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Tuesday, July 29, 2008

GCorp plans niche residential project in KL

KUALA LUMPUR: General Corp Bhd (GCorp) plans to acquire a small piece of land in the Klang Valley this year for a proposed niche residential property project, says executive director Datuk Marco Low.

The company wanted to focus on small and luxury residential projects because they were in demand, he said, but declined to provide more details on the proposed land acquisition.

“However, for the broader property market, investors are more cautious due to the current economic conditions,” Low said after the company AGM yesterday. Executive director Michael Cheong said the strategy to focus on higher-end properties was necessary to contain capital expenditure, especially due to soaring building material prices.

He said the Malaysia My Second Home programme had boosted demand for high-end properties, especially from foreign buyers. GCorp is developing Panorama, a 223-unit freehold luxury condominium project at Persiaran Hampshire, close to the Kuala Lumpur City Centre.

Low said Panorama was scheduled for completion by end-2010 and the total gross development value (GDV) was about RM300mil. About 90% of the units had been sold since it was launched in April, he added.

He said GCorp was building 25 bungalows at Taman Esplanad, Bukit Jalil, with a GDV of RM40mil and, so far, 50% of the units had been sold. The company had also been busy in Singapore with two projects, Low added. Its subsidiary, Low Keng Huat (S) Ltd, is involved in the S$346mil Hard Rock Hotel at the integrated resort at Sentosa and a S$146mil job to renovate the Meritus Mandarin Hotel along Orchard Road.

“Our development projects in Singapore are contributing the bulk of our profit this and next year,” he said.

By The Star

Developer General Corp on track to maintain growth

PROPERTY developer General Corp Bhd expects to maintain the growth it enjoyed last year, bolstered by its developments in Singapore.

The company has two contracts in Singapore worth a combined S$492 million (RM1.17 billion).

The group registered net profit of RM41.3 million for the financial year ended January 31 2008, a nine per cent jump from the RM37.8 million it made the year before.

General Corp's developments in Singapore contributed 46 per cent to revenue last year.

The group recorded RM337.6 million in revenue last year.

The group's executive director Datuk Marco Low Peng Kiat said the company will not be aggressive in executing its growth plans this year, preferring to focus on completing its existing projects.

LOW: We are looking for more of pockets of land for niche development

He said the stance is in light of the current political and economic uncertainties in the country.

This does not stop the company from growing its land bank though, as it looks to grow its number of properties in the Klang Valley area.

"We are not looking for big acquisitions, more of pockets of land for niche development," Low said.

On the impact of rising raw material prices like steel and cement, he said the group has recorded a 10 per cent increase in cost due to the phenomenon.

Low said he expects a softening in demand for the property market this year especially with the uncertainty in the political scenario.

"We are fortunate that we are involved in niche developments rather than large scale developments like townships," executive director Michael Cheong Chee Leng said.

He said larger scale projects would be the ones most hit by the price increases.

By New Straits Times (by Presenna Nambiar)

Mutiara Goodyear and Kajang Heights team up

PETALING JAYA: Mutiara Goodyear Development Bhd is teaming up with Kajang Heights Development Sdn Bhd to undertake a property project with a gross development value of RM430mil.

Under the agreement signed yesterday, Mutiara unit Regal Form Sdn Bhd would build mixed commercial and residential properties on Kajang Heights’ 27.6ha site in Kajang, of which 21.5ha would be for houses and the remaining 6.1ha for shoplots.

Mutiara chief executive offer Kee Cheng Teik said in a statement the joint venture would allow both parties to combine their resources and expertise to add value to the proposed development. The completion date for project was five years.

Under the agreement, Kajang Heights would be entitled to RM50mil or 22% of the GDV, whichever was higher, from the project with initial payment of RM6mil. Its entitlement could also be satisfied via unsold units in the project based on the launch price.

By The Star

Mutiara's RM430m project in Kajang

PROPERTY developer Mutiara Good-year Development Bhd will be developing mixed commercial and residential properties in Kajang with a gross development value (GDV) of RM430 million.

Mutiara, through its wholly-owned unit, entered into a joint-venture agreement with Kajang Heights Development Sdn Bhd yesterday to develop the latter's 27.77ha (68.58 acres) land, it told Bursa Malaysia yesterday.

"Under the agreement, Kajang Heights Development is entitled to RM50 million, or 22 per cent, of GDV from the project with an initial payment of RM6 million," it said.

By New Straits Times

IJM calls off Sabah condo, hotel plan

IJM Corp Bhd's property unit will not develop its earlier planned condominium and boutique hotel in Kota Kinabalu, Sabah.

"IJM Properties Sdn Bhd and Suria Capital Holdings have mutually agreed not to proceed with the joint venture for the development of a 16-storey condominium and 11-storey boutique hotel," it told Bursa Malaysia yesterday.

The developments were to be housed under Zone 1 within the port area at Jalan Tanjung Lipat, Kota Kinabalu, which is being developed into a tourism-related mixed development known as the Jesselton Waterfront Project.

By New Straits Times

Phase 2 of Mines park secures sales before launch

COUNTRY Heights Holdings Bhd's second phase of Mines Waterfront Business Park has already secured sales and received enquiries from potential buyers locally and abroad, even before its launch.

Project developer, Mines Waterfront Business Park Sdn Bhd (MWBP), is expected to start the construction within the next six months.

MWBP sales and marketing head Vincent Chew said the second phase of the project, which is an extension of the current five blocks of the property, would be launched in one to two months' time.

"The yet-to-be launched Phase 2 of Mines Waterfront Business Park has already secured sales from purchasers who have heard about this sure-win investment through word-of-mouth.

"There are some enquiries from foreign and local parties who are interested to purchase en-bloc with a net lettable area of a little over 66,000 sq ft," he said in a statement.

Chew said the first phase of the project is 98 per cent tenanted with a net lettable area of 246,000 sq ft. Among the tenants are Astro, EMI, Hitachi and Mynic & Sumitomo.

The second phase comprises two blocks - Prairie and Bay - with a view of 60ha lake and 18-hole golf course and country homes.

Prairie is a 14-storey commercial block with a net lettable area of 66,000 sq ft and Bay is a 19-storey building with a net lettable area of about 106,000 sq ft.

Chew also said that it is timely for purchasers to buy the property now because if the costs of building materials keep rising, future property launches would inevitably be more expensive.

"In this scenario, property prices in general are likely to escalate soon and it is thus, timely to buy now before developers increase their prices," he said.

He said soaring material prices would result in lower supply of commercial properties as developers are more cautious in launching new projects but demand will continue to grow.

"The company (MWBP) has been closely monitoring the increase in building material prices over the past year and fortunately for us, foundation works as well as a portion of the super-structure have already been completed," he added.

By New Straits Times (by Hamisah Hamid)

Lafarge raises cement retail price

PETALING JAYA: Lafarge Malayan Cement Bhd, the country’s largest cement producer, has increased the recommended retail prices for its bagged cement products by RM1 per 50kg bag or RM20 per tonne effective Aug 1. The price increase will apply until year-end. (see table)

Lafarge’s latest move was seen by industry observers as setting the benchmark for local cement players to increase their prices “anytime” soon.

President and chief executive officer Bi Yong Chungunco told StarBiz that the company had to adjust its cement selling prices to alleviate some of the major cost increases.

Bi Yong Chungunco

The cement industry continues to face more increases in its cost of production, particularly for coal and fuel since December 2006 to June 2008.

There has been no adjustment in local cement prices since 1995. In December 2006, the Government increased the cement price by 9% but during the same period, the sector was facing cost increase of over 40%.

Following the liberalisation of the local sector last month, cement prices had increased by an average 17% to “help defray some of the cost increases that the industry has been absorbing since 1995,” Bi Yong said.

Despite the price hike in cement, diesel price shot up even higher, by 63%, while electricity cost rose 26% effective early July.

Bi Yong said: “The higher electricity tariff has an immediate impact on Lafarge’s cost of producing cement and the increase in diesel price directly impacted our inbound and outbound transportation costs.

“This also indirectly affects our other costs including overheads, contract works and capital expenditure.”

Based on the latest cement price increase effective next month, Bi Yong said cement price would have increased only three times in the past 13 years which is a total of 34%.

“This is an average of about 2.6% per annum which is much lower than the annual inflation rate while other costs have risen much higher in recent years,” she added.

Meanwhile, there was consensus that cement prices next year would depend on the prices of vital raw materials that are expected to rise in tandem with the commodity prices.

The current local cement prices range from RM250 to RM280 per tonne.

A spokesman of a major local cement group told StarBiz yesterday that coal prices had increased three-fold to US$120 this year from US$40 five years ago while cement prices increased merely 10% in the 10 years between 1995 and 2006.

“We will absorb additional costs but there are limits to how much we can absorb. The rest we need to pass on to consumers,” he said.

He said international cement prices were 5% higher than local prices, excluding logistic and storage costs.

The recent hikes in fuel price and electricity tariff were also to be blamed for squeezing manufacturers’ operating margins, he added.

Meanwhile, Cement and Concrete Association of Malaysia executive director Grace Okuda said the 10% import duty imposed on non-Asean countries was a fair measure for all parties, including builders.

She also said Malaysian manufacturers had excess supply and there was no shortage of cement at this moment.

An analyst with OSK Research has a negative outlook on the construction industry for the second half of this year. He said construction activities had slowed down partly due to economic uncertainties and inflation.

The price of cement, an important component of concrete, jumped 22% after the ceiling price was lifted on June 5.

Coal, fuel and electricity make up more than 50% of the total raw material costs for cement products.

By The Star - StarBiz - (by Law Kai Chow)

Quill sees long-term gains in assets tenanted by blue-chip firms

PETALING JAYA: Commercial real estate investment trust Quill Capita Trust (QCT) believes that quality commercial assets tenanted by blue-chip companies not only offer a stable income stream but will also generate sustainable long-term total returns on investment despite the challenging economic climate.

Chief executive officer Chan Say Yeong said blue-chip companies usually tenanted QCT's assets on a long-term basis with step-up rental rates.

“In keeping up with the quality blue-chip tenants, we are focused on continuously improving building and tenant relations. These provide QCT with organic rental growth,” he told StarBiz yesterday.

QCT recently announced a 140.4% increase in revenue to RM13.7mil for the second quarter ended June 30 from RM5.7mil recorded in the previous corresponding quarter.

Meanwhile, net profit jumped 81.1% in the quarter to RM6.7mil from RM3.7mil previously.

Earnings per share rose to 1.73 sen from 1.54 sen.

The company attributed the better results to full revenue and income contribution from recent acquisitions, namely Wisma Technip and commercial units and car park of Plaza Mont Kiara acquired in September last year, Quill Building 5-IBM, Quill Building 8-DHL and Quill Building 10-HSBC purchased in March this year.

RHB Research in a report said that despite the jump in revenue, the company experienced about a 5% decline in net profit from the preceding quarter partly due to one-off maintenance costs.

“However, despite rising inflation, we do not expect property maintenance costs to affect the company significantly in the future as we understand that it has the rights to pass on the increase to its tenants via higher service charges,” the report added.

The company recently proposed to acquire the Tesco building in Jelutong, Penang, for RM132mil from IJM Properties Sdn Bhd.

According to Chan, upon the completion of the acquisition in the fourth quarter, QCT’s asset size would increase to RM810mil, exceeding the original forecast of RM750mil for the current financial year ending Dec 31.

New assets in the pipeline include the new HSBC headquarters and KL Sentral Lot J.

“The Kuala Lumpur office market is experiencing an upturn due to healthy demand from business expansion, especially in finance, insurance as well as the oil and gas sectors,” Chan said, adding that take-up rate was expected to remain healthy.

By The Star (by Laalitha Hunt)

Al Rajhi Bank buys property

KUALA LUMPUR: Al Rajhi Bank (Malaysia) is purchasing 36 units of i-City Cybercentre 1 office suites for RM95mil, marking its first property venture in the country.

The purchase accounted for 80% of the units completed in the first phase of i-City, a RM2bil township on 72 acres in Section 7, Shah Alam.

“The investment of Al Rajhi in i-City demonstrates its real value and increasing interest among Middle Eastern companies in our property market,” I-Bhd director Eu Hong Chew said after the parties signed a sale and purchase agreement yesterday.

I-Bhd director Eu Hong Chew (left) and Al Rajhi Bank (Malaysia) CEO Ahmed Rehman posing with the signed documents for the purchase of RM95m worth of office units in i-City, Shah Alam, by the Al Rajhi Bank.

I-Bhd is the developer of iCity.

The purchase is to be completed over the next two to three months.

The first phase of i-City comprises 44 units totalling 300,000 sq ft. I-Bhd will retain 20% of the units for local information and communications technology companies.

By Bernama