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Thursday, June 25, 2009

MK Land eyes RM3b Indian JV project

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By The EDGE Malaysia (by Gan Yen Kuan)

MK Land in India venture

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

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

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

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

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

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

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

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

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

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

By Business Times (by Azlan Abu Bakar)

IGB leads stocks of developers higher

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

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

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

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

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

‘Potential Beneficiaries’

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

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

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

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

By Bloomberg

MRCB's property brand launch in Perak on Saturday

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

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

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

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

By Business Times

Asas Dunia developing over 1,000 homes in Seberang Prai

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

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

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

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

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

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

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

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

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

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

By The Star (by David Tan)

Asas Dunia lines up new projects

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

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

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

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

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

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

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

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

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

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

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

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

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

By Business Times (by Marina Emmanuel)

SP Setia CEO doesn’t see PNB takeover taking place

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By The Star (by Angie Ng)

Asian developers more upbeat

SINGAPORE: Asian property firms are beginning to see light at the end of the tunnel and several are positioning for an upturn even as the world economy struggles to recover from its worst recession in decades.

The mood among US and European executives at this week's Reuters Global Real Estate Summit is glum, but Asian counterparts are more upbeat with some revealing plans for new projects in anticipation of an upturn later this year.

For instance, Chinese commercial property developer SOHO said it has built up a war chest of US$1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months.

Indiabulls, India's third-largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

"The general mood has been cautious, but there is also optimism. Asian companies in general are in much better shape compared to their peers in other regions," said Ayala Land chief financial officer and Asian Public Real Estate Association president Jaime Ysmael.

Spurring the optimism in Asia is a recovery in residential markets, with price cuts drawing buyers in China, Hong Kong and Singapore, where saving rates are high and banks are prepared to lend.

The volume of transactions in these places are close to levels seen during the bull market of 2007 and residential property values have begun to edge upwards as developers such as Singapore's City Developments raise prices.

Asian property values did not rise as much as in the US and parts of Europe this decade. In dollar terms, property in countries such as the Philippines are cheaper than before the onset of the Asian crisis in late 1997.

Interest rate cuts and government stimulus plans are also helping regional property markets recover.

Singapore residential prices were supported by mortgage rates that were below rental yields, a Bank of America Merrill Lynch report said this week.

"At the current mortgage rate of around 2.75 per cent, our net cost of carry model implies that prices can rise by 30 per cent before home buyers enter negative carry," it said. The bank predicts Singapore home prices will rise 20 per cent next year.

Singapore's housing market has been hit hard by the downturn, with home prices plunging nearly 14 per cent in the first quarter of this year, the steepest drop in over 30 years, according to government data.

Separately, Nomura said unemployment was stabilising in Hong Kong and forecasts home prices and rents in the Chinese territory will rise by 22 per cent and 11 per cent, respectively, this year.

A poll of 10 analysts conducted in conjunction with the Reuters Global Real Estate Summit showed China home prices are expected to gain an average of 10 per cent between now and the end of 2010.

The outlook for Asia's office market remained negative but most developers said rents have stabilised after falling sharply in the fourth quarter of 2008 and earlier this year.

Some investors said any pick-up may not be sustainable.

"There is a risk that this is a bear market rally and the situation could reverse when such liquidity leave the cities or country, or there is new shock to the economies," said LaSalle Investment Management's Asia-Pacific head of research and strategy Kenneth Tsang.

By Reuters

Goldis in final talks with anchor tenants for GTower

KUALA LUMPUR: Goldis Bhd is confident of a good response for its soon-to-be-completed GTower and is in the final stages of negotiation with anchor tenants to take up space in the Grade A++ office building.

GOLDIS Berhad chief executive officer Tan Lei Cheng dropped in at the chess league just in time to watch her chess-playing father Dato Tan Chin Nam start off his game.

Executive chairman and chief executive officer Tan Lei Cheng said the anchors comprised companies in the oil and gas and information technology sectors as well as multinationals.

“It will take time but we are confident that GTower will be fully taken up. There are not many new stock in terms of offices in the city centre and most of the existing ones are quite old.

“Currently 40% of the total space has been taken up already,” she said after the group’s AGM yesterday.

GTower, which started construction in July 2006, is expected to be completed and operational in the fourth quarter.

The 30-storey twin tower GTower has over 500,000 sq ft of office space and CEO duplex offices available for lease. The G City Club Hotel, within GTower, is a boutique five-star hotel comprising 180 rooms.

Goldis has private equity investments in the country and China with focus areas in healthcare, property investment and development, information and communication technology, paper manufacturing, water treatment services and organic aquaculture.

Tan said the group recently signed a build, operate and transfer concession agreement and supplemental agreement via wholly-owned subsidiary Crest Spring (Shanghai) Co Ltd of a sewage treatment plant in Zou Cheng Industrial Park, Shandong Province in China.

“We are at the design stage now. It will take 1½ years for the plant to be ready. It fits into our investment strategy and is a long-term cash cow business.

“With our experience we can also look at the sewage treatment business in Malaysia in future,” Tan said.

The group already operates two sewage treatment plants in China.

On new investments, Tan said Goldis had no plans to invest in new businesses at the moment but would focus on growing its subsidiaries via mergers and acquisitions or organically.

Goldis’ private equity investments include Hoe Pharmaceuticals Sdn Bhd, Macro Kiosk Bhd and Protech Yu (Asia) Sdn Bhd.

Goldis recorded a 5% drop in net profit to RM8.2mil for the first quarter ended April 30 versus the previous corresponding period while revenue slipped 7.5% to RM43mil.

All resolutions were passed at the AGM and EGM yesterday.

By The Star (by Elaine Ang)

Glomac net profit up 66%

PETALING JAYA: Property developer Glomac Bhd’s net profit rose 66% to RM7.21mil in the last quarter ended April 30, as revenue rose 39% to RM99.89mil compared with the previous corresponding period.

This brings its full-year (FY09) net income to RM32.3mil, which was slightly lower than RM35.1mil achieved in FY08. Sales grew to RM352mil from RM324mil previously.

In a press release issued yesterday, Glomac attributed its improved performance for the year just ended to strong progress billings from on-going projects, with maiden contribution from new developments.

“Group profits for the year include RM4.4mil fair-value gain for the sale of Wisma Glomac 3,’’ it said, adding that minority interest was higher for the year due to higher contribution from 51%-owned Glomac Tower.

This was the primary reason from the decline in net profit despite higher revenue achieved for the year.

Glomac proposed a final gross dividend payout of 3.5 sen for FY09.

“Prospects in the current year remain healthy, driven by unbilled sales and new commercial launches,’’ group executive chairman Tan Sri FD Mansor said in the statement.

Total unbilled sales reached RM364mil as at end-April.

By The Star