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Saturday, August 15, 2009

New trend from SoHo

Courtyard view of CENTRIO

Small office and Home office (SoHo) property is definitely gaining momentum in Malaysia, particularly given the advent of information, communication and technology (ICT).


Tempo Properties Sdn Bhd chief executive officer Khoo Boo Hian says it’s definitely a budding trend given the working culture and the mushrooming of young entrepreneurs who tend to spend long hours at work or in the office.

“SoHo is becoming a trend in the market especially for young executives. The advantages of SoHo are convenience and flexibility as you can work and live within the same space,” he says.

Khoo says SoHo can either be perceived as a living area with complete office facilities and amenities such as a conference room, waiting lodge, business centre or an office space that provides all your out-of-office needs and privacy.

“You can also customise your SoHo suite to suit the functionality, performance and aesthetic aspects of your businesses. It allows young business owners a more private but compact and efficient space to express their brand and to grow their businesses,” he says.

The Atmosphere Sdn Bhd with its partner, Ekson Corp Bhd, is developing a 53-acre site of The Atmosphere, an integrated concept-driven commercial development comprising modern corporate-styled shop-offices, boulevard shops, a hypermarket, retail outlets, designer SoHo suites, apartments, a hotel and a regional retail centre in Serdang, Selangor.

“Our SoHo suites are designed in the form of a spacious duplex complete with residential and business amenities and we have received very positive feedback especially from our young urban customers – from couples, professionals to single working groups,” he says.


Zerin Properties chief executive officer Previndran Singhe says the trend of SoHo development started in the 1960s and 1970s in Manhattan, New York City.

He says the place was formerly known as Cast Iron District which originally housed warehouses and factories and was famed for its cobblestone streets.

“Living in SoHo was deemed illegal during that time but in 1980s, the neighbourhood rapidly rose up the socio-economic scale due to location, lots of living space, the architecture and the fact that it was considered hip,” he says.

He says the SoHo trend in Malaysia started 4-5 years ago due to emerging young executives working in service sectors such as finance, insurance and real estate.

“As the new culture of working emerges that includes flexible working hours, limited service workers, connection all around the world and service-based business, SoHo has become a hit among these young executives.

He says among the critical success factors for SoHo developments are locations with good accessibility and amenities.

“Apart from that, buyers are also looking for such factors as design and functionality and also technology before they decide to purchase them,” he says.

YTL Land & Development Bhd is also another developer involve in the SoHo property development through CENTRIO at Pantai Hill Park in Bukit Kerinchi, Kuala Lumpur.

“Our SoHo at the CENTRIO concept comes after our research revealed that an increasing number of young people are looking for living spaces that offered greater flexibility, with many of them wanting to work from home,” says sales and marketing senior manager Jessica S.S. Loo.

She says the majority of them are from creative and entrepreneurial fields such as insurance, design, advertising, real estate and IT, where work will require them to be always on the move with no need for big office spaces.

“They are also looking for their first home, hence they will be drawn to a concept that allows them to work from home specifically designed with lifestyle flexibility in mind,” she says.

She adds that SoHo units at CENTRIO are really a success as 70% of the development was sold when they were opened for sales in 2006.

“Last weekend, we managed to sell all the remaining units of our SoHo units during our special promotion package that gives rebates up to RM150,000 to our buyers,” she tells StarBizWeek saying that CENTRIO offers a total of 238 units of duplex SoHo with build-up between 623 sq ft and 1,536 sq ft.

By The Star (by Edy Sarif)

Mah Sing’s missing link

Today’s topic is “managing the news” and here’s a question for discussion: What does a listed company do when it has two unrelated major deals to disclose in one day? That doesn’t happen often, of course. Fortunately, we have a fresh case study.

On Wednesday, Mah Sing Group Bhd had a couple of stories – actually three, but we’ll get to that later – to tell and each involved a hefty sum of money.

It’s apparent that the property developer knew in advance that it would be making the news that day. On Aug 7, it sent out an invitation to a press conference on Wednesday morning. The purpose? To announce a “material corporate development”.

Then on Tuesday, the property developer requested for a one-day suspension of trading in its shares “pending announcements relating to material transactions”. Note the company’s use of plural nouns.

However, at the press conference, the Mah Sing management talked about only one deal – its proposed acquisition of almost 47 ha of freehold land in Cyberjaya.

Wholly-owned subsidiary Myvilla Development Sdn Bhd is buying the property from Cyberview Sdn Bhd and Setia Haruman Sdn Bhd for RM130.5mil cash.

Myvilla also has an option to buy an adjacent plot of commercial land (2.6ha) within 12 months from the date of the sale and purchase agreement.

Mah Sing’s plan is to develop medium to high-end homes on the land. The project will be called Garden Residence and its estimated gross development value is RM690mil.


The press release handed out at the function dwelled primarily on the proposed acquisition. It quotes group managing director and chief executive Tan Sri Leong Hoy Kum as saying: “As major infrastructure is readily available and the vendor shall provide other infrastructure, we are confident that the project shall fit our business model of having a quick turnaround which is highly cash generative.

“Developing land in Cyberjaya has an added economic advantage as there are no low-cost components requirements since the master developer is relocating them to another location.”

Nevertheless, Mah Sing accords higher priority to a different bit of news. The press release kicks off by stating that the company’s sales for the first 7½ months of financial year 2009 has surpassed expectations.

Says the developer: “Mah Sing Group Bhd has achieved RM543mil sales in just 7½ months, exceeding its full-year target of RM453mil by 1.2 times. The group’s unbilled sales in 7½ months now stand at RM800mil, approximately 1.6 times the revenue recognised from the property division last year.”

Leong attributes this to “pre-emptive measures” over the last few years in project planning, pre-construction, cost management and cash management. He also credits the company’s marketing strategy, which includes coming up with the 5/95 home loan package.

Here’s when things got a little curious. After the press conference, Mah Sing issued not one, but two announcements through the Bursa Malaysia website.

Artist's impression of Southgate Commercial Centre

One was regarding the Cyberjaya land acquisition. The other was about a proposed en bloc sale and leaseback of an eight-storey office building by another wholly-owned subsidiary, Jastamax Sdn Bhd. The building is part of the ongoing Southgate development fronting Jalan Sungai Besi, Kuala Lumpur. Koperasi Permodalan Felda Bhd (KPFB) is buying the property for RM226mil cash and Jastamax will subsequently lease it back for two years.

It’s pretty much a standard announcement of a deal until you get to the six-paragraph rationale. Mah Sing is eager to explain the transaction, pointing out that the proposed en bloc sale has been structured to ensure a win-win for both the vendor and purchaser.

“Following the overwhelming success of the 5/95 programme, the group is extending this programme to KPFB,” says the company.

“As per the normal terms of this programme, 5% of the sale consideration will be paid upon the execution of the sale and purchase agreement and the purchaser’s financiers shall release the balance 95% of the sale consideration to the vendor based upon the architect’s certification of each stage of completion.”

But the most intriguing part is the third paragraph: “With the proposed en bloc sale, the group has achieved sales of RM543mil in just over 7½ months of financial year 2009, exceeding the group’s full-year sales target of RM453mil by 1.2 times. It also allowed the group to reach an unbilled sales level of approximately RM800mil which is 1.6 times of our property revenue last year.”

By omitting the proposed en bloc sale from its press release and yet highlighting the sales that had benefited from the transaction, Mah Sing has presented a distorted picture. And why did it choose to be silent about the en bloc sale at the press conference?

The developer had three developments to publicise – the proposed Cyberjaya land purchase, the proposed en bloc sale and its claim that it has exceeded its sales target with more than four months to spare. The third is a consequence of the second.

Yet, when the management issued a press release and briefed the media, it did not offer all the facts. In its Aug 7 invitation to the press conference, Mah Sing says: “We understand the importance of keeping both retail and institutional investors informed on our plans and business strategies.” Sometimes, things are easier said than done.

Deputy business editor Errol Oh wonders if it’s hard to get things right when there are too many stories to tell. He doesn’t know the answer because he hardly has any developments worth talking about in a year, let alone two announcements to make in a single day.

By The Star (by Errol Oh)

Sunrise in talks to buy more land

The property developer is looking at three or four of land in the Klang Valley and some may be purchased before the year is out

Sunrise Bhd, a property developer with extensive projects in Kuala Lumpur's upmarket Mont'Kiara area, is actively looking to buy three or four parcels of land in the Klang Valley, executive chairman Tong Kooi Ong said.

"We are currently actively looking at three or four (parcels) ... but these are all still pending negotiations," he told reporters after an analyst briefing late yesterday.

Some may be purchased before the year is out, he said, adding that joint ventures will also appeal to the group as they do not involve a lot of capital.

"We have limited capital and don't really want to keep going into debt," he remarked.
Sunrise has a landbank of 348ha, including 175ha of agriculture land. Its landbank in Mont Kiara alone is 33ha.

Tong said the Malaysian property market appeared to be stronger than a year ago and it was likely that developers would be rushing to launch projects once again.

"We do think it is quite likely that the property momentum will stay. There shouldn't be any shocks," he said.

Sunrise has a pipeline of projects ready to be launched depending on market conditions, Tong added, declining to be specific.

The group reported fourth quarter net profit of RM43.1 million yesterday, slightly lower than the RM44.9 million it made a year earlier.

This brought its net profit for the full year ended June 30 2009 to RM156.2 million, a slight drop from RM159.9 million before. Revenue was up 17 per cent to RM803.9 million.

The group had unbilled sales of RM971 million as at June 30, which will underpin its earnings for the next two years to 2011, Tong said.

These would further be boosted by property sales of RM39.3 million last month and another RM157.1 million pending the formalisation of sale and purchase agreements, he added.

Most of the unbilled sales - essentially sales that have yet to be booked into its accounts - were from higher-margin products.

In the last fiscal year, Sunrise chalked up new property sales of RM344.1 million.

Its introduction of innovative financing packages for two of its projects, 11 Mont'Kiara and Mont'Kiara Residence, have been well received and helped add up RM264.2 million in bookings between March and July.

By Business Times (by Adeline Paul Raj)

Sunrise Q4 net profit down to RM43mil

KUALA LUMPUR: Sunrise Bhd, known for its luxury high-rise projects in Mont’Kiara, reported a slightly lower net profit of RM43.1mil for the three months ended June 30 against RM44.9mil a year ago.

For the fourth quarter to June 30, the group’s pre-tax profit fell 3.4% to RM53.6mil from RM55.5mil on a turnover of RM237.3mil.

Earnings per share (EPS) fell to 8.72 sen from 9.98 sen in the previous corresponding period. The company declared a final dividend of 3 sen per share for the quarter.

In a filing to Bursa Malaysia, Sunrise said the group’s pre-tax profit of RM53.6mil achieved in the fourth quarter showed an increase of RM10.9mil, or 26% from the preceding quarter.

“The increase is mainly due to sales of The Residence during the period,” it said in the notes accompanying its results.

For the financial year ended June 30 (FY09), Sunrise posted a net profit of RM156.2mil on the back of a 17% growth in revenue to RM803.9mil.

Its EPS stood at 31.90 sen compared with 35.70 sen in the previous corresponding period.

Its total expenses for the financial year were 2% lower at RM81.5mil compared with RM83.2mil previously.

Net debt rose to RM445.7mil in the period under review from RM393.2mil previously due to funding for ongoing projects.


The developer’s executive chairman Tong Kooi Ong said the company had unbilled sales totalling RM971mil as at June 30 which would underpin its earnings till FY11.

He said the unbilled sales excluded sales of RM39.3mil recognised in July and another RM157.1mil pending sale and purchase agreement signing.

“Profits from future billings will be recognised over the next two financial years and will sustain earnings in the near future,” he said at a briefing to announce its quarterly results.

On new launches, Tong said the timing and pricing of future launches would be dictated by market conditions.

“We will take into consideration what the market demands and what the market is prepared to pay, to establish our cost and product mix,” he said.

Tong said property prices in Malaysia had been consistent with the country’s economic growth and did not see a property bubble in Malaysia for the time being.

Among the supportive factors for the property market are low unemployment and ample liquidity while the approval rate for mortgage loans is resilient with low interest rates, according to Tong.

However, he cautioned that there were some pockets of oversupply around the KLCC area.

By The Star (by Leong Hung Yee)

Looking for the perfect buy

It has been a tough and challenging ride for Malaysians and people the world over this past one year or so.

Their confidence in the free market economy must have been shaken badly after so much wealth and asset value have been eroded by the global financial meltdown.

The leveI of confidence going forward will depend on how the people perceive their general well-being and whether there’s hope for the future, which depends among other things on their expectation on the health of the local and global economy.

It will be a herculean task to reinstate the same robustness to the economy to that of the pre-global crisis days and much work remains to be done in many parts of the world.

The same goes for Malaysia and hopefully all parties will get down to work expediently for the common goal of lifting the country’s chance of a sustainable economic recovery and growth.

The liberalised measures introduced by the Government, aimed at raising the country’s competitiveness and attract foreign direct investments to the country, will need the total commitment and cooperation of all to succeed.

Based on the strong sales registered by developers these past few months, one wonders whether there is a pent-up demand for residential properties, especially landed properties, as the supply pipeline has been put on hold or substantially scaled down when the crisis hits.

The question on whether property buyers will be flocking back into the market after the days of easy financing packages for house purchases are over remains to be seen.

There is still some hesitation among buyers on whether this is the best time to seal the deal as some are still waiting for better deals or offers to come along.

To be sure of striking the right chord with buyers, developers should literally put themselves in the buyers’ shoes and proactively seek their feedback on what type of property products are being sought after.

Housebuyers today are looking for more than a roof over their head. Expectations have certainly gone up many notches and they want more value from developers before committing to buy.

Besides the basic requirements of a good location, quality standards and developer’s reputation, buyers are also giving more priority to safety and conducive environment, well landscaped parks and surroundings, community facilities, good infrastructure and accessibility.

There is still much liquidity in the system and property is one of the time-tested investment tools with potential for capital appreciation and rental yields.

The prevailing low interest rates and slew of incentives offered by developers are helping to fan property buying interest.

After all, property in Malaysia has proven to be a good investment tool and hedge against inflation. Prices of most of the residential property, except for high-end condominiums in the Kuala Lumpur City Centre and Mont’Kiara areas, have held out quite well throughout the crisis period.

Developers will not go wrong if they target their products at the mass market segment as the country’s young population, where at least a third of the 26 million population are between 25 and 44 years, will need a fairly big number of houses each year.

Those with high-end projects may opt to wait out a little longer until market sentiment has recovered before putting out their projects for sale.

It will certainly help with the sales if developers take the proactive steps of making sure their housing units are designed practically and buyers will not need to do any further renovation before moving in.

Having the housing units fitted with some basic necessities such as air conditioners, wardrobes and kitchen cabinets will prove to be a big plus for buyers as it will save them substantial time and money to shop around by themselves.

Offering a few choices of colours, materials and designs will be a practical option for buyers.

By sourcing for these fittings for a whole project, developers will be able to enjoy economy of scale and lower average cost which can then be passed on to their buyers.

Deputy news editor Angie Ng believes every little extra effort and value adding initiatives by developers will go a long way to raise the chances of success for property projects these days.

By The Star (by Angie Ng)

Sui Wah to open sixth outlet in October

GEORGE TOWN: Penang-based departmental cum supermarket operator Sui Wah Corporation Bhd is opening its sixth outlet this October at the Times Square shopping mall in George Town.

Group executive director Cynthia Hwang told StarBizWeek that the new outlet, known as Sunshine City, would be the anchor tenant for the shopping mall, occupying some 120,000 sq ft on the third and fourth floors.

“What differentiates this outlet is the availability of brand names that are not normally found in other stores, the personalised shopping experience that will be provided, and a local designer brand corner,” she said. “We will have promoters to provide consultancy on fashion to our customers.”

Hwang said the group sent a surveying team to various countries in Asia to obtain interior design ideas for the new outlet.

“Sunshine City is the product of many mid- and high-end departmental and supermarket stores that we visited in Asia.

“We want to ensure that Sunshine City has the appeal to attract shoppers from all income segments.

“For example, the interior is designed with a lot of glass panels to generate a classy and feel-good shopping experience,” she said.

Hwang said there would also be over 50 brand names of apparel.

“We are confident that Sunshine City will be able to compete during these economically challenging times as our apparels are trendy and affordably priced,” she said. “The apparels and the foodstuffs in the supermarket are targeted at the a broad range of customers from diverse income backgrounds.”

On the group’s departmental and supermarket business, Hwang said business at its five other outlets on the island experienced a drop of about 10% for the first five months of 2009, compared to the corresponding period a year ago.

“But starting June, business is picking up on a month to month basis. We expect August to be 5% to 10% better than July,” she added.

Besides Sunshine City, the Sui Wah group owns and manages Sunshine Square, Sunshine Farlim, Sunshine Wholesale, Sunshine Jelutong and Sui Wah Air Itam on the island.

After Sunshine City, the group plans to build a two million sq ft commercial building on the island in the near future.

“The plan is for the building to accommodate a budget hotel, serviced apartments, retail outlets and offices,” Hwang said.

For the 2009 fiscal year ended May 31, the group posted RM12.8mil in pre-tax profit on the back of RM368mil in revenue.

In fiscal year 2008, its pretax profit was RM15mil while revenue was RM373mil.

By The Star (by David Tan)