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Monday, March 31, 2008

Rehda to work with new Selangor govt

PETALING JAYA: Property developers in Selangor have pledged their willingness to work with the state government helmed by the newly-appointed Menteri Besar Tan Sri Khalid Ibrahim, says the Real Estate and Housing Developers’ Association (Rehda) Selangor branch chairman Datuk F D Iskandar F D Mansor.

Iskandar, who believes business would go on as usual, also expects the new state government to encourage investments in the state.

“As Selangor is the most developed state, I believe the new Menteri Besar will continue to support investments and Rehda, as an NGO, will respect and work with the new state government,” he told theSun.

However, Iskandar highlighted a more pressing issue faced by developers in the state which is the shortage of construction materials, particularly cement and steel.

While welcoming the Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad’s recent call for the scrapping of price controls of essential items, Iskandar said if the move is extended to construction materials as well, it would certainly benefit the property and construction sector.

“Although steel prices are controlled at RM2,300 per tonne, an additional fee of up to RM900 still has to be paid out under the counter. Since there is a shortage of cement and steel, then we should do away with exports and allow for imports of these two materials. Let the market forces of supply and demand determine the prices,” said Iskandar. Rehda’s Selangor branch represents more than 300 developers in the state.

On the prices of properties, Iskandar noted that it has been increasing by as much as between 10% and 20% since the 2H2007. However, with the recent announcement by the Prime Minister that gas and fuel prices would be maintained, developers hope that the federal government would continue subsidising these items.

“With fuel prices rising, a hike in petrol prices locally will cause a domino effect that will be felt in all sectors. Consequently, prices are just going to go up. However, our purchasing power and disposable income are not rising in tandem with these increases,” said Iskandar. “On the developers’ end, we are facing the same issues as those faced at the national level, which is the rising cost of doing business,” he added.

Iskandar said that developers also hoped to see more improvements in the delivery system which would enhance competitiveness in bringing in foreign direct investments. Another concern which Selangor developers face since the 2H2007 is the levy imposed on them when the bumiputera quota for their development projects are not met.

“Although the national policy for bumiputera quota is 30%, some places in the state have higher quotas of easily 50% to 70%. There are certain areas that cannot meet such high quotas but can only sell 30%.

It is unfair that we are being penalised for the unresolved quota,” said Iskandar.

By theSun (by Loo Pik Kwan)

Fiabci’s new vice president

PETALING JAYA: Newly appointed Fiabci network and marketing vice president Michael Geh (pix) said he would be enhancing and building on the achievements of Fiabci Malaysia and Fiabci Asia Pacific, making it more relevant as a local professional group.

Last December, Geh who is also senior partner of Raine & Horne International, was elected by Fiabci (the French acronym for International Real Estate Federation) to the post for a two-year term ending 2010. This is the first time a Malaysian property consultant was selected for the post.

“Being chosen for this high profile position speaks volume of the standing of the country in the eyes of the international fraternity. My role is to strengthen existing ties between Malaysia and Fiabci International. I am expected to accompany the Fiabci world president when he attends
functions in the region,” said Geh.

He also hoped to bring Fiabci University to the region, especially Malaysia, as it is timely for local property and real estate professionals to make their push overseas. Fiabci University offers international graduate programmes in real estate. Fiabci is recognised as a special consultant with non-governmental status to the United Nations Economic and Social Council. It is a business club of real estate professionals in 60 countries and a federation of 100 national real estate associations representing 1.5 million professionals.

By theSun

Klang-Shah Alam corridor a future hub

The advent of big developers with sizeable and well-planned townships has transformed the area, which used to be a relatively quiet property market

Aerial view of Bandar Bukit Tinggi, Klang

The Klang-Shah Alam corridor has the potential to grow into a robust regional hub for well-sought-after residential and commercial addresses, judging by new property developments underway or planned by developers.

For the past two decades, property projects remained pretty much unchanged but the landscape is fast changing with the launch of planned community projects such as Bandar Bukit Tinggi, Setia Alam, Setia Eco Park, Aman Perdana and Bandar Botanic.

Klang has outgrown its image as an old port town and a new village in the past decade with improved infrastructure connectivity that opens up the western corridor of the Klang Valley.

Its proximity to Port Klang, one of the world’s busiest seaports, and Selangor's administrative city, Shah Alam, has been a boon to Klang.

Today, Klang is the second largest city in the country after Kuala Lumpur with a population close to 900,000 people. It is also 10 times the size of Petaling Jaya.

Shah Alam has also seen a spurt of new township developments. Its population of 600,000 is among the highest in Selangor.

The Klang-Shah Alam corridor is today one of the more exciting corridors in Malaysia and the entrance of big developers have significantly changed the property landscape.

According to WCT Land Bhd executive director Lai Yeng Fock, there was a pent-up demand for housing in the corridor, as the number of projects coming on stream had not caught up with the rising demand.

Klang, which has a population of one million, needs over 10,000 new housing units a year but now, only 5,000 to 6,000 units are being built.

Meanwhile, housing needs for Shah Alam's 600,000 people are also on the rise, especially with the improving trunk roads and expressways.

SP Setia Bhd group managing director Tan Sri Liew Kee Sin said it was a natural progression for development activities to head towards the Klang-Shah Alam corridor owing to the scarcity of land in matured suburbs.

Tan Sri Liew Kee Sin

“The advent of sophisticated highway linkages was one of the most important catalysts in opening this new frontier of development in Klang and Shah Alam.

“The completion of the SP Setia-funded NKVE-Setia Alam Link has transformed the profile of Klang and Shah Alam by shortening the travelling distance to other key urban locations,” he noted.

SP Setia is credited as one of the first developers to introduce master-planned community living in northern Klang through its Setia Alam project in 2004.

The project, with its green street concept of concealed utilities and extensive landscaping, promised a new lifestyle for home seekers.

The “green” Setia Eco Park, which showcases semi-detached homes and bungalows in an ecologically balanced environment, has added a new lifestyle living dimension into the corridor.

Mah Sing Group Bhd president Datuk Sri Leong Hoy Kum concurred that soaring property prices in Kuala Lumpur and Petaling Jaya in recent years had resulted in sub-urbanisation of Shah Alam and Klang, with developers shifting their attention to this corridor.

»Prime land suitable for development has grown increasingly scarce« DATUK SRI LEONG HOY KUM

“Prime land suitable for development has grown increasingly scarce, as the excellent trunk roads and expressways has made this corridor even more accessible,” he added.

He said the advent of big developers with their sizeable and well-planned townships had transformed the Klang-Shah Alam corridor, which used to be a relatively quiet property market until about 10 years ago.

The profile of buyers showed that the company's project Aman Perdana had benefited from increasing interest from non-Klang folks to buy properties in the corridor.

“We have been a beneficiary of this trend, as can be seen by our house buyers’ profile for Aman Perdana.

“Besides 64% buyers from Klang, we have 22% from Shah Alam, Subang Jaya, Petaling Jaya, Puchong and Sungai Buloh. The balance 14% is from other Klang Valley areas and outside Klang Valley.

“For our Kemuning Residence project, 52% is from Subang Jaya, Shah Alam and Klang; 16% from Petaling Jaya; 21% from Kuala Lumpur and 11% from outside the Klang Valley,” Leong said.

By The Star (by Angie Ng)

Attractive land price, availability the pulling factors

The cheaper land price and availability of land in the Klang-Shah Alam corridor will continue to attract developers and house buyers to the property market there.

Henry Butcher (M) Sdn Bhd property consultants said transaction prices for residential title land for bungalows in Klang was relatively lower than Shah Alam and other first-tier cities in Malaysia.

Bungalow vacant lands were transacted between RM50 and RM60 per sq ft in Teluk Pulai, Klang, and RM65 to RM80 per sq ft in Bukit Jelutong, Shah Alam.

Newer townships such as Bandar Botanic was transacted from RM70 to RM80 per sq ft and Kota Kemuning had the highest transaction price from RM80 to RM100 per sq ft.

Meanwhile, transaction prices in Setia Alam in Shah Alam was from RM80 to RM90 per sq ft.

The Glenmarie-Saujana-Subang corridor and newer areas in Petaling Jaya such as Mutiara Damansara was transacted from RM220 onwards per sq ft.

Ho Chin Soon Research Sdn Bhd managing director Ho Chin Soon said: “It is a natural progression for people to move away from Kuala Lumpur to Petaling Jaya, Subang Jaya, Shah Alam and finally, to Klang as land become more expensive and scarce.”

With population growth at 4.8% per annum in the Klang Valley, developers are hard-pressed to move to second-tiered cities.

PPC International Sdn Bhd executive director Thiruselvam Arumugam concurred that land price was relatively cheaper and the built up of the properties was bigger in Klang.

“We believe Klang will continue to develop rapidly over the next three to four years, especially in the north,” he said.

Residential projects in Klang due for completion this year include D'Anjung in Teluk Pulai, Bayuemas, Taman Selat Damai in Pandamaran, Bandar Botanic and Glenmarie Cove.

Many new townships in Klang that which were launched in several phases consist of 70% residential units in view of higher demand for houses, he said, adding that property owners in Klang are cash-rich and price cautious.

According to PPC International Sdn Bhd executive director Kamarud-zaman Saad, property owners prefer Klang to Shah Alam, thanks to the freehold status.

He said WCT Land Bhd's Bukit Tinggi township, which is freehold, had led to the opening of Jaya Jusco and hypermarkets like Tesco and Giant. This has transformed Klang into a lively town with better facilities.

The landscape in Klang had gradually changed with the development of Bandar Botanic in the south by Gamuda Bhd that had also led other developers to promote similar lifestyle concept living, he noted.

Kamarudzaman said capital appreciation in Klang averaged from 10% to 15%, with good locations reaching up to 20%.

Meanwhile, Setia Alam township by SP Setia Bhd, which occupied 4,000ha in Shah Alam, is expected to trigger more new developments in north Klang, he said.

“The Setia Alam township will have a positive impact in Klang and Shah Alam,” he said, adding that the mixed development project was expected to complete in 10 to 15 years.

Reapfield Properties Sdn Bhd president David Ong said Setia Alam was the new growth area in Klang-Shah Alam corridor.

The new residential projects in Shah Alam are Kemuning Utama, Bukit Jelutong, Alam Impian, Alam Suria, Setia Eco Park and Subang Permata.

On the property market outlook, Kamarudzaman said the current volatile stock market would lead buyers to become more cautious in buying properties.

“We expect another year of slowdown in local property market in tandem with worldwide property market,” he said.

By The Star (by Shannen Wong)

Major highways help draw buyers to second-tier cities

The well planned community development of Setia Eco Park in Shah Alam

GREATER accessibility through major highways has contributed to the rapid growth of Klang-Shah Alam corridor in the past decade.

Reapfield Properties Sdn Bhd president David Ong said four major highways – North Klang Valley Expressway (NKVE), North-South Expressway Central Link, Shapadu Highway and Federal Highway connects the second-tiered cities to city centre.

With the opening of these highways in Klang-Shah Alam corridor, new townships development was further extended with the infrastructure in the surrounding areas.

Ong said NKVE is a 35km expressway that runs between Jalan Duta in Kuala Lumpur (KL) and Bukit Raja, which is a new industrial and urban area in Klang.

“NKVE is a heavily utilised route for residents in Damasara, KL, Klang Petaling Jaya, Subang and Sungai Buloh,” he said.

Meanwhile, the North-South Expressway Central Link, better known as Expressway Lingkaran Tengah (ELITE), is a critical link that connects the north and south with an uninterrupted journey bypassing the congestion in KL, said Ong.

ELITE starts at a new interchange on the existing NKVE near Shah Alam, transverse towards the south through Batu Tiga on Federal Highway Route 2, towards the KL International Airport (KLIA) in Sepang.

It continued towards the east to connect with the existing North-South Expressway that is about 6km at the north of existing Nilai interchange.

Ong said the 63km expressway, which connects NKVE in Shah Alam to ELITE at the Nilai North interchange, was a popular route for travellers heading to KLIA and the Sepang F1 circuit.

Additionally, Shapadu Highway, or North Klang Straits Bypass Highway, is a new 17.5km dual carriageway that linked North Port to Bukit Raja and connects to NKVE, ELITE and Federal Highways Route 2.

Ong said the accessibility to North Port and West Port in Klang would enhance the growth in the area due to the huge upside potential for the two main ports.

“With the Government encouraging foreign direct investment, these ports are expected to increase activities and stir the economy,” he said.

There is also the Federal Highway Route 2, which is a 16km upgraded expressway that connects Batu Tiga in Shah Alam and Sungai Rasa in Klang, he said, adding that it has two toll plazas and connects to Federal Highway.

PPC International Sdn Bhd executive director Thiruselvam Arumugam said travellers would not mind paying the tolls for these highways along Klang-Shah Alam corridors.

Meanwhile, there are three proposed highways around Klang – the South Klang Valley Expressway, West Coast Expressway and Kemuning-Shah Alam Highway, said Ong.

However, the West Coast Expressway, which stretches from Taiping, Perak, to Banting, Selangor, and runs parallel to ELITE, is believed to have been delayed due to the high price tag of some RM3.1bil for construction, he said.

By The Star (by Shannen Wong)

Well-planned projects change landscape

The advent of big developers with their sizeable and well-planned townships has transformed the Klang-Shah Alam corridor from a sleepy hollow into a robust address.

The developers have brought new concepts, including lifestyle resort living and modern, contemporary designs, in well-planned developments.

Besides offering new standards in home design, quality and concept, they also helped to improve the existing infrastructure and amenities.

New trunk roads and highways have sprouted, making this corridor more accessible to homeowners from suburbs like Petaling Jaya and Subang Jaya.

More exciting and innovative property products, both residential and commercial, have been lined up for the Klang-Shah Alam corridor.

At SP Setia Bhd's Setia Alam, the first commercial hub, Eramas is shaping up well with prominent tenants such as banks, eateries, clinics and convenience stores.

The new modern commercial centre Setia Avenue will have a Tesco hypermarket as the anchor tenant while the Setia Alam Clubhouse will break ground soon.

“Our priority is to enhance the commercial vibrancy of Setia Alam by providing more entertainment and recreational facilities,” SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said.

Lai Yeng Fock

“The Klang community is very family-oriented and likes to stay close together, so it is seldom they will uproot to other locations.

“With its vibrant community-centric focus, Setia Alam has become an ideal township for house buyers in search of a living environment that balances the four aspects of human life – live, learn, work and play – the guiding philosophy of all SP Setia’s projects,” Liew said.

Mah Sing Group Bhd president Datuk Sri Leong Hoy Kum said developers were coming up with more appealing residential enclaves and using innovative product differentiation.

The company's 315-acre Aman Perdana in the Meru-Shah Alam growth corridor comprises some 3,000 units of mainly semi-detached homes and bungalows, supported with some shop offices.

Since its launch in 2005, a total of 1,800 units have been sold and this year, products worth RM92mil comprising mainly bungalows and shop offices have been lined up for launch.

“Our good take up is by listening to our customers – for example, they wanted more land for their homes, and we recently launched Type E bungalows with bigger land of 50ft x 80ft, and saw a 70% take up rate during the weekend launch,” Leong said.

Meanwhile, Kemuning Residence, on 21 acres in Shah Alam, is a RM127mil gated and guarded development of exclusive bungalows.

So far, 57 units of the 141-unit enclave have been launched and this year, RM80mil worth of garden bungalows will be launched.

Besides a tropical grand entrance and plenty of green spaces, there will be a playground and clubhouse complete with swimming pool and gymnasium exclusively for the residents.

WCT Land Bhd executive director Lai Yeng Fock said Klang folk were rather simple when making decision on buying their dream homes.

“The people here believe in simple practicality. Projects that offer practical designs, wide space and good access have been getting good response,” he said.

WCT Land's Bandar Bukit Tinggi has received a thumping endorsement from Klang folk, going by the strong occupancy rate of 90% for its houses and shops.

“We understand the mentality of the Klang folk and provide them with 50-ft wide roads, multiple accesses, free security and 11-ft ceiling height.

“Our buyers also appreciate our efforts to promote strong neighbourhood bonding through community events such as moon cake festival and other family activities,” Lai said.

Since its debut in 1998 as the second township development in Klang after Bandar Baru Klang, Bandar Bukit Tinggi has become one of the fastest growing in the Klang corridor with its affordable and semi-detached homes, commercial properties and vacant commercial land, as well as the presence of two hypermarkets, Tesco and Giant.

By The Star (by Angie Ng)

Villa for grand living

This house is situated on a slope and with a view of the jungle

A professional house-builder bought a piece of hill slope property because of the great views and spent 18 months constructing a six-level villa. Now he is willing to part with it.

Situated on a slope and with a view of the jungle and a pond, this grand house comes with all the amenities any home-owner could hope to own.

The property comes with 11 bathrooms and a beautiful, restful and peaceful view all around.

Gan Eng Thai has been building houses for 10 years. With his vast experience, he has been able to keep the work flow smooth, moving the various contractors along.

“As the house is built on a slope, there were a lot of geo-technical issues to iron out. But I chose to build on a slope because the different elevations and levels allowed me the opportunity to realise the full potential of the house,” says Gan.

With six levels, including a roof-top, the opportunities for the new house owner to go in and stamp his own style on all the spaces are simply tremendous. For the person who loves fitting out a house, filling out the spaces, taking into account the beautiful forest view, this should be a labour of love.

In his years of building, Gan has seen house-buyers tear down parts of a house, renovating and redoing the bathroom, kitchen cabinets, etc. This, says Gan is very wasteful, besides being costly. “Sure, everyone has their likes and dislikes, but there are certain basic things that no one would want to argue with: more space, more height and more natural light. ”

Gan has put in the basics, and done up the house only to a certain extent, so that the new house owner can have the flexibility to mould the house to his particular lifestyle. No cupboards or kitchen cabinets have been installed as “everybody has a different concept”.

Gan’s wife has taken care of the little practicalities which a house should have for day-to-day living. When the lady of the house comes back from the supermarket with the groceries, she doesn’t want the maid to be lugging shopping bags all over the living room and into the kitchen, therefore, a side door to the kitchen leading from the car porch is the answer. A pantry in the kitchen is a welcome addition.

A house this size is made for entertaining, and when the caterers come, they can use a side-gate down a staircase to the lower level to set up their workstation. This passageway also provides space for the maids and drivers of visitors to relax.

The main entrance is situated 14.1m (47ft) from the gate to give a sense of grandeur. The living room on the ground floor has a double volume ceiling; the ceiling is 8.4m (28ft) from the floor. There are two powder rooms on this floor, which also has the dining and audio visual room.

The formal dining is wide enough, but for that added luxury, it offers the option of terrace dining with the forest as a backdrop.

The house is painted in white, adding to the feeling of spaciousness. And to complement the white walls, the ground floor has pure white slabs of a composite material of glass and stone.

The AV room, which can be done up as a library, is on the ground floor. The floor is lined with Balauwood. The same type of wood is used for the four bedrooms, and the numerous rooms which can double up as nursery, recreational rooms, computer rooms, etc.

The walls that separate the AV room from the hall are laminated material. All windows are framed in powder-coated aluminium. The doors are of solid timber, “Tengkawan” wood from Kalimantan.

The master bedroom is a suite by itself, spanning 83.7m (930sq ft) with a walk-in wardrobe and attached bathroom. The occupant can relax in an open-air jacuzzi and an attached room which can be turned into a multi-purpose area.

Relax in an open-air jacuzzi

The bathrooms have dark ceramic tiles forming a strip against a beige wall.

Further up is the open-air rooftop. “The roof is made of heavy gauge steel, which can last and provide insulation against the heat and noise with 15.2cm (6in) of padding. It is also aesthetically pleasing.”

The infinity edge swimming pool offers views of the jungle

A lift, with glass walls which look out to the forest reserve, is installed at the corner of the house. The swimming pool is situated on the lower ground, which is the recreational floor. There is a rumpus room on this floor.

This area has its own kitchenette for the hungry swimmer.

Wide stairs link the floors

At the lowest level, there is even more space which can be converted into a wine-cellar. There is enough room for a billiards table, basketball post and other sports equipment.

It is a grand house, and when furnished, would be even grander. The asking price is RM8.5mil. The land area is 1,080sq m (12,000sq ft) and the built-up area is 1,224sq m (13,600sq ft).

Gan’s e-mail is

By The Star (by Annie Ooi) (Pix by Chan Tak Kong)

Evolution of housing industry

It has evolved from catering to mass market to undertaking niche projects

Gated and guarded communities have mushroomed over the past decade

HOW time flies. Before we know it, many of us, including this writer, have hit the magical age of 55 and suddenly we find ourselves at a crossroads, eager to take on new challenges.

Having been a property columnist for the past 18 years and a journalist for 33 years, it is time to pause and make a brief observation of the housing industry over the past 20 years.

There are too many things to discuss in one article, but I am glad to note that thanks to keen competition, the housing industry has evolved from merely catering to the mass market to undertaking niche developments and over the past two decades, have seen new designs and concepts introduced not only for residential but also commercial properties.

Developers, conscious of the need to fulfil the requirements of a very discerning house-buying public, have made many improvements.

This include giving quality ceramic tiles and timber strips replacing old-fashioned broken marble and parquet, double-volume ceiling height to houses and some offices, high ceilings (some 14ft high) to even link houses to give them a majestic look, and more interesting facade and interior layout.

Eco-friendly homes (like those in Mulpha's Leisure Farm Resort in Gelang Patah, Johor, whose Pinggiran Bayou Village Homes won the FIABCI Malaysia Property Award 2007 for best residential development (for low-rise category) and “back to nature” themes have become very popular, especially among the younger generation who have grown up in barrack-styled houses.

Gated and guarded communities, green street concept (underground cabling), and zero-lot concept have mushroomed over the past decade.

And in recent years, the Safe City concept where CCTV cameras and other security surveillance systems are incorporated into a development have become the trend in view of the rising crime rate.

One of the companies that embraced this concept is Brunsfield, which has teamed up with Sime Darby Property in projects such as Oasis Ara Damansara in Selangor to provide top-notch security in its developments.

Asian Pac Holdings Bhd's RM1bil KK Times Square in Kota Kinabalu also set new industry benchmarks with many features such as ventilation fans and air wells in the basement car park, many CCTV cameras, double-volume ceilings and chimneys for its ground floor shop lots.

One thing good has also come out of the last recession. The house buying public has become more discerning and, with so many new developments, can afford to pick and choose.

Gone are the days when only a few big names dominated the industry.

Today, many of these big players, especially those that have failed to deliver, are gone.

In their place sprouted a new breed of caring developers such as SP Setia, Bukit Kiara Properties, YTL Land, Gamuda Land, Mulpha Land, Sunrise, Dijaya Corp, Mah Sing, Ken Holdings, KIP, Ireka, Mitraland, Sunway City, Glomac, E&O and Perdana Parkcity, to name but a few, which have helped to raise industry standards.

They have come out with innovative ideas, vastly improved the quality of their products and tirelessly branded themselves not only for the local but international markets.

In the process of promoting their brand names, the developers have added value to their products and improved the image of the industry that was once badly hit by shoddy workmanship and abandoned projects.

The “bad boys” just cannot survive in today's demanding market.

SP Setia has spearheaded its signature town parks in all its township projects in the Klang Valley and Johor.

Under the stewardship of group managing director and chief executive officer Tan Sri Liew Kee Sin, SP Setia has grown by leaps and bounds.

Older players such as Sime UEP Properties, Hap Seng Land, Berjaya, I&P and TTDI Development are re-branding themselves.

Sime UEP, a household name since the 1960s, has been re-branded under Sime Darby Property, a regional giant.

Meanwhile, Hap Seng Land, a household name in Sabah, will be the company to watch as it spreads its wings to Peninsular Malaysia, bringing with it some 30 years of experience in property development in East Malaysia.

An important gauge of a development's success is its capital appreciation and rental yield. In this respect, I foresee the next winning UPS (unique selling point) is to have a Multimedia Super Corridor (MSC) status. It is the way to move forward.

One company that has the foresight to work towards an MSC status for its project is I-Bhd.

Its proposed i-City, Selangor's first cyber centre with MSC status in Shah Alam, is testimony of a bold private initiative that will bring enormous benefits to its investors.

With rapid modernisation and transformation of the working and living environment, an MSC project will particularly appeal to foreign companies who expect world-class physical and IT infrastructure. Hence offices in i-City will have a true plug and play experience.

Companies, especially foreign start ups, can save time and money from hiring staff to support their infrastructure, and there will be no long waiting period to get services such as telephone numbers and broadband.

I-Bhd is offering an advanced ICT infrastructure that is at par with developed countries.

Upon completion in five years, i-City will create 50,000 jobs for knowledge workers.

By The Star (by S.C.Cheah)

Al-Hadharah Boustead REIT in for more upside

Analysts are bullish of the oil palm plantation REIT as the future of palm oil remains bright due to its diverse applications

Despite uncertainties in the US economy, industry experts are bullish on plantation as palm oil supply is still tight and expect CPO prices to trade above RM2,500 per tonne – AFP

MOST analysts are upbeat on Al-Hadharah Boustead Real Estate Investment Trust (REIT), saying there should be further upside to the stock's performance.

A local analyst said while market sentiment remained weak, the Al-Hadharah Boustead REIT could continue to perform well in the medium to long-term.

“Our confidence in the REIT stems from the prevailing positive trend in the global commodities markets and buoyant crude palm oil (CPO) prices,” he told StarBiz.

Last Friday, the CPO price closed at RM3,543 per tonne and commodity price is expected toremain firm in the near-term.

Currently, Al-Hadharah Boustead REIT was the only oil palm plantation REIT listed on Bursa Malaysia and was shariah-compliant.

The analyst said: “The REIT manager plans to grow its asset base and expects to acquire at least two more plantations before year-end to add to its stable of eight palm oil estates and two palm oil mills in Peninsular Malaysia.”

“The new plantations should translate into better performance of the trust,” he added.

At the end of last year, Al-Hadharah Boustead REIT had a market capitalisation of RM665mil covering 12,000ha, making it arguably the second largest REIT listed on the exchange at that time.

Another local analyst said the REIT had a dividend policy that took account of performance based on profit sharing and rental income from plantations.

For financial year ended Dec 31, 2007, Al-Hadharah Boustead REIT registered RM55.2mil in revenue and RM49.8mil in net profit.

Due to the phenomenal rise in CPO prices over the last twelve months, the analyst said the trust had outperformed its forecast fixed dividend distribution of 7.38 sen by 48% in its fiscal year ended 2007.

“The performance-based dividend is the first of its kind in the domestic REIT market. In total, 10.91 sen is distributed to unit holders in its first fiscal year,” said the analyst.

She said the strong performance of the trust had attracted many local and foreign investors since the REIT's listing on Feb 8, 2007.

Boustead REIT Managers chairman Tan Sri Lodin Wok Kamaruddin said the timely listing of the trust on Bursa Malaysia and significant progress in CPO prices kept the REIT ahead of the pack in the local REIT market.

Tan Sri Lodin Wok Kamaruddin

Lodin said: “We are exceptionally pleased with the performance of the REIT, which can be directly attributed to soaring CPO prices”.

He said the management was of the opinion that further upside to the REIT's performance, including share price performance, was conceivable.

Most brokers are also positive on the REIT's performance, going forward.

A broker said stocks with exposure to oil palm plantations and oil and gas sectors were deemed to be more defensive in nature as global demand for such commodities remained strong.

“Since the REIT is a plantation-based stock that commands good demand, we are optimistic of its performance, especially if the REIT managers can expand its asset base to capitalise on the buoyant times of the sector,” he said.

Despite uncertainties in the US economy, industry experts are bullish on plantations as palm oil supply is still tight and CPO prices are expected to trade above RM2,500 per tonne.

“I'm sure at current CPO prices, they aren't complaining,” the broker said.

Palm oil futures (FCPO) prices have doubled in the past year, hitting a record high of RM4,486 per tonne on March 4.

A Singapore-based economist said demand for palm oil was expected to grow as the reduction in soy oil production in recent years had resulted in an increase in global demand for palm oil, especially from industrialised countries.

“We are seeing greater interest and regulatory mandates imposed on developed countries to use biofuel and biodiesel as an alternative form of energy due to environmental concerns and escalating fossil fuel prices,” she said.

She added that the future of palm oil remains bright due to its diverse applications.

Year-to-date, Al-Hadharah Boustead REIT share price reached a high of RM1.60 (Feb 5) and a low of RM1.39 (Jan 25) before closing at RM1.40 last Friday.

By The Star (by Danny Yap)

Mission to boost halal industry

MALAYSIA External Trade Development Corp (Matrade) will take part in several world-class exhibitions to further globalise Malaysian halal industry, particularly among 1.8 billion Muslims worldwide.

Specialised missions overseas are also being organised to promote the Malaysia International Halal Showcase (Mihas) further, Matrade products and services director Wan Norma Wan Daud said.

The global market value for food products is estimated at US$1.3 trillion (RM4.2 billion) per year, with the halal sector worth some US$150 billion (RM480 billion).

Malaysia's halal exports to member countries of the Organisation of Islamic Conference in 2006 totalled RM2.66 billion.

This accounted for 23 per cent of the country's exports in processed foods, beverages, essential oils, cosmetics, perfumery and toiletries and pharmaceuticals.

Wan Norma said Matrade wants to increase awareness that halal products are beyond meat and beverages, besides making Malaysia's domestic sector more visible internationally.

She said last year, the trade body brought along many Malaysian companies to participate in trade fairs in Iran, Turkey, South Africa and China.

"This year, we are planning to participate in 16 trade fairs on food alone, including in the UK and France.

"We have started our programme with the Gulf Food fair in Dubai in early March, bringing along 40 local firms there," Wan Norma said in a recent interview in Kuala Lumpur.

By New Straits Times (by Zuraimi Abdullah)