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Friday, January 30, 2009

Genting’s casino resort project on track

An artist’s impression of the Resorts World at Sentosa. Robin Goh (inset) says the economic downtu rn has not affected the progress of construction works.

PETALING JAYA: Resorts World at Sentosa (RWS), built at a cost of S$6bil (RM14.34bil) by Genting Bhd, is on track for opening early next year despite the global financial crisis.

According to Resorts World at Sentosa Pte Ltd assistant vice-president Robin Goh, the economic downturn has not affected the progress of construction works.

He said RWS would be the only casino resort in the world with two world-class attractions - South-East Asia’s only Universal Studios theme park and Marine Life Park, the world’s largest oceanarium.

“No other casino offers such a strong, integrated one-stop proposition which will be highly attractive to family travel, a substantial segment in the region.

“We believe that Resorts World’s proposition as a complete destination is its key differentiation from Macau, which is still very skewed towards gaming,” he told StarBiz.

On worries that the poor performance of casinos in Macau would affect Singapore’s latest resort, Goh said (RWS) would “bring to the table what Macau does not already have.”

“Macau only has casinos and big hotels whereas RWS will be home to some of the world’s leading attractions, including the Universal Studios theme park which will occupy almost half of the resort,” he said.

He said the theme park would feature 24 movie-themed rides, 18 of which were designed exclusively for Singapore.

“Among them is the world’s tallest pair of duelling roller coasters, the “Transformers” ride and hot favourites given a new twist, such as Revenge of the Mummy, Jurassic Park River Rapids and the Waterworld Stunt Show,” he said.

Based on the blockbuster movie, the “Transformers” ride is the world’s first and is scheduled to debut at Universal Studios Singapore and later at Universal Studios, Hollywood, both in 2011.

RWS will also be home to Mark Burnett Productions Asia, which will set up studio facilities where game shows will be filmed.

The 49ha resort will also feature a FestiveWalk, Marine Life Park and Maritime Xperiential Museum. “Marine Life Park — sited on 8ha and filled with 20 million gallons of water — will be the largest oceanarium in the world,” Goh said, adding there would be over 700,000 marine creatures and opportunities to hand-feed tiger sharks from an enclosed cage.

Just a 20-minute ride from Changi airport, RWS will also be able to host over 12,000 delegates in three formal meeting locations at any one time.

“We would be able to do something which has never done before in the region. We propose to bring delegates on rides and show them what goes on behind the scenes. So people will get to see the magic behind how we scare people,” Goh said.

The resort is expected to welcome 15 million visitors in the first year of operations.

Goh said a S$4bil (RM9.57bil) credit facility to fund the project was secured last April. It was one of the largest syndicated credit deals undertaken in Singapore and was completed in less than four months, he said.

Underwritten by five local and international banks, the successful and swift process of securing the credit facility reflects the support and vote of confidence that the banks and financial institutions have in RWS,” Goh added.

He said the company had awarded most of the major construction contracts for the resort.

“To date, we have awarded S$3bil (RM7.18bil) worth of contracts, including those for Universal Studios, four hotels, the casino, and FestiveWalk,” he said.

Goh said Malaysia remained one of RWS’s priority markets.

“We are reviewing our pricing and packages, taking into account the price-sensitivity of the market and the current economic situation,” he said. The rates and packages would be revealed later in the year, he added.

By The Star (by Eileen Hee)

Daiman scaling back launches

City skyscrapers in Singapore. Daiman is considering a foray into the republic’s property market — AFP

JOHOR BARU: Daiman Development Bhd is scaling back on new products and launches this year as the local property market cools down.

General manager Siah Chin Leong expected most local developers to adopt a similar move as they were not willing to take any business risk.

Hopefully, the unemployment rate in Malaysia would not rise as this would affect the whole market since the disposal income would be vastly reduced, he said.

Siah said developers in Johor were already facing a tough time and most had experienced a 40% decline in sales in the past two months.

“Everybody, including developers, is pessimistic. They don’t know what lies ahead in the next two years,’’ he said in an interview with StarBiz.

Siah said Daiman would be launching 87 double-storey cluster houses and 26 double-storey semi-detached houses in Taman Gaya in the fourth quarter of its financial year ending June 30 (FY09).

The company is currently building 132 double-storey cluster houses and only a few units are still unsold.

It also just started building 120 single-storey terrace houses with an average selling price of RM158,000 unit and 60 double-storey shop offices at RM398,000 per unit at Taman Daiman Jaya.

“We are looking at RM130mil gross development value (GDV) for the 425 units and they will keep us busy for the next two years,’’ said Siah.

Daiman has three major on-going projects - Taman Gaya along the Tebrau corridor, Taman Daiman Jaya in Kota Tinggi and Taman Perindustrian Murni in Senai.

Taman Gaya will take six to seven years to complete and Taman Daiman Jaya, between 15 and 18 years.

Both projects have so far contributed RM428mil in sales turnover.

About 40% of its industrial lots and factories in Taman Perindustrian Murni have been sold and contributed RM12.09mil at the end of FY08.

Daiman has leased out some of its factories which are fetching an annual yield of 6% to 7%.

Siah said despite a slowdown in the local property market, there was encouraging response to high-end properties.

Daiman was targeting professionals, senior executives, extended families and those looking for bigger houses, he said.

“These buyers are willing to pay more for their houses provided they are located within gated and guarded precincts,’’ he said.

Daiman was on the lookout for land in Nusajaya as the area would be the main growth centre in Iskandar Malaysia, Siah said, adding that its focus here would be high-end houses.

He said Daiman had over the past few years been looking for land in the Klang Valley but so far the land viewed was not feasible.

The company is also considering venturing into Singapore as demand for private properties there was still good due to the influx of wealthy buyers from worldwide to the republic.

Last April, the company’s wholly-owned overseas subsidiary Caversham Universal Ltd subscribed to 70% equity in CNES Property Pty Ltd for A$875,000.

Australia-based CNES was incorporated in February 2008 and its principal activity is property development. It plans to build some bungalows in Perth.

“We are very cautious when expanding overseas but if it is a sound investment, Daiman will definitely explore the possibility,’’ Siah said.

Daiman has some 36 years experience in the property sector in Johor and had net cash of RM74.22mil at the end of FY08.

For FY08, it recorded RM114.46mil in revenue while the pre-tax profit was RM36.43mil. That compared with RM99.81mil and RM37.99mil respectively in FY07.

By The Star (by Zazali Musa)

Good response to Bayu Ferringhi development

Photo source from Bayu Ferringhi website

Bayu Ferringhi, a property development in Penang, has received good response following its recent launch. The project has attracted 11 bookings for its villas and 37 for the condominium project.

Bayu Ferringhi is being developed by Plenitude Heights Sdn Bhd, a wholly-owned subsidiary of Plenitude Bhd.

"We believe that Bayu Ferringhi will attract substantial foreign interest.

"We are honoured to play a positive role by developing properties which have an international appeal while supporting the government's, "Malaysia My Second Home" initiative," said Plenitude executive chairman, Chua Elsie.
Bayu Feringgi is a freehold project on an approximately 4.45 hectares- site along Jalan Batu Ferringhi.

It comprises 44 luxurious semi-detached villas and 112 condominium units within a lush tropical seaview setting.

Prices start from RM1,762,000 for semi-detached villas and RM761,000 for the condominium units.

By Bernama

'Ang pows' for Bandar Bukit Raja house buyers

SIME Darby Property Bhd will be giving "ang pow" treats to house buyers of the Bandar Bukit Raja township between January 26 and February 9.

Ang pows worth RM3,888 will be given to all intermediate house buyers and RM6,888 to those who purchase the end and corner units, the company said in a statement.

Sime Darby Property said Bandar Bukit Raja will be launching their latest Avira and Levena double-storey link units from RM325,888 with a built-up area of 1800 sq ft and RM388,888 for a built-up area of 2280 sq ft respectively.

In conjunction with the "Chap Goh Mei" celebration, a feng shui talk by Joey Yap will take place on February 7 and 8 and free personal consultations will be held on both days.
Sprawled over 161.87 hectares, the Bandar Bukit Raja development is an integrated township comprising residential homes, schools, shops, medical and commercial centres.

To date, Bandar Bukit Raja has sold over 3,500 residential and commercial units and has over 10,000 residents. Upon completion of Stage 1, Bandar Bukit Raja will comprise some 7,800 residential and commercial units.

By Business Times

Hektar REIT a 'buy' on high dividend yield: S&P

INVESTORS should buy Hektar Real Estate Investment Trust because of its high dividend yield and the share is now trading at a low price to net tangible asset of 0.7 times, Standard & Poor's said.

The 58 per cent fall in its share price from a high of RM1.74 to the recent low of 73 sen is overdone, S&P said, given that it is not facing any re-financing or sharp asset devaluation issues.

"At the current level, HektarREIT offers a more attractive dividend yield of 13.4 per cent compared with the average yield of 9.5 per cent for its peers," analyst Tam Ching Wah wrote in a report.

Suburban neighbourhood retail properties also enjoy more stable occupancy and rental income than other types of commercial properties such as offices and urban retail properties, the report said.
S&P has initiated coverage on Hektar REIT with a "buy" recommendation and a 12-month target price of 95 sen. Its shares closed 3.5 per cent up at 88 sen on Bursa Malaysia yesterday.

The prospects for Hektar REIT are positive, S&P said, given that there are 34 cities in Malaysia with sufficient population to support one regional or neighbourhood mall such as Subang Parade and Mahkota Parade, both owned by the fund.

Hektar REIT plans to either develop greenfield shopping malls or take over existing ones and refurbish and revive them into modern malls.

S&P said the entry of Fraser and Neave Ltd as one of its major shareholders augurs well for Hektar REIT since F&N will bring along its reputation and expertise to help it build a chain of neighbourhood malls throughout Malaysia.

"Hektar REIT does not have any re-financing issues in the near term. Its total borrowings of RM301.5 million will only be due in 2011 and 2013. Furthermore, interest rates are expected to decline further over 2009," S&P said.

By Business Times

Thursday, January 29, 2009

UK property firms to sell retail assets

LONDON: Britain’s two biggest property companies, British Land Co Plc and Land Securities Group Plc will sell £750 million (£1=RM5.13) worth of retail assets within weeks, The Times newspaper reported yesterday.

British Land is close to selling a 50 per cent stake in the Meadowhall shopping centre, Sheffield, for about £550 million to a joint venture between an Abu Dhabi fund and Aim- listed London & Stamford Ltd, while Land Securities is nearing completion of a deal to offload a one-third stake in the Bullring shopping centre in Birmingham to an Australian government fund, for £200 million.

By Reuters

Wednesday, January 28, 2009

High-end projects set to put Mulpha on profit track

MULPHA Land Bhd (MLB) (7889) is launching four high-end projects worth RM1.03 billion in Kuala Lumpur and Johor this year, in a bid to turn around.

MLB slipped into the red in the 12 months to December 2007, incurring a net loss of RM417,000 against a net profit of RM864,000 in 2006.

For the first nine months in 2008, MLB, the property arm of Mulpha International Bhd, posted a net loss of RM94,000.

Chief executive officer Lai Meng told Business Times in an interview that the way forward for MLB is to offer niche and sought-after products.
It is launching Bangsar Enclave in the next quarter, which features seven units of 3-storey villas in a gated and guarded community, worth RM70 million.

In the second half of the year, MLB will launch Menara Mulpha at Jalan Sultan Ismail, and a yet-to-be-named luxury development in Kenny Hills, offering eight unique villas with private pool, worth RM110 million, or RM15 million each.

Menara Mulpha is a 23-storey Grade A office building, worth around RM350 million. The property, which is the first iconic building with green features for the Mulpha Group, will be leased for recurring income, Lai said.

"These projects have strong unique product concept in superb locations and should provide impetus for growth. Nevertheless, we are mindful of the gloomy economic outlook and will adopt a cautious approach in our planning and execution," he said.

Also in the pipeline is Precinct 7 at MLB's RM1.2 billion Leisure Farm Resort project in Gelang Patah, located in Iskandar Malaysia, Johor.

It will offer 320 units of semi-detached homes and bungalows, surrounded by garden parks and canal waterways, worth a combined RM500 million.

"Precinct 7 will be developed in phases to enhance price positioning," added Lai.

MLB is also banking on its recently refurbished and restored project, opposite the Raintree Club in Ampang Hilir, to improve earnings.

Dubbed Raintree Residence, it has four semi-furnished 5-bedroom duplex penthouses, and eight units of 4-bedroom apartments, which will be leased.

"It will be our first rental product in Kuala Lumpur and should be favourable in this locality filled with expatriates and consulate staff," Lai said.

MLB's current projects are Bukit Punchor in Nibong Tebal, and Desa Aman in Padang Meha, Kulim, Kedah, worth RM706 million.

By Business Times (by Sharen Kaur)

TA Ent mulls best way to structure property unit's IPO

Stockbroking firm TA Enterprise Bhd (TAE) may delay plans to list its property unit on the local bourse for the second time, due to a weak stock market, industry sources said.

TAE, which has the Securities Commission's nod to list TA Global Bhd (TAGB) on Bursa Malaysia's main board by March, may list it in the second quarter in view of current market sentiment, a source told Business Times.

Its earlier target was to list TAGB by December 2008, later postponing it to March this year.

When contacted, TAE group managing director and chief executive officer Datin Alicia Tiah told Business Times that the group is still aiming to list TAGB by March or April, but the plan will be guided by market sentiment.
"While we are optimistic to list the property business, we want to be sure the timing is right especially when the world economy is in a depressed situation. TAE is expanding its property business and the listing will give it more recognition overseas as it expands," Tiah said.

She said TAE is talking to underwriters for the placement of the shares, and exploring the best way to structure the initial public offering (IPO) so that the market will be able to absorb the listing.

"Our approval has an expiry of six months. In the event we do have to delay the IPO, we can always apply for an extension," Tiah said.

TAGB's listing exercise involves a proposed rights issue of 860 million new shares and a public issue of 350 million new shares at 50 sen per share.

TAE is proposing to sell its property units to TAGB in an all-share deal and raise about RM613 million.

It will inject its property assets held under TA Properties Sdn Bhd; Sanjung Padu Sdn Bhd; Wales House Trust, which owns the Radisson Plaza Hotel in Sydney; and Taman Duta Residences, in exchange for shares worth RM1.75 billion in TAGB.

TAE is also proposing a capital distribution to its shareholders that will cut its share capital, share premium reserve and retained earnings. As a result, its par value would be reduced to 50 sen from RM1 currently.

Upon completion of the proposed capital distribution and listing, TAE will hold at least 24.3 per cent equity interest in TAGB.

TAE will also use part of the proceeds to apply for an investment banking licence, and the rest for its future working capital.

By Business Times (by Sharen Kaur)

Shenyang Islamic development project plan on track

The proposed RM11 billion commercial and residential development in Shenyang, China, that will utilise Syariah-compliant financing from Malaysian banks is on track despite the current global economic downturn.

Islamic Banking and Finance Institute Malaysia (IBFIM) managing director and chief executive officer Datuk Dr Adnan Alias said the report on the feasibility study of the project is nearly completed.

"We will present the report to the Shenyang Governor next month when we meet in Singapore," he told Business Times when asked about the progress of the project.

IBFIM is the syariah adviser to the proposed development.
Themed "Modern Islamic Lifestyle", the proposed development is expected to commence by the end of this year and be completed within five years.

The project would take place in the Shenyang Finance and Trade Development Zone. It will be developed on a 17.96ha site in one of the most centralised Muslim community living areas in China.

A special purpose vehicle, known as Shenyang-Malaysia Development Sdn Bhd (ShenMas), was formed in November last year to undertake the conceptual planning, land acquisition, funding issues and feasibility studies.

A consortium of Malaysian builders, including Bina Puri Group, will be involved in the development of the project.

Shenyang is the capital city of Liaoning Province. The province is located south of northeast China, which has about 100,000 Muslims.

China, one of the world's fastest growing economies, plans to woo Islamic banking and finance institutions to the country by establishing an Islamic finance hub.

By Business Times (by Hamisah Hamid)

Surprise rise in existing home sales in December

A home sits for sale on 25 July, 2007 in Batavia, Illinois a suburb outside of Chicago. The pace of sales of previously owned homes rose for the first time since September and inventory declined — AFP

WASHINGTON: An unexpected improvement in US home sales provided a rare dose of good economic news on Monday, but companies continued to wield the axe on jobs as the year-long recession inflicted more pain.

The pace of sales of previously owned homes rose for the first time since September and inventory declined, a bit of positive news amid a US housing market crash that has chilled growth, sent unemployment soaring and sharply eroded household wealth.

Sales of previously owned US homes increased 6.5% to a 4.74-million-unit annual rate in December, the National Association of Realtors said. Analysts polled by Reuters had expected sales to set a 4.40 million unit pace.

Analysts said the uptick was encouraging and might be a signal the worst housing bust in decades was finally nearing a bottom following government steps to slow foreclosures and cut interest rates on home loans.

“Though unlikely to mark the bottom of the housing downturn, the report at least suggests the market is not spiraling downwards in response to mounting job losses and tightening credit standards,” said Sal Guatieri, an economist at BMO Capital Markets in Toronto.

“An upward trend in home sales that gobbles up supply and stabilises prices would be an important signpost of economic recovery, but that is likely still some ways off.”

US government bond prices and the dollar fell as the housing data eroded their safe-haven appeal, encouraging investors to seek riskier assets.

Stability in the US housing market, the root cause of the worst financial crisis since the Great Depression, is seen key to any recovery in the domestic economy which has been stuck in recession since December 2007.

December existing-home sales were largely driven by distressed sales, which dragged the median national home price down 15.3% from a year earlier to US$175,400.

The chief economist of the National Association of Realtors, Lawrence Yun, said it was the largest price drop since NAR started keeping records in 1968 and probably the largest since the Great Depression.

“There is pent-up demand, which could be unleashed with the right stimulus. The Obama administration and Congress need to move fast … to stabilise home prices and set the foundation for a sustainable economic recovery,” Yun said.

US President Barack Obama is drumming up support for an US$825bil spending package, which he hopes will kick-start the economy and create or preserve three million to four million jobs.

Analysts were also heartened by the 11.7% drop in the inventory of existing homes for sale to 3.68 million units from 4.16 million in November.

That translated into 9.3 months of supply at December’s sales pace. The supply stood at 11.2 months’ worth in November.

“It suggests we are working through some of the inventory, which is the first thing to happen before we see any kind of housing recovery,” said Frank Lesh, futures analyst at FuturePath Trading in Chicago.

“Until we work through the supply that’s out there, it’s going to be hard to see anything turn. The low rates the Fed has engineered is starting to create some demand, which is what we wanted to see.”

Separately, the Conference Board said its index of leading economic indicators rose 0.3%, beating analysts’ forecast for a 0.3% decline.

Economists attributed the rise to the improvement in credit markets, thanks to the action by the Federal Reserve.

The Fed has cut interest rates almost to zero and pumped hundreds of billions of dollars into financial markets to keep them operating.

The Fed is expected to hold its target range for the key overnight federal funds rate steady at zero to 0.25% at the end of its two-day meeting today.

Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co, reckons that given the recent uptick in government bond yields and mortgage rates, the Fed could place emphasis on its plans to buy mortgage securities and possibly Treasuries.

By Reuters

Friday, January 23, 2009

New mall for PJ residents

Dancing lights: One of Tropicana City Mall’s unique feature is its signature glass portal with changing colour hues that light up at night.

Branded as the New Pulse of Petaling Jaya, the Tropicana City Mall (TCM) is a neighbourhood mall that is set to provide the Damansara and PJ community the convenience of shopping and lifestyle entertainment under one roof.

Located at the intersection between the Sprint and LDP Expressways, TCM is part of a mixed commercial development that includes Tropicana City Business Park (formerly known as Damansara Intan e-Business Park), Tropicana City Tropics Service Suites and Tropicana City Office Tower.

TCM is owned by Dijaya Corporation Bhd and offers four floors of retail space.

Among its unique features is the signature glass portal with changing colour hues that light up at night and a glass-domed skylight.

The mall had its soft opening on Dec 18 last year.

Miniature version: A model of how Tropicana City Mall would look like with the soon-tobe- completed ramps.

Dijaya Corporation Bhd and Tropicana City Sdn Bhd managing director Tong Kien Onn said a neigbourhood mall should have three elements – convenience for grocery shopping, places to eat and entertainment outlets.

As such, TCM has the Carrefour hypermarket as its main anchor on the lower ground floor and GSC cinemas with eight halls on the second floor.

Carrefour is already open for business while GSC cinemas is expected to be opened in late June.

TCM’s mini anchors include fashion and lifestyle retail outlets like Nichii, Kitschen, Shop-A-Lot, Best Denki, Borders, Gymboree and Toys “R” Us.

Among the one-of-a-kind outlets at TCM are Sorella’s first boutique, Storybook’s photo compilation services store, BodyBar Natural Skincare’s organic skincare shop, Kid’z Spot’s speciality store for children, as well as F&B outlets Sushi Tei, Good Taste Cafe and Bad Ass Coffee.

Shoppers will be spoilt for choice with the variety of F&B outlets that includes Santini, San Francisco Steakhouse, Bangkok Twist, Esquire Kitchen, Penang Village, Papa John’s Pizza, Pho Hoa, Subway, Otak-Otak House and Sumptious Corner.

The mall’s other stores offer a variety of products and services related to beauty and personal care, fashion, IT, jewellery, entertainment, home living, gifts, toys and hobbies, sports, optical, as well as other facilities.

“About 85% of TCM’s total lettable area has been leased out. This includes one hypermarket and about 200 retail lots,” Tong said.

“Out of that number, 65% have been opened for business and we expect another 12% to be open in the next two months.”

He said the 12-storey Tropicana City Officer Tower is set to be completed by the second quarter of 2009, while the 601-unit Tropics Service Suites is expected to be completed by the first quarter of 2010.

The gross development cost for the entire Tropicana City development is RM310mil.

For details on TCM, including its Chinese New Year promotions, visit or call 03-7710 0101.

By The Star (by Jade Chan)

STG unit to invest RM10m in ECER project

GOLD Coast Kuantan Resort Sdn Bhd, a subsidiary of the STG Group that aims to be listed on the local bourse by 2012, will invest RM10 million in its first property development in the East Coast Economic Region (ECER).

The development will consist of 99 apartment suites with full hotel service and will be located with a full view of the South China sea.

"Over 60 per cent of the freehold Gold Coast Kuantan apartment suites have been sold," said STG Group chairman Datuk Dr Alex Tan Siong Seng in a statement yesterday.

"Some 80 per cent of them have signed up for the investment plan, while the balance will be owner- occupied," Tan said, adding that the buyers are equally split up between domestic and foreign purchasers.

The Gold Coast Kuantan project is expected to be completed by 2010.

Gold Coast Kuantan follows in the footsteps of another Gold Coast development, Gold Coast Morib Resort, which is expected to be completed by December this year.

"The group has plans for properties with different characteristics from those with ocean and lake views to islands' hills," said Tan.

He added that the new property in Kuantan will be built with high standards in mind, with the building material and furnishing being fitted out like a hotel.

"You can enjoy your own personal spa in the bathroom while looking out at the ocean or enjoying the east coast's famous sunsets," he said, adding that Gold Coast Kuantan will also provide good return on investment.

"While purchasers own a luxury holiday property by the beach, which is run like a hotel, and enjoy the property's leisure facilities, they can also choose to have their properties managed and rented out on a nightly occupancy basis by a professional company when they are away.

"This gives owners an 8 per cent return per annum on their investment for up to 15 years, without sacrificing their ability to use the property or any other Gold Coast properties for up to 60 days if they chose to," he said.

Owners can also expect a capital appreciation of 40 per cent after five years from the date of purchase.

Facilities at Gold Coast Kuantan include a club house, a cafe, seafood restaurants, water sports, a healthcare centre, karaoke, a bar, 24-hour security and hotel management services.

By Business Times (by B. Suresh Ram)

Property fire sales in 3 countries seen

SYDNEY/TOKYO: Emergency property sales are in store in Japan, Australia and India as banks refuse to roll over debt, forcing landlords to raise funds or go out of business.

Although banks in the Asia-Pacific region are not hobbled by the toxic assets that have paralysed their Western counterparts, they are cutting exposure to falling property markets.

Big firms with healthy reputations and balance sheets will likely get the benefit of the doubt, but their small rivals will suffer. And big discounts on "distressed" sales will drag down prices for land and commercial buildings across whole markets.

In Australia, large real estate investment trusts (REITs) raised A$5.5 billion (A$1 = RM2.37) of equity in 2008 to cut debt, including Mirvac and ING Office Fund.

But the sector needs another A$20 billion-A$30 billion of debt refinancing or other funding in two years.

JPMorgan estimates the 22 most highly leveraged Australian REITs have some US$32 billion (US$1 = RM3.61) worth of debt, which accounts for 94 per cent of their enterprise value. They include Macquarie CountryWide and Tishman Speyer Office Those who fail to lure new investors will need to sell some, or even all, of their buildings.

"I think 2009 is going to be the year of trusts going private and assets being sold," said Jonathan Kriska, analyst at Paterson Securities.

Things are even tougher in Japan, where 16 listed property firms including Urban Corp failed last year because of trouble raising operating funds, despite having profitable businesses.

The Japanese government announced last month emergency measures to rescue cash-strapped property firms. But since then, Creed Corp filed for court protection from creditors and the economic outlook has grown even more gloomy, raising the prospect of more victims of the credit crisis.

"As Creed's failure shows, I think banks still want to rein in lending despite requests to be more flexible," said Goldman Sachs analyst Atsuko Chiyoda.

"It's almost impossible for small and mid-sized REITs to get refinancing with the same kind of agreements they inked before."

In 2009 some 1.1 trillion yen (100 yen = RM4.06), or about 30 per cent of total debt held by 41 Japanese REITs, will be due for refinancing.

Analysts have said the biggest property firms, Mitsui Fudosan Co and Mitsubishi Estate, may emerge as buyers when the market is glutted with sellers.

The companies bolstered their balance sheets following the asset bubble in the early 1990s and are now cashed up and own prime assets to generate healthy cash flows.

"Property firms with bigger exposure to the leasing market are in a relatively stable condition," said a brokerage analyst, who asked not to be identified because he was not authorised to speak to media.

"But most of the small- and mid-sized developers expanded via securitisation, and that's why they're suffering."

In India, shares of the country's biggest developers DLF, Unitech and Indiabulls Real Estate have tumbled by 75-90 per cent in the last year because of a slump in home sales and a lack of finance.

The Indian government has asked banks to restructure loans for commercial property and to give better terms. But property firms, who survived on a mix of upfront payments by home buyers, loans and public equity sales, could be forced to sell land or stakes in projects to investors - if they can find any.

"They're looking for money, even the big developers," said Sharmila Joshi, vice president at Systematix Shares & Stocks. "If they don't get access to funds, the scenario could get worse."

By Reuters

TA buys Melbourne hotel for A$160mil

MELBOURNE: TA Enterprise Bhd has acquired the five-star Westin Melbourne Hotel for about A$160mil.

CB Richard Ellis hotels directors George Nicholas and Scott Callow negotiated the sale which saw offers by offshore investment groups from the Middle East, Asia and the United States.

The property was sold on behalf of a consortium of industry super funds. Nicholas described the sale as a “vote of confidence in the Australian hotel investment market”.

The Westin Melbourne, popular with Malaysian officials and businessmen, is at the corner of Collins and Swanston streets.

By Bernama

MK Land to use sale proceeds for projects

KUALA LUMPUR: MK Land Bhd plans to use the proceeds from the disposal of 9. 2ha in Sungai Buloh, Selangor, for development projects.

In reply to a Bursa Malaysia query, MK Land said the market value of the land was RM157.8mil while the forced sale value was RM118.35mil.

The land was acquired by Ketara Megah Development Sdn Bhd, a company related to MK Land chairman and chief executive officer Tan Sri Mustapha Kamal Abu Bakar, for RM157. 8mil.

Ketara Megah acquired the two parcels of leasehold land in an open tender after they were forced sold by PPC International Sdn Bhd.

MK Land said an open tender was carried out by Henry Butcher Real Estate Sdn Bhd from Sept 9 to Oct 20 last year. As there was no bid received, a second open tender was carried out from Dec 1 to 15.

The proceeds are intended to be used as working capital for the various deve lopment being undertaken by the group .

By The Star

Axis REIT to spend on enhancing properties

AXIS REIT Managers Bhd will invest RM8 million for property enhancement this year, its chief executive officer and executive director, George Stewart LaBrooy said today.

By taking advantage of the economic slowdown, the exercise would be cheaper, as the cost of construction materials had fallen, he said.

LaBrooy said RM6 million would be used to refurbish the Nestle House in Petaling Jaya, which the company owns.

“This will be our major refurbishment project and it will start in November,” he told a media briefing today.
He also said that the company was looking to acquire at least one property this year but nothing has been finalised.

Axis REIT, the manager of Axis Real Estate Investment Trust, owns 19 properties.

On the company’s performance, he said Axis REIT managed to record an income before taxation of RM38.97 million, an increase of 39.2 per cent from the preceding year.

Gross revenue for the year rose to RM63.442 million from RM46.827 million the previous year.

On the property outlook, he said, the industry is expected to remain flat this year, as a result of the gloomy global economic outlook.

He said that demand for high-end condominiums would be most affected, as buyers were looking for cheaper alternatives.

LaBrooy also stated that the rental rates of commercial offices were retreating.

By Bernama

Axis-REIT Q4 net surges 88pc

AXIS Real Estate Investment Trust Bhd (Axis-REIT) reported an 88 per cent surge in fourth quarter net profit, driven mainly by the higher value of its properties.

However, excluding revaluation gains, its net income from operations was RM10.5 million, a third higher than what it made in the same period last year.

Out of this, it will distribute RM10.38 million to unitholders.

Axis-REIT made a net profit of RM35 million for the quarter to December 31 2008. About 70 per cent of that was due to revaluation gains.
Revenue from rental income increased by 30 per cent to RM16.93 million.

Axis-REIT said it will be able to maintain a strong performance for the coming quarter and the financial year ending December 2009.

Its existing investment portfolio as well its strategy to actively pursue quality buys will drive growth.

However, for the 12 months period, net profit dipped 7.5 per cent to RM63.4 million, mainly because the value of its assets grew at a slower pace in 2008.

Revenue in the same period increased by 36 per cent to reach RM63.44 million.

For 2008, Axis-REIT will distribute 99.31 per cent of its realised income before tax of RM38.7 million.

"This translates into a distribution per unit of 15.27 cents for year 2008," it said.

Beginning January 1 2009, Axis-REIT will change its current income distribution policy from semi-annual payment to quarterly payment.

By Business Times

Thursday, January 22, 2009

Dubai property slumps after banks cut lending

DUBAI: Dubai property prices dropped 23 per cent last month from a record high in September after banks cut lending and sellers offered discounts as a result of the global economic slowdown, according to an HSBC Holdings plc survey.

The average price of villas in Dubai fell 30 per cent and for apartments 20 per cent from September, according to the survey, which for the first time captured actual real-estate transaction prices in Dubai.

Developers in Dubai have cut jobs and cancelled projects to cope with a slowdown in demand and credit shortage after more than one trillion dollars in worldwide writedowns and losses at financial institutions.

Since the September high, "the discount of agreed to advertised prices has deepened, indicating market distress," HSBC analysts including Majed Azzam and David Lepper said in the report released yesterday.
"Early 2009 data suggests further weakness," the report added.

The bank added that fourth-quarter real-estate sales volume, however, showed a healthy trend with 5,800 transactions booked, 226 per cent more than for the same period a year earlier.

The bank recorded 1,782 transactions in the first two weeks of January, or 6 per cent more than for all of December and 175 per cent more than from December 2007.

By Bloomberg

NAZA TTDI eyeing land in Iskandar region

JOHOR BARU: NAZA TTDI Sdn Bhd is scouting for land in Johor, its next destination for property development and first foray outside the Klang Valley.

Group managing director Datuk Johan Ariffin said the company was looking for land here especially in Iskandar Malaysia.

Datuk Johan Ariffin (right) shaking hands with patient Wang Kong Wee after the handover. With them are Austin Heights Sdn Bhd group MD Datuk Steve Chong (left) and NAZA TTDI assistant general manager audit and compliance Mohamad Fauzy Mohd Lufti.

“Iskandar Malaysia offers good prospects for property developers with the inflow of local and foreign investors,’’ he said yesterday, adding that the company was mindful that location was still the most important factor for most property buyers in Malaysia.

Iskandar Malaysia covers 2,217 sq km and is a mixed development planned for completion by 2025.

Johan said the company was open to all options when making inroads into Iskandar Malaysia, including teaming up with Johor-based developers.

He said unlike in the Klang Valley where land suitable for property development was becoming scarce, Iskandar Malaysia still had abundant land.

“We are confident that our TTDI brand will appeal to buyers in Iskandar Malaysia as our company has a good reputation for developing quality homes,’’ he told reporters at the handing over of a dialysis machine worth RM43,000 to the JB Lions-MAA-MEDIcare Charity dialysis centre at Century Garden.

He said the donation was part of the RM1.69mil collected from the company’s charity golf tournament held last year and the collection had been handed over to more than 180 charitable bodies nationwide recently.

By The Star (by Zazali Musa)

MK Land sells 9.2ha to Ketara for RM150mil

PETALING JAYA: Property developer Tan Sri Mustapha Kamal Abu Bakar’s company Ketara Megah Development Sdn Bhd has acquired 9.2ha in Selangor from MK Land Holding Bhd for RM150mil.

Ketara Megah acquired the two parcels of leasehold land in Sungai Buloh in an open tender exercise from MK Land, of which Mustapha Kamal is chairman and chief executive director.

MK Land said in a statement the sale consideration of RM150mil was in excess of the forced-sale value of RM118.35mil indicated in the valuation by PPC International Sdn Bhd.

At the close of the tender exercise on Dec 15, only one tender had been received from Ketara Megah.

The land was originally acquired by MK Land’s unit Saujana Triangle Sdn Bhd in 1995 for RM3.72mil. As at June 30 last year, the book value was RM151.9mil due to the fair value adjustments, said MK Land.

“The entire proceeds from the proposed sale will be used for working capital,” it said. It added that the proposed sale would unlock the value of land which MK Land had no immediate plan to develop.

MK Land said the proposed sale was by open tender and the transaction was not regarded as a related-party transaction under the Bursa Malaysia listing rules.

By The Star

MK Land to use proceeds from land sale for devt projects

KUALA LUMPUR: MK Land Bhd plans to use the proceeds from the disposal of 9.2ha of land in Sungai Buloh, Selangor for development projects.

In reply to a query from Bursa Malaysia Securities on Thursday, MK Land said the market value of the land was RM157.8mil while the forced sale value was RM118.35mil.

The land was acquired by Ketara Megah Development Sdn Bhd, a company related to Tan Sri Mustapha Kamal Abu Bakar for RM157.8mil He is also chairman and chief executive officer of MK Land.

Ketara Megah acquired the two parcels of leasehold land in an open tender exercise after they were forced sold by PPC International Sdn Bhd.

MK Land said an open tender was carried out by Henry Butcher Real Estate Sdn Bhd from Sept 9 to Oct 20 last year. As there was no bid received, a second open tender was carried out from Dec 1 to 15.

The proceeds are intended to be used as working capital for the various development projects being undertaken by the Group. These development projects in a few localities such as Damansara Perdana, Damansara Damai, Bukit Merah Laketown and Ipoh.

By The Star

UMLand to directly own Bangi Heights

PROPERTY developer United Malayan Land Bhd (UMLand) is turning Bangi Heights Development Sdn Bhd into a directly owned unit to improve its structure and efficiency.

It is buying a 70 per cent stake for RM82.86 million from its wholly-owned unit, Country Equity Sdn Bhd.

Since Country Equity owes UMLand RM82.82 million as at December 31 2008, this amount will offset the total purchase consideration.

The outstanding amount of RM44,339 will be paid at completion of the exercise or remain as a debt due from UMLand.

By Business Times

Gamuda takes selective stance in Gulf states

DOHA: Gamuda Bhd, a construction company making inroads in Qatar is taking an “active but selective” approach when bidding for construction projects in the gulf states despite the good reputation of the oil rich nation, its Senior General Manager KW Chan said yesterday.

He said the company’s RM2.6 billion worth of projects to design and build airfield facilities, tunnels and detention ponds for the new Doha International Airport have been 70 per cent completed and due for completion by February next year.

“Another project, the RM760 million Dukhan Highway West, a 42 km for lane dual carriageway is now 95 per cent complete and should be ready by June l.

He said the company was bidding for the second phase of the highway for which the tender would be out next month. The contract is worth more than RM1 billion.
“We are confident of getting the job since we are already established and had been successful in implementing the first phase.

Actually we are pre-qualified for the second phase since we are already equipped with facilities like heavy machinery to implement the project,” he added.

Chan said the company was also building the RM650 million worth Sitra causeway bridge in Bahrain.

He said beside tendering in Qatar and Bahrain, the company was also eyeing potential construction projects in Dubai and Abu Dhabi.

“We will be active in the Middle East, but we are taking a selective approach when bidding for projects to keep up with our good reputation,” he added.

On the massive developments in the gulf states like Qatar he said that Malaysian companies should not be left behind in bidding for development projects especially in the construction industry.

“The key development projects like in Qatar are funded by the government and the gulf countries have huge cash reserves and this would enable them to implement many huge projects without any problem,” he added.

By Bernama

Wednesday, January 21, 2009

Don: Investors should look at buying REITs

KUALA LUMPUR: Investors should consider buying into real estate investment trusts (REITs) as the valuations are now very attractive.

Prof Datuk Mani Usilappan, former director general of the valuation and property services department at the Finance Ministry, said REIT yields had increased tremendously and most of the REITs were selling at a discount to their net asset value (NAV).

“The return or dividend is the same in absolute term but because the share price has been declining, investment return is higher. In addition, investors may enjoy capital appreciation in the future,” he said in his speech during the summit yesterday.

Organised by the Association of Valuers and Property Consultants In Private Practice Malaysia (PEPS), the one-day event gathered prominent valuers and real estate players to discuss the current issues and the outlook for the property market in Malaysia.

Mani advised investors to look for REITs with a management team that was flexible in its decision making amid the volatile economic conditions. Other criteria to consider are location and rental revision structure of the REITs’ properties.

Mani also pointed out the characteristics of a REIT’s stock movement.

“During a market downturn, the REIT’s share price will decline in some correlation with the KL Composite Index.

“However, in bullish market conditions, the REIT behaves like a bond, where the share price does not escalate,” he said.

According to his risk and return analysis, a REIT’s average monthly total return does not discriminate the sector of assets the REIT is invested in.

REITs invest in different types of real estate classes such as office, retail, commercial, industrial, healthcare, retail and plantation.

Going forward, Mani predicted rental income to continue at current levels, as a “rental crash” was unlikely. He foresaw fewer new assets being injected into the REIT market this year because of yield disparity.

Until the economy recovered, he said major players such as Sunway Group, CapitaLand Ltd group, TA Enterprise Bhd and Country Heights Holdings Bhd would defer their listing plans.

As at December 2008, REIT yields ranged from 5.63% to 13.77%, which were much higher than the average yield of 6% before the economic slowdown. The share prices were also selling up to 39.3% discount to NAV.

By The Star

Crisis not slowing down Gamuda projects

KAJANG: Gamuda Bhd’s property arm Gamuda Land Sdn Bhd will continue with its projects despite the softening market.

Managing director Chow Chee Wah said there were enough funds to complete its projects, some of which would be on a long-term basis.

Chow Chee Wah explaining the development of Jade Hills.

“Based on our experience during the last financial crisis, it is better to finish the projects soon so that when the market is stable, the products are ready for the buyers,” he said.

He said, for example, when the property sector was badly hit during the financial crisis in 1997, Gamuda continued to develop its Kota Kemuning integrated township in Shah Alam. Two years later, when the economy recovered, sales increased as the products were already there.

“When the economy is bad, we can’t just stop the development and wait for the recovery. By then, it may be too late to do sales as buyers want a ready product,” Chow said.

The Kota Kemuning township will be fully developed in three years.

Gamuda Land is also the developer of Bandar Botanic in Klang, Valencia in Sungai Buloh, Jade Hills in Kajang and Horizon Hills in Nusajaya.

It is also developing a condominum project in Jalan Madge, Kuala Lumpur, which is scheduled for completion in three years.

Gamuda Land contributes about 30% to group revenue.

On the results of its first quarter ended Oct 31, Chow said the reduced revenue from the property division was due to the economic slowdown which made buyers more cautious.

“They prefer to wait and see because of the current uncertainty. However, with the Government initiatives and banks now offering attractive housing loans, we hope buyers will regain their confidence,” he said.

He added that based on the cycle of the property market, a recovery could be seen next year.

On Jade Hills, Chow said Gamuda Land would transform the 366 acres into a fully integrated township by 2018.

“About 260 acres are reserved for residential development, including terrace and semi-detached houses and bungalows.

“In total, only 800 houses will be built at Jade Hills, making it a low-density development,” he said.

Located in the fast-growing southern Klang Valley corridor and just 20km from Kuala Lumpur, the project is accessible via major highways.

“The gross development value of this township is RM1.5bil and we will develop it in phases,” Chow said, adding that there would be a total of 12 phases.

Prices of the houses will range from RM700,000 to RM2.4mil. There will be proper road and traffic systems, amenities for a healthy lifestyle and also commercial facilities.

“Our target buyers are people living around the Cheras, Serdang and Kajang areas who want to upgrade their lifestyle. We are also targeting expatriates,” he said.

When the first phase was launched last month, the company brought in sales worth RM50mil.

“The first phase of Jade Hills will be ready by mid-2010,” Chow said.

By The Star (by Edy Sarif)

Property prices to weaken on slower economy

KUALA LUMPUR: Property prices and demand will weaken by 5% to 10% in 2009 due to slower economic growth and a decline in foreign investment, says an industry official.

Association of Valuers and Property Consultants In Private Practice Malaysia (PEPS) president James Wong ruled out a property price plunge but said he expected a “gradual correction” as prices had peaked in the third quarter of last year.

James Wong

“At this point, there is no panic and force selling. Our property market is more mature and there is less speculation,” he said.

Real estate investment trusts cutting back on property acquisitions, which had been a significant factor in the rising property market for the past two years, was partly blamed for the slowing property demand, he told a press conference yesterday.

Wong forecast property launches to soften this year and said he expected a prolonged economic slowdown.

To boost the property market, development and consumption had to increase, which he said were unlikely to happen this year as many potential buyers would opt to save.

“Many potential buyers and investors are adopting a wait and see strategy (and thus are not spending).

“How resilient our economy is in 2009 will depend on domestic demand and the recovery of the Asian giants, including China,” he said.

He added that the RM7bil stimulus package was too small to have a meaningful impact, as it only represented 1.4% of the national gross domestic product (GDP). He stressed that Malaysia needed a second stimulus package to prevent the economy from falling into recession.

“Government should reduce personal income taxes and increase disposable income to directly increase domestic demand and consumption.

“It should also improve the investment climate such as liberalising the Foreign Investment Committee (FIC) guidelines on foreign purchase of real estate, licensing, visa and work permit requirements and relaxing the foreign equity participation policy,” he said.

If possible, he hoped the Government would emulate the approval process adopted by Singapore and Hong Kong for manufacturing projects.

Wong also recommended further interest rates cut by Bank Negara to help revitalise the economy.

By The Star

Malls told to think of shoppers

KUALA LUMPUR: Developers of hypermarkets should consider the needs of shoppers if they want to keep pulling in the crowds.

Regroup Associates managing director Allan Soo said with the weaker market sentiment currently, hypermarkets needed to be more than just “faceless big boxes”.

“There are too many poor quality malls around. Many of them are not well planned or family-orientated. Developers need to change the architecture and not just build a shoe box,” he said in his presentation at the property summit yesterday.

He said many malls were monotonous and had the same problems, such as insufficient parking space, which often deterred people from shopping.

Soo added that developers of hypermarkets should conduct surveys with shoppers before starting construction and not just go by their “gut feeling.”

“Shoppers also should be more vocal about what they want,” he said, adding that hypermarket developers needed to consider issues such as size, location and accessibility.

On another note, Regroup Associates executive chairman Christopher Boyd said hypermarkets should have a different mix of brands to attract a wider audience.

“Every mall has the same brands. This creates mall and brand fatigue. There should be a better mix of new brands, products and merchandise,” he said, adding that there were too few local brands in hypermarkets.

“There aren’t enough Malaysian brands in a conventional mall. All it takes is a sense of adventure and a little bit of skill.

“Alternatively, they can always outsource if they lack the skill.” Soo said.

By The Star

Mustapha Kamal-related company buys land from MK for RM150m

PETALING JAYA: Property developer Tan Sri Mustapha Kamal Abu Bakar’s company Ketara Megah Development Sdn Bhd has acquired 23 acres of land in Selangor from MK Land Holding Bhd for RM150mil.

Ketara Megah had acquired the two parcels of leasehold land in Sungai Buloh in an open tender exercise from MK Land, of which Mustapha Kamal is chairman and chief executive director.

MK Land said in a statement on Tuesday the sale consideration of RM150mil was in excess of the forced sale value of RM118.35mil indicated in the valuation by PPC International Sdn Bhd.

At the close of the tender exercise on Dec 15 last year, only one tender was received, which was Ketara Megah.

The land was originally acquired by MK Land’s unit Saujana Triangle Sdn Bhd in 1995 for RM3.72mil. As at June 30 last year, the book value was RM151.9mil due to the fair value adjustments, said MK Land.

“The entire proceeds from the proposed sale will be used for working capital,” it said. It added the proposed sale would unlock the value of land which MK Land had no immediate plan to develop.

MK Land said the proposed sale was by open tender and the transaction was not regarded as a related party transaction under the Bursa Malaysia Securities’ listing rules.

By The Star

Tuesday, January 20, 2009

Malaysian property developers throw in perks

PROPERTY developers are finding new ways to boost sales as they grapple with a slowing economy and fragile consumer confidence.

OSK Research analyst Mervin Chow said more developers will offer incentives, especially for landed properties, to boost sales.

"There is more competition. So developers will have to do something new to survive. They may offer more giveaways or discounts," he said.

SP Setia Bhd yesterday unveiled a scheme that halves the downpayment on a house to five per cent. Rival Mah Sing Group Bhd is set to follow with its own plan this week.

Group managing director and chief executive officer Tan Sri Liew Kee Sin expects a good reaction to its Setia 5/95 Home Loan package, which is available until April 19.

"We had soft launches recently (at Setia Alam) and the responses have been good. People have money but are shaken a bit. So sales have been slow. There are some cases where buyers cannot get loans. This is why we came up with the 5/95 package to assist them to own a home," Liew said.

Liew was speaking to reporters after launching the 5/95 package with Housing and Local Government Minister Datuk Seri Ong Ka Chuan at the Setia Alam township in Shah Alam, Selangor.

The package requires buyers to make a 5 per cent downpayment on a property with no interest payable during construction. The buyer only starts to service the 95 per cent loan when the property is completed.

The campaign is supported by CIMB Direct Access, Maybank, Public Bank and EON Bank and is applicable to all of SP Setia's residential properties in the Klang Valley, Penang and Johor.

As for Mah Sing, it will launch its easy ownership campaign on Thursday.

Under the campaign, buyers can buy completed semi-detached homes or bungalows with a RM1,000 deposit, and thereafter pay a minimum of RM1,200 a month for the next five years.

They will enjoy an attractive loan interest package from the fifth year, Mah Sing senior manager, corporate communications, Lyanna Tew said.

Last year, Sime Darby Property Bhd (SDP) sold 241 properties worth RM141 million in one month, at its 10 ongoing townships.

Sales were boosted by its Guaranteed Buy Back scheme, which is valid until June 15. Under the scheme, buyers can sell back their properties to SDP with "no question asked".

By Business Times (by Sharen Kaur)

SP Setia’s latest 5/95 Home Loan package

Minister of Housing and Local Government Datuk Seri Ong Ka Chuan (left) and SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin at the launch of Setia 5/95 Home Loan Package on Monday.

SHAH ALAM: In the current difficult times, SP Setia Bhd has come up with a scheme to make it easier for buyers to own homes.

And four local banks – Malayan Banking Bhd, Public Bank Bhd, CIMB Bank Bhd and EON Bank Bhd – have committed more than RM1bil to provide financing facilities to the company’s new 5/95 Home Loan Package.

Under the package, buyers need only make a downpayment of 5% and the balance is payable upon completion of the property.

Under the 10:90 variant of the build-then-sell system, buyers have to make a downpayment of 10% of the property cost.

SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said: “We want to reassure buyers that bankers are not shying away from lending.”

Besides the banks’ support, the group also had RM600mil in cash to fund the campaign, he said after the launch of Setia 5/95 Home Loan Package by Housing and Local Government Minister Datuk Seri Ong Ka Chuan yesterday.

The three-month campaign ends on April 19 and is applicable to all SP Setia’s residential properties in the Klang Valley, Johor and Penang.

SP Setia would also bear other entry costs such as legal fees, stamp duty on the sale and purchase agreement and loan agreement as well as memorandum of transfer for purchases under the campaign.

“We believe Malaysians are still looking to buy and have the purchasing power to do so but got shaken a bit by the current market,” Liew said.

He added that the company had received “very encouraging” response from buyers to the promotion it introduced two weeks ago.

Ong said the Government encouraged developers to embark on build-then-sell system.

“As the country faces pressure from the global financial meltdown, Malaysians have become more cautious in spending. By introducing this 5/95 package, I believe SP Setia has managed to work out the right mechanics to offer prospective homeowners an attractive plan that is difficult to ignore,” he said.

However, Ong said the Government could not fully implement the build-then-sell system yet as smaller developers might find difficulty in securing loans from financial institutions to start a housing project.

The Government, he added, would provide incentives including fast-track approval for projects of developers who opted for the concept.

By The Star

Building materials prices to remain stable

PETALING JAYA: Prices of most construction building materials are likely to remain stable this year amid slowing demand and lower production costs on falling commodity prices.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen predicted prices of all construction materials would eventually drop closer to the levels before the fuel hike in June last year. He said the current prices should stay stable unless the Government made drastic changes to the base materials prices.

Ng Kee Leen

“Government policies have to be consistent and predictable, as investors dislike uncertainty,” he told StarBiz yesterday.

Ng also said MBAM’s ongoing discussion with cement manufacturers on price reduction was encouraging and the association was confident of a positive outcome.

Meanwhile, National Ready-Mixed Concrete Association of Malaysia on Sunday announced a 5% price reduction for ready-mixed concrete effective Feb 1. It said the new recommended selling prices would be applicable in Kuala Lumpur and Selangor.

Transportation charges and steel bar prices have been revised several times since last year.

Ng said prices of domestic steel bars had declined to about RM1,900 per tonne, which was about RM200 per tonne above the imported steel price. He estimated domestic steel demand at about 2 million tonnes in 2009.

However, since the conditional steel import liberalisation on May 12, the import of other steel products, for both the construction and non-construction industries, had faced new setbacks such as higher import fees, more frequent product testing and longer importation procedures, he said.

“It (import of steel products other than steel bars) has become less efficient and unproductive,” he said.

On the RM7bil stimulus package and the second scheme, Ng hoped the Government would implement them quickly.

“New contracts must start entering the market as many ongoing jobs were awarded in 2007 and will be completed soon.

If not, the construction industry will be affected in 2010,” he said.

He said the impact of the stimulus package would be felt only in the second half of 2009.

An analyst with Maybank Investment Bank Bhd who has an “underweight” on the construction industry this year projected that construction materials, whose prices had fallen since the fourth quarter of 2008, would not revert to an uptrend anytime soon.

She forecast the domestic construction industry would remain quiet this year, while local construction companies with overseas projects such as in the Middle East could risk jobs cancellation and potential delayed payments.

She added that construction material costs in India had not come off as quickly as in Malaysia. She also predicted international steel prices to average US$600 per tonne in 2009 from around US$400 per tonne currently.

By The Star (by K.C.Law)

1Utama owner wants to run own mall

See Hoy Chan Holdings is unlikely to renew a lease that lets Aeon Co (M) Bhd manage the first phase of the 1Utama shopping complex in Bandar Utama, Petaling Jaya.

The 15-year lease between Aeon and See Hoy Chan, which owns the shopping complex, will end sometime next year.

Aeon, operator of the Jusco department stores, manages the first phase, which opened in 1995, handling two million sq ft of gross space and 680,000 sq ft rentable area.

The second phase, with three million sq ft of gross space and 1.2 million net rentable area, is owned and operated by the developer See Hoy Chan. It opened in December 2003.

"We are negotiating a new arrangement with Jusco," See Hoy Chan director Datuk Teo Chiang Kok told Business Times.

"We prefer to run it on our own to present the mall as an integrated and wholesome centre," Teo said.

Nevertheless, See Hoy Chan would like Aeon to continue being its anchor tenant.

Apart from the department store and supermarket, Jusco also operates the Jusco Home Centre and Jeans Studio in 1Utama.

Aeon derives its revenue both from retail sales and mall management.

According to Aeon's website, there are 21 Jusco stores in the country, of which 16 are located in shopping complexes which it also manages.

In the first nine months ended September 30 2008, Aeon posted RM75.77 million profit on RM2.5 billion revenue.

Profits from retail operations (before tax) accounted for RM70.66 million and from property management, RM46.49 million.

By Business Times (by Vasantha Ganesan)

Monday, January 19, 2009

Local property market still attractive and sustainable

Ireka Corp Bhd executive director Lai Voon Ho expects downward adjustment in property prices

What is your outlook on the domestic property market in 2009?

The property market is likely to soften in 2009 unless the global economy is able to recover swiftly. There is an expected downward adjustment in property prices in general, but I believe prices in prime locations will hold out relatively well.

A rational property buyer with a long-term perspective would believe that Malaysia’s properties are still at an attractive and sustainable (price), as opposed to a lot of the other cities in the world.

The Malaysian property market is much more resilient as financial institutions have been more prudent in project lending.

Property companies today are also better capitalised, as stringent regulations are in place by both financial institutions and regulatory bodies, reducing the risk of widespread abandoned projects.

The other stabilisation factor has been the strong mortgage market, largely driven by domestic consumption and the young population. The local mortgage market remains resilient, thus maintaining access to relatively cheap home financing, ensuring the property market remains attractive.

With strong macroeconomic fundamentals, ample domestic liquidity and relatively robust job market, the belief that Malaysia will avoid ‘property price crash’, in my opinion, would hold true.

When do you think the domestic demand for property will pick up?

It is difficult to be certain when the property market will pick up again. However, I am optimistic it will ride out this uncertainty over the next two to three years and may return to a ‘boom market’ in the next four to five years.

Lessons learned from the current economic turmoil?

We can draw two important lessons. The first is the immutable fact that we are becoming a ‘globalised’ nation. At Ireka, we have always acknowledged the importance of thinking global in whatever we do, venturing into Vietnam while staying focused in Malaysia.

We will monitor the market very closely throughout 2009 and undertake in-depth feasibility studies, especially before embarking on new product launches.

We now have Mont’ Kiara as our i-ZEN branding showcase, providing us with the necessary experience and expertise to expand to new locations, such as Vietnam.

We will take a cautious yet opportunistic approach so that we will be in an advantageous position when the market recovers.

The second lesson is the vitality of ‘change’. ‘Change’ will be the guiding principle for the world economy in 2009 as we start to redesign the entire global financial architecture and change the way most financial businesses operate.

Our mantra for 2009 will be to ‘Embrace Change.’ It is no longer adequate for us to undertake tasks in a conventional manner – be it business decisions, branding platforms, marketing and sales strategies or product innovations.

The slowing economy has made it harder for consumers to part with their cash. However, our partnership with reputable property players such as CapitaLand of Singapore as well as leveraging on our i-ZEN brand of properties have provided greater value for each development and encouraged repeat buyers for our projects.

Business strategies for Ireka in the next two to three years?

Ireka will focus on its two main core businesses – construction and property development.

Over the next two to three years, Ireka will focus on completing its four construction projects in Malaysia with a total order book of RM1.14bil, which will help the group maintaining a healthy revenue inflow up to 2011. Ireka will continue to focus on providing integrated design-and-build services.

With an experienced team, Ireka is able to ensure cost and resources are optimised. With prudent cost management, the group hopes to achieve healthy margins while delivering completed projects in a timely manner.

On the property development front, Ireka will continue to earn a management fee from Aseana Properties Ltd (Ireka holds a 19.6% investment stake in Aseana) as its exclusive development manager. We will focus on completing projects like Tiffani by i-ZEN by the third quarter of this year.

For new projects, it is important for us to continue undertaking detailed market studies on the specific target markets. Innovative, targeted marketing strategy and branding initiatives are important steps to ensure that we focus on reaching the right audience.

By The Star

Analysts upbeat on REIT market

ANALYSTS remain upbeat on the real estate investment trust (REIT) market, with Axis REIT being one of the more favoured stocks.

The company is expected to release its full year results this Thursday for FY08 ended Dec 31.

An analyst with HwangDBS Vickers Research said Axis REIT was expected to deliver dividend per unit of 14.3 sen, or 12% gross yield, compared with 11% industry average in FY08.

Despite the weaker property market, it was anticipated that there was little risk of asset devaluation and tenancy non-renewals for Axis REIT given its diverse tenant mix, where only 19% of leases will expire in FY09 forecast.

“However, we have trimmed our FY09 and FY10 forecast net distribution by 8% and 9% respectively to reflect flat rental growth and one percentage point increase in interest cost, but maintain a “buy” call on Axis REIT for its strong operating cashflow and attractive 12% yield,” the analyst said.

“We believe Axis REIT’s RM1.65 net asset value per unit is intact despite the current weak sentiment, as demand for office and warehousing space in prime locations remains stable, and foreign direct investments have not dropped significantly in recent months.”

He said Axis REIT’s tenant mix comprised of 55% of properties in Petaling Jaya, 21% in Johor, 15% in Shah Alam and 5% each in Klang and Kedah.

“About 75% of Axis REIT’s properties are offices and warehouses, and the locations and tenant mix should cushion the REIT against a slowdown in demand in any one particular market segment or location,” he said.

The analyst said Axis REIT’s properties achieved 11% average gross property yield for 2008 and only about 19% of its leases were due for renewal in FY09.

“The tenancy renewal risk is low,” he said.

On the company’s expansion plans, the analyst said Axis REIT was unlikely to proceed with its planned placement of up to 120 million new units in the near term due to the weak market sentiment.

“Given its 33% gearing against the maximum allowable limit of 50%, we conservatively assumed that there will not be any acquisition for Axis REIT in FY09 to FY10. Management will only consider new purchases if they are accretive to unitholders,” he said.

On financing issues, the analyst said Malaysian banks were unlikely to pull back credit lines for properties with secured long-term tenants.

“But interest rates could rise slightly because of higher risk premium as a result of the global financial crisis,” he said, adding that the research unit estimated that for every one percentage point increase in interest rate, it will reduce Axis REIT’s FY09 forecast distribution by 5.4%.”

By The Star (by Danny Yap)

New loan plan to drive SP Setia home sales

Property developer SP Setia Bhd is confident of securing more sales this year with the introduction of its new 5:95 home loan package, its group managing director and chief executive officer Tan Sri Liew Kee Sin said today.

The package is expected to attract more buyers despite the economic slowdown as it offers a build-and-sell concept, Liew said.

“We had the soft launch last two weeks ago and the response was very encouraging,” he said.

Speaking to reporters after the launch of the package in Shah Alam, Liew said the concept required buyers to pay only five per cent of the purchase price and the remaining 95 per cent after completion of the property.
Legal fees, and stamp duty are also waived for the consumers under the new loan package, he said.

He added that the loan package will be applicable to all residential properties in the Klang Valley, Johor and Penang for three months starting today.

By Bernama

Saturday, January 17, 2009

Malaysian firms put on hold Vietnam projects

With the economic situation in Vietnam deteriorating by the day, it is only natural that investors have concerns over the fate of Malaysian businesses in the country.

Similarly, against the backdrop of such uncertainty, even Malaysian companies are holding back on their projects in Vietnam, says an analyst with TA Securities. Vietnam’s economic growth slowed to 6.2% for 2008, its weakest since 1999 largely attributed to lower demand for exports as recession hit the US, Europe and Japan last year.

“Basically, it is good that they should hold back first, given the situation in Vietnam.

“They are facing a high interest rate environment and growing economic pressure on demand, even though input costs have come down,” says the analyst.

Construction and property development costs are generally considered to have come down with the bursting of the commodities bubble since the middle of last year.

As for potential losses to Malaysian developers and construction players, “the amount committed so far is not large. Losses would be minimal,” the analyst adds.

The analyst, who covers WCT Bhd, SP Setia Bhd and Gamuda, also points out that many Malaysian companies have not begun work on any projects in Vietnam as they are held back by the global economic crisis.

He says in his coverage that only Gamuda Bhd has commenced infrastructure work on the RM8bil Yen So Park project.

Artist’s impression of Yen So Park (left) and Vietnam International University Township

Artist’s impression of Yen So Park (left) and Vietnam International University Township

The Yen So Park lake-side project in Hanoi covers 130.8ha that will include a five-star hotel, an international convention centre, offices, apartments, luxury condominiums and villas, a recreational club, community facilities and a botanic park.

Responding to StarBizWeek queries, Gamuda says there has been no further change in the company’s operations in Vietnam.

Last month, Gamuda announced that it would maintain the total value of its projects in Vietnam at RM10bil. However, it added that the financial crisis and investors’ difficulty in getting funding might delay the development of the retail mall, office block and hotel parcels for one or two years. It pointed out that although the project was scheduled to run for 12 years, the delay would not be significant.

Berjaya Land Bhd which has received investment licences in Vietnam for four projects covering 920ha, expects some slowdown in demand for properties there and is prepared to defer projects.

Berjaya Land chief executive officer Datuk Francis Ng says: “With the current economic situation, we expect some slowdown in demand for properties as purchasers adopt a more cautious attitude, and we may have to slow down or defer some of our projects if the demand is not there.”

Even so, Berjaya Land aims to launch the first phase of its Thach Ban project in Hanoi by the second half of 2009.

Thach Ban City in Hanoi is the company’s maiden project in Vietnam comprising 148 units of condominiums worth a total of US$550mil (RM1.97bil).

Ng adds: “We have started work on our Dong Nai Residential Development project, and are also planning to launch it in the second quarter of 2009.

“We have also received investment licences for the Vietnam Financial Centre and Vietnam International University Township projects, and are now awaiting construction permits for these projects.”

“We believe that once the global economy has stabilised, the take-up rate for property will improve.

“We view our investments in Vietnam on a long-term basis and we have confidence that the country is resilient enough to weather the downturn and recover when the global economy picks up.”

Berjaya Land currently has no contribution from its overseas projects in Vietnam as it only entered the market in the last two years.

The company has a target that all its overseas property development ventures will contribute some 30% to group revenue in three to four years.

Currently SP Setia, which has one ongoing project in Vietnam and another in the planning, says there would be no change in schedule and it was going ahead with the development.

Its on-going project is the 226ha township EcoLakes at My Phuoc, Ho Chi Minh City in a joint venture with Vietnam’s state-owned conglomerate, Becamex IDC Corp.

The project in planning is called EcoXanh, (meaning “Eco Greens”) which will be a range of villas with club house facilities on 31.6ha in Ho Chi Minh City.

EcoXanh is a joint venture between unit Setia Saigon East Ltd and Saigon Hi-Tech Park Development Co.

Tan Sri Liew Kee Sin, group managing director of SP Setia says: “We are going ahead. Where EcoLakes is concerned, our show village is almost ready and should be launched in the first quarter of this year.

Tan Sr Liew Kee Sin

“This will enable us to market our properties better. The Vietnam market has never seen or experienced such a development before, let alone an entire show village that showcases different types of properties.”

SP Setia says it is confident its ideas will take off in Vietnam, despite the current economic turmoil.

“We feel that the sub-urbanisation of housing and offices is inevitable given the congestion, inadequate infrastructure, cramped living quarters and expensive office space in central cities like Ho Chi Minh City and Hanoi.

“In this sense, we feel that SP Setia has a distinct advantage in Vietnam as building sub-urban townships is our forte,” he adds.

At present SP Setia’s revenue solely comesfrom the domestic market.

Main board-listed Ireka Corp Bhd’s exposure to the Vietnam market is mainly through its 19.6% stake in London-listed Aseana Properties Ltd as well as the appointment of wholly-owned subsidiary Ireka Development Management Sdn Bhd as the exclusive development manager for Aseana. The successful London-listing of Aseana in April 2007 was initiated by Ireka.

In mid-2008, Aseana received investment licences for Queen’s Place (formerly known as Horizon Place) and International Hi-Tech Healthcare Park in Vietnam; both are mixed developments with residential component.

Queen’s Place will cover 8,400 sq m adjacent to the central business district in Ho Chi Minh City and the Hi-Tech Healthcare Park will be a fully integrated “Medical City” with approximately one million sq m of gross floor area.

Meanwhile, all of Aseana’s other pipeline projects in Vietnam are still at the master planning and approval stages.

Ireka Development president Lai Voon Hon says: “This includes Wall Street Centre (District 1, Ho Chi Minh), Nam Khang Resort & Residences (Danang) and One Saigon.

Lai Voon Hon

“In July last year, Aseana also acquired a strategic stake in Nam Long Corp, one of Vietnam’s leading property developer with over 500ha of land bank in Ho Chi Minh City and neighbouring provinces.

“Through this partnership, Aseana is expected to co-develop at least four property development projects with Nam Long in Vietnam.”

On the company’s outlook for Vietnam, he says: “Vietnam is frequently compared to China of a decade ago and therefore is thought that the current challenging environment mirrors that of China in the mid-1990s. This is as a result of rapid growth, in which there is bound to be a reactionary correction but eventually will be followed by stabilisation and growth.

“Hence, though it may be a challenging environment today, I am optimistic that the property market will ride out this uncertainty and will be on an upturn in the next four to five years). We will take an opportunistic approach in our involvement so that we will be there when the market takes an upturn.”

That pretty much sums up most Malaysian companies’ aspirations in their Vietnam ventures.

By The Star (by Loong Tse Min)

Good time for value buys

DESPITE the gloom and doom encompassing much of the global economy these days, there are still good opportunities for cash-rich entrepreneurs and companies looking for value acquisitions.

As a more meaningful recovery of the local economy and property market will only become more evident around year-end or in early 2010, most developers will be consolidating their positions to get ready to ride on the next wave of growth.

Companies with strong balance sheets and cash reserves should look out for the right opportunities to snap up good quality assets, both within and outside the country, that may be available at more realistic prices now.

Besides local opportunities, companies should also look to the global market and consider investing in assets overseas for a wider geographical expansion as it would cost less to do so now.

Companies that have laid the groundwork by building up a pool of top-notch management and technical capability, internal processes, and financial resources should take advantage of the current slowdown to further enhance their areas of competency.

Regional markets like Singapore, Vietnam, India and China have much to offer investors as asset values have eroded by 20% to 30% since they succumbed to the contagion effect of the global financial meltdown.

According to the latest market report on Singapore by CB Richard Ellis (CBRE), out of 2,200 units in luxury projects that were launched in the city state between 2006 and 2008, 55% or 1,204 units remained unsold as of last November.

The average launch prices of new luxury condominiums fell from a range of S$2,000-S$4,000 per sq ft (psf) in the last quarter of 2007 to S$2,000-S$2,600 psf in the fourth quarter last year.

CBRE is projecting a 10% to 15% fall in prices of existing projects this year. That means retail property buyers can also look around for some value buys.

Vietnam, which is still reeling from the effects of an overheating economy and high inflation in the first half of last year, also offers good potential for some good cherry picking.

Companies with strong net cash position such as YTL Corp Bhd has already started shopping around for distressed assets.

With its war chest of more than RM10bil cash, YTL Corp is making great headway in the construction, property and infrastructure sectors in Malaysia, Australia and Britain, via acquisitions.

Last October, the company agreed to pay S$285mil for control of Macquarie Prime Real Estate Investment Trust (MP REIT).

With the price at a 49% discount to the net asset value, the proposed acquisition of MP REIT will provide stable earnings and good upside potential to the company.

By having a REIT in Singapore, YTL will be well placed to tap the city-state’s expanding real estate sector and promote its Starhill brand in the international market.

A consolation for local property players in the current challenging market is that their low gearing position and prudent financial management will likely pay off and enable these companies to ride out the current downcycle.

In fact, a number of property companies have net cash reserves to expand their landbank and pick up some value assets.

As the saying goes, “Every cloud has a silver lining.” While developers have been forced to review and delay project launches, the market slowdown also offers them the chance to consolidate and identify new opportunities to thrive when the good times return.

# Angie Ng is deputy news editor of The Star and she believes with right planning and foresight, developers will be able to ride out the tough times.

By The Star (by Angie Ng)