Upswing seen for next year

Despite the gloomy economic outlook on the global front, the local property market is expected to be positive and on the upswing for next year and 2012, the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) organising chairman Eric Ooi said.

However, there were certain market segments within the property sector that may be lagging behind, he says.

Ooi says the Malaysian economy has bounced back, the stock exchange is reaching new highs, an indication that the stimulus packages introduced by the government after the global financial crisis is working.

On the different property segments, he says landed properties in prime locations have skyrocketed, especially in the Klang Valley, and the retail property segment remains fairly strong.


Eric Ooi fielding questions from reporters, while PEPS president Choy Yue Kwong is on the left.

However, the office sector is still soft but showing signs of improvement, as is the industrial sector, he says.

Ooi also says there is a need to ensure greater balanced growth in all sectors of the property market and this requires government support as well as incentives for the developers to participate in such property developments.

He cites affordable homes to the masses and young couples setting homes as a segment of the property market that need further support from the Government.

However, Ooi concedes that affordable homes in the residential sector, especially in the Klang Valley and in prime locations in other states are possibly going beyond the affordability of this young group of people, based on their general income levels as studies show the average homes in the Klang Valley cost from RM400,000 to RM450,000.

On the value of Malaysian properties, Ooi says there was a time not too long ago when Malaysian properties were undervalued.

But now we believe the properties are generally fairly valued based on our estimates. Malaysian properties generally have a trend of steady and stable growth over the years, unlike some other developing countries in the region where property prices can spike considerably in a matter of a few years, he says.

On high-end properties, he says there is currently a good balance of locals as well as foreigners buying these properties, which are generally worth RM1mil and above.

We are also seeing many high net-worth foreigners showing interest in properties in Asia and some have chosen to purchase properties in Malaysia, despite the lower yield, compared with, say, Vietnam.

These foreign buyers may not be looking at high yield, which normally comes with higher risk, opting for properties with stable growth such as those in Malaysia and Singapore. As a rule, Malaysian properties generally double up in their value over a ten-year period, but there are exceptions, especially in strategic locations in the Golden Triangle, he says.

The 4th Malaysian Property Summit 2011 will be held on Jan 18 at the Sime Darby Convention Centre in Bukit Kiara, Kuala Lumpur.

Organised by PEPS, it will focus on property trends, movements in rents and prices, demand and supply and forecasts for the various property segments of the property market.

We expect over 200 participants from the property sector such as developers, property owners, investors, fund managers and bankers as well as property analysts, economists and property consultants present at the this property summit, Ooi says.

Property consultancy Savills Rahim & Co executive chairman and founder Datuk Abdul Rahim Rahman says he is optimistic about next year, particularly the second half of 2011.

The Government has announced various mega projects. This will have a spillover effect. But you cannot expect to see the cranes immediately. That will come later. The land (for the various projects) has been identified. As for the development of Kampong Bharu, the bill has been tabled for first reading. So the corporation to see to that development will be set up some time next year, says Abdul Rahim.

Much of the economic growth will be driven by the services and manufacturing sectors and this will have a positive effect on the property sector.

Nevertheless, Abdul Rahim cautions that there must be adequate studies done on demand and supply today and in the future for office space.

There are 6 million sq ft of office space in Kuala Lumpur under construction today. This will be ready by 2012, excluding those announced and being planned by the government this year. It is prudent to do more detailed feasibility studies on demand and needs, with some consideration given to what is happening in US and Europe today, and if there is a need to postpone some of these projects, let's do so.

Nonetheless, Abdul Rahim says he supports the high value, high impact projects because they will help to push the country into the high-income bracket model that the government is envisioning.

But do not do it at the expense of a glut, he says.

In all likelihood, if the government goes ahead with the planned projects, there will be 10 million sq ft of office space on the cards entering the market in years to come.

The city of Kuala Lumpur can only absorb 1.5 million sq ft of office space. This has been the trend for the last three years. That means, next year and 2012, we can only absorb 3 million, and we have 6 million sq ft coming on stream in 2012, excluding the office space that will be made available in the several high-impact projects announced this year.

By The Star

Land rights and legacy

MALAYSIA is 53 years old this year. More than 20 years ago in the 1980s, a group of Penans from Sarawak, wearing only flimsy loin cloths and feathered head gear, flew into Kuala Lumpur to protest against the deforestation. The opening up of the interiors resulted in environmental degradation, clogging rivers and cutting off their source of food and clean water supply.

They contented that the forest was their home, ancestral grounds, source of livelihood, that they have native customary land rights'' to the forest. Remember the movie Avatar?

Fast forward to 1990s, a decade later. Initial plans to build the Bakun hydroelectric dam in Sarawak created another hue and cry among natives. Thousands of Kayans and Kenyahs were displaced. The 67,000ha reservoir, about the size of Singapore, is being flooded right now, after much delay in its construction.

Enter the present. Early this week, the Kampong Baru Development Corp Bill was tabled for its first reading. It will go through the usual process for debate in the lower house of Parliament and in Senate, the upper house.

That Bill paves the way for the setting up of a corporation to implement the development of Kampong Baru (literally translated new village), a Malay reserve enclave that goes back to British India days in the late 19th century.

Covering about 380 acres amid the progress and modernity of the city, the village is a rustic world of timber and concrete housing, with chickens running helter skelter admist the gleaming Petronas Twin Towers. In Kampong Baru, traditions still reign supreme.

For years, the different administrations have tried to bring development to the land owners there ar 4,300 lot owners only to face a palette of issues, from legal to political to racial. It is the hotbed of Malay sentiments.

What has the natives of Sarawak laying claim to the forest got to do with the Malays laying claim to Kampong Baru? First, they are all Malaysians, known singularly as bumiputras, or sons of the soil. Secondly, they want their land rights to be protected.

Land ownership is a funny thing. It stirs up much sentiment within each of us, no matter what tribe we may hail from. Although we may lay claim to modernity and display elements of it, in many ways, if we examine the roots of our being, each of the race that make up this country is tribal. And each of us have a legacy we want to protect and pass on to future generations.

Legacy goes beyond land ownership, or wealth but has much to do with it. Legacy also includes values, knowledge, experiences that are passed down from generation to generation. These are the intangibles that must be considered as assets, as much as the tangibles like land and houses.

Legacy should not just denotes the past. It includes the present and future because mankind is made in such a way that they enter this world with the desire to leave something for future generations.

Herein lies the need for strong leadership because how a family or a country is governed has a strong influence on the future. The core issue of Kampong Baru development will be its Malay land rights, just as the natives of Sarawak demand their native customary rights, just as everybody in this country desire his right to live, work and prosper in this country, unquestioned.

The number of hotels, office blocks, residential houses or condominiums, roads and healthcare are important, but when laid side-by-side with the issue of the legacy of the Malay community of Kampong Baru, the future architectural landscape seems peripheral.

Kampong Baru is among several mega property projects to be undertaken by the government but it is probably, by far, one that may potentially be the most contentious because of this issue of legacy and land rights.

Let's have consensus, not directives.

Assistant news editor Thean Lee Cheng is all for development, but don't leave out the soul of that development.

By The Star (by Thean Lee Cheng)

IJM unit wins RM460m job from Naza TTDI

PETALING JAYA: IJM Corp Bhd said its wholly-owned unit received a contract worth RM460.59mil from Naza TTDI Construction Sdn Bhd for superstructure works for the latter’s development in Kuala Lumpur.

It told Bursa Malaysia yesterday that IJM Construction Sdn Bhd received the work contract acceptance letter on Dec 16 for the execution and completion of superstructure works for the Platinum Park Phase 3 along Jalan Stonor.

Phase three includes the proposed development of two office tower blocks of 50 and 38 levels, comprising one facilities area, eight levels of podium carpark and three levels of basement carpark.

The completion date for this project is Dec 31, 2013.

Platinum Park is an integrated high-end residential and commercial development. It will see seven towers, namely two super condominium towers, a serviced apartment, a five-star hotel and three Grade A office towers.

By The Star

KPJ to inject assets into REIT

KPJ Healthcare Bhd is set to raise RM138.7 million by injecting three of its hospital buildings into a real estate investment trust (REIT) scheme called Al-'Aqar KPJ REIT.

KPJ managing director Datin Paduka Siti Sa'diah Sheikh Bakir said under the scheme, the healthcare group will in return get a combination of RM1.1 million in cash and the balance in new Al-'Aqar KPJ REIT units.

The exercise involves the sale of two hospital buildings here - the Bandar Baru Klang Specialist Hospital in Selangor and the Kluang Utama Specialist Hospital in Johor.

The third hospital is the Rumah Sakit Bumi Serpong Damai building in Jakarta, Indonesia.



To retain the use of the buildings, the group in turn will rent the buildings via a 15-year lease with an option to extend the tenure for another 15 years.
The asset injection will allow the group to unlock value and realise its investment in the properties, Siti Sa'adiah said.

Proceeds from the asset sales will be used to pare down the group's borrowings and trim the gearing to 0.4 times from 0.5 times and an interest cost-savings of about RM2.2 million a year.

"This will enable us to gain access into funds in our plans to build new hospitals next year such as in Pasir Gudang, Kuantan, Klang, Muar and in Sabah," she told reporters in Kuala Lumpur yesterday after Al-'Aqar KPJ REIT's annual shareholder meeting.

Al-'Aqar KPJ REIT is the first and largest Islamic healthcare REIT in Malaysia and managed by Damansara REIT managers Sdn Bhd, which is a member of the Johor Corp Group (JCorp).

The sale and leaseback of the three hospitals is the fourth tranche of the REIT's injection since its launch in 2006.

The first tranche involved the injection of six hospital buildings valued at RM481.2 million, the second involved the sale of five buildings for RM170.0 million and the third comprised seven hospital buildings and one nursing college for RM292.5 million.

With the injection, Al-'Aqar KPJ REIT's total enlarged units stands at 636.8 million units with a total of 22 hospital buildings under its scheme, one nursing college, the Selesa Hotel, Metropolis Tower and another two properties in Jakarta.

Upon completion of the proposed acquisitions, the enlarged total asset value will be more than RM1.2 billion.

Al-'Aqar KPJ REIT will seek listing and quotation for its consideration units of 56.6 million units on the Main Board of Bursa Securities.

By Business Times

MRT project to generate billion$ in GNI

The implementation of the mass rapid transit (MRT) project in the Klang Valley is expected to generate a Gross National Income (GNI) of between RM3 billion and RM4 billion beginning next year until 2020, said Prime Minister Datuk Seri Najib Tun Razak.

He said between RM8 billion and RM12 billion was expected to be generated in terms of spinoffs from the construction of the MRT project.

"RM21 billion in GNI incremental impact is anticipated to be generated in 2020 from the value appreciation of the project and increase in productivity rate," Najib told a press conference at the Royal Malaysian Air Force base in Subang before his departure to Kuala Terengganu for a one-day official visit.

The Prime Minister said the Cabinet had approved the implementation of the MRT project at its weekly meeting on Friday.

The MRT, the largest infrastructure project in Malaysia, is an economic entry point project identified for the Greater Kuala Lumpur/Klang Valley National Key Economic Area under the Economic Transformation Programme.

Najib also said the MRT project would generate 130,000 jobs during the duration of its construction which was expected to commence July next year and be complete in five to six years.

Once operational, the MRT will first ply the Sungai Buloh to Kajang route via the Kuala Lumpur city centre.

"The travel distance is about 60km and 35 MRT stations will be built along that route. Integrated stations would be built in locations where the MRT overlaps KTM Commuter, Kelana Jaya and Ampang Light Rail Transit (LRT) routes," he explained.

The Sungai Buloh-Kajang MRT will provide efficient train service to 1.2 million people, he said, adding that it would serve densely populated Kota Damansara, Mutiara Damansara, Bandar Utama, Taman Tun Dr Ismail, Bukit Damansara, Cheras, Bandar Tun Hussein Onn and Balakong.

Najib also said more than 400,000 commuters would benefit from the Sungai Buloh-Kajang MRT service daily.

The routes and locations for the MRT have yet to be finalised and value management studies would be conducted taking into account the optimum utilisation rate and maximum real estate realisation value.

As such, he said the actual project cost can only be determined once the value management studies are completed.

"The entire cost of building the project is being fine-tuned. Initial estimates made in 2009 placed the figure at about RM36 billion but this was subject to changes," Najib said.

The Prime Minister said the final cost of the project would depend on factors such as the awarding of contracts through open tender, the escalating cost of raw materials and others.

The Prime Minister also added the government decided on kicking off the project with the Sungai Buloh-Kajang route as this corridor did not have adequate rail transport service.

Indepth studies were also carried out on this route which was proposed by Syarikat Prasarana Negara Bhd in 2008 and by MMC-Gamuda Joint Venture Sdn Bhd recently.

The Sungai Buloh-Kajang MRT will built under phase one of the MRT network in the Klang Valley.

Future routes to be developed gradually over several stages have been proposed and is being studied under the Urban Public Transportation Masterplan, he said.

Asked if any new entry points projects would be unveiled, Najib said several projects would be announced in January.

By Bernama