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Monday, November 10, 2008

SunCity Ipoh to woo Asia Pacific, Mideast investors

SUNWAY City (SunCity) Bhd's RM2 billion Sunway City Ipoh township project in Perak, stalled during the 1997 Asian financial crisis but revived in early 2002, will feature a few world-class properties.

This is to woo investors from Asia Pacific and the Middle East as tourists or to take up residence in the township under the Malaysia My Second Home programme.

"We hope there will be interest through the product offering," managing director for property investment Ngeow Voon Yean told Business Times.

Last year, South Korean developer, CI Korea Co Ltd, signed a memorandum of understanding with project developer Sunway City Ipoh (SCI) Sdn Bhd to get South Koreans to buy properties in the township.
According to SunCity's website, it has a 65 per cent equity in SCI. The Perak State Government has some shares in it also.

The township, covering 520ha in Tambun some 20 minutes away from the city centre, is made of three components - property, leisure and education - planned for completion over five to 10 years.

Already built are over 3,000 lake-side homes, semi-detached houses, country home bungalows and apartments; Lost World of Tambun (LWOT); a golf driving range; a Giant hypermarket; Sunway College; Sun Inns Budget Hotel and an Extreme Park. Also in the pipeline are plans to set up a seafood park, an entertainment centre, an education hub and a hospital.

SCI is building a five-star hot spring and health spa resort for RM70 million, earmarked to be an iconic property in Malaysia and a world-class attraction.

Ngeow said the resort, with majestic limestone hills and a rainforest background, will operate from early next year and will add to Perak's appeal.

"We will launch 25 units of hill villas aimed at foreigners. Depending on the market, we will add 50 or 100 more later," Ngeow added.

There are also plans to extend LWOT, which was built in 2006 for RM60 million on a 14.6ha.

LWOT general manager Calvin Ho said the theme park, which has been designed along the lines of a lost civilisation, has pockets of land outside the 14.6ha enclave, for expansion. Among its attractions now are slides, a man-made river mea-suring 600m, a waterpark with turbulent waves and a variety of tube slides.

It boasts some unique attractions like the Tiger Valley, home to Siberian and Bengal tigers and the Tambun Hot Springs, with waters that have an average temperature of 45 degree Celsius.

"LWOT is the most expensive theme park built in the north and is set to grow. It features elements of medical tourism to attract the Arabs," he said.

By Business Times (by Sharen Kaur)

I&P: Four new projects on despite global crisis

PROPERTY developer Island & Peninsular Sdn Bhd (I&P) is going ahead with the launch of four new projects in the remaining months of this year, undeterred by the global economic slowdown.

Group managing director Datuk Jamaludin Osman said the first project calls for the launch of four additional phases of properties at its flagship Bandar Kinrara township this month in Puchong, Selangor.

The other three projects will involve launches of properties in new townships such as Alam Sari in Bangi; Alam Impian in Shah Alam; and Kota Bayuemas in Klang.

"It is business as usual for I&P, despite the slowdown. We are going ahead with our planned property launches from now until next year," he told Business Times in an interview.

Properties to be launched at the various developments will comprise two-storey terrace houses, semi-detached houses, bungalows and shoplots.

For example, the developer plans to launch two-storey terrace houses and shop units at Kota Bayuemas, as well as 110 units of two-storey terrace houses in Bandar Kinrara, priced from RM475,0000 per unit.

"All these launches are in preparation for next year's revenue," said Jamaludin.

Jamaludin said I&P also plans to push projects currently under construction at Bandar Kinrara and Alam Impian in Shah Alam.

Meanwhile, Jamaludin said the company has seen a softening of the market for its properties.

"It now takes six months to sell a certain property compared with previous years when once we launch, the units are immediately snapped up. But that's okay, we still manage to sell," he said.

"We remain positive on the local property market and will tread carefully," he added.

Jamaludin said I&P is still doing fine and has collected a revenue of RM517 million for the first nine months ended September.

The group turned in a revenue of RM800 million in the financial year ended January 2007.

Jamaludin, however, said the company will proceed to launch projects in 2009 only after carefully reviewing prevailing economic and market conditions.

"We will only launch in tandem with good economic and market conditions, we need to be cautious and prudent," said Jamaludin who declined to reveal the number of property launches the company has in store for next year because he wants to first observe the market conditions.

He said I&P has to remain competitive by coming out with strategies in tandem with the market situation.

"When the market is bad and you launch 1,000 units, you are certainly looking for trouble," said Jamaludin.

He said the market will be good with the support of banks to give out loans to housebuyers because houses are seldom bought cash.

"I&P takes pride that its houses are reasonably priced and remain competitive among its peers despite the rising cost of construction materials.

With a total landbank of 5,263ha nationwide, I&P also owns and develops Alam Damai in Cheras, Seri Beringin in Bukit Damansara, Alam Sutera in Bukit Jalil, Kota Seriemas in Nilai, Negri Sembilan, Taman Setiawangsa in Kuala Lumpur, Impian Morib hotel in Morib, Taman Inderawasih and Desa Mutiara in Penang and others.

I&P is a wholly-owned subsidiary of Permodalan Nasional Bhd (PNB) and was delisted from Bursa Malaysia in July last year.

Analysts believe that the company was privatised because PNB felt that its shares were undervalued.

By Business Times (by Zaidi Isham Ismail)

Mideast confidence in Bukit Kiara Properties

PETALING JAYA: The UAE-based Al Batha group, which invested RM42mil in a joint venture with Malaysia’s unlisted Bukit Kiara Properties group, highlights Middle-east companies’ interest in well-managed Malaysian companies.

However, the relationship between the diversified Al Batha group and Bukit Kiara group went beyond profits and it was built on common values, ethics and integrity.

Bukit Kiara Properties Sdn Bhd managing director Tong Nguen Khoong said three years ago, a representative of Al Batha group expressed interest in the properties built by the company.

This saw the Al Batha group, which is involved from automobiles, manufacturing, electronics and real estate, buying a few properties in Bukit Kiara’s Hijauan Kiara apartments.

This was followed by purchases in its first and second tower of the Verve Suites over the past 18 months.

“During this period, both companies got to know each other better,” he said, as both parties took cognisance of each other’s common values, ethics and integrity.

Tong said he remembered a conversation he had with Al Batha vice chairman Sheik Salem bin Mohammed Al Qassimi when Al Batha expressed interest in co-developing Bukit Kiara’s second tower of the Verve Suites.

He remarked to Sheik Salem that Al Batha would be better off as an investor in the project than as a co-developer because “our profit margins are very reasonable and we offer good value to our customers”.

He also recalled Sheikh Salem’s reply that making a reasonable profit but not exorbitant profit was good. This viewpoint was also consistent with Bukit Kiara group’s values.

“Later, this became the catalyst for discussion of investing into the Bukit Kiara group at the holding level,” he said.

Tong said with Al Batha group at the holding level was better instead of being co-investor on a project-by-project basis which would be too ad-hoc.

This led to the formation of the JV company - Al Batha Bukit Kiara Holdings Sdn Bhd (ABBK).

The JV, formalised in Dubai on Oct 20, would see Bukit Kiara group injecting properties with a gross development value of RM700mil.

The JV would provide Al Batha group a foothold into the global market where it intends to have its operations or JVs with overseas companies.

Tong said the paid-up capital of ABBK would be increased to RM105mil, following the injection of RM42mil for the 40% stake in ABBK.

Before Bukit Kiara group started discussions with the Al Batha group, an insurance company had earlier expressed interest to team up with the former.

“However, the insurance company’s focus was on returns in investments only, while we wanted to look at a longer-term partnership,” Tong added.

For the Bukit Kiara group, it has an opportunity to learn from the Al Batha group in the area of long-term growth as it is a huge conglomerate, he said.

“The future for the group is very bright and opens up the possibility of new growth areas to attract Middle-east investors. In the past, investors gave Malaysia a miss because of its small size,” he said.

Tong said once the critical mass was built up, Malaysians could expect to attract more foreign interest, especially from the Middle-east.

“We are looking at a 10 to 15 year horizon. The Middle-east market will create opportunities for Malaysians to venture out,” he added.
By The Star (by Joseph Chin)

HK property prices plunge but few buyers

HONG KONG: The window displays at the Hong Kong property agency where Stephen Poon works are bursting with cut prices, last minute reductions and cash incentives.

But buyers were still few and far between, as the stumbling global economy has cut dead the city's five-year booming property market.

"It has been very quiet," said Poon, a property agent for Midland Realty, a large city firm.

"Before September our branch was making HK$2 million to HK$3 million (HK$100 = RM45.42) every month, but now it's only around HK$50,000," he said, describing a 98 per cent drop in revenue.
"I have six kids, three are at university in the UK where fees are high," said Poon, whose commission has inevitably suffered. "It's my mission to make sure I can put them through school, but it is now also my cross to bear."

The global financial crisis is rapidly stunting Hong Kong's office, luxury and residential property markets after they hit a peak in the early summer.

Signs outside agents have shown discounts of more than a HK$1 million in recent weeks and analysts said they expected prices in every sector to drop by an average of 20-30 per cent before next July.

With sellers reluctant to lose value and many potential buyers holding off amid stock market turmoil and tightening lending conditions, many agents in the territory have already lost their jobs.

Nearly 5,000 agents in Hong Kong and China have left the city's biggest property group Centaline since June as the company struggles with plummeting commissions, Centaline's chairman Shih Wing-ching told AFP.


IJM Land banks on niche projects

With a number of lifestyle residential projects in its stable, IJM Land Bhd can look forward to riding out the current soft property market by focusing on its niche projects in Kuala Lumpur, Penang and Johor Baru.

For the financial year ending March 31, 2009 (FY09), the company expects to maintain sales at around RM800mil to RM900mil, especially from new project launches in Penang and Johor Baru, and ongoing developments in Kuala Lumpur and the Klang Valley.

Sales hit RM1bil for FY08.

Unless the market takes a turn for the worse, IJM Land is looking at 20 new project launches worth a total gross development value (GDV) of close to RM1bil over the next 12 months.

Managing director Datuk Soam Heng Choon said the market slowdown had affected mainly the mass market and lower product segments while the medium-high to high-end sector was still showing potential.

“We will focus on medium, medium-high and high-end products that are priced from RM300,000 to RM7.2mil a unit in good locations,” Soam said.

IJM Land now has more than 60 projects in various parts of the country and is reviewing the launches.

He said should conditions deteriorate, “there is a possibility of holding back some of the projects, which may also include the high priced products if demand falls.”

Soam expects the sales of the medium high-end and high-end properties to mitigate the margin squeeze in the lower-end product segment.

He said one of IJM Land’s strengths was having a broad product range in a geographically diversified market across the country.

“This allows the company the flexibility to tweak its product mix and product specifications to suit the current market conditions.

“We have also been prudent in ensuring our projects are located in prime locations and this has kept our projects in the radar screen of buyers, especially those looking for premier properties,” he pointed out.

Being low-rise and low density, Ampersand located in the highly sought after address in Jalan Kia Peng, Kuala Lumpur, stands out among the other high-rise condominium developments in the Kuala Lumpur City Centre (KLCC) area.

The 71 luxurious apartments with built up of 3,000 sq ft to 5,800 sq ft are priced from RM3mil to RM7.2mil, or an average price of RM1,200 per sq ft.

The price has almost doubled from the time when the project was first launched early last year. About 50% of the units have been sold to-date and the project will be completed next year.

In Penang, the maiden launch of IJM Land’s flagship project, The Light will take place in the first quarter next year.

The first residential project called The Light Linear to be launched in the first quarter will have a GDV of RM150mil while Light Point with a GDV of RM90mil will be launched few weeks after that.

The Light Linear will have 328 units with built-up from 1,379 to 1,513 sq ft, while the more spacious The Light Point units are from 1,807 to 4,000 sq ft.

The Light, a RM4.5bil residential and commercial development on Penang islands’ eastern coastline, will be developed over 12 years.

The residential precinct will have 1,186 residences, including waterfront villas and condominiums.

The commercial precinct will comprise office buildings, four hotels, retail malls, dining and entertainment facilities, a seafront park, floating restaurants and facilities for meetings, incentives, conventions and exhibitions.

In Johor Baru, IJM Land is planning to launch its latest development, Nusa Duta on 127 acres in the Iskandar Development Region by the first half of next year. The RM320mil project will comprise mainly landed properties that are priced from RM300,000.

To tap the foreign market, Soam said IJM Land was also resorting to marketing its high-end residences to participants of Malaysia My Second Home programme.

The maiden event was undertaken recently in Seoul to promote the Pearl Regency project to South Korean buyers.

“There is still good interest for quality Malaysian residential products among the Koreans and we plan to promote some of our other projects there in future,” he added.

Soam said property roadshows would also be held in the Middle Eat and Japan next year.

By The Star (by Angie Ng)

True ‘open door’ policy needed

The RM7bil stimulus package may not be enough to avert a further property market slowdown next year.

The same can be said of the proposal to further liberalise the Foreign Investment Committee (FIC) guidelines on property and commercial sectors.

What we need is not a mere shot in the arm but a total “open door” policy that will truly attract foreign investors to buy our properties on a long-term basis.

Why do I think some of the proposed expenditures might not have its desired result?

RM1.2bil to build 25,000 units of low-and-medium-cost houses: The amount is a drop in the ocean when compared with the overall effect that a severe downturn would have on the economy, particularly the property market.

Developers are not so concerned with getting business to build low-cost units but how they are going to dispose off their billions of ringgit worth of properties, especially the medium to high-end ones.

A better option may be to buy the numerous unsold or vacant low-cost apartments in secondary areas so that the low-income group need not have to wait two to three years to move into their units. Many of these are going for a song. The problem is how to encourage people to move there.

One way is to provide discounted train fares. To spur locals to buy, the Government should waive stamp duties and allow tax deductions on house renovation and the purchase of furniture and appliances to encourage people to buy their first home.

Rather than borrowing RM5bil from the Employees Provident Fund to put into Valuecap Sdn Bhd to buy shares, (some developers describe it as putting money into quicksand), it could be better spent on infrastructure and on building new schools.

RM200mil to revive abandoned housing projects in strategic areas: This again is simply not enough. There are already many abandoned projects, some almost 10 years old. One abandoned project can be worth more than RM100mil. Moreover, reviving abandoned projects is very complicated and time-consuming. Usually it is done in good times when private sector developers find it lucrative enough to undertake them.

We should instead go all out to woo foreigners. Do away with unnecessary restrictions and red tape and treat foreign investors, especially those buying big-ticket items like en bloc purchase of office towers and joint venture partners, like VVIPs.

We must offer them something better than other countries. Provide all the incentives like waiving stamp duties, temporarily abolish the need for FIC approvals, give tax rebates and even permanent residents’ status and citizenship.

Why worry whether foreign buyers occupy the property or not? When developers are able to sell an entire office block to a foreign company, our developer makes money and the Government can earn revenue from taxes. The spin off from foreigners setting up businesses here will be great.

Look at Dubai, in the United Arab Emirates. If this tiny emirate can be transformed into the world’s most futuristic city in less than a decade, why are we still hampered by racial and other petty issues despite having achieved independence for over half a century?

Why are foreign investments pouring into Dubai, which is the world’s biggest construction site? It is luring hoards of tourists as well as property investors worldwide. This desert city of 1.4 million people in 2006 is an oasis of creative and bold ideas that we should emulate.

Yet, here in Malaysia we are unable to resolve issues like bumiputra quota for housing units.

Housing & Local Government Minister Datuk Seri Ong Ka Chuan said over the past few years, Asia Pacific had been steadily attracting a stream of foreign capital into its real estate markets and that of late, renewed bullishness in the region’s economies had revved investors’ interest in many property projects.

“Last year was particularly exciting, with hoards of global real estate investors from the US, the Middle East, China and Japan being drawn here,” he said at the recent signing ceremony between Berjaya Golf Resort Bhd and Hanju-Savanna (M) Sdn Bhd for the en bloc sale of Covilleas Bukit Jalil condominiums in Kuala Lumpur.

Ong said among the reasons for the foreign interest in this region were the exorbitant prices and increasingly compressed yields in the US and Europe; the abundance of liquidity in global markets; the perception by foreign fund managers that the region could provide high returns and the improving transparency of the region’s real estate markets.

Instead of waiting for the Arabs to come, some companies are wooing them in joint venture tie-ups (like the Bukit Kiara Group).

This will be the trend where our companies have to be more aggressive to venture abroad, not only to sell our properties but also to engage in win-win deals with foreign parties where both sides can do business in each other’s countries.

We should explore ways to further encourage more en bloc sales to foreigners as local demand is set to weaken in the coming months. We have to work hard to attract investments from the Middle East which is also hit by the current global financial “tsunami” and the fact that it now finds US real estate more affordable because of the subprime crisis.

By The Star (by S.C.Cheah)

Axis REIT to ride out slowdown

AXIS Real Estate Investment Trust (Axis REIT) (5106) expects to continue paying out attractive dividends to its unitholders despite the slowing global economy and the recent dismal performance of the local stock market.

Axis REIT, which now has a portfolio of 19 properties, does not see a cause for concern as only 20 per cent of its tenancy agreements are up for renewal next year.

Chief executive officer Stewart LaBrooy in fact feels that when businesses feel the pinch of the slowing economy, they tend to cut costs by relocating their offices from Grade A buildings into those offering more attractive rates.

"Based on the previous recession, when things get bad, companies trim their budgets and move to industrial parks .... (and) these are the types of properties that Axis REIT owns," he said.
"Our rentals have always been below the market price. We are so, (because we are) not located in town centres and want to be competitive. Our strategy is to keep the tenants for the long term," LaBrooy said, adding that buildings owned by Axis REIT are categorised as Grade A minus.

"In the location we are based at, we offer better yield even with our lower rents," he told Business Times in an interview recently.

Axis REIT, according to him, has managed to generate a gross yield of 11.6 per cent and has always distributed 99.9 per cent of its net income.

On whether Axis REIT will continue to acquire properties in the current economic scenario, Labrooy said: "We will still grow (our assets) despite the market.

"One should not buy when the market is greedy, but when the market runs scared," he said. In fact, he said, in the current market, there is more properties for sale than previously.

"There are many building owners who want to sell and lease back as they want to monetise their assets for working capital," he said.

"We will take the opportunity when we see it," he said.

Axis REIT will continue to look for commercial properties like offices, warehouses and industrial buildings in the Klang Valley and Johor to expand its asset base.

Currently, Axis REIT has completed the purchase of four and is completing a fifth property that will bring the value of its portfolio to an estimated RM696 million by December 31 2008.

Meanwhile, Axis REIT, which recently applied to be registered as a syariah-compliant counter, may look at debt financing though the issuance of sukuk paper as part of its future strategy.

"We are not looking at it ... maybe at the end of 2009 or in 2010," he said.

By Business Times (by Vasantha Ganesan)