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Monday, October 5, 2009

Asian properties to lead global recovery

KUALA LUMPUR: Vincent Lo, the billionaire chairman and chief executive officer of Hong Kong-based Shui On Group which developed Shanghai’s popular tourist landmark, Xindianti, believes Asia’s property market will take the lead in recovering from the shocks inflicted by the global financial crisis.

“Things are looking up again for the region and we are as busy as ever in China,” Lo told StarBiz.

After his last visit to the city more than 10 years ago, Lo was back last week to attend the three-day Forbes Global CEO Conference 2009.

“I am very impressed with how much Kuala Lumpur has developed and by what Prime Minister Datuk Seri Najib Razak is doing to further raise the country’s competitiveness. I certainly look forward to coming back again and this time to look at the possibility of venturing here if opportunities arise,” Lo said.

He said if Shui On decided to venture to Malaysia, the first thing he needed to do was to look for the right local partner. “The property business is a highly-localised business and a good local partner who knows the local conditions will be one of the factors for success.”

The affable Hong Kong-born Lo has built up Shui On into one of the largest real estate developers in mainland China. Today he keeps busy with his group’s many developments in prime locations of major Chinese cities, including Shanghai, Beijing, Chongging, Wuhan, Foshan and Dalian.

He sees immense growth potential in China and has made the world’s most populated country the main business focus for his group.

Lo started investing in China 25 years ago and, in recent years, he sold all his group’s investment assets in the United States and channelled them to China.

“We go where the opportunities are. There’s no place like China in terms of its strength as an economic powerhouse and growth opportunities.

“Today, more than 90% of our assets with total investments of at least 100 billion yuan are in China,” Lo added.

Shui On has a land bank of 13.2 million sq m in China. Of this, 50% will comprise residential property and the balance commercial, office and hotel property.

Lo said China would continue to chart amazing growth for many years to come.

“I am very happy to be in China right now. The Chinese leaders have proven their mettle in managing the country’s economy very well throughout the global financial crisis.

“The progress being made in the country’s real estate sector is just in the beginning stages and there are immense opportunities for more phenomenal growth.

“Each year, 16 million to 22 million Chinese are been urbanised and this translates into major needs for housing, commercial space, factories and other public facilities,” the tycoon said.

He said amid the rapid globalisation, China’s economy was being transformed very rapidly with much wealth creation and structural changes along the way.

Lo, who founded Shui On Group in 1971 after borrowing HK$100,000 from his father, the late Hong Kong property tycoon Lo Ying-shek, is today a highly-regarded figure and one of the leading entrepreneurs in China.

Shui On Group is the parent of both Shui On Land Ltd and Shui On Construction and Materials Ltd (Socam). Both are listed on the Hong Kong Stock Exchange.

Shui On Land, listed in 2006 and headquartered in Shanghai, is the group’s flagship property company undertaking large-scale re-development projects in China.

Shui On Land specialises in masterplan communities with minimum built-up space of 10 million sq ft while Socam undertakes smaller-scale developments.

Lo, who is still the controlling shareholder in Shui On Land with just under 50% of the company’s shares and 37% in Socam, believes that the Chinese government will soon open up the Shanghai Stock Exchange for listing by companies established outside China.

By The Star (by Angie Ng)

Property development to be Tradewinds top revenue earner

TRADEWINDS Corp Bhd expects property development to start contributing significantly to its revenue sometime between 2011 and 2012, its top official said.

The group undertook a restructuring exercise in 2008 to focus on hotel and property development.

The contributions are expected to come in once projects which are now on the drawing board are launched from 2010 onwards.

In 2008, Tradewinds' property division, including rental income from Komplex Antarabangsa and Menara Tun Razak, made RM24.51 million representing 5.2 per cent of total revenue.
"We expect to launch projects in 2010 that will see revenue coming in in 2011 or 2012," TCB's chief executive officer Shaharul Farez Hassan said.

"And we expect property development to overtake hotel contributions (in terms of revenue) in four to five years' time," he added.

Hotel operations now contribute 70 per cent of total group revenue.

In a recent interview with Business Times, Shaharul said given that it was only beginning to establish itself as a property developer it will take sometime for the segment to mature and make a mark.

TCB now has 365ha of land in Nusajaya in Johor for development. TCB plans to form tie-ups with established property developers to launch its housing projects.

It has already entered into a 49-51 per cent joint venture agreement with United Malayan Land Bhd (UM Land) holding the majority share, to develop land in Nusajaya.

At the same time, it is also looking for land within the Klang Valley and Penang to buy or enter into joint-venture pacts for property development projects.

Previously, TCB's venture into property development has been by roping in a developer to develop land that it owns.

These projects include Bandar Baru Pulai in Johor and Bandar Jaya Putra in Mount Austin, Johor.

In the half year ended June 30 2008, property division contributed RM13.6 million in revenue.

TCB in 2008 split its plantation and sugar refining business from the group to focus on its hotel and property operations.

By Business Times

Tradewinds sets sights on hotel acquisitions abroad

Hotelier and property developer Tradewinds Corp Bhd (TCB) is setting its eyes on hotel acquisitions abroad, as this provides better and speedier returns on investments.

It has been looking at several proposals which it has received from around the region.

"We have been approached by various parties, but we are not actively pursuing any of these at the moment, neither are we saying no to these proposals," chief executive officer Shaharul Farez Hassan told Business Times.

He added that he sees Southeast Asia as a suitable location for its foreign venture.
"Hotels in other countries fare better in terms of room rates," he said.

With the exception of Langkawi, Malaysian hotels in general rake in lower average room rates compared to their counterparts elsewhere.

TCB's previous foreign hotel initiatives were in Vietnam and Sarajevo, Bosnia Herzegovina. It sold its partially completed hotel in Hanoi, The InterContinental Westlake hotel, two years ago for US$75 million (RM261 million). This gave TCB a one time net gain of RM148.5 million.

Tradewinds had also previously won a bid for a hotel in Sarajevo, but pulled out after due diligence was conducted.

Meanwhile, Shaharul expects its hotel division revenue to dip by between 10 per cent and 13 per cent in the year ending December 31 2009, as the global economic crisis and the H1N1 flu sees people travelling far less.

Last year, the division chalked up RM332.74 million, which accounted for 70 per cent of its total revenue of RM475.46 million.

In the first half ended June 30 2009, TCB made a net profit of RM13.12 million on the back of RM223.63 million. Sixty four per cent of the revenue was from its hotel division.

This year, its worst hit hotel has been Hotel Istana Kuala Lumpur. Business is down by about 10 per cent compared to last year. Nevertheless, all hotels are profitable.

The best performing hotel in terms of room rates is the five star Meritus Pelangi Beach Resort & Spa, Langkawi which it owns but is operated by Singapore Meritus International Hotels Pte Ltd.

Other hotels owned and operated by the group include Mutiara Taman Negara, Pahang and Mutiara Johor Baru.

Hotels owned by TCB but operated by an international chain include Crowne Plaza Mutiara Kuala Lumpur, Hilton Batang Ai Longhouse Resort, Sarawak, Hilton Kuching and Hilton Petaling Jaya.

TCB also manages the Mutiara Burau Bay Beach Resort, Langkawi for the Langkawi Development Authority.

By Business Times (by Vasantha Ganesan)

BLand may start work on S. Korean project next year

BERJAYA Land Bhd (BLand) is expected to start construction of its maiden US$3 billion (RM10.4 billion) mixed development township project in South Korea in the second half of next year.

"We are at the design stage now. We target to complete that and start construction next year," Berjaya Hotels & Resorts chief executive officer Joseph Won said in an interview with Business Times in Kuala Lumpur recently.

Won said he is bullish about the project, given that Jeju province is popular among people from Japan, South Korea and China.

BLand entered into a joint venture with Jeju Free International City Development Center (JDC) in 2008 to become master developer for the project in Jeju.

The resort-type township will be built within eight and 10 years on 74.4ha of land and feature 600 mid-rise apartments, 200 villas, a five-star hotel with 250 rooms and a casino hotel with 500 rooms, a casino, a shopping complex and a medical centre.

BLand, which acquired the 74.4ha land from JDC to undertake the project, has a 81 per cent interest in the development. JDC holds the balance.

Berjaya Hotels & Resorts, the leisure unit of BLand, is looking for properties to operate in Asia Pacific to build up its existing portfolio.

Future growth plans in the Asia-Pacific region will include Japan and Maldives, including South Korea.

"We are eyeing to set up city hotels in Tokyo and Yokohama in the longer term. Japan would definitely be on our radar," Won said.

BLand has a joint venture, also, in Maldives to build 90 to 100 chalets under the Ritz brand for US$125 million (RM433.7 million).

Its partners in the venture are Ritz Carlton and Far East Consortium International Ltd, holding 33 per cent and 10 per cent interest, respectively.

Berjaya Hotels & Resorts may operate the properties for BLand and its partners.

By Business Times (by Sharen Kaur)

LCL to bid for more jobs in Abu Dhabi

DUBAI: LCL Corp Bhd will shift its focus to bid for more interior fit-out (IFO) contracts in cash-rich Abu Dhabi, after the completion of IFO jobs in major projects like Atlantis The Palm Hotel, Dubai Metro System, Dubai Mall and Dubai Marina Hotel in Dubai, said group managing director Datuk Low Chin Meng.

Given the current slowdown in the construction sector in Dubai, he said: “LCL does not want to miss out on the opportunities in Abu Dhabi’s bustling construction sector.”

“LCL will aggressively bid for IFO projects in Abu Dhabi particularly in government-funded projects such as hospitals, universities and clinics,” Low told a group of Malaysian journalists visiting LCL’s existing projects in Dubai and potential projects in Abu Dhabi as well as some top Malaysian government officials based in the United Arab Emirates (UAE).

The group will also be looking at setting up strategic partnerships with Malaysian construction and property companies as well as Middle Eastern groups with investments in UAE and other countries in the Gulf region.

Unlike the tight liquidity situation in Dubai following the global economic downturn, Abu Dhabi is actively forging ahead with mega projects such as commercial and residential buildings, roads, airport and rail systems estimated to be worth a whopping US$208bil.

The top 10 construction projects in Abu Dhabi include the US$40bil Khalifa City, which is similar to Malaysia’s Putrajaya, the US$39bil Yas Island tourist development, Burooj Properties’ US$24bil real estate community project and Saadiyat Island’s offshore development worth US$28bil.

There is also the US$22bil Masdar City, the world’s first zero-carbon, zero-waste city, the US$18.5bil mixed hospitality development Al-Raha Beach Complex, the US$7.5bil Al Reem Island mixed development and US$3bil Abu Dhabi Light Rail Project and a MGM Grand Hotel.

On the status of LCL’s IFO projects in Dubai, Low said: “We hope to complete most of our existing projects before year-end and are also in the process of recovering our claims and entitlements from property developers in Dubai estimated at not less than RM200mil.

“We have a strong case to make these claims and expect these claims to materialise in the next eight to 10 months. This will lead to a substantial reduction in our high borrowings currently.”

LCL has seen three consecutive quarters of losses.

For the second quarter ended June 30, it posted a net loss of RM18.1mil on revenue of RM105.6mil.

Low believes LCL will be looking at a better second half and hopefully a stronger fourth quarter to stay in the black this fiscal year.

Although LCL is consolidating its business in Dubai, he is confident that recovery in the emirate’s construction sector will likely take place next year.

According to the latest data by Dubai-based Real Estate Regulatory Agency, almost three-quarter of property development in Dubai have made construction progress despite the slowdown.

Of 552 projects, more than 72% showed some construction progress, while 17% were “stalled” and 11% “delayed.”

Jones Lang LaSalle, the world’s leading real estate investment and advisory firm, late last month said Dubai and Abu Dhabi were among the best positioned to attract long-term investment to their real estate markets over the next two to three years, noting that Dubai had made “considerable progress” towards recovery since last year.

The positive views on Dubai and Abu Dhabi are shared by Malaysian Ambassador to UAE Datuk Yahaya Abdul Jabar, Dubai-based Matrade senior trade commissioner Dzulkifli Mahmud and Export-Import Bank of Malaysia Bhd (Exim Bank) managing director Mohd Fauzi Rahmat.

Dzulkifli said UAE was Malaysia’s largest export market in the Middle East with exports worth RM12.4bil posted in 2009 from RM2.93bil in 2008.

Malaysia’s major exports to UAE include jewellery, electronic and electrical products and palm oil.

“Malaysian companies are well regarded in Dubai as having good reputation in terms of their on-track delivery and good quality products,” he said.

Fauzi said Exim Bank had been assisting Malaysian companies seeking facilities to undertake investments in the Middle East and African countries.

“To date, 10% of Exim Bank’s business is in the Middle East. So far, the bank has approved some RM365mil facility for this market,” he said.

Yahaya commended LCL’s performance in Dubai amid the tight credit situation there.

He said the company had set the benchmark for Malaysian companies operating in Dubai.

By The Star (by Hanim Adnan)

Affordable home policy mulled

PENANG: The Penang Government is looking into the implementation of a new housing policy that will mark the end of the construction of low-cost flats in the state.

Deputy Chief Minister I Mansor Othman said current trends were leaning toward affordable homes.

“We are not thinking anymore of low-cost flats, we are thinking about affordable homes now,” he told reporters when attending a housing forum organised by the Bukit Gelugor Residents’ Welfare Association in George Town yesterday.

Mansor said the affordable houses would still be in the price range of the lower income group — be it the urban and semi-urban or the rural areas.

“There is a demand for affordable homes and I think that those from the low-income group, who are the target (of this new policy), can afford homes from RM60,000 to RM100,000.

“We have to add more of these houses and the state needs to create more affordable houses in every district,” he said, adding the houses should be at least 850 sq ft.

Mansor said the state executive council was currently trying to resolve issues pertaining to squatter and strata title issues in the state and this should be concluded by the end of the month.

“We are thinking about a new (housing) policy and are currently discussing it at the state executive council meeting.

“There are 160,000 unresolved strata title cases in Penang and after we finish looking into that, we hope to come up with some kind of policy suggestion for housing.

“Come November, we can begin discussions and by January, I think we can kick off the policy,” he said.

Speaking to reporters at the same function, state PKR chairman Datuk Seri Zahrain Mohamed Hashim described some of the current low-cost flats as “unliveable” and urged the state to look into improving houses for the lower-income group.

“Houses that are between 550 sq ft and 600 sq ft are not livable and should not be encouraged,” he said, adding that houses should be a minimum of 900 sq ft for comfortable living.

On the state’s plan to raise the density in certain places in Penang, Zahrain said he supported the decision.

“I totally agree. Land is scarce in Penang and sticking to 20-year-old policies are not relevant anymore.

“But we don’t want the creation of slums. If the density is too high, there will be social problems,” he said.

By The Star

China seeks more bilateral trade

KUALA LUMPUR: Malaysia and other developing countries need to know the right approach to woo China to secure more business opportunities, says China chief representative of the Economist Group and Directory of Advisory for Economist Intelligence Unit Steven Xu Sitao.

“China is still looking for more bilateral trade with other developing countries such as Malaysia for various businesses in real estate and as a source of natural resources for the country (China) ...,” Xu said on Saturday at the International Real Estate Federation (Fiabci) Malaysia Global Summit 2009.

Xu who presented a paper on “From Boom to Bubble – Impact of Growth in China’s Real Estate Sector” said the stimulus package by China recently had shown some result that the property market had escaped the downturn and Chinese consumers continued to buy houses.

He said financial liberalisation was the key to China’s sustainable development and this need to be done in a fast pace.

“By strengthening the financial liberalisation, more small and medium enterprise companies will have the opportunities to get more capital from the banks as compared with the current situation where lending is tight because banks are under government’s control,” Xu said.

He added less political influences by the Government to banks would attract more foreign investors to do business in the country.

During a panel discussion, Fiabci Asia Pacific Regional Secretariat chairman/ Fiabci World President 2005 - 2006 Datuk Alan Tong Kok Mau said total cooperation between public and private sector was crucial to gain sustainable business during the current uncertainty.

“We are fortunate that the current economic slowdown is not as bad as in 1997 financial crisis where lot of developers were out of business,” Tong said.

By The Star (by Edy Sarif)

CapitaLand to list retail unit in Singapore

CapitaLand Ltd, Southeast Asia’s largest developer, plans to list its CapitaLand Retail Ltd subsidiary in Singapore to tap growth in Asia’s shopping mall industry.

CapitaLand Retail will be renamed CapitaMalls Asia Ltd. and will have stakes in and manage malls valued at S$20.3 billion (US$14.4 billion) as of June 30, the company said in a statement to the Singapore stock exchange today. The unit will take control of CapitaLand’s retail real estate fund and property trust management business.

“The proposed listing of CapitaMalls Asia is consistent with CapitaLand Group’s approach of optimizing business growth with prudent capital management,” chairman Richard Hu said in the statement. “This transaction is also a logical evolution of CapitaLand’s business model and will allow us to accelerate our next phase of growth.”

Chief executive officer Liew Mun Leong has said CapitaLand wants to expand its real-estate services business along with the main property development operations. The listing of the unit follows offerings in other units including CapitaMall Trust and CapitaCommercial Trust in Singapore since 2002.

CapitaMalls Asia’s portfolio includes 59 completed malls in China, Malaysia, Japan, India and Singapore, including the Ion Orchard development on the city-state’s Orchard Road shopping strip. Another 27 properties are currently being developed.

CapitaMalls Asia will also take a 15 per cent stake in Raffles City China Fund, which has stakes in four Raffles City- branded developments in the nation, according to the statement.

By Bloomberg

Bina Puri working hard to fatten up its order book

BINA Puri Holdings Bhd, one of Malaysia's largest construction groups with RM4.2 billion jobs in hand, will continue to aggressively tender for new projects to sustain growth in earnings and bring the group to a higher level.

It has ongoing projects in Malaysia, Pakistan, Thailand, Brunei and Abu Dhabi, but is aiming for more work in the existing markets to keep its business in the local and overseas sectors moving, group managing director Tan Sri Tee Hock Seng said.

Tee said in an interview with Business Times recently that it will submit bids for construction projects worth more than RM2 billion a year.

Bina Puri, involved in construction, property, highway concession, quarry and manufacturing, is targeting public and private sector projects.
Locally, it is looking to bid for jobs from the new permanent low-cost carrier terminal (LCCT) in Sepang, the light rail transit (LRT) extension works, road and highway projects, housing and building construction.

"There are a lot more projects to award under the Ninth Malaysia Plan. Many have not been executed as a lot of time is spent negotiating and finalising details of the contracts with the relevant ministries, before the letters of award are issued," Tee said.

Tee said as the company will be finishing some of its projects in Pakistan, Abu Dhabi and Thailand over the next three to eight months, it is working hard to replenish its order book.

Tee added that Bina Puri should be able to secure more than 30 per cent of the bids as its proposals are usually more competitive and it has strong networking.

He said the group has letters of intent for four projects now, worth RM410 million, and it is working to convert them into letters of award soon.

This year alone it has won projects in Malaysia, Brunei and Pakistan to the tune of RM1.15 billion. Its biggest win was a RM693 million job to build 2,000 houses in Brunei.

In 2006 and 2007, Bina Puri secured projects worth RM1.6 billion and RM1.42 billion respectively.

By Business Times (by Sharen Kaur)

Bina Puri sees 20pc growth in net profit, revenue

BINA Puri Holdings Bhd expects net profit and revenue to grow by as much as 20 per cent in the current year, helped by some RM1.15 billion of new jobs it has won this year, and also from contributions of existing works.

It has RM2.4 billion worth of projects in hand, which have yet to be booked into its accounts, group managing director Tan Sri Tee Hock Seng said.

For fiscal 2008, Bina Puri posted a net profit of RM4.3 million on revenue of RM676 million.

Bina Puri has been profitable since its establishment in 1975 and its revenue has been growing steadily by 10 to 15 per cent, especially after listing in 1995.
Its net profit has always been single-digit, but Bina Puri is now aiming for double- digit earnings.

"This year would definitely be better for Bina Puri. The price of raw materials have stabilised and the projects in hand are starting to contribute significantly to our earnings. A lot of our projects are fast track," Tee told Business Times.

He said the most significant contribution in the future will be from its Kuala Lumpur-Kuala Selangor Expressway (KSE) project, which it expects to complete by mid-2011.

The company holds the design-and-build contract, worth almost RM1 billion, for the KSE Package 1 and 2 and it will start to contribute to earnings from 2015.

Bina Puri was founded by Dr Tony Tan Cheng Kiat, who is related to Tee, and his partner. Tee was roped into Bina Puri in 1983.

Both Tan and Tee hold 37 per cent of Bina Puri while Bumimaju Mawar Sdn Bhd, controlled by Tan Sri Tong Yoke Kim and son Datuk Andrew Tong So Han, holds 19.27 per cent stake.

Bina Puri started with a small building contract for the police station and staff quarters in Kepong for the Public Works Department.

It evolved from a class "BX" licence contractor to class "A" industry leader in September 1985.

The company expanded its business activities in 1995 to include property development, highway concessionaire, quarry operations, manufacturing of construction materials and polyurethane system house.

Its first overseas venture was in 1999 and it has since completed many highway and housing projects in India, China, Nepal and Thailand.

By Business Times