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Thursday, April 30, 2009

Colliers awarded Best Commercial Real Estate Agency

KUALA LUMPUR: Colliers International has been awarded the Best Commercial Real Estate Agency Award 2009 in Hong Kong. With the win, Colliers is now in the running for the Best Commercial Real Estate Agency Award in the Asia Pacific region.

The award is a feature of the International Property Awards, a contest dedicated to identify the best real estate companies and professionals across the globe.

“Colliers prides itself for its excellent business partnership and unique culture. We are delighted to have won this award. The result is a reflection of our position in the Hong Kong real estate industry,” Richard Kirke, managing director of Colliers International Hong Kong, said in a press statement on April 30.

“We strive to deliver specialised services that are based on our in-depth market knowledge at the local, regional and global levels. It is great to have independent recognition that we add value for our clients, staff and the community where we do business.”

The International Property Awards are sponsored by institutions including the CNBC, New York Times and HSBC. The judges comprise professionals from a wide range of property disciplines.

By The EDGE Malaysia

LBS to launch 1,420 medium-cost terrace houses

KUALA LANGAT: LBS Bina Group Bhd aims to launch 1,420 medium-cost terrace houses with a total gross development value (GDV) of RM218mil in the Klang Valley by year’s end, said managing director Datuk Lim Hock San.

From left: LBS Bina Group executive director Alan Chia Lok Yuen, Datuk Lim Hock San and staff members at the launch of Iris Garden in Bandar Saujana Putra Wednesday.

The developer also has projects lined up in Ipoh, Cameron Highlands and Batu Pahat, Johor.

LBS will be launching 1,000 units in Bandar Saujana Putra and 420 units in Taman Tasik Puchong in the next few months, according to Lim.

“We want to build affordable homes priced below RM200,000 for the middle-income group,” he told reporters here after the launch of Iris Garden in Bandar Saujana Putra yesterday.

Lim said the group had sold about 85% of the 220 single-storey houses under the Iris Garden series since their soft launch in February.

LBS is confident of selling by next month all the units which have gross built-up areas of 968 sq ft and priced from RM149,900.

“We will then launch our Ruby Garden project that consists of 200 terrace houses with GDV of RM30mil located in the same area. We also hope to launch phase two of Iris Garden this year,” Lim said.

To date, 4,800 property units worth RM499mil have been completed and delivered to buyers in Bandar Saujana Putra.

It also plans to launch 588 single-storey semi-detached houses priced below RM200,000 in Batu Pahat, Johor with a GDV of RM90mil.

A further 680 apartments and 300 townhouses in Taman Golden Hill in Cameron Highlands, with a combined GDV of RM140mil, will be launched by the year-end.

“There is still demand for property amid the current difficult times and we believe that this is a good time for buyers to buy as mortgage interest rates are very low,” Lim said.

On why the company had been very quiet in recent years, he said: “We have been quiet for the past two years but we hope to have a higher profile again this year. With the right products and business directions, I believe this year would definitely be better for us.”

LBS currently has a total landbank of 2,500 acres in the Klang Valley, Pahang, Ipoh, Batu Pahat and Zhuhai in China.

By The Star

Home decor expo targets RM25m deals

The Home Decoration Exhibition 2009 (HOMEDEC'09), which began at the Kuala Lumpur Convention Centre (KLCC) today, is expected to see an increase in business transactions from RM23 million last year to RM25 million this time.

The four-day event is organised by C.I.S Network Sdn Bhd, a leading organiser of trade exhibitions and events management in Malaysia.

C.I.S Network president Vincent Lim said that in 2008, there were 230 exhibitors for the exhibition, while this year there are 260.

"HOMEDEC is aimed at creating a market place for homeowners to get more tips and information on the latest home decoration products. We are targeting 90,000 visitors throughout the exhibition," he told Bernama after a media tour of the event today.

Lim said given the economic downtrend, it was the best time for homeowners to purchase home decoration products, as prices are much more affordable.

He also said the home decoration industry is expected to record positive growth this year.

The products at HOMEDEC include home technology, kitchen and home appliances, bath and sanitary ware, windows and doors, pools and spa, bedroom and wardrobe, furniture and furnishings as well as interior decorating.

By Bernama

SP Setia leads rally in property stocks

SP Setia Bhd led a rally among Malaysian property developers, the country’s best performers this month, after central bank data showed loans approved for home purchases in March jumped the most in at least a year.

Shares of SP Setia, Malaysia’s largest developer, surged 12 per cent to close at RM3.54, the most since September 7, 1998, capping a 27 per cent rise in April. Sunway City Bhd jumped 5 per cent to RM2.11, adding to a 42 per cent monthly advance.

Loans approved for buying Malaysian residential property surged 49 per cent in March from a month earlier, the second monthly gain, adding to signs the industry may be rebounding.

The Kuala Lumpur Property Index of 87 stocks jumped 23 per cent this month, outpacing the benchmark Composite Index’s 14 per cent gain, and making it the best performing industry group on the stock exchange.

The industry is “showing signs of resiliency” and “incentives to buy property are more compelling now as the average lending rate is at a new low of 5.16 per cent,” ECM Libra Capital Sdn Bhd said in a report today. The “risk-reward trade-off is favourable now as opportunities for significant absolute gains are aplenty when stocks trade back up.”

Malaysia’s central bank said yesterday the domestic economy is likely to improve in the second half as the world economy stabilises. It refrained from lowering its benchmark interest rate yesterday, pausing after three consecutive cuts amid signs the worst may be over for Asia’s exporters.

Prime Minister Datuk Seri Najib Razak has unveiled two stimulus plans to bolster an economy he said may contract as much as 1 per cent this year.

By Bloomberg

Wednesday, April 29, 2009

Sunrise wins best residential awards in AsiaPac Property competition

10 Mont'Kiara

KUALA LUMPUR: Two luxurious condominiums under construction by Sunrise Bhd have won best residential awards in the Asia Pacific Property Awards 2009 competition.

Sunrise said on April 29 that 10 Mont’Kiara won in the category for “Best High Rise Architecture in Malaysia” and 11 Mont’Kiara for “Best High Rise Development in Malaysia”.

The Asia Pacific Property Awards were established in 2008 and were selected by independent judges selected by the International Property Awards organisers.

Twenty-one countries in the Asia Pacific zone took part in the coveted property awards this year which was sponsored by CNBC Arabia Television.

The luxurious bungalow-in-the-sky twin-tower 10 Mont’Kiara boasts 332 lavish units with sizes ranging from 3,478 sq ft to 4,090 sq ft and sprawling penthouse units of 7,500 sq ft.

11 Mont'Kiara

The iconic Green Mark-rated 11 Mont’Kiara presents five uniquely patterned curvilinear towers with a total of 339 units each enjoying a grand 270ยบ view. With two private abodes per floor, unit sizes start from 2,700 sq ft with a choice of eight unique designs.

Limited units in both condominiums, located next to each other at Jalan Kiara 1, are available for sale.

By The EDGE Malaysia

Developers of luxury condo hardest hit

Analysts say property firms need new launches to boost sales

PETALING JAYA: The impact of the current economic downturn on property companies depends on the sub-segments that they are exposed to, with developers of luxury condominiums likely to take a much bigger hit, say analysts.

Developers also need to boost sales via new launches instead of sustaining on unbilled sales, they said.

OSK Research property analyst Mervin Chow said sales of luxury condominiums had been extremely slow.

“Certain speculators and short-term investors, especially those with poor holding power who have been trying to unwind their investments, will place massive downward pressure on luxury condo prices,” he said. “The glory days of luxury condos are over.”

Chow said the luxury condo segment “will experience a steep correction that should last for two years before a slight recovery, likely to be seen in 2011 when developers start to launch some projects which were scaled back in the previous two years.”

ECM Libra property analyst Bernard Ching agrees that companies which are exposed to high-end properties, especially condos within the KLCC and Mont Kiara areas, have been seeing declining sales.

However, Ching said many developers were now more prepared to face the downturn, having survived the 1997/98 Asian financial crisis.

“Most developers are now focused on preserving cashflow. This has been done by differring ‘greenfield’ projects which require substaintial upfront costs and focusing on existing projects or unsold stocks.

“Many developers are also introducing aggressive financing packages to entice buyers,” he added.

He noted that many developers were absorbing some of the upfront costs such as legal fees, stamp duties and even interest payments during the construction period and beyond.

For instance, early this year, SP Setia Bhd and Mah Sing Group Bhd required buyers to pay only 5% upon signing the sales and purchase agreement, with no further payments until completion of the projects concerned.

Analysts also noted that the sales performance of landed properties, especially in the mid to high-end segment, had been relatively better compared with luxury condos.

Chow said developers had been surviving on their huge unbilled sales built up in recent years, hence it was not a surprise that most were still able to report an impressive set of earnings figures in their latest quarterly results.

“However, as most of these developments are due for completion soon, much of these huge unbilled sales will be largely exhausted towards the later part of this year,” he told StarBiz.

An analyst at TA Securities concurred that some developers were sustaining on unbilled sales, and that they must have new launches to boost revenue.

“As long as companies have huge unbilled sales, they will still show resilient performance,” he said, adding that many developers were holding back on new launches now because buyers were adopting a “wait-and-see” attitude in anticipation of declining property prices.

Meanwhile, ECM Libra’s Ching said with the Malaysian property market in a downcycle for at least a year now, listed property companies had seen their market values decline significantly.

“Based on the KLSE Property Index, these companies’ market values have fallen by 48% since July 2007,” he said.

The TA Securities analyst said: “We will see price correction for mid-cap (property) companies by the end of the third quarter.”

By The Star (by Rachael Kam)

Mah Sing bags 2 AsiaPac Property awards

KUALA LUMPUR: Mah Sing Group Bhd’s Southgate Commercial Centre and Aman Perdana projects saw the lifestyle developer winning two coveted awards in the Asia Pacific Property Awards 2009.

Southgate in Kuala Lumpur was recognised as “Best Office Development in Malaysia”, whilst Aman Perdana in the Meru-Shah Alam corridor was named “Best Mixed Use Development in Malaysia”.

The awards, organised in association with CNBC Arabiya, would be presented to the winners at a gala dinner at the Marina Mandarin in Singapore on July 16.

Mah Sing said in a statement on April 29 the awards proved the group’s continued commitment to raise the benchmark as a premier lifestyle developer.

The Asia Pacific Property Awards 2009 was part of the International Property Awards, the world’s most prestigious competition dedicated to finding the best real estate professionals across the globe.

Mah Sing was named a winner of these coveted awards for three years from 2007 to 2009 which proved that Malaysia was not only able to compete at this level but also excel in this highly competitive Asia Pacific property arena.

Its innovative product development and quality of finishes, as well as committed customer service saw the group taking top honours in the property category in recent The BrandLaureate 2008-2009 awards.

The group also won in three categories in the Euromoney Liquid Real Estate Award 2008, which were Best Developer, Overall – Malaysia; Best Office/Business Developer – Malaysia and Best Mixed-Use Developer – Malaysia.

Mah Sing group managing director Datuk Seri Leong Hoy Kum said the group was gratified to be recognised for its development on an international level.

“Buying a property is quite probably the most significant personal expense anyone is likely to make during their lifetime. As a developer that is setting global standards, we will continue striving to live up to our buyers expectations by offering quality properties.

“Coming hot on the heels of our recent win namely Best Brand in Property in the prestigious The BrandLaureate Awards 2008-2009, these awards serves to encourage us and allow us to stand out in the crowded market place. We will continue to build a leadership position for Mah Sing Group Berhad whilst contributing to branding Malaysia globally,” he said.

Mah Sing, meanwhile, extended their “Easy Home Ownership” campaign to June 30, 2009. The campaign is a financing programme for their residential and commercial properties.

Of the purchase price, buyers are required to pay only 5% for residential properties, and 15% for commercial properties, with the balance payable upon completion of the properties. For completed residential properties, buyers can reduce their monthly installment payments by servicing only the interest on their loan amount for the first five years. Mah Sing Group will absorb the legal fees for the sales and purchase agreement, loan documentation, and memorandum of transfer for selected properties.

Mah Sing Group has 16 projects in Klang Valley, Penang island and Johor Bahru with RM3.8 billion worth of remaining gross development value and unbilled sales as at Dec 31, 2008.

By The EDGE Malaysia

House buyers cautious due to fears of income security

PETALING JAYA: Potential house buyers are still wary about making property purchases despite lower mortgage rates as the economic outlook remains uncertain, analysts said.

Average mortgage rates have fallen to about 3.5%, but at the same time banks have been more stringent on the approval of loans. The average mortgage rate is obtained from base lending rate (BLR) of 5.55% minus 1.5% to 2.4% for housing loans (or effective annual rates between 3.15% and 4.05%), depending on the amount and tenure of loans, and the package customers sign up for.

OSK Research said the attraction of lower mortgage rates had been superseded by fears of income security amid a deteriorating economic outlook.

“For those who are still financially sound, most would rather wait a while longer to snatch up better bargains a few more months down the road. Some are hoping for developers to come up with more creative and attractive perks and some are also waiting for prices to drop further, if any, before they are convinced to buy,” the OSK analyst told StarBiz.

The research house said downside risk for landed properties appeared limited compared to luxury condominiums, with the demand for landed properties expected to return by year-end.

“Most of the homebuyers in this segment are cash-rich and not highly leveraged. Given the accommodative interest rates today, any forced-selling or foreclosures of properties like the one we saw during the 1997/98 Asian Financial Crisis will be limited in this downcycle,” it said.

OSK Research expects the demand for luxury condominiums to decline by 30% to 40% in 2010 from 2008, with luxury condo prices already currently down by 15% to 20%.

An analyst from Kenanga Research agrees that the bearish economic outlook is making potential buyers hesitant about buying properties now.

“What if this (sign of market recovery) is just one-off data? What we need is for the sentiment to improve,” she said, noting that only 60% of bookings had been translated to actual sales compared to almost 100% previously due to more stringent loan requirements.

Jupiter Securities Sdn Bhd head of research Pong Teng Siew said that with the mortgage rates of 3.5% and effective cost of funds of 1.5%, banks net interest margin should be about 2% now.

“But cost of funds for smaller banks such as EON Capital Bhd, RHB Capital Bhd, AMMB Holdings Bhd are higher (slightly over 2%) because of higher interest bearing liabilities,” he told StarBiz.

A house buyer contacted by StarBiz said his current mortgage loan interest rate was 3.15% for the first two years and 3.45% for the remaining tenure.

He recently signed up for a 20-year conventional home loan from Alliance Bank Malaysia Bhd for the purchase of a double-storey house.

He is paying about RM1,700 per month for his RM300,000 loan.

His loan package included a one-time payment of RM2,500 for mortgage reducing term assurance, legal fees and stamp duty.

Other banks are offering similar mortgage rates.

For example, RHB Bank is charging BLR minus 2.1% for housing loans that range from RM250,001 to RM500,000, while Hong Leong Bank Bhd is offering BLR minus 2.2% for a RM300,000 mortgage loan.

Malayan Banking Bhd uses a property’s location as one of the criteria to determine interest rate, but is still offering rates in the region of BLR minus 2%.

All these banks have BLR of 5.55%.

By The Star (by K.C. Law)

Sime Darby sells 700 homes from 3rd showcase

PETALING JAYA: Sime Darby Property Bhd has clinched sales of over 700 units worth RM500mil from its third series of Parade of Homes showcase launched last month.

Managing director Datuk Tunku Putra Badlishah said the company’s initial target sales was RM600mil for the third showcase that runs till June 15. It had RM800mil worth of properties on sale for the third showcase.

“We are pleasantly surprised with the strong sales results amid the current economic situation.

“This proves the Malaysian property market is still resilient and people are still willing to invest in properties,” he told StarBiz.

Of its nine new launches, three projects were fully taken up.

Sime Darby’s Parade of Homes campaign, which was held in conjunction with Malaysia Property Expo 2009, has generated sales of RM246mil and RM146mil for its first and second series respectively.

Tunku Putra Badlishah said property buyers tended to purchase from reputable developers during this time for the assurance of completion of their projects.

“While other property developers are occupied with clearing their previous launches, we have, as of now achieved 60% of sales for our new launches,” he said.

Among the benefits offered during the showcase are special easy payment scheme that allows buyers to pay the difference between the purchase price and loan amount in monthly instalments of up to 12 months, base lending rate minus 2.3% after vacant possession and interest-free period during construction.

The property developer also provides a guaranteed buy-back programme.

By The Star (by Shannen Wong) 

Reviewing Malaysian REITs

Menara Axis in Petaling Jaya

The Malaysian real estate investment trusts (MREITs) were launched in 2005 after REITs in general hit the stock markets in Japan, Hong Kong and Singapore. Within a year 10 REITs were launched, one repackaged with another two oldies remaining, making up 11 REITs.

Before the global financial turmoil in 2008, the MREITs performed predictably well, yielding 6% to 7% dividend returns with marginal growth in share premium.

By end-2008, along with the rest of the equities market, the MREITs took a severe beating from which they have hardly recovered.

Some salient points of the MREITs are worth noting.

■ REITS share prices have declined substantially.

The MREITs today show a substantial discount to the net asset values (NAV) of the assets underlying the REITs, ranging from 23% to 39% (as shown in Table 1). The property market, in general, has not shown such drastic changes in values over 2007.

Although the asset base of the MREITs has increased, much of this is due to the injection of new and additional assets and not because of increases in asset values or appreciation in values.

The peculiar nature of this phenomenon is because of the nature of the REITs.

■ On a down market, REITS show equity tendencies, on an up market, REITS show bond tendencies.

Much research has been carried out by academics as to the behaviour of REITs. The research has been inconclusive.

It will appear, from the little information and research that can be done in Malaysia, that MREITs have a tendency to behave like an equity in a down market, that is, if the stock market declines the MREITs will also follow suit, irregardless of the stability, or otherwise of the underlying asset.

However, in an upswing, the fixed nature of the income and the inability of the underlying asset to react quickly forces the MREITs to behave like a fixed-income instrument, like a bond. This phenomenon would explain why the MREITs are now selling at a discount to the NAV.

■ Income to continue at current levels.

It is anticipated that the current income of the MREITs will continue at current levels and may not be affected by the general downturn. Almost all the MREITs were launched before 2007; therefore the rents underpinning their income were at 2006 and 2005 levels.

It is believed that these rents are sustainable and the majority of MREITs did not increase the rental levels to the high levels reached in 2007. Hence, the income and the dividend flow is expected to continue.

■ Sale and leasebacks will continue to perform better.

Another reason the income will be sustainable is because a number of MREITs has secured guaranteed returns on a sale-and-leaseback basis. Therefore, the downturn in the market is shielded.

■ Yields have increased tremendously.

The sustainable income, coupled with the decline in the net asset value, has boosted dividend yields to between 6% and 14%. Table 1 explains the dividend yield position of the MREITs in January 2009. These returns show, on average, an increase of 50% over the previous yields.

■ Singapore yields even higher due to a sharper drop in REITS pricing.

The sharper corrections to the equities market and the more prominent impact of the economy has affected the Singapore REITs, pushing prices down and, thus, increasing yields. Some REITs are giving yields in excess of 25% in Singapore.

■ Injection of new assets will face yield disparities.

The yield disparities have affected the injection of new assets into existing REITs. Most real estate pricings and rental incomes fall between 6% and 8% for commercial properties. When current yields are in excess of these returns, REIT sponsors will be unable to inject new assets at below the dividend yields.

■ Opportunities for acquisition of better quality asset.

However, the current downturn can also provide wonderful opportunities for the acquisition of better quality assets and a more competitive pricing of the real estate.

■ Refinancing.

Financing for REITs has been different from normal financing. As the requirement is for the income to be distributed, almost all the MREITs have been servicing only the interest component of the loan; there is no repayment, partially or otherwise of the loan.

This, coupled with the lower negotiated interest rates regime, has helped the MREITs to declare a higher dividend than the yields from the underlying asset.

In a number of cases, refinancing may be soon. In view of the reduced interest rates currently being considered by the financial institutions, it might be easier to get a lower interest rate.

The MREITs appear to have weathered the financial storm well as the discounts to the net asset value is manageable and not as severe as in other countries.

Added to that is the sustainable income from the rents.

It would appear, therefore, that MREIT yields will be maintained and the downside risks are manageable.

PEPS is the acronym for Persatuan Penilai & Perunding Harta Swasta Malaysia (Association of Valuers and Property Consultants in Private Practice Malaysia). We welcome your feedback on this article. Please email to

By The Star

Freebies, low interest rates pamper house buyers

IT looks like potential house buyers are having the best deal ever — they are being courted by developers who are eager to seal more sales by offering better terms, including freebies, as well as financiers who have brought down interest rates to among the lowest since 1980.

At rates as low as base lending rate (BLR) of 5.25% minus 2.3%, buyers can lock in their loans for the whole of their loan tenure.

This is made possible by the all-time low overnight policy rate at 2% per annum now.

This compares with the previous rates of BLR plus a certain percentage of spread in the past two to three years.

The high liquidity in the local banking system as a result of the people’s high savings rate, coupled with a low loans growth in the past three to four quarters, has resulted in banks having huge cashpiles.

As at Feb 28, the loans-to-deposits ratio stood at only 73.6%, compared with 92.8% during the 1997 Asian financial crisis and 85.9% in 2001 during the dotcom bust. The banking system is flushed with total deposits of RM976.5bil while total loans disbursed amounted to only RM729.2bil.

This means close to RM250bil is still available for financing purposes.

Amid the global financial crisis and the adverse impact on the local economy, loans for most business sectors, including for small and medium enterprises, are expected to slow down further.

Property loans are still a major source of financing for local financial institutions but since last October, the monthly residential property loans growth has contracted by 5% to 27% on a year-on-year basis.

The low loans rate reflects the people’s cautious sentiment on the state of the economy and their unwillingness to spend on big-ticket items, including property.

Besides new property loans, banks are also looking at the refinancing market as more borrowers are considering the option of re-financing or re-mortgaging their properties to benefit from the existing low interest rates.

If one were to opt for a new loan facility from another bank, the borrower has to be prepared to pay penalty charges for early redemption of the loan. This usually works out to between 3% and 5% of the outstanding loan or the total amount taken.

Depending on the loan tenure and financing rates one has signed up for, it looks like most borrowers will opt to refinance their property as it will still work out to be cheaper for them, even after paying the penalty charges.

In view of the current challenging times when most people are watching over their spending, any amount of savings will be welcomed.

It is understood that some banks have offered to absorb the loan processing fees and penalty charges if the borrower switched to their loans.

With the many financing packages available today, the onus is on the borrowers to weigh all the costs and benefits before signing on the dotted line.

Angie Ng is deputy news editor at The Star

By The Star (by Angie Ng)

Paramount Venue plans to build apartments in Sentul

Developer Paramount Venue Sdn Bhd aims to launch six blocks of low-cost and low-medium cost apartments worth RM62 million collectively in Sentul, Kuala Lumpur, over the next 8-15 months.

The company will launch four blocks of low-cost apartments, comprising 850 units worth RM42,000 each, by year-end.

It expects to launch two blocks of low-medium cost apartments featuring 320 units, each priced at an average of RM80,000, by early 2010, project director Mohd Zainudin Badarudin said.

The properties will be built within its ongoing RM1 billion Bandar Sentul Utama township project, located close to the YTL Sentul east and west developments.

Mohd Zainudin said the low-cost apartments are primarily for squatters occupying several sites at the township while the low-medium cost apartments are to cater to the low-income group.

"We are in the midst of submitting the building plans to City Hall for approval," he said yesterday after handing over keys to buyers of Sentul Utama condominium at the township, witnessed by Datuk Bandar Kuala Lumpur Datuk Ahmad Fuad Ismail.

The 28ha Sentul project was supposed to have been developed in 1997 but failed in 1994 as its developer, Sentul Murni Sdn Bhd, a unit of Mycom Bhd, was dragged into a legal battle by squatters located within the township.

To rid itself of assets that are slow to develop, the ailing public-listed Mycom sold Sentul Murni to Paramount Avenue in 2005.

At the time when Paramount Avenue took over the project, only the first phase comprising low-cost apartments had been completed, while 80 per cent of Phase Two namely the Sentul Utama Condominium and the following phases were abandoned.

In less than 30 months after Paramount Venue took over, it completed three 17-storey blocks (Sentul Utama Condominium), totalling 720 units.

It hopes to start constructing the final block, or Block D, by August.

"We are waiting for building approvals and for the squatters to relocate. Block D will have 240 units with added features, each priced from RM180,000. We have Singaporean investors who are keen to buy the units," Mohd Zainudin said.

Earlier at a press conference, Ahmad Fuad said a programme has been put in place to help relocate squatters in project areas.

"Between 1990 to 2007, there were 270 abandoned projects in the Federal Territory, majority of which have been revived. We need more white knights like Paramount Venue to take over abandoned projects for the sake of buyers," he said.

By Business Times (by Sharen Kaur) (Posted on April 28, 2009)

Ken looks to RM80m HQ for recurring income

Property developer Ken Holdings Bhd will build its RM80 million headquarters in Taman Tun Dr Ismail to help provide recurring income for the group.

The 12-storey office block, to be ready in three years, is expected to provide an annual rental income of RM12 million to RM15 million.

Construction of the office block will begin by the year-end or in the first quarter of next year.

"We target to build a Grade A and green-mark office block which promotes environmental awareness. We plan to rent out about 90 per cent of the space to tenants," Ken Holdings managing director Kenny B.K. Tan told reporters after its shareholder meeting yesterday in Kuala Lumpur.

Tan said the development will probably be financed using internal funds. The group has zero debt.

Initially, Ken Holdings was supposed to build two 20-storey buildings - an office tower and serviced apartments - on about 5ha along Jalan Burhanuddin Helmi.

It had purchased the land from Prokhas Sdn Bhd for RM15.8 million.

However, the plans came to a halt when residents in the vicinity protested against the development.

On its financial outlook, Tan said the company will be able to sustain its performance with the projects in hand.

It posted net profit of RM6.3 million against revenue of RM39.1 million in the financial year ended December 31 2008.

The gross development value (GDV) of its ongoing projects in the Klang Valley and Penang are estimated at RM700 million and will keep the company busy for five years.

"We will also finish our serviced apartments, known as Ken Bangsar, in Bukit Bandaraya by the third quarter of 2009," Tan added.

The project, with a GDV of RM120 million, comprises 14 floors with 80 units. Prices range from RM650 to RM1000 per sq ft.

The take-up has been close to 50 per cent as Ken Holdings has had two soft launches.

Tan also said that the group was looking to expand its landbank, but only at the right location and a good price.

Ken Holdings has a landbank of 56ha in the Klang Valley, Penang, Genting Highlands and other strategic locations.

Tan said that property prices in prime areas such as Bangsar, Mont'Kiara and the Kuala Lumpur City Centre were still holding firm.

"I can see the low- and medium-end housing being affected compared to high-end projects. However, the property market will probably be a bit more stable by year-end," he said.

By Business Times (by Jeeva Arulampalam) (Posted on April 28, 2009)

IRDA keeps options open on Cityscape Dubai 2009

DUBAI: Iskandar Regional Development Authority (IRDA) is keeping its options open on its participation at Cityscape Dubai 2009 in October to further promote Iskandar Malaysia, a special economic corridor being developed in southern Malaysia.

"We're keeping an open interest about taking part in Cityscape Dubai, unless something very negative happens," IRDA's strategic communications chief Jameson Pias said on the sidelines of Cityscape Abu Dhabi 2009 which concluded in the UAE's capital last week.

He said that continuous efforts must be made to raise the profile of Iskandar Malaysia, a 2,217sq km mixed development planned for completion in 2025.

Alluding to the current global property slowdown, Pias said: "There will be glitches here and there in the property market but this shouldn't be a basis for us to be discouraged. It's a question of how you manage the situation and look for niches."

He said future participations in events like Cityscape would convey the message that IRDA was committed to its Middle Eastern partners in Iskandar Malaysia and, at the same time, present an opportunity to seek out new partners in the project that offers good investment possibilities in other economic segments besides property and real estate.

The economic zone is being developed based on nine pillars, namely health services, educational services, financial services, information and communications technology and creative industries, electrical and electronics, petrochemical and oleo-chemical, food and agro-processing, logistics and related services, and tourism.

"Certainly some people have been hurt by the global economic crisis and credit crunch but there are others who have been prudent, and in times like these they may be the ones who'll take the opportunity to look for value investments, which Iskandar is offering," said Pias.

According to him, feedback from IRDA partners present at Cityscape Abu Dhabi indicated good response from visitors.

By Bernama

Association wants govt decision on hill slope projects

SUBANG JAYA: The Government should make a decision quickly on hill slope developments that have been halted since December last year, as it is causing hardship to developers.

Real Estate and Housing Developers’ Association national treasurer Muztaza Mohamad said it should state its hill slope requirements clearly, so that developers could carry on with their planning.

“The Government cannot have a wait-and-see attitude, it has to make a decision. To stop class three (25 to 35 degrees gradient) and four (above 35 degrees gradient) slope development, it will cause hardship to developers, as people have already invested millions.

“They (developers) have to move on,” he told reporters on the sidelines of the seminar on “New Approach in Land Development 2009”, officially launched by Natural Resources and Environment Ministry’s deputy director general of land and mines Datuk Azemi Kasim yesterday.

Muztaza, who is also Fairview Group of Companies group managing director, said the Government could utilise world-class Malaysian engineers to speed up introduction of new technical requirements.

The Government has stopped some of the hill slope developments in the Klang Valley for safety concerns after the Taman Bukit Mewah, Bukit Antarabangsa, landslide on Dec 6 that killed five people and destroyed about 14 bungalows.

During the seminar, an official of SDB Properties Sdn Bhd, whose bungalow development at Damansara Heights was temporarily halted, had expressed concern about the government’s inaction.

He said the company had spent about RM67mil on the 5.75-acre site but the future of the project was uncertain pending the issuance of new guidelines on hill slope development.

In the meantime, SDB Properties continued incurring costs on slope strengthening and stabilisation works, he added.

Meanwhile, the ministry’s mineral and geoscience division under- secretary Dr Azimuddin Bahari said Malaysia should learn and apply Hong Kong’s hill slope development management, as its soil composition was similar with our country.

“We can look at Hong Kong as a benchmark,” he said, adding that it provided online all the necessary information on hill slope development.

Azimuddin said Hong Kong had a building ordinance and it was mandatory for owners to comply, which Malaysia lacked.

However, he advised Malaysians to change their attitude and tackle landslide and soil-related issues seriously.

He said all parties – government authorities, developers and house owners – were responsible for safety of hill slope developments.

By The Star (Posted on April 28, 2009)

Monday, April 27, 2009

Amarin to unveil super luxury housing project

A model of the Amarin Wickham. All the penthouses will have private pools, jacuzzis, a roof sun deck and garden for private entertaining

It wants to tap on the dearth of new launches in inner city of KL

The Amarin group plans to launch its latest super luxury residential project, Amarin Wickham in the coveted Jalan U-Thant embassy enclave in July.

The move is to take advantage of an absence of new project launch in Kuala Lumpur’s inner city since the third quarter of last year following the global financial meltdown.

The enclave of 21 residences are located in the capital city’s prestigious embassy district and within the proximity of the Kuala Lumpur city centre (KLCC) and Bukit Bintang.

According to managing director Lee Vun-Tsir, there were signs that the global economy and capital market were stabilising and “we want to be among the first to catch the worms before other developers start coming back into the market.”

He said unless things turned for the worse, the company would be keeping to its target launch of July 7, adding that the months of June to September were considered good time for new project launch as things started to get back on track after all the festive breaks.

“As we are still in the early days of a potential market recovery after so much uncertainties caused by the global crisis, we will be monitoring the market closely and hope the project will be on track,” Lee added.

The residences will have various built-up from 2, 848 sq ft to 4,792 sq ft for the duplex units; and 3,489 sq ft to 5,527 sq ft for the triplex units. There are also seven triplex penthouses with sizes from 6,682 sq ft to 6,965 sq ft. The most exclusive unit is the premier penthouse with a built-up of 9,258 sq ft.

All the penthouses will have private pools, jacuzzis, a roof sun deck and garden for private entertaining. There will also be a common gymnasium, swimming pool and landscaped garden facilities for all the residents.

The residences will be in two five-storey blocks with the penthouse units build on top of the duplex units.

They will be priced at around RM1,000 per sq ft for a gross development value of RM140mil. It is expected to be completed in 2011.

To attract buyers to take up the premium units first, the penthouses will be the first to go on sale.

“We want to be different from the other developers who will typically launch their least expensive units first and keep the most premium units for the later phase. With Amarin, investors will be able to select the best units first,” Lee said.

When it comes to finishings and fixtures such as kitchen appliances and choice of tile quality and colour, the developer Amarin Wickham Sdn Bhd will allow for some degree of customisation by buyers.

The company has teamed up with a panel of financiers to offer the 10:90 financing package where buyers only need to make a 10% downpayment of 10% of the property price while the developer will bear the interest costs during the project’s construction. Buyers will only start to service their loans after receiving the vacant possession for their property.

The Amarin group was established in 2003 by Lee and two other friends who share a passion for luxury property development.

Lee said Amarin which meant “heavenly” in Sanskrit symbolised a commitment to innovative design, contemporary lifestyle concepts, exemplary quality, above the line finishing and an overall promise of great value for the buyer.

On other potential projects, he said the company was also planning to launch a resort development comprising bungalows, villas and semi-detached houses in Cherating, Pahang. The 10-acre project is expected to start by year-end or early next year.

Its Amarin Kiara project, which comprises 30 semi-detached units with built-up of 3,000 sq ft to 5,000 sq ft, was launched early last year and all the units have been sold.

By The Star (by Angie Ng)

SunCity keen to export project expertise

SUNWAY City Bhd (SunCity) is keen to export its expertise in development and investment projects to the potentially high-growth markets of China, India and Vietnam.

Managing director for property investment Ngeow Voon Yean said that besides having the right project plans, the other main challenge in the company’s overseas pursuit was identifying the right joint-venture partners.

“Having good local partners there will be a significant help for our success overseas as they know all the practices of the market and this will help to shorten our learning curve,” Ngeow told StarBiz.

Building up its overseas presence will enable SunCity to replicate its success as a Malaysian community master developer in the other countries in the region.

“These overseas projects will also contribute towards widening our earnings base. In the next five years, some 30% of SunCity’s revenue will be contributed by our overseas projects,” he added.

Ngeow said the global financial crisis had resulted in more favourable costs for new project start-ups as there were better deals around.

“We have been receiving many foreign visitors from the private sector and government-linked companies who are in Malaysia to explore joint-venture opportunities and to find out more about SunCity’s property projects,” he said.

SunCity has been engaged for two commercial projects – involving property designing and management services in China and as a consultant for a hotel development in Vietnam.

“We have the hardware and software to advise our clients on every aspect of a project’s development – from design planning to integration of facilities, marketing and property management. Given our expertise in theme park projects, there is also potential for this kind of management projects in those countries,” Ngeow said.

The contract for the Shenzen Holiday Plaza, a mixed development comprising retail, hotel and office suites, was inked two years ago. The project was opened to the public last September.

In March 2007, SunCity clinched the contract for the Chongqing project which comprised of retail space, hotels and residences.

It is also in the final stages to undertake a five-star hotel development in ChongSan, China.

In Vietnam, the company has been awarded the contract for a four-star city hotel that is under development by VIPTOUR group. SunCity is also working on securing other management contracts for another two or three hotels there.

In property development, SunCity has made inroads into China’s market through a joint venture with Sunway Holdings Bhd’s subsidiary, Sunway Mas Sdn Bhd, and Shanghai Guanghao Real Estate Development Group Co Ltd for a mixed high-rise development in Jiangyin New Harbour City in Jiangsu Province.

The resort-style project on 6.8ha will comprise 1,110 medium- to high-end condominiums with an estimated gross development value of RM473mil. Overseas projects, especially from India and China, will contribute 30% to property sales in the next five years.

Ngeow said locally, SunCity was looking for ways to expand the market for its hotels, shopping complexes and hospital facilities to improve its income streams.

“We have invested close to RM5bil in our property investment assets in the Klang Valley, Penang and Ipoh, that comprise office buildings, shopping complexes, university campuses, a medical college, hotels, theme park resorts and convention and exhibition centres.

“The management will ensure the necessary efforts are expended to optimise the operational efficiency and productivity to derive higher yields from all our assets and projects,” he added.

Under the company’s plans to unlock the value of its property investment, assets to the tune of RM3.1bil will be injected into a real estate investment trust (REIT) that was initially planned for a listing in the second half of last year. The listing had to be postponed when the local market succumbed to the impact of the global financial crisis.

Ngeow said the company would closely monitor the economic and market conditions before deciding on the listing plans for the REIT.

“We are not in a hurry to list the REIT as we can still depend on our strong rental income to ride out the financial crisis,” he added.

About 75% of SunCity’s operating profit of RM175mil for the first two quarters ended Dec 31, 2008, was from property investment assets and the balance from property development.

For the current calendar year, SunCity can look forward to total rental income of RM285mil, of which 70% will be from Sunway Pyramid Shopping Mall.

An analyst with a local brokerage said earnings from property investment were expected to remain resilient with the full occupancy of the 1.7 million sq ft net lettable space in Sunway Pyramid while rental rates remained firm.

“With a beta of 1.37, SunCity is a good proxy for a property sector recovery play. Our ‘buy’ call on SunCity is re-affirmed and it remains our top pick for the sector,” he added.

By The Star (by Angie Ng)

Glomac mulls expanding Sg Buloh township project

PROPERTY developer Glomac Bhd may expand its ongoing 440ha Bandar Saujana Utama township project in Sg Buloh, Selangor, as demand soars.

The RM1.3 billion township, which is 80 per cent developed, is focused on providing affordable homes priced from RM230,000 to RM400,000.

During an economic downturn, houses in that price range usually move faster.

Glomac has 88ha of undeveloped land within the township but it will use it to build terraced houses, semi-detached homes, shopoffices and apartments, worth RM90 million, from early 2010.

Thus, it would need to buy land to build more houses within the township if it decides to expand it.

Corporate communications director Fara Eliza Tan Sri FD Mansor said Glomac has offers from banks, landowners and receivers, to buy 40ha to 200ha of land, surrounding the township.

"We are considering the offers. This is a matured township and there is soaring demand for properties. The township has attracted civil servants, who are not severely affected by the recent economic downturn," Fara said.

She said the 400ha Universiti Teknologi Mara (UiTM) in Puncak Alam would be a catalyst for further growth at the township.

Bandar Saujana Utama, which now has a population of 60,000, began in 1998 via a joint venture with private landowners.

When Glomac first started on the project, it had 80ha. The company formed a joint venture with the farmers association to accumulate 200ha, while 160ha was bought from private landowners.

Year to date, Glomac has built and sold RM970 million worth of properties.

Fara told Business Times during a recent tour at Bandar Saujana Utama that the township contributes RM8 million to 10 million a year to the company's gross profit.

She said under construction are 208 units of semi-detached homes, priced from RM398,000, and 84 units of single and double-storey shopoffices, worth more than RM252,000 each. Glomac is also building 85 units of double-storey terraced houses, priced from RM252,800 to RM428,730.

Fara said 65 per cent of the terraced houses were sold within three months from the launch last November. She expects a similar take-up rate for the semi-detached homes which will be launched in May or June.

By Business Times (by Sharen Kaur)

I&P to offer incentives to push sales

STATE-OWNED Island & Peninsular Bhd (I&P), one of Malaysia's largest property groups by landbank, will launch a stimulus package to push property sales as it grapples with a slowing economy and fragile consumer confidence.

Group managing director Datuk Jamaludin Osman said he hopes to achieve higher property sales this year.

In 2008, I&P, a wholly-owned unit of Permodalan Nasional Bhd, sold 544 houses for RM245 million collectively, in Selangor and Kuala Lumpur.

"We will offer incentives for our properties. The business needs to go on despite concerns of slower economic growth," Jamaludin told Business Times in an interview in Kuala Lumpur recently.

I&P will keep property prices competitive and offer, among others, a discount on stamp duty, and incentives such as zero per cent interest during construction.

Separately, despite the company's huge untouched landbank of 5,263ha, it will pace out its launches and release units in smaller quantities this year.

"We will not launch and have balance of stocks as it will lead to cash flow problems," Jamaludin said.

He said the focus this year will be to launch double-storey terraced houses and semi-detached homes within its four townships in Puchong, Klang, Shah Alam and Bangi, Selangor.

I&P is targeting to launch 400 houses, worth a combined RM250 million, by the end of July. It will launch 34 units of terraced houses, priced from RM416,000, and six units of semi-detached homes, worth about RM1.1 million each, in Bandar Kinrara, Puchong, by end-April.

Around the same time, it will launch 76 units of terraced houses in Bayumas, Klang, priced from RM230,000.

Depending on take-up, it will launch 110 units of terraced houses in Bandar Kinrara in June, for RM60 million collectively.

In Alam Impian, Shah Alam, I&P will launch Nukilan 2, featuring 71 units of terraced houses, from RM500,000 each, and Chanting 2, comprising 103 super link-homes that will cost below RM500,000 each.

"We are ready to launch and are optimistic about the rate of sale, especially in Bandar Kinrara, as we have over 1,000 registrations. But we reckon it would be a little slow in Bayumas, although it has cheaper houses," Jamaludin said.

He said buyers are confident of the company's product offering as the properties have proven to have good capital appreciation value.

By Business Times (by Sharen Kaur)

Langkawi still developers’ attraction

RIDING on its status as a duty-free port and as an internationally-known resort island, Langkawi is still attracting developers from Penang and Kuala Lumpur despite the economic crisis.

The attraction of Langkawi is that the imported and high-quality finishings used for development are sold without duties and sales tax, which enables developers to price high-end properties very attractively, compared with those in Penang.

This advantage offsets the 10%-15% higher construction cost in Langkawi, which is due mainly to the transportation of raw materials.

For example, a terraced property in a prime location in Langkawi could be obtained for about RM230,000, compared with about RM280,000 for a similar property in Seberang Prai. Similarly, a 1,000-sq-ft serviced apartment in downtown Langkawi could go for about RM250,000 against about RM480,000 on Penang island.

Langkawi’s reputation in the region as a Malaysia My Second Home destination and as a holiday getaway has also of late, attracted foreigners in the sailing fraternity to purchase or rent properties there.

The economic crisis has yet to affect properties in Langkawi. According to Penang-based valuer C.A. Lim & Co proprietor Lim Chien Aun, property prices in Langkawi have yet to drop.

“However, the volume of transactions and enquiries has declined by about 80% for the first three months of 2009,” he said.

In Langkawi, developers are focusing on serviced apartments and landed properties, such as double-storey terraced and semi-detached houses, as they attract the most demand.

One project that should boost Langkawi’s tourism industry is a high-end commercial scheme from Thong Sin Development Sdn Bhd, a Penang-based property group.

Managing director K.C. Tan said the project, to be named San Marina, would be located on an 4.6-ha site facing the Andaman Sea.

“About 55% of the area would be used for serviced apartments, and the remaining 2ha for commercial development.

“We plan to model the resort after some of the sea-fronting Mediterranean towns in Europe, with the serviced apartments on top of the commercial properties,” he said.

“There would be around 170 units with a gross built-up area of about 300,000 sq ft. We have not decided on whether to sell or rent them out.”

Tan said the commercial properties would be rented out to enable the group to have a balanced tenant mix.

“The commercial properties will be designed to suit a particular business theme, that includes al fresco dining and boutiques. The plan is also to have a state-of-the-art convention centre to house a recreation clubhouse, a spa, restaurants and meeting rooms,” he said.

All apartments would overlook Pulau Dayang Bunting, Pulau Tuba and the harbour of Kuah town, Tan said.

“This is our second serviced apartment project in Langkawi, following the 147-unit Century Suria Serviced Apartments launched nine years ago. We have sold a significant portion of the Century Suria apartments, the remainder will be sold or rented out.

Other serviced apartments in Langkawi include the Sri Lagenda, Perdana Beach Resort and Kondo Istana, all of which were developed in the early to mid-1990s.

The monthly rentals for serviced apartments generally start from RM1,200 on the island.

Intra Harta (North) Sdn Bhd registered valuer Muzlini Said said the value of serviced apartments had appreciated by 10%-20% over the past three years.

“The Century Suria, for example, priced at about RM200,000 a unit in 2006, is now selling for RM290,000. The Perdana Beach Resort, about RM190,000 in 2006, is now at RM250,000.

“These apartments have built-up areas of 930 to 1,100 sq ft and have two or three bedrooms,” she said.

For landed residential properties, the launches are usually small, from 60 to 80 units per launch.

Bertam Development Sdn Bhd property manager Tan Cheng Chooi said the company’s recent launch of 59 double-storey terraced houses and eight double-storey semi-detached houses in Taman Bukit Indah, an established residential enclave close to Kuah town, had received very good response.

Bertam Development is a subsidiary of Kuala Lmpur-based property group Bertam Alliance Bhd, which is listed on the second board.

“We have sold all the non-bumiputra units. The houses will be completed by August,” he said.

Muzlini said the appreciation of landed residential properties in Langkawi had been about 15% in the past five years.

“The selling price of a terraced property has increased to about RM230,000 from RM180,000 five years ago, while a semi-detached house is now RM320,000 from RM250,000 before,” she said.

By The Star (by David Tan)

Ken's RM700m projects enough for 5 yrs

KUALA LUMPUR: Ken Holdings Bhd expects to sustain its revenue and dividend payouts for the next two to three years despite a slowdown in the property market.

"The projects in hand will be able to sustain us for the next few years. So for this year and the next two to three years, we will be able to sustain revenue and dividend," chairman and managing director Tan Boon Kang said after its AGM on April 27.

The group had projects in hand with gross development value of RM700 million in the Klang Valley and Penang enough to keep the group busy for the next five years.

It was completing its project comprising of 80 luxurious service apartments in Bangsar with a GDV of about RM110 million and it would be officially launched in the third quarter, Tan said.

"The take-up rate was quite good during the soft launch but there has been cancellation of orders especially from foreigners.

"And we have had to spend some extra RM20 million for this project. So we may have to raise the price of the property at the official launch. But we have a special scheme for purchasers and we are quite confident take up would be good," he said.

For financial year ended Dec 31, 2008, KHB recorded lower net profit of RM6.3 million from RM8.4 million last year. Revenue dropped 35.7% to RM39.1 million from a year ago. A first and final dividend of four sen was proposed.

"This is a good opportunity to expand our landbank. As long as it is in a good location and at a fair price, we don't mind the cost. We have strong cash flow and zero gearing," Tan said.

Ken Holdings had over 138 acres of land in the Klang Valley, Penang and Genting Highlands. As at end-2009, it had RM22.2 million cash.

"People are not optimistic about the property market. But even during this time, some segments are still doing well and we believe property will further stabilise in the later part of the year," Tan added.

By The EDGE Malaysia

RM120m Ken Bangsar to complete by Q3

KEN Holdings Bhd's (KHB) exclusive service apartments project, Ken Bangsar, located at Bukit Bandaraya in Kuala Lumpur is to be completed by the third quarter of this year.

The company's managing director, Kenny Tan Boon Kang who disclosed this, said the project has a gross development value (GDV) of RM120 million comprising a block of 14 floors of 80 units.

Speaking to reporters after the company's annual general meeting (AGM) today, he stated that during the soft launch, about 50 per cent of the units had been taken up.

According to Tan, the company has a landbank of over 138 acres in the Klang Valley, Penang, Genting Highlands and other strategic locations in Malaysia.

He said Ken Holdings has plans to expand its landbank and is looking to purchase at a good price.

The company has projects in hand in the Klang Valley and Penang with a GDV estimated at RM700 million to keep it busy for the next five years.

On the property sector, Tan said there are certain areas like the KLCC and Bangsar, where prices are still firm.

"I foresee low and medium end housing being affected rather than that for the high-end properties," he said.

Ken Holdings will spend RM80 million for the construction of its new headquarters at Taman Tun Dr Ismail. It will have a block of 12 floors of office space.

The project is expected to be completed in three years and construction will start by the end of the year or in early 2010.

By Bernama

Lowyat eyes 50pc management service take-up

The Lowyat Group is targeting a 50 per cent take-up rate by year-end for its Fairlane Hospitality, a premier management service.

"Basically we are going the extra mile in rendering such a service to help our customers in getting higher rental returns and better capital appreciation," said the group's general manager, business development and marketing, Daniel Ong.

"Fairlane Hospitality is a rental management service to help owners get the best returns for their property investments. It is not a guaranteed return scheme as we don't force customers to lease back their properties," he said.

Currently, the group is offering the service to all the owners of Bintang Fairlane Residences and the group expects a take-up rate of 70 to 80 per cent by early next year.

Ong said all the 256 units in the project had been sold and response to the management service has been good.

"We had a briefing two days ago and many owners turned up. I would say that 70 to 80 per cent of them are keen to let us manage their properties," he said.

He added that the serviced apartment owners will be looking for both short- and long-term tenants to get income from their properties.

Moving forward, the group will also extend its management service to the myHabitat serviced residences located in Jalan Tun Razak here.

The service will be made available as an option for the myHabitat purchasers.

"We have just started on this, and by focusing on what we have on our plate now which is Bintang Fairlane, and myHabitat by next year, it would be enough to keep us busy," Ong said.

About 70 per cent of the owners from the two properties are expected to opt for Fairlane Hospitality within a three-year period, he said.

"Our vision is to grow this business not only locally but internationally as well. With the current projects, we will grow it strongly in Malaysia and then gradually expand to the international market," he added.

Bintang Fairlane Residences consist of 256 units of serviced apartments with a gross development value of RM160 million.

Scheduled to be opened for tenancy by next month, the project is developed by Hotel Fairlane Sdn Bhd, a member of the Lowyat Group.

The myHabitat project consist of about 168 residential units for Tower 1 which is to be completed by end of next year and Tower 2 with 215 units, with a total gross development value of RM400 million.

It is being developed by APL Development Sdn Bhd, a subsidiary of AP Land.

By Bernama

Saturday, April 25, 2009

Industrial property sector resilient

AMID the struggling economy, the local industrial property market seems to fare better than office and residential properties although industry players expect the market for this asset class to remain flattish this year.

They concur that the current slowdown in manufacturing orders has not impacted industrial property as tenancy contracts for industrial property are locked in for a longer period of between five and 10 years compared with two to three years for office space.

They say these long-term tenancy commitments reduce any panic selling or “irrational transactions”, thus sustaining the prices and rental rates of these properties.

This property sector has remained relatively resilient because landlords are more willing to work out “win-win” solutions with their tenants during the current difficult times and tenants are allowed to pay up when business conditions recover.

“Landlords are more inclined to help roll-over rentals because capital expenditure (capex) for signing up new tenants is quite high,” an analyst from Kenanga Research tells StarBizWeek.

The reason for this is that industrial property space is usually tailored for specific tenants and any changes in tenancy will incur additional costs of construction and renovation.

The gross yield for industrial property is around 7% to 13%, with rental rates averaging at between 80 sen and RM1.75 per sq ft.

Association of Valuers and Property Consultants in Private Practice Malaysia (PEPS) president James Wong, who thinks the impact of the global financial crisis has not been fully felt yet, says industrial property prices are stable and have not declined.

However, he says with the full impact of the global recession to be felt in the second half and drop in domestic investments in the industrial property sector to RM7.8bil from RM13.9bil, “the industrial property market for this year will be affected.”

“We foresee that there will be a slight drop in prices, demand will be weakened and new launches of industrial property are likely to be deferred until confidence returns to the market.

“The volume of transactions of industrial properties will also contract. Although the industrial property market in the Klang Valley is expected to be the most resilient, a mild drop in prices seems inevitable,” he tells StarBizWeek, adding that the property market for next year will fare worse than this year.

“By then, quite a number of manufacturing companies will close down and go into receivership. This will result in forced sale by the banks, which will bring down industrial property value further,” he says.

Manufacturing output has fallen from a year ago. In January, exports plunged 28% to RM38.3bil from a year ago, while imports fell by 32% to RM29.5bil.

Wong adds that unlike the Asian financial crisis in 1997/98 period, the global slowdown is expected to prolong.

“We do not foresee a recovery in the industrial property market before 2010,” he says.

The industrial property sub-sector is a relatively small sector in the property market. In 2008, there were 8,126 transactions worth RM7.9mil out of a total 340,240 transactions worth RM88.34bil.

In tandem with the economic slowdown, the unsold units in the industrial market sub-sector increased by 30.7% to 2037 units last year compared with 1557 units in 2007.

Penang is the most affected as demand has dropped by over 50% in core industries such as electrical and electronics, plastics and metal.

“The performance of the industrial property market will depend on the performance of the manufacturing sector,” he says.

Wong suggests seeking new export markets as one of the ways to boost industrial property such as the Asean-Australia-new Zealand Free Trade Agreement. Others include setting up small and medium-scale industrial parks with subsidised grants, hi-tech and science parks.

International Real Estate Federation vice-president for marketing and networking Michael Geh expects demand for industrial property to start rising after the first quarter of next year.

Reapfield Properties Sdn Bhd president David Ong says it will be a great challenge for the industrial sector going forward as there is a possibility of some factories ceasing operations due to drop in demand for their products.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam says if the economy does not improve, he expects industrial property to feel the impact by the fourth quarter this year. However, he says factories have not closed down yet although they are laying off workers.

“The situation is not clear but I understand banks have not foreclosed any property yet because a lot of factories and businesses are still paying their rentals,” he says, pointing out that the Government’s stimulus plan is to make sure factories will not shut down.

Colliers International Property Consultants managing director Teik Bin Teh says demand for industrial property is on the decline but the exact number is unclear.

“Prices have not dropped because there is no transaction. We are unable to judge the price trends with only a few transactions. But prices are certainly not going up,” he says, adding that there is no oversupply of industrial properties because not many new industrial estates have been developed in the past five to six years.

By The Star (by K.C.Law)

Selangor Prop sees sales boost from Aussie project

SELANGOR Properties Bhd (SPB), one of the largest landowners in Damansara Heights, Kuala Lumpur, expects to beat last year's revenue, driven by property sales in Claremont, Australia.

SPB, in which the Employees Provident Fund holds a 3.7 per cent interest, made a net profit of RM118.6 million on revenue of 210.6 million for its fiscal year ended October 31 last year.

The company is redeveloping a retail centre in Claremont. It is building 82 apartment units in two phases for A$69 million (A$1 = RM2.57), and a 300,000 sq ft retail mall worth A$174 million.

The apartments have been fully sold, and A$41.2 million, being the first phase of the development, will be recognised this year, financial controller Lee Boon Kian said.
Lee said the second phase, worth A$27.8 million, will be recognised in 2011.

"I don't think we can match our profits for last year, which was partly contributed by foreign exchange and exceptional gains. But we will be profitable this year, and expect revenue to do better," he said after the company's shareholders meeting in Kuala Lumpur yesterday.

The company also aims to sell a total of 270 houses, priced from RM280,000 to over RM400,000 per unit, within its RM400 mil-lion Bukit Permata mixed deve-lopment in Gombak, Kuala Lumpur, before embarking on new projects.

These are unsold stocks that the company has been unable to sell since its launch in early 2008, Lee said.

"We used to sell 20-30 units a month, but due to the current economic climate, we are only able to sell half of that," Lee said.

Its pipeline projects include a new phase within its ongoing RM350 million Selayang Mulia residential project in Selayang.

It is also planning a mix housing development on a 55.6ha in Ulu Langat, Selangor, featuring two-storey terraced houses and semi-detached homes.

In Damansara Heights, SPB will construct a condominium block at Jalan Batai, comprising 107 units, each priced from RM1 million; and office and condominium towers at Jalan Semantan.

"The launches will depend on the market, which is still very cloudy. The projects are on the drawing board. We are waiting for approval," he added.

Meanwhile, Lee ruled out the company is being taken private by its major shareholders.

By Business Times (by Sharen Kaur)

Level playing field

It’s time to have consistent bumiputra housing quota policy nationwide.

The Government’s decision to scrap the 30% bumiputra equity requirement for 27 services sub-sectors is a step in the right direction to raise Malaysia’s competitiveness in the global business front.

But in order to bring back the spotlight on the country as the place to do business and to attract more foreign direct investment (FDI), there should be proper follow through to unshackle the mantle of protectionism in the other economic sectors and create a more level playing field. One area is the property industry.

The world is certainly going through very troubled times and we have to gather all our resolve and resources to ensure the country is favourably positioned for a comeback when the global economy finally recovers.

Despite some signs of economic stability due to stimulus measures undertaken by the authorities, the International Monetary Fund sees long months of economic distress before the world economy recovers in the first half of next year.

Having lost much wealth and resources to the global financial crisis, countries worldwide will be desperately seeking to rebuild their strengths and sharpen their competitiveness to make a quick comeback when the world economy shows any signs of a recovery.

In order not to be left behind, Malaysia has much to catch up with the rest of the countries, including those in the region such as Vietnam, Thailand and Indonesia, which are making big strides in their competitive rankings.

To ensure a more competitive playing field for our local businesses and foreign investors, all the stifling rules and guidelines that affect the efficiency and competitive edge of businesses and industry groups should be removed eventually.

Given its link to the other 160 industry sub-sectors, the property industry has a huge role to play to breathe more life and activities in the local economy. But it also one of the most regulated industries and is made to fulfil various socio-economic objectives.

The local property industry is one of the most impacted by the global financial crisis as the people’s confidence in the state of the economy and their well-being nosedived since the middle of last year.

With plunging property sales and having to slow down or defer their projects, developers are bracing for tougher days ahead and do not want to be further burdened by some of these practices.

While the national housing policy should help all needy Malaysians to own their own homes, and if the bumiputra housing quota has to be continued, it should be streamlined so that there will be a consistent one across all the states in Malaysia.

Both the Federal and state governments should work together to streamline and have a consistent policy and implementation across the country.

Without clearer and more consistent implementation of the bumiputra quota policy, it will be hard for developers to continue their projects successfully and offer their best to buyers.

At present, the quota for bumiputra buyers ranges between 30% and 70% of the number of houses built, while price discounts for bumiputra buyers vary between 5% and 15%.

Although most states adhere to a 30% quota, it is 40% in Johor, while in some suburbs in Selangor such as Shah Alam, it is between 50% and 70%.

Industry players want the quota to be standardised at 30% while discounts for bumiputra buyers should be capped at 5% and should only be applicable for houses priced at RM250,000 and below. Buyers of houses that are priced higher than that are more financially secure and do not need such discounts.

An automatic bumiputra quota release mechanism that is standardised and transparent should also be in place. There should be an automatic release of the quota units after six months of a project’s launch or when a project has reached 50% of construction.

As property remains one of the most viable investment instruments around, there is huge potential to be tapped from raising Malaysia’s profile and competitiveness as a property investment hub.

To attract more foreigners to invest in Malaysian real estate, more consistent policies to attract FDIs should be implemented.

Developers lament that the policies in the various states contradict the Federal Government’s initiatives to attract foreign investors.

The abolishment of Foreign Investment Committee approval for foreigners purchasing properties priced at more than RM250,000 and the exemption of property gain tax on sale by foreigners reflect the Government’s initiative to promote FDI in real estate.

However, state governments still impose their own rules on foreign property sales and purchase. Such foreign quota restrictions make it hard for developers to sell properties to foreign buyers.

While more enabling and liberalising measures by the Federal Government are expected to be announced soon, the success of such measures, especially those pertaining to land matters that come under the purview of the state governments, is dependent on the willingness and efficient implementation by all involved.

● Deputy news editor Angie Ng believes that regardless of the good or bad times, much more can be achieved when all Malaysians unite and forge ahead as one.

By The Star (by Angie Ng)

PK Resources plans RM58m 4-star hotel

PK RESOURCES Bhd is investing RM58 million to build a four-star hotel adjacent to the Nilai Springs Golf & Country Club in Putra Nilai, Nilai Springs Resort Sdn Bhd general manager G.K. How said yesterday.

Construction of the nine-storey 183-room Nilai Springs Resort Hotel was progressing smoothly since last year and was nearing completion.

"According to our plan, we are to do the soft launch on June 8. The hotel is slated to start full commercial operations in September," he said.

How said the hotel would have the "Azuma Fusion Restaurant" serving a variety of Japanese, South Korean and Chinese food and western food by "Springs Cafe".
The stall-styled "Golfers' Terrace" will serve local cuisines. There are also "Fairway Lounge" and "Splash Station.

"For the next two years, our occupancy projection is 55 and 60 per cent. We are confident of achieving this target as the hotel has only 183 rooms.

"In fact, we have already received bookings from several F1 racing teams coming for the F1 championship at the Sepang International Circuit next year.

The optimism to woo hotel guests stems from the hotel's strategic location proximity to the KL International Airport in Sepang, Low-Cost Carrier Terminal, Sepang International Circuit, Cyberjaya Intelligent City and Putrajaya federal government administra-tion centre.

PK Resources (formerly known as (Peladang Kimia Bhd), a property developer, is currently focusing on Putra Nilai (new name for Bandar Baru Nilai) township via its wholly-owned subsidiary BBN Development Sdn Bhd.

Putra Nilai is one of the largest townships within the Multimedia Super Corridor and is strategically located in the vicinity of the Kuala Lumpur International Airport, Putrajaya and Cyberjaya.

By Bernama

EcoFirst eyeing projects worth over RM200mil

MAIN board-listed EcoFirst Consolidated Bhd, which is undergoing a corporate restructuring exercise, is eyeing various mid-sized projects worth over RM200mil.

Executive director and group chief executive officer Tiong Kwing Hee says the group is in advanced talks on construction work for a new hospital and an educational institution.

“We are awaiting approval from the relevant bodies and expect to conclude both deals by next year,” he tells StarBizWeek after the official launch of Edu Mall @ South City yesterday.

As part of its turnaround plan, the group has rebranded its key property asset South City Plaza in Seri Kembangan to an educational mall with a view to increasing its occupancy rate to 90% by year-end from 75% now.

Tiong says the group hopes to raise about RM80mil to RM100mil through the issuance of sukuk bonds by year-end to finance the building of two high rise buildings on top of the mall as well as the mall’s refurbishment.

To reform its business model, the group has identified food ration and manufacturing as new income generating divisions.

“We plan to invest about RM40mil to RM50mil to acquire two manufacturing companies by the middle of next year and have identified three potential candidates.

“We are also currently negotiating for a long-term food ration supply contract. We anticipate an average additional income of RM3mil per annum from both divisions,” says Tiong.

Meanwhile, the group is also looking to establish a 50:50 joint venture in engineering, procurement, construction and commissioning (EPCC) under its construction division.

“We are talking to some government agencies to do EPCC work for government ports,” says Tiong.

To date, the group has completed about 60% of its total government contracts worth some RM70mil.

“We hope to return to the black after the restructuring exercise is completed by the middle of next year,” says Tiong.

EcoFirst currently operates four divisions – property investment, network marketing, construction and education.

By The Star (by Shannen Wong)

Friday, April 24, 2009

Novotel Hydro Majestic Hotel put up for sale

Hotel operator and property developer Pulai Springs Bhd has put its two-year-old Novotel Hydro Majestic Hotel in Kuala Lumpur up for sale, sources say.

It is believed that the owners are asking an estimated RM200 million for the four-star 291-room hotel located along Jalan Kia Peng, a stone's throw from the iconic Petronas Twin Towers.

According to sources, Pulai Springs has received several offers for the hotel.

One source said that the Johor-based company had in fact identified a buyer. Pulai Springs officials could not be contacted for confirmation.

It is also unclear why it wants to sell the property. It is probably trying to cut debt. Its current liabilities, or what it needs to pay in a year, stood at RM193.6 million as at December 31 2008. In contrast, its current assets amounted to RM71.4 million.

Novotel Hydro Majestic is operated by France's Accor group.

Pulai Springs' main property is the Pulai Springs Resort in Johor. It also operates the The Pulai Desaru Beach Resort.

In the financial year ended December 31 2008, Pulai Springs' net loss widened to RM8.36 million on revenue of RM80.81 million.

Its resort and hotel division recorded net loss of RM4.69 million on revenue of RM67.36 million.

According to its 2007 annual report, Novotel Hydro Majestic contributed RM20.7 million in revenue.

Penang's Mah family, which runs Hydro Hotels Sdn Bhd, bought the abandoned hotel building and completed it.

It was sold to Pulai Springs for RM10 million in 2006. The price took into account the fair market value of the land and hotel of RM130 million and the total development cost of the hotel of RM120 million.

Pulai Springs was listed on the main board in December 2002.

By Business Times

Selangor Prop to clear residential stocks

SELANGOR Properties Bhd (SPB) wants to clear the residential property stocks in its current projects before launching new development phases as sales have plunged almost 50 per cent.

"People are more cautious. Average sales used to be 20 to 30 units a month but now it has been reduced by 50 per cent despite attractive interest rates," financial controller Lee Boon Kian said after SPB's annual general meeting in Kuala Lumpur today.

SPB has two ongoing projects at Bukit Permata in Gombak and Selayang Mulia, with both developments comprising about 40 hectares each.

The Bukit Permata development is 75 per cent completed while Selayang Mulia is half completed.

Lee said out of the residential 560 units in Bukit Permata, 270 units were unsold.

"There are plans to launch the next phase of development in Bukit Permata and Selayang Mulia and another project in Ulu Langat but these are all in the planning stage," he said.

According to Lee, the new phases and project may be launched late this year or early 2010.

He said the Ulu Langat project will be a mixed property development.

For the financial year ended Oct 31, 2008, the group recorded a net profit and minority interests of RM118.6 million based on a turnover of RM210.6 million.

On the outlook, Lee said: "We can't match that kind of profit (for the current financial year) as part of last year's profit came from foreign exchange gains."

Besides property development, SPB is also involved in the education business.

On talks that the company will be privatised, SPB corporate affairs manager Chong Koon San said there was no such plan.
Asked if SPB planned to acquire more land, Lee said it was looking for such opportunities in the Klang Valley "but prices have not come down that much yet."

By Bernama

Nilai's four-star hotel nears completion

PK Resources Bhd is investing RM58 million to build a four-star hotel adjacent to the Nilai Springs Golf & Country Club in Putra Nilai, Nilai Springs Resort Sdn Bhd general manager G.K. How said today.

Construction of the nine-storey 183-room Nilai Springs Resort Hotel is progressing smoothly since last year and is nearing completion.

"According to our plan, we are to do the soft launch on June 8. The hotel is slated to start full commercial operations in September," he said.

How said the hotel would have the "Azuma Fusion Restaurant" serving a variety of Japanese, Korean and Chinese food and western food by "Springs Cafe".

The stall-styled "Golfers' Terrace" will serve local cuisines. There are also "Fairway Lounge" and "Splash Station".

The hotel also has facilities for golfing on a 27-hole golf course, badminton, tennis and squash courts, swimming pool, gymnasium, jaccuzi, sauna, spa and a health centre and children water play park.

"Other facilities are a ballroom that can accommodate 550 people at one time and 12 meeting rooms. We also have facilities for team-building such as wall climbing, rappelling and flying fox, he said.

How said the accommodation package at the hotel was open to all including flight transit passangers, cabin crew, golfers, foreign tourists, businessmen and Formula One riders and spectators during the Petronas Malaysia Grand Prix F1 championship at the Sepang International Circuit.

How said under the current uncertain global economic climate, Nilai Springs Resort, a wholly-owned subsidiary of PK Resources, was optimistic the hotel investment was a viable and profitable venture.

"I believe after the challenges and pressures posed by the global economic turmoil end in two years, we expect a good occupancy of 75 to 80 per cent.

"For the next two years, our occupancy projection is 55 and 60 per cent. We are confident of achieving this target as the hotel has only 183 rooms.

"In fact, we have already received bookings from several F1 racing teams coming for the F1 championship at the Sepang International Circuit next year.

The optimism to woo hotel guests stems from the hotel's strategic location proximity to the KL International Airport in Sepang, Low-Cost Carrier Terminal, Sepang International Circuit, Cyberjaya Intelligent City and Putrajaya federal government administration centre.

PK Resources (formerly known as (Peladang Kimia Berhad), a property developer, is currently focusing on Putra Nilai (new name for Bandar Baru Nilai) township via its wholly-owned subsidiary BBN Development Sdn Bhd.

Putra Nilai is one of the largest townships within the Multimedia Super Corridor and strategically located in the vicinity of the Kuala Lumpur International Airport, Putrajaya and Cyberjaya.

Spanning over 6,200 acres of freehold land, Putra Nilai is today a diverse, modern township with a multitude of residential, commercial, recreational, educational and administrative amenities and a well landscaped environment.

By Bernama