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Tuesday, June 24, 2008

Mah Sing in talks to sell two Southgate blocks

EN BLOC SALE: Leong showing a model of the Southgate project after the AGM. Mah Sing is targeting to conclude the sale of at least one block by the year end.

Mah Sing Group Bhd is in talks with several foreign parties for an en bloc sale of two of its five blocks of buildings at its Southgate commercial development in Sungai Besi, Kuala Lumpur.

The mid-to-high-end property developer is targeting to conclude the sale of at least one block by the year-end, group managing director Datuk Seri Leong Hoy Kum said.

Each block could go for "over RM100 million", he said.

"We are actually negotiating with these foreign purchasers. We have strong interest from the Middle East - such as the United Arab Emirates and Qatar - and also from a neighbouring country," Leong said, declining to elaborate.

Southgate, Mah Sing's third commercial development in Kuala Lumpur, should be completed in 2011 and is expected to breathe new life into the surrounding areas such as Pudu and Loke Yew.

The group, which also does residential developments, has a sales target of RM560 million for 2008 and plans to launch RM706 million worth of properties this year.

Mah Sing plans to eventually raise its selling prices for new property launches that have yet to be built, given rising building material prices which have resulted in higher construction costs.

"The sooner the buyer commits now, they may enjoy more attractive pricing. But eventually, we will have our prices increased in tandem with the construction cost increase," he said.

He pointed out that construction costs, just prior to the fuel price increases in Malaysia, have gone up by between 20 per cent and 25 per cent.

Mah Sing, which had a healthy cash balance of RM130.7 million as at end-March this year and a low gearing level, is also looking to expand its landbank.

"We are planning to buy more land in the Klang Valley, Penang and Johor, but we are not in a hurry as the land must be able to fit well into our quick turnaround business model," Leong said.

Leong is "selectively bullish" on the local property sector for this year and 2009, and sees growth for branded developers' medium-to-high-end residential and commercial projects in good locations.

The group, which has yet to venture abroad, is also scouting for opportunities in regional markets such Vietnam, China and India.

In Vietnam, for instance, it would be interested in doing a mixed development project with a local partner, he said.

By New Straits Times (by Adeline Paul Raj)

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