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Wednesday, February 17, 2010

Developers optimistic on 2010 outlook

GEORGE TOWN: Property developers are optimistic that there will be growth in the local sector despite the cooling off of the broader regional market.

This is based on the Government’s projection of a 3.2% gross domestic product (GDP) growth this year, the brisk sales of high-end properties in Kuala Lumpur and Penang in 2009 and the fact that prices of Malaysian properties are still affordable to investors.

Real Estate and Housing Developers Association (Penang) chairman Datuk Jerry Chan said the prices of Malaysian homes, having appreciated 5% to 10% annually, was still affordable.

“The prices, with room to appreciate further, are still attractive to foreign buyers wanting affordable holiday homes and those with the disposable income to upgrade their properties,” he said.

Chan said given the high cost of land in Penang and the increase in building material prices, property values in the state were likely to rise by 5% to 10% this year.

“To build a 1,000-sq-ft apartment on the island will cost RM350,000 to RM380,000, taking into consideration the land and construction costs.

“This means a 1,000-sq-ft apartment will have to be priced close to RM500,000 to generate profit,” he said.

Meanwhile, IJM Land Bhd managing director Datuk Soam Heng Choon expects the recovery of the local property sector in the second half of 2009 to resume into 2010.

“There is a lot of optimism among local investors as the stock market is on the rebound and good liquidity in the market augurs well for the property sector.

“The take-up rate should remain steady with more first-time homebuyers coming into the market while the demand for high-end properties should be good with a ready pool of upgraders and investors.

“Prices should remain stable with reasonable appreciation, given that speculative buying is well under control,” he said.

Mah Sing Holdings Bhd deputy chief operating officer Teh Heng Chong said landed property prices in prime locations in Penang, Klang Valley and Johor Baru would still hold up this year.

Teh said the demand for properties in such locations would come from those with the buying power who preferred homes in a secured environment.

“That is why our recent previews of high-end projects, such as the RM209mil Perdana Residence 2 in Selayang and RM690mil Garden Residence in Cyberjaya, attracted large crowds,” he said.

Perdana Residence 2 and Garden Residence Resort Homes are both super-linked houses priced from RM828,000 and RM738,800 respectively.

“For Perdana Residence, we have potential buyers indicating they will take up 162 units while for Garden Residence Resort Homes, there are people expressing interest to buy 200 units,” he added.

Teh said the group’s main property launches in the Klang Valley this year would be iParc in Bukit Jelutong, Garden Villas in Hijauan Residence, Garden Residence in Cyberjaya, and Perdana Residence 2 in Selayang.

Mah Sing also plans to launch more phases this year in its existing projects like Hijauan Residence in Cheras, Aman Perdana in Meru-Shah Alam, StarParc Point in Setapak, as well as Sri Pulai Perdana and Sierra Perdana in Johor Baru.

SP Setia Bhd property division (north) general manager S. Rajoo said there was still room for property prices in the country to appreciate, unlike in some other neighbouring countries where prices had stagnated.

“The drivers of property demand in the country comes from first-time buyers, those who can afford to upgrade their lifestyle, and investors from Indonesia and Singapore.

“And with land scarcity being a concern on Penang island, buyers would generally jump at the chance of owning a property in the location of their choice,” Rajoo said.

Eastern & Oriental Bhd executive director Eric Chan Kok Leong said the local property sector looked promising this year, with demand expected to pick up.

He said the recovering economy was projected to improve the overall market sentiment, boosted by the attractive mortgage rates which were expected to remain accommodative, given the ample liquidity in the banking system.

“From a broader perspective, investors, anticipating inflation to follow the economic recovery, may decide to hedge their positions by investing in property.

“For us, we have seen a steady take up for our properties as 2009 drew to a close and we are confident of a better performance this year,” he said.

By The Star

New wave of development at Mines Resort

A new wave of development is set to take place at Mines Resort City, the country's first resort development, located at Seri Kembangan, Selangor.

Country Heights Holdings Bhd (CHHB), the project developer controlled by Tan Sri Lee Kim Yew wants to develop serviced residences and an area for entertainment, featuring bars, restaurants and cafes for over RM500 million.

According to Golden Horses Development Bhd executive director Dianna Lee, the 600ha Mines, which is 90 per cent developed, has pockets of land for new products.

"We are looking at entertainment-related businesses in particular. Since we are not in that field, we will call on operators whom we think would be keen to set up shop there. We want to generate new income for CHHB," she told Business Times in an interview recently.

Once the world's largest open- cast tin mine, the government had in March 1988 alienated the land to CHHB, in which Lee owns a 48.1 per cent stake, for RM50 million, for recreational and tourist-related developments.

The Mines is now home to Palace of the Golden Horses, Mines Wellness Hotel, which is the city's only beach resort, Mines Waterfront Business Park, Mines Exhibition and Convention Centre with a capacity for up to 15,000 people, Mines Wonderland, Mines Resort and Golf Club, and Mines Shopping Fair (now owned by CapitaLand).

Other properties include Mines2, which is an ongoing development by CHHB featuring office buildings and a shopping mall, and The Heritage, a project by Clearwater Group.

Clearwater is controlled by Dian Lee, the eldest daughter of the senior Lee. It is constructing five blocks of serviced residences, semi-detached homes and bungalows.

Meanwhile, Lee said the Mines Waterfront Business Park, which has four towers, is undergoing an expansion to add four new blocks for more than RM150 million.

"The four blocks are fully tenanted and we have enquiries from other companies who want to operate from here. So we are quite confident the take-up for the new buildings will be good," she added.

The existing four blocks are being leased at RM6.60 per sq ft.

By Business Times

Sime Darby Property mulls RM2b property trust

Sime Darby Property Bhd, the property arm of Sime Darby Bhd, is building its investment portfolio as it mulls setting up a property trust with assets worth more than RM2 billion, in two to three years.

It also wants to grow its rental income, which now contributes some 10 per cent to its bottom line, group managing director Datuk Tengku Putra Badlishah said.

"Property development is very cyclical while asset management provides regular income and we want to grow that.

"We have assets that give us good rental but more is better. We are building three towers in Ara Damansara and have a few more coming up in the Klang Valley," Tengku Putra Badlishah said.

With an interview with Business Times recently, Tengku Putra Badlishah said the company has several assets suitable for a real estate investment trust (REIT).
"We have reached there as far as a REIT is concerned but we want to set a target. We will launch the REIT if we think it makes sense to do one. For now, we don't require any fund raising," he said.

Sime Property may buy or build new properties in Malaysia, Australia, China, Indonesia and Vietnam. It will ride on the success of its parent which operates in over 20 countries.

Sime Property's assets, including its 14,800ha of land in the greater Klang Valley, are worth RM4 billion.

The company has several wholly-owned assets under management. They include Sime Darby Pavilion, Kompleks Sime Darby and Wisma Guthrie in the Klang Valley, as well as Performance Centre, Sime Darby Centre, Sime Darby Enterprise and Vantage Automotive Centre in Singapore.

Its hospitality assets are Sime Darby Convention Centre and Genting View Resort in Malaysia, Darby Park Executive Suite in Singapore, Randong Orange Court in Vietnam, as well as three resorts in Australia which are Quest Margaret River, Quest Subiaco and Karri Valley.

Sime Property's award-winning leisure properties include the Kuala Lumpur Golf & Country Club and Impian Golf & Country Club in Kajang.

"All these properties are doing well with most of them yiel-ding an average 7 to 8 per cent," Tengku Putra Badlishah said.

By Business Times