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Monday, October 6, 2008

Dubai aims to top its own world's tallest tower

DUBAI, United Arab Emirates (AP) - With its world's tallest building nearing completion, Dubai said Sunday it is embarking on an even more ambitious skyscraper: one that will soar the length of more than 10 American football fields.

That's about two-thirds of a mile or the height of more than three of New York's Chrysler Buildings stacked end-to-end. Babel had nothing on this place.

"This is unbelievably groundbreaking design,'' Chief Executive Chris O'Donnell said during a briefing at the company's sales center, not far from the proposed site.

"This still takes my breath away.''

The tower, which will take more than a decade to complete, will be the centerpiece of a sprawling development state-owned builder Nakheel plans to create in the rapidly growing "New Dubai'' section of the city. Foundation work has already begun, O'Donnell said.

The area is located between two of the city's artificial palm-shaped islands, which Nakheel also built.

The project will include a manmade inland harbor and 40 additional towers up to 90 floors high.

About 150 elevators will carry residents and workers to the Nakheel Tower's more than 200 floors, the company said.

The building will be composed of four separate towers joined at various levels and centered on an open atrium.

"It does show a lot of confidence in this environment'' of worldwide credit problems and a souring global economy, said Marios Maratheftis, Standard Chartered Bank's Dubai-based regional head of research.

As part of government-run conglomerate Dubai World, Nakheel has played a major role in creating modern-day Dubai, a city that has blossomed from a tiny Persian Gulf fishing and pearling village into a major business and tourism hub in a matter of decades.

Besides the growing archipelago of man-made islands for which it is best known, Nakheel is responsible for a number of the city's malls, hotels and hundreds of apartment buildings.

The company said the new project is inspired by Islamic design and draws inspiration from sites such as the Alhambra in Spain and the harbor of Alexandria in Egypt.

"There is nothing like it in Dubai,'' said Sultan Ahmed bin Sulayem, Nakheel's chairman.

Perhaps not quite. But Dubai is already home to the world's tallest building, even if it remains unfinished.

That skyscraper, the Burj Dubai, or Dubai Tower in Arabic, is being built by Nakheel's chief competitor, Emaar Properties.

Emaar has kept the final height of the silvery steel-and-glass tower a closely guarded secret, saying only that it stood at a "new record height'' of 2,257 feet at the start of last month.

It's due to be finished next September.

The final height of Nakheel's proposed tower is likewise a secret, as is the price tag.

The company would only say it will be more than a kilometer (3,281 feet) tall.

O'Donnell said he was confident that Nakheel could pay for the project despite the financial troubles roiling the world's economy.

He also brushed aside concerns by some analysts that Dubai's property market is becoming overheated and due for a potentially sharp correction.

"In Dubai, demand outstrips supply,'' he said.

"There might be a slowdown, but there definitely won't be a crash."

By The Star / By AP

Home prices in Dubai seen flat till 2010

Home prices in Dubai, the second-biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE Plc said.

About 140,000 new homes will be completed in Dubai by the end of 2010, adding to the existing stock of about 300,000 units, Colliers said in a report released in Dubai yesterday. Home prices average US$5,420 per sq m, or US$504 per sq ft, in Dubai, compared with US$6,500 a sq m in neighboring Abu Dhabi, the report said.

“We’ve not seen a drop-off in demand, but there has been a slowdown in value appreciation,” Ian Albert, Colliers regional director, told reporters in Dubai.

By Bloomberg

Germany races to save property lender Hypo

BERLIN: Germany announced yesterday that it would guaranteed all private savings accounts, joining Ireland and Greece in taking drastic independent action to head off financial crisis.

The announcement came as business leaders and lawmakers met in the capital for feverish talks to keep an embattled real-estate giant afloat.

Hypo Real Estate AG had been planning on a 35 billion (1 = RM4.81) bailout package financed by the government and private banks, but the deal fell apart on Saturday evening.

Chancellor Angela Merkel vowed that she would not let the failure of any company disrupt Europe's biggest economy.

"We will not allow the distress of one financial institution to distress the entire system," she told reporters while talks between government and business leaders continued in the capital.

"For that reason, we are working hard to secure Hypo Real Estate."

Merkel said the plan would ensure that anyone who made reckless market decisions would be made to answer for their actions.

"The federal government will make sure of that," she said. "That is our debt to the taxpayers."

The talks at the Finance Ministry came a day after a 35 billion rescue plan for the blue-chip company that was approved by the European Union on Thursday unravelled at the seams.

Finance Minister Peer Steinbrueck, who spoke at the press conference with Merkel, said the government was working on an "institute-specific solution" to Hypo's near-bankruptcy.

"We have to start again where, at the end of last week, we thought we had a solution," he said.

"I am pretty angry that the management of (Hypo) in the last few days has revealed a further liquidity hole of unknown size," Steinbrueck said.

"The federal government refuses to be forced into some sort of shared responsibility by this bank or to put the entire burden of the risks on taxpayers."

Hypo, the country's No. 2 commercial property lender, said on Saturday that the rescue plan had fallen apart after private lenders withdrew support, a key element to the proposal that had already been approved by the EU earlier last week.

Hypo is relatively small when compared with other firms in Frankfurt's blue-chip DAX index of leading companies, but its role as a lender for commercial property, infrastructure and government financing makes it a major financial player.

By Agencies

Mah Sing: New launches to proceed as planned

Developer Mah Sing Group Bhd is taking a bold step in launching new medium to high-end houses and a commercial development worth over RM1.3 billion by 2010.

It currently has 10 ongoing projects in Kuala Lumpur, Penang and Johor on its plate, which will keep it busy for the next five years.

Mah Sing Properties Sdn Bhd chief operating officer Ng Heng Phai believes the market will improve as oil and steel prices appear to be falling.

NG: The market will improve as oil and steel prices appear to be failing.

The global oil price has fallen to about US$92 (RM320) per barrel from US$120 (RM418) more than a month ago while steel is doing RM3,600 per tonne from RM4,100 per tonne some four months earlier.

From now till the end of 2010, Mah Sing will launch four projects - three residential and one commercial. They are Legenda @ Southbay featuring three and four storey resort bungalows and Southbay City, a commercial development, both in Penang; One Residence in Cheras comprising triple-storey bungalows; and Sri Pulai Perdana 2 township in Johor.

"We will go with the launch as they were pre-planned earlier. It will be profitable as we have taken mitigating measures to overcome rising cost of construction," Ng told Business Times.

He said the gross development value (GDV) from the projects will be realised over five to seven years.

"Southbay City, which will command a GDV of RM911 million and located in Batu Maung, will be an exciting project as it will feature two hotels, serviced apartments, shop offices and retails. We target to launch it at the end of 2009," Ng said.

He said Mah Sing will also continue to launch new phases within its 10 developments.

As at June 30 2008, it had a landbank of 232.5ha which will yield a GDV of RM2.9 billion, derived from the new and existing projects.

By New Straits Times (by Sharen Kaur)

Glomac to continue with overseas investments

Property developer Glomac Bhd, unperturbed by the global economic turmoil, will continue to invest overseas, especially in Australia, through takeovers of commercial buildings.

Group executive vice-chairman Datuk Richard Fong Loong Tuck said there will be more opportunities to buy with the collapse of two venerable Wall Street institutions, Lehman Brothers and Merrill Lynch.

"With the economic downturn, there will be a lot of good deals coming out in the market.

"Property owners may start to sell assets at below market rate, which is when we will buy," he told Business Times in an interview recently.

Fong said Glomac's business model is to buy old commercial buildings, refurbish them for better yields and sell at a higher price later.

Glomac made its presence in Australia in 2006 when it bought 380 Lonsdale Street in Melbourne for A$30.5 million (RM82.4 million).

The acquisition was through its unit, Glomac Australia Pty Ltd and partner Victoria Investments & Properties Pty Ltd.

The Lonsdale St property encompasses a commercial building and a seven-storey carpark complex, with 445 bays offering eight per cent rental yields.

"We are looking around in Australia for suitable office buildings to buy. We won't move (our focus) away from commercial buildings as they are easier to maintain and market," Fong said.

He said the Lonsdale St property, although worth A$40 million (RM108 million) now, will be retained until its value has appreciated by 25 per cent to 30 per cent.

"When we sell it, we will also make on the exchange rate. The gains will be reinvested for new acquisition," Fong said.

"We are being opportunistic with our investments as the outlook in Australia for commercial properties is still doing well," Fong said, adding that d Glomac is also prospecting India and Vietnam for similar acquisitions.

By Sharen Kaur

More hotels to spruce up Penang island

The Royale Bintang Penang is scheduled to be completed next year

Nine hotels will be developed in the next three to four years

SOME nine hotels in the three, four and five-star categories will be developed on the Penang island in the next three to four years.

They include Royale Bintang Penang and The Rice Miller Hotel both in Weld Quay, Hard Rock Hotel in Batu Ferringhi, Cititel Express Hotel in Jalan Magazine and Eastin e-hotel in Queensbay Mall.

The other four hotels, still yet to be named, are located at Jalan Sultan Ahmad Shah, Times Square and Queensbay Mall.

The Hard Rock Hotel, scheduled to open in early 2009, is now undergoing construction.

Located along the famous Batu Ferringhi beach front, the 252-bedroom hotel has nine studio suites and a King’s suite as well as four food and beverage outlets, which will include a Hard Rock Cafe, an all-day dining restaurant and a bar-cum-lounge.

The hotel’s main ballroom and three function rooms offer a total of 5,700 sq ft for private events as well as for meetings, corporate events and exhibitions.

Meanwhile, the four-star Royale Bintang Penang is being developed by Boustead Holdings Bhd at a cost of RM110mil.

The 12-storey hotel, equipped with 300 bedrooms, has a built-up area of about 250,000 sq ft.

Construction on the hotel has started and it is scheduled for completion at the end of 2009.

The RM150mil Eastin e-Hotel in Bayan Baru is currently being developed by the CP Land group.

CP Land group executive chairman Datuk Tan Chew Piau said the business class hotel would have 339 rooms, of which 28 were suites. It will be completed by mid-2009.

“We also plan to develop a five-star hotel and a budget hotel for the Queensbay Mall project, which are scheduled for completion in 2012 and 2014,” he said.

The IGB Group is scheduled to start developing the 28-storey Cititel Express Hotel soon. The RM100mil three-star hotel will have 550 rooms.

Cititel Hotel Management Sdn Bhd (CHM) managing director Datuk Eric H.K. Lim said the hotel was scheduled to commence operations in the last quarter of 2010.

“It will also feature a podium with a bazaar that can accommodate 80 and 100 shoplots,” Lim said.

Meanwhile, the five-star Rice Miller Hotel, scheduled for completion in 2012, is part of the RM500mil Pier commercial plaza project developed by Asian Global Business Sdn Bhd (AGB).

The Pier occupies six existing 19th century buildings that will see new structures being added on.

“We are working closely with our architects and heritage conservation and environment planner to revitalise the historical resources on the site,” said AGB chief executive officer Dr Noraini Abdullah.

Construction of The Rice Miller Hotel and the Pier project are expected to start in the next six months.

Ivory Properties group will develop a RM250mil five-star hotel for its Times Square scheme.

General manager Chok Keng Vui said construction work on the hotel was scheduled to start in mid-2010.

The hotel, which comes under phase four of the RM1bil Times Square project, will have 500 rooms.

The Low Yat Group has received the green light from the local authorities for its 23-storey hotel with 399 rooms and a double-storey basement car park at Jalan Sultan Ahmad Shah.

Construction will begin soon on the hotel, which will have about 62,000 sq ft of built-up area.

Meanwhile, the Malaysian Association of Hotels (Penang chapter) chairman Marco Battistotti said the new hotels would enable the local tourism industry to tap on tourist arrivals from niche and new market destinations.

“The new hotels will work on tapping unexplored destinations and specialised market segments, increasing the popularity of Penang as a holiday resort,” he said.

Battistotti also said in view of the heritage city status given by Unesco recently, Penang and Malacca should work together to promote heritage tourism of the Straits Settlement.

On average, the hotels in the city enjoy a yearly occupancy of 70% to 75% and beach hotels 60% to 65%.

“With the country’s economy growing 5% to 6% annually, there will still be demand from the domestic and international markets to support the new hotels.

“About 60% of the tourist arrivals is domestic with the remainder from overseas” said Battistotti.

There are now 40 hotels in Penang, of which 25 are in the city and the rest in the beach areas.

By The Star (by David Tan)

Retaining the heritage design

The four-star Royale Bintang Penang, scheduled for completion by the end of next year, will make constructive re-use of heritage buildings.

Boustead Properties Bhd executive director Datuk Ghazali Mohd Ali told StarBiz that the RM110mil project located at Weld Quay would retain the original fa├žade thus providing hotel guests a rare opportunity to experience the original fabric of a 19th century building.

The 12-storey hotel is located in offices and godowns established in 1893, a period of great significance in the history of port settlement.

“The architecture also allows for modern, up-to-date designs and facilities within the building,” Ghazali said.

He added that glass walls were installed to separate the modern structures from the heritage part of the building.

“We are also creating an atrium, which is designed to link the new and old, providing a transition space of pleasant contrast.

“The atrium is 13 metres in height, above which is a glass skylight roofing,” he said.

The Royale Bintang Penang will have 300 rooms and 222 car-parking bays.

By The Star (by David Tan)

Impact of global economic turmoil on shopping centres

The Council of Asian and Shopping Centre (CASC) Conference 2008 to be held in Petaling Jaya from Oct 29 to 31 will focus on the current global economic turmoil and its impact on Asian shopping centres.

Malaysian Association for Shopping and Highrise Complex Management (PPK) president Joyce Yap said this year’s conference was important as it would focus on issues such as the impact of inflation, cost management, environmental issues, human resources and political instability faced by Malaysia and the region.

Joyce Yap

“Speakers will compare the impact of this coming ‘recession’ to the previous two and whether the solutions used would be applicable. It will take into consideration critical issues faced by shopping centres and retailers to plan for survival strategies during this difficult time,” Yap said.

There will be prominent speakers from Malaysia, China, India, the Philippines, Hong Kong, Thailand, Singapore and Indonesia.

CASC, established in 2004, is aimed at regional co-operation and setting future directions for shopping centre management in the region. Council members include the shopping centre associations of founding countries such as Malaysia, Singapore and Indonesia together with Hong Kong, China and the Philippines.

Yap, who is the leasing and marketing director of Pavilion KL, said Malaysia still did not have enough quality shopping centres.

“We are not as competitive and aggressive as some of our neighbouring countries. Look at Thailand, they have recovered from economic and other problems quite fast and this is due to the concerted efforts by their government and the private sector,” she said.

On the current US financial meltdown, Yap believes it would not be as bad an impact as the high inflation, political uncertainty and branding issue faced by Malaysia and the region.

“Shopping is a way of life in Asia. Shoppers are wiser today and retailers need to pamper their customers with added value and incentives. Consumers must feel that they have made a worthy purchase that has also alleviated their perceived status,” she said.

Joyce added that there were many measures that landlords and tenants could take to boost sales.

For instance, landlords could review space usage; promotions, downsizing and energy management while tenants could consolidate, re-invent their merchandise, and conduct direct sales campaigns and franchising.

Where necessary, landlords may have to review rental rates to ensure that the shopping centres do not suffer too much of a drop in occupancy during bad times.

Yap, however, lamented that the retail industry still did not have firm statistics on consumer spending trends.

“It does not matter whether you are in the central business district or suburban area, the crucial point is what it takes to make you successful.

“Do you understand your market and product? Detailed feasibility studies are important. Unfortunately Malaysia is short of retail data,” she said, adding that the Statistics Department was compiling sales data and would be making it available by year-end.

By The Star (by S.C.Cheah)

Axis to inject RM300mil assets over next two years

AXIS REIT Managers Bhd has lined up more than RM300mil worth of assets to be injected into Axis real estate investment trust (REIT) over the next two years.

According to Axis REIT Managers chief executive officer Stewart Labrooy, the group will be acquiring assets from developers or third parties, as well as tapping into its eight private equity assets.

The properties from its private equity fund comprise office, warehouse, industrial or showroom type properties. The first of the asset has been injected into Axis REIT recently at a cost of RM32mil, which was a discount of some 12.5% from the market value.

“We have proven that Axis REIT has the capability to undertake yield accretive acquisitions in the open market. Today we have committed to a portfolio of 21 properties of which 18 assets worth RM670mil have been concluded.

“We have pre-qualified three assets in Johor and the Klang Valley worth a total RM150mil and expect these acquisitions to be completed by year end,” Stewart told StarBiz, adding that Axis’ target to increase its asset base to RM1bil would be achievable next year.

He said besides resorting to bank borrowings, the group would also undertake equity raising exercises to raise capital to fund the acquisitions.

The private placement of 50 million new units at RM1.80 each in January has raised RM88mil. This has given the company the flexibility to pursue more aggressive yield accretive acquisitions without raising its gearing.

Axis REIT has been approved to issue another 51.18 million units valued at around RM82mil, which is equivalent to 20% of the approved fund size of 255.9 million units.

REITs in the country are allowed to gear up to 50% of their asset value but Axis REIT is sticking to its target of maintaining a gearing ratio of between 35% and 40%. Its current gearing ratio is about 39%.

An analyst with a local brokerage said the line up of strategic office cum industrial buildings would give a boost to Axis REIT’s income yielding potential.

“We continue to like Axis REIT for its ability to acquire yield-accretive properties and a proven track record in growing its property portfolio as well as its hands-on and experienced management.

“We maintain an outperform rating on the stock,” she said.

She added that industrial buildings, being location-centric within industrial hubs, offered better yields as they have single tenants and longer-term tenure of at least five years.

“Axis REIT can look forward to good rentals and long-term defensive earnings,’’ the analyst pointed out.

By The Star (by Angie Ng)