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Wednesday, December 24, 2008

Builders expect new projects to start flowing in H1 2009

PETALING JAYA: Contractors expect new jobs to start flowing in following the Government’s efforts to pump prime the economy in the first half of next year.

Master Builders Association Malaysia president Ng Kee Leen said it usually took three to six months for tenders to be called after an official announcement.

Last month, the Government announced a RM7bil stimulus package to prevent the economy from contracting amid the global slowdown.

Ng told StarBiz that about RM4bil of the RM7bil was for the construction sector, which often had a spillover effect on other segments.

“The new jobs are likely to be small contracts like low-cost housing and schools,” he said, adding that more stimulus packages were anticipated next year.

Despite the weaker economic conditions, contractors are still busy with projects that were offered in late 2007 and the beginning of this year.

“Contractors are not doing so bad. We may not be making much money but there are still jobs to be done. We hope the RM7bil package will be quickly disseminated to contractors to bid for the projects. This will enable the benefits of the stimulus to be felt and help contractors survive in this tough times,” Ng added.

A research house, in a report, said the Government’s pump-priming efforts were likely to gain momentum next year as the stimulus would ensure the 2009 growth forecast of 3.5% was met and the country did not slip into a recession.

“With just two years to go before the end of the 9MP (Ninth Malaysia Plan) and more than half of the allocation of RM230bil not spent, we think the construction sector can certainly look forward to more aggressive project flows,” it said.

On Monday, it was reported that the Government was likely to open tenders in the first quarter of next year for the extension of the light rail transport (LRT) system involving the Kelana Jaya and Ampang lines.

The contracts offered are worth over RM1bil in total, which is part of the RM10bil upgrade of Klang Valley’s LRT system that was announced during the Budget 2009 presentation in August.

Meanwhile, Syarikat Prasarana Negara Bhd, owner of the LRT assets, said on its website the tender for architectural consultancy services for the upgrade of 24 Ampang line station was now open.

By The Star (by Yeow Pooi Ling)

Sunrise property pact latest to be called off

PETALING JAYA: The termination of Sunrise Bhd’s put and call option agreement involving RM767mil worth of properties is the latest major cancellation to hit the property sector.

The proposed agreement signed with Malaysia Commercial Development Fund Pte Ltd (MCDF) gives MCDF the right to buy Sunrise’s MK20, a mixed development project in Mon’t Kiara, for RM767mil during the option period.

MCDF paid RM36.9mil as option deposit to the developer, which would now be refunded given the deal’s cancellation.

According to Aseambankers, Sunrise’s proposed deal was supposedly a build-then-sell concept with profit recognition upon completion in 2013.

It said the deal could be called off due to rejection by the relevant authorities, or the two parties failed to secure the funds needed for the project.

Given Sunrise’s net gearing level of 52% as of end-June, the deal’s termination would provide the developer some breathing space until ongoing projects with unbilled sales of RM1.3bil were delivered by financial year 2010, it said.

“The termination of the en bloc sale of MK20, however, has lowered earnings visibility beyond financial year 2011 as it could have raked in more than 25% in profit before tax margin amid falling construction costs,” Aseambankers noted.

Last month two deals were aborted: Dutaland Bhd’s proposed joint-venture agreement with Stonehage Westcity Property Fund Ltd and Merrill Lynch (Asia Pacific) Ltd involving properties worth RM1.8bil, and the proposed sale of Menara Citibank to IOI Corp Bhd for RM734mil.

Six property-related deals, including the above, have been cancelled since August, indicating the cautious outlook for the sector, according to one research house.

It said there was a likelihood of further cancellations, especially by investors from countries badly affected by the global economic crisis such the United States, Europe, Hong Kong and Singapore, and those from countries whose currencies had depreciated sharply.

“We maintain a cautious view on Malaysian property. We prefer property investment asset owners over developers due to their more defensive earnings,” the research house added.

By The Star

Perak defends decision to give freehold titles

Cordial greetings: Najib shaking hands with Perak Mentri Besar Datuk Seri Mohd Nizar Jamaluddin after he chaired the 64th National Land Committee Meeting in Putrajaya yesterday.

IPOH: The Perak Government has defended its decision to offer freehold titles to new and planned villages.

State senior executive councillor Datuk Ngeh Koo Ham said the power related to land rested on the state government.

“The National Land Code is a governing code for administrative purposes only,” he told a press conference yesterday.

He said the state had discussed special circumstances in awarding freehold titles such as public or government projects and projects that were of public interest.

“The new and planned villages come under special circumstances,” he added.

Explaining the reason behind

the awarding of freehold titles to new and planned villages, Ngeh said the Pakatan Rakyat government wanted to rectify the past injustices done to those living in these villages.

“They did not go into the villages voluntarily but were forced to move into them and they were not given basic amenities.”

“They suffered a lot,” he added.

Meanwhile, the Penang government said it will meet and discuss whether to continue with its plan to allow owners of low and medium-cost flats to convert their leasehold titles to freehold without paying a land premium.

Chief Minister Lim Guan Eng was commenting on Deputy Prime Minister Datuk Seri Najib Tun Razak’s statement that state governments could only issue freehold titles for land intended for federal and public use.

Lim said an announcement on the matter would probably be made today.

“We need to consider carefully whether we are going to implement the policies or re-propose them at the next National Land Council meeting,” he said, noting that the state took the matter “very seriously”.

By The Star (by Sylvia Looi and Christina Chin)

Malaysia Pacific in talks to sell Wisma MPL stake

MALAYSIA Pacific Corp Bhd (MPC), a property developer, expects to conclude talks with at least two investors for the part sale of its RM250 million Wisma MPL in Kuala Lumpur early next year.

Its chief executive officer Datuk Bill C.P Ch'ng said the company still wants to own part of the building rather than sell it outright.

"Even with the current financial crisis, there are still people talking to us," he told reporters after the company's annual general meeting in Kuala Lumpur yesterday.

He declined to disclose the two parties but said one is a local and the other a foreign investor.
Wisma MPL is MPC's commercial property in Jalan Raja Chulan, in the Golden Triangle commercial district of Kuala Lumpur.

The slowing economy is also a good time to speed up a project to build a trading and exhibition centre in Johor to spur business among Asian nations, Ch'ng said.

The Asia Pacific Trade and Exhibition Centre (APTEC) in Iskandar Malaysia, Johor, forms part of MPC's LakeHill Resort City project.

"Asian countries should use APTEC to source and distribute their products to Asian markets," he said.

MPC also plans to launch the first phase of the project, Taman Nusa Damai, which comprises mostly residential units, by February next year.

"We should complete this first phase project within the next two years," he said.

In its 2008 annual report, MPC said the new partners in LakeHill Development Sdn Bhd, LakeHill Resort's developer, plan to list the company in three to four years.

Amanah Raya Bhd had bought 22 per cent of LakeHill Development. The rest is held by MPC.

By Business Times (by Kamarul Yunus)