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Wednesday, August 27, 2008

Property developers to get 2009 goodies

PROPERTY developers can expect to get some goodies from Budget 2009 to help them cushion the impact of rising fuel prices and raw material costs, says the Housing and Local Government Ministry.

Minister Datuk Seri Ong Ka Chuan said while the budget will be people-centric, the ministry has proposed to the government that incentives and assistance be pro-vided to developers to minimise the blow of a possible slowdown.

“We hope the government will render some assistance, especially on tax structures, as construction cost has escalated by some 30 per cent,” he said after opening the 19th National Real Estate Convention 2008 (NREC) in Petaling Jaya yesterday.

On the 30 per cent low-cost housing quota imposed on private developers, which has impacting all players financially, Ong said it is the prerogative of the state authorities to adjust the requirement.

“There must be flexibility. It should be lower in areas with the least Bumiputera concentration and can be more if otherwise. If really there is no demand, there is no point implementing it,” he said.

The Bumiputera Property Exhibition Selangor 2008 held last month to sell unsold Bumiputera lots saw a display of RM7 billion worth of properties offered by 50 developers or 200 times more than in 2007.

FIABCI Malaysia head Datuk Richard Fong told Business Times that the low-cost housing quota needs to be addressed as developers are losing money.

The ceiling price for low-cost houses currently is RM25,000, RM35,000 and RM42,000 per unit, set 10 years ago to assist the lower income group.

“Developers lose RM15,000 for every low-cost unit they build. With the rise in raw materials by 30 per cent, which the ministry has recognised, they are bound to lose much more,” Fong said.

“The other concern is, due to the drastic increase in raw material prices, smaller developers will be in the doldrums, hence there is a strong likelihood of a dramatic rise in abandoned projects,” he said.

NREC organising chairman Pre-vindran Singhe, who is also group chief executive officer and founder of Zerin Properties, said the biggest overhang currently is for houses priced below RM250,000.

“The market for medium- to high-end houses is superb. We are experiencing a growth in this sector,” he said.

Zerin’s wish list for Budget 2009 is to see the 10 per cent withholding tax removed for Real Estate Investment Trusts and a reduction in stamp duty.

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

Glomac scouts for more land in KLCC area

GLOMAC Bhd may buy more land within the Kuala Lumpur City Centre (KLCC) area to develop high-end properties, executive vice-chairman Datuk Richard Fong said.

“We are scouting for strategic land areas but the price must be right,” Fong told Business Times in an interview in Kuala Lumpur recently.

He was speaking at the handover ceremony of Suria Stonor, Glomac’s RM380 million condominium project in Persiaran Stonor, Kuala Lumpur.

Suria Stonor is Glomac’s flagship development in Kuala Lumpur and the most expensive project in its 20-year history.

The units are 95 per cent sold and the project has met its profit forecast, Fong said without revealing details.

Half of the units were bought by Singapore’s ING Real Estate Fund in 2005.

Launched in September 2005, it has two blocks of 23-storey and 24-storey respectively, featuring luxury “bungalows-in-the-sky” with eight triplex penthouses, 28 duplex condominiums and 78 single-floor units.

The project is on a 0.84ha freehold plot that was bought in 2004 for RM430 per sq ft (psf). The land price in the area is reaching RM2,000 psf, he said.

Fong expects profit from Suria Stonor to flow in this financial year ending April 30 2009.

Suria Stonor offers four units per floor with sizes of between 3,000 sq ft and 9,000 sq ft, each serviced by a private lift. The market prices for each unit now range from RM4 million to RM11.7 million, which is double its launch price.

By New Straits Times (by Sharen Kaur)

Property sector still a draw

KUALA LUMPUR : The Malaysian real estate still offers an attractive investment opportunity for foreign players despite uncertainties in the global financial markets.

According to Housing and Local Government Minister Datuk Seri Ong Ka Chuan, apart from the Middle East, the property sector was also attracting foreign investors from the Indian subcontinent and Asian countries such as South Korea, China and Japan.

“Malaysia is becoming more attractive to foreign investors,” he told reporters after officiating the 19th National Real Estate Convention (NREC) yesterday.

However, he did not discount the fact that the global rise in fuel prices had a domino effect on the local real estate industry, which could trigger a slowdown in the overall economy.

Existing projects should go on and new projects initiated to counter the rippling effect on the economy, he said.

While the rising construction and fluctuating fuel costs were an immediate challenge for the industry, Ong was optimistic that the budget would be “people-centric,” with more goodies to help alleviate the burden of these spiralling costs.

“We hope that the Government will give some incentives to the housing and building materials industry,” he said.

Ong also called for a review of the diesel prices

“An area that has been overlooked is the diesel-powered machinery being used in building sites,” he said, suggesting the Government review the road tax of diesel vehicles to be at par with petrol vehicles.

On the Real Estate and Housing Developers Association’s proposed change in housing policies with regard to the 30% bumiputra quota, Ong said there should be some flexibility. “Maybe in areas with not so many bumiputras residing, the quota could be adjusted.”

By The Star

IJM Corp still doing well despite challenging times

SUBANG JAYA: IJM Corp Bhd is still doing well despite the challenging times in the construction industry, said chief executive officer and managing director Datuk Krishnan Tan.

Datuk Krishnan Tan (right) and IJM Corp deputy CEO & deputy managing director Teh Kean Ming at the AGM.

Continuous focus would be placed on securing overseas jobs to contribute further to the company’s order book, he told reporters after its AGM and EGM yesterday,

The company announced yesterday a net profit of RM129.1mil for its first quarter to June 30, against a loss of RM728.9mil in the same period a year earlier.

Revenue improved to RM1.22bil from RM1.11bil previously, while earnings per share stood at 10.65 sen compared with a loss per share of 89.34 sen.

On the West Coast Expressway project undertaken in a joint venture with Kumpulan Europlus Bhd, Tan said he expected some delays as there was a double-digit increase in the cost of building materials.

IJM has a 25% stake in Europlus.

Tan said that in the Middle East, the company was bidding for two jobs in Bahrain, one in Dubai and two in Abu Dhabi worth more than RM1bil.

Its current order book is estimated at about RM5bil, of which 50% were contracts from India and the Middle East.

On the proposed listing of IJM (India) Infrastructure Ltd (IJMII) on the National Stock Exchange of India. Tan said the company had deferred it but ultimately IJMII would be listed.

“The environment in India, which contributes 30% of our order book, has changed substantially over the last six months to a year due to rising costs.

“Interest rate has also gone up to as high as 13% in India, thus affecting both the cost of doing business and demand from prospective property buyers,” Tan said.

IJM’s expressway project, which starts from Chilkaluripet to Vijayawada in Andhra Pradesh, India, requires a capital expenditure of RM900mil.

Total construction cost is RM550mil and the concession spans 15 years.

“Originally the two-lane road was to be expanded to four lanes.

“Now the Indian authorities want six lanes,” said Tan.

By The Star

Sunway to develop Toa Payoh land

SUNWAY Holdings Bhd plans to jointly develop a 2.75ha land in Toa Payoh, Singapore, into a mixed project with estimated gross development value of S$680 million (RM1.64 billion).

Teaming up with Hoi Hup Realty Pte Ltd Group, Sunway expects the project to be launched by June 2009 and should take four years to complete.

By New Straits Times