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Tuesday, July 22, 2008

Asiatic upbeat on luxury homes

KULAI: Asiatic Land Development Sdn Bhd sees demand for high-end houses in the Senai-Kulai growth corridor is expected to rise in the coming years.

Alex Phang (left ) and Asiatic vice-president Habibullah Kong after the launch

Executive vice president Alex Phang said developers with projects in the corridor should take the opportunity and cater to such demand.

Among the new developments coming up in the area are the Airport City, MSC Cyberport City, Senai Multimodal Terminal Hub and Skudai Knowledge Centre.

“This augurs well for the company as our on-going Asiatic Indahpura Kulaijaya township is strategically located in the growth corridor,” he said at the launch of 82 semi-detached houses at the Lakeview Residency Precinct 33A by Kulai MP Datuk Seri Ong Ka Ting on Sunday.

The township covers 2,832.8ha and, to date, 404.87ha have been developed.

The 20 single-storey semi-detached houses are priced from RM318,800 each and the double-storey semi-detached houses from RM470,822.

Phang said the company expected to generate RM40mil in gross development value from the houses, which would be completed in 2010.

The Senai-Kulai corridor is part of Iskandar Malaysia which focuses on the manufacturing sector and related activities like electronics and electrical, high-value food processing and agro-based processing, bio-tech, aviation-related downstream industries and engineering based industries.

Demand for houses would come from executives, senior management staff, local and foreign investors working or having investment interest in the Senai-Kulai area, Phang said, adding: “We are also looking at upgraders from Johor Baru district, Malaysian professionals working in Singapore and Singaporeans.”

Pricing would be the main factor attracting buyers from Johor Baru and Singapore, he said, as a similar house would cost double in Johor Baru and even more in the republic.

Asiatic Land is a wholly owned subsidiary of Asiatic Development Bhd and a member of the Genting group.

By The Star (by Zazali Musa)

Developer counts on Johor land for growth

JOHOR BARU: Tebrau Teguh Bhd says its land bank within the Tebrau-Plentong river basin development augurs well for its future growth.

Executive vice-chairman Johar Salim Yahaya said the company had a total 437.47ha and 12km water frontage.

Johar Salim Yahaya (left) and Mohd Zafaruddin Razali with a model of the shop offices at Puteri Point Commercial Park in Permas Jaya

He said 56.06ha were currently being developed with low and high-density apartment blocks, shop offices and a commercial complex.

“Our land bank is strategically located in the main growth nodes of Iskandar Malaysia,” Johar told StarBiz recently at the launch of shop offices at its Puteri Point Commercial Park at Permas Jaya near here.

Johar said the 62 three-storey shop offices were priced from RM456,000 and expected to be completed in 2010 with gross development value of RM37mil.

He said the company was currently talking to a supermarket operator to set up a standalone supermarket in the 4.856ha commercial park.

Head of property division Mohd Zafaruddin Razali said growth prospects for the supermarket was promising as there was an estimated population of 80,000 within a 1km radius.

He said Tebrau Teguh planned next to develop 184.69ha with a 1.5km river frontage just a stone’s throw from the commercial park.

“This is the last piece of land for development in the eastern part of Johor Baru with river frontage,” he said.

By The Star - StarBiz - (by Zazali Musa)

ASM Invt in talks on REIT with developers

ASM Investment Services Bhd, the asset management arm of Amanah Saham Mara Bhd, is in talks with two property developers on setting up a real estate investment trust (REIT).

The company may manage the property trust, which is expected to be launched by the second quarter of next year.

This is part of its plans to double the size of funds under its management to RM1 billion in two years from about RM500 million at present.

ASM Investment is also in the midst of tying up with a foreign party to offer exchange-traded funds (ETFs) by the third quarter of next year.

Chief executive officer Nik Mohamed Zaki Nik Yusoff said he hopes corporate product activities will command half of ASM Investment's fund size by 2010.

NIK MOHAMED: Firm hopes to attract larger investment with more corporate products

Currently, retail products make up 80 per cent of its fund size, while corporate products make up the rest.

"By having more corporate products, we will be able to attract larger investment, (hence) the reason we are interested to offer a REIT and ETF next year," he said in Kuala Lumpur.

Yesterday, ASM Investment launched its 17th investment fund called the ASM Syariah Dividend Fund which has a fund size of 500 million 25-sen units. A minimum of RM100 is required for the investment in the fund.

Despite the weak market, Nik Mohamed is optimistic that the fund will be fully taken up within six months.

"Yes, people are conservative to invest due to the uncertainty in the market today. But investors realise that this is in fact a good time to invest based on the low price offerings in the stock market," he said.

Furthermore, he added that a dividend fund is suitable for conservative investors like pensioners since it is low-risk and provides a consistent stream of returns.

A wholly-owned subsidiary of Amanah Saham Mara Bhd, ASM Investment also has the licence to promote and distribute third-party funds.

By New Straits Times (by Zurinna Raja Adam)

REITs an alternative to other stocks

PETALING JAYA: As large numbers of investors exit from stocks and shares of companies, high yielding real estate investment trusts (REITs) are a viable alternative.

Although REITs are equities in the sense that they are also entities listed on Bursa Malaysia, “downside is limited for these assets,” said an investment officer at Meridian Asset Management Sdn Bhd.

There are very few alternative asset classes in this country in which savers would be willing to place a large part of their savings. Generally, for the average saver, the few choices are shares, property or cash.

The edge that REITs have over real property is that in the former, investors would be buying them below their net asset values (NAV) whereas buyers would have to pay market prices for real property.

The NAV of Quill Capita Trust, for instance, was reported as RM1.20 per unit earlier this month. The REIT closed at RM1 yesterday.

In addition to this discount to its NAV, Quill Capital offers a yield of about 8.5% after its price has almost halved from a high of RM1.90 last year.

While there were concerns that property prices could decline as economic growth slows in the second half of the year, the discount in Quill Capita's NAV was defensive while replacement cost for its properties had increased, the Meridian officer said.

As a result of the much higher costs of cement, steel and other building materials, the construction cost of commercial properties has sharply increased. Quill Capita owns a range of commercial properties that comprise office, retail and technology park buildings.

The current barriers to growth would be, ironically, its high yield of 8.5%, which means it's difficult to identify and purchase properties that have a higher yield than the REIT. It would be difficult to find properties that are yield accretive for the trust.

High interest rates would also erode its ability to expand with borrowed funds.

It is partly for this reason that REITs in Singapore have also fallen in price where they are yielding about 7% against a lower benchmark yield in government securities.

Expansion by REITs may have to wait until their prices move back up.

“It would have to be money that can be kept in a REIT for a two-year time frame,” the officer said, adding that during that time, the investor would receive a good yield.

By The Star

Bank Simpanan banks on personal, housing loans

BANK Simpanan Nasional (BSN) expects personal and housing loans to drive growth this year as it braces itself for a possible rise in bad loans.

Personal loans are due to rise 21 per cent to RM4.6 billion this year from RM3.8 billion last year, chairman Datuk Seri Abdul Azim Mohd Zabidi said in an interview recently.

"BSN is now a different 'animal' after a transformation exercise." Datuk Seri Abdul Azim Mohd Zabidi Chairman Bank Simpanan Nasional

The bank is on track to achieving its target as it has given out some RM4.4 billion in personal loans as at end-June this year.

Housing loans, which form the bulk of its loan portfolio, are due to expand by another RM400 million or 15 per cent to a cumulative RM3.1 billion by year-end.

Mortgages totalled RM2.7 billion as at June 30 2008, which accounts for 37 per cent of its total.

Its customers are set to continue their preference for Islamic loans. Its Islamic assets make up 43 per cent of its loan book of RM3.2 billion at the end of June this year.

"Islamic banking has become more popular in the current situation because people think as the interest rates go up they prefer to lock in, according to the Islamic banking rates," Azim said.

The national savings bank is a statutory body, which means that its products are limited. It is not able to extend trade lines, corporate loans or overdrafts.

It has also started to give out car loans again to civil servants, mostly teachers, after terminating the service about five years ago due to "huge problems".

Azim said BSN is now a different "animal" after its transformation exercise, which has helped improve operations, service and products.

Apart from being equipped with mobile banking and weekend banking facilities, going electronic has also helped the bank to improve its efficiency and traceability of loans.

The bank's gross non-performing loans level is at nine per cent compared with six per cent for the industry. Azim expects BSN to face rising numbers although the bank's current level is still within reach of the industry average.

Malaysians are facing higher food prices as well as a higher petrol price after a 41 per cent hike in June. But BSN is ready to help customers.

"For instance, we may have to step up the repayment scheme in the case of housing loans, to reduce the monthly repayment amounts by half," Abdul Azim said.

The bank has a special monitoring unit for NPLs and delinquent accounts.

"Our advice to borrowers is once your disposable income has shrunk, you need to come back to the bank and we can help to restructure your loan, by increasing the tenure of the loan until good times come round again. Don't wait till the loan becomes a NPL which makes it difficult to justify helping you, as we have to adhere to Bank Negara's strict guidelines."

Microfinancing is still very much in the books, said Abdul Azim and a scheme was introduced last year.

"About RM800 million was disbursed under the first microcredit scheme was introduced, NPLs was high but we slowly brought them down and managed to grow our assets from housing which helped to cushion the NPLs."

Although it was one of the three financial institutions identified under the previous budget for the distribution of microfinance apart from Bank Rakyat and Agro Bank, BSN's market share is small as it prefers a prudent and more conservative approach.

As at June 30, it disbursed RM21.3 million of which 69 per cent was for the retail sector, followed by services at 23 per cent and manufacturing eight per cent.

Under the government's Amal Jariah project to rebuild houses for the hardcore poor, BSN, one of the two financial institutions tasked with the project, has disbursed RM8.8 million out of RM25 million.

Some 1,283 houses have been completed with work in progress on 423 houses.

By New Straits Times (by Rupa Damodaran)

Gamuda, IJM may be 'ideal' takeover targets: Macquarie

GAMUDA Bhd and IJM Corp, Malaysia’s second- and third-biggest builders, may be perfect takeover targets for Middle East companies seeking expertise for Gulf development projects, Macquarie Research said.

The shares of the two companies are cheaper than regional counterparts, and most of their stock is owned by shareholders without significant stakes, making an acquisition easier, Sunaina Dhanuka, a Kuala Lumpur-based analyst at Macquarie, wrote in a report dated yesterday.

“Companies like Gamuda and IJM could be ideal targets,” said Dhanuka, who has an “outperform” rating on both stocks. “Few Middle Eastern companies have the skills required to undertake large infrastructure projects. Gamuda’s skills are likely to be the most sought after.”

Persian Gulf investors are spending US$2.4 trillion on local construction projects, according to Dubai-based research company Proleads. Shares of Gamuda and IJM, which have built tunnels, roads and railways across Asia, have tumbled this year on concern growth is slowing at home, and a newspaper on July 20 reported a possible bid for Gamuda by a Middle East fund.

Shares of Gamuda, down 44 per cent this year, today rose 3.5 per cent to RM2.68 at 10.24 am in Kuala Lumpur, giving the company a market value of RM5.4 billion. IJM fell 2.9 per cent to RM5, extending this year’s drop to 42 per cent and cutting its market value to RM4.3 billion.

Gamuda’s largest shareholder, the Malaysian royal family in the state of Perak, supports the takeover plans by a Middle East fund, according to the paper, which didn’t name the possible buyer. The acquisition of the royal family’s 7.5 per cent stake is crucial to any takeover, the newspaper said.

Gamuda stock is trading at 18 times earnings, compared with an average of 22 among 20 heavy construction companies in Asia, according to data compiled by Bloomberg. IJM is trading at 11 times estimated earnings.

By Bloomberg

MRCB to buy land in Penang

MALAYSIAN Resources Corporation Bhd (MRCB) plans to acquire a freehold land in Penang for RM26 million.

MRCB entered into a sales and purchase agreement with MBSB Development yesterday to purchase the beach-front land measuring 13,533 sq metres.

The land, located near Bayview Hotel and opposite to Ferringhi Villa, will be used by MRCB to develop high-end apartments.

By New Straits Times