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Saturday, September 26, 2009

The changing face of Cheras

Cheras is undergoing a transformation. At one time known to be a suburb for petty traders, the township of about 800,000 is slowly changing public perception. It has moved up the status ladder and today holds a large middle class population.

One of Kuala Lumpur’s largest suburbs will today have what may be its first landed strata development.

Datuk Liew Hoong (left) and his son Kim Seng, the chief operating officer, with a model of the Taynton Hill bungalows.

While there are several projects there which comes with security and perimeter fencing, FAM Development Sdn Bhd says these are not strata projects.

Says chief executive officer Datuk Liew Hoong: “Prior to the Building and Strata Title Act 2007, the previous Strata Title Act governed only condominium projects. While most of us are familiar with vertical strata projects, as in condominiums, there was nothing to govern landed strata projects.

Under the Building and Strata Title Act 2007, only owners can decide how things are run in a gated and guarded community.

“Therefore, our project Taynton Hill, which comprises 16 units of three-storey bungalows will be the first strata development here,” he says.

Located in Taynton Estate, with access via the East-West highway and via Jalan Cheras, the 3.2 acre development is located next to Sri Mutiara Secondary School.

Liew says there will be another proposed access via the Middle Ring Road 2 (MRR2). This will be FAM’s first project after a long hiatus of some 20 years. Its previous project was a residential and commercial development with the Sunway group in Batu Caves in the 1980s.

Bungalow sizes range between 5,800sq ft and 8,600sq ft, with prices ranging from RM3.8mil to more than RM6.5mil. They are expected to be launched in the middle of next month.

The modern contemporary units come with lifts. Five of the 16 units have been sold. Because the project is located on undulating land, each bungalow will be a meter lower from its neighbour.

The company bought the land in 2007 for RM125 per sq feet. It is now worth about RM160 psf today. The project will have a gross development value of RM85mil.

“We are targeting upgraders in Cheras between 35 and 65 years old with extended families,” he says.

Over the years, Cheras has progressed from the usual double-storey terraces to include bungalows. This has subsequently progressed to pockets of small developments with security features and high-perimeter fencing.

“While such projects have been popular among the Cheras population, these are public roads and the local authorities can have these security barriers removed. With Taynton Hill, it will be different,” he says.

Cheras stretches from the Royal Selangor Golf Club along Jalan Tun Razak-Jalan Bukit Bintang intersection to parts of it bordering Kajang. Parts of Cheras have a Selangor address while the larger part of it comes with a Kuala Lumpur address.

There are several developers who are active there at the moment other than FAM. This includes IJM group (Bukit Mandarina and Monte Bayu), Mah Sing group (Hijauan Residence and One Lagenda), Lum Chang group (Twin Palms Cheras) and SPPK with Alam Damai (Syarikat Perumahan Pegawai Kerajaan Sdn Bhd).

While there are several projects going on at present, GuocoLand (M) Bhd’s bungalow and high-rise condominium development Cirrus Cheras will be the one that is physically nearest to FAM’s Taynton Hill. That project is on 16 acres versus FAM’s 3.2 acres. Besides the larger players, there are also several small developers in that area.

Liew says because Cheras is large and sprawling, it is home to a large cross section of the Kuala Lumpur population.

“Several generations stay here and there is constant upgrading among the population. Therefore, even very small developers with small plots of land tend to enjoy good sales when they build here, particularly if the project comes with some sort of security elements,” says Liew.

FAM Development Sdn Bhd is a family business, with Liew at the helm. He is assisted by three of his four children currently. Besides property development, the FAM group has interest in plantation and other business ventures in China and Hong Kong.

By The Star (by Thean Lee Cheng)

Plugging the infrastructure gaps

Infrastructure projects have a way of uplifting people and heralding more vibrant changes to the way they live and their overall quality of life. There are also many benefits, both socially and economically, that can be reaped from having good infrastructure projects.

Projects with high multiplier effects on the country’s social and economic sectors should be identified and implemented.

Realising the many multiplier benefits that can be derived from infrastructure projects, governments around the world are paying greater attention to leverage on infrastructure projects to get their economies out of the rut of the global financial crisis.

From Australia to China and India, many new infrastructure projects, especially public transport system, highways, schools and other public facilities are being built to generate more economic activities for the people. This is certainly one of the few positive outcomes of the global turmoil.

Malaysia has done pretty well compared with some other countries in the region in terms of infrastructure development and today boasts of some world-class infrastructure projects such as the North South Expressway and Kuala Lumpur International Airport.

But there are still many areas that need greater fund allocation and resources that have the potential to spawn more positive impact to a broad spectrum of economic and non-economic sectors.

Projects with high multiplier effects on the country’s social and economic sectors should be identified and implemented. To ensure their success, the key is speedy and efficient implementation.

In light of the worsening traffic congestion and poor public transport system that have been endured by folks in Kuala Lumpur and the Klang Valley for the past many years, this will be the best opportunity for immediate action to be taken to overhaul the whole public transport system.

After all, the public transport system that includes the various modes of transport facilities and road networks are one of the most widely used public facilities among the people.

It looks like the single most effective initiative will be to set up a single authority to look into all the initiatives to streamline and integrate the whole public transport system.

Such an initiative will ensure all the avenues that are necessary to overhaul and improve the public transport system to be made the top priority and be given due and immediate attention.

After more than a decade of the introduction of Star LRT in 1996, the light rail transit (LRT) system is still not functioning to its optimum capability and many find the facility wanting with much room for improvement.

With the city’s two LRT systems and bus services now under state transport firm Syarikat Prasarana Negara Bhd, it is necessary for more proactive measures to be taken towards meeting the government’s National Key Result Area target of raising public transport usage to 25% by 2012 from 16% currently,

Firstly, the two LRT systems under the STAR and Putra lines, along with the KL Monorail, commuter train and feeder and public bus services need to be integrated and should complement one another. This means facilities that will promote wider usage of public transport including providing sufficient car parking lots for those who are staying in areas without feeder bus services should be looked into.

The routes of the feeder buses and their regularity and reliability should be further improved.

While the latest initiative by the government to spend RM7bil to extend the Kelana Jaya and Ampang LRT lines over the next three years is lauded, the ancillary facilities to encourage its usage should be built in advance.

When our public transport system proves its efficacy and lives up to the people’s needs and expectations, working and living around the city and the peripheral areas will be much more enjoyable.

Certainly the quality of the environment (less pollution and noise) will move up many notches.

Deputy news editor Angie Ng feels that putting in place a highly efficient and widely used public transport system will be worth the while and is one of the better legacies a government can provide for its people.

By The Star

Luxury hotels risk default as US$850 rooms remain empty

LOS ANGELES: Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing.

Loans secured by more than 1,500 hotels with a total outstanding balance of US$24.5 billion (US$1 = RM3.48) may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company's watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than US$850 a night.

"All segments are showing signs of distress but the luxury segment carries much higher loan balances and is more clearly affected," Frank Innaurato, managing director of CMBS analytical services at Horsham, Pennsylvania-based Realpoint, said in an interview.

Lodging owners are struggling after adding rooms and properties at the peak of the CMBS market from 2004 to 2007, when US$83.4 billion in hotel-backed securities was issued. Occupancy among chains with the costliest rooms fell to 60 per cent in the first half from 70 per cent a year earlier, according to Smith Travel Research. The decline was the industry's largest for that period.
"Luxury hotels have been aggressively financed during the peak CMBS issuance years," David Loeb, an analyst at Robert W. Baird & Co, said in a phone interview. "That's why luxury hotel loans crowd these watch lists."

A US$90 million loan secured by the Four Seasons San Francisco, a 277-room, five-star property, is 90 days delinquent and foreclosure proceedings have begun, according to Realpoint. A notice of default has been filed, according to data.

The borrower was Millennium Partners LLC, a real estate firm founded in 1990 by Christopher Jeffries. The company controls 1,860 residential units, more than 2,000 hotel rooms and 1 million sq ft of office space, Realpoint said.

The Dream Hotel, a 220-room hotel on West 55th Street in New York City that features 300-thread count Egyptian bed linens and iPods, is collateral for a US$100 million loan taken by Surrey Hotel Associates LLC that's at risk of default, Realpoint said.

The borrower is trying to restructure the debt and defer payments, said Riyaz Akhtar, vice president at Surrey.

"What's happening to us now is happening, and will continue to happen, to many hotel properties given the current market," Akhtar said.

The US hotel loan-delinquency rate may climb to 8.2 per cent by year-end, Morgan Stanley analysts led by Andy Day said in a June 23 report. That will match the peak from the last recession in 2001.

Upscale hotels are suffering from "a heightened focus on prudent corporate travel expenditures," as well as the pullback in vacation travel, Day said.

The number of luxury-brand rooms in the US as of the end of July rose 9.1 per cent from a year earlier to 100,000, Loeb said.

By Bloomberg

Upswing mood on prime London properties

LONDON: In view of the current residential market in London, some local property investors are now eyeing for upscale properties at London in anticipation of the substantial investment gains out of these prime residential properties located outside our home ground.

Some local buyers have recently snapped up a number of luxurious apartments and penthouses at Imperial Wharf, London with a minimum estimated sales of £9.24 million (RM56 million) generated during its 2-day launch in Kuala Lumpur.

Developed by one of London's leading residential developers St George Central London Ltd (St George), the prime riverside development Octavia House at Imperial Wharf, London has seen 32.5% (28 units) of its 86 apartments and penthouses, offered at prices starting from RM2 million to RM23 million taken up during the launch.

In addition, sales and marketing manager of St George, Neil Bowron said: “The weakening of pound, coupled with the fact that the Olympics Games is going to be held at London in 2012- has further generated interest as an attractive investment worldwide.”

Having said that, the developer which also aimed to penetrate the Hong Kong and Singapore market with the same property launch in September, managed to set an overall high sales record of approximately 98% out of the total 165 apartments and penthouses at Octavia House offered to investors and homebuyers.

With sizes ranging from 903 sq ft to 3,532 sq ft, these units which are located in a prime London residential location, on the north bank of the River Thames and adjacent to fashionable Chelsea, says the developer.

Bowron said: “The reason why we chose Kuala Lumpur as one of our overseas target markets is due to the increasing demand we have seen over the years among Malaysian investors on prime London properties- around 40% of them bought as results of their children pursuing tertiary education in London.”

By the time their children graduated in the span of few years, investments gains out of capital appreciation may easily cover at least half of the education fees, or in some exceptionally good investments, these could even exceed the total education cost forked out by the parents.

In addition, “Local buyers who are non UK residents are exempted from UK's capital gains tax, the same applies back here where Malaysian residents are also exempted from capital gains tax upon disposal of properties located out of Malaysia under the Malaysia's Real Property Gains Tax Act 1976,” said Chow Chee Yen, the executive director of international tax at Malaysian-based consulting firm Advent Tax Consultants Sdn Bhd.

Ross Faragher managing director at St George commented: “Overseas investors will have the opportunity to capitalise on a 25% currency savings since Summer 2008 and the UK’s lowest base lending rate for decades.”

“Investors should capitalise on the current low base interest rates and currency exchange rates in the UK. It is now a good time to buy prime properties in London,” Bowron said, noting that the apartments located in prime locations in London could generate an average rental yield of 4% to 6% per annum.

According to a statement issued in September 2009 by Jones Lang LaSalle at UK (Jones Lang): “The UK's base rates remained unchanged at 0.50% for a sixth consecutive month in September.”

“The Bank of England is expected to keep interest rates at this level into 2010 whilst continuing its quantitative easing (QE) programme,” said Jones Lang.

In addition, Liam Bailey head of residential research at Knight Frank said, “The real test to the market will come when interest rates rise in either 2010, or if we are lucky 2011. The special impetus on very low interest rates will not last forever and the medium term outlook is probably less positive for the market.

Bailey added that the weakness of pound at the start of this year aided the recovery of demand in central London, set against continuing tight supply- by March, its prices had fallen almost 50% in US dollar terms.

“The sales taking place in London for the first three weeks in September was 75% higher than the same period last year, and we expect tight supply for the remainder of this year,” Bailey said.

In terms of prices, Bailey noted: “The 1.3% price rise for residential property at central London in September is the sixth month in a row, we have experienced positive price growth.”

Despite this recent growth, Bailey said prices are still 18% below their March 2008 peak and represent 8.9% lower than they were 12 months ago.

The strongest areas have been Chelsea, Kensington and Notting Hill, where prices have risen by between 8% and 9% since March, he added.

Although Bailey suggested that these price increase may be short term, the key drivers of price growth remain: tight supply of properties, very low interest rates for cash-rich buyers and strong overseas demand for central London properties.

Surprisingly, Bailey said since the market improvement in April, it has been the lower end of the market which has led the recovery.

“Prices in the £1 million to £2.5 million market have risen more than 5% in the last three months, compared to only 2.4% for houses priced £10 million and above market. Houses continue to outperform flats - with three-month price growth up by 4.6% and 3.6% respectively,” he cited.

That said, James Pace a partner and head of Knight Frank Chelsea noted: “Properties (in London) that are well-presented, in good locations and priced correctly will continue to do well, whilst properties that is compromised will lag behind.”

By The Star (by

Looking Down Under: Opportunities to invest in Western Australia

The current economic downturn and unsteady foreign exchange have opened doors of opportunity for investors to invest in the property market overseas, particularly in Down Under.

Raine and Horne senior partner Michael Geh said one ideal place to invest now was Western Australia where the “property are a good bargain as their prices are rising.”

“It is the right time to make a choice investment overseas, particularly in the Down Under market,” he said.

To promote such sales, Raine and Horne is co-hosting a four-day preview of the property available in the Australian market with an Aussie based Original Property Brokers (OPB) beginning tomorrow.

The preview will be held at 14, Penang Street.

OPB director Samantha Payne, a licensed real estate agent in Australia and Dubai, will meet prospective investors to provide advice and share information on Perth’s and Western Australia’s attractiveness.

“The future of the Australian property market and in particular Western Australia’s property market is extremely bright and seen by most as one of the optimum global places to invest.

“The reasoning behind this is the lack of housing — whereby demand far exceeds supply —brought about by the influx in migration, education, and conducive climate and probably the most important, the A$200 billion invested in the huge natural resources sector that are producing large employment growth,” she said.

Payne will also cover migration visa options, rapidly growing property market, finance options for investors and migrants, business and joint-venture opportunities, relocation services and education facilities and locations.

Geh said local investors could tap Raine and Horne’s vast network of affiliate offices in Australia for insider information to invest.

Interested parties should call Mac at 016-5685889 and Wan at 012-5288163 or email to make an appointment with Payne and her team.

By The Star (by

GIC may invest more in property, resources

SINGAPORE: Singapore’s US$200bil-plus sovereign wealth fund GIC will likely reveal next week if it is moving more money into property, resources and Asian assets after recently cutting its exposure to major Western banks.

GIC, or Government of Singapore Investment Corp, is due to release its annual report for the year to March 2009, only the second year the fund will make the report public.

GIC is the world’s fourth largest sovereign fund after Abu Dhabi, Saudi Arabia and Norway, according to Deutsche Bank. It is a major investor in financial giants UBS and Citigroup, even after halving its stake in the US bank to under 5%.

While GIC does not reveal the size of its assets or list its biggest investments, how GIC allocates its funds by geography and asset class will provide cues about its strategy, investment outlook and risk appetite. It will also outline the proportion of cash in its portfolio, which it could use for new investments.

About 44% of GIC’s portfolio was in stocks and a further 26% in fixed income at end-March 2008.

Analysts said GIC may park more money into physical property, which accounted for 10% of assets last year, and may have stepped up its investment in natural resources, which accounted for just 2% of assets.

“GIC’s real-estate side will perhaps become more busy these days, given the huge collapse in global property, which will give GIC a chance to spot opportunities, especially in the US,” said Song Seng Wun, economist at CIMB in Singapore.

David Cohen, director of Asian forecasting at Action Economics, said it made sense for GIC to shift more of its assets to Asia, given the Singapore fund’s familiarity with the region as well as the better growth prospects.

“I think they probably see Asia as their comparative advantage … it is not a bad place to be investing your money,” he said. “They are not going to drastically change the allocation overnight, although it could mean GIC gradually managing more of its assets in-house and allocating more funds to Asia-based managers.” — Reuters

GIC has outsourced about one-third of its funds to external managers, helping Singapore become a major Asian funds centre over the past decade.

GIC will also state its average return over the past 20 years, which most likely dipped from the 7.8% it reported last year.

More interesting to investment bankers and fund managers will be the amount of cash held by GIC, which stood at 7% at end-March 2008, despite the Singapore fund’s near US$18bil bets on UBS and Citigroup in December 2007 and January 2008.

“In this current environment of low interest rate, holding a lot of cash would not exactly be maximising your return,” said CIMB’s Song.

By Reuters

Selangor Properties 3Q net profit up 182% to RM33.3m

KUALA LUMPUR: Selangor Properties Bhd posted net profit of RM33.3 million for the third quarter ended July 31, up 182% from RM11.8 million a year ago, boosted by foreign exchange gains and higher profits from property development.

It said on Sept 25 revenue rose 36.5% to RM70.55 million from RM51.68 million. Earnings per share were 9.69 sen versus 3.44 sen.

Selangor Properties said pre-tax profit was RM41.94 million compared with RM13.1 million a year ago.

"The higher profit achieved for the current quarter was mainly due to foreign exchange gain of RM18 million as a result of the strengthening of the Australian Dollar and higher profit from property development," it said.

In the second quarter ended April 30 it posted a pre-tax loss of RM31 million due to the provision of impairment loss on its offshore investment in real estate funds.

However, for the nine-months, it was still in the red with net losses of RM3.54 million compared with RM85.65 million in earnings in the previous corresponding period. Revenue was RM166.58 million versus RM146.71 million.

On the outlook, Selangor Properties said the current global economic meltdown had resulted in provision for impairment loss on its offshore investment in real estate funds.

"Accordingly the group expects this current situation would affect the financial performance for the current financial year. However the group will remain cautious and will continue to strive to preserve the shareholders value," it said.

By Business Times (by Joseph Chin)

Selangor Properties profit surges 182%

KUALA LUMPUR: Selangor Properties Bhd’s (SPB) net profit surged 182% to RM33.3mil for the third quarter ended July 31 from RM11.8mil a year ago mainly due to foreign exchange gains and higher profits from property development.

Its revenue rose to RM70.5mil from RM51.7mil previously. Earnings per share stood at 9.69 sen against 3.44 sen a year ago.

For the first nine months, SPB posted a net loss of RM3.5mil against a net profit of RM85.6mil previously.

By The Star