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Monday, November 24, 2008

Keen interest prompts latest YNH launch

An artist's impression of the Kiara 103 project

YNH Property Bhd is targeting to officially launch its RM1bil Kiara 163 suites, a mixed development project in Mont’ Kiara, Kuala Lumpur, next month.

The project comprises a 23-storey office tower (175,000 sq ft), two 42-storey serviced apartment blocks (595,000 sq ft), retail podium (142,000 sq ft), and an auditorium (175,000 sq ft).

“We are launching the project due to keen interest from prospective local and foreign purchasers and also due to its prime location.

“There are always investors who look at property investment as a good hedge against inflation.

“We have secured about RM260mil in sales for the office and retail space to-date,” said group corporate services head Daniel Chan.

Chan said that to add value to Kiara 163, the retail podium and serviced apartments had eye-catching architectural designs and recreational facilities.

The two 42-storey serviced apartment blocks had a unique curved block design that was accentuated by the extensive use of glass windows, he said.

“The apartments will be equipped with facilities such as a swimming pool, jacuzzi, a gym, squash court with garden setting, and an entertainment pavilion,” Chan added.

The four-level retail podium is positioned as a neighbourhood retail centre catering to affluent expatriates and the local population.

“Food and beverage outlets, a supermarket, specialty stores which deals in fashion, eyewear and watches as well as service providers, including laundry outlets and medical and dental clinics, are on our list of retailers.

“The unique feature of the retail podium is the sunken outdoor courtyard where the food and beverage outlets will be located,” Chan said.

The office tower block, which would provide an alternative to corporate headquarters that did not require a city centre address, was also designed to accommodate small home-office units, Chan added. “This would help us tap into diverse markets,” he said.

The group’s other mixed-development projects, Duta Kiara 1, Duta Kiara 2, Duta Kiara 3, Duta Kiara 5, Duta Kiara 6 and Project 3KL, located in Mont’ Kiara, Hartamas and Kuala Lumpur city centre, would be launched over the next two years, Chan said.

These projects have a total gross development value (GDV) of about RM2bil.

“Our projects in KL and Mont’ Kiara, such as the Fraser Place KL and Ceriaan Kiara, have been well received with Fraser Place KL achieving sales of about 99% and Ceriaan Kiara 87% to-date,” said Chan.

Fraser Place KL is scheduled for completion soon, while Ceriaan Kiara will be ready by end-2009.

In Manjung the group’s “bread and butter” township development will continue to contribute to earnings for the next 20 to 30 years due to the demand from employees of the Lumut Naval Base as well as workers at the oil and gas fabrication and biodiesel plants there.

On the status of Menara YNH, the group had accepted Kuwait Finance House’s offer to buy 50% of the iconic “Grade A” office tower in January, Chan said.

“This property, located in the central business district, is designed by a world-renowned architect firm, Fosters and Partners.

“We are not in a rush to sell the second block as we want to get the best value for our shareholders.

“Based on our earnings before interest, tax, depreciation and amortisation of 50%, we are able to achieve a yield of above 7.20% if the rental is conservatively priced at RM3.80 per sq ft,” he said.

Chan said the company’s dividend policy was at least 30% of profits but the group had paid a higher rate in the past few years.

By The Star (by David Tan)

Freebies galore as developers push sales

Developers need to be innovative to create demand for their projects

TIMES must be getting quite bad, judging from the recent spate of generous freebies and incentives thrown in by developers to push property sales.

While in the past such incentives were offered by big and small players, this time around it appears that the “big boys” are going all out to sell their products while the smaller ones are mostly lying low.

For example, Soon Tiek Development Sdn Bhd is offering a whopping 21% guaranteed rental return to buyers of its retail outlets at Leisuretainment @ Endah Promenade.

Sime Darby Property Bhd has also been aggressively marketing its products with a host of incentives, including a “Guaranteed Buy-Back” programme to allay any fears among buyers during the current “uncertain and challenging times”.

Buyers of its houses, including those in Bandar Bukit Raja, Planters’ Haven, Bukit Jelutong, Denai Alam, USJ Heights and Nilai Impian, also stand to win big cash prizes: RM100,000 (first prize), RM60,000 (second prize). RM40,000 (third prize) and RM20,000 (fourth prize).

The SPK Group is also wooing buyers of its Cahaya SPK two-storey superlink homes, priced from RM468,000, with its “Year-End Bonanza” which consists of a grand prize of a Toyota Camry, first prize of a seven-day, six-night Australia Gold Coast holiday for two and for the other winners, vacations to South Korea and Hong Kong.

The IOI Group, which has many developments in the Klang Valley, recently offered several incentives that included a 45-day interest-free period for EPF withdrawal applicants and a 90-day interest-free period for government loan applicants. Buyers of its latest two-storey terrace houses and The Grand 2, comprising three-storey shop offices in Bandar Puteri Klang, also get a chance to win RM10,000.

A few months ago, purchasers of Phase 2 Jelutong Heights’ 2½-storey semi-detached houses priced from RM1.12mil were offered a RM50,000 “early bird” discount at a special preview. Buyers need only pay 10% upon signing the sale and purchase agreement with “no cumbersome progressive interest” until vacant possession.

These incentives, usually thrown in with free lunches, tea parties and sometimes elaborate dinners with classical music for upmarket products where only a handful of privileged guests are invited, are becoming the norm.

Most developers will not openly admit that their sales have slowed but the “off-the-record” consensus is that 2009 will be very challenging.

But will these freebies and incentives have any impact on sales? Those with steady-paying job and sound finances may find the incentives attractive enough to help them decide to buy.

However, generally, people are still wary and uncertain of the economy and are adopting a “wait-and-see” attitude, something that developers do not want.

Developers have not only delayed launches but some of them are forced to downsize or make major changes to their projects.

Some are looking for greener pastures abroad and have re-branded while others are trying to create new demand with unique products.

Berjaya Land Bhd and AP Land Bhd have new projects in Cheju Island, South Korea, and Hokkaido, Japan, respectively. It can be expected that more developers will be venturing abroad as local demand is set to shrink.

Instead of competing with each other, developers must pool their resources to collectively woo more foreign investors to Malaysia under the Malaysia Property Inc, tasked with promoting the country as an international property investment destination.

The International Real Estate Federation Malaysia is facilitating this collaborative effort between the Government, Real Estate and Housing Developers Association, Malaysian Institute of Estate Agents and the private sector.

Britain, the Middle East and Japan have been identified as the main target markets to launch Malaysia’s branding and promotional initiatives, with the Malaysia My Second Home (MM2H) programme being given priority.

Foreigners should find our products, especially the high-end ones, comparable with some of the best in the world. What we need is to let the world know more of what we have to offer. The pricing of our properties and the cost of living are still favourable.

The Government can do more, not just by injecting funds but, more importantly, addressing issues such as rising crime rates to ensure that Malaysia is seen as a safe place for MM2H, and offering tax incentives to spur people to buy their first home.

By The Star (by S.C.Cheah)

Karambunai says Sabah mart still hot

Property developer and resorts operator Karambunai Corp Bhd (KCB) will launch three new projects next year worth RM1.1 billion collectively in Kota Kinabalu, Sabah.

The Sabah firm is unfazed by the global financial crisis, expecting the property market in the state to remain buoyant, chief executive officer Datuk Robin Loh Hoon Loi said.

"We are fortunate the property market is still hot and active in the state, which is busy with palm oil, petroleum and tourism activities. Because of this, there is demand for new products," Loh said.

Loh told Business Times in an interview recently that foreigners are still looking for exotic products under the Malaysia My Second Home programme and for investment purposes.

KCB has over 766ha of prime land in Kota Kinabalu with two active big developments - Nexus Karambunai in the Karambunai peninsula and Bandar Sierra township - where the new launches are scheduled to take place.

In the Karambunai peninsula, KCB will launch Amabilis, a RM400 million upscale project in Nexus Residence Karambunai, featuring 100 luxury villas; and a 26.5ha Korean Village Resort, comprising villas and condominiums with recreational facilities worth over RM400 million.

Amabilis is expected to be launched in the first quarter of 2009, in conjunction with the opening of Dillenia, a new hotel under the Nexus resort brand, encompassing 80 units of semi-detached villas and 163 units of low-rise condominiums, some of which have been sold to investors under a leaseback option.

KCB has leased back some 90 per cent of the units to complement its existing five-star, 500-room Nexus Resort Karambunai, operating since 1997.

The launch of the Korean Village Resort, which is a 30:70 joint venture between KCB and Landlovers Korea Co Ltd, is still being finalised.

In Bandar Sierra, it will launch by mid-2009 200 units of terrace and semi-detached houses and cluster homes; 416 units of walk-up apartments; and 80 units of three- and four-storey shoplots worth RM180 million, utilising 16ha.

Loh is confident that sales will be vibrant, boosted by the location and demand.

While Nexus Karambunai is world renowned, Bandar Sierra, which is about 15 minutes' drive from the city centre, has become a landmark project for Kota Kinabalu with natural demand as government offices are relocating close by, he said.

By Business Times (by Sharen Kaur)

Silver lining for developers

Developers with a good line-up of pre-constructed projects for launch and high unbilled sales can look forward to commendable year-on-year financial results in the upcoming reporting season.

While most industry players have experienced an erosion in profit margin as a result of higher construction costs that started a year ago, companies that have projects in advanced stages of construction and recorded good take-up for their products will hold out well, performance-wise.

According to analysts’ estimates, Mah Sing Group Bhd is expected to turn in a higher net profit of RM98.7mil for its current financial year ending Dec 31 (FY08), from RM81.1mil in FY07, while revenue is set to rise to RM680.5mil from RM573.4mil.

In the first half of 2008, Mah Sing recorded sales of about RM263mil.

Mah Sing is one of the favourite picks for its sound balance sheet, strong branding and project execution capabilities.

Based on the company’s quick turnaround model, projects are usually launched six to nine months after land acquisition, although there could be some delay in the coming months following the softer market sentiment.

The company’s cash surplus of RM143mil as at Sept 30 will stand it in good stead to look for opportunistic acquisitions to expand its market presence.

In a research note, CIMB Research said Mah Sing was eyeing more land in Malaysia and hoped to wrap up several acquisitions over the next few months.

It is also scouting around for landbank in Vietnam, as the asking price for land should now be more realistic in view of the difficult market conditions there.

“Mah Sing is well-positioned to embark on more land acquisitions with its cash in hand, which should increase to RM213mil by mid-2009.

“It also has the capacity to borrow up to RM250mil should it choose to increase its net debt-to-equity ratio to a comfortable 0.5 time from 0.1 time in September,” the research house said.

Another developer with an identical financial year, United Malayan Land Bhd (UM Land), can expect some improvement for its third-quarter results following two quarters of losses.

The company recorded a loss of RM1.5mil for the first quarter ended March 31 and a further RM4mil loss in the following quarter.

However, on a year-on-year basis, UM Land’s results for FY08 are expected to be significantly short of last year’s.

In FY07, UM Land turned in a profit after-tax and minority interest of RM46mil on revenue of close to RM400mil.

The good response to its Suasana Sentral Loft condominiums in KL Sentral worth a gross development value (GDV) of more than RM300mil contributed to bottom line in FY06 and FY07.

Going forward, its latest project Suasana Bangsar, which was launched in July, will contribute to sales and earnings.

The project, with GDV of RM190mil, will take two to three years to complete.

Other projects in the pipeline will be a joint venture with MMC Corp Bhd to develop serviced residences in Persiaran Raja Chulan next year and a joint venture with Bolton Bhd to build high-end condominiums in Jalan Mayang, Kuala Lumpur, by 2010.

Meanwhile, companies which derive their income from investment property are in a better position to weather the current challenging market conditions as their rental income has been locked in.

Being the largest owner of superprime commercial properties in Kuala Lumpur City Centre (KLCC), the performance of KLCC Property Holdings Bhd is not expected to be much impacted by the market slowdown.

Hwang-DBS Vickers Research said the company had the most defensive earnings in the sector through locked-in rental income from blue-chip tenants on long-term leases.

It said KLCC Property’s earnings should continue to grow at a stable three-year cumulative average growth rate of 9%.

By The Star (by Angie Ng)

Ireka to build on i-Zen brand in Vietnam

IREKA Corp Bhd plans to aggressively grow the i-Zen brand for its overseas property development, especially in Vietnam, says executive director Lai Voon Hon.

“The Vietnamese market offers vast opportunities for the i-Zen brand, as the country has a young and educated population, strong foreign direct investment and a proactive government that promotes changes and liberalisation,” he told StarBiz.

He added that that the group was targeting the upper middle income segment in Vietnam.

i-Zen is an embodiment of quality products, contemporary lifestyle, high security, continued relationship with buyers, after-sales services and property management services.

Ireka’s property development in Vietnam is via its associate Aseana Properties Ltd. Currently, Aseana has seven projects in Malaysia and three in Vietnam.

Aseana’s joint ventures in Vietnam have an estimated gross development value of US$1.9bil. Its upcoming projects include Queen’s Place and Hi-Tech Healthcare Park, both in Ho Chi Minh City.

Queen’s Place sits on two acres and is a US$200mil joint-venture project in which Aseana owns 65%. It comprises residential units, offices and a retail mall.

Hi-Tech Healthcare Park is a US$420mil mixed commercial and residential development on 93 acres. It is 51%-owned by Aseana.

Lai said Mont’ Kiara had provided Ireka with the “branding showcase” and expertise to promote i-Zen outside Malaysia.

“The i-Zen brand has helped Ireka differentiate itself from others. This will not only benefit us during property launches but also allow buyers to command a premium resale value.

By The Star (by Law Kai Chow)

UAE intervenes in merger of mortgage lenders

DUBAI: Two of the United Arab Emirates' (UAE) largest mortgage lenders, already on track to merge, will be brought under a government-owned bank, the UAE finance ministry said yesterday, in the first sign of federal government intervention in Dubai's troubled property sector.

Trading in both Amlak and Tamweel, which have been struggling amid the global credit crunch, was suspended after the finance ministry said it will supervise their merger under the government's Real Estate Bank to ensure a fair valuation and protect shareholders.

"For Amlak and Tamweel it was always clear that some level of government support was necessary," said Raj Madha, a banking analyst at EFG-Hermes. "There were three problems that Amlak and Tamweel were facing: funding, liquidity and solvency.

"A merger between the two would have made no difference to those problems but an integration with Real Estate Bank effectively addresses all three of those issues," he said.

The combined market value of the firms is 2.5 billion dirhams, or US$681 million (US$1 = RM3.63) roughly one-third of their worth since October 4 when the two Dubai-based firms first announced merger plans.

Little-known Real Estate Bank, which comes under the finance ministry, is a government-owned entity aimed at supporting the real estate sector and provide housing for UAE nationals, according to its website.

Earlier this month, Tamweel said it was in talks with the central bank and the finance ministry about their "short-term requirements facility", and long-term funding options once its merger with Amlak had gone through.

A finance ministry official said yesterday that more details would be announced in coming weeks while an Amlak official declined to comment. Tamweel was not immediately available.

The companies will be combined as the UAE Real Estate Bank to create the largest real estate finance institution in the country, the state news agency WAM said.

Lenders and developers in the UAE have been battered by the credit crisis as market financing evaporated, property values plunged and buyers fled a market where land values have ballooned during a five-year boom.

Speculation has grown, as the financial crisis squeezes credit and hits stocks and real estate markets, that the federal government may step in to help shore up confidence in Dubai. Becoming a licensed bank would enable the two mortgage lenders to take deposits and access emergency federal funds.

By Reuters