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Monday, February 18, 2008

Homing in on Hampshire Place

Tan & Tan offers attractive pricing in the much sought-after KLCC locale

In an area mushrooming with super luxury residences all breaching the RM1,000psf mark, is it possible to find something new and modern for less?

The answer is an affirmative – starting from RM860psf, in fact – if you’re searching for a condominium in the vicinity of the Kuala Lumpur City Centre (KLCC) and come to know of Hampshire Place.

Taking shape on a 1.6-acre freehold plot just off Persiaran Hampshire, along Jalan Ampang, this endeavour by Tan & Tan Developments Bhd (T&T) began offering units for RM700psf when it was first launched in mid-2007, when the rest of the market was in the RM800psf league.

Now, eight months later and with news of nearby highrises preparing to test the limits at even RM2,500psf, the developer has pegged its remaining 20 luxury tworoom units with 1,432sq ft of space at between RM860psf and RM940psf.

Hampshire Place comprises a 30-storey tower with 186 condos and a yet-to-be-launched 30-storey corporate tower.

T&T executive director Teh Boon Ghee said most of the units have been purchased by young urbanites with high earning capacities looking for inner city living, as well as empty nesters seeking to improve their quality of life.

All units will boast state-ofthe- art features, teak timber strip flooring in the bedrooms and study, built-in wardrobes, and split-unit air-conditioners.

Greenery will insulate the facilities deck, which will host swimming and wading pools, a Jacuzzi, gymnasium and multipurpose hall.

Still to come from Hampshire Place are five penthouses at the topmost floors, which Teh said would be launched next month.

These units, tagged at RM1,200psf, will have 2,519sq ft of space.

“We also plan to launch the corporate tower later this year, which will no doubt provide added value to those who have already invested in our residences.”

This commercial element will contain 219,222sq ft of space and a typical floorplate of 8,000sq ft.

It will also have retail lots on the ground floor, which the company envisages will be taken up by cafés, fitness and wellness centres, and fine dining restaurants.

The project is slated for completion by September 2010.

By New Straits Times (by P. Rajan)

No imminent price bubble in KLCC enclave

There is no imminent worry of a price bubble in the residential and commercial property markets around the Kuala Lumpur City Centre (KLCC) enclave given the existing strong demand, especially for quality developments, according to developers and property consultants.

They concurred that the market was still able to absorb the incoming supply although in the short term, there might be an oversupply in the residential sector.

In the next one to two years, 3,000 more residences will come on stream in addition to the existing 6,000 units.

In the commercial market, a lack of Grade A office space has resulted in high occupancy and rental rates for offices.

Zerin Properties Sdn Bhd chief executive officer Previndran Singhe said the price level of RM2,000 per sq ft for upmarket apartments now was reflective of the pent-up demand for such units in the KLCC area.

“The next price level will be around RM2,500 to RM3,000 per sq ft (psf), and going forward, the really good projects may even touch RM3,500 psf.

Despite the steep price appreciation in the last two years, real estate around the KLCC is still considered cheap compared with those in other cities like Singapore, Bangkok and Hanoi.

“We expect the market to reach equilibrium in the next three years,” Previndran told StarBiz. The escalating price of land in the KLCC area has also driven prices upwards.

From about RM500 to RM600 psf about three to four years ago, land price has breached RM1,000 psf, with those closest to the Petronas Twin Towers, such as along Jalan Kia Peng, fetching around RM2,000 psf.

The rising land price has driven developers to turn to alternative locations like Jalan Aman and Jalan Damai, off Jalan Tun Razak, where land can still be purchased at RM350 to RM500 psf.

Bukit Ceylon, with land going for RM500 to RM600 psf, is another good alternative.

According to E & O Property Development Bhd marketing and sales director K.C. Chong, the RM2,000 psf level for apartments in the KLCC area has been breached by only a small number of units in certain developments.

K.C. Chong

“Prices generally average RM1,000 to RM1,500 psf, hence there is still room to move upwards,” he said.

Chong said that while looking at the price trend, it was also important to consider the absolute price of the property as the built-up of the units differed.

“The higher prices allow developers to offer properties of a higher quality, with better finishes which local developers have been unable to offer previously,” he said.

“We are a now able to compete better on the world stage, offering products which are comparable to our overseas competitors.”

Mah Sing Group Bhd president and group chief executive Datuk Seri Leong Hoy Kum said that despite the steep price appreciation in the last two years, real estate around the KLCC was still considered cheap compared with those in other cities like Singapore, Bangkok and Hanoi.

Datuk Seri Leong Hoy Kum

“KLCC's top-end condominium price at RM2,000 psf is only 20% of Singapore's high-end condominiums which are priced around S$4,000 psf,” Leong said.

Manfred G. von Nostitz, former Ambassador of Canada in Malaysia, concurred that Malaysia's real estates were still undervalued and under exposed to foreign investors.

The prices of apartments in Toronto are in the range of RM3,000 to RM4,000 psf while in Singapore, they are between S$2,000 and S$4,000.

“Malaysia has much to offer - relatively cheaper real estate, sophisticated legal system, good infrastructure, political stability and good economic prospects. The transparent land and property laws are also reassuring for investors.

“The Malaysia My Second Home programme, if successfully implemented, should also provide a big boost to the property market,” he said.

Von Nostitz is working with some local partners to attract European and American private equity funds to invest in Malaysia's real estate.

Manfred G. von Nostitz

Although Malaysians are the biggest purchasers of residences in the KLCC area, foreign buying is growing and today accounts for 30% to 35% of the units sold.

The exemption of Foreign Investment Committee approval for foreign buyers of properties priced from RM250,000 and exemption of real property gains tax last April have spurred strong buying interest from Singapore, Hong Kong, Indonesia, and Britain.

Apartments that have been sold out after the relaxation of the guidelines include Cendana, 2 Hampshire, K-Residence, Park Seven and Binjai Residency.

Leong said more modern global designs could also be expected as developers were now engaging international architects for their projects.

“These cutting-edge architecture will be a much welcome addition to the Kuala Lumpur skyline,” he said.

By The Star (by Angie Ng, Fintan Ng, Shannen Wong)

Commercial property still a good buy

Due to the tight supply and continued foreign interest in purchasing, on an en bloc basis, purpose-built Grade A office buildings in Kuala Lumpur in the past year, the commercial property segment of the market will remain a good bet in the short term.

Besides foreigners, real estate investment trusts (REITs) and property funds have also been on the hunt for commercial properties. The Macquarie Global Property Advisors' acquisition of the City Square Centre for RM680mil from Asia Pacific Land Bhd announced in mid-2006 and completed last year among one of the first.

The quarterly market reports of a number of property consultancies have also noted the continued interest among foreigners, in particular Middle Easterners and Singaporeans, in downtown Kuala Lumpur's commercial property development projects or in older Grade A office buildings.

Equity analysts are also bullish on the outlook for the property market, although they base it on broader fundamentals rather than just the commercial property segment.

In a market strategy report for the current quarter, Aseambankers Malaysia Bhd said the property sector “is expected to outperform” driven by strong earnings growth, firm domestic demand and single-digit price-to-earnings valuations after languishing for much of the second half of 2007.

“We particularly like companies and REITs with exposure to commercial property development in Kuala Lumpur, as rising foreign demand via en bloc sales will further boost capital values,” it said. It said that among foreign institutional purchasers, Kuwait Finance House (M) Bhd stood out with its acquisition of Glomac Tower from Glomac Bhd and the east wing of The Icon, Jalan Tun Razak, and The Icon, Mont'Kiara, from Mah Sing Group Bhd.

Interest in Malaysian commercial property is not limited to Middle Easterners only. Across the causeway, Singaporeans are participating in Malaysia's commercial property boom via property funds such as Injaz AsiaEquity Property Fund 1 and Quill Capita REIT, which was listed early last year.

Abu Dhabi merchant bank Injaz Mena Investment Co PSC and Asia Equity Partners Pte Ltd, a Singaporean fund manager, jointly launched the Injaz property fund in mid-2006. The fund acquired the Kenanga International building along Jalan Sultan Ismail from K & N Kenanga Holdings Bhd for RM165mil in late 2006 under a sale-and-leaseback agreement.

Quill Capita, which was jointly sponsored by the Quill group of companies, a Malaysian developer, and Singapore's CapitaLand Ltd, has so far acquired a total of RM549mil worth of properties as of end-2007, with a number of properties still to be injected into the REIT.

Foreign institutions such as Kuwait Finance House and CapitaLand are also partnering local developers to develop properties. CapitaLand is no stranger to the Malaysian property development scene, having partnered developers here for both residential and commercial property development. It also owns a stake in Menara Citibank near the Petronas Twin Towers.

Recently, it was announced that Malaysian Resources Corp Bhd, together with Quill Sentral Sdn Bhd and Kuwait Finance House, had entered into a joint venture to acquire a 1.85-acre site for RM133mil from Kuala Lumpur Sentral Sdn Bhd to build office towers in the KL Sentral area.

By The Star

Grade A office in tight supply

According to the Valuation and Property Services Department's third quarter 2007 (3Q07) commercial property stock report, the total existing stock of purpose-built offices in Kuala Lumpur stood at 372 properties with 65.04 million sq ft of space and an 83% occupancy rate.

The report noted that with the completion of one building with 272,434 sq ft of space in 3Q, there was a further 17 properties with 8.02 million sq ft of space that were under construction. Planned supply for the quarter stood at 14 properties with about 12.36 million sq ft of space.

In the Golden Triangle area that encompasses those streets nearest KLCC, there were a total of 44 properties with about 9.40 million sq ft of space and an occupancy rate of 82.1% while in the Jalan Ampang area comprising those streets neighbouring KLCC, there were 23 properties with 8.28 million sq ft of space. The occupancy rate for the area was 88.9%.

One property with 106,778 sq ft was under construction in the Golden Triangle while planned supply for the area stood at two properties with a total of 692,560 sq ft.

CH Williams Talhar & Wong Sdn Bhd noted in its 3Q report last year that a number of properties would be completed in the KLCC area next year and in 2010.

These purpose-built offices include The Icon along Jalan Tun Razak, Goldis Tower in a corner of Jalan Ampang and Jalan Tun Razak, Glomac Tower along Jalan P. Ramlee, Menara Yu Neh Huat along Jalan Sultan Ismail, the office component of Lot C in KLCC and the office components of Platinum Park along Jalan Stonor.

The property consultancy said the healthy demand coupled with tight supply would augur well for the prime office market in the short term. It added that “interest from foreign investors and institutions continue to be strong for investment-grade offices.”

In its property market review for the first half of 2007, Regroup Associates Sdn Bhd said: “KL is experiencing an unprecedented level of interest from local and overseas investors for good quality office investments to buy.”

It said the reasons for this were the Securities Commission's revised guidelines for the establishment of REITs, a policy shift in which government institutions such as the Employees Provident Fund could invest in commercial property, and demand from opportunistic funds and foreign REITs.

At that time, the property consultancy had said that based on its subjective view, the value of Grade A office space would probably rise to some RM900 psf over the next two years.

Certain yet-to-be-completed properties in the area have already surpassed this figure at the end of last year. Glomac Tower was sold by Glomac Bhd to Kuwait Finance House (M) Bhd for RM577mil or RM1,120 psf while part of Menara Yu Neh Huat, which is located further away from the KLCC area, was sold to the same company by YNH Property Bhd for RM920mil or RM1,230 psf.

By The Star

More to be done to improve infrastructure

The success of the Kuala Lumpur City Centre (KLCC) enclave has raised the profile of Kuala Lumpur on the world map, but much still needs to be done for it to reach the status of other world-class cities such as New York, London and Singapore.

The plus features of the KLCC include the integrated nature of the development comprising the Kuala Lumpur Convention Centre, three shopping complexes (Suria KLCC, Pavilion KL and Avenue K), a number of five-star hotels, as well as food and beverage outlets.

According to Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng, world-class cities have a wide range of social amenities and facilities such as shopping, healthcare, public recreational parks, places of worship and schools.

More green lung should be provided in the KLCC area to turn the area into a green enclave.

The infrastructure includes an efficient public transportation system to encourage residents to use public transport and help alleviate traffic congestion in the city.

Tang Chee Meng

“The local authorities should adopt a multi-pronged approach to tackle the severe traffic congestion problem by improving the connectivity of the three mass transit systems - STAR, PUTRA and KL Monorail – for the commuters' benefit,” Tang added.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam said that unlike Singapore and Hong Kong, which have well maintained pedestrian walkways and underground linkages, the facilities in the KLCC area were not well maintained.

To encourage people to walk instead of driving, Kumar said, better facilities should be provided for pedestrians.

“Like other major cities, traffic congestion and parking are posing a serious problem in the inner city, especially during peak hours,” PPC International Sdn Bhd executive director Thiruselvam Arumugam said.

To overcome this, he suggested the implementation of a surcharge or pricing system to limit the number of single-occupant vehicles entering the Golden Triangle and inner city area, especially during peak hours.

Reapfield Properties Sdn Bhd president David Ong said the provision of more dedicated lanes for public transport such as buses and taxis in the area would help, along with policies to curtail passenger cars from entering certain congested roads.

Meanwhile, Zerin Properties chief executive officer Previndran Singhe said more parking facilities were needed in the city centre to support the rapid growth of the city.

“There should also be more taxis, shuttle buses and light rail transit plying the inner city routes to alleviate the severe shortage of parking around the city centre.

“In addition, more green lung should be provided in the KLCC area to turn the area into a green enclave,” he said.

By The Star

Casa Del Rio breaks ground in Malacca

Boutique hotel developer Casa del Rio (M) Sdn Bhd (CdR) jump-started its foray into Malacca last week by breaking ground for its latest project featuring a boutique hotel and serviced apartment.

Aptly dubbed Casa del Rio Melaka, which translates into “Malacca’s home by the river”, the RM85 million venture will take shape on 3.2 acres beside the city’s historic river and be part of the state’s RM320 million Malacca River beautification plan.

The project comprising a 56-room boutique hotel and 32 serviced apartments is expected to welcome guests by early November 2009.

CdR group managing director Tan Sri Syed Yusof Syed Nasir said the essence of Peranakan architecture, with “charming courtyards” as well as the beauty of the Malacca sultanate heritage, will be evident in the architectural design.

Casa del Rio Melaka will also offer alfresco dining facilities overlooking the river, a fullservice spa, fitness centre, state-of-the-art meeting rooms and an infinity-edge swimming pool.

Residents of the serviced apartments will be able to enjoy all the hotel’s facilities, in addition to resident-only amenities such as a private garden, elevated pool deck and large private balconies offering panoramic views of the city and coastline.

“The project will set Malacca as an international destination that offers world-class accommodation and residential living to domestic and international markets,” said Syed Yusof at the project’s groundbreaking ceremony recently.

The state government forecasts 6.8 million tourist arrivals in Malacca this year, a 10 per cent increase over last year’s figure.

When completed, Syed Yusof said the hotel and serviced apartments will be managed and operated by CdR.

In addition to the company’s Casa del Mar hotel in Langkawi, Syed Yusof also owns the Concorde hotels in Kuala Lumpur and Shah Alam, Concorde Inn at the KL International Airport and the 18-room Lakehouse in Cameron Highlands.

Also under his belt are speciality restaurants and entertainment chains such as Genki Sushi, Saloma Theatre Restaurant, Hard Rock Café and Planet Hollywood.

By New Straits Times (by Chris Prasad)

Penang agency to build RM100m office tower

PENANG Development Corp (PDC), the state's development arm, plans to build a RM100 million office tower in Bayan Mutiara on the island, which is set to be its flagship commercial building.

It is also in talks with Citigroup to make the US bank the anchor tenant of the 16-storey building. PDC is also wooing other Fortune 500 companies to open their offices there.

"PDC has made its presentations and submitted proposals to Citigroup, and the latter is said to be deliberating the matter at its head office in the US.

"The corporation is also eyeing other top global names to invest there," an industry source said.

Bayan Mutiara is an integrated project on 40ha of seafront land.

It is also located within the Penang Multimedia Super Corridor Cybercity.

The project will comprise high-end and affordable homes, schools, mosque and government administrative complex, including the state legislative assembly building.

The project will encompass four precincts. The state administrative complex will also house elected representatives' offices and the office of the Chief Minister.

Sources said the new office complex will take up 1.2ha. PDC intends to build and then rent the offices to software companies and other international firms.

Last June, PDC sold 0.82ha to the Inland Revenue Board to build a 16-storey corporate tower.

The Marine Police Department has bought 4ha.

The corporation, through its property arm PDC Properties Sdn Bhd, has started building landed residential properties and selling them.

It will launch its condominium project soon.

By New Straits Times (by Marina Emmanuel)

Steps to cushion US slowdown

The Government is pump-priming the economy aggressively via the 9MP

There's a saying that when America sneezes, the world catches a cold.

And the United States is about to have another big sneeze that could lead to a slowdown or even recession that ultimately would affect the rest of the world, including Malaysia.

Given the bleak scenario in the US, it would be wise for Malaysia to take some pre-emptive measures to cushion the impact.

The Sabah Development Corridor launched by Prime Minister Datuk Seri Abdullah Ahmad Badawi is expected to be a big boost to the economy.

Thankfully, the Malaysian government is cognisant of the fact that the country needs to be economically strong on the domestic front in the event of an acute and protracted recession in the US.

The rollout of a slew of projects under the Ninth Malaysia Plan (9MP), especially the various growth corridors, will support and stimulate the economy.

In fact, many economists believe the bulk of the projects, especially those related to infrastructure, will be dished out this year.

Moreover, many local companies have learnt from the Asian financial crisis of 1997 not to rely solely on local projects.

Those that survived the crisis have now expanded their businesses beyond local shores to China, Vietnam, India, and the Middle East.

A local economist said that if the US economy fell, there would be “casualties” as some countries would be more affected than the others, depending on their economic resilience.

“Some economies around the world should brace themselves for a rough and painful ride,” he said, adding that Malaysia was relatively fortunate as the country was a net exporter of oil and was buoyed by good crude palm oil prices. It has a proactive government that is pump-priming the economy aggressively via the 9MP.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said that taking into account the economic situation in the US, Malaysia's growth rate was still expected to be 4% to 6% this year.

“It's still decent, given the endless series of bad news coming from the US and other countries like Britain,” she said.

Zeti said Malaysia's economy was still on a growth path despite operating in a challenging environment. This should continue this year, as domestic demand remains strong, fuelled by strong inter-linkages with other Asian economies that were also doing well.

However, the Malaysian Institute of Economic Research (MIER) has a lower forecast of 5.4% growth for the country this year based on the assumption that the US recession would last only two quarters.

A recent MIER report said: “If the recession deepens and protracts longer than two quarters, then the forecast for Malaysian growth would have to be revised down to 4% to 5%.”

Most economists believe a recession in the US is inevitable this year.

However, many say it would be a mild and short one and that Malaysia was likely to be less impacted compared with other countries in the region because of its stronger economic resilience.

Still, not everything would be smooth sailing for Malaysia.

Inflation or rising cost of living is a major concern that the Government is grappling with, and a lot hinges on the micro and macro-policies applied by the authorities and whether the 9MP projects are implemented on time.

Another issue is the country's dependence on foreign direct investment (FDI) to spur growth. It's no big secret that in recent years Malaysia's FDIs have been stagnant or falling.

Since the Asian financial crisis, the changes in Malaysia’s FDI stock have been worrying, especially when compared with its Asian counterparts. Singapore and Vietnam have fared remarkably well in terms of FDI growth.

The falling FDIs are a distressing signal, considering that Malaysia provides attractive incentives to foreign investors.

The substantial fall in Malaysia's FDIs has to be addressed quickly by the authorities if the country wants a bigger slice of the FDIs.

By The Star (by Danny Yap)