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Thursday, February 26, 2009

Brisk sales for SP Setia home loan package

SHAH ALAM: SP Setia Bhd’s recently launched 5/95 Home Loan Package has achieved better-than-expected sales of RM300mil amid the softening economy, said group managing director Tan Sri Liew Kee Sin.

From left: SP Setia executive director Teow Leong Seng, chief financial officer Yap Kok Weng, chairman Tan Sri Abdul Rashid Abdul Manaf and Tan Sri Liew Kee Sin at the briefing.

“At that point in time, we did not specify a target because the market was so bad. We wanted to test whether this (5/95 programme) will work, and apparently it works very well.

“RM300mil sales in less than two months is very good,” he said after the company AGM yesterday.

The RM300mil sales figure was based on bookings made, he said.

Launched on Jan 19, SP Setia’s 5/95 Home Loan Package allows buyers to pay only an initial 5% of the price of the house while all legal fees and stamp duty on the sales and purchase agreement, among other benefits, will be borne by SP Setia. The package is available until April.

SP Setia has targeted RM1.1bil in revenue for its financial year ending Oct 31 (FY09). It has already chalked up RM400mil in sales so far.

Meanwhile, the developer said its RM2bil Eco Lakes township in Ho Chi Minh City, Vietnam, would be launched next month as planned.

SP Setia has a sales target of RM100mil in FY09 for the 558-acre residential property development, which will take at least 10 years to complete.

In April, it will launch its first high-rise project, Setia Sky Residences.

The luxury serviced apartments project, located at the intersection of Jalan Tun Razak and Jalan Raja Muda Abdul Aziz in Kuala Lumpur, has a gross development value of RM800mil.

The company has targeted to achieve RM200mil in sales for this project in FY09.

Asked if SP Setia would be interested in any merger and acquisition (M&A) plan, Liew brushed off the idea.

“M&A doesn’t make sense right now unless the company has a lot of good landbank, but most companies that are in trouble do not have much land left,” he said.

To date, Liew said the company had unbilled sales of RM1.2bil and a landbank of about 4,000 acres.

The company would maintain its dividend payout ratio of 50% of profit after tax, he said.

By The Star

SP Setia to see maiden overseas returns in FY09

SHAH ALAM: SP Setia Bhd, Malaysia’s most valuable property developer, may begin harvesting maiden returns from its initial overseas venture in Vietnam as early as the current financial year ending Oct 31, 2009 (FY09).

This is in anticipation that the developer will rake in some RM100 million worth of landed residential property sales in the Indochina nation.

“We will work very hard to achieve this RM100 million (sales). We have never sold anything in Vietnam so far,” SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin told reporters after the company’s shareholders meeting here yesterday.

In June 2007, the developer entered into a joint venture agreement with Becamex IDC Corp and Treasure Link Far East Ltd to develop several parcels of land with a combined area of 226ha within the My Phuoc enclave of Binh Duong province.

The tract where SP Setia’s estimated RM2 billion EcoLakes at My Phuoc mixed development will be undertaken, is located 40km north of Ho Chi Minh City, and is about an hour’s drive from the Tan Son Nhat international airport.

Income from SP Setia’s ventures abroad is deemed timely. This is because the Malaysian real estate sector is heading to a downcycle, and the effects have hurt local property developers’ earnings.

But Liew said the firm would continue to reward shareholders with a 50% dividend payout from its annual net profit.

While its latest set of financials had emerged weaker, it is worth noting that the developer has existing unbilled property sales of about RM1.2 billion which could sustain earnings in the next two years.

Unbilled real estate sales refer to the value of properties sold which is yet to be recognised in a developer’s books.

SP Setia has some 1,600ha of undeveloped land in Malaysia, and another 240ha in Ho Chi Minh City. “We will focus on looking for good land to buy,” said Liew.

Meanwhile, SP Setia’s “5/95 Home Loan Package” has already yielded returns. Since its launch last month, the scheme has raked in some RM300 million worth of property sales so far, according to Liew.

“It’s beyond our expectations. The RM300 million sales involve landed properties across the board,” Liew said.

During FY08, SP Setia sold RM1.404 billion worth of properties. But FY09 figures could be lower at some RM1.1 billion against a backdrop of weaker economic outlook, according to Liew.

On the whole, SP Setia’s earnings fell in FY08. Net profit was down 17.9% to RM213.46 million from RM260.07 million in FY07 on lower gross profit margins, partly due to costlier building materials. Revenue, however, rose 15.7% to RM1.33 billion from RM1.15 billion.

Shares of SP Setia ended 1.2% or four sen lower at RM3.30 yesterday, for a market capitalisation of RM3.36 billion. A total of 721,600 shares were traded. The stock has gained 6.45% so far this year, outperforming the Kuala Lumpur Composite Index’s 2.25% rise.

By The EDGE Malaysia (by Chong Jin Hun)

No property bubble here, say industry experts

PETALING JAYA: The local property market would be able to escape a bubble, such as the one affecting neighbouring countries, several industry experts said.

They said the local property market would be resilient in facing the current downturn as it was mainly driven by domestic demand.

A roundtable discussion on Corporate Real Estate Investment Opportunities organised by Zerin Properties that was posted on its website yesterday, the panellists agreed that the real estate market, particularly the residential sub-sector in well-located areas in the Klang Valley, continued to be attractive to both local and foreign investors.

According to International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong, the property market did experience a “slight bubble” in the high-end sector in Kuala Lumpur, particularly in KLCC, Mont’Kiara and Hartamas where property prices had doubled over the last three to five years.

Fong said there were good deals to be had in the condominium market in Kuala Lumpur city centre, especially those priced between RM800 and RM1,000 psf. “One should grab when you find sellers looking to cash out at a 30% discount from the property’s peak price,” he advised.

The roundtable discussion was moderated by Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam.

Previndran Singhe, chief executive officer of Zerin Properties said: “We are still resilient although transactions are slowing down. After the Chinese New Year, you can see developers launching products but in order to be successful, they have to be innovative.”

He pointed out that landed properties continued to remain the best form of property investment. “With developers offering 5/95 and 20/80 financing schemes, the primary residential market is becoming attractive. Then two years down the line, investors can also enjoy some gains from capital appreciation.”

The panellists also said that the liquidity in the marketplace, innovations by developers and the Malaysia My Second Home programme also increased the attractiveness of real estate.

They observed that investing in real estate investment trusts (REITs) was also becoming popular as an alternative form of investment.

Axis REIT chief executive officer Stewart LaBrooy felt that investors found REITs attractive due to their hassle-free nature and high yields which could easily reach 12%.

“For foreign investors, liquid investments are far better than having the burden of a physical property like finding a tenant. When it comes to REITs, they can cash in and out as they please.”

On the commercial office sub-sector, the panellists agreed that KLCC’s iconic Petronas Twin Towers landmark remained attractive to large multinational corporations. Previndran said rental rates in KLCC were not expected to “fly” due to sustainable demand.

However, the office market could get a bit soft in Petaling Jaya with new supply coming from PJ8 and V Square while rentals are stable in micro locations like Damansara Heights and Bangsar.

By The EDGE Malaysia (by Loo Pik Kwan)

More commercial hubs for Klang Valley

Planners need to guide enterprises without stiffling initiative

IF, like me, you’d far rather commute an hour than change your baby’s nappy, then the idea of working from home surrounded by your IT gizmos is dead in the water.

It always was a silly New Age idea anyway.

I can’t speak for the female side of the equation, but a man’s office defines his purpose in life.

You don’t slog three years at university just for the privilege of locking yourself in a cubby hole under the stairs at home waiting for e-mail. Maybe that’s an acceptable way of life for asylum seekers and IT consultants but real human beings need real human contact.

The office is your club, your camp fire and your hunting ground. It opens up opportunities for matrimony as well as career advancement. As an employer, I can’t imagine promoting a dehumanised digit living the life of a troglodyte. I’d rather promote my Blackberry.

When it comes to office location, there is now a happy medium between city and suburb.

Up until the late 1980s, if you had an office in PJ your name was probably Klaus and you traded heavy switchgear for a Bavarian gesellschaft. You probably had a beard.

Now some perfectly normal people work in PJ, and Jalan Semangat is transforming into a second St Kilda Road. Take a look at the new Quill building there. It’s superb.

The Petronas Twin Towers still stand at the apex of the office space market. Last deal done was at about RM12.50 per sq ft gross (that’s including service charges, it wasn’t a comment.)

Around the Twin Towers can be found some excellent buildings, including Menara Maxis and Menara Citibank. They are also Grade A and are currently clocking up rents of RM8.50 to RM9 per sq ft per month.

This shift in focus to around KLCC which occurred in the late 1990s was at the expense of the original Jalan P. Ramlee/Sultan Ismail/Raja Chulan area which, in some sections, is now becoming viewed as secondary. This is largely attributable to traffic congestion.

Areas of the Golden Triangle which are gaining popularity include the Tun Razak/Jalan Ampang intersection which has both traffic accessibility as well as an LRT. Here you will find new buildings such as G Tower and The Icon coming up, offering a million sq ft of new space.

Damansara Heights has been a popular office location since the 1960s but other decentralised areas began to take off about the time of the first Proton Saga. There is now just over 24 million sq ft of office space in the Golden Triangle but decentralised areas, including KL Sentral and Mid Valley, have rapidly grown to 20 million sq ft and in other suburban areas along the Klang Valley, you will find 65 buildings with another 12.4 million sq ft. In other words, the Golden Triangle is losing significance.

Kuala Lumpur City Hall is presumably satisfied with this shift which is partly the result of its freeze on new office buildings in the Golden Triangle over 20 stories, imposed since 1997.

As the city grows, new commercial hubs will evolve and it is a continuing challenge for our planners to guide private enterprise without stifling initiative.

Sometimes this produces unexpected results. I have to thank those people at KPMG for moving out of Damansara Heights and into 1 Utama. It was a brave move that surprised many in the industry. For me, it took some cars off the road between me and my office and preserved my average commute time of 10 minutes, although it took some fun out of the journey. (In my imaginary driving game, you get 10 points for hitting an accountant and only two for any motorcyclist. Maiming a personal financial consultant doubles your score, no questions asked.)

Further north from 1 Utama, Mutiara Damansara is fast becoming an office destination and has 500,000 sq ft of space either completed or under construction.

And further north, Damansara Perdana is completing four office towers totaling 800,000 sq ft net and the take-up has been excellent. This was a bold project when it was inaugurated three years ago, and underlines the potential for office space in the suburbs if you get your location and timing right.

It is a pity that the new LRT lines now have difficulty in keeping up with this radial development. In the US and Australia, it was development that followed the rail lines, and not vice-versa.

Nevertheless, the new LRT linking Kota Damansara with the city will be a boon. It will roughly follow the direction of Jalan Damansara. Let’s hope they can keep the traffic flowing underneath while they build it. I don’t want to have to stay at home.

By The Star (by Christopher Boyd)

HK is the most expensive city for offices

EDINBURGH: London lost its ranking as the world’s most expensive city for offices in 2008, supplanted by Hong Kong and Tokyo for the first time in nine years.

Falling rents in the UK capital, combined with the pound weakening against the euro brought occupancy costs for prime offices in London’s West End down 23 per cent to ?1,403 (?1 = RM4.70) per sq m annually, New York-based property broker Cushman & Wakefield Inc said in a report yesterday.

That compares with ?1,743 per sq m in Hong Kong and ?1,649 in Tokyo.The global financial crisis pushed rents lower in 16 per cent of the world’s biggest cities as financial companies fired workers and cut back on the space they lease, Cushman said. Worldwide mortgage-related losses and asset write downs total more than US$1.1 trillion (US$1 = RM3.67).

London “has now felt the full impact of the credit and banking crisis,” Cushman said.
Costs fell 4 per cent in Hong Kong compared with a year earlier and declined 19 per cent in Tokyo.

“There seems little doubt that rents will continue to fall over 2009, perhaps at a faster rate than before,” said John Siu, general manager, Cushman & Wakefield Hong Kong.

Cushman & Wakefield surveyed 202 locations in 57 countries. Rents climbed 3 per cent globally, the smallest increase since 2004, the broker said. Rent accounts for the bulk of occupancy costs, which also include service charges and property taxes.

Moscow, Dubai, Mumbai, Paris, Damascus, Singapore and midtown Manhattan rounded out the 10 most expensive locations for offices.

Dublin fell to 15th, ranking it out of the top 10 for the first time in three years.

By Bloomberg