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Tuesday, June 30, 2009

KL Metro in final sales push for Port Dickson project

PROPERTY developer Kuala Lumpur Metro Development Sdn Bhd will continue to push overseas sales for a tenth of the total units left unsold in a Port Dickson water homes project, just months away from its opening.

The Legend International Water Homes, located at two miles off Jalan Seremban in the beach town, started construction in January 2007 and will be opened to owners and holidaymakers this October.

"We will continue to market the project overseas," executive director Datuk Yap Chuan Thai said at a media briefing in Kuala Lumpur yesterday.

Over 90 per cent of the project, with gross development value of RM150 million, were sold to mainly foreign buyers from the UK, Hong Kong, Singapore, Macau, the Gulf states and some European countries, Yap said. Buyers have the option to lease back with an 8 per cent gross rental income return a year.

The project has 166 water homes, 44 garden chalets and 39 sky pool villas that are priced between RM400,000 and RM700,000 each.

With an average size of 826 sq ft to 1,312 sq ft, they are all studio units equipped with private pools, designed in Balinese concept.

Mandy Chew Siok Cheng, president of The Legend Group of Hotels and Resorts, which will manage the property, said it expects 68 per cent occupancy in the first year. Room rates average around RM400 per night.

Yap said the global economic turmoil has not affected Kuala Lumpur Metro's sales. The company plans to start another similar project called the Hibiscus in Penang next year.

"We have not finalised the layout yet, so there's not much details. But with our strong marketing network overseas, we are confident sales," Yap said.

By Business Times (by Chong Pooi Koon)

OCBC unveils new home loan package

OCBC Bank (Malaysia) Bhd yesterday launched a new home loan package based on Mortgage Lending Rate (MLR).

Called Ideal Mortgage, the package is priced more competitively than BLR-based ones and is flexible enough for borrowers to make a significantly lower investment outlay on their loans during the lock in period, the bank said in a statement.

The MLR, currently set at 4.70 per cent, is OCBC Bank’s internal reference rate develop exclusively for home loans and is calculated based on the mortgage business as opposed to the BLR which takes into consideration overall bank costs, it added.

Ideal Mortgage’s first-year rate is 2.5 per cent and is fixed not to change for a year from the date of the first drawdown or until expiry of the maturity date of the guarantee, whichever comes first.

Thereafter, the interest rate is set at MLR minus 1.3 per cent.

By Business Times

Further easing on property buying by foreigners expected

PETALING JAYA: Analysts believe Prime Minister Datuk Seri Najib Tun Razak will make announcements to further liberalise property ownership by foreigners and boost the attractiveness of Malaysia for investment at the annual Invest Malaysia 2009 conference today.

Following UBS Research’s bullish call on the property sector on June 19, HwangDBS Research yesterday also upgraded its call on the sector, on the back of potential positive policy changes to lift the sector, sales bottoming out, attractive incentive schemes and the resumption of new launches.

Since end-2006, the Government has been liberalising the sector to attract foreign direct investments and boost demand.

“The Government is currently reviewing the Foreign Investment Committee (FIC) guidelines, and Najib is expected to make significant announcements at the Invest Malaysia conference. This could further re-rate the sector, which is already seeing sales bottoming out,” said HwangDBS Research property analyst Yee Mee Hui.

She said possible changes included curtailing the FIC’s role to monitoring only six areas of “national interest”, while other sectors would be placed under the respective ministries with clear investment criteria on their website.

This could help speed up the investment process as FIC approvals typically take one to three months versus no such requirement in other international property markets.

Other possible measures include easing FIC requirements relating to commercial properties and developers, the standardisation of bumiputra policies for consistency and transparency, easing local ownership requirements for retail and trade as well as liberalisation to help improve perceived investibility.

These measures could lead to a narrower pricing gap between Malaysian and regional properties (which are at present priced at more than a 90% discount compared with Singapore and Hong Kong), and improved liquidity with increased participation from international investors.

“Malaysian property is attractive as foreigners are allowed to own freehold landed properties, compared with regional markets which only permit foreigners to own leasehold land of short tenures,” said Yee.

Owing to the warm response to recent launches, Yee understands that more developers are planning to launch high-end properties in Kuala Lumpur and Penang in the second half of 2009.

“Developers could start raising prices again. Present buyers of properties are predominantly locals acquiring for own use. The return of foreign investors should provide a strong boost for property sales and prices,” she said.

Yee noted that Malaysia had yet to see a strong rebound in property sales compared with regional markets like Singapore and Hong Kong.

Her top big-cap picks include SP Setia Bhd, while mid-caps include Eastern & Oriental Bhd, Sunrise Bhd and Sunway City Bhd.

However, industry observers pointed out that some of the administrative bottlenecks relating to property transactions are at the state government level because land is a state matter.

It is worth noting that at Invest Malaysia 2007, key liberalisation measures announced were related to the property sector.

Significant measures included the exemption of real property gains tax for both residents and non-residents effective April 1, 2007.

Foreigners were also allowed to purchase residential properties above RM250,000 each without FIC approval.

There was also a series of incentives to attract investors to Iskandar Malaysia which included tax holidays and exemptions.

By The Star (by Tee Lin Say)

States may put brakes on property liberalisation

PETALING JAYA: Any move to relax restrictions on foreign property investments may face hindrances at the state level.

While the industry is expecting the government to announce further liberalisation of Foreign Investment Committee (FIC) guidelines on property investments, players hope the measures will be recognised at the state level as well.

Prime Minister Datuk Seri Najib Razak is expected to announce further liberalisation of the property sector at the InvestMalaysia conference today.

Previous measures have met with some “impediments” at the state level as land matters come under the jurisdiction of the respective state, said Kumar Tharmalingam, chairman of property advisory company Hall Chadwick Asia.

“The federal government has to work with the respective states to ensure the measures are implemented across the board and not just subject to the state’s approval,” he added. For example, he said, the state could impose a substantial levy on the developer for a property sold to a foreigner.

The industry also wants the government to liberalise the commercial property sector next.

Currently, foreign investors may acquire commercial properties of below RM10 million for own use. However, for properties valued RM10 million and above, or a building or development project, land or land with building for commercial redevelopment, the foreign interest must incorporate a local company with a 30% bumiputera equity.

But investors face a tough task getting a bumiputra partner especially during a downturn as commercial property investments can run into millions of ringgit, said Kumar.

He suggested that “free market” zones be established in certain parts of the country such as at the Kuala Lumpur city centre where foreigners could invest in without such restrictions.

The government last announced liberalisation measures in the residential property market in April 2007 and those included an exemption on real property gains tax, and the removal of FIC approvals for foreign ownership of houses costing RM250,000 and above.

By The EDGE Malaysia (by Financial Daily)

Hap Seng bids for half of Menara Citibank

The plantations and property group is believed to have offered RM800 per sq ft to RM900 per sq ft for the building

Plantations and property group Hap Seng Consolidated Bhd has offered to buy half of Menara Citibank, an office building located at the heart of the city centre, near the Petronas Twin Towers.

The 50-storey building, which is fully occupied, was previously called Menara Lion, and its holding company is Inverfin Sdn Bhd.

US lender Citigroup holds half of Inverfin, while Singapore's CapitaLand Ltd has 30 per cent and Lion Group's Amsteel Corp Bhd owns the remaining 20 per cent.

Sources told Business Times that Hap Seng wants to buy 50 per cent that's held by CapitaLand and Amsteel.

Hap Seng is believed to have offered RM800 per sq ft to RM900 per sq ft for the building that has a nett lettable area of 733,626 sq ft.

Based on the nett lettable area, the purchase price could translate into RM290 million to RM330 million.

Managing director Datuk Edward Lee Ming Foo declined to comment when contacted by Business Times. Regroup Associates Sdn Bhd, which is handling the sale of the property, also declined to comment.

In August last year, Business Times reported that the building was up for sale and three parties had been shortlisted.

Later that month, IOI Corp Bhd, announced that it had won the bid and agreed to pay RM586.7 million for Menara Citibank. Inverfin also has a RM160 million debt from the sale of seven-year bonds.

But three months later, the deal was aborted. IOI, citing concerns over the economy, forfeited some RM73.36 million of its initial payment.

The Lion Group built the property in 1994. In 2000, it sold half of the building to Citigroup for RM75.25 million, or RM543 per sq ft, to pare debt.

The building houses Citibank's local branch, Lion group offices, oil and gas company Talisman, Japan Airlines and the Tourism Board of Thailand, among others.

The net book value of the building as of December 31 last year was RM458 million, and the gross rental revenue was RM43.3 million (excluding the RM3.3 million revenue from its car park).

Meanwhile, in 2004, Hap Seng bought the 22-storey MUI Plaza in the golden triangle of Kuala Lumpur.

The building underwent a facelift and was given a new contemporary look in 2007. It was renamed Menara Hap Seng to reflect its ownership.

By Business Times (by Vasantha Ganesan)

Nagamas to maintain focus on core businesses

PROPERTY and air services company Nagamas International Bhd will remain focused on its two core businesses for now as it looks to conclude the disposal of its entire industrial division by August this year.

"We want to remain focussed and grow our two existing businesses, especially since the property division is undergoing a gestation period," Nagamas chairman Datuk Tan Yik Huay told Business Times after the company's annual and extraordinary general meetings held in Shah Alam yesterday.

Nagamas announced in April 2009 that it was selling its industrial division to Jojevi Sdn Bhd, a special purpose vehicle set up to undertake the sale, for RM4 million and a debt assumption of RM3 million. For the nine-month period ended December 31 2008, the industrial division contributed over 70 per cent of total revenue which stood at RM78.6 million.

The company saw revenue dip slightly by 4 per cent to RM78.6 million from one year ago as it changed its fiscal year-end from March to December, thus concluding its financial year after only nine months.
However, net profit dropped 89 per cent to RM448,236 in the same period due to cost increases in its industrial division in the beginning of the year and a drop in product demand later following the economic recession.

"We do anticipate that we should be able to remain profitable for this year, driven by our aviation services and as the property market in China continues to pick up," said Tan.

The company's subsidiary Nagamas International (HK) Ltd (NIHL) has a joint-venture agreement for the marketing and sale of the commercial and residential units of Longji Blue Bay Commercial and Residential Properties project in China.

However, it entered into a repayment agreement earlier this year with Zhiangxu Zhenda Construction Co Ltd (ZZ) and Zhang Yongliang, concerning the repayment of RM8 million to NIHL by ZZ as ZZ was facing cashflow issues in view of the economic slowdown and was unable to make payments by January 31 2009, amounting to RM8.8 million.

Last week, Nagamas entered into three agreements, which will ultimately lead to it owning 15 units of shoplots in Dragon Mall, Huiyang, valued at 18.61 million yuan, to be offset against the repayments owned by ZZ.

Meanwhile, Tan said Nagamas subsidiary involved in the outsourcing agreement of ticketing and cargo booking business will help contribute to the company's earnings. Aviation services accounted for roughly 20 per cent of revenue last year.

By Business Times

Property sales bottoming, says HwangDBS

KUALA LUMPUR: Property sales are already showing early signs of bottoming out due to attractive mortgage rates and incentives offered by developers, improving risk appetite and recent share market rally, said a research house.

HwangDBS Vickers Research said in a report that after a steep 6.2% gross domestic product (GDP) contraction in the first quarter 2009 (1Q09), the worst was now past. Headline GDP growth numbers should rise gradually, reflecting the underlying improvement in the domestic economy as well as the broader external economic environment.

It said the second and third quarters of 2009 should see narrower contractions (-5.6% and -4.3% year-on-year), before a turnaround in 4Q09 of 0.2% which should continue into 2010.

The research house said the recent strong market rally saw KLCI market capitalisation increase by 33% or RM161 billion, adding that commodities such as crude palm oil had risen by 30% to RM2,233 per tonne over the last three months.

“All these newfound wealth could very well find its way into the property sector, as seen in the past. Property sales have a strong correlation to stock market performance (+0.6 times),” HwangDBS said.

The research house said since end-2006, the government had been liberalising the property sector to attract FDIs and boost base demand. This includes the removal recently of the bumiputera equity requirement for 27 service sub-sectors.

HwangDBS said the current review of the Foreign Investment Committee’s (FIC) guidelines together with the expected significant announcement by the prime minister at “Invest Malaysia 2009” could further re-rate the sector that was already seeing sales bottoming out.

It noted that prime commercial asset owners and projects with international appeal would be the biggest potential beneficiaries should FIC requirements be eased for commercial properties and developers.

It said developers such as KLCC Property Holdings Bhd and Malaysian Resources Corporation Bhd, the largest landowner at the transportation hub in KL Sentral, were set to gain from such a move.

Projects with international appeal, the research house said, included Seri Tanjung Pinang in Penang and Nusajaya in Iskandar Malaysia.

By The EDGE Malaysia (by Yong Min Wei)

Monday, June 29, 2009

Ho Hup drafting turnaround strategy

The three-year business plan will see the company operating under three business entities - construction, property development and trading of ready-mix

Property and construction company Ho Hup Construction Co Bhd said it is drafting a three-year business plan that will see it return to profitability next year and ensure that its profitability will continue into the future.

The plan will see the company operating under three business entities - construction, property development and trading of ready-mix - to be headed by three individuals who will lead a team of staff to drive up sales.

"Each head of division will have to come up with their own business plan, which I will enhance to ensure that they are profitable from day one. I will monitor their progress every two weeks," Ho Hup group managing director Lim Ching Choy told Business Times.

"At the end of the day, I am here to make profits for the company and enhance shareholders value. Two years from now, we may have a dividend policy," he said.
Lim, formerly the chief executive officer (CEO) of property developer Magna Prima Bhd, took helm at Ho Hup on June 1 2009.

Dubbed "the turnaround man", he was asked to helm Ho Hup by its major shareholders to return it to profitability.

The company has been in the red since 2006. In the fiscal year ended December 31 2008, its net loss was RM56.2 million.

Lim said he has been spearheading Ho Hup's corporate restructuring to reduce debt, inject new capital and generate revenue since he took office.

"You need six months to reposition, turn around and overhaul the business of an ailing company. I will be doing a lot of things in the next six months what other people have not done in the last five years. I believe a good working philosophy and commitment from myself is important to make things work in a short span of time," Lim said.

Lim, who was in banking for 22 years, had turned around loss-making Magna Prima in 12 months. Prior to that, he had rebranded and repositioned Mah Sing Group Bhd in 18 months.

He was involved in both companies for 30 months and four-and-a-half years, respectively.

"I may stay longer in Ho Hup. It has all the licences for any kind of construction jobs. That alone is encouraging and rewarding," Lim said.

Ho Hup is betting on its RM2 billion Jalil City development in Bandar Bukit Jalil, Kuala Lumpur, and new jobs to return to the black next year.

The 24ha project, which will be launched in the fourth quarter, is poised to contribute 60-70 per cent of the company's revenue per year, starting from 2010.

It features 176 shop-offices housed in four- to eight-storey buildings, a hypermarket, a piazza, 2,000 serviced condominium units, and a Grade A office building.

"We will launch the offices worth RM600 million in two phases. We hope to complete sales in a year. We have more than 100 registrations," Lim said.

Ho Hup will also launch 20 semi-detached houses in Bandar Bukit Jalil, worth RM1.5 million each or RM30 million in total, in September.

Apart from residential projects, it will look to clinch government contracts involving infrastructure and high value construction works, and develop mega projects as it had previously.

Ho Hup has bid for government and private sector road and related infrastructure jobs worth RM500 million and hopes to get one or two this year.

Its ready-mix business is also set to improve as it is reactivating its eight plants in Terengganu, Klang, Bukit Jalil and Jinjang to increase volume. The unit is expected to generate RM6 million in revenue this year.

By Business Times (by Sharen Kaur)

Investments in Malaysian hotels plunge

However, there are signs of foreign investors returning to the Malaysian hotel market, says a real estate agent

Transactions involving the buying and selling of Malaysian hotels have plunged fivefold, from RM1.2 billion worth of transactions in 2005 to RM205 million last year, as owners preferred to hold on to their assets as property prices appreciated.

Last year also saw no foreign interests unlike in 2006 and 2007 where more than 60 per cent of the hotel investment volumes were by foreigners.

However, the momentum is expected to pick up this year, said real estate agent Previndran Singhe.

"Prices have now stabilised and so owners are willing to sell," Previndran told Business Times yesterday.

At the same time, there are signs of foreign investors returning to the Malaysian hotel market as real estate agencies including Previndran's company Zerin Properties Sdn Bhd, have been approached by them looking for deals.

Zerin Properties has closed over RM1 billion worth of hotel deals in the past five years.

"The foreigners are returning and they are willing to pay the market price, as they realised that they are unable to bargain since there is no property crisis here," Previndran said.

He added that their interest in Malaysian hospitality is spurred by the country's strong tourism market.

"We welcome more tourists here than in Singapore or even Thailand," he said.

He added that this was despite the fact Malaysia is known to have one of the lowest, if not the lowest, average room rates in the world, which could take an investor a decade to see return on investment.

"They see a potential for an upside in terms of rates," Previndran said.

This year has already seen the sale of the Novotel Hydro Majestic in Kuala Lumpur to The Nomad Residences Sdn Bhd.

Other hotels up for sale and may see deals closed include Sime Darby Bhd's sale of Hotel Equatorial Malacca and Hydro Hotel Penang in Batu Ferringhi.

IGB Corp Bhd has also voiced its intention to dispose of its Renaissance Kuala Lumpur Hotel.

By Business Times (by Vasantha Ganesan)

Malaysia real estate stocks upgraded

MALAYSIAN property developers, set to be the best performers on the Kuala Lumpur stock exchange this quarter, had their stock ratings raised by HwangDBS Vickers Research Sdn Bhd, which said sales are rebounding and potential “positive” policy announcements may bolster demand.

SP Setia Bhd, Malaysia’s biggest property developer, was upgraded to “buy” from “fully valued,” and the target price increased to RM4.50 from RM3.90, HwangDBS said in a report today. Eastern & Oriental Bhd, Sunrise Bhd and Sunway City Bhd were raised to “buy” from “hold,” it said.

“Sales are bottoming out” and “developers are more confident now to resume launches, including high-end” properties, HwangDBS said. Property stocks are now “stepping into the limelight.”

The Kuala Lumpur Property Index of 87 stocks jumped 43 per cent this quarter, outpacing the benchmark Kuala Lumpur Composite Index’s 23 per cent gain, and making it the best performing industry group on the stock exchange.

The plan by Prime Minister Datuk Seri Najib Tun Razak to announce an easing of investment restrictions tomorrow “could further re-rate the sector,” HwangDBS said.

Loan Approvals Rise

Najib, who took office in April, has raised foreign ownership limits in banks and announced a RM67 billion (US$19 billion) spending plan in an effort to boost the economy that he predicts will shrink as much as 5 per cent this year, the first contraction in a decade.

Central bank data showed loans approved for home purchases in April climbed to the highest level in at least a year. Loans approved for home purchases in April rose to RM6.3 billion from a month earlier, the third monthly gain, adding to signs the industry is rebounding.

SP Setia has jumped 47 per cent this quarter, Sunway City climbed 82 per cent, while Eastern & Oriental more than doubled.

By Bloomberg

MPHB’s property ambition faces delay

KUALA LUMPUR: Multi-Purpose Holdings Bhd’s (MPHB) hopes of diversifying its property development portfolio have been delayed by the economic slowdown, which has affected some of its commercial property plans.

“There will be some delays in the property developments that we have planned, as the current market condition is not conducive for new launches,” MPHB chief operating officer (COO) Kheoh And Yeng said after the company’s AGM last week.

At the same time, MPHB is also not ready to relook at the long-delayed Mimaland resort project in Gombak, Selangor. The land belongs to MPHB subsidiary Magnum Corp Bhd.

Kheoh said the company was still monitoring market sentiment but had no plan to start work any time soon. “It is a complex and difficult project, and the situation now is not suitable to start anything,” she said.

Magnum has 2,266ha of land, including some in prized locations such as Gombak, Rawang and Sepang, as well as a parcel near Universiti Sains Malaysia in Penang.

These plots of land hold good potential for future property development.

Asked if MPHB was looking at revaluing some of its land and properties, Kheoh said the company was comfortable with having its assets on book value.

MPHB recently acquired a 9.45% stake in Farlim Bhd for RM3.2 million, raising its shareholding in the property developer to 10.9%. Analysts described the move as an attempt to venture deeper into the property sector.

Meanwhile, MPHB’s gaming business is holding steady. Although the numbers forecast ticket sales dipped to RM2.87 billion in the financial year ended Dec 31, 2008, it was still the group’s biggest income-generating division.

As of the end of the first quarter ended March 31, MPHB had RM585 million in cash and cash equivalents, up 24.75% from RM468.94 million at end-2008.

Total dividends paid amounted to RM80.46 million in fiscal year 2008, representing a 62% payout ratio.

During the first three months of the year, its brokerage and financial services divisions also showed signs of recovery.

The stockbroking arm, represented by Dynamic Pearl Sdn Bhd and its subsidiary A A Anthony Securities Sdn Bhd, recorded a pre-tax profit of RM2.62 million. It made a pre-tax loss of RM3.6 million a year earlier.

The insurance business, meanwhile, managed to narrow its pre-tax loss to RM793,000 from RM9.8 million previously.

Going forward, analysts said the number forecast operations would remain MPHB’s main income contributor, given the lack of other major earnings drivers.

By The EDGE Malaysia (by Tony Goh)

Saturday, June 27, 2009

Supportive plans to buy foreign distributor

An artist's impression of terraced houses at Supportive's Aman Bayu project

GEORGE TOWN: Supportive International Holdings Bhd plans to acquire a foreign supply chain-cum-distribution company this year.

The acquisition of such a company was in line with the group’s plans to produce its own brand of audio-visual consumer electronics products soon, executive chairman Lee Kuang Shing told StarBizWeek.

“We plan to produce consumer electronic items such as DVD players and LCD panels.

“The company we are targeting will help us market and distribute our own brand of consumer electronic products to European countries,” he said after Supportive AGM.

Lee said he expected the economy to recover by the year-end. “The forthcoming 2012 Olympics in London should spur consumer spending,” he said.

On the group’s original equipment manufacturing business for Panasonic and JVC, Lee said it did not experience a slowdown.

“In fact the business generated stronger profits as raw material prices plunged,” he said.

For the first quarter ended April 30, the group posted about RM3.8mil pre-tax profit on revenue of RM15mil, compared with RM1.2mil and RM22mil respectively a year ago.

Supportive makes home equipment theatre systems for Panasonic and JVC.

“Our competitive edge is that we have the capability to produce the components and plastic injection moulds, and source competitively-priced raw materials for our customers,” Lee said.

On the group’s property development business, Lee said its RM360mil Aman Bayu project in Butterworth would contribute about 30% to revenue this year.

“We have sold half of the 100 three-storey terraced houses priced about RM350,000, which were launched early this year.

“The second and third phases, comprising 250 semi-detached houses and bungalows, will be launched next year,” he said.

By The Star (by David Tan)

Analysts optimistic market is turning around

An artist's impression of St Mary serviced apartments by Eastern & Oriental Bhd

HIGH take up rates for some recent property launches could be an early sign that the local property market is bottoming out and is starting to turn around like other regional markets after an 18-month slump, property analysts say.

They pointed to the fact that three project launches over the past month, from suburban mass market to high-end condominium projects, registered superb take-up rates within a week or two of their respective launches (see table). This can be attributed to attractive financial packages by some property developers.

Reflecting the improved market sentiment, residential housing loan approvals recovered 89% to RM6.3bil in April, after touching a low of RM3.3bil in January.

Perhaps the most compelling case was Eastern & Oriental Bhd’s (E&O) much awaited launch – the St Mary serviced apartments in the heart of the Golden Triangle, which recorded a whopping 85% take up rate during its preview launch on June 12.

This type of strong take-up is usually seen for landed properties in prime residential areas and not for high-end condos in KLCC.

While prices started at RM833 per square feet, the bulk of the 169 units offered for its East Tower was sold at above RM1,000 psf.

Property analysts who attended the launch preview say that the studio apartments were snapped up in minutes. “An 85% take up rate is hard to ignore. St Mary’s second tower will be launched six months later, at an estimated 20% higher price,” says a property analyst from Hwang DBS Research.

E&O is not an isolated case.

SP Setia Bhd’s Sky Residence, which is behind the National Heart Institute in Kuala Lumpur, recorded a 100% take up rate for its 220 units of Tower A apartments, selling at an average price of RM680 psf. Tower B has so far recorded a 50% take up rate. These condos too, have yet to be officially launched.

SP Setia’s Setia Walk serviced apartments (RM330 psf) and Setia Vista linked houses (RM600,000) in Shah Alam which were launched early this year have both recorded 70% take up rates.

Island & Peninsular Bhd’s 110 linked houses in Kinrara, Puchong were sold out in three days from its launch date of June 6.

Looking at the data from the Property Market Report 2008 released in May, it was verified that transaction values notched a brisk rate of 14.5% while the number of transactions went up 10%. Less surprising was the decent rise in house prices for most part of the country. Overall house prices appreciated 4.8% in 2008, matching the gain in 2007. Of the big-3 markets, Penang enjoyed the steepest appreciation of 10.4% while the Klang Valley gained 4.5%.

Meanwhile, the first upgrade in the sea of sell calls comes from UBS Research, which says that cheap financing available, low interest rates and a recovering stock market will fuel sentiment and create wealth that can be deployed into property.

“In the property upcycle that is just starting, we forecast residential property transactions in Malaysia to increase 10% to 15% per annum in 2010-2012 to RM59bil by 2012; starting with mass-market housing, then spreading to mid- to up-market landed residential properties and finally to up-market condominiums,” says UBS Research.

It adds that the overhang of completed and unsold properties in key markets of Klang Valley, Johor and Penang have also stabilised.

In value terms, the overhang is 7% of transaction in the Klang Valley, 3% in Penang and 37% in Johor. For the whole of Malaysia, the overhang is 11%.

While many may say that Malaysian property is barely affordable, UBS highlights that the estimated average house price in the Klang Valley was only RM291,477 in 2008.

CIMB head of research Terence Wong has a trading “buy” stance on the property sector for its leverage play on the broader market and bombed-out valuation.

“Although the outlook for the sector remains difficult, the sector held up better than expected in 2008. This increases the odds of a manageable consolidation for the industry in 2009, rather than a steep decline.

“SP Setia remains our preferred play on the sector for its excellent management, size and liquidity. Sector re-rating catalysts include a broad market rebound in the second half and attractive valuations,” he says.

Developers with new products to launch are E&O, SP Setia, DNP Bhd and IJM Land Bhd.

Upturn in Singapore and Hong Kong

In Singapore and Hong Kong, the trend has started convincingly since February.

Singapore released May new home sales on June 15. New units sold were close to the previous peak of more than 1,700 units for a single month in August 2007, at 1,668 units.

This is the fourth consecutive month that monthly new home sales had exceeded 1,000 units with high-end units moving fast. Prices transacted range from S$1,100 to S$1,600.

In Singapore, the queues are forming again. One example is the Vista Residence freehold condominiums by the country’s largest private property developer, Far East Organization. Of the total 282 unit, it has launched 52 and sold 38. The two-bedroom units are going at S$1,070 psf.

On the evening of June 24, buyers started lining up to buy the 68 units offered at Residences @ Killiney by Hoi Hup Realty Pte Ltd. Prices are assumed at US$2,000 psf.

Meanwhile, the Hong Kong real estate market is showing signs of revitalisation as the housing price index (which includes luxury residences) has risen 13.3% so far this year, and sales numbers have steadily increased.

By May 10, the index had reached 64.34, after rising for a five week period.

According to Hong Kong’s Land Registry, April saw an increase of home sales from 8.9% in the previous year to 9.86% this year. This is notably the first gain in the last 11 months – a good indication of better things to come. The value of unit sales rose 14.6%, the first gain since June 2008.

Luxury home prices in Hong Kong are Asia’s second-most expensive, and seeing an increase in prices in that market is certainly a sign that a turnaround is in the works.

With Premier Wen Jiabao’s US$585bil stimulus package, the outlook has certainly improved tremendously from the bleakness of a few months ago.

By The Star (by Tee Lin Say)

Gold Coast Resort developer to invest RM50m in Kenyir project

The STG Group, developer of the Gold Coast Resorts projects, will be investing RM50 million in a lake holiday resort in Kenyir, Terengganu.

This development is the Gold Coast Resorts developer's second project in the East Coast Economic Region (ECER). Its first is the RM10 million Gold Coast Kuantan resort, consisting of 99 apartment suites with views of the South China Sea .

"The Gold Coast Kenyir development will be unique. The project will be made up of a hotel mall with shops, long houses and bungalows built over Lake Kenyir's serene waters," Datuk Dr Alex Tan Siong Seng, chairman of STG Group, said in a statement.

"We are optimistic this project will help draw more tourists to Lake Kenyir to enjoy its natural scenic beauty and water sport," he added.

Lake Kenyir is Asia's largest man-made lake. It contains about 23.6 million cu m of water and covers an area of 369 sq km. Under the ECER's master plan, the lake has been designated for agro-tourism where it will be boosted by aquaculture and tourism.

The Gold Coast Kenyir project will be rolled out in March 2010, kicking off with the construction of 88 bungalows nestled over Lake Kenyir , followed by 188 units of long houses and a hotel mall.

The STG Group is targeting to be listed by 2012.

Other Gold Coast properties include Gold Coast Morib Resort, Nottingham International apartments, located near the Nottingham University in Klang Valley; and Gold Coast Pulau Pangkor.

By Business Times

STG Group plans RM50m resort in Kenyir

KUALA TERENGGANU: The STG Group, which develops the Gold Coast Resorts projects, will invest RM50 million in a lake holiday resort in Kenyir, making it the second project in the East Coast Economic Region (ECER).

The Gold Coast Kenyir project, will be built over 53 acres, and will start in March 2010. The first phase is 88 bungalows built over Lake Kenyir, followed by 188 long houses and a hotel mall.

“The Gold Coast Kenyir development will be unique. The project will be made up of a hotel mall with shops, long houses and bungalows built over Lake Kenyir’s serene waters,” said STG Group chairman Datuk Dr Alex Tan Siong Seng.

“We are optimistic this project will help draw more tourists to Lake Kenyir to enjoy its natural scenic beauty and water sports,” he said.

Lake Kenyir. which is Asia’s largest man-made lake, contains about 23.6 million cubic metres of water and covers 369 sq km. Under the ECER master plan, the lake has been designated for agro-tourism.

“This Lake Kenyir development, like other Gold Coast projects, offers good investment value as well as unrivalled lifestyle and leisure activities,” said Tan.

“Purchasers own a luxury holiday property built over the lake which is run like a hotel and enjoy nature’s scenic beauty. At the same time, they can also choose to have their property managed and rented out on a nightly occupancy basis by a professional company when they are away.

“This rental programme gives owners 8% returns per annum on their investment for up to 15 years, without sacrificing their ability to use the property or any other Gold Coast property for up to 60 days if they chose to.”

While the Gold Coast’s projects are bought off the plan, Dr Tan said owners can expect capital appreciation of 40% after five years from the date of purchase.

“Our buyers are equally split up between domestic and foreign purchasers. Some 80 per cent of them have signed up for the investment plan while the balance will be owner occupied,” he said.

The Kenyir project is the second for the STG Group in the ECER. The first is the RM10 million Gold Coast Kuantan resort, consisting 99 apartment suites.

Other Gold Coast properties include Gold Coast Morib Resort, Nottingham International apartments, located near the Nottingham University in Klang Valley; and Gold Coast Pulau Pangkor.

By The EDGE Malaysia (by Joseph Chin)

PNB not likely to take SP Setia private

PETALING JAYA: There is a possibility for Permodalan Nasional Bhd (PNB) to raise its 32.9% stake in SP Setia Bhd to the takeover trigger threshold of 33%, but industry observers believe the investment institution is unlikely to take the property company private or meddle in its affairs.

SP Setia is regarded as the industry trendsetter under the leadership of Tan Sri Liew Kee Sin

“It will be a very costly exercise for PNB to buy the remaining SP Setia shares that it does not already own. At yesterday’s market closing price of RM4.06 per share, this will cost about RM2.8bil.

“But most importantly is whether PNB can further add value to SP Setia if it is being taken private at current valuations which is expensive. It is currently trading at 19 times of FY2009 earnings estimate,” ECM Libra property analyst Bernard Ching told StarBizWeek.

PNB’s accumulation of SP Setia shares since March last year has kept the shares at a much higher valuation than the industry’s average. The pace of its share buying in the company picked up when the global financial crisis started last June that prompted some of the foreign funds to liquidate their positions.

Ching believes that the recent appointment of two nominee directors of PNB is nothing more than a check and balance to safeguard their significant investment in SP Setia rather than to exert influence over the management of Malaysia’s biggest property developer by market capitalisation.

SP Setia president and chief executive officer Tan Sri Liew Kee Sin owns 12% in the company while the Employees Provident Fund and US-based Capital Group also have 12% each. Other foreign shareholders hold another 14%.

The company’s current chairman, Tan Sri Abdul Rashid Abdul Manaf, had assumed the chairmanship since Jan 15, 1996.

Referring to concerns expressed by the investment community that PNB had taken three property companies – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – private between 2005 and 2007, Ching said the situation was different for those companies.

“These companies do not attract the kind of investors’ following as SP Setia and they were under-valued. Furthermore, PNB only spent about RM1.7bil in total following the mandatory general offers to take them private,” he said.

So, is there a likelihood for PNB after its takeover of SP Setia to merge it with the other three property companies?

“This is very unlikely as it will severely dilute SP Setia’s value. The management style of Liew and the other PNB-appointed chiefs may be very different and a significant amount of time and effort may be required to align these differences,” Ching pointed out.

He said a more likely scenario would be joint development of PNB’s vast land bank under SP Setia’s well-established brandname.

By doing so, PNB can leverage on SP Setia’s vast expertise in turning around large greenfield parcels into townships, while SP Setia can avoid heavy holding cost from new land acquisitions.

HwangDBS Vickers Research senior property analyst Yee Mei Hui said since its transfer to the Main Board in 1996, SP Setia had quickly built up its reputation as a blue-chip property stock and darling of the investment community.

The company’s good dividend payout record at the rate of about 60% of net earnings since 2005, and its capital appreciation over the years have certainly contributed to its stature.

With its track record as one of the top industry performers in terms of sustainable earnings and sales, she said SP Setia was well known for its innovative marketing expertise and product offerings.

Led by its charismatic chief, Liew, 51, SP Setia is highly regarded for being the industry trendsetter in terms of product design, good price premium for its properties and high quality. Its capability in product innovation and designing has won the company many industry awards, both on the local and international stage.

SP Setia’s 4,000 acres of land bank in the Klang Valley, Penang and Johor have all the infrastructures in place and are all paid for. They will last the company at least another 10 to 15 years.

At the end of the day, if PNB’s investment strategy in SP Setia is for long-term value enhancement, then the current Liew-led management will continue to be the faces of SP Setia for many more years to come. PNB could not be reached for comment.

By The Star (by Angie Ng)

Too early to rejoice, say developers and consultants

DEVELOPERS and consultancies are taking a cautious stand on analysts’ optimism that the market is finally turning around.

While they rejoice over the positive signs, they are of the view that “it is too early to tell” if the sector has turned from the worst.

“The issue is sustainability,” two developers and two consultancies say. They prefer to wait for the year-end before they pop the champagne bottle.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam says he would like to look further and be more cautious.

“I will not be convinced until I see the third-quarter results. In fact, I would like to look at the next six months. If the stock market hold up until the end of the year, I would say we are at the beginning of a possible bull run and with that, the property market will improve.”

Kumar says Europe is not exactly out of the woods yet and while a dip there may not have such a big effect on Malaysia and Southeast Asia, they do buy quite a bit from China.

“If China’s economy dips further, that will affect us,” says Kumar.

He says analysts are rejoicing because the developers are seeing an upturn due to better sales volume.

“Sales volume have been good because of the close co-operation between the banks and the country’s top 20 developers. The two factors which pushed developers and bankers to work together was the slowdown which started in September 2008 and the buoyant secondary market last year.

“Because of the meltdown, buyers took a back seat. Because developers needed to sell, they sought the cooperation of the banks.

“At the same time, in Selangor, out of 217,000 units of homes that exchanged hands last year, 63% were between individuals. That means, they did not buy from developers. The situation was the same for Penang and Johor,” says Kumar.

Home buyers like the security of being able to touch and feel the property before they buy and developers know that. Because buyers went to the secondary market, developers sought the help of banks to make buying from developers more attractive. The result is the special financing programmes,” says Kumar.

Beginning with SP Setia’s who started the Setia 5/95 Home Loan Package where buyers pay 5% and need not fork out stamp and legal duties, the other developers subsequently followed with 10/90 and other variations.

“Once the toothpaste has come out of the tube, you can’t put it back and so other developers had to follow. The result is better sales volumes, which we are seeing today. This need not necessarily translate into higher ringgit sales because developers are absorbing the cost of interest until vacant possession of the property, stamp duties and legal fees, which they previously used to pass on to their buyers.”

The impact of absorbing this cost will be felt by the developers for the next two to three years, he says.

“These positive signs are limited to major centres like Klang Valley, Penang and Johor, but for the time being, this is good enough. But it does not constitute a property turnaround; it is an upturn for the developers in terms of sales,” he says.

On commercial properties, he says the sub-sector is still relatively quiet and the attractive financing schemes are not for commercial projects. Within the Klang Valley, there have not been many launches.

“At this point in time, there is more demand for housing than commercial space. There is an over supply in the commercial sector and this can be seen in Kota Damansara where literally hundreds of shop-offices have come up and most of them are empty,” he says.

Another source from a major real estate consultancy, who requested anonymity, says he sees no real change in his business.

“The manufacturing sector is still doing badly and this will affect employment. People will be cautious. There is also the issue of oversupply, especially of condominiums.

“In the office space sector, we are seeing developers and landlords gearing up for higher vacancies. Some of them have become more flexible in their pricing. Landed property prices are quite stable but we are seeing lesser transactions, which means prices are still hovering around last year’s levels.

“Buyers are taking a wait-and-see stand. In the condominium market, surprisingly, we have sold RM8mil to RM10mil so far this year. There is a pick-up in enquiries and people are still looking for good deals.”

In the rental market, he says the market is seeing a further softening. The asking and concluded rentals for high-end condominiums are lower than what they were six months ago.

Echoing Kumar, he says the condominium market around the KLCC area is beginning to stabilise between RM800 and RM1,000 per sq ft while the premium ones like Troika may hold its own at around RM2,200 per sq ft.

“We are seeing new levels of lower prices where buyers are prepared to come in,” he says.

On the optimism from certain quarters, he says this is due to developers seeing more transactions in the last few months.

Two developers contacted say it is too early to say anything and sustainability of sales is an issue.

The two senior executives from the companies concurred that the market has been performed pretty well “because we have concentrated on the domestic market and offered attractive packages. Although the market is slowly picking up, it is still too early to say there is a turnaround.”

By The Star (by Thean Lee Cheng)

Time to sharpen saws and make a difference

With signs of the economy and property market bottoming out in the coming months, developers should get back in shape and ready themselves for a more active pace and competition from their peers.

After a long lull that started around September last year, things will start to pick up again if all goes well in the global and local economic fronts. Hit by the widening impact of the global financial meltdown in the past one year or so, many project launches have to be deferred and developers were mostly selling unsold stocks from earlier launched projects.

Getting back into the business should be quite easy for most of the property companies as they have already build up their landbank and some even have project plans and approvals in place and are just waiting for the market to turn around to launch their projects.

While there are developers who have kept themselves active with projects to build and sell, there are also those who have no projects to proceed with and remain in “siesta mood” during the past few months.

It is time to jolt out of this mode and start “sharpening their saws” to make a difference and create more value for property buyers.

There have been much changes during the short spate of economic upheavals and it will be worth starting on the right footing.

Despite the pensive mood of most developers after the poor reception for their projects during those “under performing” months, there is no time to waste by brooding over what could have been if the market had continued to ride on the high gear that peaked before the global crisis sets in.

One consolation for property buyers and developers is the prevailing positive industry environment now; low mortgage rates are supporting property buying and investment activities.

Since May last year, the country has experienced negative real interest rates and this encourages the purchase of property as a hedge against inflation.

Buyers are having a field day with various promotions introduced by developers whereby stamp duty, legal fees and interest during construction period (some even extend by another year after delivery of the property) are borne by developers. These facilities have reduced upfront cost of property ownership.

However, this deal, that can be rated as among the best for property buyers so far, will not last forever as most developers are looking to end the facility in the next few months.

SP Setia Bhd, which was the first developer to come out with its Setia 5/95 Home Loan Package on Jan 19, will be ending it on July 19. The rest of the developers are bound to follow suit shortly after that.

The packages and low entry cost have prompted many buyers to make multiple purchases during the promotion period as they only need to make a downpayment of either 5% or 10% of the property price for each purchase and need not make any further payments until the property’s delivery in the next two to three years.

Whether the buying will continue after the facilities are withdrawn is a big question that have no immediate answer. Only time will tell and it is left to the ingenuity of developers on what value they can bring to their projects to attract buyers.

Buyers will continuously be looking for value buys in the coming days and will shop around for good quality products that offer them a good environment and amenities, safety and security, quality management and maintenance, among a long list of other needs.

Developers should have the right understanding of what the buyers need in the fast changing world today.

The rapidly rising temperature and searing heat we experience as a result of the worsening global warming should encourage developers to look into more breezy and well ventilated designs for their property products, whether they are residences or office buildings and other commercial projects.

At the end of the day, developers that put in the right effort to genuinely plan for the well being and comfort of their buyers will triumph.

● Deputy news editor Angie Ng says to celebrate the end of the long, gruelling crisis days (when they are finally over), it should be a good start for the industry if there are developers who can offer some really cool and refreshing “green” model projects.

By The Star (by Angie Ng)

Mah Sing expects to conclude talks with PNB soon

PROPERTY developer Mah Sing Group Bhd expects to conclude talks with the country's largest fund manager Permodalan Nasional Bhd (PNB) soon to jointly develop the latter's landbank in Kuala Lumpur and Johor.

Mah Sing group managing director Tan Sri Leong Hoy Kum said it has been discussing and exploring the possibility of working with PNB.

"PNB is a valued shareholder and if there is an opportunity, we would like to work with PNB be it to develop land in the Klang Valley, Johor Baru or any other land in its stable," he said after the group's annual general meeting in Kuala Lumpur yesterday.

"Of course, any joint venture would need to match PNB's investment criteria and fit Mah Sing's business model," Leong added.
PNB, which has some 20 per cent stake in Mah Sing, has parcels of land scattered in the city centres, such as those held by its unit Malaysian Industrial Development Fund Bhd, which wholly owns MIDF Property Bhd.

Mah Sing is projecting RM435 million sales this year, helped by its financial package offering that was launched in January.

Its Easy Home Ownership programme has reached RM317 million in sales so far, which represents 70 per cent of its full-year target.

As at March 31 2009, Mah Sing had gross development value and unbilled sales of RM3.8 billion, which will keep it busy for the next five to seven years.

Apart from Malaysia, the group is exploring potential property development projects in China and Vietnam for their lower priced land and high population growth.

By Business Times (by Zurinna Raja Adam)

Mexican entrepreneur wants to turn KidZania into global brand

A model of Kidzania. Xavier Lopez Ancona (inset) says from his planning of a day-care centre, the theme park turns out to be something even more fun and bigger that could attract an even larger crowd

CHILDREN’s role-playing is a universal concept that has existed for thousands of years. Identifying this as a business opportunity, Mexican entrepreneur Xavier Lopez Ancona founded the KidZania theme park in 1999.

The president on KidZania International told StarBizWeek that the idea for KidZania started 12 years ago when his childhood friend approached him to start a business in day-care centre that would offer a variety of activities that could attract children.

Ancona was then a very successful executive in the equity capital group department of the multinational technology and services conglomerate, General Electric. But he tried to help his friend anyway.

During those two years, Ancona spent his after-hours and weekends helping his friend to draw up a business plan for the day-care centre.

“From planning for a day-care centre, it turned out to be something even more fun and bigger that could attract an even larger crowd,” Ancona says.

So, the first KidZania theme park was opened in Mexico City in 1999. It was an instant hit, and Ancona has never turned back. There are currently two KidZania theme parks in Mexico, including one in Mexico City that attracts an average of 800,000 visitors annually. A third is currently under construction. The concept has also been licensed and franchised to operators in Tokyo and Osaka in Japan; Jakarta, Indonesia; and Lisbon, Portugal.

Healthy activities

KidZania is a “nation” just for children. Targeting those between two and 12, it is an educational and entertainment centre that allows children to role-play adult activities in a replica city designed to imitate real-life and a functioning economy.

What’s even more interesting is that this “nation” has an official currency called kidZos. Children can earn kidZos by working in KidZania, and they can use the currency to pay for the goods and services there. They can also save their money and earn interest from their savings in the “banks” in KidZania.

Ancona believes that parents would like the concept of KidZania, as the programmes in the theme park have been designed to instil positive values in children.

The experience in KidZania is aimed at helping children learn faster about the adult world and how a real city works.

The programmes also help children to develop a sense of vocation as they get to try out the various occupations available at KidZania.

KidZania offers more than 60 professional roles, including pilot, doctor, teacher and journalist, for children to play. But given the limited time of five hours per entry, a child can usually play between five and 10 roles a day. Hence, there is a repeat factor for the children to come to the city again to try out other roles.

According to Ancona, the programmes at KidZania are changed regularly so that there is always something new for the children to experience each time they visit the theme park.

It also has a loyalty programme, whereby children can apply for “citizenship” and be KidZanians. As citizens of KidZania, the children will get a “passport” and enjoy various benefits such as income tax incentives.

Ancona believes that the experience in KidZania would also help children learn about the value of money, and how they have to work hard to earn a living, as well as the importance and benefits of savings.

He says children would also be able to pick up social skills through their interaction with other children in the theme park and learn to make their own decisions.

Ancona reveals that the bulk of the people working in KidZania are mainly the supervisors who have to monitor and guide the children.

“It requires special skills to be a supervisor at KidZania, and we take a long time to select the right people for the job,” he says.

Among the values that he looks in people applying to be a supervisor at KidZania are patience, service orientation and passion for children.

Generally, the KidZania theme park is targeted mainly at the local market, with an ideal composition of 70% local residents and 30% outstation or foreigners.

KidZania’s business has remained fairly resilient through the current economic challenges, owing to the fact that it focuses on the local market, Ancona says.

In recession, most people tend to turn to nearby locations for leisure and entertainment, as they cut down on travelling, he explains.

In addition, the entrance fees for KidZania theme parks are quite affordable, though they vary by countries.

However, Ancona acknowledges that the recent outbreak of the A (H1N1) influenza virus had a negative impact on KidZania’s business in Mexico when the theme parks there had to be closed temporarily.

Nevertheless, it is back to business as usual now in Mexico, he says.

Global brand

KidZania brand is growing fast internationally. He, however, did not reveal how much the business is worth today.

This year will also see the opening of KidZania theme parks in Dubai, the United Arab Emirates, and Seoul, South Korea.

Over the next two years, KidZania theme parks will be opened in Cuicuilco, Mexico; Shanghai, China; Bangkok, Thailand; Santiago, Chile; Istanbul, Turkey; and either Delhi or Mumbai in India. Malaysia will also have a KidZania theme park by 2012.

Most of these expansions have been through franchise programmes.

Ancona explains, “We want to partner the local organisations because they understand the local market better than us.”

As for the ticket pricing structures, Ancona reveals that they are usually determined by KidZania’s franchisees.

“We only make proposals based on the socio-economic levels of the local markets of our franchisees, but the decisions are ultimately in the hands of our local partners,” he explained.

Meanwhile, there is also a plan to open KidZania in the US after the next two years.

“The US is the biggest market in the world for any type of entertainment but it is also a very tough market. You only have one chance to do it right,” Ancona explains, adding that he wants to make KidZania a global brand first before setting its foot in the United States.

By The Star (by Cecilia Kok)

Malaysia fits well into KidZania’s expansion

The Malaysian market fits well into the expansion plan of KidZania, says its founder and president Xavier Lopez Ancona.

As long as there are at least 700,000 children in the city, we would deem it a worthy investment, he adds.

What’s more, Kuala Lumpur is an important international tourist destination that attracts more than 20 million foreigners every year.

KidZania Kuala Lumpur is scheduled to be open to the public in early 2012. The brand has been franchised to a joint venture between Khazanah Nasional Bhd and Boustead Holdings Bhd through their newly established Rakan Riang Sdn Bhd, in which the former holds an 80% stake and the latter holds 20%.

The RM50mil project to be located in Mutiara Damansara, Petaling Jaya, marked Khazanah’s second investment in theme parks for the country, after its earlier investment of RM750mil for the development of Legoland in Iskandar Malaysia. It also represented Khazanah’s increasing focus on leisure and tourism sector as it has identified significant development opportunities in the area. The KidZania theme park is expected to be a lucrative investment as it is the first-of-its-kind in the country.

With its strategic location in the high-density township of Mutiara Damansara, the theme park is set to draw in a huge crowd every year. The venture would generate two streams of income – one from the visiting patrons and the other from its marketing sponsors.

Taking the entrance fees of US$12 (RM42) per child for KidZania Jakarta as a guide, the venture could generate at least RM20mil from the ticket sales per year if the target of 500,000 visitors per year is achieved.

The ticketing revenue would be on top of other operating revenues, which would come from fees paid by its marketing partners who have set up their brands in the theme park as well as from food and beverage sales.

Hence, Khazanah is confident of recouping its investment in KidZania Kuala Lumpur in less than five years.

As for Boustead, the joint-venture agreement with Khazanah would not have any material effect on the company’s net assets, gearing and earnings for the financial year ending December 2009, according to its recent announcement to Bursa Malaysia.

ECM Libra in its recent report viewed the recent development as a boon to the Mutiara Damansara township developed by the Boustead group. Its analyst said the upcoming KidZania theme park would increase the property values around the township and draw more visitors to The Curve shopping mall.

The analyst thought KidZania was a clever concept as it provides real-life experience of adulthood for children and an opportunity for other corporations to market their brands. For instance, the KidZania theme park in Jakarta has sponsors the likes of AirAsia, Sony, Hewlett Packard and Sunsilk.

By The Star

S&P lifts KLCI’s year-end target to 1,150

S&P's top property picks are Sunrise, Mah Sing, KSL Holdings and Selangor Properties, and it favours Public Bank, AMMB Holdings and RHB Capital for banks

Standard & Poor's Equity Research has raised its year-end target for the Kuala Lumpur Composite Index to 1,150, saying that a potential economic recovery in the last quarter this year may boost bank's earnings.

Its top picks for banks are Public Bank, AMMB Holdings and RHB Capital.

S&P is putting its next year's KLCI target at 1,300, indicating a 21 per cent potential upside. The benchmark index closed at 1075.77 yesterday.

It expects the US economy to return to a 1 per cent expansion in the final quarter as housing prices and home sales bottom out, and has projected a better economic performance in Malaysia than the official estimates. The various stimulus plans by governments in Asia will work to lift economies in the region, S&P head of Asia equity research Lorraine Tan said.

It expects Malaysia's economy to shrink 3.3 to 3.5 per cent this year, better than the government's projection of a 4-5 per cent contraction.

"Like in most parts of Asia, the worst in Malaysia's GDP (gross domestic production) has probably been seen in the first quarter. The second quarter GDP is probably still down from last year, but there will be some pick-up," Tan said at a media briefing in Kuala Lumpur yesterday.

Still, the second half could be more challenging for Malaysian stocks, since the market has already priced in a fair bit of corporate activity improvement next year.

"At this juncture, there is risk to the 2010 corporate earnings outlook, should rising interest rates, tax rates and a weak US dollar continue to dampen US consumption and slow Asian and Malaysian export recovery," Tan remarked.

S&P has projected Malaysia corporate earnings to grow again next year at 11.7 per cent. This year, it expects companies to report 13.7 per cent earnings contraction.

"We remain positive over the mid-long term on stocks but the short term is subject to further consolidation," she said.

Apart from banks, it also likes property stocks, saying that it expects demand to stay firm because the record low mortgage rates are providing more incentives to buy house than to rent.

Malaysia's real estate prices are also among the cheapest in the region, S&P said. Its top property picks are Sunrise, Mah Sing Group, KSL Holdings and Selangor Properties.

Investors may find opportunity to pick up shares of energy and materials, like steel and cement, when market dips in the near term, S&P said. However, it remains wary of autos, airlines and shipping stocks.

By Business Times (by Chong Pooi Koon)

Friday, June 26, 2009

Dijaya plans RM1.8b property launches

Developer Dijaya Corp Bhd will launch properties worth RM1.8 billion in fiscal 2010 to expand and sustain earnings.

Managing director Datuk Tong Kien Onn told Business Times after the company's shareholders meeting yesterday that it expects its net profit and revenue to improve slightly this year despite a weak market.

Tong said Dijaya achieved RM153 million in sales in the first half of 2009 and is expecting RM100 million more in the second half.

But profit will be hit due to higher land and construction costs. The company is projecting a net profit margin of 15 to 18 per cent this year versus 25 per cent before.
For the year to December 31 2008, Dijaya posted a net profit of RM34.4 million on revenue of RM244.1 million.

In the first quarter of 2010, Dijaya will unveil Tropicana Grande, the last residential development at its award-winning 250ha Tropicana Golf & Country Resort in Petaling Jaya.

It plans to offer 300 units of high-end condominiums for about RM2 million each.

In the second or third quarter, Dijaya will launch three projects that will include Tropicana Avenue in Petaling Jaya, which will feature eight- and 10-storey office blocks including two floors for retail.

In Balakong, Kajang, Dijaya will launch a RM380 million resort development comprising apartments, and two- and three-storey semi-detached and link houses.

In Sungai Long, Cheras, it will launch a RM200 million housing project that will have semi-detached and double-storey link houses, and low-cost apartments.

By the end of 2010, Dijaya will introduce Pool Villas in Tropicana, offering semi-detached houses worth an average of RM2.8 million each, or a combined RM160 million.

Finally, it plans to launch twin-tower offices blocks in Tropicana for more than RM150 million.

Dijaya will sell one block and retain the other to build its investment portfolio for recurring income.

Currently, Dijaya's portfolio includes the 12-storey Tropicana City office tower and newly-opened Tropicana City Mall in Damansara.

By Business Times (by Sharen Kaur)

Oriental: Malacca waterfront project to be ready in 5 years

AUTO and plantation group Oriental Holdings Bhd said its proposed waterfront development in Malacca is due to be completed in about five years.

The company's group managing director Datuk Wong Lum Kong said the company will try to fast-track the integrated project at Malacca's Klebang area with support from the state government.

"Apart from a RM200 million specialist hospital we intend to open there, commercial and residential units," he said after the company's annual shareholders' meeting in Penang.

Wong said reclamation works on the proposed waterfront project have almost been completed and the hospital, a nursing school and service apartments for families of overseas patients are slated for completion within two-and-half years.

Business Times on Monday reported that OHB plans to open the 300-bedded Melaka Straits Medical Centre.

OHB is set to hold a controlling 51 per cent stake in the hospital.

Boon Siew Sdn Bhd, the controlling shareholder of OHB will hold another 20 per cent, followed by Bagan Specialist Centre with 29 per cent.

The reclamation project there is handled by Ultra Green Sdn Bhd, a construction and property development subsidiary of OHB.

Wong said OHB is hoping to fund the project with internal funds and the development value has not been finalised as yet.

"Our plan is to market the project in countries like Singapore and Australia where we have a marketing presence," he added.

By Business Times (by Marina Emmanuel)

Thursday, June 25, 2009

MK Land eyes RM3b Indian JV project

(From left): Emkay Group COO Peter Teh, Mustapha Kamal, Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir and Jitendra at the signing of the MoU at Damansara Perdana, Petaling Jaya yesterday. Photo by Chu Juck Seng

PETALING JAYA: MK Land Holdings Bhd is venturing into India, partnering India’s property developer Embassy Group for an integrated township development with a gross development value (GDV) of RM3 billion on a 120ha parcel of land in northern Bangalore.

The joint venture (JV) also sees the participation of MK Land’s sister company, MKN Embassy Development Sdn Bhd, which is under the privately owned Emkay group. The project will be undertaken by a JV company named Milan Gateway Sdn Bhd.

MK Land, via Ritma Mantap Sdn Bhd, and Embassy, via Star Dreams, each holds a 47.5% stake in the JV company, while MKN Embassy owns the remaining 5%.

MK Land chairman and chief executive officer Tan Sri Mustapha Kamal Abu Bakar, who is also the chairman of Emkay, said the project would serve as a stepping stone for the group to expand to other parts of India.

“We are replicating our previous developments (in Malaysia) into that development (in Bangalore). If we implement it successfully in Bangalore, there is tremendous potential in the whole of India. This is just the beginning,” he told reporters after the signing of a memorandum of understanding among the three companies here yesterday.

While the JV partners had yet to decide on the exact investment in the project, Mustapha said it would need to invest at least US$10 million (RM35.3 million) to start a project in India.

He said MK Land would fund its portion of the investment using internal funds. He added that funding was not a problem, as the company had returned to the black with a nine-month net profit of RM13.25 million up to March 31, and had recently redeemed its final tranche of outstanding bonds amounting to RM60 million.

Mustapha said construction on the Bangalore project would start about a year later after obtaining the necessary approvals from the Indian authorities. The expected returns of the project are about 20%.

The project to last more than five years would build 16,000 units of apartments ranging from 650 sq ft to 1,200 sq ft and 560 units of retail shops.

Embassy Group executive chairman Jitendra Mohandas Virwani said the houses would fetch selling prices of RM100,000 to RM150,000, which are considered “affordable homes” in India for the lower middle-income group.

Citing Indicus Analytics Research, he said urban India would need to build at least 10.5 million houses in the next six years to meet rising demand, and that 65% of the demand in India’s top 112 cities is for houses less than 1,000 sq ft.

This is not the first time MK Land/Emkay group collaborates with Embassy. Emkay and Embassy had previously set up MKN Embassy to jointly undertake a RM400 million office building project known as MKN Embassy Techzone in Cyberjaya.

The MK Land/Emkay group had previously ventured into Namibia in 1993. It was involved in construction and housing project in the South African country.

By The EDGE Malaysia (by Gan Yen Kuan)

MK Land in India venture

Developer MK Land Holdings Bhd is partnering two other companies for a RM3 billion residential development project in northern Bangalore, India.

This will be the company's first project in India and its second overseas, after Namibia. The project will be developed on a 120ha land near the new Bangalore International Airport.

It will be undertaken by Milan Gateway Sdn Bhd, a joint venture between MK Land, Embassy Group of India and MKN Embassy Development Sdn Bhd. MKN is a joint-venture company of MK Land and Embassy Group set up to develop IT parks, particularly in Cyberjaya.

"The project will start construction in 2010 and take not more than five years to be developed. It will potentially deliver 16,000 units of affordable homes ranging from 650 sq ft to 1,200 sq ft and approximately 560 units of retail outlets," MK Land chief executive officer Tan Sri Mustapha Kamal Abu Bakar said.

The houses, priced from RM100,000 to RM130,000 per unit, will be targeted at the low middle income group. Bangalore, India's Silicon City, is home to well-known information and communication technology companies, related colleges and research institutions.
"This type of project has a big market potential there," Mustapha told reporters at a memorandum of understanding signing ceremony between the partners in Petaling Jaya yesterday. The event was witnessed by International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir.

Mustapha said the project will be financed through internal funds and disposal of idle landbank.

"We have landbank of more than 2,800ha and we plan to dispose of some to part-finance the project in Bangalore," he said, noting that it needs an initial investment of US$10 million (RM35.4 million) to enter the Indian market.

"We are in the black now and this project will help the company tremendously," Mustapha said, adding that it will continue to seek for more projects in India in the future.

According to the company's announcement to Bursa Malaysia, the proposed design, project management and construction will be undertaken by Malaysian companies.

The Embassy Group is one of India's most reputed developers of information technology and business parks, commercial and residential developments. It has developed a portfolio exceeding 19 million sq ft of landmark commercial and residential spaces across India.

By Business Times (by Azlan Abu Bakar)

IGB leads stocks of developers higher

IGB Corp, Malaysia’s biggest owner of commercial buildings, climbed the most in two months, leading developers higher after HwangDBS Vickers Research Sdn Bhd said they would gain from any investment policy revisions.

IGB added as much as 6.7 per cent to RM1.75, set for its biggest advance since April 30, and traded at RM1.65 at 10:52 am local time. SP Setia Bhd, the country’s biggest property developer, added 1 per cent to RM4.02 , set for its highest close since June 18. The benchmark stock index gained 0.9 per cent to 1,067.14.

The plan by Prime Minister Datuk Seri Najib Tun Razak to announce an easing of investment restrictions next week “could further re-rate the sector, which is already seeing sales bottoming-out with improved consumer sentiment and attractive financing schemes by developers,” Yee Mei Hui, an analyst at HwangDBS wrote in a report today.

Najib, who took office in April, has raised foreign ownership limits in banks and announced a RM67 billion spending plan in an effort to boost the economy that he predicts will shrink as much as 5 per cent this year, the first contraction in a decade.

Policy changes are the “key driver of property market,” said Yee, who has a “fully valued” call on SP Setia and a “hold” on Sunway City Bhd. “Improving perceived investibility of Malaysian properties should help narrow the large price gap with regional markets.”

‘Potential Beneficiaries’

IGB, which owns Megamall and the Gardens shopping centres outside Kuala Lumpur, Sunway City and KLCC Property Holdings Bhd are the “potential beneficiaries should local ownership requirements be eased for retail and trade,” under the revised guidelines, Yee said.

The changes may include allowing foreigners to buy or lease properties for more than 10 years without an approval from the Foreign Investment Committee, he said. The government may also allow foreign investors to waive a requirement for 30 per cent of a locally established company to be owned ethnic Malays, known as Bumiputeras.

The government may also announce a “more competitive” withholding tax for real estate investment trusts, ease regulations on hypermarket ownerships, and take over the role of providing low-cost houses from the developers, Yee said.

Prime commercial property developers such as Malaysian Resources Corp, E&O Property Development Bhd, and UEM Land Bhd would also benefit from the policy revisions, according to the HwangDBS Vickers report.

By Bloomberg

MRCB's property brand launch in Perak on Saturday

MALAYSIAN Resources Corp Bhd (MRCB) will be launching its property brand and unveil the second phase of its pioneer project at Bandar Seri Iskandar in Perak on Saturday.

In a statement, the company said during the brand launch, over 200 units of residential properties comprising bungalows, semi-detached and terrace houses from the second phase development called Puncak Iskandar will be showcased for two days until Sunday.

"It is our hope the new positioning for the company's property development will enhance the value of the brand," MRCB group managing director Shahril Ridza Ridzuan said in the statement.

He said the group is optimistic about the response for Puncak Iskandar, as the demand for quality housing within an integrated enclave offering amenities beyond the conventional is very encouraging.

By Business Times

Asas Dunia developing over 1,000 homes in Seberang Prai

GEORGE TOWN: Asas Dunia Bhd will be developing 1,177 units of landed residential properties with an estimated gross sales value of RM203mil on the mainland in the second half of 2009.

The properties comprise double-storey terraced, double-storey semi-detached and bungalows priced from RM215,000 to RM450,000, and low medium-cost houses with prices ranging from RM42,000 to RM65,000.

Group managing director Datuk Jerry Chan said the key reason for the new developments had to do with the substantial progress made on the construction of the second bridge by UEM.

“Recently I visited the site in Batu Kawan and saw a jetty being constructed to transport components of the bridge. There were also a lot of raw materials being brought in and piling works are being carried out at full steam.

“This indicates that there is commitment to complete the bridge on schedule in 2012, which will unlock the full value of the land in South and Central Seberang Prai,” Chan told reporters after the company AGM.

Chan said another reason for the development was the pick up of the global economy.

“For Asas Dunia, our sales picked up in May and June. In June so far we have sold over 25 units of properties on the mainland worth over RM5mil, which is double the sales in May,” he said.

“The state government has also roped in new investments for this year, which will create demand for housing,” he added.

The 1,177 new properties would be launched for sale once they have reached about 70% completion, Chan said, adding: “They are scheduled for completion in four years.”

The group currently has undeveloped land bank of some 1,308 acres.

By The Star (by David Tan)

Asas Dunia lines up new projects

PENANG-BASED property developer Asas Dunia Bhd (ADB) is looking at implementing eight new projects in mainland Penang over the next four years.

Its managing director Datuk Jerry Chan Fook Sing said 1,177 units of dwellings ranging from affordable housing to high-end homes will be scattered on different sites totalling 48ha.

"We are looking at embarking on the new jobs this year and the proposed properties carry a value of RM203 million," he told reporters after ADB's annual shareholders' meeting in Penang yesterday.

The company currently has ongoing projects worth RM56 million and boasts an unutilised landbank of 571ha.

Chan said ADB's bullishness on embarking on the new projects was spurred by not only the new investments which were being ploughed into Penang, but the tangible progress made in the construction of the Penang Second Bridge.

Penang's second link will connect Batu Maung on the island with Batu Kawan on the mainland.

The project is pivotal to ADB's new developments, which are being planned in areas like Nibong Tebal, Sungai Bakap, Bukit Minyak and Bukit Mertajam.

"The new investments into Penang will see the creation of new jobs and since people follow jobs, they will be looking for housing," Chan said.

He said since industrial land is running scarce on Penang island, the mainland is set to be the centre for future industrial development and ADB intends to leverage on this.

"Following a site visit to Batu Kawan yesterday where UEM Construction Sdn Bhd has a yard, I am pleased to see that the company is going full-steam ahead with the jetty construction for the piling works.

"A lot of construction materials have also been brought to the site and this sends out positive signals that we can expect more growth to be spurred on the mainland," Chan added.

The 24km Penang Second Bridge will link Penang island and Seberang Prai. Upon completion by 2011, the bridge, which will comprise 294 piers and 9,364 sections, is set to be the longest in Southeast Asia.

UEM Construction Sdn Bhd - a subsidiary of UEM Builders Bhd - has named port builder and bridge construction firm China Harbour Engineering Co Ltd as its main contractor for the iconic bridge project.

By Business Times (by Marina Emmanuel)

SP Setia CEO doesn’t see PNB takeover taking place

SHAH ALAM: Although Permodalan Nasional Bhd (PNB) has raised its stake in SP Setia Bhd to 32.9% which can easily trigger a general offer if it decides to further increase its stake to 33% in the coming days, the company’s president and chief executive officer Tan Sri Liew Kee Sin is unperturbed by worries of a potential takeover.

Addressing concerns voiced by the investment community that PNB may further raise its stake in the company and the possibility of the company being taken private, Liew, who owns 12% of the company, said he personally did not think that would happen.

“It does not make sense for the fund to take the company private because that will not serve any purpose in further adding value to its investment. Whatever future plans there may be, they will add value to the SP Setia group,” he told StarBiz.

PNB controls three property developers – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – all privatised between 2005 and 2007.

Liew sees PNB’s majority stake in the company as a boon that will enhance its value as a premier developer.

The investment fund, which has been a shareholder of SP Setia since the 1990s, had from last March started picking up more of the company’s shares in the open market.

He said being an investment fund, PNB would always be on the lookout to create value for its unitholders.

“Its purchase of the company’s shares over the last 16 months to become a majority shareholder underscores the good value it sees in SP Setia. We are very pleased to have a strong and long-term shareholder that looks for long-term value enhancement potential rather than quarter-on-quarter results performance,” Liew added.

He said the company’s goal was to have good, long-term institutional shareholders as their presence was a sign of confidence in the company’s potential and in what it had achieved so far.

Other institutional shareholders of SP Setia include the Employees Provident Fund with 12%, Capital Group of the US also with 12%, and other foreign shareholders which hold another 14% in the company.

On June 18, SP Setia announced the appointment of two nominees of PNB – Tan Sri Wan Mohd Zahid Mohd Noordin and Datuk Noor Farida Mohd Ariffin – as its new non-independent and non-executive directors.

SP Setia’s two executive directors – Khor Chap Jen and Teow Leong Seng – resigned from their positions on the same day.

However, both remain with the company in their existing capacity as executive vice-president in charge of property division (central) and executive vice-president/CEO of international business development respectively.

Analysts concurred that Liew’s hands-on management was a huge asset to SP Setia’s growth to become the largest property company by market capitalisation at RM4bil, based on the closing price of its shares at RM3.98 yesterday.

“The possibility of PNB taking over SP Setia and taking it private is very slim as the move will dilute the company’s value. It is also fair to say that the current management team led by Liew is highly professional and will be hard to replace,” an analyst with a foreign brokerage said.

ECM Libra property analyst Bernard Ching said the company was moving into the next stage of transformation from being a Malaysian-centric property player to a regional player.

“The management led by Liew has an enviable track record in Malaysian property scene. Its long term prospects are underpinned by its drive to penetrate high growth regional markets such as Vietnam and most recently China. While pursuing growth in new markets, management is also cognisant of risks involved and has structured its investment with minimal upfront cost and deferred payment based on development progress.

“Domestically, it is venturing into large scale commercial development such as Setia City. Its long-awaited The Kuala Lumpur Eco City project in Abdullah Hukum is also poised to enhance its value going into the next property cycle.

“This project will easily match Mid Valley’s size and value,” he said.

With projects worth a total gross development value of RM5bil in the pipeline for launch in one to two years, SP Setia will be well positioned for a potential pick-up in the property market.

“Its net gearing ratio at 0.2 times as of April 30, 2009 means its balance sheet is not stretched and has plenty of room to increase its leverage to capitalise on any acquisition opportunities as and when they arise,” Ching added.

Meanwhile, Liew said the company was confident of achieving its sales target of RM1.1bil for financial year ending Oct 31 after having raked in RM803mil in sales between November 2008 and June 15.

His confidence is based on the more positive signs appearing in the global and local economic fronts.

“The share market is improving and there is less negative news about the economy. I think things are looking to be more positive and that the worst times are over,” he added.

Attributing the company’s record sales of RM803mil to the Setia 5/95 Home Loan Package, Liew said the housing facility contributed 90% of the total sales recorded during the period.

By The Star (by Angie Ng)