Malaysia Property News | Property Market In Malaysia

Saujana Rawang offers an out-of-the-city abode

2012-01-27T11:00:00.000+08:00

Well spread out: The Botania units comprise Phase 11 of Saujana Rawang township, and will be located nearby the plots allocated for linked shoplots.

For aspiring homeowners who wish to avoid the saturated city market, the Saujana Rawang Township, developed by Glomac, may offer a viable alternative.

The project will be developed under Phase 11 of the township, with intermediate units measuring 22’ x 70’.

Assistant general manager Gary Goh said there would be a total of 160 units built under this phase, although it would be broken up into further sub-phases.

Pleased: Goh (left) and Ezwan at the launch of Phase 11B of the Botania units at the new Saujana Rawang township.

“Right now, we are already fully booked for Phase 11A, which comprises the first 30 units of Botania homes. Phase 11B which was recently launched will have another 27 homes,” said Goh.

He added that the sub-phases 11C and 11D, which comprised 52 units each, could possibly be launched together.

“It will be 160 units in total, and we are expecting this phase to be completed two years from now, by the end of 2013,” Goh said.

The two-storey units are built in modern contemporary style, with four bedrooms, a utility room and three bathrooms.

“The intermediate units are priced at RM419,882, while corner units will of course cost more. This makes Botania an ideal solution for people looking to buy property with a budget of RM500,000.

“They will be able to afford landed property even though it is some distance away from the city,” said sales and marketing manager Ezwan Zainal.

Ezwan noted that there were eight more development phases left for Saujana Rawang as the township had more commercial and residential areas to develop, including medium-to-high priced apartments as well as two lakes which allowed for recreational activities.

“We are also building another access road into the township as the current one can get too congested at times. So the new road we are building will allow residents and visitors to enter Saujana Rawang without traffic problems,” said Ezwan.

It was estimated by Ezwan and Goh that the future development phases would take another five years for completion.

“Our first buyers were primarily bumiputras but we are also seeing many Chinese buyers now showing interest in this township as well,” Ezwan noted.

He explained that recent developments in the area, such as the opening of an Aeon Jusco shopping centre in Rawang had contributed to the influx of buyers into Saujana Rawang, and that the township’s own phased development would further increase the already encouraging take-up rate.

By The Star

All set for a lasting impact

2012-01-27T10:29:00.000+08:00

The Belleview Group is undertaking the development of RM1.724bil worth of property this year for Penang island and Kedah.

Its managing director Datuk Sonny Ho said some RM360mil worth of property projects including All Seasons Park’s final phase, Moulmein Rise and W Residence were planned for the island.

“The remaining RM1.364bil worth of property included the third and fourth phases of the Kulim-Techno City (KTC) project, Amansuri Residences, Aman Central and Star Centro in Kedah.

“Kicking off the launch for Penang island in April is the RM200mil Moulmein Rise project in Pulau Tikus, Penang, a 27-storey iconic structure comprising 84 life-style suites and a two-level podium of retail shoplots, with views of the sea-fronting Gurney Drive,” he said.

Designed architecturally to be a modern building, it would include a host of desirable amenities with five-star features and state-of-art security system, he added.

In May, Belleview will launch the RM100mil Autumn Tower comprising 220 condominium units for the All Seasons Park project in Bandar Baru Air Itam (popularly known as Farlim), Penang.

The built-up area for the units ranges between 850sq ft and 1,323sq ft. The project also features a full range of modern recreational facilities.

Ho said the sales of the Summer, Spring and Winter Towers had been a roaring success, with only a handful of units available.

“The third project launching on the island in June is the RM60mil W Residence on Jalan Utama.

“W Residence comprises eight freehold bungalows with a gated community that provides a safe and secure environment, monitored by closed circuit television cameras and protected by a two-tiered security electronic card system,” he said.

For Kedah, Belleview kicked off with the launch of the RM180mil Amansuri Residences in Alor Setar on Tuesday.

The Amansuri Residences, Ho said, comprised 277 condominiums with built-up areas of 1,248sq ft onwards.

“Equipped with an advanced three-tiered security system, the project has extensive water features, landscaped greenery and a grand guest drop-off atrium,” he said.

Belleview will then launch the RM34mil third and fourth phases of the KTC project at the Kulim Hi-Tech Park in the second half of this year.

Ho said both phases comprised 1 1/2 storey and double storey terraced houses, single-storey and 1 1/2 storey semi-detached houses, and single storey bungalows.

“The KTC project is about 20 minutes away from the Penang Bridge, and is a self-contained township with schools, hospitals, a hypermarket, a recreational park, a golf course and multi-national factories nearby,” he said.

In June, Belleview will launch the RM150mil Star Centro in Alor Setar, a multi-functional commercial centre with 32 units of three-level shop offices and a leading hypermarket as the anchor tenant.

The project is located at the intersection of Jalan Tambang and Jalan Gangsa near the edge of the city on the west side which is accessible from all directions.

Ho said the project would offer a vibrant retail mix of restaurants, lifestyle cafes, banks, telecommunication centres, pharmacy, and personal care outlets.

Belleview Group recently started the construction of the RM1bil Aman Central, the largest shopping mall in Kedah.

The project, located along the busy Lebuhraya Darulaman, will have six floors of retail outlets, providing food and beverage services, entertainment, fitness centre, and bowling alley. All the projects, he added, had received overwhelming response and enquiries.

Meanwhile, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said the sentiments in the property market would remain cautiously optimistic.

“However, there are still a strong propensity to buy in preferred locations and an interest in well conceptualised schemes with good quality finishes and security.

“Presently, foreigners comprise less than 8% of the property buyers in Penang. The foreign segment is expected to grow in tandem with Penang’s popularity as a second home paradise,” he said.

By The Star

RM650mil Hunza projects

2012-01-26T10:18:00.000+08:00

Facelift: The group has spent RM10mil to restore the heritage structure and a further RM3.5mil to transform St.Joseph’s Novitiate building in Gurney Paragon, now known as St. Jo’s, into a new dining and entertainment hub in Penang.

GEORGE TOWN: Hunza Properties Bhd is launching about RM650mil of residential properties in Kepala Batas in Seberang Prai and Tanjung Bungah on Penang island this year.

Group executive chairman Datuk Khor Teng Tong told StarBiz that residential properties worth about RM300mil in gross development value (GDV), comprising double-storey semi-detached, terraced, and low-medium cost houses, had been planned for Kepala Batas.

“We have already started work on the houses and will launch the properties for sale in the second half of 2012,” Khor said. “After the launch, the group will still have about 350 acres of undeveloped land-bank in Kepala Batas, which will be used for residential development.”

In Tanjung Bungah, Khor said the group would launch Alila 2, a 265-unit condominium project, in the second half of this year. It would have a GDV of about RM350mil.

“The condominium units will have built-up areas ranging from 1,700 to 3,000 sq ft,” he said.

On the group's proposed mixed-development project with an approximate GDV of RM6bil to RM7bil on a 16.2ha site in Bayan Baru, Khor said the group had engaged two internationally renowned architect consultants to advise on the master plan.

He said the group had just acquired a 2ha land to develop 1,000 low-cost homes for the households currently occupying the over 16.2ha site. “We have initiated steps to obtain approval from the local authorities to develop the low-cost homes.”

Khor also said the group was targeting to complete the Gurney Paragon shopping mall in November 2012.

“So far we have committed to lease out about 45% of the over 700,000 sq ft of nettable area of the shopping mall,” he said.

On the preservation of St. Joseph's Novitiate building in Gurney Paragon, now known as St. Jo's, Khor said the group had spent RM10mil to restore the heritage structure and a further RM3.5mil to transform it into a new dining and entertainment hub in Penang.

“Hunza will work hard to continue to bring in established names that have yet to set up a presence in Penang to open their businesses in Gurney Paragon,” he said.

Khor said the multi-purpose hall of St. Jo's would be used for hosting events such as meetings, conventions, and weddings.

St. Jo's was completed and formally opened in 1918 by the De La Salle Brothers, who pioneered education in Malaysia and around the world.

By The Star

SP Setia climbs to 6-month high

2012-01-26T10:16:00.000+08:00

With a higher buyout offer in place and an assurance that its chief Tan Sri Liew Kee Sin will continue to helm the company, SP Setia Bhd's stock climbed to an almost six-month high yesterday.

State investor Permodalan Nasional Bhd (PNB) roped in Liew as a joint bidder and improved on its last September solo bid of RM3.90 a share for the property developer last Friday.

The joint bidders are now offering RM3.95 for each SP Setia share and 96 sen for each warrant, instead of 91 sen before.

The stock rose by 1.5 per cent to close at RM3.94 yesterday, off an intra-day high of RM3.97.

Analysts from RHB Research Institute and MIDF Research said the offer was "fair" and advised minority shareholders to accept it.

Both raised their target price for SP Setia to RM3.95 to match the offer price.

"The revised offer will be a win-win situation for both parties as PNB could leverage on Liew's expertise in the running of SP Setia while SP Setia will have the backing of a strong shareholder," MIDF said in a note to clients yesterday.

HwangDBS Vickers Research, meanwhile, raised its target price to RM4.50 from RM3.90 and said investors were better off holding on to the shares given that there will be management continuity for three years.

Under the new deal, Liew will keep his 8.56 per cent stake in SP Setia and remain as its group president and chief executive officer for three years, during which he will have sole responsibility for the mana-gement and general conduct of the business.

No changes will be made to the board, and PNB will keep its two board seats.

"We welcome this news as it removes uncertainty over the future of SP Setia, particularly with regard to Liew's involvement," Hong Leong Investment Bank Bhd (HLIB) .

With PNB's backing, analysts believe SP Setia stands an even better chance when bidding for government land parcels.

MIDF Research said the offer is fair given the current uncertainty in the world economy and the normalising growth rate of the property sector.

"From last week's briefing, Liew indicated that SP Setia is soon signing the Bangsar land deal, which is estimated to yield a gross development value of RM10 billion.

"However, in the near term, outlook for the overall property sector will still be rather challenging, and we thus advise investors to accept the offer," RHB Research said.

The deal is expected to be completed by end-March.

By Business Times

SP Setia at 6-month high

2012-01-26T10:14:00.000+08:00

PETALING JAYA: SP Setia Bhd rose six sen, or 1.5%, to close at RM3.94, its highest level in almost six months and one sen short of the revised offer price jointly proposed by its president and chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB).

Meanwhile, analysts have hailed the revised takeover offer as a “win-win” deal for all parties as it would enable Liew to stay at the helm of the property developer with full control over the next three years.

“This is close to our best-case scenario where there is incentive for top management to stay on and take SP Setia to greater heights. It is a win-win situation for all parties and a share price catalyst,” CIMB Research analyst Terence Wong said in a note to clients.

Liew’s commitment to stay on in SP Setia has been viewed positively by analysts.

SP Setia had on Friday notified Bursa Malaysia about the revised offer, which raised the offer price by five sen each for the shares and warrants to RM3.95 and 96 sen, respectively.

Liew, PNB and SP Setia would also enter into a management agreement for Liew to remain in his current position for three years following the close of the revised offer.

Among others, Liew would continue to oversee and manage the operations of SP Setia within the ordinary course of its business and enter into contracts or arrangements for and on behalf of the company.

As a joint offeror, Liew is not allowed to sell his 8.6% direct shareholding of 158.2 million shares, or 8.6% stake, in SP Setia, but he would be given a put option to sell the shares to PNB in tranches over three years at an exercise price of RM3.95.

Under the terms of the put option, Liew can choose to sell his stake to PNB at RM3.95 or in the open market at the then prevailing market price, which thus acts as an incentive for him to continue to grow the value of the company.

However, Liew's wife, who has a 2.3% stake in SP Setia, will be accepting the revised offer.

PNB and its related parties currently hold 38.6% of SP Setia while Liew has a direct and indirect stake of 10.9%, which adds up to a combined 49.5% interest.

“We view positively Tan Sri's (Liew) commitment to stay on and retain his direct stake without getting any premium even though he will only be allowed to exercise the put option gradually over three years.

“This signals his commitment and confidence that he can take SP Setia to the next level and add value to the company and share price,” CIMB Research said.

Kenanga Research said in a report that the slightly higher offer price is a show of good faith to minority shareholders, adding that SP Setia would have more bargaining chips to bid for government land with the backing of a shareholder like PNB.

As PNB intends to retain the company's listing status, RHB Research Institute noted that post-takeover, the joint offerrors might have to pare down their stakes via a placement exercise to maintain the stock's mandatory 25% free float.

Kenanga Research said investors with a 12-month view should accept the revised offer as there might be cheaper entry points when the stock succumbed to an expected downtrend in the property sector. However, it said longer-term shareholders might want to stay invested as liquidity could tighten up in the future, preventing substantial accumulation.

By The Star

Developers advised to look into location, cost and design to make sale

2012-01-25T08:36:00.000+08:00

JOHOR BARU: Property developers in Johor must be prepared to face tougher times this year and next if the eurozone debt crisis prolongs and the United States continues to experience economic slowdown.

Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng expected 2012 property outlook to be not as good as 2011.

"Hopefully, our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang," he told StarBiz.

Heng said the sign was already there with developers chalking lower sales in the Malaysia Property Expo (Mapex) held in November last year.

Developers who took part in the four-day event raked in about RM256mil in sales over a month-period lower from RM384mil in Mapex in May 2011 and RM331mil in November 2010.

Heng pointed out that the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.

He said the last five to six years were considered good for most Johor property developers as they were able to keep the number of unsold properties to a minimal.

Heng said local developers had learnt their lesson well from the 1997-1998 Asian financial crisis as they were caught unaware resulting in many abandoned projects and unsold properties.

He advised developers not to be overly ambitious and more realistic when launching a project this year and their focus should be more on products that could sell in view of the unfavourable property market.

"Go for affordable residential properties as demand for them is good especially in the Johor Baru district as there are many potential first time house owners out there," said Heng.

He said first time house buyers normally went for houses priced within their budget and with no-frills designs as what was important was to have a roof over their heads.

Heng said areas like Gelang Patah, Kempas, Kulaijaya, Mount Austin, Nusajaya, Senai and Tebrau would be the property hot spots and many projects were expected to be launched this year and 2013.

"For instance, land in Tebrau has been sold for RM4 per sq ft on average the last few years but now the asking price is RM20 per sq ft or even higher," he said.

Heng said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway and Southern Link this year would improve accessibility and connectivity within Iskandar Malaysia.

Leisure Farm Corp Sdn Bhd senior project manager Siew Fook Wah said that he always believed there would be a silver lining despite uncertainties in the property market.

He said the ruling introduced by Singapore last December to foreigners buying private residential properties in the republic was likely to benefit property developers in Iskandar Malaysia.

Foreigners have to pay an additional 10% stamp duty when buying a private home there; effectively raising the purchase price by 10%.

The move is seen to cool the private residential prices in the island state which are on the uptrend despite a slowing economy.

Siew said Johor's close proximity with the republic was an added advantage and prices of private properties here were lower than those in Singapore and to some extend in places like Kuala Lumpur and Penang.

"Iskandar Malaysia will continue to drive the growth of the property market in Johor in many years to come with demand for high-end properties likely to remain good," he said.

Siew said that with Iskandar Malaysia progressing well since its inception on Nov 4, 2006, these buyers (foreigners and Singaporeans) were most probably looking at Johor Baru.

A subsidiary of Mulpha International Bhd, Leisure Farm is developing the RM2.1bil Leisure Farm Resort on 714.27ha in Gelang Patah. The residential and gated resort development project offers 11 architectural design themes.

The villas are built on lots of 3,000 to 18,000 sq ft and priced from RM2mil and above. The scheme is now home to international communities from 35 countries.

SP Setia Bhd executive vice-president (property division) Datuk Chang Khim Wah said the company was still upbeat on the Johor property market as demand for properties had gone up steadily in the last few years.

"Take up rate for our properties in South Johor has been good over the years as we don't only cater for locals but also Singaporeans," he said.

Chang concurred with Siew that Iskandar Malaysia was one of the strong factors that would help to mitigate the slow growth in the Johor's property market this year and next if there was one.

He said Singapore would play a significant role in the development of Iskandar Malaysia as when people talked about Iskandar Malaysia, they would look at the bigger picture and include Singapore as well.

He said compared with other economic-growth corridors in the country, Iskandar Malaysia had the competitive edge due to its close proximity with Singapore.

"Investors, especially foreigners, will be attracted to invest in Iskandar Malaysia as they have the best of both worlds Johor and Singapore," said Chang.

By The Star

SP Setia jumps on improved PNB offer

2012-01-25T08:30:00.000+08:00

SP Setia Bhd, Malaysia's biggest listed property developer by sales, advanced to its highest level in almost six months after Permodalan Nasional Bhd raised its buyout offer.

The stock gained 1.6 per cent to RM3.94 ringgit at 11:35 a.m. local time in Kuala Lumpur trading, bound for its highest close since Aug. 2.

Three brokerages raised their price estimates today, including HwangDBS Vickers Research Sdn. which forecast in a report that SP Setia could rise to as much as RM4.50.

Permodalan Nasional, the country's largest state asset manager better known as PNB, boosted its offer by 5 sen per share to RM3.95 for the remaining stock it doesn't already own and brought in SP Setia's Chief Executive Officer Liew Kee Sin as a bidding partner, according to an exchange filing on Jan. 20. Liew will stay on to run the developer as part of a deal struck almost four months after PNB's initial bid.

“This proposal is a win-win solution for PNB, the management and shareholders," Loong Kok Wen, an analyst at RHB Capital Bhd., wrote in a report today. The revised offer is "fair," she said, advising investors to accept.

The new bid values SP Setia at RM7.3 billion (US$2.4 billion). Liew, who currently owns 10.9 per cent of SP Setia, will keep his post for three years after the buyout is completed, according to the statement.

Investors are "better off holding on given management continuity for three years," HwangDBS Vickers said in its report. "Strong execution track record and solid balance sheet should help SP Setia weather challenging outlook."

Hong Leong Investment Bank Bhd. and RHB Capital Bhd. increased their share estimates to match the new offer price, according to separate reports today.

The developer reported net income of RM82.5 million for its fiscal fourth quarter ended October, 9.7 per cent growth from a year earlier. That brought its full-year profit to RM328 million, its highest annual income since 1994, according to data compiled by Bloomberg.

The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent today. The stock market resumed trading after a two-day break for the Lunar New Year holidays.

By Bernama

CapitaMalls Malaysia REIT chalks up higher profit

2012-01-25T08:28:00.000+08:00

KUALA LUMPUR: CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM) posted a higher pre-tax profit of RM179.814 million for the financial year ended December 31 2011 compared with RM109.396 million previously.

In a statement, the company said the better performance was attributable to revenue growth at the mall level and savings in financing costs.

CMRM's acquisitions last year of Gurney Plaza Extension and East Coast Mall contributed to earnings, it said.

The manager of CapitaMalls Malaysia Trust's (CMMT) said revenue rose to RM230.887 million from RM94.636 million in the same period a year earlier.

It said CMMT achieved a distribution per unit (DPU) of 7.87 sen during the year, 8.4 per cent higher than the annualised DPU of 7.26 sen previously.

CMMT recorded net property income (NPI) of RM162.4 million, 1.6 per cent higher than the forecast NPI of RM159.8 million.

The total distributable income was RM118.3 million, eight per cent higher than the forecast distributable income of RM109.5 million for the year, CMRM said.

By Bernama

L&G set to shine again

2012-01-23T22:59:00.000+08:00

Low with a model of Damansara Foresta.

Last week, Land & General Bhd (L&G) soft-launched its condominium project, Damansara Foresta, in Bandar Sri Damansara, Petaling Jaya. That launch was significant in many ways.

L&G is an old brand that became a casualty of the 1997/98 Asian financial crisis. Bandar Sri Damansara is its old turf, having made a name for itself when it built the township with some 14,000 households decades ago.

The company fell victim to the crisis because it had a cashflow problem and became insolvent. It also had massive debts. It was also involved in a variety of businesses and owned properties in different parts of the world that it was not able to fully concentrate on.

Like other companies that fell during that period, L&G’s fall from grace revealed its many weaknesses, which had earlier went unnoticed.

The whole unfortunate affair culminated with the resignation of its captain, Tan Sri Wan Azmi Wan Hamzah, in 2002 from the debt-laden property group.

In 2007, Hong Kong-based property tycoon Tan Sri David Chiu became a substantial shareholder of L&G with an 8.35% stake through Mayland Parkview Sdn Bhd. That stake has grown to 16.94% today. His entry sparked speculation of a possible asset injection or takeover exercise. It pushed the stock up from 20 sen to over 80 sen in six months.

But there was no asset injection. Instead, the new management under managing director Low Gay Teck spent the last several years quietly cleaning house and strengthening the foundations of the company.

When L&G, under Low, launched commercial project 8trium in Bandar Sri Damansara, buyers were sceptical about the company. Does it has the financial muscle to pull it off? Today, that project is more than 95% sold and in about three months, it will be completed.

When it launched its Damansara Foresta condominium project (with gross development value of RM700mil), this skepticism was not evident anymore.

Low is a property man. He was with Mayland with Chiu for many years and has helped build up Mayland’s name in the Plaza Damas area in Sri Hartamas. But while Mayland concentrates on studio units of about 500 sq ft, L&G prefers the 1,400 to 1,600 sq ft range as can be seen in the recent launch.

While property development will remain its core business, contributing about 70% to the group’s revenue, L&G also inherited the education business in the form of private school Sri Bistari.

The last several years has seen student enrolment double to about 1,100. Low has never been in the education business but he seems willing to take what the company has inherited and to make the most of it. Today, revenue from its education business amounted to about RM5.7mil (19% of total revenue of RM28.7mil) for the six-month period ended Sept 30, 2011, according to filings with Bursa Malaysia.

Total contribution from the property division amounted to RM17mil (66% of total revenue) and looking ahead, property will be the company’s main business for the next decade or so.

L&G also has a bit of oil palm plantation (about 1,010ha) which it inherited from the previous management in the Lembah Beringin area, its previous township development during its heyday. There are plans to fully make use of that piece of land with new plantings.

The company has other sources of revenue of about RM7mil but at press time, it is uncertain whether this RM7mil is a contribution from the plantation business.

The recent launch of Damansara Foresta is interesting because that project is only one part of that 40 over acres in Sri Damansara. The entire gross development value of the 40-odd acres will be about RM2bil. As mentioned earlier, L&G made its name in Bandar Sri Damansara and it looks like it will continue to rebuild its name and branding in that location.

With that land size, the project will take several years to complete and the profit margins should be good as it owns the land, having bought it decades ago. Its recent launch was priced between RM500 and RM600 per sq ft.

L&G also has two other pieces of land, including about 25 acres in the Bandar Sri Damansara clubhouse area, but it will have to solve the membership issue of that clubhouse first.

Last year, it bought about 200 acres in Seremban and has to date submitted its development plans to the local authorities there. The Seremban land will be used for a mixed residential project with terraced, semi-detached and cluster homes priced at about RM300,000 for the terraced houses.

Although it plans to have predominantly landed housing for the Seremban land, L&G will very probably focus on condominium projects for its overall property business in order to slowly get back on its feet. It also has a joint-venture development with the Mayland group at Jalan Ampang known as Elements@Ampang with a GDV of RM700mil.

The company’s total borrowings amounted to RM68.58mil, while its cash and cash equivalents totalled about RM140mil as at Sept 30, 2011. It took a bridging loan of about RM90mil for Damansara Foresta, which is about 50% sold to date.

As mentioned earlier, when the new management came in in 2007, speculation drove L&G’s share price up to about 80 sen a share. Today, it is between 30 and 40 sen. Its shareholding seems rather fragmented, with Wan Azmi having a 2.13% stake.

Now that Low and his team have cleaned up the company, things are moving again.

By The Star

Legoland Malaysia expects a million visitors in first year

2012-01-23T22:54:00.000+08:00

JOHOR BARU: Legoland Malaysia is projecting its nearly-completed theme park to attract a million visitors during its first year of operation.

Its general manager Siegfried Boerst said the theme park will be officially opened in the second quarter of this year.

"We are looking at more than one million visitors for the first 12 months of operation, and we hope it increases all the time," he told reporters after the unveiling of Legoland Malaysia's dragon mascot made entirely of Lego bricks called "Ollie The Dragon" at Thistle Hotel here on Friday.

The model took 50-man hours to build from approximately 10,000 Lego bricks.

Boerst said construction of the RM700 million theme park is progressing well despite the rainy season affecting Johor, adding he is confident it will be completed on time.

Legoland Malaysia, he said, is planning public relations activities in Malaysia and several other East Asian countries including Singapore and Indonesia leading up to the theme park's official opening, adding it is also developing Johor as a tourist destination.

On the annual pass ticket sales, he said Legoland Malaysia is happy with the response, with its counters selling more than 300 passes daily, with Malaysians making up 80 per cent of the buyers, although the operator is hoping to attract more Singaporean buyers.

"We have registered several thousand annual pass sales, and we intend to keep it open for a few more weeks," he said.

The annual passes, sold at a discounted price of RM195 (adult) and RM150 (children), are valid right into the end of 2013.

Tickets are available online through the AirAsia RedTix and Legoland Malaysia websites.

Legoland Malaysia, the world's sixth Legoland and Asia's first, is located in Iskandar Malaysia and will feature more than 40 interactive rides, shows and attractions when it opens.

Other Legoland theme parks across the world are in Denmark, the UK, Germany and Florida and California in the US.

By Bernama

Sara-Timur expands

2012-01-21T09:49:00.000+08:00

New borders: Artist’s impression of Mersing Laguna – a multi-billion ringgit integrated resort development on three reclaimed islands – in Johor.

KUCHING-based construction and property development company Sara-Timur Sdn Bhd is building its presence in Peninsular Malaysia with a number of projects in the pipeline.

The company has an order book of RM2bil worth of construction projects and RM1.8bil of development projects.

Sara-Timur has two development projects in the peninsular KB Sentral at Bandar Baru Tunjong in Kota Bahru, Kelantan; and Mersing Laguna in Johor. It is also undertaking construction projects at KL Sentral and Utama Lodge Condo in OUG, Kuala Lumpur; and Teliti Data Centre in Nilai, Negeri Sembilan.

Sara-Timur managing director John Loi says with the company's successful venture to Peninsular Malaysia, it has established a platform to grow into a better known industry player.

“There are more opportunities here in Peninsular Malaysia for us and we intend to build up the company's presence here,” he tells StarBizWeek.

KB Sentral project in Kota Bahru which is to kick off around the middle of this year for completion in five years, will have a gross development value of RM1.2bil.

The project is a joint-venture urban development between Perbadanan Menteri Besar Kelantan, Tunjong Development Corporation Sdn Bhd and Sara-Timur Urban Development Sdn Bhd.

The 42 acres of new lifestyle project in Kota Bahru is part of the 2,000 acres of new urban redevelopment project of Bandar Baru Tunjong by the Kelantan state government.

Located about 6km from the Kota Bharu town, the new business hub is to meet the growing needs of the local populace.

Loi says the development is based on the Intelligent City concept of cosmopolitan community living where occupants will get to enjoy high-speed broadband connectivity.

Meanwhile, Mersing Laguna is a multi-billion ringgit integrated resort development on three reclaimed islands totalling over 2,000 acres set in the South China Sea off the town of Mersing in Johor.

The islands are designed as an oasis dotted by premier residential, commercial and tourism-related developments encased in an eco-friendly environment.

The developer of Mersing Laguna, Radiant Starfish Development Bhd, has awarded one of the construction packages, parcel 12 to Radiant Sara-Timur International Sdn Bhd.

Loi says the award is based on a turnkey design and build contract valued at RM360mil for the construction of an integrated resort development comprising a 5-star 216-room hotel, 70 service apartments, and 73 villas.

Radiant Sara-Timur has also been awarded another turnkey design and build package for an estimated sum of RM370mil by the same developer that involves the redevelopment of the existing Mersing township. Also known as the “Mersing Urban Renewal Development Project”, Loi says the company will apply its experience in the urban renewal project of the Sandakan Harbor Front project to help revitalise Mersing.

“The urban renewal program that includes the building of new business class hotels, recreational parks, cultural centres, medical centres, and commercial and business areas, will cater to the growing population by meeting their aspirations and needs. There will also be provision for the recovery of the foreshore around Mersing, allowing for the development of landscaped boulevards and recreational amenities for the local population,” he explains.

Sara-Timur also has two projects in Kota Kinabalu Jade Residence and the Jesselton Point Hotel comprising 140 rooms, 118 hotel suites and 25 business suites.

Projects it has completed to-date include the Sandakan Harbour Square, Sutera Harbour Hotel and Resort, Sarawak State Stadium, and Taman Tiong Ung Siew in Sibu.

Loi: ‘Sara-Timur has the resources to deliver sustainable solutions in both single-use and mixed-use developments and urban redevelopments.’

Loi says Sara-Timur will increase its hotel assets from one in Sandakan currently to other assets in Mersing, Kota Bahru and Kota Kinabalu.

Despite the challenging external front, he says the outlook for the local construction and property sectors looks quite stable.

“In the past three years, the company's turnover has doubled to RM350mil for the financial year (FY) ending May 31. We are confident the performance will get better going forward.”

Loi says the company hopes its revenue from property development will increase to 50% in the next three years from less than 15% in financial year 2011.

Sara-Timur has recently set up its corporate headquarters at Solaris Dutamas in Kuala Lumpur, and is looking to increase its paid-up capital to RM18mil from RM10mil now.

He says the company's forte lies in urban renewal projects to give a new lease of life to old dilapidated townships around the country.

“Sara-Timur has the resources to deliver sustainable solutions in both single-use and mixed-use developments and urban redevelopments. Its capabilities include building and civil engineering contracts comprising project management, turnkey design and construction, and project partnering.

“We choose to support new development and urban redevelopment because of the incredible impact they make on the lives of the families and the communities.

“New developments also provide attractive investment opportunities. They form the main elements of a new strategy by our local governments to see to the implementation of both new development and urban redevelopment plans through the attraction of private capital,” Loi points out.

To finance the company's expansion, Loi does not discount the possibility of Sara-Timur making an initial public offering on the Main Market of Bursa Malaysia.

“We are looking at the option and hopefully our listing plans will materialise by this year,” he says.

By The Star

SP Setia must take possession of Pisa first

2012-01-21T09:46:00.000+08:00

The timing of property developer SP Setia Bhd's new launches for its 2012 fiscal year in Penang appears to hinge on whether the company is given vacant possession of the Penang International Sports Arena (Pisa) by the first quarter of this year to build the RM300 million Subterranean Penang International Convention and Exhibition (sPICE) Centre.

Business Times has learnt that the property giant's application for planning approval to proceed with its upmarket Setia V Residences project along Gurney Drive cannot be deliberated as yet by the Penang Island Municipal Council, until the time SP Setia takes over Pisa officially.

Three other projects in the pipeline for its fiscal year ending October 31 2012 are located in the Relau and Sungai Ara areas.

The company on January 3 took over as operator of the building and it has already ploughed in RM1 million to spruce it up, sources say.

"The problem now lies in the fact that SP Setia is unable to avail itself yet of the increased density privilege it was accorded as part of the sPICE deal," one source said.

SP Setia was granted the right to build an additional 1,500 residential units over and above the density limit of its existing and future projects in Penang over a 30-year period when it inked an agreement with the Penang authorities last year to build the convention centre.

The project includes 2.8ha public park and an upgraded and refurbished Pisa.

The move for SP Setia to be granted additional density was viewed positively by analysts who noted that it would enhance the gross development value of some of the company's proposed high-rise projects.

Based on the existing density limit, it is learnt, Setia V Residences can only build about 50 units on the 0.8ha site, which has a dual frontage of the sea-fronting Gurney Drive and Jalan Kelawai in Pulau Tikus.

Analysts had also hailed the fact that with the additional density, SP Setia would now have a competitive edge over other developers in bidding for land in Penang, since it would be in a position to pay higher land costs, given the company's ability to build beyond the "normal" allowed density.

SP Setia officials could not be reached for comment.

Under the agreement signed in August last year between Penang island Municipal Council and SP Setia's subsidiary, Eco Meridian, the proposed sPICE Centre will feature a basement car park and a green park on the roof top. The project, which is expected to be completed by 2014, includes a 2.8ha public park, refurbishing, repairing and upgrading Pisa and the Aquatic Centre as well as construction of a new hotel, retail outlets and a car park.

By Business Times

PNB, Liew raise offer for SP Setia to RM3.95 a share

2012-01-21T09:44:00.000+08:00

KUALA LUMPUR: Permodalan Nasional Bhd (PNB)’s takeover bid for property developer SP Setia Bhd’s shares has takena new turn, and closure.

The country’s largest fund manager has revised upwards its offer price to RM3.95 for every SP Setia share, up from RM3.90 previously.

Equally interesting, SP Setia founder Tan Sri Liew Kee Sin will now be joining the governmentlinked asset manager in making the revised offer.

In a statement yesterday, SP Setia said PNB and Liew will also now pay 96 sen per SP Setia warrant they do not already own, instead of the earlier 91 sen offered by PNB alone.

“The joint offer enables a closure to be arrived at finally on uncertainties over takeover matters.

More importantly, it will provide a fresh launching pad for SP Setia to continue pursuing its quest to create greater value to
all stakeholders,”Liew said in the statement.

As a joint offeror, SP Setia said Liew will not be accepting
the revised offer. Instead, he will hold on to his direct eight per cent stake amounting to 158.2 million shares.

It also noted that PNB had given Liew an option to sell his stake progessively in tranches after three years at RM3.95 a share.

Liew said he is “highly appreciative” of PNB’s put option offer as it will enable him to focus on doing his best to grow the underlying value of the company.

“After many months’ work, I am happy that we have managed to come up with what I believe is a win-win solution for everyone, especially our customers, employees and all shareholders of SP
Setia,” he added.

SP Setia said a management agreement would also be signed between the company, PNB and Liew for the latter to remain as group president and chief executive officer for three years, after the close of the revised offer.

By Business Times

PNB and Liew in Joint offer for SP Setia

2012-01-21T09:40:00.000+08:00

KUALA LUMPUR: Tan Sri Liew Kee Sin and the country's largest asset manager, Permodalan Nasional Bhd (PNB), are making a joint revised offer for SP Setia Bhd in a bid to safeguard the interests of all shareholders and maintain management continuity in the company.

This new turn of events followed the move by PNB to raise its stake in property developer SP Setia via a conditional offer made last September to gain control of the company.

The new offer price has been revised to RM3.95 per share from RM3.90 while the offer for the warrants has been revised to 96 sen per warrant from 91 sen.

According to sources, the joint offer was arrived at following meetings between Liew, who is president and chief executive officer of SP Setia, and PNB president-cum-group chief executive Tan Sri Hamad Kama Piah Che Othman.

SP Setia board of directors said in an announcement to the stock exchange that they received the notice of revised offer from Maybank Investment Bank Bhd issued on behalf of PNB and Liew. The company had earlier asked for the trading of its shares to be suspended, with the last traded price at RM3.88.

As part of the offer, Liew, PNB and SP Setia would enter into a management agreement for Liew to remain at the helm for a period of three years following the close of the revised offer.

He would continue to oversee and manage the operations of SP Setia within the ordinary course of the company's business, appoint and remunerate managers and employees as well as enter into contracts or arrangements for and on behalf of the company.

Liew told StarBizWeek that the key point of the joint offer was the strong marriage that would arise, with SP Setia able to lean on the support of cash-rich PNB for expansion and growth while PNB would have invested in a trusted brand with a regional presence.

“It's a win-win situation and there'll be no change in management,” Liew said, adding that PNB had remained supportive of the company's ventures abroad, including SP Setia's failed bid for the Battersea power station in Great Britain, even during the period of the first offer.

He said the previous offer caused a bit of confusion as the company's management was in the dark as to PNB's intentions. “But the management agreement shows that PNB recognises that without a strong team, SP Setia's future will not be so bright,” Liew pointed out.

He said the revised offer was also to “appease ruffled feathers out there” while his role as a party acting in concert was to overcome the Securities Commission's objections as well as the rules on takeovers and mergers.

Liew, who has an 8% direct stake in the company, would not accept the revised offer but would be given a put option in the three years following the close of the takeover offer. This would give him the right to sell his stake to PNB in tranches at the same price of RM3.95 per share.

He said the revised offer and the conditions attached to it, including retaining the current management team, showed PNB's genuine interest and sincerity as an investor.

Hamad had taken the step of reassuring the company and stakeholders in a joint statement with Liew last October that the latter would continue to lead SP Setia and manage its day-to-day operations.

“On our part, we'll now have to prove ourselves worthy as they've been supportive of all the key thrusts of the company, be it in eco-homes, township development, luxury condominiums, high-rise residentials and integrated commercial projects,” Liew said.

By The Star

KrisAssets plans REIT exercise

2012-01-21T09:39:00.000+08:00

PETALING JAYA: KrisAssets Holdings Bhd is likely to inject its two retail assets in Mid Valley City the Mid Valley Megamall and The Gardens shopping mall into a retail real estate and investment trust (REIT) this year.

An industry source said the company had already engaged a merchant bank to look into the REIT exercise.

“The two assets have an estimated total asset value of close to RM4bil which makes KrisAssets a strong candidate to sponsor a REIT to unlock the value of its assets for its shareholders,” an analyst with a local brokerage told StarBizWeek.

The Mid Valley Megamall, which opened in 1999, has a net lettable area of 1.7 million sq ft on 5 floors that are occupied by about 400 stores. It also has a convention centre and two hotels Cititel and Boulevard. Its retail space is 100% occupied and commands average rental rates of RM10.50 to RM10.60 per sq ft.

The Gardens at Mid Valley City, which opened in September 2007, is the second phase of Mid Valley City. The Gardens contains a high-end shopping mall with branded labels. Its 830,000 sq ft of retail space is about 97% occupied with average rental rates of RM9.40.

The analyst said KrisAssets would be able to take advantage of the low prevailing tax structure accorded to REITs.

The REIT would be exempted from corporate tax if it distributes at least 90% of its total annual income to unit holders.

He said retail REITs had proven to be popular among the investing public but good retail assets had become a scarce commodity now.

Financing for such REITs was still available and the onus was on the sponsor companies to plan for more holistic retail projects that could cater to the changing needs of city folks, he added.

Another bank-backed analyst said the strong market response to the recent listing of Pavilion REIT, which has been oversubscribed by about 28 times, as well as the yield compression on select well-managed REITs including CapitaMall Trust, could have triggered KrisAssets' plan to expedite its REIT plan.

“Furthermore, in an environment where bank interest rates are expected to remain flat at best, we expect sustained buying interests on the REITs. This means that the company's parent, IGB Corp, which owns 75% of KrisAssets, would be able to extract generous valuations for its assets by divesting them to the REIT,” he added.

He said the REIT would be able to raise enough funds for IGB to undertake a mixed development project in London. IGB is said to be bidding for the project in west London, believed to be its first development project there.

In a recent report, RHB Research said it was positive on retail REITs although on average, they offered slightly lower yields compared with other sub-segment REITs.

“A strategic combination of asset acquisitions, asset-enhancement initiatives and creative events to drive shopper footfalls is crucial to deliver sustainable distribution per unit (DPU) growth.

“Retail REITs offer the highest earnings per unit (EPU) and DPU growth within our coverage. The office segment continues to experience massive oversupply, while industrial production is generally more sensitive to GDP growth.

“Apart from buying for the REIT's yield, investors should also ride on the rising valuations of scarced quality retail properties,” the report noted.

DTZ Research noted that retail REITs were subject to macro-economic risk and any downturn in the economy would have an impact on their performance.

“Notwithstanding the cautious consumer spending, the outlook for the retail sector remains positive with sales growth forecast to move upwards to 6.5% in 2012 from 6.0% for 2011,” it added.

By The Star

Scanwolf unit undertakes property project in bidor

2012-01-21T09:37:00.000+08:00

KUALA LUMPUR: Scanwolf Corp Bhd's subsidiary, Scanwolf Development Sdn Bhd, signed a joint-venture agreement with SQ Land Sdn Bhd yesterday to undertake the proposed development of 128 plots of mixed development land into five units of shop houses and 123 units of terrace houses in Bidor, Perak.

Scanwolf told Bursa Malaysia yesterday the joint venture allowed the company to venture into the property development business with minimum capital investment.

By Bernama

China’s housing slowdown to cut big hole in GDP growth

2012-01-21T09:36:00.000+08:00

China’S cooling property market could shave more than 2 percentage points off 2012 growth, forcing Beijing to decide just how badly it wants to keep the economy expanding at more than 8% a year.

Even if the world’s second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists’ predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.

China’s investment in real estate development rose 28% to 6.17 trillion yuan (US$977.67bil) in 2011 a full US$200bil more than the United States put into residential real estate at the peak of its housing bubble in 2005.

Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.

But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011’s strong showing.

“If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6%,” said Patrick Chovanec, an economist who teaches at Tsinghua University’s School of Economics and Management in Beijing.

That would be a dramatic slowdown from 2011’s 9.2% growth, and it doesn’t even include potential indirect impacts that typically come with a housing slowdown, such as falling demand for building materials or a rise in banks’ bad debts.

Worthy projections

China’s latest economic plan targets GDP growth of 7%, but economists widely consider 8% as the minimum needed to generate sufficient job growth and support social stability top priorities for the Communist Party.

The Chinese phrase “bao ba”, or protect 8, is a commonly used line, illustrating Beijing’s unwritten imperative to keep annual growth above that threshold.

“It’s something that’s almost ingrained within the (Communist) party,” said Alistair Thornton, an economist with IHS Global Insight in Beijing.

Thornton thinks 2012 growth will dip to the 7.5% to 8% range, largely because of the housing slowdown. But he said it could easily drift down to 7% if China chooses not to prop up the property market.

UBS economist Tao Wang predicted property investment growth would halve in 2012, less dire than Chovanec’s prediction for a flat reading. That leaves GDP right around the 8% mark.

“We continue to hold the view that property investment will slow sharply but will not collapse in 2012,” she said.

Data released on Wednesday showed Chinese house prices have fallen for three consecutive months as of December, and property developers are bracing for a brutal 2012. A Reuters poll released on Jan 10 found economists expected property prices to fall 10% to 20% this year.

Chinese officials have spent the past 18 months cracking down on property speculation to try to keep the market from overheating, and it appears to be in no hurry to change course now. A housing bubble and bust would inflict far more economic damage than a policy-induced slowdown.

In Beijing, which enjoyed one of the country’s biggest price gains in 2010 but is now feeling the pinch of the government’s tightening measures, property developers were still hoping that policymakers will loosen their grip.

“It totally depends on whether the government will relax policies or not,” said a young sales agent surnamed Cui, when asked about the likely direction of property prices.

It would take something more severe than weak property sales to alter the policy course.

Beijing seems willing to accept that some developers will go out of business, but rising unemployment or a steep drop in growth would probably prompt Beijing to lift some of the real estate purchase restrictions put in place since 2010.

“While the central government does not generally sympathise with developers, rapidly decelerating real estate investment growth is a major concern,” analysts at Macquarie wrote in a Jan 17 note to clients.

Holding the line

There is little doubt that China has the policy tools available to keep growth above 8%, but it is not clear that policymakers are willing to live with the consequences. Real estate investment accounted for 13% of China’s GDP in 2011, according to government data released on Tuesday, bigger than the 10% estimate that some economists had assumed. That means a slowdown will weigh more heavily on growth, and the remaining 87% of the economy will have to pull even harder to take up the slack.

Net exports subtracted from GDP growth in 2011 and will probably do so again this year, so that leaves consumption and government spending as the two main economic drivers.

China could offer incentives to spur demand for big-ticket items such as cars or appliances, which it did with good success during the 2009 downturn.

But that strategy must be used sparingly. Incentive schemes tend to pull forward demand, essentially borrowing sales from later periods.

“You just can’t force people to spend more money,” Global Insight’s Thornton said.

As for government spending, China went on stimulus binge to combat the global recession in 2009, but local government debt soared to US$1.7 trillion and problem loans are growing. China’s audit office said in December it had identified US$84bil worth of irregularities with local government debt.

“They could pump a lot of money into this economy and keep the investment boom going,” Tsinghua’s Chovanec said. “All of those things have a cost and the cost might be pretty steep.”

By Reuters

Malaysia housing market to pick up steam in first half

2012-01-20T09:21:00.000+08:00

The local housing market is expected to gather steam in the first half of this year, after cautious consumers shunned buying at the end of last year due to global economic uncertainties.

Datuk Seri Michael K.C. Yam, president of the Real Estate and Housing Developers' Association Malaysia (Rehda), said people are more confident on the Malaysian economy now despite uncertainties in developed countries.

Yam said the Economic Transformation Programme, the Government Transformation Programme and projects like the mass rapid transit and River of Life have garnered confidence in the market.

"They will have spin offs, creating jobs and business opportunities," Yam said yesterday, at the Rehda property market update for the first half of the year.

A Rehda survey found that 79 per cent of the 148 developers who responded were optimistic of the first six months of this year compared with 81 per cent in the second half of 2011.

Some 63 per cent said they will launch new projects in the first six months of this year, against 58 per cent in the preceding six months.

Seventy-four per cent of the respondents said they will increase their selling prices by five per cent to 20 per cent this year.

"This is due to the high costs of building materials and labour, which continues to be major challenges for the industry. Land cost is also increasing and we have no choice but to pass it on to customers as our margins are eroding," Yam said.

The survey showed that 38 per cent of respondents are facing challenges with building materials, particularly the pricing of bricks, cement and steel bars, and it is having an impact on their cash flow.

Meanwhile, the first Malaysia Property Exposition (Mapex) for 2012, organised by Rehda, will be held from March 2 to 4 at the Mid Valley Exhibition Centre here.

Rehda immediate past president Datuk Ng Seing Liong said Mapex is expected to generate property sales of up to RM100 million, slightly more than last year. Some 60 developers, including a small portion of foreign players, will showcase over 200 housing developments.

By Business Times

Rehda: Property prices will continue uptrend in H1

2012-01-20T09:19:00.000+08:00

KUALA LUMPUR: A majority of developers expect property prices to continue climbing in the first half of the year in tandem with rising costs.

In a recent survey of members by the Real Estate and Housing Developers' Association Malaysia (Rehda), about 74% of respondents surveyed generally felt that prices would be on an upward trend, largely influenced by an increase in the cost of development.

Rehda president Datuk Seri Michael Yam said about 36% of the respondents said property prices might increase 10% to 20%, 31% expected prices to increase less than 10%, and 7% expected prices to increase more than 20%.

“The main reason cited was the escalation in land, building materials and labour costs. For example, steel bar price had climbed to RM2,589 per tonne in 2011 from RM2,285 in 2010, while cement had gone up to RM16.33 per bag in 2011 from RM15.64 in 2010,” he told a briefing yesterday on the Rehda Property Industry Survey for the second half of last year.

Two other main factors were the larger deposits required in obtaining housing development licences and the higher market demand.

The deposit for a housing development licence is now 3% of the estimated project cost instead of RM200,000 previously. The survey covered 148 companies or 15% of Rehda's 979 members, and they were selected from all the states in Peninsular Malaysia.

Yam said 63% of the respondents indicated that they planned to launch projects in the first half of this year. In comparison, 45% had launches in the second half of 2011.

“The top property types to be launched in the first half of this year are two-storey terrace houses, apartments and condominiums as well as service apartments,” he added.

The survey also reported that better sales were expected in the first half of this year compared with the preceding six months. About 67% of the respondents with planned launches in the period under review anticipated to sell 41% of their properties and above. Yam pointed out that this was despite the drop in confidence largely influenced by external factors. “Some of the external factors are the eurozone sovereign debt crisis, fragile US economy and volatility in commodity prices.

“Nevertheless, the Malaysian market is still buoyed by its relatively strong economy, low non-performing loans for the property sector and the Government Transformation Programme and the Economic Transformation Programme (GTP/ETP),” he said.

On challenges for the industry, Yam said the unsold designated bumiputera lots had been the main reason for unsold units recorded in the last four surveys, which were conducted every six months.

“The way forward in solving this is to have a policy for automatic release of designated bumiputera lots. This will enable such ideal units to be put in the open market instead of them remaining unproductive.”

“Additionally, more than half of the respondents believed that the real property gains tax would have an impact on the overall property market.

“Other than that, 48% of respondents reported that they faced financing issues but mainly in the end-financing for buyers due to buyers' creditworthiness as well as due to banks being more stringent in their lending policies,” he said.

Rehda Federal Territory branch chairman NK Tong said the 45% of respondents that reported launches in second half of 2011 represented a slight drop from the 58% in the first half of 2011.

“The average size per project launch has also declined to 145 units from 160 units for the period under review,” he said.

“Sales were encouraging for the period as more than half of respondents who had launches sold more than 40% of their launched units,” he said, adding that the majority of the units launched were landed properties, but Kuala Lumpur and Penang were more focused on strata-title properties.

Rehda announced that the first Malaysia Property Exposition for 2012 would be held from March 2 to 4 and would feature some foreign developers.

By The Star

New township offers synergy of family, work, business and leisure

2012-01-20T09:17:00.000+08:00

Brand new: The Zest Serviced Apartment @ Kinrara 9 is completed ahead of schedule.

The Trinity Group team shifted into high gear as 2011 drew to a close — and delivered a full schedule ahead for the much-awaited launch of The Zest Serviced Apartment @ Kinrara 9. Dreamed up to be the next prime address in Bandar Kinrara 9 offering an integrated location for family, work, business, leisure, and entertainment — The Zest @ Kinrara 9 became an anticipated reality at the official Key Handover Ceremony recently.

The company is right ahead of target with the completion of an integrated development that consisted of 20 units of shop offices, 24 units of retail outlets and 720 units of serviced apartments in the Bandar Kinrara 9 township development — with infusions of modern and contemporary architectural design.

“The launch of The Zest @ Kinrara 9 marks our foray as a serious contender and comprehensive player offering a gamut of services in the real estate industry,” said Trinity Group managing director Datuk Neoh Soo Keat.

Moving in: Lok Jean Hui (left) is among the 720 homeowners receiving his key from Neoh (right) while Chor looks on.

Trinity Group’s long-standing commitment towards “building communities and enriching lives” is strongly reflected in its developer journey as it grew from strength to strength with each project. Its credo echoes the Malaysian government’s dedication towards ensuring quality and affordable housing to meet the needs of Malaysia’s growing population by matching demand and supply as well as providing efficient public utilities and services as well as a clean and livable environment.

Neoh added that Trinity Group wishes to redefine property development by bringing landmark projects that incorporate the best design, quality, technology and timely delivery. “As a forward thinking and customer-driven developer, we will ensure that all our new products offerings will set new benchmarks in terms of quality and value creation for our customers while remaining true to our aim of pursuing business activities in an ecologically-friendly manner.”

Housing and Local Government Minister Datuk Seri Chor Chee Heung was the guest-of-honour at the key handover ceremony. He said it was imperative for the Government and private sector to work together in order to create a competitive and sustainable housing industry.

“The partnership will benefit the homeowners as well as housing developers. I am pleased to see Trinity Group taking a leader role in raising the industry bar for private developers and employing the six thrusts in the National Housing Policy (NHP) as its guiding principle to achieving conducive and liveable environments and shared community infrastructure and foundation,” he added.

Being a resident or business owner in one of the units at The Zest Point means all-year access to amenities.

Trinity Group does not take community enhancement lightly; its service-focused vision spanning beyond property development is attested by its series of community projects such as a RM7mil access ramp, a RM3mil access road for The Z, and Malaysia’s first air-conditioned bus stop.

The ramp, linking the opposite side of the road and The Zest @ Kinrara 9 with the Bukit Jalil Expressway to lessen traffic congestion and commuting time, was launched by Chor.

Community development, to Trinity Group, is an on-going pursue. “We do not — and will not stop here. In the near future, we will undertake more development and community projects that are aimed to improve and enrich people’s lives”, said Neoh.

By The Star

L&G seeks more landbank

2012-01-19T09:06:00.000+08:00

Low showing off the model of Damansara Foresta, a high-rise condominium project in Bandar Sri Damansara.

KUALA LUMPUR: Land & General Bhd (L&G) is looking to expand its landbank in prime locations, said managing director Low Gay Teck.

“We are looking to acquire more land in prime locations in the Klang Valley, Johor and Selangor. We are also trying to venture north to Penang as the property prices at these places are good,” he said at a briefing on its high-rise condominium project, Damansara Foresta in Bandar Sri Damansara.

However, he did not reveal the size of its current landbank. He noted that sourcing for ideal land was not an easy task and was a challenge for the company.

Low said it was currently busy developing Damansara Foresta and Elements@Ampang (a luxury condominium project in Ampang). Both projects have a gross development value (GDV) of RM700mil each.

“We are also planning for a mixed residential development on 220 acres of land in Seremban.

“Based on our initial estimate, the project has a GDV of about RM550mil,” he said, adding that L&G had kick-started all relevant pre-development for the Seremban project, but actual work might only commence at the end of this year.

Low said the question of a property bubble was “relative”.

“It happened because of all the hype from certain projects when the prices have gone too high. We're not selling very speculative property projects,” he said.

Commenting on its project, Damansara Foresta, Low said it was a freehold residential property located next to the Bukit Lanjan forest reserve.

“The overall project site consists of 42 acres, whereby only 21 acres will be developed for residential developments, leaving the remaining as natural forest,” he said.

Low said L&G would be taking registration for the third block of its Damansara Foresta project in February.

“We have sold part of the phase 1.

“We are now opening registration for Block C. Block A is 99% sold while Block B is 95% sold.”

Phase 1 consists of four blocks ranging from 227 to 237 units for each block.

Each unit ranges from 1,400 sq ft to 1,600 sq ft to a luxurious penthouse of above 3,000 sq ft.

The selling price for phase 1 ranges from RM500 to RM600 per sq ft with a maintenance fee of 25 sen per sq ft.

Low said the property was designed with lots of natural activities such as jungle trekking, resting pavilions, hammock garden, camping sites and others to make use of the forest area incorporated in the development.

“We have put up all the necessary precautions, including slope protection measures at Damansara Foresta,” he said when asked as the property was located on a highland, some 180 metres above sea level.

Damansara Foresta is expected to be completed by end-2015.

By The Star

Naza TTDI bullish on KL property

2012-01-19T09:02:00.000+08:00

The company will launch Platinum Park residences, residential component in Taman Tun Dr Ismail and one residential component in KL Metropolis.

KUALA LUMPUR: Naza TTDI Sdn Bhd, which is optimistic about the property market in Kuala Lumpur, will continue to launch new projects and residential components in its existing projects.

The property development arm of the Naza Group is also launching three high-end residential projects.

Deputy executive chairman and group managing director SM Faliq SM Nasimuddin said the company is still optimistic about the property market in Kuala Lumpur.

"So far, I think we are still going aggressive into 2012, we still continue launching our remaining phases in our current township projects and also our ongoing projects," he told a news conference after the awards ceremony for "Bertam Master Plan & Creative Ideas Competition" last night.

SM Faliq said the company will launch Platinum Park residences, residential component in Taman Tun Dr Ismail and one residential component in KL Metropolis.

The combined gross development value for these projects is about RM1.5 billion.

Earlier, Naza TTDI and Persatuan Arkitek Malaysia (PAM) awarded six participants of the jointly-organised competition.

The competition required participants to submit creative ideas and designs for the masterplan of Naza TTDI's upcoming 333.6ha township in Bertam, Penang.

SM Faliq said the Bertam project is the company's first township development outside the Klang Valley.

"The success of our Bertam township development will serve as a platform for us to foray into development in other parts of the country," he said.

SM Faliq said the competition, which is its third such collaboration with PAM, aims to provide a platform for the architectural fraternity to showcase their expertise.

He added that Naza TTDI is committed to supporting and giving due recognition to local architect firms for their creative and innovative designs.

Naza TTDI had previously collaborated with PAM for respective masterplan competitions for the former's land in Puchong and Shah Alam in 2010.

Among the judging criteria for the competition include innovativeness, environmental-friendly features, the ability to achieve the Green Building Index rating, economical and resource efficiency, world-class qualities and consideration of traffic circulation while conforming to local planning standards and guidelines.

Also present at the awards ceremony were PAM president Ar Saifuddin Ahmad and chief executive officer Ar Paul Lai Chu.

By Business Times

Naza TTDI expanding to Penang

2012-01-19T08:57:00.000+08:00

KUALA LUMPUR: Naza TTDI Sdn Bhd will commence works on its first out-of-Klang Valley project in Bertam, Penang next year.

While the mixed development is still in its design stage, it will be Naza TTDI's long-term project geared towards the middle to high-end market.

Faliq: ‘This year is our trophy year.’

Deputy executive chairman and group managing director SM Faliq SM Nasimuddin said the gross development value had not been determined but gave a rough estimate of houses priced from RM600,000.

The 834-acre Bertam township will be mainly residential with commercial and education developments.

“Penang island is not getting any cheaper so people who want to stay there would have to look for alternatives,” Faliq said after the Bertam Master Plan & Creative Ideas Competition awards ceremony.

He said that Naza TTDI had plans to go south to the Iskandar Malaysia region as well as beyond the country.

While the property arm of Naza has been developing projects single-handedly, it is open collaborations and partnerships.

“There are local and foreign parties that have approached us but nothing is solid yet, we are still in talks,” Faliq said.

“This year is our trophy year. We are still aggressive and optimistic about the property market,” he added, “We are looking to launch three high-end projects this year.”

Faliq was referring to the Platinum Park, KL Metropolis and Taman Tun Dr Ismail residential projects in Kuala Lumpur. The combined GDV for these projects is RM1.5bil.

Naza TTDI has a total of 1,200 acres of landbank now, 800 acres of which are under planning.

The Bertam Master Plan competition was jointly-organised by Persatuan Arkitek Malaysia and Naza TTDI, where participants submitted ideas and designs for the master plan of the township.

Winners of the competition were architects Lim Siew Bok, David Teh Teik Lim and Almaz Salma Abdul Rahim who received RM100,000, RM75,000 and RM50,000 respectively.

By The Star

IOI targets project at Singaporeans

2012-01-19T08:56:00.000+08:00

KULAIJAYA: IOI Corp Bhd does not see any effect from the additional 10% stamp duty ruling imposed by the Singapore government on foreigners buying private property on its new project there.

IOI Properties Bhd senior general manager Simon Heng said the company was targeting Singaporean buyers instead of foreigners for its Clementi condominium project.

He said its strategic location within the mature housing estate of Clementi and close proximity with the National University Hospital and Clementi MRT station were the project's strong selling points.

“There are many Singaporeans living in the HDB flats who wanted to upgrade to living in private condominiums,” Heng told StarBiz after signing an agreement service with Telekom Malaysia Bhd to provide UniFi high-speed broadband network connectivity to house buyers of Parcels 3A and 4A of Bandar Putra here and Parcel 3A of Taman Kempas Utama in Johor Baru.

Singapore had in December introduced a new ruling where foreigners have to pay an additional 10% stamp duty when buying a private home in the republic, effectively raising the purchase price by 10%.

The move is seen to cool the private residential prices on the island state which are on the upward trend and there are complaints from Singaporeans that rich foreigners have push up demand and prices of private residential properties.

“We have yet to come out with the development details and land utilisation of 0.97ha site of the Clementi project,” said Heng adding transaction for high-end condominium in Clementi area could fetch S$1,000 per sq ft.

By The Star

Rising confidence in property mart: Napic

2012-01-18T12:24:00.002+08:00

KUALA LUMPUR: Higher housing starts and building plan approvals last year signify confidence of developers and investors in the development activity, said National Property Information Centre (Napic) director Dr Zailan Mohd Isa.

Some 400,000 transactions valued more than RM100 million were undertaken during the first three quarters of last year.

Zailan said the second quarter of 2011 was the most active period during the period with more than 115,000 transactions recorded.

Housing starts, a key economic indicator, refer to the number of residential building construction projects begun during a particular period.

Speaking at the 5th Malaysian Property Summit 2012, Zailan said residential property sub-sector expanded significantly by 23.2 per cent after recording a 8.8 per cent growth for similar period in 2010.

At a media briefing, summit chairman and real estate agency CH Williams Talhar and Wong (WTW) managing director Foo Gee Jen does not expect prices to soften within KL although the external uncertainties may have led property buyers to be more cautious.

Choy Yue Kwong, who is president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPs) said past crises have shown that although property prices may drop in cities like Kuala Lumpur and Petaling Jaya for a short period, prices also pick up as fast.

Zailan expects the vacant space in the retail and office sectors to be absorbed as more space taken up from the market as private investment spurred by the Economic Transformation Programme takes place.

He described the outlook for the 2012 property market as bright with strong demand as developers and investors capitalise on the government's incentives.

Demand for development land will also increase from the spillover effect of projects such as highways such as Ampang-Cheras-Pandan Elevated Highway, Guthrie-Daman-sara Expressway, Damansara-Petaling Jaya Highway, Pantai Barat-Banting-Taiping Highway, Sungai Dua-Juru Highway and Paroi-Senawang Highway.

By Business Times

TM eyes 20 HSBB deals with developers

2012-01-18T12:22:00.001+08:00

KUALA LUMPUR: Telekom Malaysia Bhd (TM) aims to sign service agreements with 20 property developers this year to deploy and provide its high-speed broadband service (HSBB) at their respective projects.

Its executive vice-president (SME), Azizi A. Hadi, said last year, TM inked agreements with 11 property developers, mainly for projects in the Klang Valley.

"This year, we plan to expand our services in Penang, Sabah, Sarawak, Johor and obviously the Klang Valley region," he said after signing the agreement with BHL Group of Companies here yesterday.

This move, Azizi said, will increase HSBB coverage to some 95 areas nationwide from the current 78.

"To date, the premium HSBB is offered to 1.19 million premises and we expect to increase the figures to 1.3 million by year-end ," he said.

Azizi said TM will launch Unifi in Ipoh and continue to expand it in key areas nationwide.

The agreement with BHL was for the deployment and provision of HSBB network infrastructure and services to the latter's three projects.

The projects are USJ One Park in Subang Jaya, KL Palace Court in Jalan Klang Lama and a development in Cheras.

By Bernama

UDA seeks investors for proposed complex

2012-01-18T12:20:00.001+08:00

JOHOR BARU: UDA Holdings Bhd is looking for investors to undertake a joint-venture project to develop the Angsana II commercial complex.

Chairman Datuk Nur Jazlan Mohamed said the complex, adjacent to its existing Plaza Angsana shopping complex in Jalan Tampoi, would cost between RM200mil and RM250mil.

“We are open to any proposal from interested parties regardless of whether they are local or foreign investors,'' he said yesterday.

Nur Jazlan: ‘We need to start changing our mindset.’

The proposed Angsana II commercial project would be the first shopping complex in Johor Baru to incorporate a street-mall concept, Nur Jazlan told reporters after attending the corporate social responsibility programme at the home for the handicapped in Taman Sinar Harapan Tampoi, in conjunction with the company's 40th anniversary.

He said the company would not limit itself to working only with a domestic partner or investor in the project and was more than willing to work with a foreign investor.

Nur Jazlan said that certain parties including politicians should not politicise the decision made by the company to cooperate with foreign partners in its property development projects.

He said as a government-linked company (GLC), UDA's duty was to ensure that it was able to bring benefits to all Malaysians and not to a certain race only.

“We need to start changing our mindset. The country will not be able to move forward if we continue to use race-centric issues in business activities,'' added Nur Jazlan.

The company hoped to start Angsana II project this year if it was able to find a right partner for the project and “did not want to miss the boat again,” he said.

Nur Jazlan was referring to the directive made by the Finance Ministry (MoF) to UDA to review its decision on a proposed joint-venture project with China's GLC Everbright International Construction Engineering Corp.

He said a steering committee had already started reviewing the proposal made by the MoF to develop the former Pudu Jail site, better known as the Bukit Bintang City Centre.

“The committee will see whether the MoF's proposal is viable compared with the model proposed by Everbright and it (the study) will probably take months,'' said Nur Jazlan.

On an unrelated matter, he said UDA would spent RM15mil this year to renovate its 15-year-old Plaza Angsana shopping complex, including upgrading its faade and food court.

By The Star

IOI advances on Singapore land buy

2012-01-18T12:18:00.000+08:00

IOI Corporation Bhd rose one sen or 0.19 per cent to RM5.34 as at 11.20am today as market players are bullish on its property business.

IOI announced yesterday its 99.8 per cent-owned indirect subsidiary Multi Wealth (Singapore) Ltd has won a bid for a parcel of land in the island republic for S$408 million (RM995.5 million).

Measuring about 24,417.6 sq metres (2.4ha), the land, in Jalan Lempeng, Clementi Avenue 6, is intended for condominium development.

HwangDBS Vickers Research said it was neutral on the deal as the aggregate impact over five years would be less than 10 per cent of IOI's forecast pre-tax profits (approximately RM2.8 to RM3.4 billion per annum).

"We believe the estimated S$709 million (approximately RM1,730 million) total investment cost is better spent on its higher-margin plantation operations," it said in a research note today.
The research house maintains a "hold" rating on IOI.

By Bernama

IOI Corp wins bid for S’pore condo land

2012-01-18T12:16:00.005+08:00

KUALA LUMPUR: IOI Corp Bhd has won a bid for a parcel of land in Singapore for S$408mil (RM995.5mil) that would enable the company to be involved in mass property market in the island-state.

IOI Corp said its 99.8% indirect subsidiary Multi Wealth (S) Ltd had been notified by the Housing and Development Board of Singapore of its acceptance of Multi Wealth’s bid for the land measuring about 24,417.6 sq m at Jalan Lempeng.

“The land, which is a rare condominium site, is located in the mature housing estate of Clementi and will have a good potential to tap into a large catchment of upgraders from the existing residents living in the area,” it told Bursa Malaysia.

This win confirmed StarBiz report yesterday that IOI Corp would be a potential winner as it was the highest bidder.

CIMB Research said the win was a slight surprise as it did not expect the group to venture into another Singapore property venture so soon after its recent purchase of the South Beach project.

“The Clementi condo project is strategically located and should attract pent-up demand from residents around the area.”

But CIMB Research is cautious on the Singapore property market, given the recent hike in stamp duties.

By The Star

China's property market slows down

2012-01-18T12:16:00.001+08:00

SHANGHAI: China's property market slowed last year, official figures showed yesterday, as the government sought to bring down runaway housing prices amid fears of a speculative bubble.

The country introduced a range of measures aimed at curbing the real estate market last year, such as bans on buying second homes in some cities, hiking minimum down-payments and introducing property taxes.

Overall property investment rose an annual 27.9 per cent to 6.17 trillion yuan (RM3 trillion) in 2011, slowing from growth of 33.2 per cent in 2010, the National Bureau of Statistics said.

Meanwhile, housing sales - excluding government subsidised homes - rose 12.1 per cent to 5.91 trillion yuan last year, marking a slowdown from 18.9 per cent growth in 2010.

"Our major progress is that speculative-based investment in the property market has been curbed," statistics bureau chief Ma Jiantang told a news conference in Beijing.

Analysts have warned the correction in the property market is threatening to drag on economic growth this year, despite government resolve to keep control measures firmly in place.

Alistair Thornton of IHS Global Insight in Beijing said the rapid slowdown in property investment in the final month of last year indicated the overall economy was undergoing an "aggressive" slowdown.

"In this light, the property market correction is providing the greatest downside momentum," he said.

At the same time, China has pledged to invest more than $700 billion in low-cost housing to help those priced out of the market, with plans to build or renovate 36 million homes over the next five years.

Property developers are hoping Beijing will ease control measures this year, though analysts are divided on the timing of such a move.

In Shanghai, among China's most vibrant property markets, city mayor Han Zheng has dashed hopes of an immediate relaxation.

"This year, the strength of the property market control measures will not be reduced and the policy will not change," he told a news conference on Monday.

Home prices in most major Chinese cities dropped in November last year from the previous month with 49 of the 70 Chinese cities tracked by the government reporting falls.

By AFP

Australian REITs seen outperforming

2012-01-18T12:15:00.003+08:00

SYDNEY: Australian property trusts are likely to deliver a total return of 12 to 15 per cent this year, outperforming local equities and other Asia-Pacific property markets, analysts said.

Australian REITs have proved resilient last year, slipping seven per cent against a decline of 14.5 per cent in the broader S&P/ASX 200 index.

In comparison, Singapore's FT ST Real Estate Investment Trusts Index dropped 16 per cent, while Hong Kong's property sub-index has declined 24 per cent.

Simon Garing, analyst at Bank of America Merrill Lynch, said Singapore property stocks faced a slowdown after the government rolled out measures to cool the residential market.

"We expect Asian REITs will continue to underperform for the first half of the calender year," he said.

"Australian REITs have been sort of a safe haven," he added.

Morgan Stanley is also expecting Australian REITs to perform better than the broad market as investors look for defensive plays and focus more on income rather than capital gains.

By Reuters

SP Setia eyes move into Vietnam city centres

2012-01-17T12:05:00.000+08:00

SP Setia Bhd, Malaysia’s second-biggest publicly traded developer, hopes to take advantage of lower prices in Vietnam’s property market by starting a development in downtown Ho Chi Minh City or Hanoi.

Setia’s first two projects in Vietnam are housing developments in Binh Duong province, adjacent to Ho Chi Minh City, the country’s business center. The developer is now looking for a “high-rise building with some branding” to boost its corporate image in Vietnam.

Vietnam’s property prices are falling amid a glut of high-end residential apartment developments, the U.K.-listed Vietnam Property Fund Ltd said last month. Asking prices have dropped over the past “six, seven weeks,” said Alex Loh, Setia’s chief resident representative in Vietnam.

“We are looking for opportunistic deals,” Loh said in an interview yesterday in his Ho Chi Minh City office, declining to give details on any potential projects or prices. “We have been trying for the last few weeks and months. We are looking at coming back closer to the city now.”

Vietnam marked SP Setia’s first move outside its home base and the company has now also expanded into Australia. Chief Executive Officer Liew Kee Sin said in 2008 that the Kuala Lumpur-based company planned to spend “a lot of effort and time” in developing its projects in Vietnam.

Sales in the country have been slow, hurt by commercial bank lending rates of “about 18 or 19 percent,” Loh said, as the Vietnamese central bank pushed up its policy rates to slow Asia’s fastest inflation.

“They’re not very happy with it,” Loh said about his company’s view on Vietnam five years after committing to its first project in the country. “The pace here is just not there. But head office understands it, so they’re still going along with a slower pace-type of sales over here.”

SP Setia expects to identify a downtown project in Vietnam by the second quarter, and be at the “negotiations stage” by that time, he said.

By Bloomberg

Work on KB Sentral project to take off in June

2012-01-17T12:04:00.000+08:00

KOTA BARU: Construction and engineering firm Sara-Timur Sdn Bhd plans to invest up to RM600 million to develop an integrated commercial property project called Kota Baru Sentral@Tunjong in Kelantan.

Chairman emeritus professor Datuk Dr M. Zawawi Ismail said the project, which will feature shopping malls, luxury apartments and condominiums, a convention centre and office blocks, will be developed over three phases on a 16.5ha land in Tunjong.

"We expect to begin construction by June or July as land acquisition procedures and other preliminary engineering works are already completed," he told reporters here.

The project, Zawawi said, will be jointly developed with the Kelantan Menteri Besar Incorporated and Tunjong Development Corporation.

He said the first phase of the project involving a shopping centre called "village mall" is expected to be ready for occupation in two anda half years.

"We expect the entire project to be fully ready in five to seven years from now," Zawawi said.

He said Kelantan traditional architecture and contemporary Islamic designs will be infused into buildings in the project.

By Business Times

Iskandar set to reach tipping point

2012-01-17T12:02:00.000+08:00

PETALING JAYA: Iskandar Malaysia is set to reach its tipping point in the next 24 months after the completion of key catalyst developments and infrastructure improvements, according to HwangDBS Vickers Research.

The research unit believed that prospects for the economic growth corridor in Johor would be boosted by the successful bilateral talks during the recent Malaysia-Singapore Leaders' Retreat, the entry of more property developers as well as spillover demand for properties in Iskandar due to Singapore's latest stamp duty hike and high property prices.

It was noted that the recent bilateral talks had resulted in fruitful discussions on topics such as the construction of an undersea tunnel linking Johor Baru and Singapore, sale of electricity to Singapore (possibly from Pengerang), co-operation in aviation and airport services between Johor's Senai International Airport and Singapore's Changi International Airport, and the formation of a work group on industrial co-operation to promote Iskandar and Singapore.

“The industrial co-operation work group may be a springboard for more investments by Singapore in Iskandar, and could be a key re-rating catalyst,” HwangDBS Vickers Research said.

Since 2006, Iskandar has received RM77.8bil worth of committed investments.

The region had also recently seen property launches setting new price benchmarks, the research house said.

“We were pleasantly surprised by the strong 65% bookings for UEM Land Holdings Bhd's Imperia@Puteri Harbour condominiums, which were launched in Nov 2011 at a record RM725 per sq ft.”

It was also noted that UEM Land's Impiana@East Ledang condominiums had seen brisk sales with two blocks almost fully sold within six months at RM480 per sq ft (compared with RM300 per sq ft for the adjacent Ujana apartments launched in 2009).

For SP Setia Bhd, Johor is also a core market (accounting for 29% of its sales) with sales surging 57% in its financial year ended Oct 31, 2011.

Meanwhile, land values in Johor's Southern Industrial and Logistics Clusters continued to appreciate with the latest transactions hitting RM35 per sq ft (compared with 2010's RM25 per sq ft).

HwangDBS Vickers Research said its top stock picks, for exposure to Iskandar, were UEM Land, SP Setia, Eastern & Oriental Bhd and Genting Plantations Bhd.

By The Star

UDA to spend RM15m on Plaza Angsana

2012-01-17T12:00:00.000+08:00

UDA Holdings Bhd will spend RM15 million to give Plaza Angsana, a popular shopping complex here, a facelift.

Chairman Datuk Nur Jazlan Mohamed said the project would be undertaken in two stages with the first involving external renovation works costing RM8 million.

Another RM7 million would be spent in the second phase, focusing on replacing the lights and floors as well upgrading the food court, he said.

"Tender for the first phase will open in two or three weeks and we expect the uprading work at Plaza Angsana to take a year to complete," he told reporters when attending the company's community programme at Taman Sinar Harapan here today.

Nur Jazlan said other shopping malls of the same age as Plaza Angsana had undergone upgrading works and UDA Holdings had to do the same so that Plaza Angsana could remain competitive.

The company was also looking for investors for the Angsana 2 project which would be developed at the parking lot next to Plaza Angsana, he said.

The project was expected to cost between RM200 million and RM250 million, he said.

By Bernama

TM eyes HSBB service pacts with 20 property developers

2012-01-17T11:59:00.000+08:00

From Left to Right: JPK & Associates Sdn Bhd Director Lai Kok Phooi, BHL Group of Companies Executive Chairman Datuk Lim Boo Kian, TM Executive Vice President Azizi A Hadi, TM MSC State General Manager R.Manivannan.

KUALA LUMPUR: Telekom Malaysia Bhd (TM) aims to sign service agreements with 20 property developers this year to deploy and provide its high-speed broadband service (HSBB) at their respective projects.

Its executive vice president (SME), Azizi A. Hadi, said last year, TM inked agreements with 11 property developers, mainly for projects in the Klang Valley.

"This year, we plan to expand our services in Penang, Sabah, Sarawak, Johor and obviously the Klang Valley region," he told reporters after signing the agreement with BHL Group of Companies here today.

This move, Azizi said, would increase HSBB coverage to some 95 areas nationwide from the current 78. "To-date, the premium HSBB is offered to 1.19 million premises and we expect to increase to 1.3 million premises by year-end.

"Currently, our take-up rate is around 20 per cent.

"As our service offering expands, I am sure the rate also will increase in tandem with the growing Unifi subscribers," he said.

Azizi said TM would launch its high-speed broadband services, Unifi, in Ipoh and later continue to expand in key areas nationwide.

The agreement with BHL was for the deployment and provision of HSBB network infrastructure and services to the latter's three projects.

The projects are USJ One Park in Subang Jaya, KL Palace Court in Jalan Klang Lama and another in Cheras, which account for a total gross development value of RM680 million.

By Bernama

Gurney Paragon set to welcome RM35m F&B investments

2012-01-17T11:57:00.000+08:00

GEORGE TOWN: Penang is set to welcome investments totalling RM35 million this year from food and beverage operators into phase one of the Gurney Paragon development on Gurney Drive.

The project's developer, Hunza Properties Bhd (HPB), has already seen the entry of nine tenants into Phase 1B of its multi-billion ringgit waterfront development with capital investments in excess of RM10 million.

"We are working hard to continue bringing in established names which have yet to set up a presence in Penang to open their businesses in Gurney Paragon," HPB executive chairman Datuk Khor Teng Tong told Business Times yesterday.

Phase 1B of the project comprises some 100,000 sq ft of lettable space, and its developers are touting the entire Gurney Paragon project as the only one in the country for now which integrates a restored heritage building amidst modern residential, retail and commercial spaces.

The company last night officially opened its "St Jo's@Gurney Paragon" building, which is the restored heritage building built in 1918.

The building is flanked by two towers which house 220 high-end dwellings, along with eateries on its first three levels.

St Jo's, which was formerly known as St Joseph's Novitiate, was initially started by the De La Salle Brothers to train young Catholic men to enter the religious order.

The colonial building, which was restored by HPB for RM10 million, was also once the site for Uplands School now known as the International School of Penang.

The restoration works include retaining the building's teakwood floors, roof trusses, window frames, stairways and clay tiles.

Khor said the current tenants surrounding St Jo's are Goku Roku Ramen, Pacific Coffee Co, T.G.I.Friday's, Brussels Beer Cafe, The Coffee Bean and Tea Leaf, and Meet Fresh.

The tenants who will open soon for business, he added, are Italiannies (serving Italian cuisine), Wong Kok Char Chan Teng (Hong Kong's foods and treats eatery), Share Tea (Taiwanese bubble tea beverage) and Petite Millie (casual French cuisine).

Khor said HPB is expecting at least 30 per cent of its new tenants to be first-time investors in Penang where a lifestyle mall - the Gurney Paragon Mall - is due to be completed by the end of this year.

By Business Times (by Marina Emmanuel)

Volatile year for real estate investment trusts

2012-01-16T22:30:00.000+08:00

The recent listing of the Pavilion REIT has improved the liquidity of the domestic market

PETALING JAYA: Headwinds from the gloomy global economic and financial fronts, particularly in the United States and the eurozone, will pose challenges to the performance of the local real estate investment trusts (M-REITs) this year.

According to Malaysian REIT Managers Association chairman Stewart Labrooy, the M-REIT sector will face slower growth and competition for tenants as an oversupply situation emerges in the office market leading to lower rental yields.

“It is going to be a volatile year ahead with the eurozone uncertainty coupled with low growth in the European and US markets. These markets are very important to growth in Asia and the impact would be felt in all export-led countries. Capital market activity will remain muted worldwide in 2012,” Labrooy told StarBiz.

In Kuala Lumpur, property prices are expected to remain flat for 2012 with some weaknesses in the high-end residential and office markets.

In the office sector, the seven million sq ft of new office space scheduled for completion this year would result in softening in rental and occupancy.

Despite the gloomy outlook, Labrooy said the Malaysian capital markets were expected to remain healthy this year with a significant number of deals notably the listing of Felda's assets in the first half of 2012.

“We are fully aware of the issues involved as some of the M-REITs have been through the 2008 global financial crisis and are taking a pro-active stand to retain their tenants through this period and manage their gearing leverage conservatively.

“Most M-REITs have strong tenant covenants and long leases to counter cyclical financial events. They also practise very conservative valuations so we don't see any downward pressure on them in 2012 and beyond.

In addition, the average gearing of most M-REITs are in the range of 20% to 40%, precluding any event of a default on their loan covenants,” he said.

Labrooy said a silver lining from the uncertainty and volatility of the global markets was that investors and fund managers had started shifting to dividend stocks with strong asset backing and renewed their interest in M-REITs as defensive stocks in uncertain times.

“I believe that we will continue to see a strong subscription in the M-REIT sector this year bearing in mind that the sector performed fairly well to outperform the KLCI in 2011,” he added.

He said the local market still faced liquidity problem as the size of M-REITs was still small by international standards with only five having market capitalisation of over RM1bil. This has contributed to the weak participation among retail investors.

Although the combined market capitalisation of M-REITs has climbed to over RM15bil, its market capitalisation is still way behind that of Singapore which has US$27bil in market capitalisation.

Labrooy, who is also the chief executive officer of Axis REIT Managers Bhd, said the recent listing of Sunway, CapitaMalls Malaysia Trust and Pavilion REITs had improved the liquidity of the domestic market.

Labrooy also said there was an absence of listing of foreign assets as REITs on the local bourse, adding that those who wanted to go for listing had opted to do so in Singapore due to its much higher liquidity and better tax structure. The local regulatory and tax framework must be improved to be on par with Singapore, and a comparable tax code would assist in getting greater retail participation.

On whether there was a scope for other types of REITs to come into the market, Labrooy said: “Malaysia probably has one of the most diversified REIT offerings in Asia. We are currently offering hospitals, plantations, office, retail, education, hospitality, industrial and diversified REITs.

“In addition three are syariah-compliant to cater to the Islamic investors.

“The sectors that will see growth are in industrial, medium cost housing, healthcare, education and tourism. These growth areas are in the Iskandar Malaysia in Johor, Greater Kuala Lumpur and Penang.”

Al-Hadharah Boustead REIT chairman Tan Sri Lodin Wok Kamaruddin concurred that the prospects for the REIT market has not been fully tapped in terms of awareness among potential investors.

He said M-REITs were viewed as a safer investment compared with other REITs in the region. This was due to the domestic-centric focus of their property investments, lower refinancing risks and relatively lower foreign shareholding.

“Malaysia is in a strong position for greater growth and has the potential to lead the REITs market in Asia given its good track record and stable market conditions in Malaysia.

“Generally, potential investors are not well informed about REITs. We believe the level of awareness can be increased nationwide as knowledge plays an important role,” he said.

Lodin pointed out.

On the types of M-REITs, he said: “It would be good if the market could diversify to different types of REITs. Malaysia has a lot of property related assets with the potential of being “REITed”. The only factor at play right now is time. Once the conditions are favourable, industry specialists should develop these assets into REITs.”

By The Star

Genting beats the odds

2012-01-16T22:25:00.000+08:00

An artist’s impression of the Resorts World Miami, Florida. The Greater Miami Chamber of Commerce’s move to endorse casino resorts in South Florida shows the importance of having more income generation streams to boost the sluggish economy in the US.

An analyst says it is well-positioned to build its RM11bil casino and hotel complex in Florida

The odds have turned to Genting Malaysia Bhd's favour to build a US$3.8bil (RM11.4bil) casino and hotel complex in Florida after a state Senate committee voted to allow the proposal to be debated by the state's lawmakers, analysts said.

The bill would deliberate on the issue of liberalising non-native American casinos. While the outcome would only be known in a few months, analysts say the move indicated that people supported the idea of legalised gambling to generate revenue for the economy.

The decision was positive for Genting as Florida may have as many as three Las Vegas-style casinos, with dealers and table games in addition to slot machines.

Currently in Florida, state laws only allowed casino gambling to resorts operated by native American tribes and slot machines at horse and dog race tracks.

“Genting would be well-positioned to secure the casino licence as it was the first to detail out its plans last year before any development has taken place,” said Alliance gaming analyst Cheah King Yoong.

“It's still early days and we still don't know the outcome. However, it's definitely good news for Genting. It has quite an ambitious plan in Miami,” said a gaming analyst from Kenanga Research.

Competition is hot too, as analysts say MGM Resorts International, Las Vegas Sands and Wynn Resorts Ltd are also interested in setting up casinos there.

Genting has submitted a master plan which showcased hotels, convention and entertainment centres, restaurants, retail and commercial facilities and residential towers on a waterfront site.

It is widely known that the measure is currently opposed by Walt Disney Co, the world's biggest theme-park company, whose flagship Walt Disney World is near Orlando, just over 300km away.

Another gaming analyst added that Genting may have won the battle, but it could be losing the war.

“The bill has not been finalised. What if they allowed a lot more casinos to set up shop? So although Genting gets the licence, it might still start off at a disadvantage,” said the gaming analyst.

“Furthermore, with Phase 2 of Genting New York venture coming up and estimated at a cost of more than US$4bil (RM12bil), should Genting be awarded the casino in Miami, how is it going to fund it?” asked the analyst.

Last week, it was announced that Genting had entered into a non-binding letter of intent with the New York State Urban Development Corp to consider developing an integrated complex next to its existing facility, Resorts World New York (RWNY) in Queens.

The new extension includes a convention and exhibition centre, up to 3,000 hotel rooms and an expansion of RWNY's casino. A binding MoU is expected to be inked by Nov 30.

“The timing of the developments will be important. Funding for both the developments in New York and Miami concurrently would mean spending close to US$8bil (RM24bil). I am sure Genting will work its way around that.

“However, investors are used with Genting being in net cash position. If debt levels were to rise to above 50%, then that would be something to ponder on,” said the gaming analyst.

Meanwhile, Cheah said the Greater Miami Chamber of Commerce's move to endorse casino resorts in South Florida was a huge plus point in helping to broaden the state's gambling laws.

“The endorsement by the largest business group in South Florida shows that the major business leaders understand the importance of having more income generation streams to boost the sluggish economy in the US. As such, odds are turning favourable to Genting 's Miami venture,” said Cheah.

Cheah believes that the market has not priced in the potential of Genting benefiting from the liberalisation of the gaming sector in Miami and the emergence of Genting as a global gaming giant.

The gaming analyst said that it was still early to talk about earnings potential should Genting be awarded the casino licence as this would be the first time a full-fledged casino was being constructed.

However, HwangDBS analyst Yee Mei Hui said that Resorts World New York was expected to contribute 16% to Genting Malaysia's 2012 earnings. She is estimating Genting to make RM1.75bil in net profit in 2012.

For the nine months to Sept 30, 2011, its net profit was up 17.95% to RM1.08bil while revenue was up 63.26% to RM6.16bil.

Genting gets some 90% of its revenues from its mainstay travel and leisure business in the Genting Highland Resorts.

By The Star

Sentoria to increase accommodation capacity in Bukit Gambang Resort

2012-01-16T22:21:00.000+08:00

KUALA LUMPUR: Sentoria Group Bhd is set to increase its accommodation capacity in Bukit Gambang Resort City (BGRC) by the third quarter of 2012.

Sitting on a 547-acre land, BGRC is one of the largest integrated resort cities in Malaysia featuring multiple attractions in a single location, including the popular Bukit Gambang Water Park and Active Academy, as well as meetings, incentives, conventions and exhibitions facilities and accommodation.

In a statement today, Sentoria said at present, BGRC had 998 accommodation rooms in its Caribbean Bay Resort.

"The group is currently developing Arabian Bay Resort which would increase its room capacity to 1,864 rooms in total.

"Arabian Bay Resort has an estimated gross development value (GDV) of RM92 million and is targeted for completion by September 2012," Head of Public and Investor Relations Nasiruddin Nasrun said.

He said barely two years after opening its doors to the public in mid-2009, Bukit Gambang Water Park saw an increasing number of visitors, currently recording more than one million visitors over the past two years.

Sentoria is slated for listing on Bursa Malaysia in the first quarter of 2012.

By Bernama

Johor Corp to upgrade hotels for RM40m

2012-01-16T22:19:00.001+08:00

JOHOR state investment company Johor Corp will spend up to RM40 million to upgrade all its hotel assets to cater to the expected increase in tourist arrivals, which is driven by the opening of several attractions in Iskandar Malaysia.

By end of this year, the RM350 million indoor theme park in Puteri Harbour, which is developed by government investment arm Khazanah Nasional Bhd, will open its doors.

In Nusajaya, Legoland Malaysia, which is being built at a cost of around RM750 million, is expected to open in September.

For the first nine months of last year, tourist arrivals through the state's entry points rose five per cent to 12.5 million.

JCorp Hotels & Resorts Sdn Bhd deputy chief executive officer, Muhamad Mazlan Ali, said the hotels' upgrading work would start with the Puteri Pacific Johor Baru.

"The hotel, which opened in 1990, needs some refurbishments. To stay afloat, we have to upgrade our properties," Muhamad Mazlan told Business Times.

He said once the refurbishment exercise was completed in about a year or two, the company would review its pricing strategy upwards.

Currently, the average room rate in the Johor market is about RM180 a night.

JCorp Hotels, the hospitality arm of Johor Corp, owns and manages five properties in Johor.

Besides the Puteri Pacific Johor Baru and the Persada Johor International Convention Centre, it also owns Sibu Island Resort, Selesa Johor Baru and Selesa Pasir Gudang.

The company also has a property in Negri Sembilan called Selesa Port Dickson.

The six properties are worth as much as RM600 million.

Muhamad Mazlan acknowledged that Johor needed more hotels.

There are more than 4,000 rooms available in the two to five-star categories and this is expected to double by 2014.

However, they might not be sufficient to meet demand, he said.

"We expect room demand to increase with the expected influx of tourists and attractions.

"We are optimistic that the attractions in Johor will bring more people to the state.

"With more universities and colleges opening at EduCity, we can expect a large number of international students, too," he said.

EduCity is a fully integrated knowledge-based hub comprising world-class universities, industry-centric research and development clusters, international schools and colleges, as well as conference and exhibition amenities.

By Business Times

Pink flamingos flock to i-City

2012-01-16T22:15:00.001+08:00

Taking off: Flamingos in flight in i-City.

BEAUTIFUL red and pink flying flamingos have “flocked” to i-City in Shah Alam, lighting up the nightscape with their beautiful glow.

Using state-of-the-art technology, the synchronisation of lights and movement simulates a flock of flamingos flying around i-City as part of its latest LED attractions this Chinese New Year to welcome visitors with good luck.

Flamingos signify wisdom and their presence at i-City is hoped to bring wisdom and prosperity in the new lunar year.

By The Star

Axis-REIT posts lower Q4 pre-tax profit

2012-01-16T22:13:00.003+08:00

The pre-tax profit of Axis Real Estate Investment Trust (Axis-REIT) decreased to RM31.98 million in the fourth quarter ended Dec 31, 2011 from RM40.99 million in the same quarter last year.

In a filing to Bursa Malaysia today, Axis-REIT said revenue rose to RM29.81 million from RM26.6 million previously.

In view of the current satisfactory performance, the management is optimistic that the company will be able to maintain its current performance for the coming quarter and the rest of the financial year ended Dec 31, 2012.

By Bernama

Oversupply of Klang Valley office space

2012-01-14T10:24:00.000+08:00

KLANG Valley's office space may be heading towards a state of oversupply. The total existing supply of office space is 94.4 million sq ft; 73.07 million sq ft of this were occupied in 3Q 2011. This leaves 21.33 million sq ft or 22.6% of the total space, within the various office buildings, vacant.

While a 5% to 10% vacancy is normal for most buildings, the aggregate 22.6% across the office market is high. Apart from this, there are 18.59 million sq ft of incoming space (under various stages of construction) and a further 18.74 million sq ft of planned supply.

This is space that has been approved for development, but for which construction has not commenced as yet, as tallied by the National Property Information Centre or NAPIC.

There is also the possibility that the 18.74 million sq ft could balloon substantially if all the office space being contemplated now and in the near future, especially the Economic Transformation Plan (ETP) are taken into account.

Demand-supply dynamics

In the years to come, the challenge for developers of office space is to make extraordinary efforts to adjust supply to conditions in the market when their projects are due to come on-stream and to do as much of pre-letting as possible.

For owners of existing buildings, hang onto to your tenants! For regulators and lenders, watch this with greater interest.

Much hope hinges on the roll out of the ETP and how it will create new office space demand, and of the order required, to balance demand and supply.

Nevertheless, the office market cannot be looked at, solely, through the lens of total numbers. The market exists in various sub-markets, depending on location and product type.

Each segment has its own demand-supply dynamics. Rents drive the market and post-Global Financial Crisis (GFC), rental levels have dropped to about RM7 to RM8 per sq ft per month for average prime space.

At this level, the office market for average prime space for office buildings sold en bloc can sustain at RM700 to RM900 per sq ft based on its historical yield expectation of about 7% to 7.5%, but this figure is not carved in stone.

For the market to slip below this level, it will take a severe economic downturn. In short, office values are bouncing along around the bottom. Post-Asian Financial Crisis, values did dip below the replacement cost (as it was then), for a number of years.

In terms of office space, the Klang Valley, with an existing supply of more than 90 million sq ft, dominates, compared to Penang's 9.43 million sq ft and Johor Baru's 7.7 million sq ft.

Klang Valley's retail segment, comprising modern shopping centres, is relatively stronger than the office market segment because consumer spending has continued unabated.

But there are shadows of looming oversupply even in this segment. If inflation accelerates, or household spending is crimped, will there be consumer support?

But a well-managed retail centre by its inherent higher sophistication (than an office building), has better strength to tide over temporary downturns. Once a shopping centre has clientele loyalty, usually through a prolonged period of astute mall management, it is extremely difficult for new comers to dislodge it.

Real estate investment trusts or REITs have a heightened presence after the listing of Sunway REIT and CMMT are anchored with retail properties. The latest addition, the Pavilion REIT is also essentially a retail REIT.

REITs are generally defensive investments and are ideal for lowering volatility in a portfolio of stock and bond investments.

Role of a REIT

They are also particularly attractive during difficult economic periods such as, since 2008. They are more convenient proxies for physical property. For that reason, special tax benefits are showered on them.

But, as was seen during the last GFC, to perform true to form they should also display all their other attributes, i.e. a high degree of transparency, low borrowings, professional property management and the comfort that comes from a high degree of regulatory oversight.

REITs have also to display their ability as a sector, and as individual REITs, to ameliorate its greatest weakness i.e. its dependency on short term financing due to the requirement for it to distribute almost all its earnings, yearly.

During the days of easy money before the GFC, cheap financing was not a major issue, but it now is.

As a quid pro quo for favourable tax incentives, REITs are obliged to promote retail investors, apart from institutional investors, to participate in the REIT.

This will meet the regulators objective of deepening and broadening the capital market, and set the foundation for sophisticated products in the future such as the establishment of a property derivatives market.

Retail investors would also have tenancies that come with considerable visibility. REIT managers should provide information as this is the key driver of REIT proposition and not hide behind the guise of protectionism against competition.

The residential sector of the market, viewed from the perspective of the country as a whole, is fundamentally sound.

Losing balance

In the Klang Valley, where residential properties are generally 4 to 5 times annual household income, certain hotspots have elevated this ratio in recent years. Household income in the Klang Valley is about RM6,000 a month.

While house prices have increased, household income has not. Set against property prices, rental yield has dropped over the years, slipping below the critical 3% benchmark.

This is a cause for concern as yield should range between 3% and 6% (all risks net return) depending on house type and whether landed or strata.

Over the past six months, with the onset of greater volatility in global markets stemming mainly from the European sovereign debt crisis, sentiment has filtered down to the residential market in Kuala Lumpur.

Coupled with tightening measures by Bank Negara for loans, the market has slowed and demand has become subdued. It is hoped that this has taken some heat out of the speculative end of the market.

Keeping a look out

Going forward, into 2012, the issues that bear watching for the property market in Malaysia, are the continuing European debt crisis and the sluggish US economy and its effects on the global economy and the possible slowing of the Asian behemoths, China and India (which have regional implications).

There is also the possible General Elections in Malaysia (and its ramifications), the possible introduction of the Goods and Services Tax (affecting in particular house prices, developers and service apartments) and the possible unprecedented legislative introduction of a new, single mode of housing delivery by way of the “build then sell” system (humungous down-the-line implications).

There is a possibility of further tweaking of rules for housing loans (to possibly also contain household debt) and other possible monetary and fiscal measures (may be negative or uplifting for the property market) that may be put in place should the global economy weaken further.

Elvin Fernandez is the MD of property consultancy firm Khong & Jaafar Sdn Bhd.

By The Star

Big hypermarket operators keen on MetroCity

2012-01-14T10:21:00.000+08:00

Ambitious project: Chong pointing to a map of the MetroCity project, the largest single integrated township development in Kuching City North. The two-phase development on 74ha has a gross development value of RM970mil.

KUCHING: Chong Kia Hoi Realty Group is negotiating with three international brand hypermarket chain operators to operate Sarawak's biggest hypermarket in MetroCity, its flagship integrated new township development in Matang.

CKH Realty Group chairman and managing director Chong Kia Hoi said the three chain operators were the industry's “big names”, having several stores in Peninsular Malaysia, and that they were keen to expand their retail network to Sarawak. He declined to name the operators.

“Hopefully, we can seal the deal in two to three months,” Chong told StarBizWeek.

Tesco, Carrefour and Giant are the major foreign hypermarket and supermarket retail chain operators in Malaysia. Giant has spread its wings to Sarawak, opening two hypermarkets in Kuching, and one each in Sibu and Miri over the past six months.

Chong said an established local supermarket group had also expressed its interest in the proposed hypermarket.

He said the hypermarket would have a built-up area of between 120,000 and 150,000 sq ft, and 800 parking lots.

MetroCity is CKH Realty's most ambitious project and the largest single integrated township development in Kuching City North, where the Sarawak administrative centre is located.

The two-phase development has a gross development value of RM970mil and spans 74ha.

Phase I will be a commercial precinct comprising 314 units of three/four shophouses priced between RM850,000 and RM2.5mil, a commercial hall that will house the hypermarket, two three-storey showrooms, a private medical centre and a 120-room hotel.

It will also feature a fast-food restaurant, a trade service entertainment cineplex centre, a private food court and an integrated bus transit terminal and taxi station.

Phase II will be a residential development with more than 1,000 houses of various types.

Chong said more than 80% of the shophouses had been sold since their launch about three months ago.

“The entire development is expected to take eight to 10 years, and it will be financed with internal funding,” he said.

By The Star

Institutional funds invest in properties overseas to diversify portfolio

2012-01-14T10:19:00.000+08:00

The properties in Gold Coast, Australia seem to be more attractive compared with those in Sydney and Melbourne.

INSTITUTIONAL funds including Employees Provident Fund (EPF), Retirement Fund Inc (KWAP), Lembaga Tabung Haji (LTH) and Permodalan Nasional Bhd (PNB) are on the lookout for viable properties overseas to diversify their portfolio and to take advantage of the strong ringgit.

CB Richard Ellis executive director Paul Khong says overseas markets such as the UK's commercial property market offers long-term lease tenure which ensures a fairly stable rental income.

“As such, commercial properties with blue-chip tenants at high rental yields will be ideal for these funds,” he says.

Khong says the offshore diversification will ensure a more balanced portfolio for the funds. He says most of the purchases will be yield driven with different expectations in different countries.

“With the strong ringgit against the pound sterling and the deteriorating condition of the UK property market, more trophy properties are now available for sale. It is a good time to shop around for bargains selectively both big and small properties.

“The funds can expect to look at net returns of 5% to 6% currently for good quality assets in the UK,” he says.

Meanwhile, the strong Australian currency has driven up property prices Down Under.

Khong says Australia is getting pricey due to the exchange rate.

“Sydney and Melbourne are at the higher end of the curve in the residential market cycle but other areas in Brisbane and Gold Coast seem to be more attractive as their markets are at the lower end of the scale (where selective properties are coming in at close to 10% yield for a quick sale),” he adds.

Savills Rahim & Co head of overseas business development Chris Hahn says the markets in the UK and Australia are transparent with fierce competition for institutional-grade investment properties.

“Most investment properties in the UK and Australia are marketed worldwide by exclusive agents and in parallel with this institutional investors also pay for their own advice from agents or fund managers. Sellers of property can be assured that the global market is covered and fair prices are achieved,” Hahn says.

On the need for more public disclosure of the investment activities of the funds, Khong says: “Public funds should have a good level of transparency to ward off any unwanted concerns on any irregularity.”

Khong says the Securities Commission has done a good job in monitoring the actions of the public companies and having an independent authority to monitor transactions involving large amounts of public funds is good as it will encourage good corporate governance.

Hahn concurs, adding that making reports on the funds' performance public allows the people to monitor how these offshore investments are performing.

The EPF, which has allocated £1bil to invest in properties in the UK and other European markets has, to date, invested about half of that in a number of commercial buildings in London.

KWAP which has allocated 4% of its entire fund of RM3.2bil for property investments, has completed its acquisition of the 14-storey ASX building in Sydney, Australia, for A$185mil last December.

In 2010, KWAP bought 737 Bourke Street office building in Melbourne for A$113mil.

Besides Australia, KWAP is also eyeing some properties in London.

According to a Bloomberg report, PNB is in talks with German real estate fund KanAm Grund KAG over the sale of four London office buildings valued at about £1bil.

The German real estate fund is said to be in discussions with other bidders and “a deal could be done in a couple more weeks,” says Michael Birnbaum, a spokesman for the Frankfurt-based KanAm.

The buildings are the European Bank of Reconstruction and Development's head office next to Liverpool Street train station, the UK headquarters of Thomson Reuters in Canary Wharf, Deutsche Bank AG's UK headquarters on London Wall and an office building at 90 High Holborn.

The London assets are part of KanAm's suspended 3.97 billion-euro (US$5.1bil) Grundinvest fund.

Last December, PNB paid £350mil for the Milton & Shire House building in London and the fund says it is looking to add more British assets to its portfolio.

In 2010, PNB bought an upmarket office block in Brisbane, Australia, called Santos Place for more than A$290mil.

LTH plans to invest in syariah-compliant buildings in Australia.

By The Star

When informed decisions go awry

2012-01-14T10:16:00.001+08:00

Making investments with money you don't have and with information you should not be privy to is both morally and legally wrong

LAST year, a young entrepreneur turned property investor lost his business outfit. Although his monthly income fluctuated somewhat month-to-month, he was able to get loans from the banks to finance his purchases, which he had incrementally amassed to about 10 over the years.

He was able to have a selection of properties because of the nature of his work which allowed him to source and research the sector and related industries. He was also a quick and adept student of the market and its trends, because like many Malaysians, he was interested in bricks and mortar as an investment instrument. It is uncertain how he will pay for all of them today.

Because of Malaysians' great love for properties, there is the tendency to buy multiple units, each in succession when the previous purchase is not yet fully paid for. While there is nothing wrong with this strategy some of us are more comfortable with properties than with other forms of investment instruments these “assets” can become a financial millstone. Quite a number of Malaysians bought multiple units at one go, sometimes in the same project because they have faith in the developer. Or they buy into the same segment, for example, condominiums.

If one has the means to hold on to these investments over the long term, there may not be an issue. The danger of multiple property purchases and ownership comes during a down cycle.

A couple of years ago when the property prices were steadily moving up, Malaysians' enchantment with the property market resulted in various courses being offered by property experts.

Nearly, if not all of them, were millionaires because of earlier property investments and they were offering courses to teach how one can become rich, like themselves.

However, the scenario then and the scenario today has changed drastically. It may not be possible to use the same strategy they had used. Like any investment, and at any one point in time, there are risks involved. But over and above taking a risk, there is something known as moral hazard. When risks become too high, the action taken by an investor may be hazardous and the probability of failure becomes very high. An action becomes morally hazardous when an investor makes a decision to do something assuming that he has a safety net.

Lately, there was a case where a spouse had bought two luxury condominiums with money that did not belong to him. Because properties at the time enjoyed high returns, he bought multiple units in Malaysia and Singapore. When the case came to light, he stressed that his wife, a public figure, is not involved.

A couple may not be a single entity from the legal standpoint. However, the reality is that the action of one will have a bearing on the other.

This was clearly seen early this week when the chairman of the Swiss National Bank, equivalent to our Bank Negara, resigned. Less than a week ago, he had denied any wrongdoing in a currency scandal that involved his wife.

The Financial Times reported that Philipp Hildebrand's wife had in September 2011 bought US$500,000 before the Swiss National Bank, headed by her husband, imposed a ceiling on the appreciating Swiss francs to halt its rise. Because Swiss francs was appreciating so quickly, the greenback became “cheap” by comparison. The move by the central bank sent the Swiss francs down sharply. She sold the dollars one month later. She bought the US dollar cheap and sold high.

Hildebrand had earlier rejected calls to resign. When he did, he said: “I came to the conclusion that it's not possible for me to deliver a definite proof that my wife requested the currency transation without my knowledge.”

His wife said she failed her husband because she had not considered the perception of a “conflict of interest.”

After his resignation, he asked rhetorically: “Can you live a dollar lifestyle, or a partly dollar lifestyle, like ours, and still be a central bank governor?”

That is an interesting question. It is a question of self examination that comes to each of us, at one point or another, sometimes many times over.

Assistant news editor Thean Lee Cheng ponders: Should the action of a spouse have far reaching consequences on the “innocent” half? Should one profit from one's vocation because of some privileged information?

By The Star

The beauty of having choices

2012-01-14T10:16:00.000+08:00

Cranes fill the sky at a high-rise commercial project in KL. The build-then-sell concept is mooted with good intention. However, a more holistic assessment of the concept needs to be undertaken before it is made mandatory. —AFP

RECENTLY, a friend of mine purchased a house from the secondary market after months of careful deliberation. As he shared the joy of his new property purchase, it was heartening to note that many of his friends were also hunting for properties in both the primary and secondary property markets for investment purpose and/or for their children.

We often see two scenarios when it comes to the purchase of a home. Some favour purchasing a property directly from the developer and others, from the secondary market. Both groups, however, have a common agreement that neither option is right nor wrong since personal preference largely influences the acquisition of a property.

In Malaysia, both primary and secondary property markets offer plenty of choices in terms of property types and range of prices.

Properties from the secondary market are often viewed as ready to be occupied and most purchasers of such properties are generally satisfied with their acquisition based on the principle of “what you see is what you get”.

In fact, secondary properties are very popular in our country. According to statistics published by National Property Information Centre (NAPIC), the total residential property transactions in 2010 was 181,024 units, with 151,862 units transacted in the secondary market, and 29,162 units from the primary market. In short, 84% of the units transacted were completed properties from the secondary market.

On the other hand, newly-built properties bought directly from developers offer a different spectrum altogether. Purchasers of such properties generally look for specific locations or specific project features such as newly-developed areas near to commercial lots or recreational facilities, or projects with innovative elements etc. When buying a property directly from a developer, the purchaser expects to get a good deal compared to secondary market which has factored in price appreciation.

Some may perceive primary property market as containing higher risk as they purchase a property off the plan without seeing the real product. They will only realise their hope when the house is completed and handed over to them. As such, purchasers are advised to always consider the reputation and track records of property developers before making their commitment.

Being able to choose a property from the primary and secondary markets clearly facilitates a healthy environment where house buyers can enjoy the best of both worlds.

It was not surprising that the property development industry was jolted with many questions raised on the build-then-sell (BTS) concept when the Government announced last year that the same would be made mandatory by 2015. An immediate question came to mind ... “Are we ready for just one concept when we currently enjoy a choice?”

At present, almost all newly-built properties would fall under the sell-then-build (STB) concept. Purchasers would pay a 10% deposit or 20% initial payment of the purchase price with the remaining 90% or 80%, as the case may be, mostly financed by mortgage loans provided by banks. Servicing interest or instalment would begin immediately after the banks start to disburse the monies to the developers.

BTS on the other hand is a concept that allows house purchasers to pay the initial 10% deposit and not pay a single cent thereafter until the project is completed and the certificate of fitness is issued. In most cases, the construction period may last up to 3 years.

There are two sides of the coin on when to purchase a BTS concept property. Purchasing early provides the buyer a greater selection of units to choose from and more time to shop for good mortgages. Purchasing near the completion stage, on the other hand, provides the buyer the opportunity to have a physical view of the property (design and quality) and its surroundings (infrastructure, marketability etc). However, if the decision is made too late, the buyer may miss the opportunity to purchase a house from developer, and later has to pay higher price for a unit from the secondary market.

So how does BTS fit in today's picture?

Notwithstanding the difference in the duration to occupy the property (i.e. most “second hand” properties are fit for occupation immediately while newly-built properties have to wait for the certificate of fitness), properties in the secondary market are already adopting the BTS concept. Effectively, the purchaser can occupy the property once the remaining 90% payment is secured by the seller.

No doubt, the Government's move on BTS concept is mooted with good intention to protect consumers from suffering losses as a result of abandoned projects. However, a more holistic assessment of the concept needs to be undertaken before it is made mandatory. For instance, understanding and addressing the causes of abandoned projects whether they are due to economic downturn, inflation, fraud or management know-how, etc, are highly necessary.

As it is, there have been efforts to mitigate this problem in the form of stricter regulatory measures such as imposing hefty fines of between RM250,000 and RM500,000 and harsh jail term not exceeding three years for offences relating to housing abandonment by developers. The banks are required to assess the developers before offering bridging or mortgage loans and greater awareness campaigns highlighted by the media.

With a better understanding of BTS and its existence in today's environment as well as the need to holistically assess the concept before it is made mandatory, we need to ask ourselves again “Do we allow the free market to dictate how the industry should be shaped, such as by having both BTS and STB or just adopting the BTS concept solely?”

Something for everyone to ponder at the beginning of the year.

Datuk Alan Tong is the group chairman of Bukit Kiara Properties, he was the FIABCI world president in 2005-2006 and was recently named Property Man of The Year 2010 by FIABCI Malaysia.

By The Star

AEON to open at least five more malls by 2015

2012-01-14T10:13:00.000+08:00

KUALA LUMPUR: AEON Co (M) Bhd, the Malaysian operator of the Japan-based Jusco retail supermarket, hypermarket and shopping malls, expects to open another five to eight shopping complexes by 2015.

AEON Asean vice-president and chief executive officer Nagahisa Oyama said currently the company owned and operated 28 shopping malls, with the latest opening in Rawang in December last year.

He said a shopping mall would usually cost some RM200mil, depending on location and arrangement with the developer.

“Sometimes we have to buy the land and build, sometimes the developer will construct it and we just have to run the business.

“These new shopping malls are at the planning stage. Therefore we do not have specific locations for the complexes yet,” he said after a welcoming ceremony for new Aeon staff yesterday.

By The Star

UOA REIT posts higher pre-tax profit

2012-01-14T10:11:00.000+08:00

KUALA LUMPUR: UOA Real Estate Investment Trust (UOA REIT) posted a higher pre-tax profit of RM41.87 million for the financial year ended December 31 2011 compared with RM25.08 million in the same period last year.

In a circular to Bursa Malaysia, the company said its revenue jumped to RM79.74 million from RM42.81 million previously.

By Business Times

Mitrajaya unit accepts Putrajaya deal

2012-01-14T10:10:00.000+08:00

KUALA LUMPUR: Mitrajaya Holdings Bhd announced that its wholly-owned subsidiary, Pembinaan Mitrajaya Sdn Bhd, has accepted a Letter of Award from Putrajaya Holdings Sdn Bhd.

The award is for the proposed construction and completion of residential and commercial units in Putrajaya for RM20.52 million, Mitrajaya told Bursa Malaysia.

By Business Times

Development in Shah Alam offers all the convenience

2012-01-13T21:42:00.001+08:00

Well-designed: Noorazhar showing the model of the D’Kayangan units.

HYPERLINK Marbella homes in D’Kayangan, Shah Alam offers buyers the comfort of living in a low-density residential area.

The project will be developed under phase six of the D’Kayangan township and each unit is 28’ x 80’.

Kumpulan Lebar Daun executive director Noorazhar Mohamed Nurdin said only 102 homes would be built for this phase.

Noorazhar said each unit comes with a built-up area of 3,085sq ft.

He said the development is expected to be completed by August 2013.

“The hyperlink Marbella type A homes are spacious and built without borders,” he said, adding that the type B homes would have a built-up area of 3,368sq ft.

Noorazhar said the strategic location of the project itself was an unique selling point.

It is located at the former site of the Batu Tiga race course, he said, and was easily accessible via the NKVE, Elite Highway, GCE, Kesas, LKSA and KL-Klang Federal Highway.

“It is a gated and guarded community with perimeter wall fencing and a 24-hour security under a conducive environment.

“There are hypermarkets, education centres, shopping malls, sports facilities as well as golf courses near the site,” he said.

Noorazhar added that the development also comes with a scenic lake within walking distance.

He said the homes priced between RM958,888 and RM2.2mil were ideal for investment.

“We are confident that the homes will attract good response from investors and those who seek to upgrade their lifestyle,” he said.

A 3% discount is offered for the hyperlink homes to early birds for limited units only, buyers could enjoy savings of up to RM70,000.

Besides the Marbella, D’Kayangan Residence Semi-D type Alena (40’x 80’/50’ x 90’) and Semi-D Villa type Casa Ariana (60’ x 80’) are also available for sale.

A commercial project consisting of shop office and service apartment are among the other developments expected to be launched at D’ Kayangan this year.

The D’Kayangan township with a land area of 66ha comprises superlink and semi-detached homes, bungalow lots, a recreational and commercial centre.

By The Star

Lee Yan Lian's family’s land in Klang Valley up for sale

2012-01-13T21:39:00.002+08:00

PETALING JAYA: Five parcels of freehold land in the Klang Valley owned by the late Tan Sri Lee Yan Lian's family have been put up for sale by tender.

A well-known philantrophist and community leader, Lee was a successful housing developer in the 1960s until his demise in 1983.

He is renowned for developing SEA Park in Petaling Jaya and Taman Tun Dr Ismail (TTDI), which was a joint venture with the Urban Development Authority.

Lee's SEA Housing Corp Sdn Bhd owned the 286ha of rubber estate land which was developed into the highly successful TTDI, an affluent township in Kuala Lumpur.

A property developer, who requested anonymity, said that the Lee family still owned a number of land in the Klang Valley and the five pieces advertised for sale were among the more prime parcels.

“These are among the last sizeable freehold land in the Klang Valley and will be suitable for redevelopment into mixed development projects,” he added.

In the latest sale tender, a 7,239-sq-ft land in the prime location of Jalan Bukit Bintang, Kuala Lumpur has a reserve price of RM50mil. The land is currently occupied by The Malaysia Hotel.

The second piece measuring 276,832 sq ft in 4 miles Old Klang Road (near the Pearl International Hotel) has a reserve price of RM90mil.

The other three parcels are located in Petaling Jaya.

A 265,245-sq-ft plot in Jalan SS23/15 in Taman SEA has a reserve price of RM150mil, and another piece of 82,715 sq ft in Jalan SS2/64, which is currently used as a car park, is going for RM100mil.

A vacant 84,315-sq-ft land made up of seven plots with old bungalows on two plots in Taman Tan Sri Lee Yan Lian in Section 16 has a reserve price of RM25mil.

The tender package can be purchased from Colliers International Property Consultants Sdn Bhd, the property agent appointed for the tender exercise.

A tenderer may purchase the individual property or all five properties. The last date for purchase of the tender package is Jan 16 and the closing date of the tender is at 1pm Jan 30.

By The Star

UOA REIT FY11 pre-tax profit rises to RM41.9m

2012-01-13T21:38:00.002+08:00

UOA Real Estate Investment Trust (UOA REIT) posted a higher pre-tax profit of RM41.87 million for the financial year ended Dec 31, 2011 compared with RM25.08 million in the same period last year.

In a circular to Bursa Malaysia, the company said its revenue jumped to RM79.74 million from RM42.81 million previously.

Going forward, the company said it would continue its efforts to further improve the occupancy rates of its property assets and anticipates the high
occupancy rates to sustain barring unforeseen circumstances.

"The manager will continue to adopt an active operating and capital management strategy to enhance the yields and returns of the existing
properties.

"The manager will also continue to seek opportunities to further acquire real estate that meets the objectives of the Trust," it added.

By Bernama

1MDB may sell sukuk to part-finance KLIFD project

2012-01-12T10:15:00.000+08:00

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB), a state-owned development company, may sell Islamic bonds to partly fund the construction of an US$8 billion (RM25.2 billion) financial district in Kuala Lumpur.

"We have a RM2 billion bridging loan coming due in 2013 and are looking at all options," chief executive officer Shahrol Halmi said in an interview in Kuala Lumpur yesterday.

"We may sell medium-term syariah-compliant notes if conditions are conducive."

1MDB is jointly developing the so-called Kuala Lumpur International Financial District (KLIFD) with Abu Dhabi's Mubadala Development Corp, said Shahrol.

The initial phase is due to start in the first half of this year at an estimated cost of RM2 billion and 1MDB may also look into setting up an Islamic real-estate fund for financing, he said.

The company, formerly known as Terengganu Investment Authority Bhd, last sold RM5 billion of 30-year syariah-compliant bonds in May 2009.

The debt, which was guaranteed by the Malaysian government, is rated A3 by Moody's Investors Service.

By Bloomberg

UEM Land set to launch RM5.5b property projects

2012-01-11T23:08:00.000+08:00

NEW TARGET: Firm expects sales to increase 50 per cent to RM3 billion this year

UEM Land Holdings Bhd is set to launch property projects worth about RM5.5 billion across Malaysia this year.

As such, it anticipates sales to increase to RM3 billion, about 50 per cent more than last year's sales target.

Its managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said the locations for the company's new projects would include Johor, Mont Kiara in Kuala Lumpur, and Bangi and Kajang in Selangor.

"We expect the demand structure for our properties to take a new dimension. We expect a dramatic increase in take-up (of our properties).

"So, we are targeting sales of properties worth RM3 billion this year. Last year's target was at RM2 billion," he told reporters after the signing of a joint-venture agreement with Medini Security services Sdn Bhd, a wholly-owned subsidiary of Iskandar Investment Bhd, here yesterday.

In fact, Wan Abdullah said, the company has managed to achieve last year's sales target of more than RM2 billion. He, however, declined to disclose the exact sales figures.

"At any one time when we launch a project, 85 per cent of the units offered are always taken up. And in the past two years, our sales team had managed to achieve our target.

"So the board decided to raise the target bar for 2012 ," he said.

Under the agreement sealed yesterday, UEM Land and Medini Security have agreed to form a full-fledged security services company to provide enhanced security for Nusajaya, one of the five nodes of Iskandar Malaysia.

Asked on UEM Land's properties in Nusajaya, Wan Abdullah said since 2006, the company has managed to sell some 3,500 units of properties there, noting that sales only picked up over the last few years.

"Sales were slow in the beginning, but over the last few years, they have been increasing dramatically," he said.

By Business Times

UEM Land expects higher sales of RM3bil

2012-01-11T23:07:00.000+08:00

PETALING JAYA: UEM Land Holdings Bhd has raised its sales target to RM3bil worth of properties for 2012 compared with RM2bil that it achieved last year.

“We will be launching RM5.5bil worth of properties throughout Malaysia this year, with a sales target of RM3bil,” managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said.

UEM Land had already met its sales target of RM2bil last year.

The company would unveil the actual figure when it announced its financial results for the fourth quarter of 2011, Abdullah said after a signing ceremony to mark the company's collaboration with Medini Security Services Sdn Bhd.

Security assurance: Wan Abdullah (right) exchanging documents with Iskandar Investment president/CEO Datuk Syed Mohamed Syed Ibrahim after signing a joint venture agreement to offer security services in Nusajaya.

UEM Land would form a joint venture (JV) with Medini, a wholly-owned subsidiary of Iskandar Investment Bhd, to provide full-fledged security services in Nusajaya, one of the five nodes of Iskandar Malaysia development in Johor.

The JV would expedite the implementation of the overall safety and security initiatives and control the quality of security services in Nusajaya.

Abdullah said the deal was significant as it would help address the negative perception that many people have towards the safety and security aspects in Johor, and help reassure potential investors besides attracting investments to the state.

To initiate the security effort, UEM Land had deployed 20 auxiliary policemen from Mont Kiara, Kuala Lumpur, to be stationed in Nusajaya.

Abdullah said the JV company was expected to have 160 auxiliary police men deployed in the development by 2015.

He said the JV had allocated RM8mil as capital expenditure for 2012.

Of the amount, RM4mil would be used to procure vehicles and equipment while the remainder for operation expenditure.

He said that the JV company was not a profit centre.

The company, he said, would earn revenue from the security services it provided for various projects in Nusajaya.

By The Star

Belleview plans RM500m property launches this year

2012-01-11T23:03:00.000+08:00

GEORGE TOWN: Penang-based property developer Belleview Group will unveil new projects with a development value in excess of RM500 million this year in the northern region.

Its managing director, Datuk Sonny Ho, yesterday said besides two launches on Penang island, the company is also set to launch first condominium project in Alor Star, Kedah.

"We are working with the state authorities to try and change Kedah's landscape and introduce condominium living by bringing in projects similar to the ones we have been doing in Penang for three decades," he told reporters after the official opening of the 1st Avenue mall here yesterday.

1st Avenue is a joint-venture project between Asian Retail Mall II Ltd (a pan-Asian fund managed by the Pramerica Real Estate Investors Asia Pte Ltd), Belleview Group and the Lion group.

Ho said the Amansuri Residences project along Jalan Darul Aman in Alor Star will boast two towers, comprising 22 and 24 levels respectively.

"The project will be sited on a 1.21ha of land and will comprise 277 units, with floor areas ranging from 1,200 to 3,000 sq ft and priced at around RM350 per sq ft," he added.

On Penang island, Belleview will launch its RM200 million Moulmein Rise mixed development project in the Pulau Tikus area by the middle of this year.

"We will offer, among others, commercial, small-office, home-office type units, along with upmarket condominiums in a 27-storey block close to the Pulau Tikus market," Ho said.

Also to be launched are eight bungalow units along Jalan Utama (also known as Western Road). The "W Residence" project, which carries a gross development value of between RM70 million and RM80 million, is expected to be completed by the middle of 2014.

Meanwhile, Pramerica Real Estate Investors Asia chief executive officer Victoria Shigera Sharpe said despite continued chaos in the global economic environment, the year 2011 was a very successful year for Pramerica in the Asia-Pacific region.

The S$3 billion (RM7.3 billion) fund, which is managed by the Singapore-based company, last year consolidated its popular closed-end Asian Retail Mall funds into a private open-end property fund for institutional investors looking to take advantage of opportunities in Asia's growing retail sector.

"What this new fund structure means for our investors, Pramerica and Malaysia is quite significant as the conversion allows us to maintain a more long-term position in the Singapore and Malaysian markets, where we do not have exit assets because of structural reasons, namely the term of our investment funds coming to an end," Sharpe said.

By Business Times

Naza TTDI and Seacera in joint venture?

2012-01-11T23:01:00.000+08:00

PETALING JAYA: Naza TTDI Sdn Bhd, the property arm of the Naza group, is likely to join forces with ceramic tile maker Seacera Group Bhd in a 500-acre mixed development project in Ulu Langat, Kajang , sources said.

Both parties met last week to discuss the probability of collaborating, a source said.

“The emergence of Naza TTDI - which launched last year its TTDI Grove mixed development project in the same vicinity and enjoyed a good take-up rate for it, will value-add Seacera because of its (Naza TTDI's) experience in the same land area.

“The collaboration will also be good for Seacera's tile business which will be complementary to the property project and give Seacera additional income,” the source noted.

In terms of benefits to Naza TTDI, the company has said that landbank expansion is its priority and this deal will enable it to gain direct access to more land in the Kajang area, having used up most of its landbank for its 113-acre TTDI Grove project.

No specific details on the joint-venture are available at this point.

StarBiz reported recently that Seacera will this year kick-start a 500-acre mixed development project in Ulu Langat with a gross development value of at least RM2bil that will span over 10 to 15 years.

Of the 500 acres, Seacera owns 113 acres, which it bought from land owner Duta Skyline Sdn Bhd for about RM27mil or RM5.50 per sq foot. The remaining land is currently owned on a 78:22 joint-venture basis with Duta Skyline, with the larger portion owned by Seacera.

Shares in Seacera have surged 47% over the past two weeks, ending at 76.5 sen at yesterday's close.

Recently, some four million shares were crossed to unidentified buyers, suggesting that there could be new major shareholders coming into the company.

It is learnt that corporate personality Datuk Samsudin Abu Hassan, who was one of the major shareholders of the company, has exited the company completely. For the third quarter ended Sept 30, 2011, Seacera made a net profit of RM981,000 on sales of RM24mil.

By The Star

Dijaya sees brisk sales of Tropez Residences apartments

2012-01-11T22:59:00.000+08:00

KUALA LUMPUR: Dijaya Corp Bhd, which launched Tropez Residences in Iskandar Malaysia, Johor last month, has sold more than 85% of its Tower A within the first month.

“We are very pleased to receive this strong response from locals and Singaporeans in such a short time. Following the positive response, we have launched our second phase, Tower B,” group chief executive officer Tan Sri Danny Tan said in a statement.

Tropez Residences is a 38-storey bay-front serviced apartment in Tropicana Danga Bay. The latter is a RM3.8bil integrated project spanning 37 acres in Iskandar Malaysia. It offers a comprehensive mix of lifestyle properties, offices and commercial blocks, as well as a hotel and a shopping mall.

Tropez Residences consists of 1,149 units with choices of duplex, 3 or 4-bedroom units and also 1-bedroom studio with built-up areas ranging from 463 to 1,798 sq ft.

The serviced apartment offers comfortable and luxurious living with more than 20 facilities.

There will also be two open air sky lounges in towers A and B with spectacular panoramic view of the development and beyond. Tropez Residences will also be connected to the entire Tropicana Danga Bay development via a level-six walkway.

Dijaya said two show units Type C (1,163 sq ft) and Type D (1,668 sq ft) were ready for viewing.

By next month, the company said, it would unveil two more luxurious show units, Type A (689 sq ft) and Type S1 (463 sq ft), to provide more inspirational ideas on interior decoration.

Tropez Residences is expected to be completed around 2014.

By The Star

New Zealand housing index higher in 2011

2012-01-11T22:55:00.000+08:00

WELLINGTON: New Zealand’s housing market finished last year on a firm footing, but the outlook for 2012 is uncertain because of the European debt crisis, government property valuer Quotable Value (QV) said.

QV said that its residential property index was up 2.4% in the year to December, after a 1.7% increase in the year to November and a 1.2% rise in October.

The index was now 3.5% below its peak in late 2007.

Recent data have suggested some stability in the housing market, after a sluggish 2010 because of weak domestic consumption and a slow wage growth.

“Despite national values moving upwards during the year, the property market continued to be characterised by lower than normal sales volumes,” said QV research director Jonno Ingerson.

He said sales numbers in 2011 were more than 20% below the long-term average, but were higher compared with 2008 and 2010 when they were marked by low activities. The average sale price, which is not used to calculate the main index, over the three months to December slipped 3% to NZ$398,411 (US$305,407) compared with a year earlier.

Looking forward to 2012, QV said Auckland, the country’s biggest population and business centre, would prosper further because of a growing population.

“While business and consumer confidence seems to be on the increase, there is still some concern about the financial situation in Europe, and what may happen to the New Zealand economy,” Ingerson said.

Prices in Auckland rose 4.3% on a year ago and are now 1.4% above the previous peak in late 2007.

By Reuters

UEM Land plans to launch RM5.5bil worth of properties

2012-01-10T23:05:00.000+08:00

KUALA LUMPUR: UEM Land Holding Bhd, which plans to launch RM5.5 billion worth of properties, aims to record sales of RM3 billion this year.

Managing Director/Chief Executive Officer Datuk Wan Abdullah Wan Ibrahim said the properties were located in Johor, Kuala Lumpur Central Business District, Mont Kiara and Bangi.

UEM Land achieved sales of RM2 billion last year, he told reporters here today after the company inked a joint venture agreement with Medini Securities Services Sdn Bhd to enhance security features in Nusajaya.

Datuk Wan Abdullah Wan Ibrahim

Since the mid-90s, 11,000 units of residential properties were sold in Nusajaya by UEM Land and other developers.

"The company alone sold 3,500 units since 2006.

"We expect the demand structure to continue this year," Wan Abdullah said, adding that the take up rate stood at 85 per cent, currently.

On the joint-venture, he said the company has collaborated to form a full-fledged security service company with Medini Security to provide enhanced security for Nusajaya.

Eight million ringgit has been budgeted this year to implement this initiative as part of the Nusajaya Security Blueprint, he added.

"We are looking into areas of improvement such as the expansion of our CCTV coverage in the vicinity to further add value to the current security features," he said.

By 2015, the joint venture company is expected to have an estimated 160 auxiliary police officers who will be deployed in critical areas.

UEM Land, is the master developer of Nusajaya, the key driver of Iskandar Malaysia, Johor.

By Bernama

Trinity delivers quality and style ahead of schedule

2012-01-10T23:00:00.000+08:00

Minister of Housing and Local Government Datuk Seri Chor Chee Heung (left) inaugurating the official key handover ceremony of The Zest Serviced Apartment @ Kinrara 9 and opening of Trinity’s RM7mil access ramp at Bandar Kinrara.

The Trinity Group team shifted into high gear as 2011 drew to a close - and delivered a full schedule ahead of time for the much-awaited launch of The Zest Serviced Apartment @ Kinrara 9. Dreamed up to be the next prime address in Bandar Kinrara 9 offering an integrated location for family, work, business, leisure, and entertainment – The Zest @ Kinrara 9 became an anticipated reality at the official Key Handover Ceremony yesterday.

The company is right ahead of target with the completion of an integrated development that consisted of 20 units of shop offices, 24 units of retail outlets and 720 units of serviced apartments in the Bandar Kinrara 9 township development – with infusions of modern and contemporary architectural design.

"The launch of The Zest @ Kinrara 9 marks our foray as a serious contender and comprehensive player offering a gamut of services in the real estate industry,” says Trinity Group managing director Datuk Neoh Soo Keat.

Trinity Group’s long-standing commitment towards “building communities and enriching lives” is strongly reflected in its developer journey as it grew from strength to strength with each project. Its credo echoes the Malaysian government’s dedication towards ensuring quality and affordable housing to meet the needs of Malaysia’s growing population by matching demand and supply as well as providing efficient public utilities and services as well as a clean and livable environment.

Datuk Neoh adds that Trinity Group wishes to redefine property development by bringing landmark projects that incorporate the best design, quality, technology and timely delivery. “As a forward thinking and customer-driven developer, we will ensure that all our new products offerings will set new benchmarks in terms of quality and value creation for our customers while remaining true to our aim of pursuing business activities in an ecologically-friendly manner.”

Minister of Housing and Local Government Datuk Seri Chor Chee Heung, present to officiate The Zest Point’s Key Handover Ceremony comments that it is imperative for the Government and private sector to work together in order to create a competitive and sustainable housing industry.

“The partnership will benefit the homeowners as well as housing developers. I am pleased to see Trinity Group taking a leadership role in raising the industry bar for private developers and employing the six thrusts in the National Housing Policy (NHP) as its guiding principle to achieving conducive and liveable environments and shared community infrastructure and foundation,” Datuk Seri Chor adds.

Being a resident or business owner in one of the units at The Zest Point means all-year access to amenities. Trinity Group doesn’t take community enhancement lightly; its service-focused vision spanning beyond property development is attested by its series of community projects e.g. a RM7mil access ramp, a RM3mil access road for The Z, and Malaysia’s first air-conditioned bus stop.

The RM7mil access ramp at The Zest @ Kinrara 9 intersecting with the Lebuhraya Bukit Jalil is officially open for the convenience of road users and public

The ramp, linking the opposite side of the road and The Zest @ Kinrara 9 with the Bukit Jalil Expressway to lessen traffic congestion and commuting time, is launched for public usage today by Datuk Seri Chor Chee Heung. Community development, to Trinity Group, is an on-going pursue. “We do not – and will not stop here. In the near future, we will undertake more development and community projects that are aimed to improve and enrich people’s lives”, exclaims by Datuk Neoh. “We are dedicated to provide the best to our customers with better living experiences.”

By The Star

Trinity plans RM640m projects

2012-01-10T22:58:00.000+08:00

KUALA LUMPUR: Trinity Group Sdn Bhd, a property developer, plans to launch at least four new projects, with a gross development value (GDV) of RM640 million in Kuala Lumpur and Selangor, over the next two years.

Trinity Group founder and managing director Datuk Neoh Soo Keat said the four potential new projects will be in Serdang, USJ (Subang Jaya), Ampang and Taman Melawati.

"We have adequate landbanks for these projects and are acquiring more land. We are now awaiting for approvals from the relevant authorities.

"We expect to launch the first of these four in Serdang in March this year. It will be a mixed commercial and residential development," he told reporters after the official handing over of keys to buyers of Trinity Group's the Zest serviced apartments in Bandar Kinrara near here yesterday.

Housing and Local Government Minister Datuk Seri Chor Chee Heung officially handed over the keys to the buyers and launched the RM7 million access ramp to The Zest @ Kinrara 9, a 720-unit serviced apartment project, with a GDV of RM260 million.

Neoh said the company is currently undertaking two projects, namely the Latitude in USJ and Z Residence in Bukit Jalil.

"The Latitude is a 15-unit semi-detached factory development, with a GDV of RM70 million and The Z Residence, a condominium project comprising 1,136 units in four blocks, with GDV of RM550 million.

"We expect to complete the Latitude early next year, while the Z Residence will be ready by July 2014," he said.

Going forward, Neoh said the company plans to expand its property development business overseas, mainly in Asia.

"It's still in the preliminary stage. We have to conduct a study and do research for at least two years to three years before we can start venturing abroad," he said.

On the Zest serviced apartments, Neoh said the company took pride in the development as it was com-pleted three months ahead of schedule.

"The project was launched in April 2009 and was supposed to be completed within 36 months - on April 2012. But we managed to complete it earlier and received the certificate of fitness in December last year," he said, adding each unit was priced between RM250,000 and RM350,000.

For the convenience of the residents and owners, Neoh said the company has constructed Malaysia's first air-conditioned bus stop at The Zest, apart from the access ramp and will invest in a RM3 million access road for The Z Residence.

By Business Times (by Kamarul Yunus)

SP Setia's RM500m bond rating reaffirmed

2012-01-10T22:56:00.000+08:00

Malaysia’s RAM Ratings has reaffirmed the AA3 rating of SP Setia Bhd’s RM500 million nominal value of two percent redeemable serial bonds with 168 million detachable warrants (2007/2012).

The long-term rating has a stable outlook, says the rating agency.

The outstanding amount of the bonds stood at RM250 million presently.

The rating reflects S P Setia’s strong business profile as a prominent property developer in Malaysia. S P Setia boasts strong diversification in terms of product range and geographical presence.

The group has a proven ability to offer a wide array of properties with different price tags to cater to different segments of the market, with most of its offerings achieving full take-ups within 1-2 years.

“SP Setia’s strong branding and product innovation underscore its robust revenue generation capability. We believe these factors, guided by the group’s capable management team will continue to fuel its operating performance,” says Shahina Azura Halip, RAM Ratings’ Head of Real Estate and Construction Ratings.

The group’s record level of unbilled sales of RM2.83 billion as at end-October 2011 should ensure some earnings stability over the next few years.

By Business Times

I-Bhd’s decision to leverage on digital technology has borne fruit in the form of i-City

2012-01-07T14:46:00.000+08:00

Ong with a model of i-Residence, the first residential project to be built in i-City.

When I-Bhd first ventured into property development about six years ago, the company decided to leverage on its digital technology prowess to undertake the construction of the first digital city in the country, i-City in Section 7, Shah Alam.

That decision has proved to be a worthwhile proposition.

The state-of-the-art information and communications technology (ICT) urban centre is located on a freehold plot along the Federal Highway Route II fronting the Sungai Rasau toll plaza.

According to I-Bhd executive chairman Tan Sri Lim Kim Hong, the strategy has helped the group to establish itself as a unique property developer with a unique development that I-Berhad can be proud of.

“i-City is today one of the leading technology cities in the country – from being the first to provide fibre to the unit to having the whole 72-acres of development as a Cisco network.

“Being a MSC Cybercity with complete information communication technology (ICT) infrastructure, the development is provided with dual source power supply, multi-telco environment and super broadband accessibility of 200mbps,” Lim relates to StarBizWeek in an interview.

Chief executive officer Datuk Eu Hong Chew says i-City is the first gated and guarded mixed development that has been accorded the status as an International Park in Shah Alam.

The 10-year development will feature some 12 million sq ft of gross lettable area (GLA) for a total gross development value (GDV) of RM4.5bil.

Of this, about 35% will comprise residences, and the balance will be offices, commercial and retail space, hotel and service apartments, a convention complex, an intelligent school and a technology hub.

Since construction took off in 2007, some 500,000 sq ft or 366 offices suites as well as a 70,000 sq ft Tier 4 data centre have been completed.

Eu says Al-Rajhi Bank (Malaysia) had in 2009 invested RM95mil to purchase 250,000 sq ft of the office suites for investment purposes, adding that another institutional investor is expected to buy up the balance 50% of the office suites in the next three months.

He adds that i-City is promoting a cosmopolitan lifestyle living in line with the Selangor state government’s initiative last July of according i-City an international community.

“With this status, the plot ratio for the development has been raised to five times from three times previously which raises its GLA to 12 million sq ft from 7.5 million sq ft.

Bright lights: i-City, dubbed ‘the city of digital lights,’ is fast becoming a must-see destination.

“We are taking advantage of this higher plot ratio to increase the residential component to 35% of the GLA from 5% previously. This means some 3 million sq ft will be the residential component,” Eu says.

The first residential project in i-City will be i-Residence comprising a 33-storey block of 346 service residences and an adjacent double-storey block of 20 duplex suites.

I-Bhd director Monica Ong says the service residences with built-up from 715 sq ft to 1358 sq ft are priced in the region of RM450 per sq ft, while the duplex suites of up to 3,500 sq ft will be at around RM550 per sq ft. They will be fitted with air conditioners, water heating system and kitchen appliances.

“The i-Residence design is also in line with our master planner Jon Jerde’s concept of having luscious we well as pedestrian friendly environment,” adds Ong.

Intelligent city

Being part of the MSC Cybercity, the residences get to enjoy dual source power supply, a multi-telco environment and super broadband accessibility of 200mbps.

According to Eu, since its inception, i-City has what it takes to become a success story.

“Its location within the vibrant city of Shah Alam has opened up the opportunity for I-Berhad to get the full support of the state government, which has formed the i-City Selangor Steering Committee to facilitate its development,” he explains.

Being the maiden private sector-led ICT urban centre development in the country, the project has been designated as Selangor’s International City by the state government.

The state government will build a flyover from the Sungai Rasau toll plaza along Federal Highway cutting into Section 7 Shah Alam to i-City which is slated to be ready in 2013.

“This interchange plans include providing an exclusive access to i-Residence as well as from both KL and Klang,” explains Ong.

Under the light rail transit (LRT) blueprint, the extension of the LRT system from Kelana Jaya to Klang will also serve i-City.

Leveraging on these advantages, Eu says it will not be far fetched for i-City to realise its goal as a vibrant ICT urban centre where “work, play and entertainment come together.”

“i-City’s business plan involves not only developing properties for sale as well as for long term investments, but also to build up its leisure business based on i-City’s vision of being both a knowledge hub as well as a tourism destination.

“We started i-City with the MSC Malaysia Cybercentre development.

“Then in December 2009, we opened ‘The City of Digital Lights’ as it’s first leisure component. This year, we are launching our first residential component,” adds Eu.

Midas touch

The other decision to engage renowned American architect Jon A. Jerde of the Jerde Partnership as the master planner for i-City has also given the project its “winning streak.” Jerde has brought his Midas touch of “place-making” to turn i-City into the city of digital lights and a tourism destination that has become quite a hit among Klang Valley folks.

“We believe the relationship with The Jerde Partnership has resulted in the planning for the right products in line with the famous Jerde hallmark of place-making to make a positive impact here.

“Over the years, Jerde has built a strong network of retailers, mall operators and investors. Its name alone has become a premium brand that sells,” Lim says.

He says projects that bear the Jerde hallmark in the US include Universal Citywalk in Los Angeles, which has redefined the urban village as an intricate weave of uses and services, and the internationally acclaimed Fremont Street Experience in Las Vegas, Nevada, that is now a dynamic destination for a new form of urban theatre.

Jerde is also behind the iconic 4.2 million square feet Mall of America in Minnesota, the largest mall in the US, and one of the most vibrant shopping complexes in the world with 520 shops, theme parks and a university.

In Asia, Jerde’s architectural landmarks include Canal City Hakata in Fukuoka Prefecture in Kyushu, Japan, and the famous Roppongi Hills in Tokyo. In Hong Kong, his signature can been seen in the Arcade @ Cyberport, an ICT-based residential, office and retail development.

“The first leisure element in i-City, dubbed the City of Digital Lights with its 1 million LED lights is Jerde-inspired from the Fremont Street Experience. We just adapted the lightscape concept to be in-line with our digital technology approach and hence the LED lights,” comments Lim.

Growth catalyst

Eu says for the next phase of the company’s growth, I-Bhd will be leveraging on Lim’s business and entrepreneurial expertise to further add value to the development.

The first step in this direction is the establishment of a strategic alliance between Everbright International of China and I-Bhd in December last year to co-develop 30 acres of land in i-City.

He says the 30 acres represent all the undeveloped land in i-City and will ensure that the whole development can be completed by 2020.

“The strategic alliance with Everbright International is made possible by Lim’s “guanxi” or special relationship that he has established with the various parties in China since venturing into China in 1984,” Eu says.

He points out that the joint venture with Everbright International is an important milestone for I-Bhd as it will enable the company to continue with its strategy of “selling upon completion as well as to hold part of the property as long-term investments.”

Furthermore, it will also enable I-Berhad to tap into China’s demand for investment of properties in Malaysia.

With Everbright International holding 70% share, the Chinese counterpart will drive the joint venture and thus free I-Berhad to pursue other development activities.

“For the next phase of i-City’s development, I-Berhad will be tapping into its branding expertise to brand it’s upcoming residential projects,” Eu adds.

I-Berhad has a few niche residential property projects in the Klang Valley for launch these one to two years.

The first residential project, i-Residence in i-City, is schedule for launch in March.

The 33-storey i-Residence will be the third building block in i-City after the MSC Malaysia Cybercentre and the tourism component.

The second will be a luxurious condominium project in Changkat Kia Peng, Kuala Lumpur.

The slightly more than an acre land in the city’s Golden Triangle is set to mark I-Berhad’s move into the high-end residential market.

The parcel was acquired by Lim about 20 years ago and is today a valuable prime land located within 5 minutes walking distance to KLCC. Also on the card is i-City South, a 7-acre development to the south of the current i-City site.

By The Star

Rebranding PKNS

2012-01-07T14:43:00.000+08:00

Artist impression of the PKNS Kelana Jaya Sports City project.

PKNS, or the Selangor State Development Corp, is a name that used to be synonymous with social housing. Its operations way back in the 1960s tend to be rather localised. Today, the state housing corporation has made its foray into Australia. Yes, many things have changed ... Its general manager talks to StarBizWeek's Choong En Han.

HAVING been in existence since 1964, the Selangor State Development Corp (PKNS) started building single-storey affordable housing that cost less than RM20,000 in Petaling Jaya decades ago. But over the decades, things have changed. Whether these changes are for the better of the company, or for the strata of people it once used to serve, is debatable.

In today's housing environment, where prices have skyrocketed and where affordable, social housing is now an issue, the role that PKNS used to play and the role that it has assumed today has come into focus.

It has now evolved into a mega builder and is involved in more than 60 ongoing developments in Selangor at any given time. As if that is not enough, it has 50 more projects that it is working in collaboration with private sectors and a further 30 under several of its subsidiaries. Some of these projects with subsidiaries are in Sydney, New South Wales and Perth, Western Australia.

Besides residential, PKNS has also ventured into high end commercial developments. At a glance, PKNS seems to have lost touch with its roots of being a social builder, and its role to contribute to the five million people of Selangor.

While it carries the name of the state, its objective seems to have changed.

PKNS general manager Othman Omar explains that because PKNS does not receive grants from the Government to subsidise these projects, the state body has to create profits which can only come from its medium to high end residential and commercial developments that command a respectable profit margin.

“Profit is just a means to an end, which is to maximise our profit in order to contribute more to our stakeholders, namely the state and its people. The cost of our social responsibility in terms of providing land and required infrastructure for our townships run into billions of ringgit,” he says.

Billions more in subsidies are required for PKNS when it develops its low cost housing schemes, upkeep and maintenance cost, squatters relocation programmes and other heavily-subsidised state government projects.

Branding PKNS

Faced with a legacy image of developing many low cost housing schemes, branding is an issue for PKNS as many believe that it would not be competent enough to build quality high-end properties. “Not long after I joined PKNS in 2009, we did a branding audit to find out how the public sees PKNS and how we stack up with other private developers and other government linked companies,” he says.

Images of some of PKNS’s affordable home concept.

Inadvertently, some of the branding audit findings took PKNS by surprise with 70% of what the public think about PKNS is false.

According to him, many think that PKNS will most probably be slow and not efficient as it is a government-owned or government-linked company.

“Over the years, as complaints appeared in the media especially regarding issues and problems with our low cost developments, the public perception on PKNS took a dive and we were labelled as a low quality builder and low cost developer,” he says.

Since then, PKNS has introduced a new quality system to ensure a much higher and consistent standard of finishing its houses, with the setting up of PKNS Response team to deliver maintenance services and also a customer service department.

All its rebranding efforts have also led PKNS to garner several prestigious awards including the Brand Laureate Top 10 Master Developer 2010 and the BCI Asia Top 10 Developers Award in 2011.

Othman says the rebranding exercise has helped to improve PKNS's image as a reputable developer that can also deliver high-end quality lifestyle products.

“Our initiatives to improve corporate governance and transparency in the organisation including the integrity pact and collaboration with Transparency International not only improve our image but deliver the bottom-line. In 2010, we saved RM115mil from our open tenders, e-sebutharga and value engineering, and we are targeting to save RM150mil from the same in 2011,” he says.

Business model

In line with the changing of times, PKNS has also re-looked its business model, driving the changes it needs to sustain its operations.

“What worked before does not necessarily work for us now. We used to get free land or at a cost of almost nothing. For the 9,000 acres we had for Shah Alam, we only paid the land premium as we developed them. Then we parceled out some of our land to private developers in the form of joint ventures and privatisation project to get good returns from them,” he says.

However, according to Othman, the last 15 years had been quite different, with PKNS buying 6,000 acres of Bernama Jaya land at market price, and to date have spent over RM480mil in land purchases and infrastructure development. It is also planning for further spending for infrastructure cost.

“At the end of the day, how much margin can you make selling houses in Bernam Jaya?” he asks rhetorically.

The state development corporation has also bought 1,500 acres in Selangor Science Park 2 (SSP2) in Cyberjaya at market price, and the infrastructure cost is said to be six times the land price due to bad soil condition.

“When we sold land to German Q-Cells for the purpose of setting its solar factory, we had to sell below cost. This, of course, benefited the nation and the state in attracting more foreign direct investments and creating more jobs. However, we still need to find a more sustainable business model so that we can continue to subsidise our infrastructure development, our low cost and affordable housing schemes,” he says.

New concept ofaffordable housing

The mega builder is also looking at various new business models and has revised the master plan for its SSP2 project and also Bernam Jaya.

“We have spent RM1.15bil in land acquisition, earthwork and infrastructure cost since five to 15 years ago, and it is time to realise part of its value.

Understanding that low cost housing schemes suffer from quicker deterioration due to poor living conditions and maintenance, PKNS has embarked on a new concept of affordable homes.

“The new concept of affordable homes we are constructing in Bangi, for instance, requires five times more subsidy per unit than the typical low cost housing in order to provide the enhanced facilities offered. We are selling them at RM85,000-RM120,000 per unit while the cost and market value are at RM180,000 and RM220,000 per unit respectively,” he says.

The new concept of affordable homes priced below RM120,000 will also be further fine-tuned for implementation.

“The prototype development in Bangi is currently in progress, while the second affordable homes development in Gombak will be launched soon. Facilities include tuition centres, nursery, libraries, surau, commercial centres, lush landscaped gardens, planting and gardening areas and ground-floor units for families with old folks and the handicapped. A total target of 21,000 units has been set for implementation in the next 10 years,” he says.

With a higher standard of living, he says, hopefully it can bring families out of the vicious cycle of poverty. Some families have been staying in low-cost apartments for three generations.

With PKNS in operation for almost 50 years, most of its strategic townships have been fully developed and a major part of its strategic landbanks has been depleted.

“As a result, the biggest chunk of our land-banks are presently outside the Klang Valley. To overcome these challenges, we have been transforming dilapidated brownfield areas like our old flats and industrial areas built 30 years ago into vibrant, sustainable, integrated mixed developments.”

Othman says PKNS is now looking at increasing its land bank by a further 1,500 acres this year.

“As we work on these high-yield projects, we also develop the remaining smaller land parcels in the Klang Valley, regenerate our old flats to produce the profit required to cross-subsidise the less strategic developments outside the Klang Valley and offer affordable homes. We have identified at least 10 new sites for urban regeneration and at least five new strategically located development land belonging to private and state government agencies for reverse privatization and joint ventures,” he says.

The future of PKNS

With its vision to mould itself towards a more sustainable business model, Othman says PKNS needs to continue to build quality assets that can produce a more sustainable income.

“In the next 10 years, we hope to create about RM10bil worth of assets that yield about 6% to 8% yield thus creating a sustainable passive income to help finance our social obligations,” he says.

He says in the last two years, the business development arm of PKNS has been busy churning out new projects worth more than RM14bil, which he believes will be able to provide the pipeline of projects that can be converted into the quality assets to transform its business model to a more sustainable one.

“We will be looking forward to more public-private collaboration with local and international partners to participate in our projects, especially the high profile ones.

Recently, AmanahRaya Real Estate Investment Trust (ARREIT) and PKNS mutually terminated a proposed venture into the REIT industry with the injection of three properties Menara PKNS, Kompleks PKNS and SACC Mall with a combined value of RM270mil into ARREIT.

“We are looking forward to injecting more of our existing properties into this REIT and lining up potential properties from our more strategically located redevelopment and urban regenerations projects in the Klang Valley,” he says prior to the termination.

The injection mooted in 2010 would be in exchange for new shares and cash, which would make PKNS the second largest shareholder of ARREIT with a 33% stake.

The deal was called off in light of potential planned asset enhancements to be carried out by PKNS on the properties, which would affect their market values.

A local property analyst says the termination may not be the end of the deal, instead it may potentially be the start of PKNS injecting more properties into the REIT.

“If the deal doesn't go through, PKNS could also venture into the property management industry by injecting key assets into a vehicle and seek for a listing as a REIT. Looking at how things are, PKNS seems to have the ability to get things going even if it is on their own.”

On the outlook of the property sector in the Malaysia, he says the sector may see a slight decline in prices although it is currently on a stable plateau.

“One advantage that we have is that we have a range of products, and even when there is a financial crisis, consumers would buy different products and we have all of them. Even during the financial crisis in 2009, we made more profit than we recorded in 2008. We have survived three recessions, and we are much more well prepared and have the capacity to complete the projects we started,” he says

Although PKNS is still linked to the state government, Othman says, as government servants, they have to be apolitical and just serve the government of the day.

“I would also like to highlight that our board representation is well diversified with two representatives from the Finance Ministry, one from the Economic Planning Unit and state councillors. We don't take sides. We have to do our job and fulfil our agenda, and we only need to focus on those,” he says.

In fact, he hopes to have more collaborative works between the state and the federal government.

As holistic as it seems, with profit being just a means to an end, PKNS would still be treading on a fine line to strike a balance between being a social builder and a commercial developer.

On one end it needs to fulfil its social obligations to contribute to a bigger agenda, but on another end it needs to make a profit to sustain its operations.

As Othman says “balancing our profit and social responsibility is a major challenge”.

By The Star

Projects, land banks that power PKNS

2012-01-07T14:38:00.000+08:00

In the next five to 10 years, the Selangor State Development Corp (PKNS) will be embarking on several projects, some of which may have some aspects of urban regeneration.

This involves both residential and commercial properties.

In 2010, PKNS had announced several key new developments, namely Datum Jelatek, with a gross development value (GDV) of RM900mil, PJ Sentral Garden City (GDV: RM2.6bil), Sports City (GDV RM1.8bil) and PJ Elevated City (GDV: RM2.2 bil).

These projects are expected to elevate the state to another stage of progress.

“We advise investors to watch out for the launching of the mixed retail, commercial and residential development in Datum Jelatek, comprising four residential towers that will be linked to the Jelatek LRT station, which is four stations away from the Kuala Lumpur city centre,” says PKNS general manager Othman Omar.

He says PKNS's priorities in the coming years include the remaining development in integrated townships namely Bernam Jaya (6,000 acres), Selangor Science Park 2 in Cyberjaya (1,500 acres), Kota Puteri (2,000 acres) and Antara Gapi (900 acres).

“We are introducing parcels for an internationally-acclaimed university hospital, factory outlets, hotels, an international elite golf course and golf academy, a private airpark and related industries, theme parks and a space tourism centre, among others. PKNS is also undertaking a reverse-privatisation' where we now develop land owned by other state agencies, government-linked companies or private land-owners in strategic collaborations,” he says.

The business development division of PKNS has also announced RM14bil worth of new projects at various stages of development. These are mainly developments based on the concept of urban regeneration and redevelopment.

“For lasting growth, these developments need to be supported by the required infrastructure, roads and interchanges for connectivity, public amenities, facilities, schools and the like. Many of these aspects of sustainability must come from the government,” he says, adding that there is a need to brand Malaysian cities in order to attract multinational companies.

Despite having a quickly depleting land bank, it still have parcels of land dotting the whole of Selangor that stretches over 11 townships in nine districts.

In the northern part of Selangor, lie three districts namely Hulu Selangor, Kuala Selangor and Sabak Bernam where PKNS has 6,217 acres, 125 acres and 102 acres respectively. It also have land banks in major townships in Gombak with 994 acres, Petaling (67 acres) and Klang (1,161 acres).

In the eastern side of the state, it has 158 acres in Bandar Baru Bangi and Kajang, while in the south, PKNS has 1,500 acres in Dengkil, Sepang.

Collectively, the total value of these land banks is estimated at over RM4bil.

Although PKNS has several pockets of commercial land in the Klang Valley that is less than 10 acres, these parcels have a potentially higher GDV as they are in more strategic locations like Petaling Jaya, Kelana Jaya, Shah Alam, Bangi, Kota Damansara, Ampang Ulu Kelang and Sg Buloh.

“Most of our strategic townships are fully developed and a major part of our strategic land banks has been depleted. As a result, the biggest chunks of our land banks are presently outside the Klang Valley. To overcome these challenges, we have been transforming dilapidated brownfield areas like our old flats and industrial areas built 30 years ago into vibrant and sustainable integrated mixed developments,” he says.

PKNS has identified at least 10 new sites for urban regeneration and at least five new strategically located parcels belongong to private and state government agencies for reverse privatisation and joint ventures.

Besides getting busy with its own projects, PKNS has also undertaken the development of several abandoned projects. This includes Bukit Botak which involves 1,422 units of semi-detached houses originally undertaken by Delpuri Corp Sdn Bhd.

“Not only did we finance the RM140mil project but we also subsidised RM79mil in order to price the units at RM99,000 each whereas the cost and market value is at RM180,000 and RM200,000 per unit respectively,” he says, adding that for the record, PKNS has never abandoned its own projects.

Transparency in choosing partners

Despite the impression that government-linked agencies are inefficient and lacks transparency, PKNS is leading the way to be more transparent in its dealings with private developers.

“We have enjoyed very good returns from these investments in terms of dividends and scheduled payments. With our good reputation as a partner, strategic land bank and transparent approach towards our selection method, we have been able to attract the best offers in our request for proposals (RFPs). Our latest RFP for Kelana Jaya Sports City where over 40 companies participated, the best offer was a guaranteed return of RM422mil to PKNS inclusive of the performing arts centre and stadium,” he says.

Melati Ehsan Bhd emerges as the winner after three rounds of assessment of 40 companies comprising local established companies and also one Chinese company.

“Our panel of independent committee comprising accountants, financial advisors and architects took over a year to evaluate the proposal. Melati Ehsan got it because of merit,” he says.

Recently, the application for redevelopment of the PKNS field and sports complex in Kelana Jaya was turned down at a public hearing due to technical non-compliance.

“We are going to take our time to re-assess the project and make the right amendments to the project and will accommodate the comments that was made during the public hearing,” he says.

He says the project is not going to be just any profit-driven project, but will be a new Green Building Index landmark and branding project for Kelana Jaya.

“Whatever the proposal, we will have 70% of the original land being kept in various levels as open space, and these are the good points that people should see. The project will have fields and complexes that house the podium and facilities like the sports complex, performing arts centre, traditional game field and an open-area landscape,” he says.

He says the complex has never been opened to public before but only for PKNS functions, but with the said project, the facilities will be available to the public.

“Its up to our board to decide, bearing in mind that PKNS has an obligation to the five million Selangorians,” he says.

By The Star

Balancing profits and social responsibility

2012-01-07T14:33:00.000+08:00

StarBizWeek conducted a question and answer session with Selangor State Development Corp (PKNS) general manager Othman Omar recently. Below are excerpts:

How has the PKNS fared in the last two years?

We are grateful to be able to achieve continuous profitability during the last three global economic crises. In fact, during the most recent global economic crisis of 2008/2009, PKNS’s operational profit increased significantly compared to the previous financial year supported by aggressive marketing and rebranding.

We made a profit of RM165mil in 2009, which increased significantly to RM206mil in 2010. We expect our profit to increase to RM480mil for 2011. PKNS’ audited accounts for the year ended Dec 31, 2010 saw a profit before tax of RM196.8mil, an increase of 18.5% or RM30.7mil from RM166.1mil in the previous financial year.

The 2010 figures are purely operational profits, not considering the profits to be generated from our real estate investment trust exercise (estimated cash at RM162mil and profit of about RM82mil) and diversification from Kesas (estimated at RM150mil) which will be posted under 2011.

Othman: ‘Profit is just a means to an end.’

The extensive marketing of our products has helped us to achieve better sales in 2010. For example, we managed to sell RM85mil worth of properties in three days at our Selpex 2010 Property Fair at Shah Alam Convention Centre.

Although 2009 was a tough year for most property developers, considering the global economic crisis and the rise in material prices, we achieved a respectable profit even after making a provision for a RM78 mil loss in the Bukit Botak resettlement project. For 2011, we expect to at least double the profit we made in 2010.

We need to segregate between our economic and commercial projects and social projects so as to get the best use for our land and thus optimise the return on these projects. If we focus only on doing the heavily subsidised affordable and the low cost housing, we will have nothing left to contribute (for the coming years). This balancing act is very important to ensure our continuous profitability, and thus sustainability in delivering our social obligations.

What changes do you want to see in the development of Selangor, and what role PKNS can play in this?

As the most developed state in Malaysia, Selangor needs to set the standards and benchmark in property development and other areas of growth. At the same time, Selangor is saddled with the same problem as most of the states in the country – a disproportionate representation between high-end properties and those which are within reach of the majority of our people.

It is the duty of PKNS to create more affordable housing developments to fill in this void and maintain a balance in the social ecosystem. In line with this, we launched the Section 14 Bangi project early this year and we target 11,000 new concept units in the next five years.

As of this year, the PKNS has developed 11 integrated townships. We realise the importance of integrated township and developments that feed into each other. These industrial components create jobs as well as meet the people’s housing needs while the institutional component fills the need for education. The commercial and retail aspects allow business to flourish within these townships.

Such projects also require additional investment into infrastructure development. This includes the need to build better roads, interchanges and the extension and improvement of public transport system. For example, our projects in Datum Jelatek, PJ Sentral Garden City, Section 14 PJ will be linked with LRT stations while we plan to provide shuttle services to LRT stations in Sports City and PJ Elevated developments.

The mega projects that we are embarking on are currently focused on the concept of urban regeneration while the rest of our developments also have the community in mind.

Q-Cells, the world’s largest solar panel manufacturer with its headquarters in Germany, has been in operation in Selangor Science Park 2 (SSP2) since May 2009. PKNS is also in negotiation with some local and international parties to develop solar and wind in order to promote green renewable energy in SSP2.

UEPE Bhd is also planning to develop three parcels of the lakeside commercial centre and a few residential parcels and a factory outlet complex in SSP2. We have also signed a sales and purchase agreement with the developer of the International Medina University to set up its campus for 20,000 students and we are in negotiation with another internationally renowned university for a similar enterprise.

Would you prefer to build affordable housing or low-medium cost housing or generally townships development?

We need to strike a balance between supply and demand for affordable and low-cost housing and township development especially in terms of location and pricing. There are many low-cost housing in less strategic locations that have been empty for years.

We have built over 50,000 low-cost units in the last 47 years. Although they have served well in terms of providing more affordable housing for the low income group in the last few decades, they have also created problems along the way. Building and maintaining low-cost housing schemes is a very expensive affair as many developers already know. In terms of buying trend, young couples nowadays don’t want to stay in low-cost housing schemes. These are the people who will be our main house-buyers in the future.

The state has since 2009 come up with a new concept of affordable homes that could provide an alternative solution to these low-cost schemes. The new concept focuses not only on the hardware (the architectural and building design), but also the “software” that goes in it (the people, facilities to accommodate a lifestyle). We prefer this new concept as it offers better value, more enhanced facilities and a better quality of life.

In the case of township development, heavy capital outlay is required in constructing the required infrastructure. On average, we spend between RM1bil and RM1.5bil on infrastructure development for each township, which includes the road network and interchanges, earthworks, water reticulation, sewerage system, telecommunication infrastructure and other facilities.

Unless you buy the land cheap, the financing cost over the longer development period can be very substantial. Alternatively, we can parcel out and jointly develop with other private developers to expedite the overall development or share the infrastructure cost like what we did for Kota Damansara, Bangi and Shah Alam. In SSP2 and Bernam Jaya, we synergise with investors, college operators and private developers that can add value to our development.

How does PKNS give back to the community? How much is it involved in corporate social responsibility (CSR)?

Serving the people’s needs is fundamental for us. In line with this, the profits that we make are funnelled back to the rakyat. This comes in the form of building low-cost apartments, affordable homes and subsidising the development of public housing, among others. We also put in place initiatives to support Selangor’s small and medium enterprises (SMEs). SMEs are a large contributor to Selangor’s economy and we assist them by alleviating high overhead costs and catering to their business needs. The PKNS Business Centre and Virtual Office (VIO) at PKNS Bizpoint and PKNS Real Plug n Play based in Cyberjaya provide this assistance.

VIO offers serviced suites and virtual offices to business owners without the expensive set-up costs and overheads. Plug n Play is an ecosystem conducive to the technopreneur community. To add value, we have signed an exclusive agreement with Plug n Play Techcenter of Silicon Valley in California to support and expedite the growth of digital solutions start-up companies in Selangor.

We believe in giving back to the community, and this is something that we have done before CSR was a trend. Recently, we contributed RM5.2mil to Yayasan Selangor’s development of a hostel complex and RM450,000 more for the construction of a school in Kota Damansara in Petaling Jaya.

By The Star

Will current breed of developers cater for needs of city dwellers?

2012-01-07T14:30:00.000+08:00

The clouds of tough times are looming again and the local property market looks set to be in the path of the gathering headwinds this time.

Needless to say, the need for more affordable housing projects that offer smaller but functional homes will increase as Malaysians become more cost conscious and watch over their expenditure to avoid from over committing themselves.

Latest statistics on the people's affordability level shows that less than 5% of Malaysian households have combined income of more than RM10,000 per month.

The trend is also for fewer children and smaller households, which makes it a natural choice to opt for smaller and more basic homes. This makes the luxurious larger home market a smaller segment of the overall market although demand for such property is still there.

Besides the ease of lower maintenance needs, such housing units are also easier to upkeep.

This brings to bear the huge popularity and long queue whenever projects involving small office, home office (SOHO), and more recently the small office, versatile office (SOVO) variety are launched in the Kuala Lumpur city centre and the peripheral addresses.

There is room for more projects that offer smaller built-up area but have versatile layout plans that allow for different uses including to be used as a home office. This makes the property multi-functional which explains its huge success among young Malaysians.

Some of the super luxurious projects in the city centre with huge built-up area of more than 10,000 sq ft can also be redesigned and retrofitted to cater to this group of eager buyers. Bringing down the size and price of these units will make them more affordable.

Otherwise, the large number of unsold apartments in the city will stifle efforts to bring life to the city after office hours. The large inventory could explain why prices of luxurious condominiums in the city remain stagnated after shedding around 20% since the onset of the global financial crisis in 2008.

Coming out with more “out of the box” and versatile designs will help to pacify the needs of the market better.

Another subject of interest is the ongoing merger and acquisition (M&A) activities in a number of industries in the country that has raised concerns about whether it may clip competition and stifle the competitive spirit among industry players to outdo each other.

Most of the time, free competition has been the panacea of greater market and corporate efficiency that can result in bigger benefits to consumers.

In the spirit of the survival of the fittest, competition to excel will lead to greater effort to do better and a search for better solutions to drive costs down.

Whatever the industry or service sector may be, the presence of more than one player tends to spur a more competitive spirit that often show up with better terms, service standards, and lower prices or charges to consumers.

Ultimately, competition will benefit businesses, consumers and the overall economy as a whole.

So how will the intensifying M&As impact businesses and consumers especially if they result in more collaborative and friendly industry players?

I have a feeling that unless these M&As are managed professionally and do not sacrifice the competitive spirit among the involved parties, consumers may find themselves at the raw end of the deal. And the companies and the economy may also suffer as a result.

With consumers growing more cost conscious and hunting for better deals, naturally greater competition that sweeten the deal will be more palatable for them.

Hopefully, the ongoing M&As between a number of local property players will be able to bring forth some positive outcomes for property buyers through more exciting and ingenious projects.

In the spirit of the Competition Act 2010 that came into force on January 1 this year, developers who have taken the M&A route should preferably retain their respective competitive advantages and continue to up their ante in terms of product offerings, quality workmanship and design plans.

Keeping the competitive spirit alive will promote more competition to bring to market more viable and interesting projects at more competitive pricing.

Deputy news editor Angie Ng wishes all Malaysians a blessed and blissful 2012 with hopefully great promotional offers coming our way.

By The Star

Heartbreak hotel

2012-01-07T14:28:00.000+08:00

One of biggest Malaysian businessmen in Laos fights to keep the iconic hotel he built in Vientiane, Laos from being sold by a bank

Vientiane, Laos may not be strongly associated with the world of big business but it has an interesting story unfolding that contains a strong Malaysian twist. It is a saga that the burgeoning business community of Vientiane as well as the top Laotian and Malaysian government officials are familiar with.

At the heart of the story lies a low-profile Malaysian businessman Cheok Tiam Cheng, who had since 2003, taken on a pioneering project in Vientiane to build the city's first five-star hotel to help it host the Asean summit in 2004.

The Don Chan Palace hotel, with its 240 rooms, is an imposing sight in Vientiane along the Mekong river bank and until today, it holds the record of being the tallest building in the city.

Cheok: ‘I’ve put my blood, sweat and tears into this hotel. I gave up my property in Malaysia as collateral for the loan and now I stand to lose it all in an unfair manner.’

Cheok and his hotel were the toast of the town in the early years after it was built. Battling against the odds, Cheok and his team had built the hotel in a record time of nine months for the summit, Besides not having enough skilled workers, he had to deal with the settlers on the land as well as the unrelenting torrential rain during the construction period.

The hotel was sanctioned by the governments of Malaysia and Laos as the latter was trying to pick itself up after a lengthy civil war that paralysed the country's progress. The Don Chan Palace would serve Laos' needs as a venue to host important conferences and to house VIPs.

It has hosted dignitaries from the prime ministers of Malaysia and other countries in the region. Even Condoleezza Rice, the former United States Secretary of State, had checked in before.

Hotel may have been sold

Today, Cheok, 60, is facing the possibility of the hotel being taken away from him. Cheok is fighting to keep his creditor, namely a large Malaysian bank, from selling the hotel to recoup its loan.

In Vientiane, there are rumours that the hotel has already been sold to China CAMC Engineering Co Ltd (CAMCE) and that a joint venture is being set up between CAMCE and another Malaysian party to jointly own the hotel and its adjoining land.

The interest of foreign parties in the hotel is not surprising, as it has a hidden asset. As part of the deal with the Laotian government dating back to a 2003 master agreement, Cheok has the right to develop up to 6km of the adjoining land along the Mekong river.

In the original loan agreement, the plan was for Cheok to also build a shopping complex on the adjoining land to be leased out or sold and the proceeds used to repay the loan.

According to Cheok there is an understanding that the bank would help finance the development of the surrounding properties.

However, that plan did not work out as expected. “There was an increase in the cost of construction of the hotel as it needed to meet a certain deadline and there were other problems including the weather, lack of skilled workers and difficult terrains. As a result, the monies from the loan that were meant for the shopping complex was drawn down to complete the construction of the hotel.

This was to meet the Laotion government's needs of having the hotel above all.”

Cheok had attempted to go ahead with the shopping complex but he had only enough money for the foundation work. The bank has declined to provide him more financing for the rest of the project, leaving him in a catch-22 situation.

Cheok tried another plan: building villas and bungalows on the adjoining land as a means to repay the loan. However, that move was also in vain. “The developers who joined us in the project could not get the bank's consent to redeem and secure the sale of the land,” says the embittered Cheok.

Valuation issues

The bank had granted Cheok a loan of RM28mil for the project in 2003, which Cheok has been unable to service. This is the basis of the bank seeking to sell the hotel and its adjoining land. The bank is claiming RM35mil from Cheok, including outstanding interest. Cheok says he has made a repayment of up to US$5mil (RM15.5mil) but that no statement of account has been provided by the bank.

Cheok says he is not disputing the debt but he against the manner in which the debt is being claimed by the bank.

“The bank hasn't notified me of any sale and yet the whole town is telling me that the hotel has been sold. And if it has been sold, there is the question of price. I have a valuation that shows that the hotel and adjoining land is worth much more than the outstanding loan amount. Hence the bank should give me back the surplus but there's no mention of that,” he says.

Cheok produced a valuation report done by the International Commercial Bank Lao Ltd, dated 29 March 2010, that valued the hotel at US$23mil and the adjoining land that Cheok is entitled to at US$48mil.

“This valuation also took into account the amount of money spent by us to put up the hotel in record time and to move millions of tonnes of earthwork as the land was initially not suitable for construction as it was swampy and filled with gullies and ravines,” Cheok says.

He adds: “I've put my blood, sweat and tears into this hotel. I gave up my property in Malaysia as collateral for the loan and now I stand to lose it all in an unfair manner.”

Cheok counter sues for US$2bil

When StarBizWeek contacted the Malaysian bank concerned, its CEO, in an e-mail reply, said he could not comment on the matter. “In compliance with the secrecy provision under the Banking and Financial Institutions Act (Bafia) 1989, we are not in a position to divulge any information in regard to any of our borrowers or accounts to any third party.”

He added: “As a custodian of public funds, the bank is duty-bound to ensure that we protect the interests of our shareholders at all times. Should there be any default in our loans, we shall do whatever necessary within the ambit of the legal framework to ensure that monies loaned are recovered to enable other Malaysian businesses to be given access to such funds.”

The bank has also initiated legal action in Malaysia to claim its monies from Cheok.

Cheok has filed a defence against that action as well as a counter suit against the bank at a whopping sum of more than US$2bil (RM6.2bil).

This is on the grounds of general damages, disruption and loss of business of the hotel and opportunity of developing the shopping complex, as well as on the value of the adjoining land.

Cheok's lawyers also say they have an option to refer the matter to arbitration.

Cheok's venture into Laos could be traced to 2000 when he went to Cambodia to look for business opportunities. While in Cambodia, the ambassadors of Malaysia and Laos had suggested to Cheok that he invested in Laos and a meeting was quickly arranged between him and the then Loatian Prime Minister Bounyang Vorachit, who was visiting Cambodia.

After having completed the Don Chan Palace, Cheok said the Loatian government gave his company an electronic gaming licence as well as a banking licence. But the operational permits for these businesses have yet to be issued to him in light of the current developments.

When Cheok first met up with Laotian government official in 2002, he had also inked agreements for a hydro-electric construction project, a hotel and casino in Pak Song, cattle farming, coffee and plantation development projects.

Cheok had started work on the Pak Song hotel and a casino but he faced the challenge of having to rid the land of undetonated World War 2 bombs and land mines a persistent problem in Laos which is the most heavily-bombed country in history.

In a tight spot

Through it all, government officials from Laos and Malaysia are keen to see the matter resolved. Laos will be hosting the Asean Euro Summit 2012 and the Don Chan Palace is expected to be the main venue of this event. But Cheok says he's in a tight spot as the Laotian government has requested him to refurbish the hotel in time for the conference.

“In good faith, we have offered to renovate the hotel at our own cost. But we have asked that in the event we lose the legal battle against the bank, it should pay us the amount that we spent on the renovations. But the bank has refused to entertain any of these proposals and have only offered to buy back the hotel at the current market price and we should proceed with the renovations. That is ridiculous,” he said.

Ridiculous or not, Cheok, the Don Chan Palace and the bank continue to be the talk of town in Vientiane today and it will be interesting to see how the matter will be resolved if at all.

By The Star

Sunway’s Christmas edition property show reaps RM30mil in sales

2012-01-06T14:07:00.000+08:00

Easy access: Sunway Nexis is touted as the latest integrated hub in Kota Damansara.

The Christmas edition of Sunway Integrated Properties Show has drawn close to RM30mil in sales.

A three-day event held at Sunway Pyramid, the show featured more than 10 residential and commercial properties in the Klang Valley as well as Ipoh in Perak.

Those who purchased units from the three highlighted properties at the show – LaCosta at Sunway South Quay, Sunway Nexis at Kota Damansara and Sunway Velocity in Kuala Lumpur – received several goodies such as a 10% rebate and RM10,000 down-payment with a 12-month installment.

The developer also promised to bear the interest during construction, and legal fees on the Sale and Purchase Agreement.

Sunway Group property development division Malaysia chief operating officer Ong Ghee Bin said the promotion made it easier for people to own properties.

Elaborating on the properties, Ong said LaCosta, which was launched in mid-2011, was 50% sold. The unique lake-front condominium boasts a sandy beach pool – one of its kind in the market.

Sunway Nexis, a commercial development, houses business suites, SOHO suites and retail shops.

“We improved the features of Sunway Giza by providing connectivity between the ground floor and the upper floor of the retail shops.

“An MRT station is less than 100m away and we will link it to our development to provide convenience for our customers,” Ong said.

Better features: The main highlight of LaCosta Lakefront Condominium is the sandy beach.

On the other hand, Sunway Velocity is an integrated development featuring five Vs — V Retail, V Office, V Residence, V Boulevard and V Garden.

It is located next to two MRT stations.

“We are still exploring the possibility of adding a hotel into this development,” Ong revealed.

For details, visit www.sunwayproperty.com or call 03-5639 9000.

By The Star

Analysts see REITs as defensive buys on uncertain outlook

2012-01-06T14:02:00.000+08:00

PETALING JAYA: Research analysts have mixed views on the stocks of property developers, with some saying that the oversold shares are due for a rebound while others are quite negative on the sector.

Some analysts also recommended real estate investment trusts (REITs) as defensive plays, given the uncertain outlook for growth in property development.

RHB Research Institute upgraded the property sector to “neutral” as it believed that the current valuations of property stocks had largely reflected the sector's negative factors.

CIMB Research, which downgraded the sector from “overweight” to “trading buy”, said property stocks should at least enjoy a rebound as they were oversold.

OSK Research maintained a “neutral” call on the sector, and said while global economic uncertainties might dampen property buying sentiment, the low interest rate environment and flush liquidity in the banking system would continue to shore up demand.

However, Kenanga Research was quite bearish on the property development sector, and maintained its “underweight” rating on property developers.

Kenanga Research expected property demand and capital values in 2012 to moderate to a 5% year-on-year in transactions value growth, due to recent government cooling measures, buying caution in light of global economic uncertainties as well as a “breather” after two consecutive years of record demand.

RHB Research said the outlook for the property sector remained challenging and fundamentals were still “wobbly”, as property sales were largely driven by gross domestic product (GDP) growth.

“Given our GDP growth forecast of 3.6% for 2012, we expect property sales to slow to 5% after a 20% growth in 2011 (annualised),” said RHB Research.

Kenanga Research opined that the medium to large-sized property developers such as UEM Land Holdings Bhd, SP Setia Bhd, Mah Sing Group Bhd and UOA Development Bhd were overly bullish in their 20% to 60% year-on-year sales growth targets this year.

There are signs that financial institutions are more cautious in lending to real estate buyers nowadays.

“This is evident with slower monthly mortgage approvals. There is a higher frequency of rebates' offered by developers, while some have reported that buyers are taking longer to commit to purchases.”

However, CIMB Research noted that the recent performance of property companies' share prices had diverged from the real property sector's achievement in terms of sales and profits.

“SP Setia, Mah Sing, UEM Land, UOA Development and Eastern & Oriental Bhd all locked in record sales (in 2011).”

The research unit said that fundamentally, property companies should continue to do well in 2012.

Key headwinds including slowing GDP growth (potentially from 5% in 2011 to 3.8% in 2012) should be more than offset by cheap (stock) valuations, continued record new sales and robust earnings growth.

OSK Research also pointed out that the downside risk for property prices should be mitigated by lack of equivalent investment options, as property investments offered an attractive hedge against inflation.

According to CIMB Research, there is a robust outlook for the residential market despite strong price gains in the past two years.

It was noted that the growth of residential property supply throughout Malaysia had declined over the past 10 years.

The increase in residential property supply in 2010 was among the lowest ever, which had contributed to the strong appreciation in prices over the past two to three years.

CIMB Research said with the drive to transform Greater Kuala Lumpur into an outstanding capital city, the population was forecaste to rise from six million currently to 10 million by 2020.

“It is estimated that one million homes would have to be constructed to meet the requirements of an enlarged population base,” it said.

OSK Research concurred, and said the residential market was expected to remain rather encouraging in 2012, although some developers might become more cautious on the outlook for high-end landed and high-rise residential units.

“We expect developers to shift to the more affordable mass-market housing segment to tap the high demand by first-time and young buyers,” said OSK Research.

Kenanga Research also said affordability would be the theme amidst signs of slowing property demand growth.

“We expect developers under our coverage to source for more mass-housing landbanks but sales and earnings contributions would take another one to two years.”

However, the outlook in the commercial sector is weak.

CIMB Research noted that the glut of office space in the Klang Valley would worsen as more supply cam onstream in the coming years, with flattish rentals as occupancy rates continued to fall.

“Retail space is the only bright spot but even then, the market is polarised, with leading malls still doing well and most of the others languishing,” it said, adding that the huge impending supply of office space over the next few years would continue exerting downward pressure on rental rates.

, with landlords who were recording occupancy rates of below 50% expected to lower rental rates.

Meanwhile, Kenanga Research is maintaining its “overweight” rating on Malaysian REITs, which are likely to hunt for acquisition opportunities in 2012 as the office and retail sector may face weaknesses in capital values because of incoming oversupply.

It noted that Pavilion REIT had done well with a 17% share price appreciation since its recent listing.

Kenanga Research has “outperform” calls on CapitaMalls Malaysia Trust and Axis REIT, with target prices of RM1.57 and RM2.78 respectively.

RHB Research also said it remained positive on retail REITs.

By The Star

A mixed development within a lively neighbourhood

2012-01-06T13:59:00.000+08:00

Centralised: An artist’s impression of Glomac’s BU Centro development.

Glomac Bhd recently launched the shop offices in their mixed development called B.U. Centro @ Bandar Utama.

The mixed development is sited on 7.62 acres near Bandar Utama.

Phase 1 will consist of two-storey shop offices and a 31-storey serviced apartment building.

According to Glomac, the combined gross development value for the shop offices and serviced apartments is RM370mil.

The developer added that the take-up rate for the shop offices was more than 50%.

The 54 units of shop offices will feature a modern concept with full glass windows and wide frontage of 25 feet.

The built-up sizes for the shop offices will range from 1,755 sq ft till 3,175 sq ft.

Average price for the shop offices is from RM771 per sq ft.

Each en-bloc unit comes with strata titles and car parks.

Meanwhile, the 344 units of serviced apartments are now open for registration and will tentatively be launched early next year.

The apartments come in four different types, with built-up areas ranging from 1,149 sq ft to 1,640 sq ft.

With wide lobby entrances, double-volume ceilings and a three-tiered security system, the apartments are expected to be popular with buyers.

Prices will be from RM596,700 onwards.

These modern, tropical-concept serviced apartments will provide facilities such as swimming pool, skylight, children’s playground, clubhouse and multipurpose hall, and tennis court.

The B.U. Centro @ Bandar Utama development is expected to benefit greatly from the large population nearby, as it sits in the midst of lively and well-established neighbourhoods such as Bandar Utama, Taman Tun Dr Ismail, Damansara Utama and Mutiara Damansara.

For further enquiries, call 03-7801 9000 or www.glomac.com.my.

By The Star

Nong Chik: No decision yet on TTDI market project

2012-01-06T13:57:00.000+08:00

Pleasant affair: Nong Chik (centre) and Ahmad Fuad (left) with representatives from the TTDI Market Traders Association and the TTDI Residents Association.

NO decision has been made yet on the proposed redevelopment of the 25-year-old Taman Tun Dr Ismail (TTDI) Market, although an agreement has been reached between the stakeholders and the authorities.

Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin confirmed recently that Kuala Lumpur City Hall (DBKL) had received an application to redevelop the market land but no decision had been made on the proposal.

“Everything is still in the negotiation stage and it is a long process,” he told reporters after meeting the TTDI Market Traders Association and the TTDI Residents Association.

However, Nong Chik said the stakeholders would be included in future discussions and their views on the development of the site taken into consideration.

It was reported that Kuala Lumpur mayor Tan Sri Ahmad Fuad Ismail, who was also present during the meeting, had said recently that a developer had submitted a proposal for the development of the market land but that City Hall had yet to approve the project.

DBKL had received an application from WCT Sdn Bhd and Perdana Padu Sdn Bhd to redevelop the market site.

About 100 traders and residents staged a peaceful demonstration in front of the TTDI market on New Year’s Eve against the demolition of the market.

Nong Chik said during the meeting both associations had voiced their views on the redevelopment of the market.

“They want the market to remain at the site. The developer would have to take into consideration all their views,” said Nong Chik.

The traders want the market complex to be retained with a multi-storey carpark and a link to the MRT station built on the site.

“The government will try to find a win-win situation for all the parties,” he said.

Also present at the press conference were TTDI Market Traders Association chairman Jenny Loo and TTDI Residents Association chairman Mohd Hatim Abdullah.

By The Star

IGB unit plans 2 hotels in Penang

2012-01-06T13:55:00.000+08:00

GEORGE TOWN: Cititel Hotel Management Sdn Bhd (CHM), a subsidiary of IGB Corp Bhd, is set to introduce two new hotels in this heritage city.

Construction on 0.4ha for both hotels in Jalan Magazine began in September last year and the hotels are expected to open for business in 2014.

CHM managing director Datuk Eric Lim said the gross development value for the new four-star St Giles Hotel and three-star Cititel Express Hotel was about RM180mil.

Lim: 'St Giles Penang will be the first in Malaysia'

“St Giles Penang will house a grand ballroom with a seating capacity of 1,200, several meeting rooms, a cafe, swimming pool, gymnasium, health centre, executive lounge and a helipad,” he told reporters after unveiling an 8.5m dragon made of recycled mineral water bottles at the Cititel Penang in Upper Penang Road here yesterday.

He said the hotels, which would be built back-to-back to each other, were scheduled for completion in the first quarter of 2014.

“The development will also include retail shops, restaurants, a food court and parking area for more than 500 vehicles,” he said

He added that the 32-storey St Giles would have about 500 rooms while the 23-storey Cititel Express would have 270 rooms.

“St Giles Penang will be the first (of its kind) in Malaysia after two in England, two in the United States and one in the Philipines,” he said.

By Bernama

Cititel to build 2 hotels for RM183m

2012-01-06T13:48:00.000+08:00

GEORGE TOWN: Cititel Hotel Management (CHM) Sdn Bhd, a subsidiary of IGB Corporation Bhd, will invest RM183 million to build two more hotels on the island.

CHM managing director Datuk Eric H.K. Lim said the properties would be built at the Gat Lebuh Noordin area by early 2014.

The two hotels are the four-star St Giles Hotel and a budget hotel - Cititel Express.

The 33-storey St Giles will have a unique facility of a helicopter pad at the rooftop, while the Cititel Express will occupy 23 storeys.

The St Giles Hotel will have 500 rooms and the Cititel Express will have 275 rooms.

Both these new hotels will be built adjoining each other at the site.

Speaking at a function to mark Cititel Penang's 15th anniversary celebrations here yesterday, Lim said the St Giles Hotel will be the fifth edition under the St Giles Hotel Group, with other hotels in the US, the UK and the Philippines.

The Cititel Express will be the second after Cititel Express in Kota Kinabalu.

He said the groundwork for the two new properties had already started in December and work was expected to be completed by 2014.

By Business Times

HK property market tipped to fall

2012-01-06T13:39:00.000+08:00

HONG KONG: The real estate market here is tipped to extend recent falls this year, analysts said yesterday, as property transactions dived to a five-year low in 2011 after a slew of measures to curb prices.

Leaders in the southern Chinese city have been trying to control prices, which have become a major headache for the government amid growing disquiet among its seven million population over the rocketing cost of owning a home.

The government has imposed new taxes and staged a series of land auctions to boost supply and bring down prices - helping to tame one of the world's least-affordable housing markets.

A total of 108,814 properties changed hands in 2011, down 33 per cent from 162,739 a year earlier, according to official data released by the government's land registry yesterday.

The volume was the lowest since 2006, when 99,087 deals were recorded.

"The policies were meant to curb speculating activities but they are now hurting the market," Wong Leung-sing, research head at Centaline, one of the city's largest real estate agencies, said.

He also cited rising mortgage rates and weak global economic sentiment for the fall, but said prices fell only about five per cent on average from their peaks seen in June last year - due to owners' reluctance to sell.

Property prices rose 11 per cent in the first 10 months of last year, Dow Jones Newswires reported, citing government statistics.

Buggle Lau, chief analyst at property broker Midland Holdings, said prices were likely to see a correction this year, and the slowdown could turn worse if global economic sentiment weakened further.

"Prices are likely to remain flat overall, there will be a price adjustment - about five to 10 per cent correction," he said. "If the eurozone debt crisis deteriorates, definitely it will have some overall impact in the market but what is more important will be the Hong Kong government's policies."

Despite the expected slowdown in the secondary home sales market, the primary market is likely to see an uptick with the launch of an estimated 16,000 new housing units this year, Lau said.

"After all we are going to have a new chief executive this year, we are not sure whether the housing policy and some restrictive policies will change," said Lau, referring to Hong Kong's leader Donald Tsang, whose term expires in June.

Wong said authorities should consider relaxing some restrictions to "let the market return to its normal activity".

Property prices in Hong Kong, famous for its sky-high rent and super-rich tycoons, have surged over the past couple of years due to record low interest rates and a flood of wealthy buyers from mainland China.

Following the slew of measures to curb prices, several government land sales last year were below market expectations, suggesting a cool down in the market.

Tsang pledged in October to tackle the city's housing woes, acknowledging that "people have become frustrated" at the difficulty in affording a home.

He also announced the resumption of a subsidised housing scheme for low-income residents, and promised to deliver 17,000 subsidised flats for sale from 2016 to 2019.

By AFP

IGB Corp to open two hotels in Penang

2012-01-05T13:46:00.000+08:00

GEORGE TOWN: Cititel Hotel Management (CHM) Sdn Bhd, a subsidiary of IGB Corporation Berhad, is set to introduce two new hotels in this heritage city.

Construction on a 0.4 ha site for both hotels in Jalan Magazine began in September last year and the hotels are expected to open for business in 2014.

CHM managing director Datuk Eric Lim said the Gross Development Value (GDV) for the new four-star St Giles Hotel and three-star Cititel Express Hotel is about RM180 million.

"St Giles Penang will house a grand ballroom with a seating capacity of 1,200, several meeting rooms, a cafe, swimming pool, gymnasium, health centre, executive lounge and a helipad," he told reporters after unveiling an 8.5m dragon made of recycled mineral water bottles in the lobby of Cititel Penang on Upper Penang Road here today.

He said the hotels, which will be built back-to-back to each other, are scheduled for completion in the first quarter of 2014.

"The development will also include retail shops, restaurants, a food court and parking for more than 500 vehicles," he said.

He added that the 32-storey St Giles will have about 500 rooms while the 23-storey Cititel Express will have 270 rooms. "St Giles Penang will be the first in Malaysia after two in England, two in the United States and one in the Philipines," he said.

Meanwhile, Cititel Penang general manager Tony Goh said the dragon was made in conjuction with the group's 15th anniversary celebrations, coinciding with the Chinese year of the dragon.

Cititel Penang's fundraising programmes for the year include a "guess the number of bottles used for the dragon" contest in which patrons and guests stand to win 15 prizes ranging from flight tickets, shopping sprees and hotel accommodation, he added.

By Bernama

UEM Land a top pick of RHB Research

2012-01-05T13:45:00.000+08:00

UEM Land Holdings Bhd, a Malaysian developer, rose the most in a week in Kuala Lumpur trading after RHB Research Insitute upgraded the country’s property industry to “neutral.”

The stock climbed 1.4 percent to RM2.26 at 9:13 a.m. local time, set for its biggest increase since Dec. 27.

UEM Land was among RHB’s top picks, according to a report by analyst Loong Kok Wen today.

By Bloomberg

Genting NY mulls US$4bil mixed-use complex in NY

2012-01-05T13:42:00.000+08:00

KUALA LUMPUR: Genting Malaysia Bhd's indirect wholly-owned subsidiary, Genting New York LLC (Genting NY), is considering developing an integrated mixed-use complex worth at least US$4 billion in New York.

In a circular to Bursa Malaysia, the company said it entered into a non-binding letter of intent on Tuesday with the New York State Urban Development Corporation to consider the development of the complex.

"Genting NY will work closely with Empire State Development Corporation and the relevant parties, to negotiate terms in good faith, with a view to entering into a binding memorandum of understanding on or before Nov 30, 2012," it said.

The proposed project, adjacent to the Aqueduct Racetrack in Queens, New York, will include an integrated 353,000 sq m convention and exhibition centre with up to 3,000 hotel rooms and an expansion of Resorts World Casino New York City.

By Bernama

LBS Bina: House prices will continue to escalate

2012-01-04T09:50:00.000+08:00

PROPERTY developer LBS Bina Group Bhd said house prices will continue to escalate due to rising land and building material costs.

Managing director Datuk Lim Hock San said although 2012 will be a challenging year globally, the company believes that the demand for property in Malaysia will remain strong as prices continue to increase.

"Housing prices will continue to go up and it's not because we property developers are greedy. Land cost has gone up. So has labour wages, building material and fuel costs. In fact, financing cost has also gone up," he said.

Following the inflationary effects on the housing market, Lim is hopeful of his marketing team achieving RM800 million in sales this year. This would be 20 per cent more than last year's RM663 million.

LBS Bina plans to launch 16 projects with gross development value totalling RM1.5 billion. There will also be 21 ongoing projects worth another RM665 million.

"Currently, we have some 920ha landbank with an estimated gross development value of RM9.1 billion," he told reporters after the company's shareholders' meeting here yesterday.

The housing projects are spread across D'Island Residence in Puchong, Bandar Saujana Putra in Putrajaya, Taman Golden Hills in Cameron Highlands and Bandar Putera Indah in Batu Pahat.

Lim said houses priced over RM233,000 at Bandar Saujana Putra should generate about 36 per cent of its sales target.

"The D'Island Residence, which offers resort-style homes valued at RM1 million and above, is expected to contribute 30 per cent, while non-residential developments an estimated 14 per cent in sales," he said.

At the shareholders' meeting, the company announced a share buy-back of up to 10 per cent of its own issued and paid-up share capital.

By Business Times

LBS targets RM800mil sales this year

2012-01-04T09:49:00.000+08:00

Interesting: LBS executive director Cynthia Lim, Datuk Lim Hock San and executive director Alan Chia (right) at the media briefing

PETALING JAYA: LBS Bina Group Bhd is eyeing RM800mil and RM950mil in sales of its properties for this and next year respectively, after raking in RM664mil last year and RM422mil in 2010, according to managing director Datuk Lim Hock San.

Its unbilled sales was RM649mil as at Dec 31, 2011, which could be realised when construction was completed, Lim told a media briefing.

Lim cited a tougher external environment, competition and more stringent lending regulations issued by Bank Negara as challenges, but said he believed the company's portfolio of medium to high-end residential properties would be key to achieving its sales target this year.

“As far as I'm concerned, the Malaysian property market will be alright,” he said, adding that demand for property would remain strong although prices would increase at a lower rate.

Starting Jan 1, banks are required to use net income to calculate the debt-service ratio for loan approvals across all consumer loan products including housing and personal loans.

This year, LBS will launch 16 projects valued at RM1.5bil. The company has a land bank of some 2,300 acres worth RM9.1bil in gross development value and ongoing projects worth RM665mil.

On the progress of LBS' development in Zhuhai, southern China, Lim said it would not get off the ground this year due to high inflation and property prices, which were likely to push back construction on its 197-acre plot to next year.

Lim added that LBS had been approached for a property venture in Sabah but said the company would not consider taking up any offers unless they were “very attractive opportunities.”

Of its targeted sales for residential properties, 36% is expected to come from its medium-range Bandar Saujana Putra homes, 34% from its medium-to-high-end homes, and 30% from its high-end development D'Island Residence.

An analyst told StarBiz that LBS' targets were realistic based on its pipeline, and that sales would be anchored by the resort-style D'Island Residence in Puchong.

He said landed properties could still see resilient take-up rates, even though prices might decline in view of the weaker economic sentiment.

Meanwhile, shareholders have approved a share buy-back of up to 10% of the company's issued and paid-up share capital at its EGM yesterday.

For the quarter to Sept 30, 2011, LBS' revenue was up 56.8% to RM125mil from a year ago while net profit surged 95.8% to RM8mil backed by sales of its properties in D'Island Residence, Bandar Saujana Putra along with commercial and industrial projects.

LBS shares ended one sen higher at 78.5 sen yesterday, with 593,600 shares traded.

By The Star

Seacera to kick-start 500-acre project with GDV of RM2bil

2012-01-04T09:46:00.000+08:00

PETALING JAYA: Seacera Group Bhd will this year kick-start a 500-acre mixed development project in Ulu Langat, Selangor with a gross development value of at least RM2bil that will span over 10 to 15 years, its managing director Zulkarnin Ariffin said.

"We'll probably start on 50 acres first," he told StarBiz via the phone yesterday.

Of the 500 acres, Seacera owns 113 acres, which it bought from land owner Duta Skyline Sdn Bhd for about RM27mil or RM5.50 per sq foot. The remaining land is currently owned on a 78:22 joint-venture basis with Duta Skyline, with the larger portion by Seacera.

Zulkarnin said Seacera had the right of first refusal (which basically means the right to buy something before the offer is made to other parties) to buy the remaining land it currently co-owns with Duta Skyline but no decision on this had been made yet.

As at Sept 30 last year, Seacera had RM6.6mil in cash and cash equivalents. Zulkarnin said the company, which is essentially a tile maker moving into the property segment, would realise this year a gain of RM30mil from the disposal of a factory building in Selayang.

He said although Seacera had signed the agreement with Duta Skyline a few years ago, the delay in kick-starting the development was due to some issues faced by Duta Skyline in relation to its earlier loans it took to buy the said land.

"The issues are near to being resolved," he said.

Meanwhile, recent filings to Bursa Malaysia show that Zulkarnin had from the period of Dec 20 to Dec 22 bought a total of 1.8 million shares at 54 sen a piece bringing his stake to 19% in Seacera.

"I see value in the company," he said.

Last Friday, some 4 million shares were also crossed to unidentified buyers, suggesting that there could be some new major shareholders coming into the company.

It is learnt that corporate personality Datuk Samsudin Abu Hassan who was one of the major shareholders of the company has exited the company completely.

Shares in Seacera have put on 26% over the past two trading days ending at 65.5 sen at yesterday's close. For the third quarter ended Sept 30, 2011, the company made a net profit of RM981,000 on sales of RM24mil.

By The Star

Bright outlook for rental market

2012-01-04T09:45:00.000+08:00

SINGAPORE: The rental market could brighten for landlords this year as home-buyers defer buying units in the wake of the recent cooling measures, said analysts.

They believe the larger pool of tenants might stabilise the rental market or even drive a pick-up of up to 5% in rents over the next 12 months.

These analysts' comments are a contrast to earlier expectations that rents were set to fall as a large supply of completed units come onto the market this year. Analysts had predicted a possible softening of rents this year due to the new private and public homes that will be completed within the next few months.

But some consultants now say that foreigners considering buying might be persuaded to head to the leasing market, after being put off by the recent introduction of the additional buyers' stamp duty of 10%.

“(The measures) effectively increase their (financial) risks tremendously if they buy and ... get reassigned elsewhere or lose their jobs (within the first two years),” said Alan Cheong, head of research at Savills Singapore.

“Leasing has always been seen as a faster and easier decision to make as compared to buying a property because of the lower commitment level and the smaller amount of money required upfront,” said OrangeTee managing director Steven Tan.

In the third quarter of last year, the Urban Redevelopment Authority (URA) rental index of non-landed homes showed increases compared with that of the previous quarter, although the index rose at a slower pace in the central regions and suburban areas.

While demand from foreigners and expatriates is expected to be the main driver of the residential leasing market next year, the local factor cannot be ignored.

There may be some locals who have sold and want to rent, and wait until they can buy at a cheaper price. There may also be locals who are now unwilling to sell their home given the weaker market.

Cheong suggested that the expected dip in rents was now unlikely, with the effects of the measures partially balancing it out.

URA figures indicate that 9,584 apartments were completed between the third quarters of 2010 and 2011, with rents rising 6% during that period.

“This suggests that rental demand was substantially greater than supply. Thus, barring external shocks or policy changes that affect immigration, rentals should at least be stable in 2012,” he said, noting that the rate of immigration was still strong and might remain so for years to come.

Market watchers added that global economic uncertainty would also have an impact on rents.

Hardest hit would be the high-end sector, said Cheong, with rents possibly experiencing declines of up to 5%.

New arrivals of foreign white-collar workers might have more constrained rental budgets, said other consultants.

“Rental budget cuts will lead tenants to look at cheaper alternatives so projects in mid-prime or well-located city fringe or suburban locations may be in greater demand,” said Ong Teck Hui, head of research and consultancy at Credo Real Estate.

By Singapore ST

Private home price hike continues to moderate

2012-01-04T09:43:00.000+08:00

Price rises of resale HDB flats have moderated in the final quarter of 2011.

SINGAPORE: The rate of increase in private residential property prices continued to moderate for the 9th consecutive quarter, according to flash estimates by the Urban Redevelopment Authority.

The private residential property index rose from 205.7 points in the third quarter of 2011 to 206.2 points in the fourth quarter of 2011. This represents an increase of 0.2%, compared to the 1.3% increase in the previous quarter.

Prices of non-landed private residential properties increased by 0.5% in Core Central Region and by 0.6% in Outside Central Region in the quarter. There was no change in the prices in property prices in the Rest of Central Region.

In comparison, in the third quarter of 2011, prices of non-landed private residential properties increased by 0.7% in the Core Central Region, 1.2% in Rest of Central Region and 2.1% in Outside Central Region.

Meanwhile, price rises of resale Housing and Development Board (HDB) flats have moderated in the final quarter of last year, rising 1.7% compared to the 3.8% rise seen in the third quarter.

This comes after two quarters of accelerated prices rises since the second quarter of last year when prices rose 3.1%, compared to 1.6% seen in the first quarter.

Analysts have expected the market to cool somewhat in light of the global economic uncertainty and moves by the government to cool Singapore's property market by imposing heavy stamp duties on residential transactions.

The HDB's estimate released yesterday brings the HDB Resale Price Index (RPI) to 190.4; the RPI provides information on the general price movements in the public residential market.

HDB said yesterday it had offered 28,043 flats for sale last year to address hot demand for homes. This comprised 25,196 new flats under its build-to-order system and 2,847 balance flats under the sale of balance flats exercise.

By Singapore ST

Developer addresses parking issues before commercial project takes off

2012-01-04T08:48:00.000+08:00

The second phase of the Uptown commercial project in Damansara Utama, Petaling Jaya, will begin this year and several measures have been put in place for construction work to begin.

The development consists of a residential block, an office tower, a shopping mall, service apartments and a 1.62ha eco-park.

Several open air car parks in the area have already been closed to facilitate piling and earthwork for the residential block in Jalan SS21/60.

See Hoy Chan Sdn Bhd executive vice-president Joe Tan said the Uptown 7 multi-storey car park had been upgraded recently to accommodate more vehicles due to the closure of the open air car park.

All ready: Earthwork has already started for the Uptown Phase 2 development and the developer has taken various measures to ensure that parking is sufficient and traffic manageable.

“It used to be only 30% occupied but now it has risen to 80%. We built a new ramp for better accessibility,” said Tan.

The interior of the structure has also been given a facelift with brighter colours, more lights, CCTV cameras and security guards.

There are also more signages put up, making it easier for motorists to park.

Tan said the parking rates had also been reduced to RM1 for the first three hours, compared with RM1 for the first two hours previously.

Helping out: Guards are stationed at the corner of Jalan SS21/37 and SS21/60 near the entrance of the construction site to manage traffic and ensure that the public do not double-park in the area.

The rates are lower than the Petaling Jaya City Council (MBPJ) parking rates of 60sen per hour at the public parking bays.

“We want to encourage the public to use the multi-level parking. We have had several rounds of discussions with the business owners and residents to keep them updated on our development plans,” he said.

Now, many of the parking bays are taken up by shopowners and Tan advised them to park at Uptown 7 to free the public parking spaces for their customers.

“We are providing a free shuttle service to pick up and drops off people at various stops in the commercial area. We started with one van and the response was good so we added another for the service.

New look: The Uptown 7 multilevel car park has been given a facelift to make it brighter and more comfortable, like this glass panel at the lift lobby on each floor.

“If the response continues to be good, we will look into making it a long-term service,” Tan said.

The shuttle service starts from the Uptown 7 parking area with a frequency of every 20 minutes and stops at Uptown 5, Uptown 1, Uptown 2, HSBC, Malaya Optical, Perodua, Station 1 Kopitiam and Public Bank.

“We have stationed a security guard at the shuttle service waiting area to make it safer for commuters,” he said.

Tan said they had also more security guards patrolling day and night.

There are also guards stationed at the corner of Jalan SS21/37 and Jalan SS21/60, where construction vehicles enter and exit the site to manage traffic flow and prevent people from double-parking.

The initial stages of construction would see a tunnel being built in Jalan SS21/37, near Uptown 37.

The tunnel will provide direct access to the basement of the retail mall from the Damansara-Puchong Highway.

“The tunnel will also be used by our heavy vehicles so they do not have to use the service roads in the commercial area,” said Tan.

He said the mall in Uptown was not meant to compete with the big shopping centres but to cater for the surrounding community and those working in the area.

The service apartments will sit on top of the retail mall and run by a Singaporean company.

The residential block is expected to be completed in the third quarter of 2014 while construction of the office tower and mall will start next year. The whole project is expected to be completed in 2016.

By The Star

LBS Bina eyes RM1bil in sales

2012-01-03T10:11:00.000+08:00

PETALING JAYA, Jan 3: Property developer, LBS Bina Group Bhd, aims to achieve sales of RM1 billion in two years in view of the strong demand despite cautious market sentiment, says managing director Datuk Lim Hock San.

He said the company aimed to achieve RM800 million in sales this year backed by 16 new launches and 21 ongoing projects and RM950 million in 2013.

"Currently, we have some 920-hectare land bank with an estimated gross development value (GDV) of RM9.1 billion to keep us busy for the next few years," he told reporters after the company's annual general meeting here today.

Lim said the company would launch 16 projects, comprising 2,426 units with a GDV of RM1.5 billion, together with some 21 ongoing projects with a value of RM665 million.

"These include projects in D'Island Residence, Bandar Saujana Putra, Taman Golden Hills in Cameron Highlands and Bandar Putera Indah in Batu Pahat, Johor," he said.

By Bernama

Naim launches first phase of Riveria Bay apartments

2012-01-03T10:09:00.000+08:00

KUCHING: Sarawak leading property developer Naim Holdings Bhd, through wholly-owned subsidiary Khimat Mantap Sdn Bhd, today launched the first phase of its Riveria Bay project here.

Located near a river confluence at the boundary of Kuching City and Kota Samarahan, it features three-storey walk-up apartments priced between RM262,888 and RM379,888. Each of the 66 units of two-bedroom and three-bedroom apartments measures between 86sqm and 119sqm.

Naim Holdings Senior General Manager (Public Relations, Sales and Marketing, and Product Development) Alaric Soh said the apartments would be ready by mid-2013 and become part of an exclusive residential area equipped with 24-hour security service and ample recreational facilities.

"We also offer a 24-month warranty, 99-year land lease, free legal fee for sales and purchase agreement and memorandum of transfer, and free kitchen cabinet and bedroom wardrobe," he said.

Deputy Works Minister and Stampin Member of Parliament Datuk Yong Khoon Seng was on hand to officiate the sales launch.

By Bernama

US is top 2012 property investment pick

2012-01-03T10:08:00.000+08:00

NEW YORK: The United States will remain the top choice of most global commercial real estate investors in 2012, but the country has lost ground to Brazil which ranked No. 2 this year, according to a survey.

While the United States offers the most stable and secure option in commercial real estate, investors said improvement in rent and occupancy growth and the repeal of a 1980 foreign investment tax would have the strongest impact on their investment decisions, according to the 20th annual survey of Association of Foreign Investors in Real Estate (AFIRE) members.

For about the past year or so, investors in US commercial real estate have focused on gateway cities such as New York, Washington, Boston, San Francisco and Los Angeles, driving prices up and yields down.

Meanwhile, commercial property in Brazil, with its bubbling economy and safer investment environment, has become a hot spot for global investors. Sao Paulo, Brazil's largest city, jumped to the fourth best city for real estate investment dollars in 2012, up from 26th place last year.

The United States is still very desirable and was second behind the UK in attracting cross border investment in 2011, according to Real Capital Analytics preliminary figures.

“The negative is it doesn't promise a whole lot of capital appreciation because the prime markets are already fully priced,” AFIRE chief executive officer James Fetgatter said. “By no means will Brazil replace the United States, at least not in the forseeable future. Brazil is considered now a much safer place to invest and a place where you can get capital appreciation and good yield.”

AFIRE'S survey respondents hold more than US$874bil of real estate globally, including US$338bil in the United States.

About 60% of respondents said they planned to increase their investment in US real estate in 2012, down from a record 72% last year, according to the 20th annual survey.

Some 42.2% said they believed the United States in 2012 would offer the best opportunity for the price of their commercial real estate investments to increase, down from 64.7% last year's survey.

By Reuters

Hong Kong firm forms joint venture with Mayland

2012-01-03T10:07:00.000+08:00

Hong Kong-listed Country Garden will have a 55 per cent stake in the property venture, with Mayland holding the remaining 45 per cent.

KUALA LUMPUR: Hong Kong-listed Country Garden Holdings Co Ltd has formed a joint venture with Malaysia Land Properties Sdn Bhd (Mayland), a property developer, to explore the potential of property markets in Malaysia.

Country Garden recently announced that the company had sealed an agreement with Mayland to set up a joint-venture company to develop property in Malaysia and Southeast Asia.

"Upon completion (of the deal), Country Garden will have a 55 per cent stake in the venture, with Mayland holding the remaining 45 per cent," the company said in its filing to the stock exchange of Hong Kong.

The joint-venture company, known as Wealthy Signet Sdn Bhd, will be principally engaged in acquiring land use rights over the development land and its development into residential and ancillary commercial properties.

"The development land consists of parcels of lands located in Selangor. It is intended that the development land will be developed into residential and ancillary commercial properties," Country Garden said.

Country Garden said it is optimistic about the property market in Malaysia and considers that the acquisition of the development land will broaden and strengthen the existing investment portfolio of the group.

"The board further believes that the formation of the joint venture company will allow the group to co-operate with a well-known property developer in Malaysia and that the joint development of the development land with Mayland will allow the leverage of expertise and resources of both parties.

Country Garden is an investment holding company and its subsidiaries are principally engaged in property development in China, including property development, construction, fitting and decoration, property management and hotel operation.

Mayland is primarily engaged in property development and property investment in residential and commercial properties in Malaysia.

Mayland's completed premium property developments include Royal Domain, Sri Putramas, Waldorf & Windsor, Maytower, Austin Boulevard, Prima regency, Parkview, Plaza Damas I and II, Menara Hartamas, and Puncak Prima.

The company's newly launched condominium and serviced apartments included The Royal Regent, The Elements. Regalia and Plaza Damas 3 in Kuala Lumpur and Palazio serviced apartments in Johor Baru.

By Business Times

Johor Land eyes expats for resort township

2012-01-02T10:06:00.000+08:00

Johor Land Bhd is talking to Malaysian and foreign investors to expedite development of its RM2 billion integrated resort township project in Tanjung Leman, south off Mersing in Johor.

According to a source, the 142ha township project has attracted interest among investors due to its product offering and location.

The project is located within the Eastern Coast Economic Region, which is among the comprehensive development blueprints put in place by the government.

Tanjung Leman, meanwhile, is one of many beaches along Johor's east coast, besides Desaru, Tanjung Balau and Tanjung Sedili.

The company source said the master plan for the project has been drafted. The project will feature world-class hotel and resorts, a mall, houses, tourist retirement homes, a commercial hub, theme parks and fruit farms, among others.

"We are targeting the expatriate market here, under the Malaysia My Second Home programme. We may also commence talks with international operators for the hotel and themepark but there is nothing on the cards yet," the source told Business Times.

The source said Johor Land, a unit of Johor Corp, the state-owned investment company, aims to start the project in the first half of this year. It is expected to be completed by 2017.

"We have developed the infrastructure and recently invested RM20 million for staging point. This is to service the islands off Mersing during construction," the source said.

JCorp president and chief executive Kamaruzzaman Abu Kassim said in November that the project would be divided into eight sections and is aimed at turning the beach on Johor's northeastern coast into a major tourism hub.

By Business Times

Urbanising Malaysia calls for the adoption of smart-growth principles

2011-12-31T11:05:00.000+08:00

Green enclave in KL: Sunway Rymba Hills is a landed residential development that integrate natural forest and open park.

STRONG emphasis given by the Government in strengthening the economic attractiveness of Greater Kuala Lumpur, improving the overall public transportation system, improving linkages in major growth centers and other initiatives identified under the various National Key Economic Areas (NKEAs) will have great implications on future development of cities.

These NKEAs will influence the direction as well as speed of growth of the cities where the projects are carried out, which will then influence the property market of these cities.

Realising the high speed of urbanisation rate in Malaysia and the inefficiency that could be created by urban sprawl, it is of high importance that sustainable development be given due consideration. This has become the main focal point of discussions in property seminars and conferences in Malaysia and the region.

At the recently held The 3rd Congress of Asian Association of Urban Regional Studies, the theme was Survival City and Region: Risk or Sustainable Planning, speakers and participants were all in agreement on the need to plan, design and invest in smarter cities where sustainable planning becomes the guiding criteria.

Smart cities require skilled workers and innovative ideas. These cities must address green and sustainable issues and be resilient against natural hazards. The President of Thai Planners Society, Professor Dr Eggarin highlighted that sustainablility did not always translate into higher cost of building cities as there were natural methods to incorporate green issues in property development but required innovative techniques to suit the local environment.

It was also highlighted by Annette Dixon, the World Bank's Country Director for Malaysia in the November 2011 edition of the Malaysia Economic Monitor that “as cities concentrate a growing share of the national economy, it is imperative that they have systems to manage natural hazards and prevent them from becoming human and economic disasters.

Malaysian cities are especially vulnerable to floods and landslides. To reduce the risks related to these hazards, Malaysia would benefit from environmental restoration and integration of risk reduction into development planning”.

To lead the move towards sustainable development, one of the key thrusts of the National Housing Policy 2011 is to promote sustainability in the housing sector by promoting green technologies and features, and encouraging urban renewal and redevelopment. In Malaysia, this growing awareness on sustainable development has resulted in various commercial as well as residential developments using “green features” as one of the development concepts and theme or their unique selling features.

Ken Bangsar and 28 Mont Kiara are two examples of outstanding high rise development employing green features and technologies. Sunway Rymba Hills and Cahaya SPK Shah Alam are examples of landed residential development that integrate natural forest and open park. Launched last month, KL Eco City is going to be the country's first integrated green development targeting GBI and LEED certifications.

It can be concluded that it is becoming a “must” for property players from planners, architects, engineers to developers to take initiatives to create liveable cities by incorporating smart-growth principles in their planning and design.

We expect more new development and redevelopment projects to adopt similar principles, In the long run, smart-growth principles will add value not only in terms of capital appreciation of the properties but also social and economic liveability of entire communities.

Urban renewal and redevelopment projects are currently taking place in Kuala Lumpur city center and mature cities like Petaling Jaya. These are indications of the need for cities to grow vertically to create economies of scale in terms of space consumption and the need to minimise vehicular movement.

The current redevelopment of AngkasaRaya (Aurora Tower@KLCC) and Bok House (W Kuala Lumpur, The Hotel and Residences) and the proposed redevelopment of Hotel Istana, Kompleks Antarabangsa and Crowne Plaza into a mix of commercial and residential uses will encourage more owners of older buildings in the city center to take similar steps.

In Petaling Jaya, owners of older industrial buildings are redeveloping their land for commercial use. Approximately 16 million sq ft of prime office space will be completed by 2016 in Kuala Lumpur city center and its immediate areas, increasing the total supply by 22% to 86 million sq ft.

With the current slow take up in office space, rent is expected to remain stable in the next few quarters, hovering between RM5.50psf and RM6.50psf.

About 11,000 new condominiums with prices ranging from RM500psf to more than RM1,000psf will be completed by 2014. Due to the high supply of newly completed condominiums within the Golden Triangle Area and Embassy Row, average rental rate for selected existing condominiums has declined by almost 5% from RM4.66psf to RM4.44psf and from RM3.49psf to RM3.31psf respectively.

Several newly completed condominiums have even lowered their asking rental rate by almost 10%. We expect the leasing market for condominium will continue to be more challenging especially for bigger units though take up rate for new projects in most cases is very encouraging, with a significant percentage of local buyers.

The retail market will see more neighbourhood malls in the Klang Valley completed between 2012 and 2015 adding about 7.5 million sq ft to the current total supply of 51.4 million sq ft. Most of these new malls are located in high growth areas such as Petaling Jaya, Kelana Jaya, Cheras, Setapak, Kota Damansara, Puchong and UEP Subang Jaya.

Will the growth of residential and commercial properties slow down in 2012? Looking at the numbers provided by the Statistics Department and RAM Economics, average annual transaction growth rate of these properties has continued to slow down from 12.8% (1991-2000) to 5.9% (2001-2009).

With the growing population, high percentage of working population and growth in employment supported by various Entry Point Projects throughout the country, we expect the Malaysian economy to provide a conducive environment for the property market to continue to be one of the key economic contributors.

Senator Datuk Abdul Rahim Rahman is the Executive Chairman of Rahim & Co group of companies. This is his last column for StarBizWeek.

By The Star (by Datuk Abdul Rahim Rahman)

Making ringgit and sense in property investments

2011-12-31T11:04:00.000+08:00

Making sensible property investment decisions, especially in the Klang Valley, is getting tougher in today's climate where real estate values are constantly spiralling upwards.

So, would buyers of recently launched properties in the Klang Valley be able to obtain decent rental yields of at least 5% per year after the units are completed in two or three years?

A recent report by property consultancy CB Richard Ellis notes that the average asking monthly rental rates of luxury condominiums, during the first half of 2011, in Bangsar and Mont Kiara were RM3.29 and RM3.13 per sq ft respectively.

The report points out that rental rates in the three main condo markets (Kuala Lumpur City Centre (KLCC), Bangsar and Mont Kiara) on a per sq ft basis had declined since 2007, reflecting weaker demand for rental units coupled with increased supply.

Two months ago, CB Richard Ellis executive chairman Christopher Boyd said: “In some cases in the KLCC area and Mont Kiara, condominium rentals have halved in the last two years.”

Meanwhile, those who are looking at swifter returns on their investments would be asking about the potential increase in value for such units within the next three years, as they want to “flip” their purchases.

A bank-backed property analyst explained that presently, there is a huge gap between the prices of recently launched properties and secondary market units.

“Recently launched properties offer better BLR (base lending rate) spread. Many property developers offer 10:90 schemes, and also absorb entry costs such as the stamp duties.”

However, he says within the next two years, it would be difficult to “flip” recently launched properties that were bought at above RM500,000 depending on unit size and location.

The analyst took the view that many buyers of recently launched properties are facing a “short-term gain, long-term pain” situation.

“I am not hopeful about “flipping” such units and getting a 20% price upside within two years. Buyers also need to pay exit costs like real property gains tax. You may end up with the same returns that real estate investment trusts (REITs) provide presently, which is about 6% to 7% annually.”

So perhaps, investors would do better in buying REITs in the current climate?

CB Richard Ellis executive director Paul Khong said the benefits of investing in REITs include their high liquidity, annual dividends ranging from 6% to 8% per annum and potential capital gain if prices increase.

“The quantum of investment can be small. For example, 1,000 shares in CMMT (CapitaMalls Malaysia Trust) would cost you RM1,440 and some brokerage fee. CMMT was listed (in July 2010) at RM980 per 1,000 shares. If you had invested on day one, you would have made more than 50% gain both capital value and dividends. REIT values are largely more stable and the dividends are usually very consistent.”

HwangDBS Investment Management Bhd equities head Gan Eng Peng concurs and notes that REITs tend to be well diversified, and property fund managers have advantages over individual landlords in terms of attracting tenants as they have “a larger network, reputation and backing behind them.”

“Also, the REIT property fund manager would have done the homework to ensure the property is a good investment and that the tenancy process is also sorted,” he said.

Gan said investors should adopt a longer-term view when investing in REITs.

“REITs are considered a defensive play within the equity asset class. Its performance moves in tandem with economic growth and business cycle.”

However, REIT investors have no direct control of what properties the fund managers invest in and there are annual management fee payments to the fund managers, says Gan.

Meanwhile, Khong took the view that investors who have the means should have both portfolios in physical real estate and REITs.

Khong says there is a “toppish” feel regarding increasing prices for recently launched residential apartments in the Klang valley, and many developers are offering more in terms of quality finishing and full furnishing.

“We note that 2011 has been a good year for the residential market with many new projects topping the charts in terms of pricing.”

Khong points out that the residential markets in areas like Petaling Jaya, Sri Hartamas, Bangsar, Damansara, Puchong and Seri Kembangan have seen substantial increases in capital values.

“Some of the newer strata projects have also done well during this period. These include The Greens @ TTDI, The Capers @ Sentul East, and KU Suites @ Kemuning Utama.”

Based on indicators in regional markets, he expects the local market to stabilise in 2012 with “some positive movements”.

However, property consultancy DTZ Nawawi Tie Leung executive director Brian Koh says, “2011 will see more moderate growth given that the second half was not fantastic. Next year will be more challenging given slower growth, and a tightening of liquidity through the imposition of lower financing margin and pegging to the net disposal income of borrowers.”

A property analyst says there are signs that financial institutions are more cautious in lending to real estate buyers nowadays.

“Unless the economic situation improves substantially, property investors may want to wait till the second half of 2012. There may be pressure on secondary market unit owners who are looking for quick “flips” to sell at lower prices.”

Gan also expects the Klang Valley property market to be softer in 2012.

“In particular, the oversupply of condominiums in Mont Kiara and KLCC, and offices in general, will cap the upside potential of these sub-asset classes,” says Gan.

However, Gan emphasies that this does not mean lower property prices as there is substantial real demand from young property upgraders as well as ample liquidity in the economy.

By The Star

Property market welcomes new group of buyers

2011-12-31T11:03:00.000+08:00

BEGINNING tomorrow, new guidelines from Bank Negara Malaysia to curb rising household debt are going to kick in. The guidelines cover all consumer loan products including housing, personal and car loans, credit card receivables as well as loans for the purchase of securities.

Instead of loan approvals being based on gross pay, they will be based on net pay, after income tax, social security deductions and the Employees' Provident Fund contributions. These are the three main items. The objective of this ruling is to reduce the household debt which has been on the rise.

In all likelihood, property sales will be affected but what is interesting is, how this ruling will affect an increasingly younger generation of buyers who are entering the market for the first time.

In the last 24 months, developers have seen a new group of buyers. They are young and aggressive, upbeat and have a huge appetite for risk. Many of them are in their 20s or early 30s. Many buy with joint names and they are not related to each other. They buy studio units and two-bedroom condominiums, with a built-up of between 600sq ft and 800sq ft with a price tag of averaging RM500,000. When the mortgage payment kicks in, that RM450,000 loan (based on a 10:90 scheme) will equate to a monthly repayment of about RM2,500.

A developer says this scenario is due to a combination of factors. The steep rise in property prices the last two years, coupled with the gains, have spurred this young group of buyers to take on the responsibility of shouldering this long-term commitment.

More than 10 years ago, during the stock market bull run of the 1990s, the market was on an uptrend for a good number of years before the Asian Financial Crisis hit the region. At that time, many young people, including college students, began dabbling in the stock market. Just as that period prompted young people to learn about stocks, the last two years have introduced them to another investment instrument. The difference between the two is the outlay, and the duration of that commitment with stocks needing a smaller capital and more liquid.

Developers say there are essentially two groups of young people who have entered the market in the last two years. The first group are those who, seeing the gains made by earlier purchasers, enter the market with the objective of making a quick gain. Another group ventures into the market before prices go up further and they plan to hold the property for the longer term.

A major factor that encourages this group of aggressive young buyers is the availability of easy credit. The introduction of the 10:90 schemes induces them to make the decision. Many of them hope they will be able to flip that property on completion and make that 25% to 30% gain.

For this group who are buying to flip, they may find the gains not worth the while for the simple reason that the premise of making a 25% to 30% gain is based on a rising market. Prices are today stabilising and there is a glut of high-rise condominiums.

Lawyers and property professionals say investors are unlikely to make that 20% gain going forward. Furthermore, the 5% real property gain tax will also shave off gains. In the event they are unable to off load their units fast enough, they will have to rent them out, but they may encounter another problem a glut of condominiums and few tenants.

Assistant news editor Thean Lee Cheng wonders how many of these young buyers will stick with their commitment.

By The Star (by Thean Lee Cheng)

Will the slowdown in property prices continue?

2011-12-31T11:02:00.000+08:00

Yes.

In all likelihood, there will just be slower growth across the board for the mere fact that the last three years have seen exceptional growth since 2008, when the global crisis hit. The following year saw a recovery and 2010 was a year of exceptional growth. Property professionals had never seen such price increases in their 30 years in the profession, where prices went up by double digits in a short period of time.

This year witnessed continued exuberance among developers, agents and property buyers. The final two quarters usher us into 2012, which will be the year of the “great slowdown”.

It will be perceived as such because of the remarkable growth experienced in 2010, but in reality, it is not really a slowdown. It is not possible for prices to go up, up and away until kingdom come.

There has to be a reality check. So we will see slower growth in the coming year. In some locations, prices may hold their ground, but unless something major happens, whether at home or abroad, prices are unlikely to recede in the Klang Valley and other major cities.

Hence, it is not that there will be no growth; price increases next year will be slower, and more subdued and stable. In some locations, prices may plateau.

If there is still growth, however small, why call 2012 the year of the great slowdown?

On the global front, we have the eurozone crisis, which is still unravelling. If the eurozone breaks up, it will affect sentiments. The stock market will be the first to be impacted by the dim outlook and this will spill over into the property sector.

Of greater concern are individuals who have over-invested. They may find it challenging to meet their commitments. These include those who have multiple property purchases, and young people who over-committed themselves with properties costing RM500,000 and more.

By The Star

Property sector to correct

2011-12-31T11:00:00.000+08:00

The steep increases seen in the last two years expected to sputter to a halt on weak global sentiment

The overall weak global sentiment is expected to cast a pall over the property sector, which is expected to undergo some downward correction next year, agents, property consultants and developers say, with the steep increases seen in the last two years sputtering to a halt. Virtually all segments of the property market will be affected.

International Real Estate Federation (Fiabci) Malaysia president Yeow Thit Sang says the slowdown, though gradual, will be seen in the pricing and take-up rate of all housing segments, particularly more so in the high-end category.

“Whether it is Penang or the Klang Valley, we don't have that many multinational companies coming in to occupy some of our high-end properties. Rentals with yields of between 6% and 8% are no longer achievable,” he says.

This slower rate of growth is expected to be more apparent after the new ruling by Bank Negara kicks in. Effective Jan 1, new lending guidelines require banks to use net income to calculate the debt service ratio for loan approvals.

The new guidelines cover all consumer loan products including housing loans, personal loans, car loans, credit-card receivables and loans for the purchase of securities.

While this latest round has the objective of reducing overall household debt, it will affect the property sector, a branch manager of a local bank says.

Previous lending guidelines capped monthly mortgage repayment at 1/3 of net pay instead of gross pay. This new ruling, and the requirement to have a 30% downpayment on the third and subsequent property, introduced in 2010, will result in the banking sector being more stringent when it comes to mortgage loan approvals. The re-imposition of the real estate property tax, at 5% flat within five years of purchase, was another measure to curb speculation.

These measures, together with the global concerns over the United States and the eurozone, will affect sentiment. However, there will be opportunities in the affordable housing segment, which is part of the Government's Economic Transformation Programme.

Says Ireka Corp Bhd executive director Lai Voon Hon: “We see strong growth potential in these under-served' sectors such as mid-market residential and commercial as well as green' developments located close to infrastructure nodes. Market movement in recent months had observed major developers acquiring parcels of land outside the Klang Valley such as in Kajang, Semenyih and Nilai which are destined to be the next “hot spots”.

“With 65% of the Malaysian population falling under 35 years old, we trust that the demand will pick up as consumer confidence recovers. Close to 10 million people are expected to work, live, learn and play in the Greater KL metropolis by 2020.

“Burgeoning young and middle-class population also means the demand for mid-market properties will remain steadfast,” Lai said, adding that the mid-market will receive strong support in terms of demand, and this will be Ireka's primary focus in 2012.

Other developers to move into affordable housing include the Sime Darby group and Mah Sing group. Sime Darby recently launched affordable housing in Bandar Ainsdale in Seremban. Mah Sing Group Bhd, too, is moving away from high-end housing to go into the affordable housing segment.

Mah Sing group managing director and group CEO Tan Sri Leong Hoy Kum says: “The high-end sector, both landed and high-rise, will be more challenging with the RM4mil and above units taking longer to sell.”

Ireka's Lai says the company will be developing a 28-acre freehold land in Bandar Nilai Utama, Negri Sembilan into a trendy mid-market neighbourhood, consisting of landed houses and apartments. Another five acres of prime land in Kajang will be developed into a mixed development. consisting of two mid-market apartment blocks and a retail precinct.

Ireka will also embark on a modern industrial park development on its 21-acre freehold land in the established Sungai Chua industrial area near Kajang.

Aside from these three mid-market developments, in the pipeline is the launch of its boutique hotel and serviced residences project in Jalan Kia Peng, within the Kuala Lumpur City Centre (KLCC). This 30:70 joint development project between Ireka and Aseana Properties Ltd is slated for launch in the second half of next year.

On the overall market, Lai says launches and sales take-up rate will be generally slower. However, Malaysia's property sector (will be) resilient, he says.

Property consultant DTZ Debenham Tie Leung's executive director Brian Koh says “properties will have to be sensibly priced” with smaller units (if they are condominiums), selling better than larger ones. DTZ will be launching Naza TTDI Sdn Bhd's Platinum Park around the KLCC area next year.

Over in the office segment, the current glut is expected to persist into next year which will put pressure on rentals.

The overall view of property professionals is that the office market in Kuala Lumpur will remain soft next year unless the global economy recovers sufficiently to spur business expansion to take up the current supply in the city. With the eurozone the way it is, that seems unlikely.

Y. Y. Lau of YY Property Solutions expects Grade A office buildings in KL (existing and new) to face intense competition to secure tenants next year.

“Demand for prime Grade A office buildings held up well last year. But we are expecting an estimated five million sq ft of office space to come onstream in the Kuala Lumpur Commercial Business District and city fringes by end-2012, with KLCC and the Golden Triangle area providing over 90% of the new supply in the first half of next year. “In the second half, the bulk of the supply will be coming from the fringes of Kuala Lumpur.

“We opine that KL Sentral, Bangsar South and Mid Valley City will play a catch-up game in attracting eminent companies seeking MSC status and green building features, as well as conveniences in terms of availability of public transportation, ample eateries and amenities, and upgrading of corporate image. Good building quality and property management services provided are expected to attract companies to set up its businesses here,” Lau says.

By The Star