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Tuesday, June 30, 2009

KL Metro in final sales push for Port Dickson project

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

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

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

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

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

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

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

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

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

By Business Times (by Chong Pooi Koon)

OCBC unveils new home loan package

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

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

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

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

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

By Business Times

Further easing on property buying by foreigners expected

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By The Star (by Tee Lin Say)

States may put brakes on property liberalisation

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

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

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

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

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

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

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

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

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

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

By The EDGE Malaysia (by Financial Daily)

Hap Seng bids for half of Menara Citibank

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Business Times (by Vasantha Ganesan)

Nagamas to maintain focus on core businesses

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

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

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

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

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

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

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

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

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

By Business Times

Property sales bottoming, says HwangDBS

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

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

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

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

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

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

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

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

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

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

By The EDGE Malaysia (by Yong Min Wei)