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Wednesday, March 12, 2008

Foreign investors may wait and see

PETALING JAYA: Foreign investors may take a wait and see approach following the dismal performance of the ruling coalition Barisan Nasional in the 12th general election, until the state and federal governments are well established, said local property consultants. In the polls, Selangor, Penang, Kedah and Perak fell to the opposition.

However, they said investments in the property sector and in other sectors would improve in the long run if there are signs of better corporate governance and transparency in doing business here.

Zerin Properties CEO Previndran Singhe expects an overall positive impact as real estate is a long-term investment.

"The outcome of the elections proved that the country is democratic and its citizens, politically matured. I do not foresee any negative affect on foreign investments, as investors will notice that
Malaysia is democratic and practises good corporate governance," he said.

“The public should be made to understand that with a simple majority, the federal government can continue to implement its policies and amend legislations, except the constitution.” However, Previndran added that certain projects could be affected in terms of timing, as they may require state approvals.

City Valuers & Consultants Sdn Bhd general manager CY Lim also expects the election results to have a general positive impact on the property sector. He said foreign investments would continue to remain positive, as investors would expect a more transparent administration.

“We also hope that the new state governments will clean up red tape and delays at the land office in Selangor,” said Lim.

Real Estate and Housing Developers Association (Rehda) president Ng Seing Liong said the dip in the Kuala Lumpur Composite Index (KLCI) on Monday was inevitable as people were shocked at the unexpected outcome of the election. The KLCI took a dive to close 9.55% or 123.11 points lower, to 1,173.22 on Monday.

“We do not expect much changes in policies as the federal government is intact but we foresee that whatever changes there may be, would be for the better,” said Ng.

He hopes that Selangor, now under a coalition led by Parti Keadilan Rakyat (PKR), will be more proactive in creating a conducive business environment including implementing development-friendly policies.

"There will be heightened expectations on both incumbents and newcomers to improve the nation's competitiveness by enhancing the delivery system and efficiency, and the efforts will benefit the economy and image of Malaysia as an investment destination for foreign investors," said Ng.

He added that the local governments should not forget their social responsibility and that building affordable houses for the hardcore poor irrespective of race is essential.

Commenting on whether the economic development corridors such as the Northern Corridor Economic Region (NCER) would be affected, Ng said that while the development corridors may be temporarily affected, he foresees medium and long-term positive effect.

By theSun (by Rosalynn Poh)

Guocoland: KFH option on Singapore apartments lapses

PETALING JAYA: Kuwait Finance House (M) Bhd (KFH) is believed to have decided not to exercise the option on 97 apartments at the 210-unit Goodwood Residence development in downtown Singapore, given the softening in the city-state's private residential property market.

The apartments were supposed to be sold to a fund managed by KFH for US$818.4mil, or at S$3,000 per sq ft.

Goodwood Residence, developed by Guocoland Ltd, is a premier residential development on a 24,845-sq-m freehold plot fronting Goodwood Hill.

A Guocoland statement issued on Monday said the options were not exercised and had lapsed.

“Both parties are presently in discussions, with a view to granting fresh options for units in the development,” it said, adding that the private residential property market in Singapore was currently cautious.

KFH did not respond to StarBiz's queries.

Meanwhile, industry observers said Singapore's property market had shown signs of softening and take-up rates had slowed since January as a result of the US subprime market woes.

According to Abbey Woods Sdn Bhd chairman and managing director Datuk Wong Choon Kee, the market had seen substantial price appreciation in the past one year, with a new price benchmark of more than S$4,000 per sq ft set by some of the recently launched luxury residential projects.

SC Global Developments' Ardmore Apartments, launched in the last quarter of 2007, were sold at an average price of S$4,400 per sq ft while the company's The Marq on Paterson Hill fetched S$5,100 per sq ft.

Wong said Singapore's luxury apartment market was well supported by good fundamentals and the limited supply would continue to drive up prices in prime districts.

“Singapore is seen as the new Switzerland, with stricter secrecy laws making it an ideal investment destination for high net worth individuals.

“Niche projects in Sentosa Cove are favoured by buyers and developers. Going forward, prices of commercial and residential properties in prime locations will remain high although sales volume will, at best, be at slightly lower levels,” Wong said.

KFH is also an active participant in the Kuala Lumpur property market, especially around KL City Centre.

The Islamic bank is focusing on the super high-end residential and other investment grade commercial properties with potential for capital appreciation.

In January, KFH offered to buy 50% of the Menara YNH tower block for a whopping RM920mil, which translates into RM1,258 per sq ft – one of the highest prices among recent property transactions in Kuala Lumpur.

Last August, KFH, together with Khazanah Nasional Bhd and Jumeirah Capital, were awarded a 99-year leasehold concession to develop the 624-acre Cultural Cluster in Iskandar Development Region.

By The Star (by Angie Ng)

Lee to quit as Country Heights MD

TAN SRI Lee Kim Yew said he will quit his post as group managing director of Country Heights Holdings Bhd, but denied that he was selling his shares in the property company.

"That is not true. I'm not leaving. I'm not selling off my shares. In fact, I have been accumulating shares of Country Heights," he told Business Times in a telephone interview yesterday.

Lee, who founded Country Heights, was responding to a recent news report that said he may relinquish his executive role in the group following an internal restructuring exercise that is under way.

The report had said that Lee planned to concentrate on running his privately-held and profitable companies involved in property development and oil palm plantations.

"My shareholding is around 46 per cent and I'm still a board member. There would be a change of management, a change for the better," he said.

Lee said that in the interest of corporate governance, it was better to leave the daily operations of Country Heights to professionals.

"I will leave it to the new team to do what is best for Country Heights. As the biggest shareholder, I'm optimistic of their capability," he said.

Lee added that Country Heights' businesses will be re-categorised into hospitality, development and property, and the three divisions will have their respective chief executive officers reporting to the group managing director.

Country Heights has hired recruitment firm Korn Ferry to help it find a group managing director.

Analysts were not surprised that Lee is relinquishing the daily operations to professionals to concentrate on his privately-held companies.

"Country Heights has slipped off the radar screens of many investors for a long time. If you exclude the one-off gain from the sale of its shopping centre last year, you can see that the group is not making money," an analyst with a foreign research house said.

Country Heights has seen profits decline from RM12.44 million in 2003 to RM10.87 million in 2004 and RM6.66 million in 2005.

It fell into the red in 2006 with a net loss of RM32.69 million.

Last year, it posted an unaudited net profit of RM107.94 million, thanks to an estimated gain of RM102 million from the sale of the Mines Shopping Fair to Singapore's CapitaLand Ltd for RM432 million cash.

By New Straits Times (Business Times)

Quill Capita gets 'outperform' rating

ALLIANCE Research Sdn Bhd initiated coverage of Quill Capita Trust (QCT) with an "outperform" rating, saying it has a defensive blue-chip tenancy profile and a strong parent in CapitaLand Ltd.

"With its tenants locked in for a long term on master lease agreements with step up agreements, the real estate investment trust (REIT) provides stable earnings with mild growth even without acquisitions," the local research firm said in a report yesterday.

"QCT management has proactively sought ways to improve asset quality and improve rental yield with some of its tenants, providing investors with further upsides for the future," it added.

Alliance Research said the strong multinational corporation presence in QCT tenancy profiles, with the likes of DHL, IBM, HSBC, BMW and Technip as its anchors, proves its earnings quality.

In terms of value, these key tenants occupy 84 per cent of the total property investment value.

Alliance Research said the upside to QCT will come from aggressive acquisitions backed by its low gearing position and low financing costs.

"With a strong pipeline of office-related commercial properties, we believe there is room for yields to improve further amid its future acquisitions," it said, setting a target price of RM1.50 on the REIT.

By New Straits Times