Malaysia Property News is a free resource website sharing Daily Property News & information about Property in Malaysia, which related to, Property Market, Property Investment, Commercial Property , Hot Properties Malaysia, Real Estate, Retail Shop, Business Park, Condominium Malaysia, Terraces & Apartment Malaysia, Houses, Residence, Resort and many more.

Saturday, January 30, 2010

IOI Properties upbeat, plans new launches

Property developer IOI Properties Bhd expects sales to grow by 30 per cent for its current fiscal year ending June 30 2010, driven by the launch of two phases of its "16 Sierra" residential development.

"We expect to achieve sales of about RM850 million this year. However, that is only a conservative target," said its general manager of marketing and business development, Lee Yoke Har.

She said sales for the first seven months of the current fiscal year have already exceeded the company's previous year's sales of around RM650 million.

IOI Properties general manager Teh Chin Guan is optimistic of the general property outlook this year in line with the worldwide economic recovery.

The company has a slew of ongoing developments, namely in Bandar Puchong Jaya and Bandar Puteri Puchong, Selangor.
Both these township developments sprawl over 404ha, with Bandar Puchong Jaya already 80 per cent developed and Bandar Puteri Puchong on its last leg to completion.

Teh said IOI Properties has no plans to halt new launches.

On the drawing board are property developments next to IOI Resort, Putrajaya and plot of land within the Jalan Ampang embassy enclave in Kuala Lumpur.

The Putrajaya project is a mixed commercial development that includes office towers, shop houses and a shopping mall.

"We are doing some groundwork at the site now. We are relocating the existing golf course to make way for the development plan," Teh said.

The development which may be launched in 2 to 3 years spreads across 162ha and is expected to keep the company busy for about 15 years.

At the Jalan Ampang site, IOI Properties plan to build a "super condo" on a small plot of land.

"We are actually submitting the plans for the high-rise residential development. The launch time depends on the market conditions. There is no hurry to launch. I think we want to construct it first," added Lee.

Meanwhile, the 216ha 16 Sierra project with a gross development value (GDV) of RM2 billion is planned as a green township, offering 16 garden themes.

IOI Properties will launch Precinct 8, the first phase of 16 Sierra, today , which features 147 residential units starting from RM448,900 each.

It will also open bookings for the 104 units in the second phase of Precinct 8.

The total GDV of Precinct 8 is RM130 million.

By Business Times

Magna Prima to launch 5 projects in Klang Valley

PROPERTY developer Magna Prima Bhd will launch five projects, worth a combined RM1.2 billion, in the Klang Valley in the second half of the year.

Its chief executive officer Yoong Nim Chee expressed optimism of a pick-up in the property market and said the projects would be launched starting June or July.

They include the much-anticipated Magna Prima City, a RM400 million integrated development in Jalan Kuching, Kuala Lumpur, which will feature serviced apartments, retail mall and shop-offices.

"I believe the market is going to be stable. There is underlying strength in the market. We have people with money to spend. For us, it is going to be a very eventful year," Yoong told Business Times after the company's extraordinary general meeting in Batu Caves, Selangor, yesterday.
Magna Prima has formulated a five-year business plan, which will be assessed yearly.

"One of the strategies is to focus on high-value, low-residue developments and buy pockets of land, instead of huge landbank, so that holding cost is reduced. We want to sell everything we build for quick turnover," Yoong said.

Another project, costing RM100 million, will be developed in Section 16 in Shah Alam, Selangor. It will comprise a gated and guarded residential community of 300 terraced houses on about 7ha.

"This is a low-density development which we will launch in phases. We are going for terraced houses to maximise the land value," Yoong said.

Magna Prima is planning a similar residential project in Selayang, Selangor, which is expected to generate some RM250 million gross development value. It is buying 11ha for RM57 million for the project.

It also plans to launch a gated development in Bukit Jalil, Kuala Lumpur, of terraced and semi-detached houses, worth RM80 million. However, the project is pending completion of a sale and purchase agreement with Ho Hup Construction Sdn Bhd.

In Section 5 in Petaling Jaya, Selangor, Magna Prima will launch a lifestyle commercial project, valued at around RM300 million. There will be four- to five-storey shoplots, a boulevard and a neighbourhood mall.

The development, which may begin late this year or early next year, will take up about 3ha freehold land along Jalan Gasing, which the company bought for RM48.5 million.

"With all the projects lined up and the completion of existing ones, we hope to surpass our 2008 net profit and revenue this year," Yoong said.

In the nine months to September 30 2009, Magna Prima posted a net profit of RM6.4 million on revenue of RM179.3 million. In 2008, it made RM26.9 million net profit on RM280.6 million revenue.

By Business Times

SP Setia in growth mode in southern Johor

Land JV in China (RM500mil GDV) is expected to take off after all the necessary approvals are obtained in the next 12-18 months, JP Morgan says.

SP Setia Bhd’s performance in southern Johor will be on the road to stronger growth given the number of projects in the pipeline and the overall economic recovery in the country, says executive vice-president (property division – northern and southern region) Chang Khim Wah.

“We will launch several hundred houses this year in all our four projects and we expect sales to be healthy,” says Chang.

Setia EcoGardens show house and (inset) Chang Khim Wah.

On average, about 800 to 1,000 units will be launched in each of the four developments with price ranging from RM300,000. The company will also launch some high-end semi-detached and bungalow units ranging from RM1mil in all four projects.

“This is a very conservative figure,” says Chang, adding that more may be introduced into the market based on prevailing market sentiments.

He says the company’s winning factor is the diversity of products and their location. Due to the different locality, each of the four projects will have their own draw. Bukit Indah, established some 10 years ago, with its proximity to the Second Link has become very popular whereas Setia Tropika, which is adjacent to the North-South Expressway, offers urbanised contemporary living.

Setia EcoGardens is the latest and most green project. When completed, Setia EcoGardens will have a total gross development value (GDV) of RM3.5bil, comprising 6,600 residential and commercial properties; about 900 units have been launched cumulatively. Setia Indah is also very established with basic amenities.

Although Johor has been known to have the highest incidence of property oversupply, Chang says the company’s development has never experienced this problem.

“Purchasers want new concepts and we have strived to provide elements of differentiation. This has been our competitive advantage,” he says.

Chang adds that overall, the company’s selling points are location, lifestyle, overall concept securty and brand and reliability.

“About 80% of our purchasers come to us through word of mouth,” he says.

As with last year, Chang’s strategy this year will be to limit the number of units per launch to about 50 units or less, depending on area and type of housing.

The company launched 75 units of double-storey housing in Setia Indah in November which is currently 80% sold. A week ago, it launched 45 more units costing about RM400,000 each in the same area which, to date, is half sold.

The company will be launching a further 66 units this March in Setia Indah and 22 units of bungalows in Setia Indah after June. There are plans to launch 300 units in Setia Tropika this year.

Because all four projects are located in Iskandar Malaysia, the company will be able to tap into the growth of the country’s foremost economic growth region.

“Major roads are being widened to four lanes and rivers are being cleaned. We have seen an improvement in infrastructure over the last two years and this will add value to all our projects. A lot of money has been poured to improve the standard of living in southern Johor. We also see more police patrols to curb crime. Definitely business will improve and this will lead to job creation. In that respect, sales have been good,” says Chang.

With the company’s “The best of the best” promotions coming to an end by April this year, the company will “no longer have a margin loss,” says JP Morgan.

The group’s project at the new KL EcoCity and international expansion will also be another growth catalyst.

“Privatisation of land for the RM6bil EcoCity commercial project is expected to be completed by August this year, with the launch targeted for October.

“The commercial component will account for 70% with residential making up the remaining 30%. Focus for the commercial component will be mainly on service apartments and offices,” JP Morgan says.

SP Setia’s share of profits in this JV will be 48% (after netting off 20% of profits to be paid as consideration for the land over the project period of between eight and 10 years).

The group is expected to spend upfront capital of about RM250mil to improve infrastructure and accessibility to the project.

“Given the learning curve and need to establish a brand in new segments (i.e. commercial, high-rise) and overseas (i.e. Vietnam, China), property margins will remain below historical average levels of 25%. The group guides for property margins to be at 18%-20% going forward (still an improvement from 16% in FY09), close to our forecast of 19% to 20% excluding land sales.”

Its Vietnam projects contributed RM70mil to sales for the 2009 financial year and the Hangzhou Land JV in China (RM500mil GDV) is expected to take off after all the necessary approvals are obtained in the next 12-18 months, JP Morgan says.'

By The Star (by Thean Lee Cheng)

Joint ventures the new way to build?

The coming together of two well regarded property groups, Sime Darby Property Bhd and Sunrise Bhd, to jointly develop a RM1bil integrated commercial property project in Bukit Jelutong, Selangor is quite a new development in corporate Malaysia and will be closely watched by industry players to see how it pans out.

The 50:50 joint venture agreement that was inked on Tuesday is bound to create some ripples in the market for various reasons.

Firstly, these are two highly successful developers with strong track record and branding in their respective niche sectors in the local property market.

Sime Darby Property is well regarded as an established township developer with award-winning townships including Subang Jaya, UEP Subang Jaya or USJ and Ara Damansara.

Sunrise, which specialises in luxurious condominiums and lifestyle commercial projects, is behind the huge success of Mont’Kiara as a vibrant neighourhood and a favourite property hotspot.

Over the years, it has garnered a strong following of repeat buyers and investors who are loyal to the Sunrise brand.

Both Sime Darby and Sunrise have also gone international with projects in various parts of the globe.

As in all partnerships, the question of who will lead as the manager will also crop up.

At an analysts briefing on Thursday, Sunrise executive chairman Datuk Tong Kooi Ong discloses that the manager will be from Sunrise and both partners will have two representatives each on the board of Sime Darby Sunrise Development Sdn Bhd.

Sunrise’s value proposition of replicating its trademark Solaris commercial project in the heart of Bukit Jelutong Commercial Centre will inject more life and further accelerate the development of the fast maturing Bukit Jelutong township.

Moving into a new growth area like Bukit Jelutong, which is the gateway to the massive Guthrie Corridor, certainly fits into the bigger plans of Tong who is eager to expand Sunrise’s reach and presence outside of Mont’Kiara.

With the fast changing market environment which will only get tougher as time evolves, forming strategic alliances will be the way forward for property groups to leverage on each other’s strengths and further sharpen their competitive advantage.

While some of the developers would already have lined up sufficient land to last them for the next couple of years and some up to the next decade or more, many of the companies are operating from “hand to mouth” or just have enough land for their ongoing projects.

Their main handicap is to get hold of the right piece of land to undertake new projects and ensure their capacities are put to good use for regular income streams.

With its vast land bank, Sime Darby Property certainly looks like a good partner to team up with.

Having plantation group Sime Darby Bhd as its parent is definitely a boon for Sime Darby Property as far as landbanking is concerned.

The mega Sime Darby merger in 2007 that involved Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd has created the country’s largest property group in terms of land assets and sales.

The merger resulted in the enlarged Sime Darby group owning a sprawling plantation land of close to 500,000 acres, of which 37,000 acres are under Sime Darby Property, the group’s property arm.

Certainly there is much value to be realised from the vast landbank and what better way to unlock their value than to invite the specialists of the various property sectors to partake in the development plans.

This way, the high value adding initiatives by the joint venture partners will ensure higher value can be realised from the land in a shorter time.

Property development is certainly a challenging business that needs constant new refreshing and creative ideas to remain at the top. One way of ensuring a developer’s name is held in high regard is to have well-planned and designed projects in the right locations.

In view of the tough environment that companies are still operating in, there is a need for them to adopt more market savvy and value-enhancing strategies to stay ahead of the game.

Even big corporations with strong reputation and deep pockets cannot take their existence for granted and have to be consistently vigilant of how they are faring.

Forming strategic alliances and partnerships between companies, whether they are big or small players, will open up more opportunities and provide a cushion to meet the challenges ahead.

Deputy news editor Angie Ng believes every property project, however small or big, deserves to be treated with reverence and be given the best thoughts and efforts.

By The Star (by Angie Ng)

IOI expects brisk sales of Adenia phase one homes

KUALA LUMPUR: IOI Corp Bhd’s property arm IOI Properties Bhd is confident of selling all 147 residential units offered under phase one of its Adenia project by tomorrow.

IOI Corp (property division) general manager Teh Chin Guan said the two-phase Adenia was a component of its mega property project 16 Sierra in Puchong.

To be completed by 2020, the project has a gross development value of RM2bil.

Worth RM70mil, phase 1 of Adenia had already recorded 50% booked sales, he said.

Based on this encouraging response, the company expected the remaining available units to be taken up soon, Teh said after the soft launch of Adenia yesterday. The official launch of Adenia is today.

The average price per unit is about RM448,900. The two-storey terrace homes have a lot size of 22ft by 75ft and are targeted for handover by the middle of 2011.

“Phase 2 will comprise 60 units worth RM50mil in total and should be launched in a couple of months,” Teh said, adding that prices for Phase 2 units would be slightly higher than in Phase 1.

Teh said there would be 14 other small residential property projects to be developed in 16 Sierra, which sits on 535 acres in the southern part of Puchong and near Cyberjaya and Putrajaya.

IOI Corp general manager (marketing and business development) Lee Yoke Har said 16 Sierra would have a central park and 16 interconnected themed gardens.

When fully developed, 16 Sierra would have 3,838 residential units and each property project would be gated, Lee said.

On IOI Properties’ performance, Lee said it had not been significantly affected by the economic downturn last year.

“We maintained our sales growth last year despite the tough times and with the expected recovery of the property market this year, the company expects to perform even better,” she noted.

By The Star

MK Land profit down, sees better year ahead

PETALING JAYA: Property developer MK Land Bhd reported a lower net profit of RM3.8mil in the second quarter ended Dec 31 from RM5.2mil a year earlier, but sees a better year ahead on expectation of higher sales and tighter cost control.

Revenue was flat at RM48mil.

Executive chairman Tan Sri Mustapha Kamal said in a statement yesterday that the company was working to “improve its performance in the coming quarters, and with concerted effort of everyone, we aim to overcome the odds.’’

It was also confirmed that three of four chief operating officers of MK Land had left recently.

A top company executive was quoted by StarBiz on Wednesday as saying that internal management changes were an ongoing process to strengthen the group.

“With the continued confidence and mandate accorded to me by the board of directors and the support of the existing management team, we have managed to establish good relationship among our stakeholders, all of which have translated into the performance of the company,’’ Mustapha said in yesterday’s statement.

MK Land is also in the midst of raising fresh funds with the proposed rights issue to raise at least RM150mil.

Mustapha said the group was cautiously optimistic about its prospects moving forward given the increased interest of buyers of MK Land’s property projects in the Klang Valley.

By The Star

MK Land's Q2 profit hurt by higher expenses

PROPERTY developer MK Land Holdings Bhd's second quarter net profit dropped by almost a third because of lower operating income and higher marketing and selling expenses.

It registered a net profit of RM3.8 million in the quarter ended December 31 2009 compared with RM5.2 million in the previous corresponding period.

This was despite an increase in revenue to RM48.4 million from RM47.8 million previously.

The group is cautiously optimistic on its future prospects given increased interest from purchasers in its property projects in the Klang Valley.

"In addition, the improvement in the global economy together with the stimulus packages rolled out by the government will augur well for the economy and the group," it said in a statement yesterday.

Second quarter net profit more than doubled, however, when compared with the RM1.2 million made in the first quarter.

By Business Times

Friday, January 29, 2010

Sunrise prefers markets with fewer home players

KUALA LUMPUR: Sunrise Bhd wants to expand into markets where there aren’t many Malaysian developers, said executive chairman Datuk Tong Kooi Ong.

“Every Tom, Dick and Harry has gone to Vietnam. There are (other) countries that have a lot of potential ... where there aren’t many Malaysian players,” he said at an analyst briefing yesterday when asked about the potential of venturing into Vietnam.

Tong said countries such as Singapore and China were potential markets. “We’re looking at China but so far there is nothing yet. Singapore is a possibility. The pricing there is fantastic. However, we haven’t had good opportunities but we’re looking,” he said.

Tong said while the Mont’Kiara area in Kuala Lumpur would continue to be a growth focus for the company, he noted the importance of having a presence in more than one location.

“It’s difficult to grow in just one location. You need to move beyond your (key) geographical location if you want to double-up (your earnings).”

Sunrise has an on-going project in Vancouver, Canada which it hopes to launch in the second half of 2010, subject to market conditions.

The condominium project with a gross development value of RM1.13bil, would be launched in two phases three years apart, said Tong.

He also said it was premature to disclose if there would be future tie-ups with Sime Darby Bhd to develop other projects.

“Neither party has contemplated another joint venture (JV) outside of Bukit Jelutong. But we’re both hoping there will be other JVs that can benefit each other,” Tong said.

Earlier this week, Sunrise and Sime Darby announced they would jointly develop a RM1bil integrated commercial property project in Bukit Jelutong, Selangor.

Tong said there was a need to have a commercial development within the area to give it “more life.” “It (the project) will accelerate development for Sime Darby and expand our reach there,” he said.

Tong also said the company was targeting to reduce its gearing to zero within the next four years.

He said potential cashflow from unbilled sales of existing and future projects would help reduce its gearing going forward. The company’s unbilled sales stood at RM714mil as at Dec 31, 2009.

Sunrise’s net debt declined to RM377mil in December from RM445.7mil six months earlier. Net gearing also improved to 35.7% in December from 45.7% in June.

“Barring major land acquisitions, we will continue to work towards reducing gearing, but near-term gearing may increase due to construction funding for our 28 Mont’Kiara (MK28) and Canada projects,” said Tong.

He added that Sunrise would also be “stingy” with dividends to achieve its zero-gearing target.

Sunrise has received 150 bookings for its MK28 high-rise residential development since it was soft launched in December. The project comprises 460 units with a GDV of RM990mil. “The success of MK28 is the most critical factor for the company in the next six months. Further ahead, the success of the launch of Solaris Towers is also critical,” said Tong.

Sunrise will be launching the Solaris Towers project in Jalan Sultan Ismail in the first half of the year.

Meanwhile, Sunrise’s net profit for the second quarter ended Dec 31 dipped 34% to RM34.52mil due to unbilled sales and a delay in property launches. Revenue also dropped 22% to RM158.32mil. The company did not declare any dividends for the quarter.

By The Star

Sunrise current income sustainable: Analysts

Property analysts are optimistic Sunrise Bhd will sustain its current earnings level into the financial year ending June 31, 2011, given the number of projects in the pipeline.

OSK Investment Research said the company's near-term earnings would receive a boost from its current unbilled sales of RM714.1 million and from the sale of the RM990 million 28 Mont' Kiara (MK28) condominium project.

The gross development value of Solaris Tower, to be launched in March or April, was estimated at RM528 million.

"Other mid-term projects include its 50:50 joint venture with Sime Darby on the RM1.0 billion Bukit Jelutong development project which is likely to kick-in by FY11 and the Canadian build-then-sell project by mid-FY11, both of which we have yet to account into our forecasts.

"Tweaking some assumptions on completion rates, particularly for 11 Mont' Kiara condominums, we are lowering our financial year ending June 31, 2010 by some five per cent while FY11 is revised upward by some 25 per cent," it said today.

Sunrise registered a 13 per cent drop in net profit to RM71.79 million for the first-half ended Dec 31, 2009 from RM82.58 million posted in the same period of 2008.

Turnover declined to RM348.59 million, for the period reviewed, from RM401.35 million previously.

OSK said Sunrise's first-half annualised net profit was 18 per cent below its full-year expectation and 7.3 per cent below consensus estimate.

Sharing the same view, ECM Libra Investment Research, in a separate statement, said the property developer's first-half results came within house but were below market expectation.

It said Sunrise's net profit achieved 47 per cent and 44 per cent of house and consensus estimates respectively.

" We tweak our earnings for FY10-FY12 by 0.8 per cent to 2.9 per cent to account for better than expected sales of MK28 as well as higher selling price," it added.

By Bernama

Sunrise H1 profit falls 13pc to RM72m

Property developer Sunrise Bhd saw its net profit fall 13 per cent to RM71.8 million for the half-year ended December 31 2009.

Its executive chairman Tong Kooi Ong said the reason for its net profit decline was because the previous corresponding period had included a one-off gain from the sale of office space in Plaza Mont' Kiara and an Australian asset.

"Excluding these one-off gains, the company's underlying net profit for the current period would have risen 14 per cent year-on-year," he said during a briefing on company results in Kuala Lumpur yesterday.

Tong expects Sunrise to sustain its performance for the second half of its present fiscal year.

"Honestly, I don't think we will do a lot better but we will definitely not do any worse," he said.
Tong added that interest rates are likely to remain low, while loan approvals for mortgages will remain strong and building material prices to stay stable.

The company will continue to reduce its gearing, which has improved to 35.7 per cent in December 31 2009, from 45.7 per cent in June 30 2009.

For the July-December 2009 period, Sunrise's revenue declined 13 per cent to RM348.59 million due to the completion of its Meridin, Mon't Kiara 10 and part of Solaris Dutamas properties.

Its unbilled sales as at December 31 2009 was RM714 million.

By Business Times

Thursday, January 28, 2010

Development of i-City enters 2nd phase this year

The second phase of I-Berhad's integrated commercial development in Shah Alam, Selangor, is expected to kick off later this year, its top executive said.

Chief executive officer Eu Hong Chew said the phase covering 3.64ha has a gross development value (GDV) of over RM150 million.

It will offer between 300,000 sq ft and 400,000 sq ft of office space. The construction cost will be between RM30 million and RM40 million and completion is due in 2013.

"The idea behind phase two will be to support (a) technopreneur campus concept," Eu told reporters after a visit by former Prime Minister Tun Dr Mahathir Mohamad to i-City yesterday.

i-City is a 29ha RM2 billion project that boasts broadband speed of 20Mbps, with fibre optics network and a back-up power supply.
The first phase, comprising 6.1ha of land with 500,000 sq ft of office space, is now 60 per cent occupied.

I-Bhd plans to complete the Cybercentre office suites, also known as CityWalk South, during the second phase.

It plans to build office towers and a one million sq ft shopping mall in future phases as well.

According to Eu, i-City aims to attract Silicon Valley based companies that are looking to expand overseas.

Apart from i-City having a technologically advanced state-of-the-art infrastructure, the Selangor state government also will focus on other elements of the Silicon Valley-like ecosystem.

This includes developing the entrepreneurial talent pool, organising programmes to connect entrepreneurs with venture capital partners and getting universities to play a higher level of support for industries.

"They have the business model and technology but may not be relevant in this market. So, they are looking for joint venture partners to localise for them so that when they go for an initial public offering their value will be higher," he said.

By Business Times

Malaysia property market to ride on new wave of interest

CB RICHARD Ellis (Malaysia) Sdn Bhd (CBRE), a real estate services company, expects the number of property transactions in the country to improve this year, thanks to a new wave of interest from local and foreign institutional funds.

Executive chairman Christopher Boyd said there is strong buying interest from Singaporean, Hong Kong, Korean and Arab investors, looking for new office buildings in the Klang Valley and Penang.

"Interest comes from as far as Ireland. They (investors) are core funds looking for completed and well-tenanted buildings in recognised locations. This augurs well for the rental market," Boyd said after a ceremony to mark the change of name of Regroup Associates to CBRE in Kuala Lumpur yesterday.

He said there is a possibility that the value of property transactions in the Klang Valley will exceed RM4 billion this year as it expects more than 30 major deals.
There were 28 major transactions worth some RM3.5 billion in the second half of 2009, involving purchase of land, office buildings and residential towers.

A bulk of the buyers were local funds, including the Employees Provident Fund and Permodalan Nasional Bhd, and developers eyeing expansion.

"We have a few investors from overseas who are looking at some property deals. They are international funds with huge capital to spend," Boyd said.

Boyd also warned property developers to be cautious over the next six to nine months of over-launching their commercial projects as there is a strong possibility of a double dip in the West in the second half of 2010, which may impact the Southeast Asian market.

"Developers will be tempted to think it's all over but it's too soon to think that. While we don't anticipate a crash, we are also not expecting any major upturn. But overall, we expect the market here to be stable in terms of capital value and rental value," Boyd said.

He added that said average rental rates of commercial space in Kuala Lumpur remains stable at RM6 to RM6.50 per sq ft, although it is 15 per cent lower from a year ago. Rentals for Grade A offices stood at RM7 per sq ft as at the end of 2009.

Office capital values are expected to remain steady throughout 2010 at between RM800 and RM1,200 per sq ft.

Earlier, Regroup changed its name to CBRE after signing an affiliate agreement last December with CB Richard Ellis Group Inc, a US-based real estate corporation.

By Business Times

Mah Sing eyes RM1b in 2010 property sales

Malaysia’s Mah Sing Group Bhd aims for property sales to climb 39 per cent to RM1 billion (US$292 million) this year as an economic recovery spurs home purchases in the Southeast Asian nation.

The nation’s fifth-largest property developer sold RM720 million worth of properties last year, beating a target of RM453 million, managing director Leong Hoy Kum said in an interview in Kuala Lumpur yesterday. The impact of a possible increase in interest rates on property transaction will likely be minimal, he said.

“This year will be a good year; our engine is going to ramp up again,” Leong said.

Loans approved for Malaysian home purchases rose to RM7.3 billion in November, the highest recorded in 2009, central bank data shows. Malaysia’s central bank said on Jan. 26 borrowing costs can’t be kept “too low” for too long as growth strengthens, signaling it may raise interest rates sooner than some economists forecast.
“The tone of the central bank has raised concern there will be a slowdown in demand for loans,” said Ang Kok Heng, who oversees US$150 million of investments as chief investment officer at Phillip Capital Management Sdn Bhd. He said he doesn’t expect an increase in rates this year and property demand will probably rise.

Mah Sing spent RM323 million buying 184 acres of land last year to take advantage of “reasonable” asset prices when the Southeast Asian nation slipped into its first recession in a decade. The company is betting that an economic recovery spurred by RM67 billion in government stimulus measures will increase demand for new homes and offices.

‘Good Year’

Mah Sing’s total revenue surged almost fivefold in the past six years to a record RM1.2 billion in 2008. Third-quarter profit rose 42 per cent to RM23.5 million from a year earlier.

Shares of the Kuala Lumpur-based company climbed 15 per cent last year, falling short of the 45 per cent in the benchmark FTSE Bursa Malaysia KLCI Index.

The company will this year begin selling nine property projects with a gross development value of RM3.4 billion, Leong said.

The company aims to expand in markets including Vietnam, Australia and Singapore. Mah Sing in December agreed to form a venture with Danlong Realty (Beijing) Ltd. to develop a property on 87.31 acres in the city of Changzhou in China’s Jiangsu province, which will cost about US$620 million.

The estimated sales value of the project, of which Mah Sing owns 51 per cent, is more than RM3 billion, Leong said.

“As long as you are targeting the real market demand and you don’t go to areas like Beijing or Shanghai” the market is not in a bubble, he said.

The company is seeking land acquisitions and is preparing a RM1 billion “war-chest” for purchases in Malaysia and overseas, he said.

Leong said he wants to boost Mah Sing’s market value of about RM1.3 billion to RM5 billion within a couple of years. That would exceed the current worth of SP Setia Bhd, the country’s biggest developer by value.

By Bloomberg

Sime Darby Prop eyes more tie-ups

PETALING JAYA: Sime Darby Property Bhd is in discussions with a few potential partners for possible joint ventures (JV) to develop its vast land bank in the country.

The company has a land bank of 37,000 acres, of which 8,000 acres are in the Guthrie Corridor, according to managing director Datuk Tunku Badlishah Tunku Annuar.

“It is the company’s strategy to team up with strategic partners to develop the land bank.

“Besides the advantage of sharing the expertise and knowledge, it will also allow us to realise the value of our land in a shorter time,” Tunku Badlishah told StarBiz yesterday.

He said the company’s first JV was with the Brunsfield group.

The 60:40 JV, with Sime Darby Property holding 60%, was established in 2006.

It has undertaken three projects to date – the RM250mil Subang Avenue, the RM550mil Oasis Damansara and the redevelopment of Oyster Cove, one of the most exclusive waterfront resorts on Australia’s Gold Coast.

On Tuesday, Sime Darby Property signed a 50:50 JV agreement with Sunrise Bhd to undertake a RM1bil integrated commercial property project in Bukit Jelutong, Selangor.

To be launched and developed in five phases from 2011, the commercial development on 21 acres will have a total built-up area of 2.7 million sq ft, consisting of retail lots, shop offices, office suites and serviced apartments.

On the latest JV, Tunku Badlishah said the partnership would pave the way for the sharing of expertise and know-how between Sunrise and Sime Darby Property.

“We see a strong synergistic alliance with Sunrise. While we have successfully build the residential component, Bukit Jelutong still lacks in its commercial offering.

“Sunrise’s expertise in commercial development will come in handy to further add value to the whole project,” he added.

Launched in 1996, Bukit Jelutong is an upscale residential enclave in Shah Alam which is home to 25,000 residents now.

ECM Libra property analyst Bernard Ching noted that while the existing township consisted mainly of terrace, semi-detached and bungalows, there was no significant high-rise residential and commercial development.

“As such, we believe there is a captive market for the product offerings proposed by the JV.

“Sunrise’s expertise in commercial development and high-rise residential projects is a good fit to bring in. It is very likely that the Bukit Jelutong project will be lifestyle-oriented, which is still largely absent in Shah Alam,” Ching said.

“With this tie-up, Sunrise will have the opportunity to replicate its success in developing Mont Kiara in another prime location,” he added.

Hwang DBS Vickers Research property analyst Yee Mei Hui said the JV would be a win-win situation for both partners as they could tap on each other’s strength and expertise.

“If it turns out well, this may be the start of more partnerships between Sime Darby Property and other property players,” she added.

By The Star

CBRE sees office rentals in Malaysia stabilising in H1

KUALA LUMPUR: CB Richard Ellis Malaysia Sdn Bhd (CBRE) expects office rentals in Malaysia to stabilise in the first half of 2010, barring any major economic setbacks.

“Office rentals in Kuala Lumpur peaked at the end of the fourth quarter of 2008 and softened by about 15% as at the end of the fourth quarter of 2009.

“Rentals for Grade A offices stood at RM7 per sq ft at the end of 2009, similar to the first quarter of 2009 level,” according to a special report by CBRE Research.

Vacancies and rentals began to level out in the fourth quarter of 2009 as was witnessed in comparable cities around Asia as the market downcycle approached its end and leasing activity gradually picked up across the region.

Despite the addition of 4.76 million sq ft of new supply from 14 office buildings completed in 2009, vacancy rates stabilised at 13% by year-end as the bulk of this new supply was non-speculative and had been significantly pre-let prior to completion.

New supply set to come on stream over the next three years will continue to make for a highly competitive leasing environment and further improve the city’s appeal as a location in which to do business.

CBRE expects continued broad-based demand across a wide range of sectors including Islamic finance, oil and gas, agribusiness and commodities.

Executive chairman Chris Boyd said the combination of modern infrastructure, quality facilities and comparatively cheap rentals made Kuala Lumpur a highly attractive location for any prospective multinational considering a move.

“Kuala Lumpur offers a consistent cost advantage which is not a flash in the pan, as growth in the supply of new buildings serves to smooth any potential fluctuations in rental levels,” he said.

CBRE feels that the market has not yet experienced the full impact of the last budget announcements which further liberalised the acquisition of property investments by foreigners.

“With no requirements for local equity, we expect to see an increasing number of overseas institutions seeking investment grade property in Malaysia in 2010 and beyond,” said executive director Paul Khong.

“Kuala Lumpur offers a wide choice of buildings and locations at rentals which are going to remain extremely competitive in the foreseeable future,” added managing director Allan Soo.

By The Star

Ivory seeks investor for planned hotel

A 352-room hotel, an exhibition and convention centre along with commercial lots will form the third and fourth phases of the RM1.1 billion Penang Times Square development in Penang.

The project, which is being carried out by Ivory Properties Group, will also feature a cineplex and luxury condominiums, its executive director Datuk Seri Nazir Ariff Mushir Ariff said.

"We are talking to several parties and hope to sign up with an investor for the hotel by the end of the year," he told a media briefing in Penang yesterday.

Nazir said it will either get the investor to buy up the 325-room hotel, or get a long-term operator to manage it. "The proposed four- or five-star hotel will occupy 0.96ha of land and we intend for it to house resort and spa facilities and services."

The property developer, which is awaiting final approval from the Securities Commission for an initial public offering, will launch the shopping mall portion of Penang Times Square on February 6 under the first phase.

On the proposed exhibition and convention centre which comes under the third phase of the project and set to break ground by 2012, Nazir said: "Our plans are for it to occupy 80,000 sq ft, but if necessary we can expand it up to 150,000 sq ft and this will give us a pillarless convention hall.

"We also hope that the hotel operator will be able to run the convention centre in order to ensure that high standards are maintained."

Penang Times Square sits on 5.2ha site where one of the country's oldest smelting operations - Escoy Smelting Sdn Bhd - once stood.

About 0.8ha has been earmarked by Ivory Properties for an urban open space and heritage museum.

On the shopping mall, Nazir said that after Chinese New Year, the retail outlet should be 65 per cent occupied.

Its anchor tenant is Sunshine City, which belongs to the Sui Wah group of firms.

"Apart from Maybank, which is moving in to the mall, new tenants include a travel agency and an amusement centre," Nazir added.

By Business Times

Sunrise upbeat on prospects with locked-in unbilled sales

KUALA LUMPUR: SUNRISE BHD posted net profit of RM34.52 million for the second quarter (2Q) ended Dec 31, 2009 and is upbeat for the remaining second half due to the locked-in unbilled sales of RM714.1 million as at Dec 31, 2009.

It said the board was confident of the company's prospects in the current financial year ending June 30, 2010 due to these unbilled sales while it also had in the pipeline other projects ready to be launched.

"Profits from these future billings would be recognized substantially over the current and the following financial year," it said on Thursday, Jan 28, when announcing its results. Revenue was RM158.32 million in 2Q while earnings per share were 6.97 sen.

It added the company recently soft?launched 28 Mont'Kiara, a luxury condominium development in Mont'Kiara. It said response was positive with bookings received for about 200 units.

"The company has a pipeline of other projects ready to be launched, including a commercial development in Kuala Lumpur, depending on market conditions. Sales from 28 Mont'Kiara and the new planned projects will sustain the company's longer?term profits," it said.

For the first half ended Dec 31, 2009, net profit was RM71.78 million, which was 13% lower than the RM82.48 million a year ago which had included a one-off gain of RM19.4 million from the sale of office space in Plaza Mont'Kiara and an Australian asset.

"Excluding these one?off gains, the company's underlying net profit for the current period would have risen 14% year-on-year," it said. Revenue was RM348.58 million compared with RM401.35 million a year ago.

Sunrise said its earnings were sustained by progress billings for its ongoing developments, namely 10 Mont'Kiara, 11 Mont'Kiara and Solaris Dutamas, as well as strong sales of the completed Mont'Kiara Residence bungalows.

By The EDGE Malaysia

Sunway City said to have hired coordinators for REIT listing

PROPERTY developer Sunway City has hired RHB Investment Bank and Credit Suisse as the main coordinators for the planned listing of its real estate investment trust (REIT) in Malaysia, sources with knowledge of the deal said yesterday.

The listing of the REIT, the biggest ever in the Southeast Asian country, is likely to happen in the first half of 2010 and the company may raise about RM1 billion in its public offering, one of the sources told Reuters.

"The REIT will have a market capitalisation of more than RM3 billion, " said one source.

Credit Suisse will act as the international global coordinator, while RHB will handle all domestic issues.
Sunway City was not immediately available for comment, while RHB and Credit Suisse declined to comment.

Sunway City, valued at US$440 million (US$1 = RM3., said last year that it may revive the plan to float its property assets in 2010 depending on the recovery in markets.

By Reuters

Wednesday, January 27, 2010

Property prices may rise 5% to 10%

KUALA LUMPUR: Property prices in Malaysia are forecast to increase by 5% to 10% this year against last year in line with the recovering economy.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia president James Wong said the market did not expect a big jump in property prices this year as the economy was not fully recovered yet.

The economic recovery will largely influence the property market performance and Malaysia’s gross domestic product (GDP) growth rate this year is forecast at 2% to 3% from the estimated contraction of 3% last year.

“Condominiums and apartments are currently selling well and landed property prices, which had held through the economic crisis last year, are expected to grow this year,” Wong said after the opening of the Malaysian Property Summit 2010 yesterday.

Citing examples, Wong said the St Mary’s serviced apartments were 80% taken up within five days of their launch, Sky Residences recorded a 70% take-up rate and the 50-unit Verticas Residensi in Bukit Ceylon achieved a 60% take-up rate during soft launch.

“This shows that condos and apartments are not short of buyers. And developers that postponed property launches last year are not expected to do so this year,” he said, adding that property prices last year were estimated to have dropped by 5%.

However, Wong raised some concerns about tenancy of condominiums and apartments.

“A lot of new developments are facing a hard time in getting tenants,” he said.

Another area of concern would be the office market that saw the supply of four billion sq ft of space last year, according to Wong.

“Thus, there is a slight concern on the take-up rate, especially for tenants that will occupy huge space of 20,000 sq ft and above as well as the effect of the new supply on rental rates,” he said.

Valuation and Property Services Department director-general Datuk Abdullah Thalith Md Thani said this would be a good year for the property sector as key economic indicators that related to the growth of the industry were expected to perform better than last year.

The expected recovery in the GDP of Malaysia’s main trading partners – the United States, Japan and Singapore – and improved prices for crude oil, crude palm oil and rubber would augur well for the country, he said.

In fact, the property market, which had slumped in the first half of last year, had improved since the second half-year, he added.

By The Star

Malaysian property market tipped to improve in 2010

The Malaysian property market, estimated to have registered transactions worth RM75.42 billion last year, is expected to improve further in 2010 in line with the economic recovery.

The transactions involved 337,990 properties as compared with the 340,240 valued at RM88.34 billion in 2008, said the director general of Valuation and Property Services Department, Finance Ministry, Datuk Abdullah Thalith Md Thani.

He said the challenging economic and financial environment had affected the performance of the Malaysian property market last year.

"This year will be a good year for all. The property market for this year will improve as the number of transactions involving new housing and construction activities, increases," Abdullah Thalith told reporters at the Third Malaysian Property Summit 2010, in Kuala Lumpur yesterday.
He pointed out that Malaysia is expected to steer towards a recovery path this year, driven primarily by domestic demand, with commodity prices for rubber, crude oil and palm oil also improving.

These, he said, will help to increase the confidence level among consumers and provide a positive impact for the property sector.

"The demand for properties is returning," he added.

Abdullah Thalith said the government would continue to implement appropriate measures to restore confidence and market sentiment.

He said the liberalisation of Foreign Investment Committee (FIC) guidelines, would lift the competitiveness of Malaysia, as an investment destination.

Furthermore, Abdullah Thalith said, acquiring properties in Malaysia would be even more attractive, as the FIC approval is no longer required.

He said the review of the Real Property Gains Tax would augur well for the property industry.

By Bernama

Property market to remain fairly stable

The world's biggest commercial property consultant, CB Richard Ellis (CBRE) expects Malaysia's property market to be fairly stable in terms of rental and capital value with increased foreign investments flowing into the property sector.

"We don't anticipate a major crash or upturn this year as we are not overbuild.

"Foreign funds drifted away with the financial crisis and now it's picking up slowly with the liberalisation measures creating new opportunities for investors," said the Executive Chairman of CBRE (M) Sdn Bhd Christopher Boyd at a press conference in Kuala Lumpur today.

He also said developers should trade cautiously for the next six to eight months as there is still no end to the problems in the West.
Boyd also said Malaysia's property market was transparent and this would be the key driver in attracting foreign investors.

"Besides, the healthy financial environment will also augur well in luring investors," he added.

Currently, he said good investments are hard to come by and investors are looking particularly at newly completed buildings in established areas of Klang Valley, Johor and Penang.

Boyd said CBRE expects at least 30 major transactions in commercial properties to take place this year, primarily in the Klang Valley.

"In the second-half of last year, 28 major transactions took place with a total value in excess of RM3.5 billion despite the global financial crisis. This year we expect perhaps 28 to 30 (transactions) or more.

"With the rules on foreign ownership becoming very clear, it has augured well for foreign interest as well as place Malaysia's commercial investment market on par with most countries in the region," he explained.

Speaking on rental rates, Boyd said: "There is quite a healthy supply of space coming on to the market. About 2.8 million to 3 million square feet will be available in the next three years as there isn't going to be a squeeze on rental," he said.

Elaborating further, he said office rentals in Kuala Lumpur are expected to stabilise in the first-half of 2010, barring any major economic setbacks.

"The combination of modern infrastructure, quality facilities and comparatively cheap rentals makes KL a highly attractive location for any prospective multinational considering a move," he added.

CBRE expects continued broad-based demand across a wide range of sectors including Islamic finance, the oil and gas industry, agribusiness and commodities.

Meanwhile, Boyd said the trend of stepped-up rate of completion of office development for the next three years was set to continue.

The company expects a further 2.40 million square feet of office space to be added this year, to existing supply, 2.82 million square feet next year and 3.93 million square feet in 2012.

He added despite weakening rentals and slightly higher yield expectations, office capital values were expected to remain steady throughout 2010 generally ranging between RM800 and RM1,200 per square feet.

Looking ahead, he said demand for green buildings in Malaysia would continue to rise as environmental awareness grows.

Multinationals would remain at the forefront of the trend, increasingly adopting a commitment to lease green office space, wherever possible.

By Bernama

Sime Darby Property, Sunrise in RM1bil JV

PETALING JAYA: Two major property groups, Sunrise Bhd and Sime Darby Property Bhd, have teamed up to jointly develop a RM1bil integrated commercial property project in Bukit Jelutong, Selangor.

Datuk Tunku Putra Badlishah (left) and Sunrise Bhd executive chairman Datuk Tong Kooi Ong looking at a model of the Bukit Jelutong township following the JV signing ceremony on Tuesday.

“The proposed development will be launched and developed in five phases from 2011 onwards,” Sunrise said yesterday in a statement to Bursa Malaysia.

The project will be undertaken via a joint venture (JV) vehicle – Baywood Avenue Sdn Bhd – with each party holding 50% stake.

Baywood has entered into sale and purchase agreements to acquire three parcels of freehold land totalling 20.95 acres from Sime Darby Bhd’s wholly owned subsidiaries Highland & Lowlands Bhd and Augsburg (M) Sdn Bhd for RM114mil. Sunrise’s share of the purchase price amounts to RM57mil.

“Through this strategic partnership, we are able to unlock the value of its landbank and create a commercial hub within the township of Bukit Jelutong,” Sime Darby Property managing director Datuk Tunku Putra Badlishah said in a separate joint statement.

“This will further enhance the value of properties in the area.”

The overall project was expected to be completed in seven years from the first launch.

“It is expected that the JV will also pave the way for future collaboration between Sunrise and Sime Darby Property,” Sunrise said.

The commercial development will have a built-up area of 2.7 million sq ft, consisting of retail, shop offices, office suites and service apartments.

“The proposed development will provide shopping convenience and easy access to services for the 25,000 residents and working population in Bukit Jelutong, which has good access to a series of highways,” Sunrise said.

By The Star

Sime Darby, Sunrise to develop RM1b project

The tie-up to develop a RM1 billion integrated commercial project in the Bukit Jelutong township means that both companies can take advantage of each other's strengths

Sime Darby Property Bhd (Sime Property) is partnering Sunrise Bhd to develop a RM1 billion integrated commercial project in the Bukit Jelutong township in Selangor next year.

It is the first tie-up between Sime Property and Sunrise. Sime Property is known for its landed properties, while Sunrise is well known for its high-end projects in Mont'Kiara, Kuala Lumpur.

The deal means that both companies can take advantage of each other's strengths, Sime Property managing director Datuk Tunku Putra Badlishah Tunku Annuar said.

"We are always looking at ways to accelerate the land development with reputable and like-minded developers like Sunrise. This partnership will further enhance the value of properties at the township," he said after signing the joint-venture agreement in Bukit Jelutong, Shah Alam, yesterday. Sime Property has 14,800ha in Greater Klang Valley.
The two firms will have equal stakes in the joint-venture company, Baywood Avenue Sdn Bhd. They plan to build retail, shop-offices, office-suites and serviced apartments on some 8.4ha.

The project, located opposite Sime Darby Pavilion, will be developed in five phases over seven years, beginning next year.

The joint venture will buy the land from a subsidiary of Sime Property for RM118.1 million, or RM125 per sq ft.

Sunrise executive chairman Datuk Tong Kooi Ong said the vision is to develop sustainable, or green, properties that will appreciate in value.

Sime Property and Sunrise may even do more projects together.

"We have completed the first part of the marriage today. This means, going forward, things will be easier for us as we have already built a base here. If the project goes well and the chemistry is there, the joint venture could be extended," Tunku Putra Badlishah said.

It is learnt that Sunrise may want to partner Sime Property to develop pockets of land along the Guthrie Corridor Expressway.

Tunku Putra Badlishah also said that the project will be the first of many joint ventures Sime Property will be forming with reputable developers. It is already in talks with several other developers and may ink a second deal soon.

By Business Times

Sunrise to replicate success in Bkt Jelutong

The joint venture (JV) between Sime Darby and the Sunrise Group for an integrated commercial development on a 21-acre site in Bukit Jelutong is expected to be positive.

This is because it allows Sunrise to replicate its success in developing Mont Kiara in another prime location, says ECMLibra Investment.

"We believe there is a captive market for the product offerings proposed by the JV," said ECMLibra Investment in its research note today.

The research house also expects earnings contribution for the Sunrise Group from the project, slated to begin in 2014.
Sunrise announced yesterday that it had entered into a 50:50 JV with Sime Darby to develop the land in Bukit Jelutong.

The JV will acquire the land from Sime Darby for RM114.1 million cash.

Based on the initial GDV and assumed net margin of 18 per cent, the share of net earnings for Sunrise will be RM90 million over the development period, ECMLibra Investment noted.

It added that, although the initial estimate GDV is RM1 billion, the figure is believed to be conservative.

Meanwhile OSK Research Sdn Bhd, in commenting on the JV, said it would likely be a significant driver for the earnings of Sunrise, going forward.

By Bernama

'Sunrise JV little financial impact on Sime'

The financial impact on Sime Darby's joint venture (JV) with the Sunrise Group is negligible, says ECMLibra Investment Research.

ECMLibra Investment also indicated that the JV was most certainly in line with the Sime Property segment's aspirations, said the research house in a statement today.

Sime Darby Property Bhd and Sunrise Bhd announced yesterday that both had entered into a JV to develop three lots of freehold commercial land in the Bukit Jelutong Township.

The project has an estimated gross development value (GDV) of RM1.0 billion. Both companies have also formed a 50:50 joint-venture company to develop it.
"We believe the move falls into the Group’s master plan for the Sime Darby Vision Valley (SDVV),of which they expect to announce more details soon," said ECMLibra Investment.

Bukit Jelutong is part of the SDVV called the Selangor Vision City which consists of Bukit Jelutong (90 per cent completed), Denai Alam (30 per cent completed) and the Elmina and Lagong Logistics Hub.

By Bernama

Sunway City hires bankers for REIT IPO

PROPERTY developer Sunway City has hired RHB Investment Bank and Credit Suisse as the main coordinators for the planned listing of its real estate investment trust (REIT) in Malaysia, sources with knowledge of the deal said on Wednesday.

The listing of the REIT, the biggest ever in the Southeast Asian country, is likely to happen in the first half of 2010 and the company may raise about RM1 billion in its public offering, one of the sources told Reuters.

“The REIT will have a market capitalisation of more than RM3 billion,” said one source.

Credit Suisse will act as the international global coordinator, while RHB will handle all domestic issues.
Sunway City was not immediately available for comment, while RHB and Credit Suisse declined to comment.

Sunway City, valued at US$440 million, told Reuters last year that it may revive the plan to float its property assets in 2010 depending on the recovery in markets.

Sunway City said earlier this month the REIT will group at least four properties in the capital Kuala Lumpur and one in northern Penang state.

Shares of the property developer ended up 0.6 percent at RM3.20, outperforming the broader market


MK Land denies dispute

PETALING JAYA: MK Land Holdings Bhd has denied that there is a dispute in the internal management of the company and a vacuum exists in the management.

General manager of its legal department, Preetie Boler, said in a statement that contrary to the StarBiz report yesterday, MK Land shares probably dipped because of the overall market downturn and not due to a management dispute.

According to her, executive chairman Tan Sri Mustapha Kamal Abu Bakar is still leading the company.

Boler said it was untrue that Lau Shu Chuan was appointed together with the three senior executives – R. Balasundram, Fatimah Wahab and Yusof Abu Othman – in November 2008. “Lau has in fact served the company since March 7, 2000 and appointed chief operating office in September 2004,” she said.

She said the company was “intensely moving ahead” with its three-pronged approach – sales of properties, cost-control measures and a corporate exercise – to strengthen its position as unanimously approved by its board of directors.

“The company has even appointed Hong Leong Investment Bank Bhd to undertake the exercise and an announcement was made by Hong Leong Investment Bank to Bursa Malaysia on Jan 14.

“Meanwhile, the company has gone ahead to appoint professionals such as advisors, valuers and lawyers to implement the corporate exercise,” she said.

Boler said it was normal for every company to have a succession plan, and internal management changes or reshuffling were an ongoing process for the betterment of the company.

By The Star

Resorts World Sentosa hotels fully booked

PETALING JAYA: Resorts World Sentosa’s (RWS) four newly opened hotels are booked solid till end of next month, according to the Singapore Business Times (SBT).

The SBT report said the republic’s first integrated resort (IR) revealed on its Facebook fan page last Friday that the four hotels “have reached maximum capacity” until the end of April. In an update post on Saturday, however, it said that it had “managed to free up some rooms” in March and April.

Occupancy rates at RWS’ four hotels soared to over 90% during this past weekend, assistant director for communications Robin Goh was quoted as saying. Both the Festive Hotel and the Hard Rock Hotel Singapore recorded full houses.

SBT said RWS expected to operate at full or near-full capacity during the weekends for the foreseeable future.

“Already, every room during the nine-day period spanning the upcoming Chinese New Year holiday from Feb 13 to 21 has been snapped up by both Singaporeans and overseas guests eager to be among the first in the world to stay at the IR,” the report said.

Collectively, the four hotels – Festive Hotel, Hard Rock Hotel Singapore, Hotel Michael and Crockfords Tower – offer 1,350 rooms and 10 restaurants.

Two other hotels, Equariyus Hotel and Spa Villas, will be launched later this year and add 500 rooms. SBT reported that when the IR’s call centre first opened its hotline on Jan 11, the first three days alone saw some 5,000 room nights booked.

By The Star

Tuesday, January 26, 2010

Sime Darby Property seeks partners to develop landbank

SIME Darby Property Bhd (SDPB), the property arm of Sime Darby Bhd, will form joint ventures with both local and foreign property developers to help develop its 14,800ha of landbank in the country.

"One of the strategies we have adopted is to accelerate the development of our landbank through joint ventures. We are now talking to a few parties," SDPB managing director Datuk Tunku Badlishah Tunku Annuar told Business Times in an interview.

He declined to name the potential parties.

According to sources, SDPB has chosen Sunrise Bhd and IOI Properties Bhd as its joint venture partners to begin with.
Tunku Badlishah also said SDPB will launch RM2 billion worth of properties this year, amid prospects of an economic recovery gaining strength.

It will launch properties ranging from affordable to high-end homes and landed to high-rise within its 10 existing townships in the Klang Valley.

The townships include Subang Jaya, Bukit Jelutong, USJ Heights, Bandar Bukit Raja, Ara Damansara, Denai Alam, Melawati, Nilai Impian, Planters' Haven and Putra Heights.

Tunku Badlishah said SDPB is cautiously optimistic that the property market will do better this year as there is strong interest among buyers.

He cited the developer's recent sale of houses in Denai Alam and USJ Heights, where each home was priced between RM500,000 and RM1.5 million and were fully taken up.

Sime launched Mandara in USJ Heights over the weekend and sold 54 per cent of the 98 units of two-and-half-storey terraced houses available for sale.

Two weeks ago, it launched Clover Park in Denai Alam, comprising 81 units of double-storey link houses. It sold 75 per cent of the homes in just two days.

Last November, Kayangan Puteri in USJ Heights was launched. It consists of 125 units of double-storey superlink homes, of which 14 per cent of the units are remaining.

"I was pleasantly surprised by our sales achievement. The success of these launches is testimony to the recovery of the property market. In times of uncertainty, people would buy from a reputable developer and we have the edge over this," Tunku Badlishah said.

He added that SDPB's "Buy Now" promotion had also helped to bolster sales. It offers buyers a "Guaranteed Buy Back" scheme, coupled with innovative financing packages.

"We will launch a loyalty or premier club programme in March, which will further strengthen our position in the market place. Under this plan, the more properties one buys from us, the more benefits they stand to get.

"We are talking to all the divisions within the Sime Darby Group such as automotive to see what they can offer for our customers. We hope to put in place everything by March."

By Business Times (by Sharen Kaur)

Sime Darby, Sunrise to develop RM1b project

SIME Darby Property Bhd and Sunrise Bhd will jointly develop three lots of freehold commercial land measuring 8.38 hectares in the Bukit Jelutong Township in Shah Alam.

The project, located opposite the Sime Darby Pavilion, has an estimated gross development value (GDV) of RM1.0 billion.

Both companies formed a 50:50 joint venture (JV) company today to develop the project. The company will be known as, Sime Darby Sunrise Development Sdn Bhd.

Speaking to reporters after the JV signing ceremony today, Sime Darby Property Managing Director Datuk Tunku Putra Badlishah Tunku Annuar said the project, would have a gross built-up area of approximately 2.7 million square feet.
It will comprise retail outlets, shop-offices, office-suites and serviced apartments.

He said the project would be launched and developed in five phases from 2011 onwards and is expected to be completed in seven years.

According to Tunku Putra Badlishah, Sime Darby Property is looking to accelerate the development of its landbank through strategic partnerships, with like-minded property developers.

The company is also in talks at the moment with a few developers on strategic partnerships.

At present, Sime Darby Property's total landbank stands at 14,800 hectares.

By Bernama

Malaysian property market to improve further this year

KUALA LUMPUR: The Malaysian property market, estimated to have registered transactions worth RM75.42 billion last year, is expected to improve further in 2010 in line with the economic recovery.

The transactions involved 337,990 properties as compared with the 340,240 valued at RM88.34 billion in 2008, said the director general of Valuation and Property Services Department, Finance Ministry, Datuk Abdullah Thalith Md Thani.

He said the challenging economic and financial environment had affected the overall performance of the Malaysian property market last year. "2010 will be a good year for all.

"The property market for this year will improve as the number of transactions involving new housing and construction activities, increases," Abdullah Thalith told reporters at the Third Malaysian Property Summit 2010, here Tuesday.

He pointed out that Malaysia is expected to steer towards a recovery path this year, driven primarily by domestic demand, with commodity prices for rubber, crude oil and palm oil also improving.

These, he said would increase the confidence level among consumers and provide a positive impact for the property sector.

"The demand for properties is returning," he added.

Abdullah Thalith said the government would continue to implement appropriate measures to restore confidence and market sentiment.

He said the liberalisation of Foreign Investment Committee (FIC) guidelines, would increase the competitiveness of Malaysia, as a preferred investment destination.

Furthermore, Abdullah Thalith said acquiring properties in Malaysia would be more attractive, as FIC approval is no longer required.

He said the review of the Real Property Gains Tax (RPGT) would also augur well for the property industry.

By Bernama

MK Land shares dip on news of internal dispute

PETALING JAYA: Shares in MK Land Holdings Bhd continued to fall yesterday, shedding another 0.5 sen to 38.5 sen on volume of 1.39 million shares, on news that three of its chief operating officers (COOs) would be leaving the company because of a management dispute.

Since hitting a six-month high of 45.5 sen on Jan 6, the stock has been facing selling pressure due to rumours of a management fallout.

The three COOs are R. Balasundram, Fatimah Wahab and Yusof Abu Othman, who together with Lau Shu Chuan, were appointed COOs in November 2008.

Sources close to MK Land said Fatimah tendered her resignation yesterday via email.

Fatimah is said to be unhappy as MK Land executive chairman Tan Sri Mustapha Kamal Abu Bakar had earlier promised to make her chief of MK Land.

However, when he recently appointed his eldest daughter executive director, Fatimah was said to be disheartened.

One source said that Balasundram was no longer going to office, while Yusuf would leave at the end of the month. MK Land officials declined comment on the issue.

On Saturday, it was reported that plans to rejuvenate MK Land Holdings Bhd had hit a snag as three of its four COOs, who were roped in to turn around the property development company, would be leaving.

To recap, Mustapha had returned to helm MK Land in June 2008, after earlier stepping down to focus on his private companies.

MK Land had posted losses in 2007 due to additional costs incurred to complete projects. He had great hopes of embarking on a turnaround plan in 2008 to be implemented in three phases.

Phase 1 involved strengthening the senior management team with the introduction of new COOs, adopting focus products to improve sales and the divestment of vacant plots of land to increase cash levels in the group.

This was when the four COOs were appointed. Since then, MK Land has been able to make profit and boost sales. It posted a net profit of RM18.3mil in 2008 versus a net loss of RM61mil in 2007.

For the first quarter ended Sept 30, 2009, revenue was up over 5% to RM80.81mil but net profit fell 75.5%to RM1.2mil.

Under the leadership of the four COOs, it was reported that MK Land was recording average sales of RM30mil per month, three times more than prior to their appointments.

The purported resignations of the COOs may put a stop to the second and third phases of MK Land’s turnaround plan.

Phase 2 is aimed at higher profitability with plans to move into a more high-end residential market in Damansara Perdana together with the development of purpose-built office buildings in Cyberjaya and Damansara Damai.

Phase 3 is where MK Land plans for longer term profitability and growth by exporting its expertise in quality affordable housing to other countries.

MK Land is the 16th biggest property developer in Malaysia with market a capitalisation of RM464mil.

By The Star

MK Land still focused on turnaround plan

MK Land Holdings Bhd said yesterday that its turnaround efforts were going smoothly as planned and that management remained solid.

It was responding to a report in this newspaper last Saturday, which had said that its turnaround plan might have hit a bump as several senior officials were leaving.

MK Land said it was "intensely moving ahead with its three-pronged approach", which entailed sales of properties, cost-control measures and a corporate exercise to strengthen its position.

The company said it had appointed Hong Leong Investment Bank Bhd to undertake the corporate exercise and was going ahead with the appointment of professionals to implement the plan.

It added that there was no dispute within the MK Land management and that Tan Sri Mustapha Kamal Abu Bakar was still leading its team of executives.

It pointed out that a succession plan was normal in every company and that the appointment of Felina Mustapha Kamal as executive director was approved by the board on August 1 last year as part of the company's succession plan.

By Business Times

MRCB set to buy strategic land

PETALING JAYA: The completion of Malaysian Resources Corp Bhd’s (MRCB) rights issue by the middle of next month will pave the way for the company to acquire some parcels of strategic land owned by the Federal Government in the Klang Valley, according to industry observers.

“It is a prelude to strategic land deals, which involve substantial amounts of money,” an analyst said. “And if the deals (go) through, it will be a boost to MRCB’s plan to be an integrated property developer.”

It is understood that MRCB’s management recently reiterated its intention to acquire several plots of such land in the Klang Valley, including a 60-ha parcel in Jalan Cochrane and 8-12ha at Ampang Hilir.

But analysts believe there are more to it than that, specifically highlighting the much sought-after 1,360-ha plot belonging to the Rubber Research Institute of Malaysia in Sungai Buloh as well as some pockets of land within the KL Sentral and Brickfields area.

At the company EGM last month, chief executive officer Mohamed Razeek Hussain said the company’s one-for-two rights issue at RM1.12 per share, was to raise funds for business expansion in line with the global economic recovery.

He said the bulk of the proceeds raised, which could total between RM508mil and RM541mil, would be used to increase its landbank, particularly in the Klang Valley, for commercial and residential developments.

Industry observers believe the award of the Federal land deals will only be finalised in June during the tabling of the 10th Malaysia Plan.

The Government is said to be very tight-lipped about the land deals, with MRCB quoted as saying that it was up to it to decide on which company to award those land deals to.

It is believed that several government-linked corporations have also been contending for those land deals.

Nevertheless, analysts believe MRCB stands a good chance of clinching most of the significant land deals that it has bid, simply because the company has strong backing from the Employees Provident Fund (EPF), which is its largest shareholder with a 30.6% stake.

MRCB chief financial officer Chong Chin Ann confirmed last month that EPF had taken up its 130 million rights shares for more than RM150mil.

This has further reinforced market belief that MRCB remains the front-runner in the Federal land deals because industry observers believe those potential land deals are important to EPF, which is an active property player and financier.

“Another thing going for MRCB is that the (parcels of) land are somewhat viewed as the company’s territory,” an analyst said, particularly referring to the KL Sentral area, where MRCB is one of the major developers of the integrated township.

By The Star

Borneo Resources in RM40mil swiflet eco-park JV

KUCHING: Sarawak State Economic Development Corp (SSEDC) and Peninsular Malaysia-based Borneo Resources Synergy Sdn Bhd (BRS) have agreed to jointly develop a RM40mil swiftlet eco-park in Balingian, Mukah Division within the Sarawak Corridor for Renewable Energy.

BRS, a wholly-owned subsidiary of property development and investment firm Masmeyer Holdings Sdn Bhd, has a 80% stake in the joint venture. SSEDC holds the balance 20%.

Sited in a rural setting along the Mukah-Balingian coastal highway, the project will involve the development of 40 three-storey units and 15 three-storey bungalow units.

“The project is targeted to be completed not later than 2012. Ideally, it is to be ready this year,” BRS director Choo Beng Kai said after the joint venture agreement signing ceremony. Golden Swift Resources Sdn Bhd, a swiftlet farming expert, has been engaged to provide technical expertise to the project.

SSEDC was tasked by the state government to spearhead the development of swiftlet farming on a well-planned, sustainable and eco-friendly manner.

The state authorities recently took action against hundreds of unlicensed swiftlet operators who used shophouses in town for swiftlet farming. The proposed park will provide an alternative venue for swiftlet farmers asked by the state government to shift their operations to approved sites.

Newly appointed Sarawak Assistant Tourism Minister Datuk Talib Zulpilip, who witnessed the ceremony, said the development of the proposed park was to ensure an orderly development of the lucrative swiftlet farming industry.

Talib, who was former SSEDC chairman, said SSEDC planned to develop similar swiftlet eco-parks in other parts of the state.

“We (SSEDC) are looking to bring in more joint venture partners in similar projects.” He said SSEDC-BRS would process and market the bird’s nests the joint-venture company produced. A kg of unprocessed bird’s nest now fetches about RM4,250.

Talib said Sarawak was well-known for its high quality bird’s nest, adding that this was evident as the early traders from China had come to Sarawak to buy bird’s nests.

By The Star

Monday, January 25, 2010

Kuwait Finance eyes more high-end KL properties

Kuwait Finance House (Malaysia) Bhd (KFHMB) is looking to buy Grade A commercial buildings and residential towers in Kuala Lumpur.

"KFHMB prefer properties in the KLCC area. There are a few going below market value. Any transactions by KFHMB will be done outside of the bank's balance sheet," a source said.

He said KFHMB will set up a special real estate fund or entity to invest here, similar to what it did when it bought Glomac Tower and The Pearl @ KLCC.

KFHMB has a proprietary equity interest in KFH Reetaj Sdn Bhd, the holding company of Prestige Scale Sdn Bhd, which bought Glomac Tower in late 2007 from Glomac Bhd, for RM577 million.

Reetaj is 81 per cent and 19 per cent held by its parent KFH and KFHMB, respectively.
The Pearl, a 41-storey condominium, was bought by Flora Bliss Development Sdn Bhd, a consortium led by KFHMB for RM550 million in 2008, from Ceramic Home Tiles Sdn Bhd, linked to Malton Bhd.

On KFHMB's move to not proceed with the purchase of half of YNH Tower on Jalan Sultan Ismail for RM920 million, the source said the plan was aborted as the parameters had changed along the way.

"From day one that we looked into the deal until now, there were a lot of variation. There were certain conditions that we stipulated, which were not met within the transaction," he said.

The source said KFHMB intends to continue to participate in property development in Malaysia through various means.

KFHMB may buy shares in the property development company, or provide financing for the construction of the project. It may also provide Mudharabah and Musyarakah, akin to the underwriting of sale, or buy the building like it did for Glomac Tower and be a master lessor.

Besides Glomac Tower and The Pearl, KFHMB has invested in Pavilion KL, Avare and The Oval in Kuala Lumpur, Sunway South Quay in Bandar Sunway and The Sanctuary Penang.

KFHMB had entered into a Musyarakah agreement with a fund to underwrite/purchase two residential blocks at Pavilion KL.

The developer, Kuala Lumpur Pavilion Sdn Bhd, a unit of Malton Bhd, was paid according to the progress of the project during construction. The condominiums were later sold for capital gains.

According to KFHMB director for real estate advisory, Siti Mariam Mohd Desa, there are no plans to sell Glomac Tower.

"We are going to lease the building to multinational companies. We want a good range of tenants but it will all depend on the market," she told Business Times in a telephone interview.

On talks that Glomac Tower will be renamed Kuwait Finance Tower, she said it has not been decided.

By Business Times (by Sharen Kaur)

Institute plans more courses for realtors

Datuk Seri Ahmad Husni Mohamad Hanadzlah hitting the gong to mark the opening of MAREC. With him are Loke Fu Wah (left) and Julie Wong.

KUALA LUMPUR: The Malaysian Institute of Estate Agents (MIEA) wants to introduce more education and development courses to enhance the standard of real estate agents in the country, said president Julie Wong.

“We plan to bring in more management courses like the CIPS (Certified International Property Specialist) to enhance the knowledge of our real estate agents,” she said after the opening of the Malaysian Annual Real Estate Convention (MAREC) on Saturday.

She said the MIEA also had plans to bring in renowned speakers from around the globe for future MAREC or realtor conventions.

An agreement was signed on Saturday between the MIEA and US-based National Association of Realtors (NAR) for the provision of a Certified Residential Specialist (CRS) course for Malaysian realtors.

“The NAR has other relevant courses as well but we are going to concentrate first on the CRS. There will be other education development courses in the pipeline and we will introduce them stage by stage,” said Wong.

MAREC organising chairman Loke Fu Wah said the local property sector was showing promising signs of recovery.

“The market reached its bottom last year and is picking up,” he said.

Wong said the property market was moving and buyers were slowly coming back.

“Last year, people held back their purchasers and adopted a wait-and-see approach,” she said, adding that the residential sub-sector would be the biggest driver of growth for the property market this year.

Wong also said the Government’s recent amendment of the (5%) real property gains tax (RPGT), which would now only apply to properties sold within five years from their date of purchase, was a good call.

The Government had previously wanted to impose the RPGT across the board, irrespective of the number of years of ownership, as announced in Budget 2010.

The two-day MAREC was officiated by Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah. Themed The Millionaire Real Estate Agent, it featured 20 speakers from the United States, Singapore and Malaysia, with The Star being one of the sponsors.

In his keynote address, Ahmad Husni said he was optimistic about the outlook for the local property sector as the affordability of local residential properties was at an “all-time best”.

“Affordability has never been better. Our banks have continued to support the market with very attractive mortgage rates at a base lending rate of around minus 2% and in some cases, below 2.4%.

“This translates to the fact that interest rates that are being charged are only marginally over 3%, not much higher than the current fixed deposit rates of 2% to 2.5%.”

Ahmad Husni also said the property market was one of the most reliable barometers of the health of any economy.

He is confident Malaysia will achieve its target of a 5% gross domestic product growth for 2010.

By The Star

Espio to invest RM60m in Sibu project

A leading property development company in Miri, Sarawak, Espio Enterprise Sdn Bhd, will invest an initial RM60 million to develop phase one of a mixed development project in Sibu, Sarawak.

Managing director Datuk David Goh Kieng Ping said the Swan City project, to be developed on a 7ha site, will comprise over 100 residential units and commercial buildings to be completed within three years.

"However, its biggest component will be the construction of the state's first and biggest purpose built hypermall for the Giant International Retail Group which will have a built-up area of 1.2ha.

The hypermall is expected to be ready and operational by end of next year.
"This is going to cost us RM30 million," he told reporters in Sibu after the ground-breaking ceremony for the project by Sarawak Environment and Public Health Minister Datuk Seri Wong Soon Koh and Deputy Transport Minister Datuk Robert Lau Hoi Chew.

The marketing director for Giant Supermarket Ho Mun Hao, said there are currently four Giant supermarkets in the state which were a big boost to local farmers as it helps them to sell their produce.

Meanwhile, Goh said the company is now entering the state central region because of its huge potential, given the location of the Sarawak Corridor of Renewal Energy.

"Sibu is going to be the next city in the state after Kuching and Miri, probably in about 15 years or less from now.

"We want to contribute to its development. This Sun City project is one initiative to Sibu's physical and human resource development," he said.

Goh said due to its central location, Sibu, with a population of one million people, will become the centre for shopping.

The group is also undertaking the multi-million ringgit Taman Tunku Housing project in Miri.

By Bernama

Sime unit to ink JV for township project

Sime Darby Property, a unit of Malaysia’s Sime Darby Bhd, plans to sign a joint venture agreement with a local partner to develop an “integrated commercial project” in its Bukit Jelutong township, outside of Kuala Lumpur.

The company will sign the agreement tomorrow, it said today in an e-mailed invitation to the event, without naming the partner.

By Bloomberg

Saturday, January 23, 2010

E&O Prop will soon launch RM1.8bil condo project

An artist’s impression of the RM1.8bil Quayside condominium to be launched at Seri Tanjung Pinang.

GEORGE TOWN: E&O Property Development Bhd will launch the RM1.8bil Quayside luxurious condominium at its sea-fronting Seri Tanjung Pinang project in Tanjung Tokong early next month.

Group general manager (marketing and sales) Lim Hooi Yen said the scheme on a 21-acre freehold land would resemble the home projects on Sentosa Island (Singapore) and Sovereign Island in the Gold Coast (Australia).

Speaking at a media briefing, she said the project would comprise seven blocks of high and low-rise condominiums, surrounded by 4.5 acres of water park and a 6.9-acre tropical garden.

“Next to Quayside is the Straits Quay, comprising a serviced suite component and a 250,000 sq ft of marina and retail space that will be leased to food and beverage outlets,” Lim said.

The serviced suite component had over 200 apartments, she said, adding the Straits Quay would be ready by the year-end.

The Straits Quay, and the size of both the water park and tropical garden, was what distinguished the Quayside condominium from other projects of its kind in Penang, she added.

“We will be going to Britain, Hong Kong, and Singapore to market Quayside where we expect some 30% of our sales will come from,” she said.

Lim said that on Feb 6, only the first block – a 26-storey building with 298 units – would be opened for sale.

“The other seven blocks will be launched in phases over a five year-period. The first block is targeted for completion in 36 months,” she said.

The Quayside is located within the first phase of the 908-acre Seri Tanjung Pinang housing project.

Lim said that to-date, only the first phase, comprising 240 acres of reclaimed land, had been developed.

“Over 500 landed residential properties have been developed and sold in the first phase.

“The estimated gross sales value for the first phase, which includes the Quayside and Straits Quay, is RM4bil,” she said.

By The Star (by David Tan)

Growing supply of office space

PEPS president James Wong (inset) says there’s a large amount of new office space being developed around the fringe of Kuala Lumpur including Petaling Jaya, Damansara, Puchong and Mont’ Kiara.

KUALA Lumpur’s office market is in for a tough year in 2010 with the expected completion of another 4 million sq ft of new office space which may further dampen rental and occupancy rates.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS) president James Wong says there is also a large amount of new office space being developed around the fringe of Kuala Lumpur including Petaling Jaya, Damansara, Puchong, and Mont’ Kiara.

This is in addition to the 4 million sq ft completed last year of which a number of the buildings are still unoccupied although there are tenants that may be moving in later this year.

“With such a large amount of new office space, demand will not be able to keep up with the growing supply and this will result in more unoccupied space. Overall occupancy and rental rates are expected to face downward pressure this year,” Wong tells StarBizWeek.

He says while offices that are well-planned, managed and marketed will achieve high occupancy, there will be those that will be left vacant.

“Office occupancy and take-up in the city used to be around 2 million sq ft when the market was at its peak around late 2007 but it has since dropped to just over a million sq ft now,” Wong adds. The overall office occupancy rate is expected to decline further to about 80% this year from around 87% in the last quarter of 2009.

According to Wong, office demand is driven by the performance of the economy which in turn is a function of business investments.

“In Malaysia, a large part of this is foreign direct investments (FDIs). Hence, the key is to attract FDIs and to draw up incentives to change the economic model of the country to being knowledge-based and driven by high-technology.”

Hopefully, the Government’s aim of achieving a high income economic model will provide an impetus for higher take-up of office space, he says.

“The market’s revival will also depend on the implementation of the two stimulus packages and their spin offs to the economy,” Wong adds.

DTZ Nawawi Tie Leung executive director Brian Koh points out that the global economy will continue to be filled with uncertainties this year and inflow of FDIs are not expected to pick up in the near future.

“Within the next three to four years, there will be 14.4 million sq ft of purpose-built office space scheduled to be completed. Unless there is a surge in demand, the additional supply will cast a dampening impact on rental and occupancy rates in the next few years,” he says.

Koh agrees that a possible upside for the market will be the new economic model which will hopefully lift economic growth, especially in the services sector.

Re-Group Associates executive chairman Christopher Boyd says with office space vacancies hovering around 13%, it is still very much a tenant’s market.

“Tenants are spoilt for choice and rental rates have come off by around 20% to 25% so far, with grade A office space fetching between RM5 and RM6.50 per sq ft, while grade B from RM4 to RM5.50 per sq ft,” he says.

Boyd says despite the higher supply, Malaysia’s office market is not likely to crash.

“In fact, the low rental rates here are a boon for businesses. Being consistently inexpensive is a good thing for the business people as it makes it easier for them to plan ahead and make decisions,” he notes.

Zerin Properties chief executive officer Previndran Singhe concurs with Boyd, saying the rental correction in the office market is not alarming and “is just a normal market cycle.”

“The concern that the over supply will adversely impact the office market will only be short term and things should recover, especially with the ongoing liberalisation of the various business and financial services sectors.”

Demand for office space should pick up among oil and gas companies and financial services providers, he says, adding that building owners need to be more innovative to attract the right tenants. “In fact, landlords have become more realistic in how much rent they can ask for and rental rates will find their new equilibrium in time to come,” he says.

ECM Libra analyst Bernard Ching notes that there has been a pick up in the office property sub-segment with more local investors looking for quality assets.

In the last quarter of 2009, the investment market jumped by about 58% to RM1.39bil against the previous quarter. The purchasers comprised mainly real estate investment trusts, the Employees’ Provident Fund and government-linked companies.

Some of the notable deals concluded recently include a 50% equity interest in Menara Citibank by Hap Seng Consolidated Bhd, the acquisition of Tower D, Glomac Damansara by Lembaga Tabung Haji as well as the acquisition of a retail/office tower in Southgate by Permodalan Koperasi Felda.

Ching notes that the office market is expected to see more foreign participation in the coming months as the global economic recovery gathers momentum.

“This follows a series of well received economic initiatives to liberalise the economy to attract foreign participation, including the repeal of the Foreign Investment Committee which regulates mergers and acquisitions in the country,” Ching says.

By The Star (by Angie Ng)