Cabinet, will be used by the Malaysia External Trade Development Corporation, the national trade promotion agency, and Malaysia Industrial Development Authority (MIDA) over two years.

"The softer investment and trade numbers should be taken as a sign that more aggressive promotions need to be organised to explore potential new markets like the Middle East, Africa, South America apart from neighbouring China and India," he said after launching the national economic outlook conference by the Malaysian Institute of Economic Research.

MIDA is working on an investment mission drive to tap areas with excess or surplus capital.
"In the Middle East, for example, we will have special missions during which we'll bring to them potential specific projects," he said.

These will include real estate, commercial development, and power generation.

He also asked the private sector, including the Federation of Malaysian Manufacturers, to present specific proposals on how the government could help them.

The manufacturing sector, which accounts for 30 per cent of the total output and employment and over 70 per cent of total exports, grew by around two per cent in the third quarter of the year.

Muhyiddin remarked that although manufacturing exports showed weakness, domestic industries continue to register strong growth, in particular, the transport equipment, construction-related products and food industries.

By Business Times (by Rupa Damodaran)

Testing times for shopping malls

Popular malls in good locations will continue to record full occupancy

PETALING JAYA: With six new projects coming onstream in the Klang Valley next year, the retail property market is expected to see a consolidation in occupancy and rental rates in the next few months.

Retail property consultants said while popular malls in good locations including Suria KLCC, Mid Valley Megamall, Sunway Pyramid and 1 Utama would continue to record full occupancy and business growth, those located in less sought-after areas would face a slowdown.

In its third quarter 2008 retail market report, Regroup Associates said the average vacancy rate in Klang Valley shopping malls rose by a marginal 0.3 percentage point quarter-on-quarter to 7.5%.

Three new retail centres will be completed in the suburbs in the fourth quarter, namely AEON’s AU2 in Wangsa Maju, Giant in Kota Damansara and the Tropicana Mall in Petaling Jaya. They will add 924,000 sq ft of net lettable area to the market.

“Kuala Lumpur registered a higher vacancy of 11.2% compared with the suburbs which registered only 3.9%. The overall dilution in retail because of the major increase in supply, totalling 4.2 million sq ft last year, has dampened the appetite for many mainstream brands,” the report said.



Regroup Associates managing director Allan Soo said there was still room for rental growth in the more popular malls from the current average rate of between RM20 and RM45 per sq ft.

Suria KLCC is commanding some of the highest rental rates in the industry with some prime lots going for more than RM80 per sq ft although its rates average around RM50 per sq ft.

Of the existing 114 retail centres including hypermarkets in the Klang Valley, Soo said only about 20 were good ones, 10 above average and the rest considered under-performing, in terms of retail sales and rental rates.

ECM Libra Investment Research said retail centres in the city seemed more saturated with average occupancy of 88.8% compared with 96.1% in the suburbs.

It said while the Klang Valley market was saturated with the current supply at 38.2 million sq ft, certain suburbs, such as Setapak and Cheras, continued to be under-served.

“The recent entry of institutional investors as owners of retail centres will improve the quality of the retail market in the long run,” it said.

If developers proceed to build according to their plans, a further 4.3 million sq ft will be added in the next two to three years.

Meanwhile, retail consultant and former president of the Malaysian Association for Shopping & Highrise Complex Management, Richard Chan, urged mall owners to upkeep their properties and ensure they are well managed.

“Retail centres are not homogeneous products and there are many factors besides location and demographics that determine their success or failure.

“Successful malls need to be well managed to attract the crowd. Going forward, for malls to be successful they must have good lifestyle elements such as popular food and beverage outlets,” Chan said.

He said suburban malls were gaining popularity with strong occupancy rates of more than 90% for the new malls coming onstream soon. Tropicana City in Petaling Jaya has achieved a 90% occupancy rate while the expanded IOI Mall in Puchong and AU2 in Wangsa Maju are fully leased out.

By The Star (by Angie Ng and Edy Sarif)

RM600m asset sale

MK LAND Holdings Bhd, a property developer, aims to sell non-core assets worth up to RM400 million to fund new projects that will be launched from next year.

The developer also plans to sell 9.2ha at its Damansara Perdana township in Petaling Jaya for RM200 million and pockets of land elsewhere to pare debt.

"This is all part of our reorganisation strategy to turn around MK Land," chief executive officer Tan Sri Mustapha Kamal Abu Bakar told Business Times in an interview in Damansara Perdana yesterday.

Mustapha Kamal, who returned to helm the company in June after a brief spell with his private companies, outlined the details of his three-year plan to rejuvenate MK Land last week.
Central to the plan is the sale of assets. They include properties under its leisure and education divisions, such as the Bukit Merah Laketown Institute of Allied Health Sciences, Taiping Golf Resort and Bukit Merah Laketown Resort in Perak and the Langkawi Lagoon Resort in Kedah.

MK Land is in talks with potential buyers for some of the properties and hopes to seal deals next year, Mustapha Kamal said.

As for new launches next year, it has lined up the Northwest project in Damansara Perdana comprising hillside semi-detached homes. It will also relaunch Armanee Terrace Block B. Both are worth some RM250 million collectively.

MK Land has eight current projects in Kedah, Perak and the Klang Valley worth more than RM10 billion.

Since Mustapha Kamal took over on June 25, MK Land has returned to profitability, after losing money in 2007 and 2008.

In the first quarter to September 30 2008, it posted net profit of RM4.9 million while revenue more than doubled to RM77 million as it sold 240 completed units between June and October.

MK Land has appointed Lau Shu Chuan, Balasundram R., Fatimah Wahab and Yusof Abu Othman as chief operating officers to handle specific tasks.

The four were roped in from Emkay Group and its associate firm, Setia Haruman Sdn Bhd, the master developer of Cyberjaya.

Emkay Group is controlled by Mustapha Kamal.

Besides developing low-, medium- and high-end properties, MK Land will also develop purpose-built office buildings to enhance profit margins.

It also plans to venture into India and Brunei.

By Business Times (by Sharen Kaur)

Dubai's island project slows down

CAIRO: The Dubai state developer building palm-shaped islands off the city's coast said on Sunday it has cut about 15 percent of its staff amid a work slowdown - the clearest sign yet that the Gulf's property boom is hurting from the global economic slump.

Nakheel, which is owned by the emirate's government, said in an emailed statement that 500 employees have been laid off and it is scaling back work on some of its most ambitious island-building projects.

In response to questions, the company said sales have slowed as a result of tighter liquidity globally and that buyers today - unlike the property-flipping speculators that helped fuel Dubai's rapid boom - "are more focused on long-term investment opportunities".

Speculation has been growing that Nakheel would be forced to curtail some of its plans even as the company put on a brave face in response to the worldwide slowdown.
Less than two weeks ago, the company's chairman co-hosted a US$20 million (US$1=RM3.63) red-carpet party to launch its first palm-shaped island and the Atlantis hotel located on it. Its hotel division last week welcomed the arrival of the storied cruise ship Queen Elizabeth 2, which will be turned into a floating hotel moored alongside the island, known as Palm Jumeirah.

Projects that Nakheel said it is delaying include a hotel being built with Donald Trump on the Palm Jumeirah, the only man-made island project the company has completed.

Work is also being slowed on the Waterfront and Palm Jebel Ali - two even larger archipelagoes being created in the Persian Gulf. Development of another series of islands arranged like the solar system will be restricted to preliminary engineering studies, Nakheel said.

A number of other Dubai developers have laid off staff in recent weeks, though none of the cuts have been as large as Nakheel's.

By AP

Rising defaults in Dubai high-end properties

DUBAI: Dubai is experiencing an increase in defaults in high-end properties as financing conditions worsen and is likely to see smaller property developers merge, a member of the emirate’s financial crisis committee said on Sunday.

“There are more and more defaults on the high end, if banks do not give mortgages and speculators are high (in number) in the market,” Marwan bin Ghalita, chief executive of the Real Estate Regulatory Authority told Reuters in an interview.

Bin Ghalita said now would be a good time for smaller developers to join forces, and that he expected some to do so. “If you look at the market, a merger between smaller companies would give it confidence. I always support and encourage good mergers in any sector if it adds value to the sector,” he said.

By Reuters