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Wednesday, March 3, 2010

SP Setia revises 2010 sales target to RM2b

Property developer, SP Setia Bhd has revised its sales target for financial year 2010 to RM2 billion from an intial RM1.65 billion.

President and Chief Executive Officer Tan Sri Liew Kee Sin said the optimistic forecast was due to the RM608 million in sales recorded in the first quarter of the 2010 financial year.

Speaking to reporters after the company's annual general meeting today, he also said the confidence was based on the country's economic recovery following the 4.5 per cent fourth quarter gross domestic product (GDP) growth recorded last year.

For the financial year ended Oct 31, 2009 the company recorded its highest ever sales of RM1.65 billion, amidst challenging market conditions.
At present, the group has a landbank of 1,560 hectares in the Klang Valley, Johor and Penang with 10 ongoing projects.

According to Liew, the gross development value (GDV) of the landbank is estimated at RM26 billion and would enable the company to sustain itself for another 12 years.

He said for this year, the company would focus on its projects in Johor, the Klang Valley and Penang.

He disclosed that SP Setia expects its Vietnam operations to contribute RM100 million only.

SP Setia currently has two development projects, the Eco Lakes at MyPhuoc Industrial Park and EcoXanh in Ho Chi Minh City, Vietnam.

The company has chosen to go "slow and steady" in Vietnam, following the discouraging economic situation in that country, with a high interest rate of 16 per cent and the devaluation of its currency, the Dong.

However, Liew said the devaluation of the Dong did not affect SP Setia's projects there much, as the land already belonged to the company.

For the financial year ended Oct 31, 2009, SP Setia recorded RM1.4 billion in revenue with a profit before tax of RM231 million.This is against the RM1.47 billion in revenue and profit before tax of RM297.9 million previously.

By Bernama

Property sales to rise 5-10pc: RAM

The outlook for Malaysian property market is promising with sales volume expected to increase by 5 to 10 per cent this year, according to RAM Holdings Bhd.

In stating this, its chief economist Dr Yeah Kim Leng said the improving economic outlook and friendly lending policy will help to increase the confidence level of consumers and boost the property market.

"Affordable housing and domestic-led growth strategy implies supportive policies will continue, though Bank Negara Malaysia remains wary of asset bubbles," Yeah said at a talk organised by the International Real Estate Federation or FIABCI here today.

He said the favourable demographics, stricter-but-still easy access to home financing, rural-urban migration, foreign demand and income growth are all expected to improve housing sales.
Yeah said expectation that the central bank will start "normalisation" of its monetary measures beginning this month will not dampen home purchases, especially when economic growth strengthened further.

RAM expects an increase of 0.75 to 1.00 percentage point in the overnight policy rate by year-end.

Loan growth is projected to expand between 8.0 and 10 per cent this year with non-performing loans likely to hover around 2.0 to 3.0 per cent.

Loans growth remained positive at 6.5 per cent last year during the first 11 months of 2009 despite the economic recession as loans to the broad property sector outpaced overall loan growth.

Yeah said consumer credit will continue to remain the core focus of banks'' lending but competition from non-financial institutions is likely to intensify.

Property loans accounted for 36.2 per cent of total banking system loans.

"The banks still view residential property lending as relatively safe, accounting for 26 to 27 per cent of their loans portfolios," he said, adding that credit conditions are not expected to tighten as demand is not overly excessive and output gap remains for the rest of the year.

On the Malaysian economy, Yeah said the country is expected to resume modest growth this year with an upside bias should public sector reform and transformation policies and strategies strengthen further consumer and investor confidence, thus triggering a surge in domestic and foreign direct investment.

"After a massive running down of inventories last year, re-stocking will contribute to higher production this year but ''autonomous'' or ''self-sustaining'' growth has to come from private consumption and investment," he said.

RAM projects the country''s economy to grow by 4.9 per cent in 2010 and 5.4 per cent in 2011, supported by domestic-driven private sector spending and government spending.

Yeah said Malaysia could reduce its budget deficit to below 3.0 per cent of the gross domestic product (GDP) from 2013 onwards compared to the forecast of 5.6 per cent this year.

According to him, there is a chance for the deficit to be reduced from next year if economic growth can improve further.

"With the goods and services tax (GST) introduction next year, the country can raise more revenue and will be able to cut back on spending," he said.

Currently, taxes and royalties from oil and gas accounted for 40 per cent of the government revenue while its debt level made up 40 per cent of the GDP.

By Bernama

Asia acts over fears of property bubble

Asian countries fearing a disastrous US-style property bubble are striving to cool down their real-estate markets as the region powers out of the global financial crisis.

Policymakers are worried that excessive exuberance could push property prices far above their real value, only to crash and bring down with them banks that lent money too freely and individuals who borrowed beyond their means.

"It is better to pre-empt a bubble than wait for it to get serious and have to take more drastic measures," Singapore Prime Minister Lee Hsien Loong said last month after the city-state took fresh measures against speculation.Singapore was one of the countries hit by the 1997-1998 Asian financial meltdown.

That crisis followed a property crash, leaving a blighted landscape of unfinished projects across the region and banks gasping for lifelines.

Problems in the US housing market had set off the devastating financial firestorm that swept across the world in late 2008 and lasted well into 2009.

While Asia is now leading the global economic recovery, officials are determined to avert another crisis. Low interest rates, strong demand and speculation have pushed property prices in many Asian cities higher, in some cases surpassing peaks reached in 2007.

"The risk of an asset bubble is quite high in certain (economies) such as China, Hong Kong and Singapore," said Chua Yang Liang, head of Southeast Asia research at property consultancy Jones Lang LaSalle.

A bursting of that bubble could "potentially derail economic growth, especially if banks and other investment houses are overly exposed to those sectors", Chua told AFP, singling out real estate as a cause of concern.

In China, property prices in 70 major cities hit a 21-month high in January.Beijing has tightened lending, requiring buyers of second homes to put up a downpayment of at least 40 percent, and they also face higher interest rates on their mortgage loans.

In Singapore, where housing prices have been heating up since last year, the government slapped additional duties on sellers who flip a residential property within a year of buying it.

Home buyers are also now limited to borrowing up to 80 percent of the property's value, instead of 90 percent.In densely packed Hong Kong, home to one of the world's most frenetic property markets, authorities are fretting about a surge of speculative money since late 2008.

Starting April, the territory will increase the stamp duty for sales of flats worth 20 million Hong Kong dollars (2.6 million US) or more from 3.75 percent to 4.25 percent. Prices of some Hong Kong luxury flats have returned to 1997 boom levels.

In October last year, Henderson Land Development said it had sold a luxury duplex apartment for a world record of 88,000 Hong Kong dollars (11,300 US) per square foot, or a price tag of 57 million US dollars.

Australia's central bank on Tuesday lifted interest rates afresh. One factor it cited was a "solid" increase in mortgages, "and dwelling prices have risen significantly over the past year".

Median house prices in Sydney rose 12.1 percent in 2009 and 18.5 percent in Melbourne, and observers said the rise was likely to continue.But Simon Vinson, head of Asian property at AMP Capital Investors, said he did not see the overall Asian market overheating.

"It's really only been the residential market that has experienced strong price growth. Commercial markets remain less buoyant," he said. The rise in residential property prices is just a "retracing" of some of the losses suffered by the sector during the global downturn, he said. "Is this a bubble? At the overall market level, we believe it is more a reversion," he said.

Analysts also said that unlike their counterparts in the West, Asian banks are not over-exposed to the property market. "Banks in Singapore, China and Hong Kong have been managing their risks quite well as the respective monetary authorities provide strict instructions on banking operations," said Chua Chor Hoon, head of Southeast Asia Research at property consultancy DTZ.Chua of Jones Lang LaSalle said that in Asia, "the share of mortgages as a proportion of total bank lending is still within healthy levels".


JAKS to make debut in property development

KUALA LUMPUR : Water-infrastructure builder JAKS Resources Bhd is making a debut in property development under a collaboration with Star Publications (M) Bhd.

In a statement to Bursa Malaysia today, JAKs said its unit JAKS Island Circle Sdn Bhd had signed a joint development agreement with Star to undertake an estimated RM370 million mixed-project on a 2.5ha (24,568 square meters) leasehold site along Jalan University in Section 13, Petaling Jaya.

The site is adjacent to the Jaya One commercial centre.

"JAKS group has the expertise in the construction business and the proposed development will forge the JAKS group forward into the related industry of property development.

"The entire proposed development is expected to be completed within sixty months from the development commencement date," JAKS said in a statement.

Both Star and JAKS will jointly apply for banking facilities not exceeding RM 50 million which will be charged against the land to partly finance the proposed development.

By The EDGE Malaysia (by Chong Jin Hun)