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Monday, August 31, 2009

Property market on robust revival

PETALING JAYA: Asia’s property market is making a strong comeback with renewed buying interest for residential property powering sales on expectation that the economic downtrend is bottoming out.

However, the commercial property market, including office and retail space, is still quite soft as easing demand has resulted in rental and occupancy rates sliding.

Bouncing back from the dampened sentiment brought on by the global financial crisis, the regional property market has shown more resilience this time around compared with the 1997 Asian financial crisis which took a heavier toll on the market.

There is increasing evidence that the US recession is bottoming out and this will stabilise the region’s economy and spur its recovery during the second half of the year.

The recovery is expected to provide a favourable basis for both residential sales and leasing markets in Asia, including Kuala Lumpur, Singapore, Hong Kong and Jakarta.

Industry observers are expecting a more robust revival in the region’s property market towards the end of the year, in tandem with a further pick-up in the global economy.

Home prices are forecast to see further upside, driven by huge liquidity in the economy as well as further rebounds in residential rents.

UOB Kay Hian in a recent regional market update said residential sales made a strong comeback in the second quarter of this year on expectations of an economic recovery and relative stability of the job market, despite a steep fall in gross domestic product growth rates, low mortgage rates and a lack of alternative high-yield investments.

“Price levels rebounded by 5% to 10% quarter-on-quarter in the second quarter after a 30% to 50% fall from the end of 2007 peak levels. As the economic recovery gains ground in the coming quarters, we expect sales momentum to pick up and price levels to firm up further on the back of improving liquidity conditions and easy financing options,” the research house added.

UOB Kay Hian said structural transformation had lent a high degree of sustainability to the current recovery.

Across the region, interest rates are drastically low and currencies are fairly stable in comparison to the situation during the Asian financial crisis.

“Household affordability levels are relatively high this time around due to the higher income levels, record low mortgage rates and stronger net household wealth. Corporate balance sheets are also a lot stronger. Furthermore, favourable migratory patterns to Asia due to its attractive long-term growth potential help support a sustainable recovery in the residential sector,” the research house explained in its report.

Market stabilisers

In the office property sector, stabilising economic conditions since June provided support to the prime office market and rentals in Asia for the rest of the year are unlikely to fall as drastically as in the first quarter 2009.

Knight Frank said on the flip side, a continued downward adjustment in occupancy costs could raise the competitiveness of doing business in most Asian cities, and provide more business opportunities for international firms and investors.

Although Kuala Lumpur still lags behind some regional cities like Singapore and Hong Kong, residential property sales have improved.

ECM Libra senior analyst Bernard Ching said the local residential market was more resilient than other regional cities and prices had not been much impacted. This compared with a price drop of about 30% to 40% in Singapore and Hong Kong, he added.

The affordable interest rate environment and lower entry cost for buyers supported property buying and investment activities during the period.

With the average mortgage base lending rate (at 5.5%) minus 2% at an all-time low, Ching said property investment was making a comeback as the preferred hedging tool against inflation.

According to Reapfield Properties Sdn Bhd president David Ong, clearer economic direction in both the global and local arenas had pushed property to regain its position as one of the leading investment instruments among Malaysians.

“Coupled with the more liberalising environment, the property market is in for stronger growth and sales performance going forward,” he noted.

Recent policy liberalisation measures to attract foreign direct investments to Malaysia’s real estate market and relaxation of rules on property purchases by foreigners have also resulted in positive effects on the property sector.

In Singapore, improved market sentiment and pent-up demand stirred private residential launch and sales activities in the first half of this year with a total 5,992 units launched.

Knight Frank said 7,374 residential units were sold during the period, exceeding the total sold in the whole of 2008 by 68%.

“With the take-up significantly exceeding the units launched, it suggested some projects which were launched before this year received strong buying interest and this allowed developers to move outstanding stock,” it noted.

UOB Kay Hian said the two upcoming integrated resorts (IR) in Singapore, which were slated to be ready by the year-end, would boost the city state’s long-term economic fundamentals.

The IR projects are expected to create 50,000 to 60,000 jobs and would directly contribute S$5.4bil to the Singapore economy, or 2.6% of GDP, by 2015.

The liquidity and openness of Singapore’s property market have contributed to attracting high net worth individuals and talented people to its shores.

This is a boon for the property market as it makes a sharp rebound from the meltdown of the past year.

Indicators are pointing to increasing possibilities of a sustained sales activity and price recovery.

These include stabilisation in the economy, which may be able to prolong homebuying sentiments for the second half of 2009.

Various findings by recruitment firms also showed that firms are more likely to hire than before.

Together with the current low interest interest rate environment, these may boost the confidence of buyers for mass-market homes who are concerned with affordability and financing issues.

“As such, homebuying sentiments may persist in the second half, although the number of new homes sold is likely to slightly decrease as the pent-up demand weaken and prices are also increasingly resisting downward corrections,” the research house added.

Meanwhile, Knight Frank said China’s property market was back on its feet following the government’s supportive measures as well as price discounts offered by developers that helped release the pent-up demand for residential properties in key cities.

Amid a lack of new residential supply in core districts, buyers are shifting to the secondary market, which saw strong rebounds in both transaction volumes and sales prices in the first half of 2009.

A more active office market is also expected in most Chinese cities in the coming 12 months with developers launching projects and acquiring land for future office developments amid a recovering market.

Its views are echoed by US research company Real Capital Analytics Inc that reported China’s commercial property transactions totalled US$31.2bil in the first six months this year following a surge in land sales after the government eased credit terms.

Capital inflow from mainland China into Hong Kong has contributed to a rebound in luxury home prices in the Special Administrative Region (SAR).

Compared with the market trough last December, Hong Kong’s housing prices have rebounded 27.2%.

According to CLSA Asia Pacific, capital continued to flow into Hong Kong, bringing the aggregate balance in the banking system to HK$211bil, as at Aug 21.

A number of local property veterans jumped on the bandwagon, engaging in batch acquisitions in The HarbourSide in Kowloon Station.

One acquired 12 units for about HK$100mil and another bought six units for HK$90mil.

In Indonesia, the disbursement of 2.5 trillion rupees in housing subsidies allocated in the 2009 budget and the finalisation of the government’s ruling on foreign ownership are expected to boost overall demand for property.

Thailand’s property prices have also recovered to its previous level due to the high liquidity in the system, low interest rates and property tax incentives.

Although high-end condominiums that cater to foreign buyers succumbed to about 30% price correction, they have since found support from wealthy domestic bargain hunters.

By The Star (by Angie Ng)

RM141m Sunway Giza coming up in Kota Damansara

Sunway Damansara Sdn Bhd, a joint venture between Sunway City Bhd and Perbadanan Kemajuan Negeri Selangor (PKNS), will open a new lifestyle retail centre in Kota Damansara, Selangor, in December.

Dubbed "Sunway Giza", the RM141 million centre will consist of 48 units of shop offices, a three-storey lifestyle shopping mall and an 800-bay basement car park.

It will also feature a pedestrian-friendly covered boulevard, which links the shop offices and shopping mall.

In a statement issued last week, Sunway Group chief executive officer of shopping malls, H.C. Chan, said Sunway Giza has already seen a take-up rate of 85 per cent.
He said Sunway Giza will be managed by the same team responsible for the management of the Sunway Pyramid shopping mall in Petaling Jaya, Selangor, the Sunway Carnival in Seberang Jaya, Penang, and the soon-to-be-launched Sunway Velocity in Kuala Lumpur.

On Thursday, a signing ceremony was held between Sunway Damansara managing director Ngian Siew Siong and Village Gourmet Sdn Bhd managing director Ong Kim Too for the latter to operate a supermarket in Sunway Giza.

By Business Times

S. Korean interest in Selangor Science Park

A South Korean property firm may invest RM1.5 billion to build hotels and a theme park in Selangor Science Park 2 (SSP2), an integrated development in Cyberjaya.

A source said the developer had expressed interest to buy land from the Selangor State Development Corp (PKNS).

"The investors met PKNS officials two weeks ago for a discussion. They have seen the layout and concept of SSP2 and like it," the source told Business Times.

The source said the developer also wants to build resort-style homes and plans to market the properties in Asia-Pacific, Europe and the US.

If the deal materialises, it will be the fourth for PKNS this year.

On August 21, PKNS signed agreements with property developer Metro Kajang Holdings Bhd, investment group Andaman Group and Q-Cells, a Germany-based solar cell manufacturer, to develop land at SSP2.

They plan to collectively invest RM6 billion in SSP2.

PKNS general manager Othman Omar had said that more investments were expected to come from Singapore, South Korea and Indonesia, and that there were enquiries about SSP2 from the rest of Asia-Pacific.

The 400ha project was launched in 2007, with more than RM600 million spent on infrastructure.

The development plan shows that there will be 108 semi-detached factories and industrial lots as well as 261 shop lots, shop-offices and commercial lots.

It will also feature 9,289 units of workers' quarters, low- and medium-cost apartments, serviced apartments, condominiums, double-storey link houses, semi-detached homes and bungalows, covering 12 per cent of the total development area.

The remaining 38 per cent is for recreation and sports facilities, parks and green area.

SSP2 is projected to create 20,000 jobs and spur Selangor's economy.

By Business Times (by Sharen Kaur)

Resort spending US$9m to upgrade, promote property

The five-star Nikko Bali Resort & Spa said it will maintain its 2009 budget of US$9 million (RM31.77 million) to upgrade and promote the property, despite poor global market sentiments.

General manager Jean-Charles Le Coz said Nikko Bali has so far spent US$7.5 million (RM26.48 million) to refurbish all the 386 rooms and two food outlets.
The refurbishment was completed in June and it was the first exercise by the 13-year old resort.

Le Coz told Business Times that it will be spending another US$1.5 million (RM5.30 million) to promote Nikko Bali in Asia Pacific and Europe.

“Whether there is a downturn or not, the property (Nikko Bali) has to look good and be marketed well. We did this last year and it has yielded positive results. We are expecting to achieve a revenue of US$17 million (RM60.01 million) this year,” he said.

Le Coz said he believes Nikko Bali can achieve a higher revenue next year as it aggressively promotes the meeting, incentive convention and exhibition (MICE) business.

“We are a five-star property in a holiday destination and therefore have to offer the best services. If we need to spend money for the betterment of the property, we will do it. We will not compromise on service either,” he added.

Le Coz is no newcomer to Bali, having held consultant and managerial positions in various resorts and opening innovative properties such as Novotel Benoa Bali and Haris Resort Kuta.

He earned his degree in Hospitality Management at the Ecole Hôtelière de Lausanne in Switzerland.

His background spans 14 years in the international hospitality arena including Geneva, Paris, Phuket, Jakarta and Lausanne.

By Business Times

Saturday, August 29, 2009

Little gems in the outskirts

Small-scale developers weather the crisis well.

Very often, when one considers a property for investment, one tends to consider those in the city. And when one thinks of developers, there is a tendency to consider the big, established players for fear of projects being abandoned.

But what about the smaller players, some family-based business, in a little town far away from city life serving their community? Where are these companies heading? And how has the turmoil of the past year affected them? Or did it?

Before going further, a big company does not become big overnight. One does not become rich out of the blue. It takes years of savings and investing, wise decisions and many other factors.

From Skudai, Johor to holiday destinations like Langkawi in the north, from Peninsular Malaysia’s largest state to former tin state Perak, these small-scale developers share their views about the community they are building in, and for, and the effects of the global downturn. For three out of four of them, property development is their core business. Because they have years of experience in that community, they know the infrastructure and the market. On the whole, they have weathered the crisis well.

Some, like YNH Bhd, have decided to venture out into the Klang Valley. Others, like Hua Yang Bhd which started out in the Valley, is venturing out to the little areas. Yet others are contended to stay put.

Professionals working in the town centre can also consider Bandar Putra with its exclusive living and pretty surroundings.

To the city

In 2003, a little-known developer from Manjung, Perak, YNH came to Kuala Lumpur. Manjung is about 80km from Ipoh, and is located between the city and Lumut, the getaway point to Pangkor, and Sitiawan.

When it came to Kuala Lumpur, its choice of land was telling – Mont’Kiara and the Jalan Sultan Ismail vicinity. The family business was seeking its fortune in the city but it was not leaving behind its roots in Perak; it was, in fact, adding another pillar to its foundation.

Come the fourth quarter, YNH will be handing the keys to buyers in both projects, Fraser Place, next to Wisma Hong Leong, in the city and Cerian Kiara in Mont’Kiara.

(Because Fraser Place is a project with a commercial title, it is not governed by the Housing Developers Association’s mandatory three-year completion deadline.)

Formerly known as Yu Neh Huat Bhd, the company was incorporated in 1985 as a family business. The late Datuk Yu Neh Huat was a farmer and livestock keeper. The company began constructing its first project – 10 units of double-storey shop offices – in the late 1980s.

Its financial controller Chan Yan Meng says the company’s turning point came in 1995, with the Manjung Point township, a project of about 1,000 acres. It still has about 700 acres that are yet to be developed.

“Although we may have ventured out to Kuala Lumpur, Manjung Point will continue to be our reference point. Today, YNH is a trusted and one of the largest developers with a strong base here,” says Chan, who has been with the company since 1990. Its staff strength has grown from 30 in 1990 to 250 today.

Most of its customers are civil servants – mainly those at the naval base located there and teachers – and small holders.

With 45% of its revenue coming from there and the rest from its projects in Kuala Lumpur, the company has diversified its market with a foot in the city.

There are dozens of small-scale developers in and around the peninsula, Sabah and Sarawak. Many of them have humble beginnings and are contended to be where they are. In some ways, the economic downturn has not really affected them as much as the big boys.

Says an analyst who declined to be named: “Housing development is still very much location based. If a developer is from a small town, it has to consider the local economy and demographics in that area.

“In such a situation, there may be a tendency to expect sales to be poor because of the global economic woes but this need not be the case. Away from the city, these smaller developers have a captive market and they will still do relatively well. In terms of sales and earnings, it will be stable.

“YNH, for example, sells to civil servants, and makes an average RM40mil to RM50mil sales annually in what many would consider as remote areas. Likewise, Pasdec Holdings Bhd in Pahang.

“In Sabah, property sales are doing well in plantation areas because of the significant price of palm oil. So it really depends on locality. While some – Hunza Properties Bhd from Penang and YNH who have made their way into the city the last several years – there are many others who are contented doing what they are doing in these smaller towns.

“A big deterrent is the price of land in the Klang Valley, which is not representative of the whole country.”

Klang Valley-based Hua Yang is scouring for projects outside the Valley where land prices are cheaper.

The rural pull

Like YNH, Hua Yang is also a family-based business. Its Seri Kembangan mixed development is by far the largest project in its stable. Its chief operating officer Ho Wen Yan says it would like to focus on other markets in Perak, Johor and Seremban.

Says Ho: “Outside the Klang Valley, our focus is mass housing in integrated townships; in Seri Kembangan, it is high-rise residential units.”

He says the affordable mass market segment is the company’s core focus and contributes the bulk of Hua Yang’s revenue. In terms of customer demographics, most of them are first-time buyers comprising young couples who buy for occupation.

“In the city, the story is different. There is the investor group who buys to sell, or to rent. So the present lull is an opportunity to grow our presence.

“The bigger boys have gone into niche housing, resulting in a lack of affordable mass market housing in the RM90,000 to RM380,000 range. Our opportunity is to tap into this market,” Ho says.

The company plans to launch several developments in the next six to nine months in Seremban, Senawang and Johor Baru amounting to about nearly RM120mil. Its Sg Besi project, comprising residential, commercial and retail, has a GDV of RM550mil.

It is also pretty upbeat about its financials for 2010 with revenue of RM100mil in 2009, RM60mil in 2008 and RM63.5mil in 2007.

In Pahang, the largest state in Peninsular Malaysia, land is in abundance. This is Pasdec Holdings home turf. CEO Mohd Khairuddin Abdul Manan says the company is best known for medium-cost houses comprising mainly single-storey terrace and semi-detached homes, which contribute 60% to the group’s turnover.

Besides housing development and management, the group is also involved in construction, the manufacture of bricks and trading in building materials.

The group recorded improved sales of its residential properties from RM32mil in 2007 to RM64.8mil in 2008. The projected sales for 2009 is RM81.8mil. The group has 2,500 acres of land, 90% of which are in Pahang. Pasdec expects revenue and profit to be affected due to market condition.

Says Khairuddin: “Results for the first half of the year indicated a drop in our targeted turnover by 37%, we anticipate unfavourable results for the second half of the year. But we will look for ‘wow’ factors’, like public infrastructure and other amenities.

“We expect caution and perseverance for the residential market owing to the economic turmoil until the year-end.”

The total GDV of the company’s five flagships projects, which are located in Kuantan, Pahang is RM1.98bil.

Further north, Thong Sin Development Sdn Bhd has made Langkawi and Cameron Highlands its playing field. The company is best known for building apartments and serviced apartments, which contribute 70% to the company’s revenue. It has some double-storey and semi-detached units scattered about but overall, its forte is apartments.

Born and bred in Penang, and having been in the business for the past 30 years, its managing director K. C. Tan is familiar with the infrastructure and the market he is operating in.

The glass bubble lift overlooking the pool in Century Suria condominium.

“The global downturn did affect us, but not too much. Century Suria condominium in Langkawi saw a drastic drop in response from foreign purchasers as a result of the global woes. Since second quarter 2009, sales have picked up for all the projects and continue to look encouraging from local buyers. We have 17 acres in Kuah, Langkawi and 2.5 acres in Cameron Highlands and we expect things to be stable and encouraging in the coming months,” he says.

By The Star (by Thean Lee Cheng)

Developers foray into boutique development

Valencia residents enjoy a private 9-hole golf course and country club.

The concept of boutique developments is fast becoming an attraction in the property market nowadays.

Gamuda Land Sdn Bhd managing director Chow Chee Wah says usually, the design of a boutique development is for the middle to high-end housing, catering to a special targeted niche market that has a discerning taste and appreciation for resort lifestyle living.

“Gamuda Land has a few boutique developments, namely Valencia in Sungai Buloh, Jade Hills in Kajang and Madge Mansions in Kuala Lumpur. Both of these landed developments – Valencia and Jade Hills – are within the 300-acre range, while Madge Mansions, our high-end condominium is on 2.16 acres,” he says in an email.

Chow defines Gamuda Land’s concept of a boutique development as one with a low density ratio and a host of other Oooomph! factors.

“It has to be very exclusive, very private with top security features in placed. Added to that is the ambience and this includes a host of criteria – quality products, safety and security, tranquil environment, well-equipped facilities, status and class, and a good return on investment, he says.

He says Gamuda Land first ventured into boutique developments in the year 2000 with Valencia.

“This luxurious project became the first boutique development in Malaysia with a private 9-hole residents’ golf course and country club. Valencia soon became a much sought after address because it offers the perfect combination of living in a landed property with condominium living facilities.

“It is a private, exclusive development within an environment equipped with the best resort facilities for a healthy and secure living lifestyle,” he says.

Facilities and ambience aside, Chow says a boutique development is also about location. It has to be a prime address that an owner will be proud of.

“It is about being a class above others,” he says.

“Gamuda Land decided to undertake this type of projects because we saw a growing demand and need for it. In urban areas, especially in the Klang Valley, the growing population of the affluent and elite group are looking for residences that meet their needs and desires for fine resort living.

“Valencia and Jade Hills testify to our success in this boutique home category. More than 60% of Valencia purchasers are repeat buyers. Thirty percent of Valencia’s residents today are expatriates, a large majority of them are Europeans. This means our boutique developments have become prime investments,” he says.

Because developers saw the popularity of boutique properties, they are now beginning to offer boutique commercial developments.

IRDK Land Sdn Bhd director Datuk Kevin Woo says such developments are not a trend but a need as the market evolves.

“The difference between boutique commercial developments and other commercial developments is the concept and setting of the development. It gels the business with lifestyle elements by providing and facilities,” he says.

The company is developing a boutique commercial development called Alam Avenue in Shah Alam, comprising 51 commercial units on three-storey intermediate shop offices and five-storey corner and end units.

“The ground floor will have a floor to ceiling height of 4.5 metres (15 feet). It will be generously fitted with high quality zinc aluminium roller shutters of 10 feet high to give maximum advertising and showroom presence.

These shops will have generous 17-feet verandas and walkways frontage to accommodate alfresco dining and cafes. They will be tiled luxuriously with homogenous floor tiles. Decorative light fittings will be installed at the walkways to enhance the ambience and to exude on easy flamboyant lifestyle where business and leisure meet in a quaint setting,” he says.

The gross development value of the project is about RM100mil. It is scheduled to be completed by December next year.

A green development is another concept introduce by developers. Sentral City (M) Sdn Bhd has gone one step further by incorporating a touch of Zen in its green concept development in Puchong Zen Residence@Asplenium condominium.

General manager Pang Swe Haw says the word Zen has been widely used in different industries like food and beverages but nobody has attempted to define the true meaning and essence of Zen.

“Zen is a living philosophy which centres around the simplicity and beauty of nature around us.

“In Zen Residence, we aim to create landscape and architecture settings that encourage the residence to take a longer and closer look at the environment around them and hope they will be able to develop a greater insight and appreciation of nature.

“So, we may not be the one who first use the word Zen, but we are the first to really explore and implement the Zen living concept,” says Pang.

With GDV of about RM96mil, Pang says Zen Residence has achieved close to 90% sales to date. The company will continue to explore this concept in their next project that is currently on the drawing board.

By The Star (by Edy Sarif)

Talk to your buyers

Customers quite spontaneous to share their views if sought

The property market is set to move into higher gear after the dreary days of project delays and deferment of the past one year.

Despite the seemingly brighter days ahead, developers are treading carefully and have not completely lowered their guard on the market’s passiveness to avoid an over built situation that will send property prices southwards.

While mulling over whether it is still too early to launch their projects, especially if they are green field developments that will take many years, developers should not completely withdraw from the market. Instead, they should stay in touch with their potential and existing buyers.

Engaging their customers will enable developers to stay on top of things and know what their buyers want and plan their projects accordingly.

Buyers’ needs are always evolving and developers who take the trouble to stay in touch with them will benefit tremendously.

After all, customers know best what they want and they will be quite spontaneous to share their views if sought.

They would appreciate developers who keep them posted on new initiatives and seek their views, especially for product development and improvement.

These days, it is not unusual to receive newsletters and project brochures from developers. There are also announcements on new upcoming project launches to promote repeat buying.

With the Internet, developers should go a step further and interact directly with buyers. By opening up the communication channel through a well managed and user friendly website, a participative virtual community will emerge among residents and buyers of their projects.

An active two-way communication flow and interaction will promote a more well informed and knowledgeable society.

In the process, developers will be able to get invaluable information first hand from their customers on how to design, or redesign, their projects.

Developers who value their customers’ views and input will be able to have the right products in place, whether it is during the good or bad times.

The tag line for developers these days should be to deliver real value for customers. A clear focus on customers will certainly go a long way to earn their lifetime loyalty.

It is still very much a buyer’s market and property buyers now have many choices to choose from.

Instead of building rows and rows of standard housing units or shop lots, it will be good if developers allow buyers to have some degree of flexibility in the interior layout plans of the property they are buying.

For a start, this can include the number of rooms and their sizes, choice of colours, and materials used, to meet the different needs and budgets.

Although such flexibilities are only practised in very high-end housing estates now, especially for houses with price tags of at least a few million ringgit onwards, the developer that is willing to extend this “magnanimous” gesture to the medium-range projects will, without a doubt, become an instant favourite.

Many Malaysians are still practising the extended family tradition with their aging parents and grown-up children staying together in the same house, and catering to their differing needs will be a good act of corporate social responsibility on the developer’s part.

Going by the earning capacity of the majority of average Malaysians, buying a decent house priced at slightly over RM300,000 is still a big commitment.

To borrow for a property priced that cost RM300,000, a couple will need to have at least a combined monthly income of RM10,000.

So the onus is on developers to offer greater value to house buyers and any gestures that show that they truly take great care to plan their projects to meet their buyers’ needs will earn them a more loyal following.

Village or “kampung” environment has always been the preferred for many Malaysians until quite recently when rapid urbanisation and massive infrastructure projects changed the people’s living landscape and way of life.

To many, it is still their preferred living environment as they like the stability of staying “grounded” in landed housing units and enjoy the closeness and camaraderie of their fellow villagers.

To promote closer kinship among the people, one of the ways is to replicate the village–like features and environment in our new townships.

■ Deputy news editor Angie Ng believes that a return to more community-centric developments will be good to promote and revive a stronger bonding among the people, in line with the 1Malaysia aspiration.

By The Star (by Angie Ng)

Friday, August 28, 2009

MK Land returns to the black

MK Land Holdings Bhd returned to the black with a net profit of RM18.3 million in its full year to June 30 2009, and it expects to do even better this year, driven by higher property sales.

The developer, which suffered a loss of RM60 million in 2008, said its turnaround was due to strong property and land sales.

"The strategies which we put in place during the recession has paid off and we are optimistic of seeing continuous growth in the current financial year," said its executive chairman Tan Sri Mustapha Kamal Abu Bakar.

He said the company is seeing robust growth in sales despite the economic slowdown due to its properties' strategic location and also a more stable property market.
"Another contributing factor is the success of our turnaround plan or renaissance which took place early July 2008," Mustapha Kamal told reporters at a media briefing in Petaling Jaya, Selangor, yesterday.

MK Land's revenue for 2009 stood at RM246.5 million as against RM137 million previously.

In the 12-month period, the group recorded sales worth RM136 million compared with only RM93 million previously.

Mustapha Kamal is confident the property market will continue its recovery over the next 12 to 18 months.

"With a total landbank of 2,833.6ha, we have enough landbank to last us for the next five years," he said, noting that in the first three months alone until August, the group already achieved sales worth RM271 million.

The group has a total gross development value of RM19.8 billion.

By Business Times (by Azlan Abu Bakar)

Sunway Damansara to open new retail centre

COME December, Sunway Damansara Sdn Bhd, a property development company, will open a RM141 million lifestyle retail centre in Kota Damansara.

Sunway Group of Shopping Malls' Chief Executive Officer H.C. Chan said Sunway Giza, the first lifestyle retail centre of its kind, would serve as a convenient shopping and dining area for the residents in the vicinity.

Saying that retail space was already 85 per cent taken up, he added that Sunway Giza would be managed by the same management team of Sunway Pyramid shopping mall.

Sunway Giza will consist of 48 units of shop offices, a three-storey lifestyle shopping mall and basement parking with 800 bays.
"We are assured of the retail centre's success as the area has a population catchment of 700,000 people from Subang Jaya, Bangsar, Kelana Jaya and Mont Kiara, all within a nine kilometres radius", he said in a statement today.

Sunway Damansara is a joint-venture between Sunway City Bhd and Perbadanan Kemajuan Negeri Selangor.

By Bernama

PJ Dev registers lower Q4 pre-tax profit

PJ Development Holdings Bhd has recorded a lower pre-tax profit of RM18.264 million for its fourth quarter ended June 30, 2009, compared to RM22.887 million in the same period last year.

Its revenue rose to RM168.208 million from RM164.845 million previously.

Basic earnings per share stood at 2.45 sen from 3.78 sen previously.

For the financial year, the group's pre-tax profit dropped to RM37.450 million from RM122.566 million in the previous year.
Its revenue declined to RM628.731 million from RM680.029 million previously.

By Bernama

China plans to let funds, brokers launch REITs

SHANGHAI: China plans to allow fund houses and brokerages to launch real estate investment trusts, or REITs, that would be publicly traded on the Shanghai and Shenzhen stock exchanges, two people with direct knowledge of the proposal said.

REITs should be launched in the form of closed-end funds via special asset management firms, in which property developers can also own a stake, according to draft rules issued by The China Securities Regulatory Commission (CSRC) for consultation, the people said.

The draft rules are subject to changes and it is not clear when they will be officially published.

China's bourses are competing with the country's interbank market in launching China's first REITs as soon as this year, as Beijing accelerates financial reforms to support a slowing economy and the property market.
"REITs are liquid investment instruments that would enable individuals to invest in properties even with only a few thousand yuan," said Alex Wang, real estate lawyer at Paul, Hastings, Janofsky & Walker LLP.

He added that REITs would mean a new source of funding for developers and may create a new exit channel for foreign property investors in China such as Morgan Stanley.

A REITs market in China would also generate new revenue streams for fund companies and brokerages, such as Haitong Securities Co and Harvest Fund Management Co.

But analysts noted that a shortage of qualified properties, uncertainty over tax treatment and fears of irrational price swings all threaten to delay the launch of REITs in China.

REITs, which invest mainly in commercial and industrial properties and pay most of their rent as dividends, have been long-established in the US and Australia but only caught on across Asia over the last five years.

China's stock exchanges appear to be lagging the interbank market in the race to pioneer the REITs market.

The People's Bank of China plans to submit a proposal to the State Council, or Cabinet in September, seeking approval for the launch ofREITs in the interbank market by the end of this year, the Caijing magazine reported on Monday.

Developers including Shanghai Zhangjiang Hi-Tech Park, Shanghai Jinqiao Export Processing Zone Development Co Ltd, Shanghai Lujiazui (Group) Ltd and Shanghai Waigaoqiao (Group) Co Ltd are likely to raise money via REITs in a pilot programme, Caijing reported.

Creating a domestic REITs market was part of a financial reform package unveiled by the government last December to aid the rapidly slowing economy and help developers, which at that time suffered from stagnant sales, tight credit and a frozen IPO market.

The real estate market has rebounded sharply this year after China unveiled a massive stimulus plan and boosted lending, making developers less willing to sell high-yielding properties.

"One major problem is that there's a shortage of qualified properties to be bundled into REITs," said one person familiar with the situation.

He added that for REITs to be attractive enough to investors, the underlying assets must generate an annual rental yield of 7 to 8 per cent.

It is a challenge especially at a time when the global economic downturn saps demand for lodging and office space in China, with prime office rentals in major cities falling in the first six months, real estate consultancy CB Richard Ellis said.

By Reuters

Wednesday, August 26, 2009

Penang raises density for property development

GEORGE TOWN: The state government has raised the density for property development in Penang, which will bring down land cost and stabilise property prices, said Hunza Properties Bhd executive chairman Datuk Khor Teng Tong.

Datuk Khor Teng Tong says it will help arrest the escalation of property prices.

“The state government recently decided to increase the density to 280,000 sq ft in built-up area from 90,000 sq ft per 100,000 sq ft of land.The decision to increase density will allow developers to build more, hence giving consumers more choices.

“It will also help arrest the escalation of property prices over the next few years,” he said at a company briefing for the media, analysts and bankers.

On the group’s projects on the island, Khor said Hunza would finalise the design plans for a “green” apartment building project on a 4ha site soon.

The apartments would have built-up areas ranging between 1,300 and 1,800 sq ft

The project was expected to contribute strongly to the bottom line of the group for the financial years ending 2011 and 2012, Khor said.

On the Gurney Paragon project, Khor said the designs and plans for the shopping mall had been finalised and submitted to the relevant authorities for approval.

“We hope to start work by early 2010,” he said.

The seven-storey shopping mall will have a gross built-up area of 1 million sq ft, of which 650,000 to 700,000 sq ft would be lettable.

On the property market in Penang, Khor said property was currently in short supply.

“The shortage of supply is mainly due to a slowdown by developers. Not many new housing projects have started in the past one year.

“Furthermore, work on projects in the state has to stop at 6pm, which will delay the delivery of units, resulting in lower supply and the increase of property prices,” he said, adding that the local authorities needed to speed up approvals for new housing projects to meet market demand.

For the fiscal year ended June 30 (FY09), the group posted RM27.6mil net profit on revenue of RM91.8mil compared with RM48.4mil and RM245mil respectively in FY08.

By The Star

UM Land ties up with Tradewinds Johor

PETALING JAYA: United Malayan Land Bhd (UM Land) has proposed a joint venture with Tradewinds Johor Sdn Bhd to govern Extreme Consolidated Sdn Bhd (ECSB), and to participate in a property development project in Kulai, Johor.

Tradewinds Johor is an indirect wholly-owned subsidiary of Tradewinds Corp Bhd.

In a filing with Bursa Malaysia yesterday, UM Land proposed to purchase the remaining 49% of the total issued and paid-up share capital of ECSB in a call option agreement with Tradewinds Johor.

And UM Land – through wholly-owned subsidiary ECSB – has proposed to acquire a piece of freehold 629.25-acre land in Kulai from Ambang Budi Sdn Bhd and Hartaplus Realty Sdn Bhd for RM233mil cash upon the terms and conditions in the sale and purchase agreement dated Feb 12.

UM Land will hold an EGM in respect of the proposed joint venture and acquisition on Sept 10 in Kuala Lumpur.

By The Star

Malaysia's Renexus proposes to build houses in Pakistan

Local construction firm, Renexus, has submitted a formal proposal to the Pakistan government for the construction of 20,000 low-cost houses in each of its eight major towns.

Pakistan High Commissioner to Malaysia Lt-Gen (Rtd) Tahir Mahmud Qazi said the state land in major towns - Lahore, Rawalpindi, Multan, Bahawalpur, Faisalabad, Sargodha, Gujaranwala and Sialkot - would be used to build quality houses through private sector participation and financial institutions.

Describing Renexus' proposal as the beginning of a mutually beneficial cooperation between the two countries in the housing sector, Tahir is inviting other Malaysian companies to take full advantage of the Pakistan government's vision to provide decent housing to its low-and middle-income families.

"The supply and demand gap in the housing sector will be met by public and private partnerships and the government will serve as enabler, regulator and facilitator," he said in a statement recently.
For major investments, Tahir said it would be tapped from the private sector, both local and foreign and financial institutions.

Commercial Counsellor at the Pakistan High Commission, Waijullah Kundi, said the proposal titled "Green Township for the Future" envisages each satellite township complete with commercial, educational, institutional recreation, spiritual, healthcare, and infrastructure services.

Waijullah said the development would incorporate Renexus' latest state-of-the-art smart building system and other industrialised building methods to ensure good quality workmanship and speedier construction time.

The Punjab province, with a population of 82 million, is facing a shortage of five million houses.

It has an incremental demand for 700,000 units a year against the annual construction of 150,000 units, leaving a huge gap and as a result creating immense opportunities for construction firms.

By Business Times (by Rupinder Singh)

World housing market showing signs of recovery

KUALA LUMPUR: The world's housing markets are showing signs of recovery, with seven countries having emerged from the house price slump, according to Global Property Guide.

After experiencing declines in 2008, house prices in China, Portugal, Australia, New Zealand, France, Sweden and Hong Kong rebounded during the latest reported quarter, 2Q 2009.

In its survey of world-wide house price indices, issued on Aug 26, it said however, most countries suffered sharp house price falls during the year to end-Q2 2009, hence the general situation remains negative.

The Global Property Guide uses price-changes after inflation, giving a more realistic picture than the (more upbeat) nominal figures usually preferred by real estate agents.

In Shanghai, China, house prices rose 1.96% during the year to end-2Q09, with most of these gains entirely during 2Q when Shanghai's house prices rose 2.09%.

China's house prices started falling in 2Q08, but a strong increase in government spending revived the housing market and the economy. This saw the country recording a 7.1% growth in GDP in 1H09. Chinese property prices are widely expected to increase further.

Average house prices in the Algarve, Portugal, at €1,429 per square metre, were up by 2% in 2Q09. House prices in Portugal as a whole rose 1.01% in 2Q and were down only 0.43% on the year to end-2Q09, compared to minus 7.24% during the year to end-2Q08. New CONSTRUCTION [] orders in Portugal increased 12.3% in 2Q09.

Global Property Guide said in Australia and New Zealand saw house price increases of 3.73% and 3.31% respectively in 2Q09. All regional capital cities in Australia registered quarterly house price increases, ranging from 2% to 5%. However, over the year to Q2 2009, there was a price decline of 2.80% in Australia.

In New Zealand, the annual change was still negative at minus 3.07% in the year to end-2Q09. But in July 2009, New Zealand had the first yearly house price increase since 2008.

After falling for the last five quarters, house prices in France were up by 3.31% during Q2 2009, thanks to government subsidies. In Sweden, house prices were up by 3.16% during Q2 2009. Hong Kong's house prices increased by an average of 8.9% during Q2 2009.

As for the US housing market, it was stronger, as reflected in the Case-Shiller house price index, which rose 0.35% in 2Q09, from a decline 6.46% in 1Q09.

Year-to-date in 2Q, house prices were down 13.96%, an improvement from 18.51% decline on-year to 1Q09.

The FHFA's purchase-only index was however down by 1.74% during 2Q09, somewhat worse than the 0.04% drop in 1Q09, so the signals in the US are mixed.

Year-to-date in 2Q, seasonally-adjusted prices fell 5.03%.This was a lesser fall than in the year to end-Q1 (down 9.16%) and than in the year to end 4Q08 (down 9.69%) (all figures inflation-adjusted).

However, the Global Property Guide said some countries avoided the crunch.

Israel's housing market has continued to sail through the global recession. The average price of houses rose 8.40% on-year to end-2Q09. But the quarterly increase in 2Q09 was down to 1.02%, a drop from 5.52% in 1Q09.

Switzerland saw an increase of 4.90% over the year to end-2Q09. However, house prices barely increased during 2Q09.

A key indicator of improvement is the market's momentum, that is the number of countries that did better this year, than during the previous year.

Nine countries improved their on-year performance to end 2Q09, compared with a year ago. In contrast during the year to end-1Q09, only six countries did better than the previous year.

But many countries are still suffering. The house price index for Dubai, UAE, fell 49.9% during the year to end-2Q09. But quarterly data indicates Dubai's downward house price spiral is moderating.

House prices fell 8.92% in Q2 2009, much less than the 42% drop in 1Q09.

Double digit year-on-year declines were also experienced in Bulgaria, Singapore, Iceland, UK, Japan, Denmark and South Africa. Most recent quarter declines in these countries range from 2% to 10%.

By The EDGE Malaysia (by Joseph Chin)

IJM expects to keep orderbook above RM4b

Malaysia's second biggest construction firm aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia

IJM Corp Bhd, the country's second biggest construction company, expects to maintain an order book of more than RM4 billion as it bids for sizeable government contracts locally and abroad.

It aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia. Governments around the world are spending more money to pull their economies out of recession.

"We would replenish the order book so that we maintain about RM4 billion plus at any one time. Since our chewing rate is about RM200 million a month, we have to (replenish) about RM2 billion plus a year," said IJM Corp managing director and chief executive officer Datuk Krishnan Tan Boon Seng.

He was speaking to reporters after the group's annual and extraordinary general meetings in Subang Jaya yesterday.
Some projects IJM Corp is eyeing include the new permanent low-cost carrier terminal in Sepang and the light rail transit (LRT) extension works in Kuala Lumpur.

"We do a broad range of work from civil engineering works to building. You will see us participating where there are sizeable jobs," said Tan, adding that the company was bidding for works here and abroad.

Tan said tenders for both the LCCT and LRT projects have yet to be called.

"For the LCCT, the pre-qualification process has been called and we have also submitted. We will look to bid for the sizeable packages (once the tender is open)," he said.

Tan also said that there will be other tenders from the Pahang-Selangor Water Transfer project, including the dams, intakes, ancillary infrastructure and the treatment plant.

On IJM Corp's property division, Tan said there are strong property sales yet to be billed and expects the division to perform decently given the wide range of products - retail, industrial, medium- and high-cost developments - in high density locations.

Meanwhile, the group saw its first quarter net profit decline 22.5 per cent to RM70.8 million while revenue slipped 5 per cent to RM1.16 billion.

In a Bursa Malaysia announcement, it said the lower earnings for the three-month period to June 30 2009 was due to lower contributions from its plantation division as crude palm oil prices fell.

Also, the construction division suffered lower margins from old contracts affected by higher costs in the previous year and higher financing costs incurred in India.

The plantation division earnings dipped as the group expedited its fertiliser application and repair cost for infrastructure due to heavy rainfall and floods.

"We don't think that the first quarter is reflective of the following quarters," said Tan. He added that the current fiscal year ending March 31 2010 would be similar to 2007, where the first quarter was lower but later quarters showed improvements.

By Business Times (by Jeeva Arulampalam)

Sunway bidding for deals worth US$5.7b

Sunway Holdings is bidding for foreign and local contracts worth about US$5.7 billion (RM20 billion) as big spending plans by governments boost construction activity globally.

"Including what we are going to bid, it's about RM20 billion," managing director Yau Kok Seng said on Monday.

"Our past track record (for successful bids) is about 10 per cent, which means over the next six to 12 months, we should be able to win at least RM2 billion (worth of jobs)," Yau said in an interview.

Sunway has submitted bids for construction jobs worth about RM1 billion in India. The company, the seventh-largest builder in the country with market value of US$224 million (RM785 million), is also confident of obtaining repeat jobs within the US$25 billion (RM87.75 billion) Arzanah Development in Abu Dhabi.
"We have been shortlisted to tender for Phase 2 which will be launched in the near future," said Yau.

In May, Sunway said 75 per cent-owned Sunway Construction has been awarded a RM326 million contract for the Arzanah Development.

In Malaysia, the company is bidding for jobs under a multi-billion ringgit low-cost carrier terminal project, said Yau.

Construction stocks are the best performers on the local bourse so far this year, as investors bet that massive government pump-priming will boost builders' earnings.

Malaysia has one of Asia's largest stimulus plans, worth RM67 billion.

The government is expected to launch later this year major infrastructure projects including a light rail line extension and the RM2 billion low-cost carrier terminal project.

Shares in Sunway have more than doubled so far this year, outpacing its larger rivals such as Gamuda and WCT. The Kuala Lumpur Construction Index, made up of 42 stocks, has risen 36 per cent.

Sunway, which also has interests in property development and quarrying, is one of three bidders for German cement maker HeidelbergCement's Malaysian assets.

HeidelbergCement is looking to sell the Malaysian assets, which have also drawn interest from private equity firms, for at least US$250 million (RM877 million), two sources said in June.

"They have not officially informed us yet, but we should know soon," said Yau. The potential acquisition is not expected to stretch Sunway's balance sheet as it seeks to further reduce debts by selling off non-core assets, he said.

"The way we structure the acquisition, there is a minimum capital requirement," he said.

Sunway wants to cut its gearing ratio to 0.5 times over the next two years from about 0.8 times currently, said Yau.

"Although it's our vision to regain our pole position (in the quarry business), we are not keen to compete with someone who's prepared to pay (a) ridiculous price," said Yau when asked if he was confident of securing the assets.

By Reuters

Tuesday, August 25, 2009

IJM Land to launch properties worth RM1bil

PETALING JAYA: IJM Land Bhd, the listed subsidiary of construction firm IJM Corp Bhd, plans to launch over RM1bil worth of properties in the financial year ending March 31, 2010 (FY10).

So far, according to managing director Datuk Soam Heng Choon, major launches include The Light Linear in Penang with a gross development value (GDV) of RM200mil, Nusa Duta in Johor with a GDV of RM78mil and existing phases of Seremban 2 with a GDV of RM32mil.

He said the company would launch more than 20 projects in FY10. Last year the company launched RM600mil worth of properties.

Datuk Krishnan Tan ... ‘Over time, IJM Land will take over projects now under the IJM Corp umbrella.’

Meanwhile, IJM Land chairman Datuk Krishnan Tan said recent launches especially in Penang had been very well received by the market. “We’re looking forward to better times in line with market sentiments,” he told reporters after the company AGM yesterday.

However, Tan cautioned that these launches, which would involve the company’s existing and new projects throughout the country, would very much depend on economic conditions. “The realistic approach is to see how fast you can run in the time given and at the same time have a clear view of the horizon,” he said on how the company would weather another economic contraction.

Tan said the major obstacle was if consumer sentiment fell should the jobless rate in the country rise on a less rosy economic outlook. “Let’s hope there’s no double dip,” he said referring to the country’s economic performance.

Tan said conditions going forward were bright with ample liquidity and lower interest rates while expectations of increasing property costs brought on by higher building material and land prices would also spur the market.

On overseas projects, he said IJM Land would spearhead future projects of the group. Tan, who is also chief executive officer and managing director of IJM Corp, said over time IJM Land will take over projects now under the IJM Corp umbrella.

He said there were plans to revive Talam Corp Bhd’s Changchun, China mixed development project, in which IJM Land has a 50% interest, with a launch slated for next year. The project is located in China’s automotive city and has an estimated GDV of RM500mil.

IJM Corp has a 25% stake in Kumpulan Europlus Bhd, the holding company of Talam. Tan said IJM Land was still scouting suitable sites for a project in Vietnam with Ho Chi Minh City as the most viable location.

He said the company had an undeveloped landbank of 5,300 acres with a potential GDV of RM18bil over a 15-year period.

By The Star

IJM Land to unveil RM1b worth of properties

SUBANG JAYA: IJM Land Bhd plans to launch some RM1 billion worth of properties across Malaysia in its current financial year ending March 31, 2010 (FY10) capitalising on improving sentiments in the local real estate market.

The value of the developer’s FY10 launches is two thirds more than the estimated RM600 million unveiled a year earlier.

The RM1 billion worth of launches would comprise about 20 projects, of which more than RM300 million had been introduced to buyers so far, IJM Land managing director Datuk Soam Heng Chun.

These include about RM200 million worth of properties at its “LIGHT Waterfront Penang” mixed development, RM78 million at its niche medium-high to high-end residential project “Nusa Duta” in Johor, and RM32 million worth of shops in Seremban.

“We need to deliver these units to the buyers in two to three years,” Soam told reporters after the company’s shareholders’ meeting here yesterday.

Its parent company IJM Corp Bhd’s chief executive officer and managing director Datuk Krishnan Tan Boon Seng said: “We are looking forward to better times with the improving sentiments in the property market.”

IJM Corp now owns 62% of IJM Land, down from some 75% in September 2008, following share placement exercises in the latter.

The share placements in IJM Land were intended to boost the liquidity of the stock, and increase the number of institutional shareholders in the firm which was conceived following the union between RB Land Holdings Bhd and IJM Properties Sdn Bhd.

Abroad, the firm is undertaking its maiden overseas project — a RM500 million upmarket residential and retail initiative in Changchun, the capital city of Jilin province in northeast China. Shares of IJM Land added five sen or 2.6% to RM2 yesterday.

By The EDGE Malaysia (by Chong Jin Hun)

Mayland property projects reflect its Midas touch

All projects developed by Malaysia Land Properties have appreciated in value and in some cases risen by threefold

Property developer Malaysia Land Properties Sdn Bhd (Mayland) seems to have the "Midas touch" as all projects developed by it have appreciated in value and in some cases, by threefold.

Mayland, whose projects include the integrated Plaza Damas development in Sri Hartamas, Kuala Lumpur, is confident that this trend will continue for the remaining projects planned at the site.

The entire Plaza Damas project, which started in 1998, is located on a 5.95ha site with Phase 1 and Phase 2 taking up 3.54ha.

Mayland is now developing its RM800 million Plaza Damas 3 that will include serviced apartments and possibly a hotel.
"Our track record has spoken for itself. We do not know of anyone who has bought from Mayland and did not make money. We want our customers to make money," its director Winnie Chiu told Business Times in an interview.

She quoted the examples of its Parklane block of shop offices where 91 units were sold from RM880,000 each in 1998 and today their value has appreciated to RM2.5 million.

Its Waldorf and Windsor apartments in Phase 1, which were sold in December 2007 have appreciated in value to RM240,000 from RM141,000 for the 480 sq ft unit, in less than two years.

Chiu expects the same kind of results for its new launches.

In fact, Mayland's projects are so popular, they are snapped up even before they are advertised. And 50 per cent of its purchasers are repeat customers.

"We sold our 72 units of shop offices in Phase 3 within half a day. It was even before we sent out our advertisement for print," she said, adding that each unit costs RM2.3 million.

According to Chiu, Mayland saw a dip in sales in November 2008, which continued until March this year. However, she is no longer worried as she believes that confidence in the market has returned.

"We are seeing a huge pick-up in sales," she said.

Mayland still has available some 5 per cent of 185 units of serviced apartments in Carlton@Sri Hartamas and 30 per cent of its 230-unit Chelsea@Sri Hartamas for sale.

The pricing for a fully furnished unit starts from about RM820 psf for units measuring 500 sq ft to 955 sq ft.

As part of its plan to make Plaza Damas an integrated development, it is also looking at the possibility of having a hotel in Plaza Damas 3.

Plaza Damas 3 will then be linked by an overhead bridge to Hartamas Shopping Centre and Plaza Damas 1 and 2 within two years.

By Business Times (by Vasantha Ganesan)

Aussie firm seeks Malaysian partner for waterfront jobs

AUSTRALIA's Niecon Development Pty Ltd plans to partner Malaysian developers, including government-linked companies to develop waterfront projects here.

Niecon, set up in 1969 in Australia, is a private company with projects mainly in Queensland.

Its head of international sales and marketing Jo Pavlovich said Niecon is in talks with a few developers but declined to name them .

Pavlovich told Business Times in an interview in Kuala Lumpur recently that Niecon is keen to develop waterfront projects in Sabah, Sarawak and Port Klang to replicate what it has done in Australia.
"We want to develop properties in Malaysia so Australians could buy here. There are great opportunities for Australians to own properties under the Malaysia My Second Home initiative," Pavlovich said.

"Malaysia is one of the strongest country in Asia. There is a good working relationship between Malaysia and Australia and we find it easy to do business here," she added.

Pavlovich said Niecon may form a project-related vehicle with interested developers or landowners to undertake developments jointly, or come in as an equity partner.

She said Niecon is open to options and its role in the developments would be in design, project management and marketing.

Pavlovich said Niecon is also interested to develop luxury residences and office towers in Kuala Lumpur.

The company is currently developing two prestigious projects in Queensland, namely The Oracle in Gold Coast and Nirvana, each worth A$850 million (RM2.51 billion) and A$70 million (RM206.5 million).

Pavlovich said the projects are not designed for first time house buyers but purchasers who buy homes as lock-ups or as a holiday destination.

By Business Times (by Sharen Kaur)

TA buying stake in Singapore hotel for RM635mil

PETALING JAYA: TA Enterprise Bhd has proposed to acquire a 30.65% stake in Singapore-based Quayside Gem Ltd, a company incorporated in Mauritius, for S$260.04mil (RM635.8mil) cash from LaSalle Asia Opportunity II SARL.

Quayside Gem owns Swissotel Merchant Court Singapore, a four-star hotel.

In a filing with Bursa Malaysia, TA Enterprise said the proposed acquisition would be funded from internally generated funds and external borrowings.

“The acquisition is expected to bring synergistic benefits to the group as it will further enhance TA Enterprise’s hospitality operations in major cities around the world and increase its existing portfolio of hospitality properties,” it said.

TA Enterprise recently concluded the acquisition of the 262-room The Westin Melbourne at a cost of A$160mil.

Its earlier venture into Australia was via the purchase of the 362-room Radisson Plaza Hotel in Sydney in the late 1990s for A$115.5mil It acquired its first hotel property in Canada, the 190-room Aava Whistler Hotel, for C$33 million (RM10mil) last December.

Back in Malaysia, TA Enterprise is also building a six-star hotel and a five-star hotel, located directly opposite the Petronas Twin Towers and at the Jalan Bukit Bintang/Jalan Imbi junction in Kuala Lumpur, respectively.

By The Star

VXL Group planning RM25b resort in China

PETALING JAYA: The VXL Group is planning a resort project with a gross development value (GDV) of RM25 billion in China on 100 sq km located about 250km from Beijing.

The project, to be named “Beijing’s Secret Garden” will comprise a mix of tourist-cum- holiday home development is in planning stages now and will begin major construction works next year.

Expected launch for Southeast Asian buyers would be in 2011, founder and president of VXL Group, Datuk Lim Chee Wah said.

The VXL Group, which was originally founded to realise the Malaysian government’s initiatives for technology transfer in the development of information and communication services in the country, is the parent group of a Hong Kong-listed developer VXL Capital Ltd.

Bursa-listed ICT solutions and services provider Dataprep Holdings Bhd is 39.1%-owned by VXL Holdings Sdn Bhd.

Speaking to reporters after Dataprep’s AGM and EGM yesterday, Lim said the project was still in the early stages, with the developer still gauging consumer needs on amenities as well as composition of units at the project.

To be built over the next 10 to 12 years, depending on demand and economic conditions, the resort would incorporate ski, golf and nature resort elements and possibly traditional Chinese medicine facilities.

Lim said the site is near an existing ski resort and that the group would “hook up” with it.

Infrastructure work has already begun on the project but major construction work would only begin next year as winter would soon be approaching this year.

Project costs for the first phase from 2009 to 2012, consisting of golf course, ski resort, single-family and multiple-family residential units is one billion yuan (RM513.86 million).

The VXL Group will call for open tender for contractors in China within this year.

VXL Group vice-president for investment Chang Yee Er said that the developer was looking more for China-based contractors who were familiar with the country.

She said the Chinese government required projects above a certain value to call for open tender.

By The EDGE Malaysia (by Loong Tse Min)

Monday, August 24, 2009

Glomac to sell off block B at Kelana Business Centre

Property developer Glomac Bhd wants to sell off block B of its building at the Kelana Business Centre in Selangor for RM30 million.

This year alone, Glomac has sold two buildings for RM72.6 million, namely the 13-storey Wisma Glomac 3 in Kelana Centre Point and a building at Wisma Glomac.

Glomac is also in the later stages of finalising by the end of the month, a sale of a 25-storey building at its Glomac Damansara project to a government agency for RM200 million.

"We are selling the buildings so we can use the money and develop bigger projects. The proceeds from the sale of the properties will form part of our war chest," executive vice-chairman Datuk Richard Fong Loong Tuck told Business Times.
Glomac slashed its gearing from 0.5 to 0.12 times since a year ago via the sale of assets, he said.

Glomac Tower, located near the Petronas Twin Towers was sold to a Bumiputera firm for RM577 million in December 2007 and proceeds from the sale are being recognised now as construction progresses, Fong said.

Elsewhere, Glomac Galleria in Sri Hartamas featuring 20 units of four-and-a-half-storey shop offices was sold en bloc last year for RM100 million.

On the fresh asset sale, Fong said that despite block B of the building being put up for sale in the market recently, the company has received numerous offers.

Fong said Glomac will do better this year, with net profit and revenue increasing by 10-20 per cent.

For the fiscal year ended April 2009, it posted a net profit of RM32.3 million on a revenue of RM351 million.

"We have had better sales this year, thanks to financial packages that we had launched earlier in the year. We are also getting income from Glomac Tower and Glomac Galleria, and from our Seri Bangi project," Fong said.

Seri Bangi comprises double-storey terraced houses and shoplots worth RM121 million, and half of the residential properties were launched in April and August this year.

"We launched 94 units and 76 units of double-storey terraced houses in April and August respectively and almost 70 per cent were sold within two weeks after the launch. We were caught by surprise.

"We are going to launch the final 88 units early next year, each priced from RM360,000. We are expecting a similar take up," Fong said.

By Business Times (by Sharen Kaur)

Dijaya Tropicana development almost at tail end

DIJAYA Corp Bhd's development at the 250ha Tropicana Golf & Country Resort in Petaling Jaya, Selangor, is almost reaching the tail end, with the scheduled December launch of the RM745 million Tropicana Grande and Tropicana Avenue project.

The two are are among the final three or four developments left in Tropicana.

According to managing director Datuk Tong Kien Onn, there is only 3 per cent or 7.5ha of land to develop in Tropicana. Tropicana Grande and Tropicana Avenue will use 2.08ha and 2.3ha each.

The remaining land will be used to construct purpose-built office towers for investors, Tong told Business Times in an interview in Petaling Jaya.
Tong said Tropicana Grande is the last residential development in Tropicana and he is expecting brisk sales at the launch as it has ready buyers.

Tropicana Grande will featuring four crystalline blocks. It will offer 300 units, priced from RM600 per sq ft, Tong said.

"We are optimistic of sales. The market is improving and there is demand for properties overlooking a golf course. Our pricing is less than half of what is being offered at the KLCC area," Tong said.

Dijaya is targeting existing Tropicana home buyers, and investors from Singapore, Dubai, Hong Kong, South Korea and Japan.

To accelerate sales from foreigner property buyers, Dijaya will launch Tropicana Grande in Singapore in December, Tong said.

Tropicana Avenue, a lifestyle commercial development, will comprise three blocks of nine and 11 storey offices, worth RM205 million.

There will be 359 shop offices and 38 loft offices parked in seven to nine floors, that will seat on top of 50 retail lots in two floors.

"At the moment, we are looking to lease the retail units to control the mix so we can create a lifestyle for our buyers. We will be selling the office suites at RM350 per sq ft," Tong said.

Tong said he expects Dijaya to surpass its 2009 revenue target of RM260 million this year, attributed by sales from the new properties.

Over the past seven months, Dijaya has achieved RM215 million in sales, or 70 per cent of its target.

For the financial year ended December 31 2008, Dijaya posted RM244 million in sales.

By Business Times (by Sharen Kaur)

MRB plans to cash in some land bank assets

KUALA LUMPUR: The Malaysian Rubber Board (MRB) plans to monetise some of its existing land bank assets, especially those in the Klang Valley, to support the increasingly high operating costs in terms of research and development, patents and information on manufactured rubber goods.

Datuk Dr Kamarul Baharain Basir says MRB’s major research achievement is in tissue culture and genetic transformation.

Its director-general Datuk Dr Kamarul Baharain Basir said MRB currently had an estimated RM1bil of land bank assets nationwide.

“The Government has strongly urged MRB to follow in the footsteps of major corporations and government-linked companies, which have either sold or leased their holdings like buildings or land bank, to monetise their non-core assets,” he told StarBiz.

Kamarul said MRB was now working closely with its property cooperative to look at how best to monetise its land bank assets in prime locations like Sungei Buloh and Jalan Ampang.

“We are keen to develop part of our 1,700ha Rubber Research Institute in Sungei Buloh into commercial centres.

“However, our development (in Sungei Buloh) must not duplicate the nearby Selangor Vision City development,” he said.

Having said that, MRB also does not want to see too much depletion in its assets as it strives to generate regular income to support its operations.

Under the Ninth Malaysia Plan, the Government has allocated RM113mil for MRB, which is the statutory authority for the management of the country’s rubber industry.

“We plan to seek a higher allocation of about RM300mil under the 10th Malaysia Plan but we don’t know how much we will get this time,” he said.

According to Kamarul, MRB is the world’s most “referred” rubber organisation among international rubber set-ups seeking information on the upstream, midstream and downstream activities in the industry.

“Our core activities are in research and innovation in both upstream and downstream, crop management, improvement and protection as well as in biotechnology,” he said, adding that MRB’s major research achievement was in tissue culture and genetic transformation.

“We were able to create a transgenic rubber tree that can enhance crop productivity, production of valuable protein in the latex and has bigger girth tree trunk for timber production as well as high resistance to diseases,” he said.

MRB recently launched its latest high-yield rubber clone, the RRIM 3001, which can boost latex production to over 2,000kg per hectare a year compared with the average yield of 1,430kg in 2008. When mature, the RRIM 3001 tree could also be a good “rubber timber” source for the local furniture industry.

“Currently, rubber timber represents 80% of the raw material used in the local furniture industry,” he said.

On another note, Kamarul said the price of natural rubber was tracking well with crude oil and that demand from China was encouraging. China takes up about 35% of Malaysia’s total natural rubber production.

He said tyre grade SMR 20, currently trading above RM6 per kg, boded well for rubber planters, as the cost of production was about RM3 per kg.

By The Star (by Hanim Adnan)

Nomad strengthens regional foothold

The office space provider is now negotiating to buy an 80-room serviced apartment in Bangkok and is also eyeing Singapore for a suitable property there

The Nomad Group Bhd, an office space provider, has allocated some RM100 million to expand its serviced apartment portfolio and is eyeing properties in Thailand and Singapore.

The group is now negotiating to buy an 80-room serviced apartment in Bangkok, Thailand, for up to RM60 million. Chief executive officer Hew Thin Chay said the deal could be completed as early as next year.

The average occupancy at this property is now only 40 per cent while its average room rate (ARR) is around RM200, providing ample room for improvement.

In an interview with Business Times, Hew said The Nomad was also eyeing Singapore but has yet to find a suitable property there.

In Malaysia, The Nomad was not keen to buy more hotels or serviced apartments but it was open to managing them instead.

It has been approached to convert a 200-unit condominium on Jalan Tun Razak into a serviced residence and manage it.

In other countries, it is looking at the possibility of operating serviced apartments in Chennai, India, and may consider Indonesia in the future.

Meanwhile, Hew said he expects the group to return to the black this year, as it sees the money coming in from the various investments it made last year.

For the financial year ended December 31 2008, The Nomad incurred a net loss of RM7.63 million on the back of RM25.85 million in revenue as a result of start-up costs.

"We have had eight openings, six of which are offices. It takes start-up businesses about 12 months to mature," Hew said.

Its investment last year include The Nomad Offices at Etiqa Twins, The Gardens Mid Valley and Pavilion Kuala Lumpur.

Together with its space in Menara Hap Seng (which opened in December 2007), it has 80,000 sq ft space, making it the largest serviced office provider in the capital.

The Nomad has ventured into the Gemadept Tower in Ho Chi Minh City, Vietnam, and Interchange 21 in Bangkok, Thailand. It also bought the iOffice and Menteng Office Park in Jakarta, Indonesia.

"In the first half of 2009, we will incur a loss but post positive earnings before interest, taxes, depreciation and amortisation. But I think, by end of the year, we should make profits," he said.

In the first quarter to March 31 2009, it posted revenue of RM7.44 million and net loss of RM235,000.

Its cash cow is the Raffles Place in Singapore, which provides it with RM1.6 million a year in operating profit. The group makes 60 per cent of its revenue from foreign markets.

It is eyeing Hong Kong, South Korea and Taiwan for the serviced office business.

By Business Times (by Vasantha Ganesan)

Tanjung Bungah hotel to be rebranded

Serviced office and residence specialist The Nomad Group Bhd has taken over the management of the Tanjung Bungah Beach Hotel in Penang as part of a branding exercise.

The hotel will be renamed The Nomad Penang after a facelift to raise its rating to four stars from three.

The property is set to undergo a RM2 million refurbishment exercise, which will see it being transformed to cater for a market mix of business travellers and the information technology-savvy, The Nomad Group chief executive officer Hew Thin Chay said.

"We have a five plus five-year contract to manage the hotel. We plan to reposition it towards a new market segment," Hew told Business Times. The hotel is owned by Plenitude Bhd.

"We are in Penang to establish a network and have a branding presence," Hew said.

The 200-room hotel enjoys 80 per cent occupancy and garners an average room rate (ARR) of RM100 a night.

Currently, most of its business comes from the low-yielding sector, such as through travel agencies.

Hew is confident that repositioning the hotel will work in its favour, especially since it is located close to the island's city centre.

He described the hotel as "a city hotel with a beachfront", noting its position along Jalan Tanjung Bungah, which is between George Town and Batu Ferringhi.

The hotel has already seen an improvement since The Nomad Group took over its management in March this year. Occupancy has touched 90 per cent and the ARR is RM110.

The Nomad Group expects to make a net profit of RM300,000 in the first year of operating the hotel.

Hew expressed his optimism that occupancy will be as good and its ARR can reach RM120 after the upgrade is completed early next year.

The Nomad Group is also managing the The Nomad SuCasa serviced suites in Kuala Lumpur and is in the process of acquiring the Novotel Kuala Lumpur City Centre.

By Business Times (by Vasantha Ganesan)

Sri Lanka opens doors to foreign investors

SRI Lanka is calling on foreign investments to pump prime its economy which had been ripped by over 30 years of civil war.

State Corp (Pvt) Ltd (SCorp) managing director and chief executive officer Keerthi Sri Weerasinghe said there are over US$70 billion (RM246 billion) worth of jobs available in construction, infrastructure and tourism.

Keerthi, who is chairman of the Coconut Development Authority under the Ministry of Plantation Industries said there are also contracts to be undertaken in mineral mining and housing.

"Because of the war, we could not undertake a lot of developments. Many buildings, roads and bridges were ruined during that time. We are now opening doors for investors to come in and develop the country for us," Keerthi told Business Times in an interview in Kuala Lumpur recently.

The present government has introduced a 10-year economic development policy the "Mahinda Chintana" where the focus is to steer investments to vital sectors such as agriculture and infrastructure development to pump up the economy.

Bilateral investment agreements, supported by a constitutional guarantee, provide strong protection to investors in Sri Lanka. Such an agreement exist between Sri Lanka and Malaysia.

Keerthi said a few Malaysian firms have made successful foray into the country and the situation was viable for new players to come in now.

Malaysia remains the largest investor in the country, mainly in telecommunications, infrastructure and property development.

Companies such as Dialog Telekom plc, a unit of TM International Bhd, MTD Construction Sdn Bhd and HeiTech Padu Bhd had ventured into Sri Lanka despite the war.

"We are an open economy and the government is interested to invite investors in oil and gas (O&G) and agriculture. We have identified six sites in north-west and south of Sri Lanka for O&G activities. We are also looking to revive a cement factory which had been shut down during the war and are calling for interested parties to bid," Keerthi said.

Keerthi said the Indian and Chinese governments, and the International Monetary Fund would lend their support financially while building materials were readily available for use.

By Business Times (by Sharen Kaur)

Saturday, August 22, 2009

Sime Darby Property’s mega plans to build wholesome townships

Since taking over the helm of Sime Darby Property Bhd a year ago, managing director Datuk Tunku Badlishah Tunku Annuar has been busy crafting up strategic plans to build on the company’s strength as a formidable local and international property player.

Datuk Tunku Badlishah ... ‘The merger has allowed us to enhance operational efficiency.’

The mega merger of Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd in 2007 has created the country’s largest property group in terms of landbank and ongoing developments.

“The merger has allowed us to put in place strategic transformation initiatives to enhance operational efficiency as well as establish strategies for sustainable growth,” Tunku Badlishah says in a recent interview with StarBizWeek.

Following the merger in November 2007, priority was placed on establishing a Target Operating Model by July 1, 2008. This entailed a complete review of the organisation structure and operating processes by adopting best practices within the merged entities and re-engineering the organisation to best deliver the strategies and synergies expected from the merger.

For example, previously sales, marketing and customer service functions were centralised in the corporate headquarters. In an effort to improve the customer service and better understand the market, township offices have been established in each of the company’s ten townships. These offices are helmed by a township head with independent sales, marketing and customer service operations.

Tunku Badlishah says a comprehensive review was also undertaken of the existing development plans for each of the townships and where possible, products and development phases were replanned to enhance development value.

“Efforts were made to identify and execute projects that could increase the marketability of the townships for the benefit of existing and future residents,” he says.

As an example, he says Phase 5T in Putra Heights was originally planned as a typical terraced housing project consisting of 22’ x 75’ and 24’ x 75’ houses with about 500 units on 57 acres of land and an estimated gross development value (GDV) of RM275mil.

Taking into consideration its location at one of the most strategic areas in Putra Heights, The Glades has been re-planned as a premium gated development with meandering waterways and an exclusive lakeside club house with an adjacent retail complex – features that will enhance the project value and attract high-end buyers to the development.

Scheduled to be launched in the first quarter of 2010, The Glades product mix totaling 409 units includes bungalows, cluster villas, courtyard homes and two-blocks luxury condominiums with an estimated GDV of RM700mil, a 250% increase compared to the original plan.

Sime Darby Property has also pioneered a comprehensive Safe City agenda for its Ara Damansara township in its continuous efforts to create a safer living environment for its communities.

Launched by Home Affairs Minister Datuk Seri Hishammuddin Tun Hussein on July 21, the initiatives are based on the Safe City criteria set by the Federal Department of Town and Country Planning, Ministry of Housing and Local Government.

Tunku Badlishah says the success of Sime Darby Property’s township projects so far show the merged entity has been well accepted by the public.

“Buyers are buying into the company’s reputation as a reliable developer with quality projects in good locations, innovative products and wholesome living environment.”

Having a common marketing platform such as the Parade of Homes Series, allows for the promotion of the company’s ten townships under a single initiative.

“We are constantly looking at innovative ways on how to assist potential homebuyers make their home ownership dream a reality. One of our most successful marketing initiatives is the Parade of Homes Series which was launched in June last year.

“The overwhelming response from homebuyers to the three campaigns so far exceeded our expectations. It is an indication that despite concerns over the economic climate, home ownership remains a priority among Malaysians.

“We just need to come up with out-of–the-box marketing ideas to give them the confidence to make that decision to purchase,” he adds.

Its latest Parade of Homes from March 6 to June 15 managed to record sales of 1,657 housing units worth more than RM1bil, by far the highest sales since its first launch last year.

“It is a major accomplishment given the weak economic environment that has negatively impacted the property industry,” Badlishah says.

Post merger, the company has also given top priority to research and development innovation.

Tunku Badlishah believes the future success of the company is dependent on its ability to create desirable, innovative and environmentally-friendly products by establishing new typologies, utilising new materials and construction methodologies and collaborating with cutting-edge technology providers.

Synergistic operational efficiency in research and development, product innovation and marketing will ensure the merged Sime Darby Property becomes a leading industry player in product offerings and sales going forward.

The Sime Darby Idea House is a socially, economically, and environmentally responsive prototype dwelling that provides an insight into future tropical living.

“One of the key initiatives of the year is the Sime Darby Idea House where we are showcasing the latest in construction solution, system applications which will be an example of how green architecture, good design and sustainable living can work harmoniously.

“The Sime Darby Idea House is a socially, economically, and environmentally responsive prototype dwelling that provides an insight into future tropical living.

“Conceived as a test bed for new ideas, the house showcases the latest in sustainable architecture in the buildings’ quest to become the first carbon zero residence in South East Asia,” says Tunku Badlishah.

Sharing his passion for the project, Badlishah says the Idea House will be a self sustaining building that generates power from the sun, reuse harvested rain water and is built entirely on the principle of modular construction where the user would be able to expand and contract the building as the need arises.

The entire frame and construction is modular to provide not only a speed and ease of construction, but also the ability for the house to be demounted in the future in order to preserve the terrain for future generations or future development.

Another initiative is The R&D Village which is a 20-acre experiment facility to be located in Elmina East.

Tunku Badlishah says the facility will be the testing platform to analyse various performance aspects of the company’s latest prototype designs.

“Working closely with our vendors and suppliers, the R&D Village will test and demonstrate new building products, construction technologies and system applications to the public in order to evaluate the response of the market.

“What we hope to offer to our partners is an opportunity to test and showcase products that have not been available or generally associated with regular home offerings,” he further explains.

He says the merger has allowed Sime Darby Property to take advantage of its increased scale by negotiating better terms with its vendors for the benefit of purchasers.

Significant cost savings and quality improvements have been achieved through identification of preferred vendors and negotiating pricing based on estimated annual requirements.

“Sime Darby Property is giving preference to vendors whose manufacturing process and products are “green” and “sustainable”.

“Quality has been enhanced as contractors are required to utilise specialist installers/applicators nominated by the preferred vendors and the product warranties are issued directly by the manufacturer to the purchaser,” he elaborates.

So far, the new procurement initiative has resulted in savings of up to 20% on certain building materials.

Tunku Badlishah says construction costs have also been reduced by combining construction contracts that are within the same location, as it has resulted in significant savings on the cost of preliminaries and mobilisation.

By The Star (by Angie Ng)