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Monday, September 7, 2009

Hua Yang aims to be among top 10 players

Property developer Hua Yang Bhd aims to become one of the top 10 developers in Malaysia within five years by offering more residential and commercial properties.

"Currently, we are not even in the top 20 list. To be close to the top 10 list, you need to have RM300 million to RM500 million revenue annually. The big boys are way ahead, but nevertheless, it is our ambition to achieve the goal, hopefully in five years," said chief operating officer Ho Weng Yan in an interview with Business Times in Kuala Lumpur recently.

For its recent financial year ended March 31, the company's revenue grew by 67 per cent to RM100 million, while net profit rose 31 per cent to RM8.6 million.

It expects to perform better in the current financial year.

"It is highly likely to be a better year. So far, our products have received good response and we have a number of launches coming up. With consumer sentiment improving, we see the property market, especially properties for the middle-income group which we are focusing on, will continue to grow.
"Interest rates are low now and buyers are becoming more savvy these days. They know that interest rates will eventually go up. So, for them, they feel that this is the best time to buy properties now," he said.

Hua Yang plans to launch Phase Two of Symphony Heights sometime after Hari Raya, One South - a mixed development in Sg Besi worth RM540 million and spread over 6.7ha of land - in January next year, as well as a commercial development in Senawang and a residential development in Johor over the next 12 months.

It is also in talks with various land owners to expand its land bank. "We are always in talks. Normally, two to three pieces at the same time. We expect to seal one of the talks within the next 12 months," he said.

The company, which has projects in Johor, Perak and the Klang Valley, is also eyeing the Penang property market. "But, it is a very tough market. There's very little supply of land, especially on the island, and on the mainland, several big players have already established themselves there," he added.

The company, which has been established since 1978 or 31 years ago, started its business by building properties for the Perak market. In the 1980s, it decided to look beyond the home-base market.

"We tried a few small projects in Kuala Lumpur, but it was only in the 1990s that we did a big pro-ject outside Perak (Flagship project: Taman Pulai Indah in Johor). Last year, we entered the Klang Valley market in a big way with the launch of Symphony Heights," he added.

By Business Times (by Goh Thean Eu) (Posted on 8 Sept 2009)

'SunCity faces challenge in selling high-end units'

Property developer Sunway City Bhd (SunCity) faces a great challenge to sell a massive stock of RM1.2 billion houses, particularly the high-end projects in Mont Kiara and Bandar Sunway where sales have been slow, AmResearch says.

The group is aiming for RM330 million in residential sales this year but has so far achieved only RM130 million, the broker said.

The take-up rate for Bayrock South Quay in Bandar Sunway, which has 77 bungalows priced between RM4 million and RM7 million per unit, has stalled at 35 per cent since the soft launch in April last year.

Only about two-fifths of the Vivaldi project in Mont Kiara were sold, where there are 234 units priced at RM850 per sq ft.
"We understand from its management that the group is unlikely to bring prices down to speed up inventory liquidation," AmResearch said in a report yesterday to initiate coverage on the company.

Instead, SunCity plans to lure potential buyers with more attractive financial scheme for selected projects, such as no-interest payment during construction and no payment for up to 24 months, the report said.

AmResearch rates the shares of SunCity as a "hold", with a fair value of RM3.45. The stock appears "fairly valued" after its price more than doubled in March this year, the broker said.

SunCity fell 1.8 per cent to close at RM3.20 yesterday. The stock has risen 83 per cent this year, beating a 36 per cent rise in the FTSE Bursa Malaysia KLCI so far.

The primary catalyst for the shares continues to centre on SunCity's potential to cash out from its large portfolio of investment properties worth an estimated RM3 billion to RM4 billion via the set up of an real estate investment trust (REIT).

"We, however, are skeptical that the group can successfully launch a REIT given our concern over pricing and quality of assets to be injected," AmResearch said.

Aside from Sunway Pyramid shopping mall and Wisma Denmark, other assets that the group plans to sell into the property trust are not really suitable for a REIT, it pointed out.

Sunway Group had planned to float a REIT which holds its key assets that include office towers, retail malls, a hospital and university hostel by as early as 2007. The plan has been delayed so far, mainly due to unfavourable market conditions.

By Business Times (Posted on 8 Sept 2009)

BLand expects RM150m from Seputeh project

BERJAYA Land Bhd, a unit of Berjaya Corp Bhd, expects to rake in RM150 million in sales from its Vastana25 bungalow and villa boutique development in Taman Seputeh in Old Klang Road, Kuala Lumpur.

Vastana25, which has three bungalows and 22 link villas, is an exclusive enclave within the 16.5ha freehold low-density Seputeh Heights project.

Berjaya Land senior general manager for properties and marketing, Mah Siew Wan, said the company has started construction on Vastana25 and the properties will be ready by October next year.

The bungalows and villas are priced from RM5.5 million to RM8 million, with a built-up area of 5,743-7,665 sq ft and a private glass lift and pool each.

Mah told Business Times during a site visit recently that Berjaya Land has sold eight bungalows despite the economic slowdown, by word of mouth.

She said there will be a private viewing for the properties in December, where the company hopes to close sales for the remaining 17 units.

"People are buying into Vastana25 because of its location. Every unit offers an excellent view of the city and a lot of natural lighting, thanks to the glass features," Mah said.

On Seputeh Heights, Mah said that prices of properties built by land owners in Seputeh Heights have tripled since 1997.

Berjaya Land started Seputeh Heights in 1997, offering 103 bungalow lots, measuring 7,992 to 23,100 sq ft, for sale.

Ninety lots have been sold over the past 12 years at more than RM150 per sq ft.

Seputeh Heights also has four purpose-built bungalows, which were constructed by Berjaya Land and sold for more than RM5 million each.

"Seputeh Heights is one of our most exclusive developments and it would be impossible to replicate it. This is because land is scarce in prime locations and not many areas can offer a full view of the city," Mah said.

By Business Times (by Sharen Kaur)

11 new hotels by 2011

PETALING JAYA: The Klang Valley will see 11 new hotels by 2011 although some newly planned projects will be delayed due to the uncertain economic climate, property consultants said.

These hotels are mostly three- to five-star rated, comprising a mix of foreign and local brands.

Based on recent research, the hotel sector would have an additional 4,000 rooms upon the completion of these hotels, they said, without giving an estimated value of the projects involved.

Goh Tian Sui ... ‘The average hotel room rate in Malaysia is the cheapest in the region.’

CH Williams Talhar & Wong Sdn Bhd (WTW) managing director Goh Tian Sui said the new supply of hotel rooms in the next three to five years would not lead to an oversupply in the market as demand was still intact.

“More people will start travelling again when the global economy recovers. And later more foreign brand hotels will come in to expand their operations here,” he told StarBiz recently.

Goh said that coupled with more budget travel packages offered by airlines like AirAsia, more tourists would be visiting the country, thus boosting the domestic hotel business.

“Moreover, the average hotel room rate in Malaysia is the cheapest in the region,” he noted.

Although the hotel industry is currently doing not so well due to the Influenza A (H1N1) outbreak and global financial crisis, Goh sees a positive outlook for the hospitality industry.

There are currently 103 hotels (both foreign and local brands) with three- to five-star ratings in the Klang Valley, providing a total of 33,484 rooms.

According to WTW’s latest research, there will be an additional 297 rooms by year-end, 1,845 rooms in 2010, 992 rooms in 2011 and 553 rooms in 2012.

“Average occupancy rate in (upcoming) years will be around the current level of 60% to 70%, which is the historical average level,” Goh said.

Average room rates at present for hotels in Malaysia range between RM250 and RM600, according to Goh.

Zerin Properties chief executive officer Previndran Singhe said the company expected eight new 5-star hotels to be launched after 2011 in the Klang Valley, worth RM2bil to RM2.2bil.

Previn sees the Klang Valley needing more branded budget hotels in five years’ time.

“Budget hotel is set to be the next growth market in Asia,” he said, adding that many investors were taking positions in the Malaysian hotel sector as they realised that the country’s tourism industry was underrated.

Malathi Thevendran ... ‘New entries into the market should weigh the pros and cons first.’

International real estate consultant Jones Lang Wootton executive director Malathi Thevendran said the Klang Valley, the main economic centre of Malaysia, had consistently recorded the highest number of hotel guests in the country, increasing to 20.5 million in 2008 from 16.7 million guests in 2004.

“Although the opening of more four- and five-star hotels may heighten competition in the local hotel scene, they (especially the new brands) will enhance the global awareness of Kuala Lumpur/Klang Valley in totality as an international destination for leisure, culture and meeting,” she said.

But she noted that developers of four- and five-star hotels were cautiously monitoring the market to avoid any oversupply in the long term.

“Hence any new entries into the market should weigh the pros and cons prior to making inroads into the local market,” she added.

Malathi concurs with Previndran that budget accommodation is always good investment as budget-conscious business travellers downgrade to cheaper accommodation during these challenging times.

“Overall, the mid- to long-term outlook of the Klang Valley hospitality industry remains positive as it has received strong government support to grow further,” she said.

The 5-star Royale Chulan Kuala Lumpur, soft-launched in April, expects to achieve 55% occupancy rate by year-end.

Leo Kuscher ... ‘Hotel business is cyclical, so there will be demand.’

Its general manager Leo Kuscher told StarBiz that there appeared to be an oversupply of hotel rooms in the Klang Valley and the current market was very competitive, affecting hotel room yields.

“However, the hotel business is cyclical, so there will be demand,” he said.

Operated by Boustead Hotels & Resorts Sdn Bhd, The Royale hotel chain also has three 4-star hotels, namely The Royale Bintang Kuala Lumpur, The Royale Bintang Damansara and The Royale Bintang Resort & Spa Seremban.

The hotel operator plans to launch The Royale Bintang Penang and The Royale Bintang Suria-Damansara, with 300 rooms each, in the second quarter and end of 2010 respectively.

Meanwhile, TA Enterprise Bhd managing director and chief executive officer Datin Alicia Tiah said it was too soon to comment on its two hotel projects in Kuala Lumpur. TA said in an email reply that it had not started any hotel project in Malaysia.

“Construction of the new hotels will start next year and be ready only in four to five years,” the company told StarBiz.

By The Star (by Racheal Kam)

Reclamation project not under us, says developer

JOHOR BARU: The Lido Boulevard land reclamation project is under the purview of the Iskandar Regional Development Authority (IRDA) and its appointed contractors.

CMP, developer of the Lido Boulevard project, said it was not responsible for the land reclamation.

It was reported in a Bernama story in The Star on Wednesday that Pulai MP Datuk Nur Jazlan Mohamed had urged the state to order the Lido Boulevard developer to activate its environment management plan to prevent pollution.

CMP managing director Datuk Chan Tien Ghee said the company had carried out studies in line with the Government’s environmental standards.

“We have conducted all the relevant studies in line with Federal and state environmental standards.

“The Detailed Environment Impact Assessment Studies initiated in 2006 received approval in May last year while the Environmental Management Plan was approved in March this year,” he said.

He added that all approved measures would be in place before the company started work at the project site.

“We hope that complaints will be referred to the relevant parties responsible for the project,” he said.

By The Star

Tech park to attract RM2bil investments

Kulim Technology Park holding talks with three US companies

KULIM: Kulim Technology Park Corp Sdn Bhd (KTPC), the developer of Kulim Hi-Tech Park (KHTP), is negotiating with three US companies to bring in about RM2bil investments.

President of Kulim Technology ParkCorp, Muhamad Sobri Osman(inset), says KYPC has recently completed the RM1 billion business centre wing.

KTPC president Muhamad Sobri Osman said the companies were involved in the solar power, semi-conductor and pharmaceutical businesses.

“The solar power investment, likely to be around RM1.5bil, will be on a 75-acre site in phase three of the KHTP development.

“The phase, covering 432 acres, is over 90% complete in terms of infrastructure development,” he told StarBiz recently.

Sobri said he hoped the deals would be finalised in 12 months.

“The investment for the phase three infrastructure is around RM100mil,” he said, adding that KTPC was also in negotiation to bring in investment from a US company involved in nano-technology.

On the development of phase four of KHTP, Sobri said KTPC had recently secured a RM80mil soft loan from the Federal Government to lay high-technology and utilities infrastructure for the 450-acre site.

“We recently completed the RM11bil business centre wing, which has a built-up area of 75,000 sq ft.

“We are now bringing in tenants involved in business process outsourcing activities, research incubators and equipment support business,” he added.

In fulfilling its pledge to turn KHTP into the most successful high-technology park in the country, Sobri said the Federal Government had agreed to upgrade the present hospital so that it could handle hazardous chemical cases.

The Government had also given the green light to set up a police station and an industrial skills development centre.

Sobri said the capacity of the present 220MW power plant in KHTP, which is owned and managed by Northern Utility Resources, could be upgraded to 440MW.

“Thus, KHTP could cater to the needs of the new tenants without building another power facility.”

On housing for workers, Sobri said some 1,900 units of landed properties, priced between RM170,000 and RM220,000 each, were being developed.

“So far, about 1,900 units of landed and high-rise properties have been sold and occupied in KHTP,” he said.

By The Star (by David Tan)

Tradewinds, InterContinental terminate Mutiara contract

Plans to renovate and rebrand The Mutiara Beach Resort in Penang, which belongs to Tradewinds Corp Bhd (TCB), has been put off indefinitely.

The 20-year-old property, which has been closed for some 41 months now since 2006, was to be renovated and rebranded as an InterContinental Resort Penang.

TCB and InterContinental have now mutually terminated the management contract, its chief executive officer Shahrul Farez Hassan told Business Times.

"Both parties decided to terminate the contract early this year," he said.
However, he dismissed talks that it may sell the hotel located on a 4.05ha land in Jalan Teluk Bahang, Tanjung Bungah. He pointed out that the group plans to develop the hotel at a later stage.

"We are now relooking ... there are weaknesses in the market and we want to see when these weaknesses will abate," Shahrul added.

"Our strategy is to continue maintaining our hotel assets, especially in key areas," he said.

TCB, which owns eight other hotels in the country, is controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary.

A year ago, TCB chairman Tan Sri Megat Najmuddin Megat Khas said that it had scrapped its initial plans to halve the room inventory and build luxury residences at the hotel.

It had instead decided to have only hotel rooms, as otherwise the return on investment will not commensurate with the cost of building the property.

TCB had planned to reduce the inventory of the 438-room property to 220 rooms and include 80 units of luxury residences. The cost at the time was estimated at around RM100 million.

The residences were to be sold at around RM500 per sq ft and leased back. The hotel was supposed to reopen at the end of 2008.

The reopening date was then changed to mid-2009.

TCB's hotel portfolio includes Crowne Plaza Mutiara Kuala Lumpur, Hotel Istana, Hilton Petaling Jaya and Mutiara Johor Baru.

By Business Times (by Vasantha Ganesan)

Cash-rich AEON scraps REIT plan

Retailer and mall operator AEON Co (M) Bhd has scrapped its plan to set up a property trust, one of the company's options to raise funds, as it has enough cash to expand.

Managing director Nagahisa Oyama said it has enough money in its coffers to grow its business without having to raise funds.

"AEON has money to open two to three outlets each year ... so we do not need to do a REIT (real estate property trust)," Oyama told Business Times in an interview.

Companies with a lot of assets can form a REIT as a way to raise funds. Typically, they sell some of their assets to the REIT which in turn will raise funds from an initial public offering.
As at June 30 2009, AEON has RM33.3 million in cash. The group has also seen its net profit growing each year for the last five years. For the year ended December 31 2008, it made a net profit of RM120.6 million on revenue of RM3.43 billion.

AEON chairman Datuk Abdullah Mohd Yusof first announced that it was looking at a REIT as an option in April 2007.

However, in 2008 the company said that it was in no rush to set up the REIT as it thought the local property trust market was still in its infancy.

AEON continued to keep tabs on the industry and was also studying the REIT.

It identified seven properties valued at about RM700 million to be sold to the trust vehicle. Four of the properties are located in the Klang Valley namely Alpha Angle Shopping Centre in Kuala Lumpur, Jusco Metro Prima Shopping Centre in Kepong and Aeon Cheras Selatan Shopping Centre and Bukit Raja Shopping Centre in Klang.

Two outlets are in Johor - Jusco Taman University Shopping Centre and AEON Tebrau City Shopping Centre. The seventh outlet is Jusco Melaka Shopping Centre.

In 2008, its property management division made an operating profit of RM62.17 million and a revenue of RM308.86 million.

Today, it operates 25 outlets, four of which are MaxValu supermarkets. About 10 shopping centres, where the 21 Jusco department store-cum-supermarkets operate, are owned by AEON.

It will also own two of the three new confirmed store openings - the Mahkota Cheras and Bandar Permaisuri. It will lease the space in Bandaraya Melaka.

By Business Times (by Vasantha Ganesan)

Gamuda rises to a 3-week high

Gamuda Bhd, Malaysia’s second- biggest builder, rose to the highest level in three weeks after Maybank Investment Bank Bhd said the company may report a 52 per cent increase in net profit in the year ending July 2010, boosted by a strong order book.

The stock gained 1.6 per cent to RM3.18 at 10:14 a.m. in Kuala Lumpur, set for the highest level since Aug 14 and outpacing the FTSE Bursa Malaysia KLCI Index’s 0.4 per cent gain. Gamuda shares have surged 68 per cent this year.

It’s “sunny skies ahead,” Maybank Investment said in a report today. “We also expect major job wins in fiscal 2010.” Gamuda is Maybank’s top construction stock pick with a “buy” rating and a target price of RM3.80.

Profit at Gamuda is expected to rebound next year as the work pace on its RM8 billion (US$2.3 billion) of outstanding orders accelerates and profit margins at the new Doha International Airport project are restored, the report said.
The government may roll out as much as RM80 billion of construction contracts over the next few years, benefiting builders, CIMB Investment Bank Bhd said in a report on Sept 2.

The government has unveiled stimulus plans valued at RM67 billion in the past year to restore economic growth.

Gamuda is the only contractor vying for all three major infrastructure contracts that are now at various stages of “pre-award,” Maybank Investment said.

The projects are the Pahang-Selangor interstate water transfer project, the new Sepang low-cost carrier terminal, and the extension of the Klang Valley Light Rail Transit, the report said.

Gamuda’s profit for the year ending July 2010 may advance to RM281.6 million, Maybank Investment said. Net income may have shrunk 40 per cent to RM185.7 million in the year ended July from a year earlier, it said.

By Bloomberg