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Tuesday, March 31, 2009

Suria KLCC eyes 5pc growth in retail sales

AMIDST the gloomy outlook of a weakening economy and dampened consumer sentiments, one of Kuala Lumpur's shopping bright spots, Suria KLCC, expects total retail sales to grow for the 11th consecutive year.

The premier shopping centre, housing 330 specialty stores within the 1.04 million sq ft of retail space, hopes to grow total retail sales by up to 5 per cent to about RM2.1 billion this year.

The growth, though small compared to the 15 per cent in 2007, is still better than its marginal growth in 2008.

Retail sales were stable at Suria KLCC last year amidst lower traffic count as a result of an additional 2.9 million sq ft of retail space in the market (at the Pavilion Kuala Lumpur, The Gardens Mid Valley and Sunway Pyramid) and high fuel price.

Suria KLCC Sdn Bhd's chief executive officer Andrew Brien said this year's strategy is to get customers to stay longer and spend more.

"In 2008, we grew by a few percentage points to just over RM2 billion in sales, despite a 4.5 per cent drop in traffic (to 42.02 million) from 44 million in 2007. We have been able to maintain modest growth in what has been a challenging environment. This is a testament of our strength," he told Business Times.

In a previous interview, Brien had noted that the high growth experienced for two-and-a-half years (between mid 2004 and 2007) would be nearly impossible to sustain forever.

Suria KLCC is a 60:40 partnership between KLCC Property Holdings Bhd and ING Real Estate.

For the financial year ended March 31 2008, Suria KLCC registered RM232.3 million in revenue, representing a 8.2 per cent growth from RM214.7 million achieved in the previous year.

The 57 per cent urbanised Malaysian population and a higher level of job security, particularly for those in the Klang Valley as well as the high spending tourist crowd, also works in the mall's favour.

"If there has been a drop in tourists numbers we have not seen it. They still account for 20 per cent of our business as they are big spenders," he said.

He added that even rentals was not an issue at the mall. "If a mall is successful, rent is never an issue," he said, adding that Suria KLCC does not plan to cut its advertisement and promotion spending for 2009.

"We have a good team, a good product, and we want to make sure it remains great," he said.

Apart from investments to spruce up the mall, Suria KLCC has also remixed the retailers to drive sales. Some of the recent additions include Harrods, Ed Hardy, Mulberry, 7 For All Mankind and ck Calvin Klein Accessories.

By Business Times (by Vasantha Ganesan)

TSR to build, equip RM1.7bil hospital

PETALING JAYA: Construction group TSR Capital Bhd looks set to build and equip a teaching hospital costing RM1.7bil for International Islamic University Malaysia (IIUM) in Nilai, Negri Sembilan.

Prime Minister Datuk Seri Abdullah Ahmad Badawi will today officiate the ground-breaking ceremony for the hospital which will be funded by private finance initiative (PFI).

Under a PFI scheme, a private sector company will finance the development of infrastructure and lease it to the Government over a period of many years.

TSR recently announced to Bursa Malaysia that it has received approval in-principle from the Economic Planning Unit for its subsidiary Medicalcity Corp Sdn Bhd to develop a post-graduate teaching hospital for IIUM.

The project remains subject to terms and conditions to be negotiated and a concession agreement to be executed.

TSR senior accountant K. K. Ng said Medicalcity was a joint-venture company that was 70:30 owned by TSR and Lembaga Tabung Haji (LTH) group.

Medicalcity would design, manage the turnkey construction and finance the development of the hospital while TSR would construct and equip the facility, Ng told StarBiz yesterday. After TSR has completed construction, Medicalcity will provide maintenance services for the hospital and its facilities over the next 30 years.

“The doctors can focus on medical treatment and teaching while the building and facility maintenance services are outsourced to us,” Ng said.

The PFI arrangement will be under a build-lease-maintain and transfer (BLMT) scheme where the facilities will be transferred to the Government at the end of the lease period.

There will be key performance indicators to be adhered to by Medicalcity in its maintenance contract for the facilities.

The total development cost of RM1.7bil comprises about RM1bil for construction of the hospital and about RM700mil for the medical equipment.

While that is a huge sum to finance at this time, it is doable because bankers would be comfortable with the Government as the customer. Even so, Medicalcity will work on a debt-to-equity ratio of 80:20 as against a higher leverage of 90:10 that was originally planned.

“That’s to enable us to work towards a triple A rating for the bank loans. Bankers will be more comfortable if we put 20% of equity into the financing structure,” Ng said.

The teaching hospital will be built on a large piece of land in Nilai that’s owned by the Higher Education Ministry, and within Bandar Enstek that is being developed by a joint venture of Negri Sembilan State Development Corp and TH Properties Sdn Bhd, a subsidiary of LTH.

It is also near a 370-acre site owned by TH Properties and planned for a medical city. It is expected that TH Properties will form a joint venture with TSR to develop that.

The medical city will comprise facilities to offer services such as a combination of western and eastern or herbal medicine and treatment.

The whole concept focuses on the dual objectives of training knowledge workers and making available herbal treatment in a managed facility.

By The Star (by C.S.Tan)

IOI Corp offer for IOI Prop to close today

KUALA LUMPUR: IOI Properties will be suspended with effect from April 7 and be removed in due course from its listing on Bursa Malaysia.

AmResearch said in a research note said the final closing date of the voluntary takeover offer was on March 31.

On March 30, IOI Corp announced the level of acceptances for its voluntary takeover of IOI Properties had reached 90.65% of the latter’s issued and paid-up share capital on March 30.

IOI Corp had previously said that as long as it received acceptances resulting in the minimum level of 90% shareholding in IOI Properties, it would suspend and delist IOI Properties.

Shareholders of IOI Properties, who have not accepted IOI Corp’s voluntary takeover offer of the company, will face the risk of holding shares in an unlisted company. The only form of return that they would get would be dividends.

“To recap, we view the privatisation of IOI Properties positively as IOI Properties is being acquired close to the bottom of the property cycle.

“Offer price of RM2.598 per share values IOI Properties at an annualised FY09F price-to-earnings (PE) of 8.9 times and price to book value (P/BV) of 0.7 times versus the sector’s average P/BV of 1.1 times,” said the research house.

AmResearch said the acquisition of IOI Properties would increase IOI’s FY10F net profit by 4% to 5% as the elimination of minority interest would more than compensate for the increase in IOI’s share base and loss of interest income.

After the privatisation exercise of IOI Properties, IOI Corp would still have plenty of cash left in its reserves.

The group’s gross cash and cash equivalents amounted to RM1.9 billion as at end-December 2008. Cash outflow from privatising IOI Properties was about RM66 million.

“We believe that IOI Corp would most probably still be looking for acquisitions or expansions in the downstream segment of oleochemicals or specialty fats.

“We maintain a Buy on IOI Corp as it will benefit from improving crude palm oil prices. IOI Corp is one of the more efficient plantation companies in the country,” it said.

By The EDGE Malaysia (by Joe Chin)

Axis REIT plans bond sale in first half

AXIS Real Estate Investment Trust, the world’s only Islamic office and industrial REIT, plans a bond sale in the first half of 2009 to help refinance debt as it prepares for potential acquisitions this year.

“There’s nothing worse than having the sale of the century if you haven’t got any money to buy anything,” Stewart LaBrooy, chief executive officer of Axis REIT Managers Bhd, manager of the property trust, said in an interview yesterday. “There’s a lot of opportunities and fat pickings.”

Axis REIT, which is eyeing RM100 million (US$27 million) of property assets, may sell Islamic bonds under a seven-year program to refinance about RM220 million of debt, he said. It may also sell new stock to private investors.

Axis owns RM726.4 million of assets in Malaysia, from offices and warehouses to logistic centers. It is taking advantage of a global recession to snap up properties at cheaper prices and ride on an eventual rebound when economies recover.

Axis may raise about RM70 million selling new units to private investors to help fund any acquisitions, LaBrooy said. It raised RM90 million last year from a placement of 50 million units and will consider the fund-raising plan once it refinances its existing debt, he said.

Axis REIT’s stock has gained 18 per cent this year, making it the second-best performing property trust in Malaysia, outpacing the benchmark Composite Index’s 0.7 per cent decline.

By Bloomberg

Monday, March 30, 2009

Cyberview draws up 5-year plan for Cyberjaya

CYBERVIEW Sdn Bhd is drawing up new plans for Cyberjaya - including products and development - that will cover a five-year period from 2011 to 2015, a top official said.

"We will have a round of discussion with the Economic Planning Unit to identify what are the niche areas that need to be prompted and expanded. One area where I see a lot of potential is creative multimedia," said Redza Rafiq, managing director of the government-linked entity spearheading developments at Cyberjaya.

He believes there will be an influx of investments to Cyberjaya as companies worldwide, especially Ame-rican information and communications technology (ICT) firms, relocate to keep costs low.

Cyberview has embarked on a campaign to promote Cyberjaya in North America, and several firms have indicated their intention to move to the ICT hub, Redza told Business Times in an interview recently.

"We are expanding. It is not a real estate game. We are using property as a tool to create economic opportunities in targeted sectors. We believe there are opportunities in every crisis," he said.

Redza said Cyberview is moving to develop more land and provide more buildings as demand has outstripped supply.

There are currently 500 companies operating in Cyberjaya, 465 of which are homegrown and the rest, multinationals. This is 65 per cent more than three years ago.

Redza said 26 companies have confirmed moving to Cyberjaya since July last year, including Malladi, a biotech firm from India; Rhythm & Hues Studios, which specialises in visual effects and computer animation for feature films; Experian plc, a global information services company; institutional investor services provider RBC Dexia; and a prominent US-based micro processor.

Cyberview is currently busy building eight properties for, among others, Dell, Satyam, Hewlett-Packard, KRU Studios, and the Knowledge Workers Development Institute.

These properties are worth a combined RM585 million, and will add 1.65 million sq ft of new office space in Cyberjaya by end-2010, breaching the anticipated five million sq ft mark.

Redza said it will also create 7,000 new jobs by then, increasing the current workforce of 19,000.

Cyberview, meanwhile, has postponed the launch of its flagship housing project, myHome@Cyberjaya, worth over RM100 million, to the fourth quarter.

It was aiming to launch the project, comprising 1,000 units of serviced apartments and double-storey houses worth from RM88,000 to RM168,000 respectively, in August last year.

The delay is due to unexpected demand from knowledge workers in Cyberjaya, Redza said.

Today, some 25 per cent of Cyberjaya's total land size is developed with proper infrastructure, public amenities, houses, commercial blocks, SME buildings and learning institutions.

"It would be unrealistic to assume that we would be unaffected by job cuts by companies operating from Cyberjaya. But it is realistic to believe the effect on Cyberjaya will be more muted compared to other areas," he told Business Times.

By Business Times (by Sharen Kaur)

UK's Sure Corporate eyeing property bargains in KL

FOREIGNERS are fishing for investment opportunities in Malaysia's property sector, riding on the gloomy economy that has made properties cheaper by 15 to 30 per cent, especially in Kuala Lumpur.

Property investment firm Sure Corporate Holdings Sdn Bhd, a unit of UK-based Sure Holdings Ltd (SHL), is looking for properties, but is also tightening its belt now as developers are reluctant to offer discounts on properties still under construction.

"We are not investing over the next quarter. Like most investors, we will watch for sellers to lower their price. We will only buy what we consider to be an absolute bargain that has a real potential for good rental yield," says SHL founder James Pala.

"In my view, condominiums in Mont' Kiara are over priced by 15 per cent. It's greed on the developer's side," Pala told Business Times in Kuala Lumpur.

He said there is also a big gap of property pricing range in KLCC. While a 500 sq ft studio apartment costs around RM600,000, a 5,000 sq ft condominium is priced at RM10 million to RM15 million.

"There is no price correlation. Prices need to be adjusted if developers want to sell," Pala said.

Pala is not new to the Malaysian real estate scene. He has been buying and selling luxury condominiums and expensive landed homes since 1999.

The 34-year-old British born is buying properties to lease to expatriates and foreigners under the Malaysia My Second Home (MM2H) programme.

In its portfolio, it has 50 properties in Mont' Kiara, KLCC, Hartamas and Dutamas, bought in bulk from PJ Development Holdings Bhd, Sunrise Bhd, Mayland Properties and Palam Mesra Sdn Bhd.

Pala says the properties, which are 70 per cent occupied, are leased for RM2,500 to RM10,000 a month, 20 per cent cheaper than a year ago, as depression heightens.

"Our philosophy is to buy high-rise properties in bulk, hold for five years, then sell. For landed properties, we will hold for 5 to 10 years. If the market is good, you can double your money when you sell," he said.

Pala said for new purchases, SHL will stick to areas like Mont' Kiara, Bangsar, Golden Triangle, Sri Hartamas and Dutamas to invest.

It may look at potential growth areas being developed like Segambut.

"Malaysia has a lot of scope for growth. The properties are by far cheaper in comparison to Singapore and Hong Kong, hence making it a viable place to invest," Pala said.

SHL also trades in Fine Vintage French Wines, to complement its property investment business.

"We buy and sell for our private clients and build portfolios for them. They are the same investors who buy our properties," he added.

By Business Times (by Sharen Kaur)

Pan Arab Dev-Hong Bee project talks

PAN Arab Development Co Sdn Bhd, controlled by a Pakistan businessman, aims to develop a commercial project in the Klang Valley, in partnership with the Hong Bee Group.

Its founder Aftab Adamjee said its investment in the development will be over RM200 million, but declined to elaborate as plans are still preliminary.

The project is a first in a series of investments Aftab will make in Malaysia.

Founded in 1933, Hong Bee is run by the low-profile Gan family, with interests in textile.

Aftab is in talks with Hong Bee to also build houses for the Muslim community from the Middle East, Pakistan and the West.

"I am talking to Glomac Bhd and Ireka Corp Bhd for similar purpose. But the bigger plan is to get investors from Pakistan and the Middle East to invest here," he told Business Times in an interview.

Aftab is also buying houses in bulk from developers in choice locations, and selling to the Muslim community worldwide.

"I see large groups of Muslims from the Middle East and Pakistan coming here over the next five years under the Malaysia 'My Second Home programme'. They feel insecure because of what is happening in their home country," he said.

Aftab, via a private firm, has sold RM50 million worth of properties for Ireka, to high-net worth people in Pakistan, and is in talks with Glomac to sell its properties in the same country.

"Developers are giving good rebates if you buy in bulk. If you have the heart to weigh it out during this turmoil, it is a good time to do it. You will be getting better deals now than six months ago. Obviously, this is the time to also negotiate," he said.

Aftab does not foresee the downtrend cycle to be long term as he expects a turnaround in three to five years' time.

But the biggest challenge is getting funds as banks have increased margin requirements, he said.

"For Malaysian acquisition, we try to get funding from local banks. I have been successful so far in getting more than RM50 million in credit from UOB, Affin and CIMB," he said.

Aftab said he is looking at downstream projects to do with oil- and gas-related firms, and derivatives of palm oil like pharmaceutical grade by-products.

By Business Times (by Sharen Kaur)

Kampong Baru project may cost RM500m

The Puncak Baru project, a mixed deveopment venture on the site of the Sunday market in Kampong Baru, Kuala Lumpur, is estimated to cost RM500 million.

Federal Territories Minister Datuk Seri Zulhasnan Rafique said the project on the land owned by City Hall (DBKL), provides a balance, by taking into account the needs of local residents and that of the property market.

He said that the project comprises four main components,a 60-storey condominium tower with 392 residential units, 40 floors of office units, three floors for shopping and businesses as well as an integrated development for the Kampong Baru LRT station and business space or "Bazaar".

"The Puncak Baru project is expected to change and enhance the image of Kampong Baru into a modern village cum commercial centre with the same world status as that of the Kuala Lumpur City Centre or KLCC," he said at the ceremony to launch Puncak Baru in conjunction with the redevelopment of the Sunday market site here today.

The project was launched by the Prime Minister Datuk Seri Abdullah Ahmad Badawi.

Zulhasnan also hoped that the project would serve as the catalyst for the development of Kampong Baru as a whole.

Meanwhile, Naza TTDI chairman SM Nasarudin SM Nasimuddin said the project is expected to begin within three months and slated for completion in four or five years time.

By Bernama

Country Heights in luxury villa deal

COUNTRY Heights Holdings Bhd said its 70%-owned Borneo Heights Sdn Bhd will cooperate with Coughar Properties Sdn Bhd to develop, construct and market up to 20 premium luxury villa units in Sarawak.

Under the agreement, Borneo Heights will contribute land for the project while Coughar agreed to a minimum total sales value of US$160mil.

By Bernama

Saturday, March 28, 2009

RM2bil projects to be launched

Penang to see new development year-round

An artist’s impression of the IJM’s Light Point project along the Jelutong Expressway.

KUALA LUMPUR-BASED developers will execute projects with an estimated gross sales value of RM2bil on Penang island this year despite a challenging economic climate and price the new products competitively.

IJM Land Bhd, for example, is launching projects with estimated gross sales value (GSV) of RM350mil in the second and third quarter of 2009.

These are high-end sea-fronting projects comprising the RM200mil Light Linear, RM102mil Light Point, and the RM48mil Lots 28 located near the Jelutong Expressway.

The Light Linear consists of two 17-storey block of 328 condominiums on a 7.6 acre land, while the Light Point is a 28-storey block of 88 condominiums on a 2.8 acre site, and Lots 28 comprises 28 units of two and three-storey commercial and shop offices on a 2.6 acre site.

Pricing new property launches competitively does not mean lowering the selling price.

IJM Land Bhd managing director Datuk Soam Heng Choon says the group’s new properties would be priced competitively to reflect current construction cost, which in reality was still above the pre-July 2008 level.

“In reality, prices of construction materials are still high, with the exception of steel bars.

“To reduce the price further means to go for lower specification and finishes. “However, the flexible loan packages and other incentives thrown in by the developer will make the properties more affordable,” he says.

Soam adds that the group recently launched the RM174mil Summer Place condominium project, located at the Jelutong Expressway.

“About 40% of the 531 condominiums in Summer Place was taken up on the first two days of the recent soft launch,” he says.

C P Group is implementing its RM300mil BayVillas water project at the end of 2009 for its RM2bil Queensbay project in Bayan Lepas.

Its executive chairman Datuk Tan Chew Piau says the BayVillas comprises 76 waterfront bungalows, waterfront gardens, and garden villas, equipped with built-up areas ranging between 3,100 sq ft and 10,000 sq ft.

The entire project is guarded and has private swimming pool facilities and smart home features.

Tan says the group’s 335-room, Eastin Hotel located in Queensbay, will come on by the end of 2009.

“This will be the second hotel operating under the Eastin brand name,” he says.

Tan adds that the group is holding back the commercial project, BayCapital office suites, scheduled for launching in mid-2008, after the country succumbed to the global economic recession.

To date, CP Group has generated about RM600mil from the sales of its properties in Queensbay.

The largest project to take off the island this year comes from Mah Sing Group Bhd, which expects to launch its RM1.35bil Southbay Penang by mid-2009.

Group managing director and chief executive Datuk Seri Leong Hoy Kum says that the launch of the project would coincide with the completion of Southbay Penang’s showhouses.

Leong says the Southbay Penang had to date attracted more than 3,000 prospective buyers of which 70% had registered their interest for Residence@Southbay’s superlink homes, and the rest registered their interest for Legenda@Southbay’s designer bungalows and Southbay City, the commercial precincts.

On the prices of Southbay Penang’s properties, Leong says the early registrants would still enjoy the old prices they signed up.

“We will not lower the prices but we will make it easier for buyers to own properties through our Easy Home Ownership scheme which has been very well received.

The Southbay Penang, comprising 376 units of landed residential properties and an integrated commercial hub, is scheduled for completion within seven years.

By The Star (by David Tan)

i-City project could be a model for other locations, says Hamad

Tan Sri Hamad Kama Piah Che Othman (left) and Datuk Lim Kim Hong. Hamad says i-Bhd has acquired knowledge in developing properties with state-of-the art facilities amd it's good to learn more about it.

The intelligent business park project that I-Bhd is developing in Shah Alam can be constructed along similar lines by the company. It has the expertise and financial resources to do so.

It has made early tracks in establishing a record in this field which is now held back by the global recession. A successful completion of its RM2bil i-City will set it on the road to other states. Permodalan Nasional Bhd (PNB) CEO Tan Sri Hamad Kama Piah is convinced I-Bhd has developed expertise in this niche.

Hamad, who became I-Bhd’s non-executive chairman in February, says: “The i-City project could be a model for other locations and be replicated in other states, from an opportunity point of view.”

To a question on joining a company that’s small for the scale of PNB, he told StarBizWeek recently that it’s not a matter of small or big.

“It has acquired knowledge in developing properties with state-of-the-art facilities and it’s good to learn more about it,” he adds.

i-City boasts multi-telecommunications facilities and high-speed Internet access at a speed of 10 megabits per second (Mbps), which is 10 times the speed of Telekom Malaysia Bhd’s Streamyx service of 1Mbps or less.

The high-speed broadband will be useful for workers of companies in the information technology (IT), animation arts, law, architecture and banking sectors for which i-City is designed for.

In addition to the interest in i-City, Hamad says PNB has been associated with I-Bhd deputy chairman and controlling shareholder Datuk Lim Kim Hong for several decades.

In the 1980s and 1990s, this association was in Dreamland Holdings Bhd where both Lim and PNB were substantial shareholders. Lim sold his controlling stake in Dreamland some years ago. During his watch, Dreamland produced steady profits and dividends, attributes that attract PNB.

Lim, through his family-owned company Sumurwang Sdn Bhd, owns 58% of I-Bhd while PNB owns 18%.

In a re-entry into the corporate sector, Lim bought a controlling stake in Neico Industries Bhd which manufactured Sanyo electrical appliances. Neico was renamed I-Bhd but, after an unsuccessful attempt to expand the electrical appliances business, this division was phased out in 2007.

Its sole business now is its i-City project and a lot of cash.

I-Bhd has net cash of RM120mil, which exceeds the company’s total market value of RM89mil on Thursday.

The i-City project may need RM60mil of that for working capital but the rest of the development cost can be met by other means.

Eu Hong Chew, a director, says I-Bhd can tap a combination of some borrowings, internally-generated profits and capital injections by joint-venture partners.

In a joint venture with the Al Rajhi banking group, for instance, 80% of i-City’s phase one was sold to that group for RM95mil last year, with I-Bhd retaining the balance.

The company has used just 10% of the land for phase one, which leaves most of the rest of the 72-acre i-City to be developed.

While I-Bhd is cash-rich, it is not asset-rich in land as the i-City land was bought and is owned by parent company Sumurwang.

Eu says there is a supportive arrangement with Sumurwang such that I-Bhd pays for the land only as and when each parcel is developed. It is thus an asset-light business model.

In the development, I-Bhd follows a build-and-sell model. It does not sell prior to construction “and it doesn’t even have to borrow to build,” he adds.

By The Star (by C.S.Tan)

I&P upbeat on next phase of Alam Impian township

ISLAND & Peninsular Bhd (I&P) is “cautiously confident” that all the 103 properties under the next phase of its Alam Impian township in Shah Alam will be almost sold within six months of launch in May.

Priced under RM400,000 per unit, the 22ft x 80ft Canting 2 double-storey terrace houses have an estimated gross development value of RM40mil.

Noor Lida Nazri with a model of the Nukilan houses currently being developed by I&P at Alam Impian.

Group marketing and communication general manager Noor Lida Nazri says I&P is confident of strong response because of the project’s location.

“This is an integrated township, not a piecemeal development. It is very hard to get a good township in the Klang Valley.

“However, looking at the market condition now, we probably have to launch in stages as we do not want to flood the market.

“We have to be very cautious but we are confident that terrace houses are still something that people look for,” she tells StarBizWeek in an interview.

Alam Impian is a RM4.5bil township that is expected to be fully developed in 12 to 15 years. I&P plans to build about 10,000 homes on the 1,235 acres of freehold land.

Noor Lida says the next phase will only be launched when sales of Canting 2 have hit between 60% and 70%.

Since Alam Impian was launched in 2006, I&P has sold about 265 of the 309 units launched.

Two earlier phases, Canting and Tinta which were launched last December and in January, comprised 115 double-storey terrace houses and 106 semi-detached units respectively. Both phases are sold out and have been handed over to buyers.

Early this month, I&P launched Nukilan comprising 54 double-storey linked-houses with land area of 24ft x 80ft and priced from RM465,000 per unit.

Noor Lida says a lot of people are viewing the Nukilan show unit but making a commitment would take time due to the economic uncertainty.

“They need to check on financing and the downpayment. So far, we have sold 10 units,” she says, adding that the partial opening of Kemuning-Shah Alam Expressway (LKSA) has allowed quick access to Federal Highway and Shah Alam. The LKSA is expected to be completed by the middle of this year.

I&P has other township development such as Alam Damai (Cheras), Alam Sari (Bangi), Bayuemas (Klang) and Bandar Kinrara (Puchong). The company focuses on landed property and its products cater mostly for locals. It has a land bank of over 5,263ha in the peninsular.

By The Star (by K.C.Law)

Raising KL’s living standards

Michael Yam still contributing to property development

VETERAN property developer Datuk Michael Yam wants to contribute towards raising the standards of the country’s living environment through his strategic, technical and project management consultancy firm, Impetus Partnership which he set up last May to offer holistic strategic solutions to property development companies.

Yam ... It’s not too late to undertake a comprehensive master planning for Kuala Lumpur.

Since retiring from Sunrise Bhd last March after helming the company for 11 years, Yam is happy to let go of the responsibilities of “micro managing” to other younger breed of managers.

“My objective is to provide an avenue for people to harness their skills and expand their horizon as entrepreneurs. I see my role as a lead surgeon who works with other specialists to offer holistic solutions to industry players,” says Yam.

He is currently an advisor to several local and foreign conglomerates including Tan Chong Motor Holdings Bhd, Cahya Mata Sarawak Bhd, Serai Saujana Development Sdn Bhd, and more recently Rajawali Corp.

Yam believes the business of creating wholesome living spaces lies with good planning and a good vision from the start of a project’s conception.

“Developers need to be proactive by introducing more zest and refreshing layout plans and designs in their projects. Through more holistic planning strategies, they can make a difference by planning and building more wholesome and energising living spaces for the people,” he says.

The market is getting more sophisticated with consumers demanding more facilities, convenience and built quality to improve their quality of life.

“Good planning and understanding of the relationship between the various usage components is imperative to ensure good quality of life and environmentally-friendly and sustainable developments. Some of the issues to consider include transport connectivity, lifestyle facilities, shopping convenience, community services, as well as security and safety,” he points out.

To keep his passion of building quality residences alive and keep him abreast of the latest building know-how, Yam is also venturing into small niche developments in the Klang Valley.

Together with some partners, Yam is involved in the Serai Saujana residential project, a luxury RM320mil gated and guarded community on ten acres next to the Saujana Golf and Country Club and two 18-hole golf courses in Saujana Subang.

The project comprises two 15-storey blocks of 163 condominiums priced from RM400 to RM650 per sq ft and 42 three-storey villas priced at RM3.5mil to RM4mil each.

Launched early last year, the project is scheduled to be completed next year.

Together with his consortium members who are private equity funds, Yam is also assessing the viability of two parcels in the Damansara area for a commercial project.

With an economic recession at the country’s door step, Yam says the property sector has a big role to play to contribute towards a recovery of the country’s economy given its link to more than 140 other industries.

He hopes to make more contributions and changes for the property industry through his active participation in the Real Estate and Housing Developers’ Association (Rehda). He is Rehda deputy president and also the chairman of Rehda Kuala Lumpur.

He sees his recent two-year term appointment as a member of the advisory board to the city of Kuala Lumpur as a good opportunity for him to contribute towards turning Kuala Lumpur into a sustainable world-class city.

“Kuala Lumpur’s 1.7 million population is expected to expand by 30% within the next decade and there is an urgent need to address the various issues such as putting in place an integrated public transport system, well planned housing projects and world-class infrastructures to meet the needs of the growing population.

“Kuala Lumpur must have in place facilities that can sustain a high density if it wants to continue flourishing and become a world-class city,” Yam points out.

He says by adopting a proactive stand and active joint private-public participation in urban redevelopment programmes, Malaysia’s cities will continue to thrive and change with the needs of the times.

According to Yam, it is still not too late to undertake a comprehensive master planning for Kuala Lumpur as long as there is a strong political will and cooperation from all the relevant stakeholders, including land owners, to enhance the city’s sustainability and quality of life for the city folks. A building engineering graduate from the University of Westminster UK in 1978, Yam is a fellow of the Royal Institution of Surveyors and a qualified member of the Chartered Institute of Building (CIOB).

He had an illustrious career spanning 30 years in the construction, real estate and corporate sectors, including five years in Britain and in various Malaysian companies such as Landmarks Bhd, Peremba Malaysia Sdn Bhd, Country Heights Holdings Bhd and Sunrise Bhd. He was involved in the development of hotels, resorts, shopping malls, golf courses, international schools, residential and mixed developments in Malaysia, Australia, Britain and South Africa.

Among the projects that he feels passionate about include the Georgian Mansion in London, which he looks upon as his “finishing school” after his graduation; Sungei Wang Plaza (for its vibrancy, variety, wealth and profit generated); Carcosa Seri Negara (a restored state guest house for the rich and famous); The Datai resort (a truly world-class Malaysian resort); and the recently opened St Regis Bali Resort in Bali.

Recognising his contribution for steering Sunrise to its leadership position in the high-end condominiums market in the Mont’Kiara enclave and for his good leadership qualities, Yam was voted “CEO of the Year 2002” for Malaysia by American Express Corporate Services and Business Times.

Despite his busy schedule, Yam is serving as a director of the British Malaysian Chamber of Commerce and a trustee of Standard Chartered Charity Trust. He is an independent non-executive director of public listed PECD Bhd and statutory board CLAB Bhd.

Yam is also one of two Asians on the Board of Trustees of the British-headquartered Chartered Institute of Building which sets global standards for the management and implementation of the construction process. He is an examiner and accreditor for the Institute which has 42,000 members worldwide.

With so much on his plate, Yam is taking his time to evaluate and analyse offers available on the table.

“Certain criteria have to be met. Apart from the land being in prime location, the project must be easily accessible, has the right address and on a friendly terrain, is not too large, has good visibility and is located in a neighbourhood where the market is ready and receptive towards a green and sustainable development,” he says.

By The Star (by Angie Ng)

A softening housing sector

The property market in Penang experienced a slight decrease in sales for the first three months of 2009, compared to the previous corresponding period, and the housing sector is likely to soften further by end year.

Although there is a drop in sales, there is no corresponding decrease in property prices.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat says at this juncture there were no symptoms of a “fire sale”.

“For sub-sales, some owners are asking for a lower price to attract buyers. However, current sentiments suggest that the property market will become increasingly soft by the end of 2009,” he says.

Presently landed properties in Penang are still holding firm at RM600,000 to RM700,000, depending on the location and size of the properties. Mid-end high-rise properties are still priced between RM300,000 and RM400,000 for a 1,000sq ft unit, depending on their sizes and location.

The price of super-condominiums still hovers between RM2mil to RM3mil.

The total transactions in terms of sales volume and value in Penang for 2008 are expected to be at least 20% lower than 2007, although the finance ministry had yet to release the official figures.

Teoh says the high-end category was more vulnerable to the global economic climate because the owners were now under pressure to seek suitable tenants or a divestment opportunity.

“Rental returns from the high-end properties are also rather low.

“It is now a buyers’ and a tenants’ market for the high-end property segment in Penang.

“Expatriates are now spoilt for choice,” he says.

Teoh says the mid to high-end segment was quite sustainable, due to the demand from the young population in Penang.

Real Estate & Developers Housing Association chairman Datuk Jerry Chan says the price of properties in Penang would not plunge drastically.

“This is because prices in Penang have moved upwards gradually between 7% to 10% per annum over the past five years, unlike the KLCC area where property prices doubled during the period 2006-2008,” he says.

Chan adds that developers were now dishing out free legal fees on sales and purchase agreement, free legal fees on loan, and other easy payment terms to roped in buyers during this challenging market condition.

On the mainland, there is a 20%-30% drop in property transaction for the first three months of 2009, compared to last year’s corresponding period, due to the uncertainty in the prevailing market and the caution banks are taking towards loans.

Prai-based Kington Real Agency business development manager Frankie Soon says however, there was no corresponding drop in prices.

“The single-storey terraced properties are the most popular in Seberang Prai.

“However, developers are not building that many because they are not profitable,” Soon says.

By The Star

Giving green a chance

WHEN the going gets tough, the tough gets going.

In the current challenging market conditions, when property sales have taken a severe hit causing developers to defer their launches, it may be an opportune time to enhance product research and development efforts to keep their antennae tuned in to the types of products that are in vogue and will drive sales going forward.

Needless to say, those who are more proactive and creative in their product offerings, have a better chance of sailing through the adverse market conditions.

Towards this end, given rising concerns over the deterioration in the environment and global warming, developers should pay more heed to building more “green” properties that will contribute towards a more sustainable environment.

One of the areas that has yet to be tapped in a significant way is that of ecologically- and environmentally-friendly residential projects that are affordable and within the reach of the average middle income households. Most of the green projects available now are still quite exclusive and expensive.

To succeed in these green projects, companies must not only be driven by profit but should make it their corporate culture to adopt practices that will reduce the carbon footprints.

Keeping things simple and practical by going back to the basics of the good old days of using durable yet inexpensive materials will be a good practice that can be easily revived and meet the needs of the current times when people are closely watching their budget.

As responsible corporate citizens, developers should strive to build sustainable and eco-sensitive developments. Wherever possible, they should ensure minimal cut and fill at the site to maintain optimal environmental friendliness in their developments.

Being ecologically conscious does not necessarily mean incurring more cost as that may defeat the sustainability portion of the equation.

What is needed is for this “green spirit” to be implanted in the company’s DNA as a corporate culture that is practised company-wide so that it permeates every level of the organisation, especially in project planning and decision making process.

One way to get this going for developers is to consciously adopt designs and plans that will lower energy and water usage, as well as promote recycling and conservation from the conception stage of the project, Simple measures such as incorporating windows extension up to the floor for both residential and commercial properties to maximise natural lighting and allow cross ventilation will reduce the need for air conditioning and lighting in the premises.

So having designs that have ample use of windows, glasses and skylights that promote natural lighting and good ventilation will go a long way towards cutting down the high electricity consumption.

To reduce heat, the use of pitch roofs that allow large volume ceiling spaces, extending the roof eves and having deep set balconies will cool the interior of the house.

Extensive landscaping and tree planting also provide the much needed shades from the burning sun.

Water-saving fixtures and fittings that minimise the volume of water used in households will minimise water waste. One simple example is the use of low-flow water closets in the toilets. To promote recycling and reduce wastage, providing recycling bins in various locations for community use will be a good start. Recyclable construction materials should be re-used in other developments to avoid wastage.

Under the company’s green efforts, Mah Sing Group Bhd prefers using masonry materials over materials manufactured with high energy power. High grade local materials are also preferred to provide a convenient source for future replacements.

The selection and specification of materials are based on ecologically sustainable design and are sourced locally and the efficient construction methods it adopt minimise the dumping of materials. Even the appliances selected for the fit-out of the houses are based on low energy ratings.

During the current economic turmoil when the majority of Malaysians and corporations have to resort to cost cutting measures to ride out the tough times, going green and back to the simplicities of life seem to be a wise choice for them.

·Deputy news editor Angie Ng hopes that people and businesses will adopt environmentally-friendly practices to protect the Earth for many generations to come

By The Star (by Angie Ng)

Pearl Garden anchors Prai projects

In Seberang Prai, the largest project to be launched this year is the Pearl Garden, a joint-venture housing scheme by Taman Indah Group and Mutiara Goodyear Bhd.

The Pearl Garden, targeted for launch in May, comprises 616 bungalows, semi-detached, and terraced houses with an estimated gross sales value (GSV) of RM210mil.

“The Pearl Garden project is located in a 1,086 acre township developed by Mutiara Goodyear Bhd to become a fully integrated township for the Simpang Ampat community, which will serve as a growth catalyst in the region,” says Tambun Indah managing director Teh Kiak Seng.

Teh expects property prices on the mainland to remain resilient due to high land costs, insignificant decrease in raw materials except for steel, and high labour costs due to the shortage of construction workers.

“The current economic environment has affected the housing sector. In order to mitigate the effects, we are absorbing legal fees and stamp duty on transfer and zero interest for new purchasers during the construction stage,” he says.

Island Landcap Sdn Bhd, a company specialising in developing high-rise properties on the mainland, is launching some 350 units of apartments with an estimated GSV of RM65mil in Seberang Jaya at the end of 2009.

Its managing director Oon Weng Boon says that the yet to be named scheme, located on a seven acre site, would be equipped with life-style facilities.

They are mid-income homes, priced between RM150,000 and RM180,000, but they come with the facilities that you would enjoy from a high-end condominium on the island. These apartments are priced about 30% lower than landed properties on the mainland.

Oon says the company plans to launch another 650 units of apartments in 2010.

The company previously developed 300 units of similar type of properties called Cassia Resort Condominiums in Jalan Raja Uda.

By The Star

PNB to merge three property units by June

The merger of three property firms taken private by Pemodalan Nasional Bhd will be completed by end of June, says president and chief executive officer Tan Sri Hamad Kama Piah Che Othman.

“We are supposed to complete the exercise by end of June,’’ he said in Kuala Lumpur yesterday.

Hamad was speaking at a briefing to announce income distributions for three funds under the Amanah Saham Gemilang (ASG) stable for the year ending March 31.

It was reported earlier this month that PNB is grouping together Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd into a single entity.

It is unclear at this stage whether the enlarged property group will be publicly floated.

All three companies were previously listed on Bursa Malaysia before they were taken private by PNB over the past few years.

Analysts opine that the timing for any potential re-listing will depend on market condition.

Meanwhile, the weak share market sentiment has dragged down the performance of funds under ASG.

“Despite the decline in payouts, the yields for the three funds are still competitive compared with rates in the market,” says Hamad.

For the 6,557 unitholders in ASG-Pendidikan, the payout for the year dropped to 5.5 sen per unit from 7 sen last year. The total amount distributed for the year was RM2.14mil.

ASG-Kesihatan’s 4,065 unitholders will get 6 sen per unit, compared with 7.25 sen previously.

Meanwhile, the income distribution for ASG-Persaraan, which affects 2,767 unitholders, was set at 5 sen versus 6.75 sen per unit a year ago.

All three funds have been suspended since March 25 and will resume trading on April 1.

By The Star

Penang hotel expansion pending clarification on height

EASTERN & Oriental Bhd (E&O) is halting expansion work on its E&O Hotel in Penang.

According to the heritage guidelines submitted by the local authorities to Unesco, buildings in the heritage zones must not exceed 18m in height.

Group communications and investor relations director Lyn Chai says E&O has recently stopped work and will wait for clarification from the relevant authorities, which is expected in June.

“Presently, activities at the site is confined to the car park level where we are carrying out the necessary concrete works to protect the formworks and steel bars (which are already in place) from corrosion and to prevent material wastage,” Chai tells StarBizWeek.

The E&O Hotel expansion project, known as Annexe, is one of the four developments on the island that faced height restriction problems after Penang was awarded the World Heritage Site status by Unesco a year ago.

The other projects are the RM400mil Pier Hub, the RM130mil Royal Bintang, and the Low Yat Group’s proposed 23-storey hotel on Jalan Sultan Ahmad Shah.

While the first three projects were approved by the previous state administration, the proposed 23-storey hotel was given the go-ahead in June last year, less than two weeks before George Town won the Unesco status on July 7.

Chai says the group had originally in 1996 obtained building plan approval from the local authorities for a 28-storey building.

“But we scaled it down to 15 stories in 2008. When the Unesco height restrictions came to the forefront recently, we decided that it would be for the best interest of George Town, and consistent with E&O Hotel’s unique position as a heritage hotel, to review our plans and await formal notification from the authorities,” she adds.

Chai says when the group bought the hotel, the purchase consideration included the adjoining parcel of land (where the E&O Annexe now stands), which was already approved for high-rise development.

The expansion plan includes the construction of over 100 guest suites, an additional restaurant, boutique retail space, meeting and conference facilities as well as a branded spa.

By The Star (by David Tan)

Japan seen eyeing REIT properties

JAPAN may set up a US$10bil fund to buy properties held by real estate investment trusts (REITs) and make loans to the trusts, the Nikkei business daily said, pushing shares in the hard-pressed sector up nearly 8%.

REITs have fallen on hard times as the global financial crisis has pushed down property values and squeezed financing, driving investors out of the market.

”The news helped ease investors’ worries about the REITs’ financing problems,” said Daisuke Seki, a REIT analyst at IB Research & Consulting Inc.

”If the fund can really buy assets from REITs, then that would help such REITs raise much needed cash and trigger cash flow in the market.”

The Nikkei said ruling coalition lawmakers were concerned that a protracted downturn in the REIT market would hurt regional banks, who are big buyers of REIT units, and damage the financial sector.

One Japanese REIT, or J-REIT, has failed so far during the crisis, while 16 listed property companies collapsed last year.

Regional banks are suffering in the global crisis, as sliding exports and a deepening recession in Japan hit their customers, with falling property values adding to the pain.

A panel from the ruling Liberal Democratic Party and its coalition partner, New Komeito, is looking at the problems of REITs as part of measures to stabilise financial markets, an LDP official said, but no decision had been taken.

The coalition parties are planning to finalise the stabilisation measures by the end of the month.

By Reuters

Friday, March 27, 2009

Super Rich's appetite for property remains unshaken

KUALA LUMPUR: Luxury house prices have fallen around the globe, but the super rich's appetite for property remains unshaken, according to the Knight Frank/Citi Private Bank Wealth Report 2009.

Knight Frank London's head of residential research Liam Bailey said despite the global house prices falls, the rich are committed to property as an asset class.

“The results of our Attitudes Survey, which represents the views of a cross section of Citi Private Bank’s wealthiest clients, reveals that 55% of them plan to increase their exposure to residential property over the next two years,” he said.

Bailey added the wealthy want their investments to be both tangible and transparent amidst the turbulent times.

The Wealth report analyses prime residential property markets and the behaviour and attitudes of the wealthy.

It covered the property market in the UK, Europe, the Caribbean, Asia, Australia and Africa.

It is produced by Knight Frank in collaboration with Citi Private Bank and includes the 2008 Knight Frank Prime International Residential Index, Knight Frank/Citi Private Bank High Net Worth Individuals (HNWI) Attitudes Survey, Knight Frank World Cities Survey and Knight Frank Global Farmland Survey.

The report also showed a majority of HNWIs appeared to be sitting on the fence at the moment when looking at bricks and mortar as an investment class.

It added 57.1% of them were not making changes to their property portfolios, although over 90% have seen their property portfolios decrease in value during the credit crunch, with about a third of those hit by a substantial decrease.

According to the survey, property accounts on average for 30% of the HNWI's asset portfolios.
Although a number of investors admitted they might have to sell some property, it appeared that HNWIs still regarded property as a crucial part of their investment portfolios and have more confidence in it than other more ephemeral investments.

Some of the world’s richest people had cut down discretionary spending, with some of the most desirable prime residential property markets in the world inevitably affected by the global downturn.

According to the report, experienced investors realise they are firmly into the bargain-hunting stage of the property cycle, especially in the commercial and newbuild sectors with some HNWIs actively looking to take advantage of distressed sales to cheaply acquire stable assets with good yields.

However, there are those who seemed to be awaiting the bottom of the market but they risk missing out on the best opportunities, which could have been snapped up by those prepared to take more risks, it said.

Bailey said: “Although almost half the locations surveyed in Knight Frank’s Prime International Residential Index (PIRI) managed to show a positive overall return in 2008, price growth had either stalled or started to decline in nearly 75% of these locations by the end of last year."

Hong Kong saw the sharpest annual drop of 24.5%, Dubai, which recorded annual overall growth of almost 11%, and later saw prices fall by 19% in the last quarter of 2008. Prime properties in Monaco are the most expensive in the world, costing an average of €55,000 psm for its best properties, followed by London and Manhattan.

By The EDGE Malaysia

Glomac cuts target for new launches

A house in Bandar Saujana Utama

PETALING JAYA: Glomac Bhd has cut its new launches target this year by about 40% to RM400mil from an initial target of RM600mil to RM700mil due to the economic slowdown.

Nevertheless, the group still had 15 projects with a total gross development value (GDV) of some RM3bil to be launched in the next five to six years, said group managing director Datuk Fateh Iskandar Mohamed Mansor.

Glomac hopes to chalk up at least RM120mil in sales by the end of next month from its ongoing Glomac 360 property fair.

“We hope to achieve about 30% to 40% sales out of the RM400mil properties on sale during this period,” he told a press briefing at Glomac’s show gallery in Kelana Jaya on Wednesday.

The group currently has unbilled sales of about RM400mil.

For the third quarter ended Jan 31, the group posted a flattish net profit of RM9.5mil and a 5.5% decrease in revenue to RM81.1mil.

For the first nine months of its financial year ending April 30, the group generated sales of RM148mil.

Glomac’s property showcase, which runs from March 20 to April 30, offers both commercial and residential properties worth some RM400mil from 10 projects.

Among the properties on sale are the group’s Saujana Utama development in Sungai Buloh, Suria Stonor in Kuala Lumpur and Galleria in Sri Hartamas, Kuala Lumpur.

Its latest commercial project, Glomac Cyberjaya, with a GDV of RM180mil and located in the Cyberjaya Flagship Zone, is also open for bookings during the showcase period.

Glomac is offering incentives including loans of up to 100%, 0% interest during construction period, free legal fees on the sale and purchase agreement and free loan documentation during the promotional period.

By The Star

Metro Kajang unit buys land worth RM32m

METRO Kajang Holdings Bhd's subsidiary, Pelangi Semenyih Sdn Bhd has entered into a sale and purchase agreeement with Glengowrie Rubber Company Sdn Bhd to acquire 168.18 acres of freehold development land in Ulu Langat, Selangor for RM31.95 million.

Currently, the land is mainly planted with oil palm trees, Metro Kajang said in a filing to Bursa Malaysia.

The acquisition is in line with the group's strategy to acquire good, ready to develop land for its property development projects.

The land will be developed into a township comprising mixed residential and commercial properties with an estimated total gross development value of RM335 million over a period of seven years.

By Bernama

Boustead unit gets RM18.8m hotel deal

KUALA LUMPUR: Boustead Holdings Bhd unit Boustead Building Materials Sdn Bhd has been awarded a RM18.87mil deal from from Boustead Hotels and Resorts Sdn Bhd, also a subsidiary.

In a filing with Bursa Malaysia, Boustead said the contract involved the construction and completion of earthworks, piling and sub-structure works in relation to the proposed construction of a 12-storey, four-star, 301-room hotel and two levels of basement of car park in Mutiara Damansara, Selangor.

By Bernama

Thursday, March 26, 2009

Further regional diversification for Glomac

Fateh Iskandar: We have to pace the launches in Malaysia. Photo by Chu Juck Seng

KUALA LUMPUR: Glomac Bhd’s group managing director Datuk Fateh Iskandar Mohamed Mansor’s years of training in the property development company has prepared him for the uphill task of navigating the firm through today’s stormy economic seas.

A backdrop of weaker consumer demand in Malaysia has prompted the developer to trim its plannned launches in the country to some RM400 milllion annually from original estimates of about RM700 million.

Hence, further geographical diversification within the region, possibly in Indonesia, is deemed pivotal to spur the growth of the company which had ventured into Australia and Thailand in recent years.

In July 2006, Glomac marked its overseas ventures via the acquisition of an office building in Lonsdale Street, Melbourne, for A$30.5 million (RM77.25 million) to boost its property investment portfolio.

Subsequently, in January 2007, Glomac announced its acquisition of a 49% stake in Thailand-based Warehouse Asia Alliance Company Ltd (WAA) for 151.9 million baht. WAA, which specialises in warehousing and logistic services in Bangkok, owns about 315,000 square metres of warehousing space.

Glomac’s investment in WAA is deemed strategic in anticipation of high capital appreciation and rental yield in view of the attractive long-term lease of warehousing space.

“We have to pace the launches (of properties in Malaysia),” said Fateh Iskandar, who also this week assumed the role of chief executive officer, taking over from his father and founding member Tan Sri Mohamed Mansor Fateh Din who remains as group executive chairman.

“Location-wise, we are looking (to see) if there are good buys,” Fateh Iskandar told reporters yesterday at a briefing on the company’s latest real estate sales promotion called Glomac 360 Showcase.

Glomac has 15 projects worth some RM3 billion in the Klang Valley, Melaka and Johor. Unbilled sales as at January 2009 stood at RM381 million which is expected to sustain earnings in the next two years.

Unbilled real estate sales refer to the value of properties sold which have yet to be recognised in the books.

“It is a slowdown (but) we hope to achieve some good sales,” Fateh Iskandar said, when asked on the developer’s latest marketing initiative, through which the firm is offering some RM400 million worth of properties for sale.

Under the latest initiative, buyers are exempted from sales and purchase agreement legal fees, and loan documentation charges. The promotion includes full loan for property purchases and easy payment scheme.

Glomac’s net profit rose 0.3% to RM9.56 million in its third quarter ended Jan 31, 2009 from RM9.53 million a year earlier, while revenue fell 5.5% to RM81.13 million from RM85.82 million, due to fewer construction jobs and lower income from its real estate projects. It proposed an interim tax-exempt gross dividend of 2.5 sen a share.

Analysts are still optimistic on the firm’s prospects. RHB Research Institute Sdn Bhd raised its earnings forecast for Glomac by 16.5% to 17% for FY09 and FY10. The estimates took into account higher operating profit margins due to weakening raw material prices and lower construction losses.

“The risks include potential cancellation of purchase agreement by buyers in the absence of funding, competition from peers, and delays in launches and approvals,” RHB Research analyst Low Yee Huap wrote in a note.

The research house rates Glomac shares a “market perform” with a fair value of 60 sen.

By The EDGE Malaysia (by Chong Jin Hun)

The ‘sell then build’ system has seen the market safely through more than one recession

It was on Feb 21 that I was delighted to discover that the Malaysian motor industry had heartily embraced the “sell then build” concept. That was the day I took the family to buy a Proton Exora.

We all eagerly anticipated the hunt for the showroom, the brochures, the test drive, the fight over the colour, the wayang over the price, the special deal on the delivery date, and the satay and bottled water that combine to make the purchase of any big ticket item the family sport it has become today.

Imagine our bitter disappointment on discovering that none of these was on the agenda. Not only that, but a whole new set of rules had been introduced.

The rather strange press ads were not a launch, sir, we were told. No, no, no, they were a soft launch. Aha. And would it be too unreasonable to request a few details, such as the size of the vehicle? Sorry, no info.

And, we asked our hapless salesman, with a sense that we might be pushing our luck, had anyone ever seen an Exora? Why yes, he beamed, every day, it could be spotted on a test run on the old road up to Genting Highlands.

The irony of that destination was not lost on us. Armed only with an ad showing the seats and a steering wheel, our salesman was remarkably on the ball when it came to the booking arrangements.

Price: RM76,000. Booking fee: RM1,000, payable now. Delivery, “after the launch.”

At this stage, I have to confess to being a little overcome with emotion. Here I was buying something the price of two low-cost houses, and treated to a marketing strategy that left the housing industry in the dust.

Those developers will just have to buck up. This is the way of the future. Imagine the possibilities of unveiling a new housing estate with a photo showing a couple of bits of plumbing and the wiring diagram.

Show house? Certainly sir, just nip up to Teluk Intan and you could well find a couple of houses quite similar.

I personally believe that it would only take a few structural changes in the Housing Developers Act to enable developers to pick up on this new marketing technique and be almost certain of not going to jail.

Don’t misunderstand me. I’m a big supporter of the “sell then build” system. It is in fact the great safety valve sitting on top of the pressure cooker that is the housing industry. It has seen the market safely through more than one recession.

To build houses without having customers in the bag would be courting disaster. This is a market where hard data is scarce and where the players are prone to periods of over-exuberance.

Building only when the product is sold can save, and has saved, an enormous quantity of potentially mis-allocated resources.

While on the subject of allocation of resources, the RM60bil stimulus package makes mention of RM1.2bil to build low- and medium-cost houses.

According to the Housing Ministry, there are still some 500,000 low-cost applicants on the waiting list.

It is possible that much of this demand is outside the Klang Valley. There are 4.2 million residential dwelling units in the whole country.

For a population of 27.7 million, that makes an average of 6.6 people per house. However, in the Klang Valley there are only 4.2 people per house, hardly what one might call overcrowding.

These statistics highlight the fantastic achievements Malaysia has made in the provision of housing. The Klang Valley has 362,000 low-cost houses, about 23% of its total housing stock. This number is increasing by over 10% annually.

About 70% of the supply of low-cost comes from the private sector. Government agencies do a good job, but I hope the private sector can be persuaded to maintain its leading role, particularly when it comes to fast-tracking several thousand new units under the stimulus package.

The idea of this being carried out solely by the state smacks of the kind of central control and brutalist architecture that made Leningrad the garden city it is today.

In fact, all this may have been on the mind of the Housing Minister recently when he mooted the idea of providing subsidies to developers as a reward for building better low-cost properties.

It’s hard to fault this clever plan to combine private sector skills and public sector resources. I hope it works out.

In addition to the construction programme, there is another heart-warming proposal to be found in the stimulus package.

This is a specific provision to give a one-year deferment of housing loan repayments to unfortunate individuals who have been retrenched.

In my line of business, I’ve witnessed the foreclosure of many low-cost properties and it’s a sad affair. It is good to see that there is a workable solution already being offered to what may become an increasing social problem this year.

I doubt that even a global recession can reduce the number of cars on our roads. I have to confess, I booked my Exora. Like most people I had a bootleg photo of the vehicle in my back pocket.

I know it’s going to be great. As my American friend remarked: “You people in Malaysia haven’t lost your faith in the future yet.” May it ever be thus.

·Christopher Boyd is Regroup Associates Sdn Bhd executive chairman. We welcome your feedback. Please write to

By The Star (by Christopher Boyd)

Mudra Tropika to launch projects in JB’s prime area

JOHOR BARU: Mudra Tropika Sdn Bhd sees RM200mil in gross development value (GDV) from its three property projects in Johor Baru.

Executive chairman Datuk Mohd Rashidi Mohd Nor said the locations of the projects in three of the most-sought-after areas in the district were the main attractions to potential buyers.

Datuk Mohd Rashidi Mohd Nor (right) and Mudra Tropika director Mohd Nzaim Sabtu with a model of the Nong Chik Heights.

The projects are sited along Jalan Sungai Chat opposite the 95-year-old English College, Nong Chik area, well known for its middle and upper-class Malay residents, and Jalan Mustapha opposite near the Mentri Besar’s official residence Saujana.

“We will launch two projects by the middle of the year – Nong Chik Riverside and Nong Chik Heights,’’ Rashidi said at the signing of a sale and purchase agreement between Mudra Tropika and Dynac Capital Sdn Bhd yesterday.

Under the agreement, Dynac Capital agreed to buy 44 of the 54 three-storey shop offices in Nong Chik Riverside from Mudra Tropika for RM43mil.

Nong Chik Riverside is an international leasehold commercial project on 6.8 acres and comprises shop offices in seven blocks.

Nong Chik Heights is a housing project on 36 acres of Malay reserve land, to be sold only to Malay buyers.

The 11.2-acre Mustapha Gardens will comprise 17 bungalows with an indicative selling price from RM1mil and they are open to international buyers.

Mudra Tropika is a company under Johor Government State Secretary Inc and all the land for the three projects belong to the state government.

“Nong Chik Riverside and Nong Chik Heights projects will keep the company busy for the next five to eight years,’’ said Rashidi.

He said the first two blocks in Nong Chik Riverside would be completed within two years of the project launch in mid-2009.

Rashidi said phase one of Nong Chik Heights, comprising 120 houses priced from RM290,000 to RM400,000 each, would also be launched in the middle of this year.

The second and final phase will offer 40 bungalows and semi-detached houses.

He added that traffic flow at the three areas would improve once all the state government offices moved to Nusajaya by the end of next month.

By The Star (by Zazali Musa)

Mudra Tropika sells 44 Nong Chik units to Dynac

JOHOR-based property developer Mudra Tropika has sold 44 units of its Nong Chik Riverside commercial project to Dynac Capital Sdn Bhd, a property investment company based in Johor Baru.

The 44 units are valued at RM43 million but it is not clear if Dynac paid that much.

Mudra Tropika executive chairman Datuk Mohd Rashidi Mohd Nor said the first phase of the project will be launched in June. However, Dynac Capital can start marketing the 44 units.

Nong Chik Riverside, an international leasehold project covering 2.75ha, comprises 54 units worth some RM60 million. The land for the three-storey buildings, located along Sungai Chat, Johor Baru, is owned by the state investment arm, State Secretary Inc.

Mohd Rashidi said Mudra Tropika has yet to decide on what to do with the remaining units.

Next on its agenda is the launch of the Mustapha Garden, a high-end housing project comprising 17 bungalows in Jalan Mustapha.

Mudra Tropika is also the first developer to build the honeycomb housing concept called the Nong Chik Heights in Jalan Kolam Air. This means houses would not have fences and they would be clustered around courtyards built on Malay reserve land.

He said it has sold 60 per cent of the 120 units of the houses under phase one of the Nong Chik Heights. He is confident the project will do well because of its novelty, location and pricing of between RM290,000 and over RM400,000.

By Business Times (by Chuah Bee Kim)

Boustead wins RM18.87m contract

BOUSTEAD Holdings Bhd’s unit Boustead Building Material Sdn Bhd has won an RM18.87 million contract to construct and complete earthworks, piling and sub-structure works of a four-star hotel in Mutiara Damansara.

The contract, from Boustead Hotels and Resorts Sdn Bhd, for the 12-storey hotel that has 301 rooms, will be funded with bank loans, internal funds or a combination of both.

This will be the Boustead group’s second hotel in Mutiara Damansara after Royale Bintang Damansara.

By Business Times

Wednesday, March 25, 2009

PKNS plans RM300m property launches

The Selangor Development Corp (PKNS) will launch new housing and commercial projects worth RM300 million collectively in Shah Alam, Kota Puteri, Kota Damansara and Selayang in May.

At the same time, it will relaunch existing stocks valued in total at RM180 million in Bangi, Shah Alam, Kota Damansara, Bandar Sultan Sulaiman, Kota Puteri, Antara Gapi and Bernam Jaya.

Overall, it will launch 3,525 units of medium- to high-end houses, shop offices and factories, said PKNS general manager Othman Omar.

Half of them will be built by June. The rest will be built by early next year.

"We are confident to sell. Our pricing is affordable and not as expensive as private developers. And the impor-tant thing is, we will deliver,"Othman said at a property seminar in Kuala Lumpur yesterday.

PKNS will launch a month-long housing campaign starting May 8 to promote the properties.

Last week, it sold 20 units of semi-detached houses worth RM18.7 million in Bandar Baru Bangi.

Othman said PKNS will continue to launch affordable homes despite the economic slowdown but will focus on developed areas in the Klang Valley.

"We are profit-driven, hence, will focus on locations where there is demand, and the areas are developed. We will fine-tune the progress so there is no oversupply. We plan to maintain the rate of construction," he added.

PKNS will also develop projects jointly with private developers and will award contracts based on open tenders, Othman said.

By Business Times

Magna mulling features of RM1.3b project

Magna Prima Bhd may build luxury residences or office towers, or both, on the 1.05ha prime site in Jalan Ampang, Kuala Lumpur, which it is buying from a school association.

It is learned that Magna is finalising the development features, which will be market-driven.

"We are doing a study to decide on the best components. It may be office towers, or commercial and residential mix," an official said on condition of anonymity.

The project, worth more than RM1.3 billion, will begin in 2012 and be completed in four years.

It will be Magna's single largest development to date and its second project in the Kuala Lumpur City Centre area.

The first was the RM300 million Avare condominium, neighbouring the Petronas Twin Towers near Jalan Stonor, launched in 2005.

"Magna aims to start the project in 2012 as it believes the economic situation will improve by then, thanks to the two stimulus packages launched by the government," the official added.

The official said it may construct the buildings on its own, or in a venture with a reputable firm to be identified later.

Magna is buying the land on which the 44-year-old Lai Meng Primary School and Kindergarten sits from the Lai Meng Girls School Association for RM148 million.

It may use its own funds as well as borrow to pay for the land, the official said.

Under the agreement, Magna is to rebuild the school and kindergarten on land it owns.

It is unclear where Magna will rebuild the school.

The company has pockets of land in Bukit Jalil and Jalan Kuching, Kuala Lumpur.

"We have not decided on the location. We will call for open tender to build the school, which will be at a choice location," the official said.

Analysts, who declined to be named, said that Magna is acquiring the land at a fair price and may sell the properties for between RM950 and RM1,000 per sq ft.

"Assuming 10 times plot ratio, construction cost of RM400 per sq ft and 80 per cent efficiency ratio, it would potentially translate into a total redevelopment cost of RM660 per sq ft, with average selling price of RM950 per sq ft, at 30 per cent margin," said an analyst.

By Business Times (by Sharen Kaur)

Selangor to revive abandoned housing projects

SELANGOR aims to revive a third of 147 abandoned housing projects in the state over the next one year.

The projects cover more than 50,000 houses, worth some RM5 billion in total, and they have been sitting idle since 1997.

"It will be good for developers to revive these projects, instead of launching new ones. Incentives will be given to those who come forward," said Iskandar Abdul Samad, the state executive councilor in charge of housing, building management and squatters.

These includes fast-track approvals and the rescheduling of up to RM1 million in quit rent payment owed by previous developers on a single project.

Iskandar said developers will also make money faster as the projects have units that have been sold.

He was speaking to Business Times on the sidelines of a real estate convention organised by the Selangor Development Corp (PKNS) in Kuala Lumpur yesterday.

The projects were abandoned by some 80 developers that had faced cash flow problems, causing hardship to buyers.

"We have formed three groups to match the developers of the abandoned projects to those who are willing to take over. So far, 13 projects have been revived," Iskandar said.

The state will also seek help from the Real Estate and Housing Developers Association and the Malaysian chapter of the International Real Estate Federation on the matter.

By Business Times (by Sharen Kaur)

Boustead unit gets RM18.9m contract

BOUSTEAD Holdings Bhd's (BHB) unit, Boustead Building Materials Sdn Bhd, has been awarded a RM18.9 million deal from from Boustead Hotels and Resorts Sdn Bhd, also a subsidiary.

In a filing to Bursa Malaysia, BHB said the contract involved the construction and completion of earthworks, piling and sub-structure works in relation to the proposed construction of a 12-storey, four-star, 301-room hotel and two levels of basement of car parking in Mutiara Damansara, Selangor.

It said the contract would be funded through bank borrowings and/or internally-generated funds.

By Bernama

Am ARA assets increase by 17%

KUALA LUMPUR: The assets under management by Am ARA REIT Managers Sdn Bhd, the manager of AmFIRST Real Estate Investment Trust (AmFIRST), have increased by 17% to RM980mil from RM837mil.

In a statement yesterday, AmInvestment Bank Group said the increase followed the recent revaluation exercise undertaken on all of its investment properties.

“Subsequently, AmFIRST’s net asset value per unit has also increased to RM1.32 per unit from 99 sen (as at January 2), upon incorporation of the revaluation surplus,” it said.

Am ARA chief executive officer Lim Yoon Peng said the company had the advantage in terms of locations and would fully utilise them to further strengthen the occupancy rate and thus improving its earnings.

AmFIRST currently has six properties.

- Bangunan AmBank Group, Menara AmBank Group, AmBank Group Leadership Centre, Menara Merais, Kelana Brem Tower and the Summit Subang USJ.

By Bernama

Tuesday, March 24, 2009

SP Setia bullish on condo project

From left: SP Setia Bhd deputy president Datuk Voon Tin Yow, Tan Sri Liew Kee Sin and executive director Chang Khim Wah with a model of the Setia Sky Residences.

SINGAPORE: SP Setia Bhd sees positive response to its Setia Sky Residences condominium in Kuala Lumpur that will be launched next month, said group managing director Tan Sri Liew Kee Sin.

The project, which has a gross development value of RM800mil, is the property developer’s first high-rise project in the Kuala Lumpur city centre.

“We are confident that it will attract not only well-heeled Malaysians but also wealthy foreigners who want to call Kuala Lumpur their home,’’ Liew said after opening a sales office at the Harbourfront Tower One here.

Setia Sky Residences is located along Jalan Tun Razak on a 2.43ha site and will comprise four 39-storey tower blocks, with each block containing 211 condos.

“The first two towers will be launched next month at an average selling price of RM680 per sq ft and both towers are expected to be completed in 2012,’’ he said.

On the opening of the Singapore office, Liew said the move was aimed at enhancing the company’s service to Singaporean buyers while attracting new ones.

SP Setia had attracted 800 buyers from Singapore who had bought RM300mil worth of properties from the group, mainly for its projects in Johor Baru, he said.

It planned to undertake a development in Singapore in the future via a joint venture with a reputable Singapore-based company, he added.

The Singapore office is SP Setia’s second abroad after the one in Ho Chin Minh City, Vietnam. The developer also plans to open offices in Beijing and Dubai this year.

Liew also said SP Setia had to date recorded about RM500mil sales for its 5/95 home loan package launched in January.

By The Star (by Zazali Musa)

Properties continue to attract investors

SINGAPORE: The global economic crisis has not slowed down the property development sector, particularly in Malaysia's southern region.

SP Setia Bhd Group president and chief executive officer Tan Sri Liew Kee Sin said people still had the means to invest in property.

"In these trying times, selling (property) is not easy to do. But the good thing about the current situation is that people have money. In 1997 and 1998, people had no money.

"As far as the Malaysian market is concerned, the banks are flush with money. None of the banks are in trouble," said Tan, after launching SP Setia's Singapore sales office at Harbourfront Tower One here.

Tan said SP Setia had taken advantage of this situation by offering the "5/95 Home Loan Package" where buyers pay a five per cent downpayment and service the remaining 95 per cent through a bank loan.

Maybank, CIMB, Public Bank and EON Bank are involved in this three-month offer which ends April 19.

Tan, who admitted that Johor Baru continued to be an attractive area for property sales, said SP Setia recorded almost RM500 million in sales since the "5/95" offer was launched.

The offer is also open to buyers from Singapore.

SP Setia has property developments in Klang Valley, Johor Baru and Penang. The group has also teamed up with a Vietnamese conglomerate, Becamex IDC Corp for a development project near Ho Chi Minh City.

Tan said that the group was further expanding its products to Singaporeans with the opening of its first sales office at the Harbourfront, which is located in the heart of the republic's busiest trade district.

Currently its Singaporean clientele stands at 800 with accumulated property sales of RM300 million.

Singaporeans make up five per cent of the SP Setia property buyers, and Tan said the group aimed to increase it up to 10 per cent.

By Business Times (by Ahmad Fairuz Othman)

Property sector may still be in for the worst

The worst is yet to come for the property sector as the country continues to feel the impact of the global economic crisis, according to HWANGDBS Vickers Research Sdn Bhd's roundtable.

The discussion with three property brokers to assess conditions in the sector and its outlook found the high-end residential market at the Kuala Lumpur City Centre (KLCC) and Mont'Kiara as well as retail and hotel segments, especially those with poor branding, to be the most vulnerable.

The panel included Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam and Regroup Associates' executive chairman Christopher Boyd and managing director Allan Soo.

"Office rental/occupancy rate should continue to hold up, with demand support coming from government-linked companies (GLCs). The KLCC commercial segment would be the most resilient due to its captive demand," HWANGDBS Vickers analyst Yee Mei Hui said in a report.

She noted that asking prices for the high-end residential segment in the KLCC and Mont'Kiara areas had fallen 20-30 per cent year-on-year.

Given the large incoming supply over the next two to three years and the high foreign ownership, prices were likely to fall further, Yee said.

However, the fourth quarter of 2008 saw growth. The average rental for prime office space in Kuala Lumpur breached RM7 per sq ft, while the vacancy rate dropped to 7 per cent.

As to the retail sector, Yee projects a 10-20 per cent rental downside this year amid rising vacancies.

"The average rental for prime retail malls started declining marginally in the fourth quarter of 2008. We understand that newer malls are struggling to breach 60 per cent occupancy and a few tenants are looking to pull out from recently-opened malls. Some have been offered rebates, such as at The Gardens Mall at Mid Valley City," she said.

Yee also expects hotels with poor branding to be the worst hit by the slowdown.

"The average room rate (ARR) has fallen by 20 per cent, while occupancy rate has remained steady at around 70 per cent. Most affected were hotels with ARR less than RM200 per room per night, partly due to slower public spending.

"Niche budget hotels, like Tune Hotel, however, have been relatively resilient.

"The Mandarin Oriental Hotel Kuala Lumpur saw ARR grow 5 per cent to RM630 per room per night, while the occupancy rate eased slightly to 65-70 per cent last year from 74 per cent in 2007."

Among the strategies highlighted at the roundtable for property developers to weather the crisis and emerge stronger were to hold income-producing, fully-tenanted properties and sell underperforming assets.

Developers were also advised to accumulate strategic landbank, focus on branding, reassess their business models and identify new opportunities.

Yee reiterated her cautious view on the Malaysian property sector and named KLCC Property Holdings Bhd as her top stock pick owing to its locked-in rental income from blue-chip tenants on long-term leases.

By Business Times