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Monday, August 4, 2008

Ivory sees potential in high-rise properties on Penang island

An artist’s impression of Ivory Property’s Island Resort project launched earlier this year

Higher construction costs can lead to shortage of high-rise properties with price ranging from RM300,000 to RM400,000 on the island over the next two years.

Ivory Property Sdn Bhd general manager Chok Keng Vui said the properties would be in high demand, as the rising cost of fuel would make it expensive to travel on a long distance to work at the island.

Having said that, Chok believed that it was still possible to construct high-rise properties on the island at affordable selling prices.

“Ivory is able to undertake such projects as we operate and manage our own construction company and design team, which helps to reduce the construction costs,” he said.

Chok said the company was reviewing one of its high-rise projects on the island – The Peak.

Originally scheduled for launching this month, he said: “We are waiting for the construction costs to stabilise before deciding on the exact launch, possibly by year-end.

“The Peak condominium units were originally priced at RM330,000,” he said.

Earlier this year, Ivory Property group launched the Island Resort project in Batu Ferringhi with a price tag between RM280,000 and RM600,000 per unit.

The project, which is 65% booked, is now selling for RM360,000 to RM700,000. The Island Resort is scheduled for completion in 2011.

Mah Sing Group Bhd managing director Datuk Seri Leong Hoy Kum said the group would still implement its South Bay project in Batu Maung as planned.

“Our target market is the medium-high to high-end segment, which is more resilient to the rising costs environment.

“We will look at properties that are in good locations, concepts and designs. Properties have proven to be the best hedge against inflation,” he added.

IJM Land Bhd managing director Datuk Soam Heng Choon said the company would constantly study the market scenario to time its launches.

“Given our penetration across all market segments, we can review the type of properties to be launched according to the demand. We can also adapt our design concept for certain specific target market.

“We believe that in a negative interest rate environment, properties will be a good hedge against inflation. Given the stock market volatility, investors can shift from the equity market to physical property assets,” he said.

IJM Land would be launching its Summer Place condominium scheme at the Jelutong Expressway early next year.

“We are able to keep the selling price at RM288,000 to RM420,000 per unit, as most of the contract works for the scheme have been awarded,” he added.

The built-up area for a Summer Place unit ranges between 960sq ft and 1,440sq ft.

Soam said the selling price for the group's new launches many be increased by 20% to 30%.

By The Star

For detail information, please visit Ivory Property Sdn Bhd Official Website

Commercial push by Glomac

Glomac to launch RM1.1 billion worth of integrated projects in 12 months

STRATEGIC DEVELOPMENT: Glomac’s project in Damansara. Right: Fong

GLOMAC Bhd, unfazed by slow consumer spending, is launching new commercial properties worth RM1.1 billion over the next 12 months while most developers are postponing their launches.

As the residential market suffers from high fuel and raw material prices, Glomac's move to invest in commercial properties is seen as strategic due to demand, group executive vice-chairman Datuk Richard Fong Loong Tuck said.

"The residential segment seems to have reached a saturation point. We are reacting to the market, which is why we are moving into integrated commercial developments," Fong told Business Times in Petaling Jaya, Selangor, recently.

"Integrated projects offer higher profit margins. We have expertise in these developments and do not see why we should not move with the flow," Fong said.

Glomac had previously built Kelana Centre Point, Kelana Business Centre, Glomac Business Park, Plaza Kelana Jaya, Dataran Prima, Glomac Square and OUG Square on similar concepts.

Fong said Glomac will not only replicate them but include more lifestyle features for new launches.

"We are launching a few commercial projects. The most expensive is Glomac Damansara," Fong said.

The RM650 million project will be sprawled over 2.76 hectares of freehold land along Jalan Damansara and adjacent to Damansara Kim.

It will feature a 15- and 30-storey office tower, a nine- and 10-storey office suite, two 25-storey serviced apartment blocks, 12 units of multi-storey shop offices and a three-level hybrid retail mall.

The project, Fong said, will be developed in four phases from this year for completion by end-2011.

Phase one, launching this month (August), will see the structures of the shop offices and the RM131 million 15-storey office tower building up first.

The mall with net lettable area of 150,000 sq ft and worth RM161 million, and the two office suites valued at RM168 million is in planning stage. This phase two project will be launched early next year.

The third and fourth phases will comprise the serviced apartments and the 30-storey office tower respectively and will be launched in late 2009.

Fong said the indicative proposed selling price for each serviced apartment unit is from RM600 per sq ft and around RM110 million per block.

The 30-storey office tower is worth RM185 million.

"We are open to selling the towers en bloc for sustainable development. The towers will attract European, Arab and local investors," he said.

Fong, who is also Malaysian chapter of the International Real Estate Federation (Fiabci) president, is optimistic on en bloc deals after selling Glomac Tower in Kuala Lumpur for RM577 million.

"We made a handsome profit from the sale. En bloc is something we will look at from now," he added.

Glomac also recently sold 20 units of four-and-a-half-storey shop offices in Sri Hartamas for RM100 million. But these were via open tenders.

The project, dubbed Galleria, will be constructed from August.

"The units were sold within a week from the tenders. We will consider this option to sell," Fong said.

By New Straits Times - Business Times - (by Sharen Kaur)

Glomac PJ complexes to be launched early 2009

PROPERTY developer Glomac Bhd is in the process of acquiring 1.28ha of freehold land in Petaling Jaya, Selangor, the site of the former Kelana Seafood Centre, to build a commercial complex.

Group executive vice-chairman Datuk Richard Fong Loong Tuck said the commercial complex will generate sales of RM250 million for Glomac, which is continuously seeking strategic land bank in Selangor and the Klang Valley for niche developments.

The commercial complex, which will overlook a lake and has yet to be named, will feature a three-level mall, a 20-storey office tower and an office suite.

"It is on the drawing board. We expect to launch it by January 2009," Fong told Business Times.

Glomac will also launch two office towers and a serviced apartment block worth RM200 million by early 2009 in the burgeoning Mutiara Damansara township in Petaling Jaya.

It recently acquired two adjoining freehold parcels totalling 115,755sq ft for RM38.69 million or RM334psf from Boustead Properties Bhd.

"We are excited over these new launches and are gearing up for more next year," Fong said.

While Glomac is optimistic on positive sales from the two projects, Fong said the developments will be affected by more expensive materials.

"We will be prudent with the developments and manage cost effectively," Fong said.

"We expect the projects to contribute significantly to Glomac's revenue and net profit from 2009," he said.

By New Straits Times - Business Times - (by Sharen Kaur)

New benchmark in luxury living

BOUTIQUE property developer Urban Hallmark Properties Sdn Bhd aims to lift the benchmark of luxurious residential living through its maiden project Zephyr Point on Basong in Damansara Heights.

Targeted for launch in the first quarter of next year, the gated and guarded development with only seven exclusive residences strives to offer the ultimate urban residential address.

From left: Julien T. Hodson-Walker, Dion Vercoe, Datuk Jeffrey Ng, Mok Chee Paan and Regroup Associates executive chairman Christopher Boyd with a model of Zephyr Point

Managing director Datuk Jeffrey Ng said Zephyr Point had been meticulously designed for those seeking a well-planned and modern living environment away from the hustle and bustle of the city but enjoy conveniences such as chic cafes and retail shops.

“Every step of the way – from the initial master planning to product layout and design, material sourcing to landscaping – we go the extra mile to set a new benchmark in quality finishes and design functionality.

“A lot of time was spent with our consultants to ensure the architecture, interior and landscape designs create a boutique effect to meet the luxurious lifestyles of our buyers,” he told StarBiz.

The panel of consultants comprises project master planner Garis Architect, interior designer Palladio Interiors and landscape architect ICN Design International.

The four units of three-storey villas and three penthouses are targeted at homeowners who desire privacy, picturesque views, security, spaciousness and exclusivity.

The residences, averaging 7,900 to 11,700 sq ft with indicative prices of RM8mil to RM12mil each, are perched nearly 60 feet above road level. Two show houses of a penthouse and a villa will be ready by the first quarter of next year in time for the sales launch.

Construction started last July and is scheduled for completion by the middle of next year.

Ng said the extensive use of premier brands in fittings and equipments and top quality finishing would ensure classy looks and durability.

Garis Architects director Mok Chee Paan said the penthouses that sprawl over an entire floor of over 10,000 sq ft each had been designed with optimal use of space and an open-plan interior that invites natural light and cross-ventilation.

Privacy is assured by way of individual entrance lobbies and private lift access. Each penthouse owners has a lock-up garage for three vehicles and a large storage room in the basement.

Palladio Interiors managing director Dion Vercoe said the double-volume atrium at the foyer of the villas would accentuate light, space and comfort of the open-plan living and dining areas.

“Another unique feature is the provision of personal space in the form of a self-contained retreat studio at the lower level that opens out to a spa pool and deck,” Vercoe said.

ICN Design director Julien T. Hodson-Walker said Zephyr Point would have trees and lush foliage strategically planted to cocoon the elevated estate to give it an intimate ambience.

Every homeowner at Zephyr Point enjoys a personal home office at the Breezeway level that also accommodates the residents' function lounge and fully equipped gymnasium.

By The Star - StarBiz - (by Angie Ng)

Mutiara Goodyear takes rising costs in its stride

As other property developers brace themselves to weather rising building material costs and general slowdown in the economy, Mutiara Goodyear Development Bhd is forging ahead with its projects.

Mutiara Goodyear chief executive officer Kee Cheng Teik is continuing with the launch of Prima Avenue, Mutiara Gombak and Melawati projects, which have a combined gross development value of RM950 million.

KEE: The Mutiara Goodyear CEO believes that even though uncertainty in the market may hold up decisions on property buying, it is temporary in nature and buyers will eventually come around.

Prima Avenue and Mutiara Gombak are commercial developments, while Melawati is a combination of commercial and residential.

The first of its projects on offer is Prima Avenue, a 1.38ha development, which will house business suites as well as retail outlets in Kelana Jaya.

"We have not factored in the increase in building materials into our pricing of the units," Kee told reporters in Petaling Jaya last week. Each business unit is priced at RM280 per sq ft while the retail lots are at RM400 per sq ft.

Kee gave two reasons for the move.

He does not expect price of building materials to remain at current levels for long and also the book cost for the 1.38ha land is almost zero, a "leftover" from its Dataran Prima development.

Steel bar prices have reached an all time high of RM4,100 per tonne, while cement prices are up a further RM1 to RM14.25 per 50kg.

"We are still happy with the profit margin we are getting," Kee said.

The project, which will house 342 business and 33 retail lots, has a GDV of RM120 million.

He said the group's status as a medium-sized developer gave it a lot of flexibility on its development.

Kee said even though he acknowledges that the uncertainty in the market might hold up decisions on property buying, it is temporary in nature and buyers will eventually come around.

"Comparatively, property and real estate are still very durable," Kee said.

On whether the current price of building materials will affect its profits for the year, Kee said it was fortunate to have completed two big projects this year and have yet to award the work for current projects.

The 35 year old company has an undeveloped land bank of 360.86ha in Klang Valley and Penang.

By New Straits Times (by Presenna Nambiar)

Developers generous despite slowdown

Despite the slower economic growth and a softening property market, many developers are still giving freebies and financial incentives to purchasers.

While some developers are hoping that these incentives could spur sluggish sales, others genuinely want to reward their purchasers for having confidence in them.

Two recent property exhibitions held in Kuala Lumpur – Expo at the Kuala Lumpur Convention Centre and the 27th Malaysia International Property Showcase at the Mid Valley Megamall – saw many developers throwing big discounts and extras.

For example, Naza TTDI Sdn Bhd (TTDI) is still offering 10% discount to buyers of its award-winning Laman Seri Business Park. Bumiputra buyers get another 10% discount. These discounts were initially accorded to “early birds” during the initial stage of launch recently to reward purchasers for their confidence in TTDI.

Senior manager (marketing and sales administration) S.M. Faliq S.M. Nasimuddin said the discounts would be removed once the sales target of 70% was achieved.

“Sales have been encouraging. We have sold up to 55% since the recent launch,” he said, adding that the incentive was attractive because the project was positioned as the “best commercial centre” in Shah Alam.

Faliq said developers normally gave discounts when they were promoting a new concept or developing a new location.

“Such incentives are real, especially when promoted from the outset, and not when the sale is slow.

“In the case of our business park, we are introducing a new concept to Shah Alam that is tried and proven like our successful TTDI Plaza.

“Our discount is real and represents immediate gain once the property is nearing completion,” he said.

Purchasers of the four and five-storey strata shop offices priced from RM403,000 are also offered a two-year guaranteed rental return of 7.5% per annum and two years free maintenance fees.

Other projects that also offered discounts and incentives include:

Mutiara in Bukit Jalil: Purchasers of the 3-storey link houses priced from RM668,888 get eight air-conditioners, autogate, security alarm and a special loan package. The house will have a spacious 3,600 sq ft built-up area with 5+1 bedrooms and 6 bathrooms and two halls.

Amaya Saujana: Malton Bhd is offering two free car-parking bays and three free air-conditioners for purchasers of its Amaya freehold suites in Saujana, Selangor. The price per unit is from RM551,397.

NZX Square in Ara Damansara: Purchasers of the freehold hybrid semi-detached shop offices get incentives like zero interest until vacant possession (limited to 30 units), two years free maintenance fees, 20/80 scheme and 100% capital return.

Aman Perdana: Mah Sing Group offered 10% discount for five units during a recent weekend sale for its completed, freehold semi-detached houses priced from RM351,800 (32ft x 75ft) and from RM425,800 (35ft x 75ft).

At another launch to promote its semi-detached homes in this township, it also gave incentives worth RM70,000, including RM35,000 discount and even a “durian feast” for visitors.

Subang Alam: Subang Alam Sdn Bhd has offered lots of freebies during a recent sales launch ranging from a grand prize of a car worth RM100,000 for a lucky draw.

Other prizes include a 32-inch LCD TV set and notebook. For “early birds”, it offered free golf memberships and free legal fee for the sale and purchase agreement.

Jelutong Heights: Perhaps one of the biggest discounts was given by NBC Land Sdn Bhd who advertised in the newspaper offering “early birds” discount of RM50,000 for its 2½-storey semi-detached homes, Cypris and Dahlia, priced from RM1.17mil. The houses are 90% sold and 70% completed.

The Legend International Water Homes: This award-winning project in Port Dickson by the Kuala Lumpur Metro Group is offering 8% rental return per annum for the first three years and 12.5% per annum for the next 12 years.

For people who need a home and who think they can afford to finance their housing loan, I believe they should buy now, especially when the mortgage interest rates are still low and developers still giving away freebies.

Prices of new launches will only go up. That's a fact of life.

By The Star

YHN unit formalises deal with F&N unit

KAR Sin Bhd (KSB), a wholly-owned subsidiary of YNH Property Bhd, has formalised agreements for management, technical and consultancy services with Frasers Hospitality Pte Ltd, the hospitality arm of Frasers Centrepoint Ltd (a wholly-owned subsidiary of Fraser and Neave Ltd).

Frasers Hospitality will manage the Gold-Standard Serviced Residence, Fraser Place Kuala Lumpur, located at Lot 163, Jalan Perak, Kuala Lumpur.

Fraser Place Kuala Lumpur, slated for completion soon, will be a young vibrant hub for expatriates, located in the "golden triangle" of the Malaysian capital, where most international banks, oil and gas companies and multinationals are based. It will be within walking distance of the Petronas Twin Towers (KLCC) and Pavilion KL, the city's largest retail mall.

"This is in line with our strategy to ensure the quality of our projects to meet the taste and requirements of our discerning purchasers and also ensuring that the management of the building is left in the hands of professionals," YNH executive chairman Datuk Dr Yu Kuan Chon said in a statement.

The project comprises an office tower and a second tower with 217 studios, bedrooms and penthouse serviced residences.

By New Straits Times

Rising material costs put developers in limbo

The escalating cost of building materials is raising concerns over the widening gap between the income levels and the selling price of properties as well as availability of affordable housing.

“A family with a combined monthly income of RM10,000 is eligible to obtain a mortgage loan of about RM350,000 from a commercial banking institution. But how many fall in this income bracket?,” asked registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun.

Lim Chien Aun

“From statistics collected, the average employee monthly income is RM2,000 to RM4,000. On a joint basis, this enable the purchasers to obtain a mortgage loan for a property valued at about RM200,000.

“But with the rising cost of building materials and construction, a RM200,000 residential property will be about 30% higher if other factors affecting the market value remain as it is today.”

Steel bars have gone up to RM4,100 per tonne compared with RM3,500 in June while cement is sold at RM13.45 a bag compared with RM10.95.

Across the board, all types of commonly used construction materials have increased by 15% to 30%.

Less than 5% of the families in Malaysia have a combined income of RM10,000 and above

Lim said the Penang state government should seriously encourage the development of more affordable housing schemes on the island.

It also has to find ways to address the plight of house owners in view of the current spiralling cost of living.

“One way is to reappraise the plot ratio. Presently the plot ratio on the island allows the developer to build 3.5 times per sq ft.

“This plot ratio needs to be reappraised, taking into consideration the additional infrastructure requirements that can be added to a specifically identified area.

“Such a revision will allow a developer more space to construct a variety of homes for different income groups,” he said.

A filepic of terraced houses in Tanjung Bungah. Rehda sees fewer projects being launched in Penang this year

Presently, developers are complaining that the existing development guidelines on the island are too restrictive. For each acre, developers are allowed to develop 15 units of 1,400 sq ft properties, or 30 units of 700sq ft properties.

With the present land and construction costs, this works out to about RM600,000 to develop a high-rise unit of a 1,500sq ft.

This is why developers on the island are not able to price their properties affordably.

But with a higher plot ratio, developers can spread out their development costs and build properties with different lower price range.

Lim also urged the Penang Development Corp to work with the private sector to create more affordable and improved housing projects, taking into account the interest of the people, especially the working population.

“Otherwise, only the very rich can afford to stay in George Town, leaving the other parts of the island to become a blighted zone,” he said.

Lim is also concerned over the impact of higher interest rate on the property market. It is speculated that the banking authorities may raise interest rates by 0.5% soon.

“This may lead to a forced selling situation for those who cannot hold on to their properties due to higher mortgage repayments as well as the rising living and maintenance costs.

“Should this happen, there will be a negative impact on property prices and the livelihood of the general population which can affect the economy,” he said.

At a press conference recently, Real Estate Housing and Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan appealed to the state government to allow developers to build projects with higher density and larger built-up areas in the city.

In view of soaring energy and building prices, he said there would be no development of new low-cost and low-medium-cost housing projects, which were currently priced at RM42,000 and RM75,000 respectively.

“We are appealing to the state government to revise these prices.

“Developers will resort to building only expensive homes comprising less than 150 units per scheme, which does not require them to build affordable housing,” he added.

Chan expects fewer property projects to be launched in Penang this year due to the rising cost of fuel and building materials.

“This is reflected in the new launches lined up for exhibition at the Malaysian Property Exhibition (Mapex) 2008 held recently.

“There were only three new launches this year for Mapex 2008 with a gross sales value (GSV) of RM44.5mil, compared with seven last year which had a GSV of RM300mil,” Chan added.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat concurred that fewer residential project launches were expected in the immediate term due to the rising development costs, including fuel and building materials.

Based on today’s land value and the existing local authority’s planning guidelines, he said it would be difficult to supply affordable homes in the near future unless the basic macro and micro challenges were promptly addressed.

The mid-end of the market will also be affected but to a lesser extent, compared with the affordable home sector.

Teoh said the high-end market would continue to attract entrepreneur’s attention, as it offered the highest margins.

He said recent foreign interests in Penang’s real estate had supported property values at levels that were unheard of in the past.

“This augurs well for the prospect of Penang’s real estate as it encouraged greater product innovation and creativity.

“Penang is now better known as a 'ought to visit' destination for property investment,” he said.

By The Star (by David Tan)

Axis REIT to become syariah-compliant?

NEWEST ASSET: Menara Axis in Petaling Jaya. It is believed that Axis REIT may soon appoint a syarlah expert to conduct due diligence on its properties

AXIS Real Estate Investment Trust (REIT), Malaysia's first property trust to be listed, is studying the possibility of converting into a syariah-compliant vehicle, to appeal to a wider group of investors.

Sources told Business Times that Axis may soon appoint a syariah expert to conduct due diligence on the properties held under the REIT.

"Axis is looking at syariah-compliant REIT to have a wider pool of investors who can invest in the trust," the source said.

Axis has some RM700 million worth of properties under the REIT in commercial, light industrial, logistics and warehouse retail facilities.

Officials from Axis REIT could not be contacted for confirmation.

According to the Securities Commission guideline for Islamic REITs, syariah-compliant assessments must be carried out by an appointed syariah committee/syariah adviser to assess any property to be acquired by an Islamic REIT.

An Islamic REIT has tenants who operate permissible activities according to the Syariah. In the event that the tenant is found to operate non-permissible activities, the fund manager for the Islamic REIT must perform additional compliance assessment.

In general, a 20 per cent non-compliance leeway is allowed. This is based on total rental from non-permissible activities which will be compared to total turnover of the Islamic REIT to obtain the percentage of rental from non-permissible activities.

As per SC's requirement, an Islamic REIT must also use takaful schemes to insure its real estate, unless takaful is unable to provide the insurance coverage needed.

It was reported that Axis REIT plans to increase its real estate size to RM1 billion in 2008.

Currently, there are two listed Islamic REITs - the Al-'Aqar KPJ REIT, the first healthcare REIT in Malaysia and Al-Hadharah Boustead REIT, Malaysia's first Islamic plantation REIT.

By New Straits Times (by Vasantha Ganesan)

UEM won't collect tolls at second Penang bridge

UEM Builders Bhd, the main builder of a second bridge to the Malaysian island of Penang, won't get the contract to collect road tolls at the site, according to Second Finance Minister Tan Sri Nor Mohamed Yakcop today.

The government decided about a month ago to set up "a special-purpose vehicle to collect the tolls," Nor told reporters in Kuala Lumpur. Under a new contract, the developers will just build the bridge.

Penang is home to manufacturers including Dell Inc and needs an additional bridge to relieve traffic congestion. China Harbour Engineering Co will work with UEM Builders to build the 23-kilometer (14-mile) link from the mainland to the island after the Export-Import Bank of China agreed to lend Malaysia US$800 million for the project, the Chinese company said last year.

UEM said in June the Malaysian government has agreed to raise the cost of the RM4.3 billion project on higher raw material prices. The bridge is due for completion in 2011, UEM said.

By Bloomberg