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Tuesday, October 21, 2008

Relaxed FIC rules boon for residential property

PETALING JAYA: Further liberalisation of the Foreign Investment Committee (FIC) guidelines to attract foreign investors to the local property market, especially for commercial property, is most welcomed, industry players said.

It would be a most timely measure to raise the country’s attractiveness as a real estate investment destination, they said.

Lauding the economic stabilisation plans announced by Deputy Prime Minister Datuk Seri Najib Tun Razak yesterday, industry players said the Government’s proposed measures to review the FIC guidelines for the property sector would cushion the market from a demand slowdown caused by the global financial meltdown.

International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong said while the FIC guidelines for residential property purchases by foreigners had been relaxed over the years, the commercial property sector was still subject to strict regulations.

Datuk Richard Fong

“Currently, a foreigner who wants to invest in any commercial property such as offices, retail malls, shop lots and factories but does not intend to occupy the premises himself, is required to have a bumiputra partner taking up 30% stake in the investment before he can go ahead with the purchase.

“This has been a huge restriction to commercial property sale as the guideline is deemed impractical and not advantageous to either party. It is not easy to find the right bumiputra partner who has the financial means to tie down their money for a commercial property purchase which usually runs into millions of ringgit,” Fong said.

Calling for the restriction to be relaxed, he said FIABCI Malaysia had proposed to the Government to impose such a requirement only on investments above RM100mil.

“There have been many instances where foreign interest for commercial property of RM50mil to RM100mil have been rejected because the right bumiputra partners could not be found,” he pointed out.

Fong said the relaxed FIC guidelines for the housing market that were introduced in December 2006 had attracted stronger interest from Middle Eastern, Korean, Japanese, Chinese, British and American buyers.

Since then, FIC approval for housing units priced from RM250,000 and restrictions on the usage and the number of units foreigners can purchase had been lifted.

Stressing that the property sector had the potential to attract higher foreign investments, Fong said the joint public-private sector initiative to launch Malaysia Property Inc next year to promote Malaysia’s real estate overseas had targeted to attract RM10bil in foreign investments over the next five years.

Meanwhile, Real Estate and Housing Developers Association president Datuk Ng Seing Liong said while the FIC had been relaxing guidelines for property purchases by foreigners, there were still restrictions imposed by state authorities.

At the state level, each state authority has the discretion to consider acquisition by a foreigner based on the location and type of property and the percentage of total units in a project. The transfer of property title is under the jurisdiction of the state government.

“These pertain mostly to issuance of property titles for projects involving state-alienated lands and bumiputra lots. State governments should abide by the Federal Government’s directive to relax rulings on foreign purchases to ensure the success of these measures,” Ng said.

By The Star (by Angie Ng)

Berjaya Land to proceed with overseas projects

BERJAYA Land Bhd (BLand), which has excess cash of RM1.8 billion from asset disposal and sale of loan stocks last year, will use more than half of it to fund overseas projects.

The projects are in Vietnam, South Korea and Libya, worth about RM50 billion, which will be released in phases over the next eight to 10 years, chief executive officer Datuk Francis Ng said.

Ng is cautious but bullish about the prospects, despite the current uncertainties in the global economy.

"We may rope in partners to work on the projects in Vietnam to cushion the volatile market. We believe demand will pick up due to the population size and the need for housing," he said after signing an agreement with Hanju Savanna (M) Sdn Bhd for the sale of Covillea Bukit Jalil condominiums in Kuala Lumpur for RM150 million.

BLand has four projects in Vietnam - the RM6.8 billion Vietnam Financial Centre and RM24.03 billion university township project in Ho Chi Minh City; Bien Hoa City Square in Dong Nai province worth RM752 million; and Thach Ban New City in Hanoi worth RM1.64 billion - launching from next year.

It plans to launch the RM11 billion Berjaya Jeju Resort development project in South Korea by the first quarter of next year and the RM6.8 billion integrated golf resort-cum-residential and commercial project in Tripoli, Libya, by mid-2009, Ng said.

"We expect the property division to contribute 50 per cent to the company's revenue by 2012 from 20 per cent currently. From the amount, 30 per cent will come from overseas projects," Ng said.

For fiscal year ended April 30 2008, BLand achieved a net profit of RM1.14 billion, largely from selling KL Plaza in Bukit Bintang, Kuala Lumpur, for RM470.6 million; two hotels in Seychelles for RM201 million; and irredeemable convertible unsecured loan stocks amounting to RM938.1 million.

Revenue tripled to RM1.52 billion due to the consolidation of Berjaya Sport Toto Bhd as a BLand unit.

Ng said earnings for the current year may dip due to outflow of investment funds for overseas projects.

Locally, BLand will launch 110 units of double storey houses or phase 2 of Berjaya Park in Shah Alam, Selangor, next month and 25 units of luxury bungalows worth RM175 million in Seputeh Heights, Kuala Lumpur, by December.

Ng said BLand is looking for en bloc buyers for the properties and also for its future launches.

"We hope to achieve RM350 million in sales by the end of the current fiscal year, from RM200 million currently," he added.

By New Straits Times (by Sharen Kaur)

BLand may put projects on hold

KUALA LUMPUR: Property company Berjaya Land Bhd may put some of its projects on hold due to the current bearish market sentiment but is still confident of generating some RM350mil in property sales in its financial year ending April 30, 2009, said chief executive officer Datuk Francis Ng.

But the company’s huge projects in Vietnam would not be affected, Ng said, pointing out he expected the property slowdown in Vietnam to be short term.

“We will proceed with our Vietnam ventures because it is a long term investment,” he said, adding that the company’s four property development projects in Vietnam were worth about US$2.5bil in gross development value (GDV).

He said he expected the overseas markets to contribute 30% of the company’s revenue in the next three to four years.

Ng said the global financial crisis and rising cost of building materials had brought on a slowdown in the local property market and that the company might have to review and postpone some projects until the market recovered.

But he said other new launches would boost the company’s total property sales and that Berjaya Land was confident of achieving RM300mil to RM350mil in sales this financial year.

Berjaya Land is scheduled to launch its Berjaya Park project in Shah Alam and Vasana Link Bungalows development in Seputih Heights before the end of the year.

“We are currently in talks for en-bloc sales of the properties,” Ng said, adding that the GDV for its 25-unit Vasana Link project was RM175mil.

“We have sold about RM200mil worth of properties currently,” he said after a signing ceremony between Berjaya Golf Resort Bhd and Hanju Savana(M) Sdn Bhd yesterday.

Berjaya Land’s subsidiary Berjaya Golf Resort signed a sale and purchase agreement with Hanju I&D Co Ltd’s subsidiary Hanju Savana, for the sale of its entire two blocks of the 20-storey Covillea Bukit Jalil condominiums for a total of RM150mil.

Ng said Berjaya Land was not in a hurry to raise new funds as it had about RM1.8bil from previous fund-rasing exercises, which it would use for future expansion.

By The Star

Bukit Kiara in UAE JV It is injecting RM700mil of properties

DUBAI: The Bukit Kiara group is injecting its properties, with a gross development value (GDV) of RM700mil, into a joint-venture (JV) company with United Arab Emirates’ Al Batha group to focus on property developments in Malaysia and overseas.

Under the JV agreement signed in Dubai yesterday, the JV company, Al Batha Bukit Kiara Holdings Sdn Bhd (ABBK Holdings), would be owned 60% by the Bukit Kiara group and 40% by Al Batha.

“The JV would enable both parties to expand their customer bases as well as leverage on each other’s strength to undertake property developments both in Malaysia and the UAE,” the two parties said in a joint statement

The Al Batha group, one of the biggest private investment groups in the UAE, would invest RM42mil in ABBK.

Al Batha, which is owned by the Al Qassimi family, has diverse businesses, including automobiles, pharmaceuticals, manufacturing, real estate and education.

As for the Bukit Kiara group, eight of its companies related to property development and previously 100% owned by Bukit Kiara Capital Sdn Bhd (which is under the Bukit Kiara group) would be injected into ABBK. These include the RM700mil worth of projects.

These eight companies include Bukit Kiara group’s flagship company Bukit Properties Sdn Bhd and seven others that are involved in interior design and contracting works as well as properties management services.

Bukit Kiara Properties Sdn Bhd managing director Tong Nguen Khoong said for the Bukit Kiara group, the formation of ABBK marked a significant milestone.

Speaking at the signing ceremony, Tong said Bukit Kiara Properties, which was set up eight years ago, had successfully completed its first and second projects with a GDV of about RM300mil.

“We are now in the middle of our third project, namely the Verve Suites, which comes in four phases. When completed, Verve Suites will reap in gross development revenue of close to RM530mil,” he said.

Tong added that the Verve Suites were now injected into ABBK as part of the RM700mil property projects.

He said ABBK would also undertake more property projects, the Persiaran Madge in Ampang and another along Jalan Tun Razak.

“We will also be exploring possibilities with Al Batha about expansion plans within Malaysia, the region and perhaps the UAE, where Al Batha has strategic pockets of land,” he said.

Tong said ABBK had started plans to open up a marketing and sales office in Dubai to tap into the growing affluence of UAE residents seeking alternative real estate investment opportunities.

Al Batha group managing director Rainer Joechen said the JV was an important step into the global market, where Al Batha wanted to have its operations or JVs with overseas companies.

“To invest in Malaysia is in line with the strategic objective of the Al Batha group to expand beyond the UAE,” he said.

Joechen said Al Batha was seeking to develop into the global markets and to have operations and JVs that would add value to its business.

Among those present at the official signing ceremony were Bukit Kiara group chairman Datuk Alan Tong Kok Mau and the chairman of the Al Batha group, Sheikh Ahmad Mohammed Al Qassimi.

By The Star (by Joseph Chin)

Malaysia to review foreign hypermart rules

The Ministry of Domestic Trade and Consumer Affairs is proposing that guidelines governing the expansion of foreign hypermarkets in Malaysia be reviewed as the business environment has changed over the years.

"Some of the conditions that were there during the time when the Cabinet discussed and issued the guidelines (several years ago) have now changed," Minister Datuk Shahrir Abdul Samad said, adding that the ministry will prepare a paper on the matter to be discussed in Cabinet.

SOCIAL DUTY: A representative of Carrefour giving out Deepavali gift. Looking on is Shahrir (right)

Speaking to reporters at "Deepavali with Carrefour" in Subang, Selangor, yesterday, he said hypermarkets like Carrefour, Giant and Tesco have had an impact on prices, spending, employment and investment in the country.

"As far as the Cabinet is concerned, there is a great deal of interest and support for the presence of hypermarkets," Shahrir said.

He said based on the ratio of hypermarket to population, "theoretically, there is no need for any more hypermarkets", but there continues to be interest by foreign hypermarkets to invest and open new outlets.

The ministry, since 2001, has introduced several guidelines to control the expansion of foreign hypermarkets and protect mom-and-pop stores.

The most stringent rule was a five-year freeze beginning January 2004 on openings in Kuala Lumpur, Shah Alam and Petaling Jaya in Selangor, Penang and Johor Baru. It is unclear whether this ban is still in force.

Other rulings include the application for building a hypermarket be submitted two years in advance and before the land is purchased. The government also requires that an impact study be done in a 3.5km radius from the identified location of a hypermarket.

These rules were incorporated into the Guidelines on Foreign Participation in the Distributive Trade Services 2004.

In his speech, Shahrir said the fall in global crude oil prices, which has also seen a decline in prices of some commodities and fuel pump, should see the prices of goods on the shelves come down in the next four to five months.

He said there will be an announcement on the price reduction for one food item this Friday, but declined to elaborate.

By New Straits Times (by Vasantha Ganesan)