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Monday, January 31, 2011

Glomac rides on niche projects

Some of the completed units at Suria Residen, a low-density, gated housing developed by Glomac in Cheras.

PETALING JAYA: Glomac Bhd, a medium-sized property outfit, is on an exciting growth path as it undertakes more niche developments with fast turnaround time in Greater Kuala Lumpur.

The company has a broad range of affordable to higher-end projects. Its 13 ongoing projects include townships in Sungai Buloh and Rawang in Selangor and in Kota Tinggi, Johor, as well as some niche residential and commercial projects in Greater Kuala Lumpur.

For the six months ended Oct 31, 2010, its revenue surged 98.5% to RM267.2mil while pre-tax profit rose 87.5% to RM61.5mil. Net profit attributable to shareholders grew 78.4% to RM31.4mil.

In a recent note, ECM Libra Research said Glomac was on the brink of higher earnings and land bank.

An analyst with a local brokerage concurred, saying the company could look forward to strong double-digit growth of at least 30% over the next three years.

As at end-October 2010, Glomac has unbilled sales of RM572mil, which will be one of its key earnings growth drivers, going forward.

For the financial year ending April 30, 2011, Glomac has set a sales target of about RM500mil.

Going forward, the company can look forward to growing contribution from some of its key ongoing projects like Glomac Tower, Glomac Damansara, Glomac Cyberjaya and Bandar Saujana Utama.

Glomac Damansara Residences, a 2-tower serviced apartment project with an estimated GDV of RM240mil, is set for soft launch in the middle of next month.

Other projects earmarked for launch over the next 12 months will have a combined GDV in excess of RM1bil.

These include a boutique mall in Glomac Damansara with an estimated GDV of RM145mil, Glomac Al Batha Mutiara serviced apartments (RM250mil) and Glomac Utama, a mixed development within the vicinity of Bandar Utama (RM400mil).

One of Glomac's core strategies is to acquire land bank that offers potential for prime and sizeable greenfield developments in Greater KL.

Its recent acquisitions include a 200-acre parcel in Puchong and seven acres in Cyberjaya.

The Puchong land, purchased at RM8.84 per sq ft, has a potential GDV of RM800mil. Glomac will start developing it in about 12 months and the project will comprise terrace and semi-detached houses as well as villa apartments.

The seven acres of commercial land in Cyberjaya were purchased at RM90 per sq ft.

The mixed commercial project planned for this year will have an estimated GDV of RM250mil. It will be an extension of the ongoing Glomac Cyberjaya project launched about two years ago.

Glomac was founded in 1988 by two entrepreneurs, Tan Sri FD Mansor and Datuk Richard Fong.

The company was listed on Bursa Malaysia main board on June 13, 2000. In 2003, it received ISO 9001:2000 certification.

Glomac has completed about 15,000 residential and commercial units with sales totalling RM4bil. It has also completed 5.4 million sq ft of commercial space.

The completed high-end residential developments include gated-and-guarded communities of Aman Suria Damansara in Petaling Jaya, Lakeside Residences in Puchong and Suria Residen, Cheras.

Suria Stonor being developed by Glomac in Kuala Lumpur.

Suria Stonor, a luxury condominium in the vicinity of Kuala Lumpur City Centre, is Glomac's jewel in the crown.

In late 2007, Glomac acquired a 1.3-acre site opposite Petronas Twin Towers and developed it into Glomac Tower, the company's first commercial high-rise project in Kuala Lumpur.

Artist’s impressions of Glomac Tower.

Glomac Tower, a grade A commercial building, has been sold en-bloc at a record price of RM1,120 per sq ft. The project will be completed in the middle of this year.

In 2006, Glomac made two overseas investments. They comprised an office building with car parking lots in Melbourne and a “built-to-suit” warehouse in Bangkok. Both are contributing steady rental yields to the group.

Glomac is now helmed by Datuk FD Iskandar, who is group managing director-cum-chief excutive officer.

The group comprises about 40 subsidiaries involved in every facet of real estate business including property development, property investment, construction, property management and car park management.

By The Star

All eyes and ears on second MRT

KUALA LUMPUR: The second mass rapid transit (MRT) line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the “circle line”, is already in the final planning stage.

The details are expected to be announced in March.

“Its alignment must depict the current and future business districts in Kuala Lumpur,” said Minister in the Prime Minister's Department and chief executive officer of Pemandu Datuk Seri Idris Jala during an Economic Transformation Programme (ETP) update to analysts and fund managers recently.

In the longer term, a third line to Port Klang was being comtemplated, he said. The circle line is expected to cover the hotspots surrounding the KLCC, Jalan Bukit Bintang, the new Kuala Lumpur International Financial District in Dataran Perdana, KL Ecocity, Pusat Bandar Damansara and Sentul, among others.

Meanwhile, the “blue line” the first line which is a 50km alignment that covers Sungai Buloh to Kajang, via Pusat Bandar Damansara and Bukit Bintang is slated for completion in 2016. The network of all the three MRT lines will be fully operational by 2020.

“Greater KL now has a population of 6 million people. By 2020, we will have 10 million people. If we don't have the MRT, the city will be choked. Right now, nearly everybody drives. This is not sustainable,” said Idris.

He added that currently 13% of people commuted using urban transportation. Under the ETP, Idris said this should increase to 50%, adding that the funding structure for the MRT would be disclosed by end-February.

“Apart from reducing travelling time, the MRT will also cause property prices to appreciate because of better accessibility. If your house is near the MRT station, prices will go up because of the commercialisation created around the area,” said Idris.

Some analysts are wary of the ambitious plans laid out by Pemandu.

“As usual, it's a case of execution. Will the Government be able to actually implement the project? We'll need to see it being done to believe it. More importantly, how is the Government going to fund this project?” asked a construction analyst.

Another analyst said the Government was likely to reduce cost by getting developers to co-fund some of the MRT stations.

On implementation, he said that Pemandu would have learnt from past lessons of the LRT, monorail and commuter train.

Some brokers have notably been able to analyse the impact of the proposed MRT comprehensively.

In a Malaysia Market Strategy Report titled “Property boom-boom” released on Jan 26, global investment bank UBS' head of research Chris Oh said Malaysia was set to enjoy improved connectivity in the coming years with the proposed infrastructure rollout of the MRT system and possible high-speed rail linkage between Kuala Lumpur and Singapore.

He said the MRT captured the imagination of the people, developers and investors. He expects property value around a radius of 20km of the city centre to rise significantly.

The preference would be on developers who have vast landbank with high-density mixed development around MRT stations.

“Interest in Malaysian property will be fuelled by foreigners looking out for higher returns (via undervalued currency and low entry costs) than their home countries (Singapore and Hong Kong) and the absence of significant restrictions on property ownership by foreigners,” said Oh.

Singapore-based DBS Research was the first to issue a property sector report titled “Entering a Golden Era” on Jan 14, analysing the impact of MRT on the property sector.

The analyst, Yee Mei Hui, said: “The MRT system is expected to be a structural catalyst for the rise in value of the real estate surrounding MRT stations.”

In the report, the firm was projecting boldly that land values in MRT hot spots could jump by up to six-fold over the next five years.

She said the MRT would have a strong structural impact on the Kuala Lumpur real estate, given that the KL city had been under-invested since the last wave of mega-projects in the late 1990s.

The new MRT will create new opportunities for high-density mixed developments, urban renewal and new suburban townships.

In turn, this has boosted the potential for land prices to reach new peaks with higher plot ratios and more commercial developments. Other than existing prime areas, she identified KL Ecocity, Pusat Bandar Damansara and Sentul as new locations for high-density developments to watch out for.

By The Star

Sunway adds shine to REITs

The real estate investment trusts market is expected to be an attractive investment with positive macro economy numbers and higher disposable income.

More property groups are likely to set up real estate investment trusts (REITs) in Malaysia this year as the market continues to stay attractive, said the manager of a major property trust.

"With positive macro economy numbers and higher disposable income, we expect the REIT market to be an attractive investment," said Datuk Jeffrey Ng, the chief executive officer of Sunway REIT Management Sdn Bhd (5176), the manager for Sunway REIT.

Sunway REIT is Malaysia's largest REIT, and it is also the largest REIT initial public offering in Asia, excluding Japan, since 2007.

It was launched by Sunway City Bhd and Sunway REIT Management last July, with eight assets worth RM3.7 billion.
Sunway REIT is expected to double its asset size to RM7 billion in five years, which will comprise 60 per cent of retail properties.

Ng said it is looking for properties to buy, but he declined to elaborate.

Pipeline properties include the two new phases to Sunway Pyramid mall, now known as SP3 and SP4.

Ng said Sunway REIT has helped to bolster the equity market and made it more attractive to foreign institutional players.

"Before the entry of Sunway REIT, the Malaysian REIT (M-REIT) market was never on the international radar screen as the players were too small to attract foreign investors.

"With Sunway REIT coming in, I think we have been catalytic to put M-REIT back on the global funds' radar," he said on Friday in Bandar Sunway, Selangor.

Sunway REIT's assets are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya and two office towers.

Sunway REIT is 58 per cent held by institutional funds like the Employees Provident Fund, Permodalan Nasional Bhd, Government of Singapore Investment Corp and Great Eastern Life Assurance (M) Bhd. Some 26 per cent of the trust is held by foreign unit holders.

By Business Times

Property loans growth may taper off

ECM Libra Investment Research expects the loans growth to taper off in anticipation that property sales growth may slow down in late 2011.

Residential and non-residential property loans which accounted for 44 per cent of loans growth in 2010 are already showing signs of growth moderation, it said in a research note today.

Residential loan approval has contracted 3.8 per cent year-on-year in December while non-residential loan approval slowed to 30.2 per cent from 47.3 per cent in November.

"Loans growth will also be dampened by an impending statutory reserve requirement (SRR) hike and imposition of macroprudential lending measures as guided by Bank Negara Malaysia in its latest monetary policy statement on Jan 27," said ECM Libra.

In the near term, it said, loans growth is expected to remain intact as lending indicators continue to be in positive territory with loans application and approvals in December 2010, increasing by 36.5 per cent and 17.4 per cent year-on-year, respectively.

"That said, loans disbursement contracted by 2.8 per cent year-on-year in December," it added.

Loans grew by 12.8 per cent to RM883.6 billion in 2010.

Both household and business loans growth moderated in December at 13.4 per cent and 12.1 per cent, respectively.

The loan-deposit ratio remains high at 81.4 per cent from Nov 10 at 81.3 per cent, which is close to the seven year high of 81.7 per cent reached in Oct 10.

"This was due to deposits growing at 7.3 per cent as compared to the loans growth of 12.8 per cent. We believe the lagging deposit growth may curb loans growth momentum going forward," ECM Libra said.

ECM Libra said it has maintained the neutral call on the banking sector as loans growth is tapering while net interest margins is under pressure going forward.

Meanwhile, OSK Research Sdn Bhd has maintained its view of loans growth for 2011 as remaining robust, with the rise in interest rates from record lows unlikely to dampen pent-up credit demand spurred by a recovering economy.

"The banking system's capitalisation remains sufficient, with the risk weighted capital and core capital ratio, standing at 14.6 per cent and 12.8 per cent, respectively," it added.

By Bernama

SP Setia remains a 'sell', says ECM

SP Setia Bhd remains in the 'sell' zone despite the positive acquisition of a 106.2 hectare (262.5 acres) land in Tebrau, Johor, last Friday, ECM Libra Investment Research said today.

It target price was at RM6.00 per share. "We are not imputing any earnings from this new project into our model yet, until there is more clarity on the development timeline," the research house said in a note.

The land, to be developed as a mixed township, is expected to
generate a gross development value (GDV) of at least RM700 million, ECM Libra added.

It also expects the project to be launched in FY12 with the contribution commencing from FY13 onward.

With the new acquisition, SP Setia will have six projects in Johor.

By Bernama

AZRB, Jasa Bakti JV awarded RM125m public housing project

KUALA LUMPUR: AHMAD ZAKI RESOURCES BHD and Jasa Bakti Sdn Bhd have been awarded a RM125 million contract to undertake a public housing project in Kuala Terengganu.

AZRB said on Monday, Jan 31, it had received a letter of acceptance from the Housing and Local Government Ministry to build 1,002 flats under the public housing program (PPR-for rental) in Changang Tiga, Kuala Terengganu.

“The award for the works amounted to RM125 million. The works are to be completed within the period of 30 months; that is commencing from Feb 16, 2011 to Aug 15, 2013,” it said.

By The EDGE Malaysia

Challenging times ahead for Iskandar

JOHOR BARU: Iskandar Regional Development Authority (Irda) chief executive officer Ismail Ibrahim says attracting new investments to Iskandar Malaysia is going to get tougher and more challenging.

He said although the country's first economic growth corridor was making significant progress and moving in the right direction, albeit uncertainties in the global economy, Iskandar could not afford to rest on its laurel.

“The intensity of the competition is becoming greater and we have to prove our sceptics wrong that Iskandar is indeed taking shape as planned,'' Ismail said in an interview with StarBiz.

He said the challenge was not only in attracting new investments to Iskandar, but also receiving financial support from the Government for infrastructure development projects.

Ismail Ibrahim … ‘We have to prove our sceptics wrong, that Iskandar is indeed taking shape as planned.’

Under the Comprehensive Development Plan 20062025, Iskandar is set to transform into a metropolis of international standing.

Iskandar, launched on Nov 4, 2006, is located in the southern most part of Johor and spans over 2,217 sq km. It is three times bigger than Singapore and has five flagship development zones JB City Centre, Nusajaya, Eastern Gate Development, Western Gate Development and Senai-Skudai.

The corridor has attracted investments totalling RM67.68bil up to November last year. A total of RM39.42bil, or 58%, of the total investment was from domestic investors and the balance from foreign investors.

Of the overall investment received, RM6.28bil was from the public sector; RM14.45bil went to tourism, utilities and others; RM20.25bil for properties; and RM26.38bil for the manufacturing sector.

During the same period, RM27.61bil or 40.8% of the total committed investments have been spent on development projects in the region.

Ismail said Irda would continue to work closely with government agencies like Malaysian Industrial Development Authority and Malaysia External Trade Development as well as foreign missions to promote Iskandar.

He said Irda also had a good working relationship with the Johor State Investment Centre (JSIC) although Irda's coverage was limited to Iskandar only, while JSIC covered the entire state.

Irda is the regulatory body mandated to plan, promote and facilitate the development of Iskandar. Prime Minister Datuk Seri Najib Razak and Johor Mentri Besar Datuk Abdul Ghani Othman are the co-chairmen.

“We are mindful of the growing Asia-Pacific region and we are coming out with programes to attract more investments from China, India, Indonesia and Singapore,'' Ismail said.

He said besides these countries, Irda would continue to woo investors from Europe, the United States and the Middle East, and would likely to extend its reach to Brazil, Russia and South Africa.

Ismail said although the economies of Europe and the United States were still in the doldrums, Irda believed that they still offered good investment opportunities for Iskandar as not everyone there was affected by the downturn.

He said Iskandar was now in the second phase of its road map which focused mainly on attracting new investments and the completion of phase-one projects.

Ismail said Irda would have more outreach programmes this year with the private sector, which would not be limited to meeting them as groups in seminars or conferences, but would be on one-to-one basis.

“We want to engage them better and intensively so as to share our plans for the private sector in Iskandar and vice versa,'' he said.

Ismail said the private sector stakeholders included property developers, investors, chambers of commerce, small and medium-scale enterprises and land owners.

On why the Government decided to allocate an additional RM600mil for Iskandar in November from the RM339mil announced by Najib in Budget 2011, he said the Government must have its own reasons for that.

Ismail said the bulk of the allocation would be spent this year on ongoing projects like the New Coastal Highway, Iskandar Malaysia public housing project and river cleaning works.

“We believe (the extra allocation) has got to do with our timely delivery of our infrastructure projects and the commitment shown by us and the new projects already in the pipeline,'' he said.

By The Star

Saturday, January 29, 2011

Bringing condo living to Perak

Artist’s impression of The Haven Lakeside Residences in Tambun, Perak.

It takes a foreigner to help us appreciate what is available in our backyard. It also takes the can-do spirit of Australian Peter Chan to do the unthinkable.

The limestone rocks and hills around Ipoh have so enchanted the co-principal of Superboom Projects Sdn Bhd that he is building three blocks of luxurious condominiums The Haven Lakeside Residences in Tambun, 15 minutes' drive out of Ipoh.

Peter Chan ... ‘This is a little Guilin.’

“This is a little Guilin,” says the CEO of Superboom Projects, referring to China's famed holiday destination Guilin. “Limestone hills and formation are unique. They do not happen just anywhere and The Haven is surrounded by them.”

The area that Chan has set his sight on forms part of the Malaysian Main Range, which stretches from southern Thailand to Johor. Limestones have today become synonymous with Ipoh, just as the Melawati Range is synonymous with Taman Melawati, Kuala Lumpur which also is part of the Main Range.

Leveraging on the green factor and old money looking for new lifestyles, Chan will be building what will be Ipoh's most luxurious condominium priced from RM330,000 to RM2mil a unit. It will also be the tallest building in and around Ipoh. The tallest building is Tower Regency, a 20-storey hotel in Ipoh. The project is expected to set a new benchmark for the Perak property market.

“Property prices move up quite a bit in the Klang Valley and Penang but there is this perception that it should be low here (Ipoh). It is just that there is little population growth here. The young people keep leaving home to seek work in Kuala Lumpur and Penang. So, when there is no population growth, there is no demand. But environmentally, Ipoh is an ideal place to retire in. The cost of living is not as high as in Kuala Lumpur or Penang,” he says, adding that there are several hospitals and a supermarket chain within a short drive of the project.

For years, developers in Perak have concentrated on building double-storey terraced and semi-detached houses. Because of the abundance of land, the idea of building luxurious high-rise condominiums did not figure.

Chan looks at the market demand with new lenses. There are many empty nesters in and around Ipoh, with a population of about 800,000. Increasingly, security has become an issue. There is no room today for a five- or six-room house, unless two or more generations stay together, he says.

His target audience is the retirees' market in and around Ipoh, Kuala Lumpur and Singapore. The other market segments are those in search of a holiday home.

“Ipoh is a quiet and serene place to retire and to holiday in. Penang and Malacca are oversold but little is known about Ipoh. I would like to change that,” he says.

He is offering 11 layouts with built-ups ranging from 1,000-3,000 sq ft. Although there are about 500 condominium units, Chan is offering about 300 covered car parks in a three-storey parking podium with lifts. There will be two separate covered parking facilities with additional bays on ground level.

Chan does not expect full occupancy all year around. Hence, he is working with Best Western Hotels group, one of the world's largest hotel chain to manage, market and lease out some of the properties. Maintenance charges for the first 1,000 sq ft is 22 sen, the second and third 1,000 sq ft at 16 sen and 12 sen per sq ft.

On the issue of the terrain housing the three 26-storey blocks, Chan said the site has been tested by three independent engineering companies working on structure and foundation. Prof Bernard Pierson, the Shell chair for Geosciences at Universiti Teknologi Petronas was reported to have vouched for the safety of the residences.

This will be Chan's third project. His previous two projects are double-storey terraced housing at Subang Galaxy in Subang 2, Selangor and Permai Lake View Apartments, located adjacent to the 14-acre Haven site. Chan completed the apartments in 2006. Fronting the Permai Lake View apartments later on will be about 30 shops. The concept to build the condominiums came in 2008.

The three blocks will be sited around a 4-acre lake on the foothills of the Main Range, where a 14-storey limestone rock stands. Chan's 14-acre site, inclusive of the lake, is adjacent to Sunway's plot of land which includes a hill. On the other side of the hill is Perak's famed spa resort, The Banjaran.

“Things are moving in Perak. It is just that this place has long been overlooked, with Penang and Malacca oversold as a retiree's home and a retreat,” he says.

The project, with a gross development value of RM250mil, is being constructed by Bina Puri Holdings Bhd and Beijing Construction Engineering (M) Sdn Bhd, two top contractors in Malaysia and China respectively. The leasehold project is expected to be completed in 2013.

By The Star

Higher income status will help grow real estate sector

We are in very interesting times when changes are happening in almost every sphere of our lives and in every part of the world. We are certainly experiencing first hand the age old saying that “the only constant thing is change”.

With change comes challenges and opportunities. To avoid being left behind, all alike from the common folks to governments and organisations should be proactive and take the necessary steps to be part of the big wheel of change.

One of the big changes underway for the country is the need to take the big step forward to become a high income nation. This is indeed a welcoming change that will allow all working Malaysians to progress up the income ladder and to look forward to bigger pay checks and maintain a higher standard and quality of living.

Widening the pool of high income earners is certainly good for the country to take a leapfrog forward across all the economic sectors. This is because it will promote higher domestic consumption and more sustainable growth for the country.

In the real estate sector, one of the keys to ensure sustainability in the local market is to increase the people's per capita income at least to the level of the other developed countries in Asia.

Unless we grow our per capita income, we will not be able to move up the value chain and see a phenomenal growth in our real estate sector.

The vast difference in per capita income compared with the high income countries of Singapore, Hong Kong, South Korea and Taiwan could be the reason for the big property price gap here compared with that in those countries. Likewise in the other sectors, there are also many growth opportunities to be tapped by moving up the value chain.

It does not help that the country is still dependent on so many foreign workers which is causing substantial outflow of foreign exchange to the other countries. Instead of relying on these supposedly lower wage foreign labour, it is time to revert back to our own Malaysian workforce which will have substantial spillover benefits to the local economy.

Although the pay structure will have to be revamped upwards, employing our own workers will ensure that they will be duly employed and prevent them from getting involved in other undesirable activities if they remain unemployed.

Like many high-income countries such as Singapore, Hong Kong and Taiwan, foreigners should only be allowed to work as domestic maids and high skilled and critical professional jobs that are in short supply locally.

This way, the people's wages will have a chance to move upwards and not kept artificially low like what is happening now. There will also be less outflow of funds from the country.

In the real estate sector, one of the most obvious changes is the rapid appreciation of property valuation and the sudden windfall for many property investors.

The sharp rise in property prices in some parts of the country has caused both anxiety and excitement depending on which side of the scale one is at.

Developers certainly have a big role to play in the way property prices move. The pace and size of their project launches will determine the supply coming into the market.

When there is still a strong pent-up demand for more affordably to higher priced houses like what is happening now, it will help if developers speed up on their launches and help to ease the supply flow.

The price of a property when it was first launched is an important factor, but beyond that, the rate of how much a property will appreciate or depreciate is dependent on a number of factors including demand and supply. While location is a major factor that determines a property's value, other important considerations include infastructure network, accessibility, security, and the amenities and facilities provided.

I have observed that while there are townships and neighbourhoods that continue to be relevant and look refreshing and happening, there are also many that are dreary without much going for them. Of course, the value of properties will also differ accordingly.

Developers should continue to establish strong rapport with their buyers even after the projects are handed over to buyers.

We should give the thumbs up to developers who consider the handing over of completed projects as the beginning of their relationship with their customers.

They continue to listen to their buyers, help to form active and engaging community activities and add value to the townships they build.

It is important not to undermine good after-sales service as they can work wonders for a developer's reputation and promote loyalty and repeat purchase from customers.

Deputy news editor Angie Ng hopes to see developers sprucing up parks in their townships instead of cannibalising them and deprive residents of a healthy form of recreation.

By The Star (by Angie Ng)

Best Western to manage and market The Haven

BEST Western International Inc, one of the world’s largest hotel chains, has been appointed by property developer Superboom Projects Sdn Bhd to manage, market and lease out The Haven Lakeside Residences.

Jonathan Badman (left) and The Haven Sdn Bhd co-principal David Yam at the site of The Haven Lakeside Residences.

BWI Hotels Sdn Bhd group director of sales and marketing (Malaysia) Jonathan Badman says this will be the group’s first undertaking of luxury residential eco-resort in Malaysia and the first of its kind in South-East Asia.

Says Badman: “Owners have a choice to stay or to lease out their units. The transaction is between themselves and Best Western Hotels. We will also manage the public areas of the project.”

He says the Arizona-based company will further improve the design and facilities at The Haven to Best Western’s premier level, the equivalent of a four-star and above in hotel rating.

The company manages and operates two hotels under franchise agreements in Malaysia currently, these being Best Western Kinabalu Daya Hotel in Kota Kinabalu and Best Western Marina Island Resort in Pangkor. Both are its core three-star brand.

In the second quarter of this year, it will be opening in three new locations namely Best Western Sandakan Hotel and Residence in Sabah (170 rooms), Best Western Premier Dua Sentral KL (352 rooms) and Riverside Malacca (170 rooms).

The group will be having four new locations in 2012 and 2013 in Malacca, Kuala Lumpur, Shah Alam, and The Haven in Tambun, Perak.

“If we cannot bring value into a relationship, we will not do it. In the case of The Haven, it will be a win-win situation,” Badman says.

The Best Western brand began operations in Malaysia in 2005 and Asia will be its growth market. The group manages and operates 165 properties in Asia and the Middle East. It operates in 80 countries and territories globally.

By The Star

SP Setia to expand Johor landbank

KUALA LUMPUR: SP Setia Bhd, which has established a strong foothold in Johor, continues to expand its landbank in the state by acquiring a land from Kenyalang Property Development Sdn Bhd for RM125.8 mil.

In a filing to Bursa Malaysia yesterday, SP Setia said its subsidiary, Setia Indah Sdn Bhd, had entered into an agreement with Kenyalang for the acquisition, which is expected to conclude during the financial year ending Oct 31, 2011. It plans to develop a mixed residential development located in the Tebrau corridor.

By Bernama

Sunway REIT to beat profit forecast

SUNWAY Real Estate Investment Trust (REIT), Malaysia's biggest property trust, expects to do better than the RM170 million net profit it forecast for the year.

This is due to strong rental revision of 16 per cent for its entire portfolio in 2010, which has improved performance of the properties, Datuk Jeffrey Ng, the chief executive officer of Sunway REIT Management Sdn Bhd said.

Sunway REIT has eight assets worth RM3.7 billion. They are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya and two office tower.

Ng said the main driver for growth this year will be Sunway Pyramid.
Net rental for Sunway Pyramid was raised from RM8.90 per sq ft (psf) to RM9.40 psf after Sunway REIT's initial public offering last July, by Sunway City Bhd (SunCity).

The mall has recorded a sales growth rate of 15 per cent, higher than industry growth of between five and 10 per cent.

Any major change to the mall's earnings will have a positive impact on the trust's overall performance as it contributes 60 per cent to the trust's earnings.

Ng expects Sunway REIT to also surpass its forecast revenue of RM330 million, led by overall improvement of Sunway Integrated Resort City (SIRC).

SIRC, a multi-billion development by Suncity has two operating hotels, shopping malls and universities, Sunway Medical Centre, condominiums and villas, convention centres, shopoffices and a theme park.

Ng said SIRC will benefit from the rising growth in tourism spending, which is around RM50 billion a year.

"If SIRC continues to grow and be vibrant, there is no reason why Sunway REIT cannot achieve double digit growth year on year," Ng said.

By Business Times

Bayu Melati, PKNS in venture to develop land

MELATI Ehsan Holdings Bhd’s wholly-owned unit Bayu Melati Sdn Bhd has sealed a joint venture agreement with PKNS Holdings Sdn Bhd to develop three parcels of land in Kelana Jaya, Selangor, into a mixed commercial development worth RM1.62 billion.

The proposed development will feature serviced apartments, office towers, Soho offices, a sports complex, mall, hotel and a performing arts centre.

By Business Times

Setia Indah to acquire 106ha in Johor Baru

SP SETIA Bhd’s wholly-owned unit Setia Indah Sdn Bhd has entered into a conditional sale and purchase agreement with Kenyalang Property Development Sdn Bhd to buy 106ha in Johor Baru, Johor, for RM125.8 million.

It told Bursa Malaysia yesterday that it intends to develop a mixed residential development project on the land.

By Business Times

Parkway to run private hospital in Sabah

Parkway Holdings Ltd, the Singapore hospital operator, said it will lease and operate a RM200 million (US$65 million) private hospital that will be built in Kota Kinabalu, Sabah.

Parkway, controlled by Malaysia’s Khazanah Nasional Bhd, signed an agreement with Jesselton Wellness Sdn Bhd, a special-purpose vehicle set up to develop the hospital that is part-owned by an investment arm of Sabah’s state government, the company said in a statement.

Danajamin Nasional Bhd, a Malaysian state bond insurer, will guarantee RM200 million of notes that will be issued to finance the project, it said.

By Bloomberg

Friday, January 28, 2011

SP Setia buys land for RM126m

SP Setia Bhd, which has established a strong foothold in Johor, continues to expand its landbank in the state by acquiring a land from Kenyalang Property Development Sdn Bhd for RM125.8 million.

In a filing to Bursa Malaysia today, SP Setia said its subsidiary, Setia Indah Sdn Bhd, had entered into an agreement with Kenyalang for the acquisition, which is expected to conclude during the financial year ending Oct 31, 2011.

It plans to develop a mixed residential development project on the land, located in the Tebrau corridor.

Currently, it is developing four on-going project within the corridor, namely Bukit Indah Johor, Setia Indah Johor, Setia Tropika and Setia Eco Gardens.

SP Setia said the proposed acquisition was in line with its strategy to strengthen its presence in the state while taking advantage of the exciting happenings in the Iskandar region.
It is also expected to contribute positively to the future earnings and cash flow of the group.

By Bernama

China's first property taxes kick in

China's long-awaited first property taxes took effect on Friday in Shanghai and the mega-city of Chongqing in the southwest, as the country tries to reform its booming real estate market.

People buying higher-end second homes in Shanghai, China's wealthiest city, and Chongqing, home to 30 million people and the country's fastest-growing municipality, now have to pay a 0.4-1.2 percent annual tax, officials said.

But Chongqing Mayor Huang Qifan said the pilot tax programmes were not aimed at clipping the soaring real estate prices that are a top consumer concern across the country.

"People will ask if I think the real estate tax will definitely bring property prices down.... No one believes the property tax will hit the nail on the head and bring prices down," Huang told a news conference late Thursday.

He estimated the tax would generate 150 million yuan ($22.8 million) in revenue for the municipal government this year, according to an official transcript, although state media cited him as saying 200 million yuan.Michael Klibaner, head of China research for property company Jones Lang LaSalle, said the ultimate aim of the tax was not to rein in prices, but rather to prevent hoarding of properties, a pressing problem in recent months.

"Previously there was very little holding cost for residential property because many people paid 100 percent cash for these properties.

Now the holding cost is no longer zero," Klibaner told AFP.

"When the holding cost is zero, it's very easy to let these homes sit idle.

It doesn't cost you anything to let them sit there. It's like gold," he said. "Now there's a holding cost -- the hope is it will change the way people perceive real estate as an asset class.

"The two cities announced different tax pilot projects almost immediately after the State Council, China's cabinet, said it had approved the trials on Thursday.Shanghai announced a flat 0.6 percent tax on new second homes that are double the average market price.

New second homes costing less will be subject to a 0.4 percent tax.Chongqing introduced a progressive tax ranging from 0.5 percent for homes that are double the market average price and rising to a maximum of 1.2 percent depending on the value of the home.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

Property prices in China's major cities posted their fourth straight month-on-month rise in December and sales picked up pace, according to the latest government figures.Prices in 70 major cities were up 0.3 percent last month from November and were 6.4 percent higher than a year ago.

The annualised surge peaked in April, when prices soared 12.8 percent, but growth has since slowed.But prices have remained stubbornly high, despite a range of government measures such as hiking minimum down-payments on property transactions to at least 30 percent in a bid to avoid a damaging price bubble.


China to launch property tax on trial basis

China said Thursday it would start imposing property taxes on homes in some cities on a trial basis, in the government's latest move to try to cool the red-hot real-estate market.The State Council, China's cabinet, approved the trial but said the tax levy method would be decided by the governments of the provinces where the cities are located, the official Xinhua news agency said. It gave no more details.

A statement posted on the finance ministry's website said the tax would help "adjust income distribution and promote social equality.""People's living standards have hugely improved, but the income gap is also widening.... Property tax is one important method to adjust income and wealth distribution, and levying property taxes helps reduce the wealth gap," it said.It added the tax would help "rational" home-buying.

The trial is the latest in a range of measures taken by the government to curb spiralling property prices, as polls have shown the difficulty in affording housing has become the top consumer fear.On Wednesday, the government raised the minimum down payment for second homes to 60 percent of the property's value and ordered authorities to rein in real estate prices.

The central bank has also raised interest rates twice since October, and has increased the amount of money banks must keep in reserve in a bid to curb lending.But despite these policies, property prices in China's major cities have continued to increase, posting their fourth straight month-on-month rise in December as sales picked up pace.

The statement did not mention which cities would trial the tax, but Xinhua said Shanghai was one of them and had already set the tax rate at 0.4 to 0.6%.

The southwestern municipality of Chongqing is also one of the trial locations.According to a report on popular web portal, authorities in Chongqing have set the tax rate at between 0.5 and 1.2%.Chongqing mayor Huang Qifan estimates revenue from the tax will reach 200 million yuan ($30.4 million) and will be used to build public housing, the report said.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.


Equine-JPSB project agreement

KUALA LUMPUR: Equine Capital Bhd’s wholly-owned subsidiary, Taman Equine (M) Sdn Bhd (TEM), has entered into a joint-development agreement with Jelang Puncak Sdn Bhd (JPSB) for a proposed project in Selangor worth RM198.1mil.

Equine Cap said the proposed development was expected to comprise of 177 units of properties comprising 138 units of two-, three- and five-storey shop offices and 39 units of low-cost shops within a multi-storey car park.

The project is expected to commence in early 2011 and completed in 2013.

By The Star

Equine unit calls off land purchase deal

EQUINE Capital Bhd’s wholly-owned unit Taman Equine (M) Sdn Bhd has scrapped a deal to buy a parcel of land in Selangor from Jelang Puncak Sdn Bhd for RM47.4 million.

The two companies will instead sign a joint development agreement (JDA) to build shop offices worth RM198.1 million on the land, Equine said in a filing to Bursa Malaysia yesterday.

By Business Times

Thursday, January 27, 2011

Supply of office space in the city to considerably exceed demand

PETALING JAYA: The supply of new office space in Kuala Lumpur will be overwhelming this year making the market soft and competitive as tenants will get to pick and choose the best deals.

DTZ Nawawi Tie Leung executive director Brian Koh said an additional 2.3 million sq ft in new office space this year will put more pressure on the market.

He estimated that the average rental rate for office space in the city would ease by 5% to RM5.90 per sq ft compared with last year's figure.

“Demand will not grow as fast as supply and this will result in a vacancy rate of 12.5% this year. With the increase in new office space, the rate of unoccupied space is expected to go up to 15% by next year,” he told StarBiz.

Koh said an estimated 13.2 million sq ft of new office space was in the pipeline in the city between this year and 2013.

He said the target to have 100 multinational companies based in Malaysia and the proposed growth of the services sector would augur well for office space demand.

In its latest market report, DTZ Research said the overall occupancy rate of office buildings in Kuala Lumpur decreased from 87.1% in the third quarter of 2010 to 86.4% in the fourth quarter due to weak demand.

Total office space in the city stood at 63.1 million sq ft of net lettable area. It added that office rentals continued to be under pressure in thefourth quarter of 2010 due to competition with average prime office rent going at RM5.97 per sq ft per month in the fourth quarter of 2010.

Knight Frank executive director Sarkunan Subramaniam said office rates were expected to come under pressure and rentals would trend downwards as “completion coming onstream from new and refurbished buildings is expected to overshadow tenants' demand.”

Last year, 2.495 million sq ft were added to the market.

The new buildings included Menara PJD (414,00 sq ft), HSBC new headquarters (175,000 sq ft), Cap Square Tower (600,00 sq ft) CCM headquarters (281,000 sq ft), MIDA Building (283,000 sq ft) and BRDB Tower (221,000 sq ft).

He said the buildings, coupled with those completed in 2009 which were still being leased out, gave existing buildings stiff competition.

Sarkunan said the average rental and occupancy as of the fourth quarter of 2010 have dipped slightly to RM5.09 per sq ft and 92% respectively. Prime office rentals in the city were between RM6.50 to RM10.00 per sq ft.

“The tenant-favoured market environment will continue to prevail. There could be more incentives other than rent-free periods for negotiations,” Sarkunan said.

It would be tough to retain tenants and attract new ones, he said. “Tenant rapport is key. It is important to understand the geographical location and service type concentration in the area and target such tenants,” Sarkunan said.

He said good grade office buildings in good locations, supported by amenities and public transportation would continue to be favoured by tenants.

Offices within integrated developments that offer complementary support components such as retail and hotel facilities as well as MSC-status are expected to perform well.

CB Richard Ellis executive chairman Christopher Boyd was optimistic that the market would be balanced this year with very little hangover from last year.

“Since the end of last year we have been hearing of more multinational companies, financial institutions and oil and gas companies looking to expand their operations here.”

Boyd said rentals in most prime buildings in city's golden triangle were from RM6.50 to RM7.50 per sq ft and from RM5 to RM5.50 for secondary buildings.

“However, from the middle of next year supply will considerably exceed demand while rentals and occupancy rates are expected to weaken.”

He said a total of 4.21 million sq ft in new office office space will be completed in Kuala Lumpur this year and 5.46 million sq ft more will come onstream in 2012.

By The Star

Tambun Indah unit buys land in Penang

TAMBUN Indah Land Bhd's wholly-owned unit, Epiland Properties Sdn Bhd is buying two parcels of land in Butterworth, Penang from Hussain Imam Md Ismail and Ayesha Mohamed Ismail for RM11 million.

The deal is in line with its strategy to increase its land bank.

By Business Times

Wednesday, January 26, 2011

Mah Sing eyes 30pc revenue from overseas

PROPERTY group Mah Sing Group Bhd said it hopes overseas ventures will be able to bring in 30 per cent of its total revenue within five years.

Mah Sing is aiming to launch its first project in China this year and is also working towards participating in property development activities in Vietnam, Singapore and Australia.

"China and Vietnam have a high population demand, while for Singapore and Australia, we can offer the type of products they need based on our experience over the years," senior manager corporate communication Lyanna Tew said in Kuala Lumpur.

She said the group is expected to do well overseas, given its large network of consultants and architects.
Yesterday, Mah Sing held a signing ceremony with 20 of its future tenants at its first retail development project, Southgate Sungai Besi, which will be officially opened in June this year.

Southgate is an integrated commercial hub comprising three retail office blocks and corporate blocks with a total new lettable area of 600,000 sq ft. In 2009, it sold a seven-storey Apex Tower in Southgate to Taiwanese Chen Ho-Yuan for RM63.1 million.

Among tenants who took part in the signing ceremony include food and beverage outlet Subway, Aunty Anne's and Pappa Roti and fashion house Nichii, which took up 32,000 sq ft of retail shop lot.

This year, the property group is projecting between RM2 billion and RM2.5 billion in sales, boosted by project launch, with a gross development value (GDV) of between RM2.5 billion and RM3 billion.

Two highly anticipated projects are the MCity in Jalan Ampang and Icon City located in Petaling Jaya.

Currently, Mah Sing has 33 ongoing projects with a GDV of RM9.4 billion, which should last it over the next seven years.

By Business Times

Mah Sing targets 30% sales from overseas ops

KUALA LUMPUR: Property developer Mah Sing Group Bhd is targeting to get 30% of its revenue from overseas projects in five years.

“In five years we hope that 30% from our sales will come from the overseas projects,” its senior manager for corporate communications, Lyanna Tew told reporters after the signing of agreement with the tenants of its Southgate commercial centre project here, yesterday.

Tew said the remaining 70% revenue contribution would come from the company’s property projects in the Klang Valley, Penang and Johor.

As for the company’s overseas expansion plan, she said it was looking at China, Vietnam, Indonesia, Singapore and Australia.

According to Tew, China and Vietnam are good markets due their population and there is simply such a big demand for properties over there.

“In other places like Singapore and Australia, we believe that we will be able to provide the type of products that will do well even though their market is pretty mature,” she said.

She added that the company also expected to do well overseas because of its network of consultants and partners.

By Bernama

At RM77mil for 200 acres leasehold land in Puchong, analysts say it’s a steal

PETALING JAYA: Glomac Bhd's proposed acquisition of leasehold land in Puchong from Score Option Sdn Bhd (SOSB) will be advantageous to the property developer for its attractive price and strategic location, analysts said.

At RM77mil for 200 acres, the effective cost of the land worked out to be RM8.84 per sq ft, which was significantly lower than the range of transacted or asking prices of RM32 to RM48 psf in Puchong.

“The purchase price is deemed cheap,” TA Research said in its report.

Located near the established commercial hub of the town with the IOI Mall and Tesco Store in the vicinity, it is basically an extension to Glomac's present development, called the Lakeside Residences in Puchong.

“Glomac can now strategise any land enhancement activities to improve the value of its enlarged landbank,” TA Research said.

The Lakeside Residences is a joint-venture development between Glomac and SOSB on a 90-acre land to be acquired.

The project, comprising 537 units of double-storey terraced houses and 100 units of semi-detached houses, was launched in 2005 with a total gross development value (GDV) of RM250mil.

“What's positive is that property prices have increased significantly since the launch of the first phase of Lakeside Residence,” ECM Libra said in its report, comparing the initial launch price of about RM300,000 per unit in 2005 for terraced houses versus the current asking price of about RM440,000.

Puchong is one of the property hot spots in the Klang Valley, as the area is easily accessible via Lebuhraya Damansara-Puchong, the Shah Alam Expressway as well as the Bukit Jalil highway.

With the land acquisition, Glomac's future earnings capability would be enhanced, as the property developer could now extend its presence in Puchong and gain from the fast-growing property market there, analysts said.

“The acquisition would be accretive to the company's net asset value (NAV) and earnings,” AmResearch said in a recent report.

On average, some analysts were looking at a potential increase of 25% for the company's NAV and more than 20% in the company's earnings in the financial year ending April 30, 2013.

However, Glomac had yet to reveal details such as the GDV and timeline for its “enlarged” Puchong project. Following the proposed land acquisition, Glomac's existing masterplan for the area would likely undergo significant amendment, according to some analysts.

Analysts in general viewed Glomac favourably for its strong earnings visibility with unbilled sales of almost RM600mil.

They also expect further news flow on land acquisition by the company as part of its aggressive expansion plan.

Glomac reported a net profit increase of 71% year-on-year (yoy) to RM15.88mil for the second quarter ended Oct 31, 2010 on revenue of RM140.89mil, which represented an increase of 86% yoy.

Over the next 12 months, the company would be launching projects valued in excess of RM1bil. These include a RM250mil apartment project in Mutiara Damansara, a RM145mil retail mall in Glomac Damansara and the RM400mil Glomac Utama mixed development in Petaling Jaya.

By The Star

Sunway REIT posts RM356m interim profit

Sunway Real Estate Investment Trust posted RM355.9 million pre-tax profit for the six months ended Dec 31, 2010, on the back of RM157.778 million revenue.

For the second quarter, the company registered RM45.2 million pre-tax profit on the back of RM85.333 million revenue.

In a filing to Bursa Malaysia, it said the better performance for the current quarter was contributed by the commencement of new tenancy terms pursuant to renewals at the Sunway Pyramid Shopping Mall about one million square feet of net lettable area achieved an average increase in rental rates of 17.1 per cent for the three-year term.

The stronger performance at Sunway Resort Hotel & Spa and Pyramid Tower Hotel during year-end holiday season further contributed to improved results for the current quarter.

On the prospect, it said, visitorships to Sunway Pyramid Shopping Mall registered strong quarter-on-quarter growth of 9.7 per cent, whilst Sunway Carnival Shopping Mall recorded moderate growth of 2.9 per cent due to the year-end mega sales campaign and festive and school holidays.

It said occupancy remain strong with Sunway Pyramid at 98 per cent, Sunway Carnival at 93 per cent and Suncity Ipoh Hypermarket at 100 per cent.

The Sunway REIT Management Sdn Bhd believes the Sunway REIT retail properties, especially Sunway Pyramid Shopping Mall, will be able to enjoy another year of solid performance in tandem with the expectation of continued robust domestic consumption, pursuit of lifestyle trends and thriving Sunway Integrated Resort City.

As for the hotel market, it said the Sunway REIT's hotel properties would continue to perform well in line with the positive outlook for the industry.

In the quarter under review, the Sunway Resort Hotel & Spa and Pyramid Tower Hotel enjoyed strong occupancy (Sunway Resort Hotel & Spa: 70.8 per cent; Pyramid Tower Hotel: 86.3 per cent) and average daily rates (Sunway Resort Hotel & Spa: RM407; Pyramid Tower Hotel: RM258) in conjunction with the year-end school holidays and MICE (meetings, incentives, conferences and exhibitions).

Meanwhile, Sunway Hotel Seberang Jaya, a four-star corporate hotel, enjoyed steady performance as the domestic and global economy recover.

The office market, occupancy at both the Sunway REIT’s office properties, has been stable at 99.5 per cent for Menara Sunway and 97.0 per cent at Sunway Tower.

The occupancy for Menara Sunway and Sunway Tower is expected to remain stable and the rental rates are expected to increase moderately for the renewals in 2011.

By Bernama

HK has world's least affordable housing: survey

Hong Kong has the world's least affordable housing, according to an international survey, a finding that is sure to stoke anger among many residents already fed up with runaway property prices.

Buying a home in the Asian financial hub, synonymous with its super-rich tycoons and glittering financial district, costs more than 11 times the city's average salary, outpacing London, New York and other major cities, US-based consulting firm Demographia said in a report released Monday.

Sydney was ranked the second-least affordable major city, followed by Vancouver, and Melbourne.

The 7th Annual International Housing Affordability Survey compared home prices and household income in 325 cities in Australia, Canada, Hong Kong, Ireland, New Zealand, Britain and the United States.

It was the first time Hong Kong has been included in the survey.Hong Kong's median home prices in the third quarter of 2010 averaged HK$2.58 million ($330,939), about 11.4 times the median household annual income of HK$225,400.

The most affordable homes in the survey were all in the US and Canada, with Saginaw in the US state of Michigan being the most affordable city, where the median house price was $61,400.

Atlanta was the most affordable major city, where the median house price was $129,400.Rising property prices have become a major concern for Hong Kong's population of seven million.

Worries about a property bubble have prompted Hong Kong's government to announce a series of cooling measures, including boosting land supply and new stamp duties to keep out hot money.

Home prices in Hong Kong have risen 50 percent over the past two years, due to low interest rates, a robust economy and an influx of buyers from mainland China, who account for a big portion of purchases, especially for luxury homes.

Buggle Lau, chief analyst at Hong Kong property broker Midland Holdings, said he expected home prices to continue to surge in 2011, but he questioned the Demographia survey's methodology.

"The survey does not take into account more affordable housing in Hong Kong, like government housing," he said.


US home prices still falling in November

US home prices dropped in November for the fifth month straight after appearing to have bottomed out from mid-2009 to mid-2010, according to the monthly S&P/Case-Shiller index released Tuesday.

The index, which maps prices in 20 key urban areas, fell 0.5 percent from October on a seasonally adjusted basis, after a 1.0 percent fall the previous month.

It was also off 1.6 percent from the year-earlier figure.All but four of the 20 metropolitan areas covered in the index fell.

Prices rose in Washington, San Diego, California; and Charlotte, North Carolina, while in hard-hit Las Vegas they were unchanged.

The five-month fall in the index represents a clear return to bearish sentiment in the market after a slow but steady rise from the May 2009 low through May 2010, according to S&P.

The seasonally adjusted index peaked in April 2006 and has since fallen in all but 13 months.

The November level was just 1.2 percent higher than the 90-month low struck in May 2009.S&P's David Blitzer said the data suggests "that a double-dip could be confirmed before spring."

Certainly (with) eight cities setting new lows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in home prices," he said in a statement.

Economists at Barclays Capital Research said the November fall was smaller than expected.

"We expect softness to persist in the near term as home prices continue to face headwinds from the large pipeline of foreclosures entering the market," they said in a statement.

"However, we expect this to be a gradual process with some of the decline offset by increased housing demand."Inna Mufteeva, an economist at Natixis, echoed that view."

In the context of job market sluggish revival and continuous deleveraging of households, real estate remains the area of risk for the current economic recovery," Mufteeva said.

"Indeed, still-numerous foreclosures should keep home prices subdued in the medium term despite some improvement on the real estate market."


Tuesday, January 25, 2011

Increase in property and rental prices after facelift in Brickfields

Many business operators in Little India and other parts of Brickfields are likely to be edged out or forced to take a cut in their profits with an imminent increase in rental and property prices.

According to property consultants, realtors and valuers, the market was adjusting to the improved outlook Brickfields is now enjoying.

All along the price of property and rental were stagnant because Brickfields, though close to the city centre, was perceived as congested, dirty and predominantly Indian enclave with perennial traffic problems.

Property consultant agency PPC International Sdn Bhd executive director Thiruselvam Arumugam said with improved traffic flow, better infrastructure, cleaner environment and better-looking buildings the market was adjusting and this was reflected in rising property prices and rental.

He said the rental and property prices had been low for quite sometime and now the market was adjusting to reflect its true value.

“In other words the market is only making up for its lost time,” he said.

Citing the Palm Courts condominium as an example, he pointed out that before KL Sentral was built the price of a unit was between RM240,000 and RM250,000.

“But recently it has shot up to RM300,000 and it will likely go up to RM500,000,” he said.

Property valuer T. Nagalingam of Azmi & Co Shah Alam Sdn Bhd noted that foreign money had also helped boost property prices in Brickfields.

“Investors now see Brickfields in a positive light and forecast a better return on the investments,” he said.

Nagalingam said the present business operators, who are renting in Little India and other parts of Brickfields, would probably have to go somewhere else.

Since Little India took shape, many traders have complained that while their profits were dwindling due to lack of parking space fronting their shops, property owners were increasing the rental.

Little India Action Committee chairman S. Baktha, also a registered property agent, said many business operators had complained that their landlords had threatened to increase the rental once their tenancy agreement expired.

“Their businesses have been further affected by lack of parking space in front of their shops,” he said.

Sampoorna Curry House owner S Thilagavathy, 30, noted that the lack of parking was likely to keep away many customers and cut into her profits by at least 30%.

Another restaurant owner, M Prema, 40, who owns Seetharam Curry House, pointed out to lack of parking space as the main factor in the drop in her revenue.

Her business registered almost a 50% drop since parking bays were done away in the area.

Saradha Silks (M) Sdn Bhd owner P Loganathan, 45, attributed the rise in rental as the main concern of the business community in the area.

“There is talk that building owners may hike up rentals after Deepavali,” said Loganathan, who is also a tenant.

He claimed that he had learnt that building owners were planning to increase rental to RM30,000 for the ground floor, from the current RM10,000 once the tenancy agreements expired.

“I’m not sure how I’m going to deal with the increase,” said Loganathan, who claimed the move was attributed to the RM35mil facelift to the area to attract more tourists.

By The Star

Glomac buys land

GLOMAC’s wholly-owned unit, Glomac Alliance Sdn Bhd, has sealed a sale-and-purchase agreement with Score Option Sdn Bhd to buy 80ha of leasehold land in Puchong, Selangor, for RM77 million.

In a filing to Bursa Malaysia yesterday, Glomac said the acquisition was in line with its core strategy to buy suitable land in Klang Valley with strong potential for a prime new development.

By Business Times

Ninth Tune Hotel in Malaysia opens

KOTA BARU: Barely three years after the inception of Tune Hotels, a total of one million people have stayed in its 12 hotels locally and abroad, confirming that it is one of the fastest-growing hotel chains in the region.

Tune Hotels chief executive officer Mark Lankaster said the limited service model offers value for money.

“We always listen to our guests and strive to meet their needs and expectations.

“Recently, we removed the RM10.90 administration fee across our entire chain.

“Guests now only pay for the room,” Lankaster told reporters after the soft launch of the 12th Tune Hotel here on Sunday.

He added Tune Hotels enjoy a 95% occupancy rate on any given day.

The opening of the Kota Baru hotel brings Tune Hotel properties in Malaysia to nine, the last hotel was opened in Bintulu on Jan 3.

Three other Tune properties are located in Kuta and Legian in Bali and one in London.

Lankaster revealed that by the end of next year, a total of six hotels woud be built.

“The Kota Baru hotel completes our framework to cover the northern, southern, central, eastern and western regions of the country and from next year we would be concentrating on building hotels beyond Malaysian shores,” he said.

By The Star

Tune Hotels to expand chain

TUNE Hotels is confident of expanding its hotel chain to more than 40 in the country and abroad by the end of next year, group chief executive officer Mark Lankester said.

At least one hotel will be opened every month from September to add to the existing 12 under its name, including two in Bali and one in London.

Lankester said the new hotels would be coming up in Indonesia, the Philippines, Thailand, Australia and the United Kingdom, beside expanding locally.

"Locally, we have covered the central, northern, southern, eastern and western parts," he said after the soft launch of the latest Tune Hotels in Kota Baru on Sunday.

Lankester said it would invest substantially for the new hotels as the development cost for a hotel in the country averaged from RM15 million to RM20 million.

In London, he said, the cost could rise to RM70 million for a hotel.

On Tune Hotels Kota Baru, he said it cost the company RM20 million to develop the 173-room hotel which was completed in 11 months to usher in the New Year.

It was built in a partnership with property company HLK Group, which established HLK Ventures Sdn Bhd to exclusively develop the hotel.

"As our sister company AirAsia is doing well with its flights to Kota Baru, it is a natural extension for Tune Group to come to Kota Baru," Lankester said.

"The opening of Tune Hotels here is also an acknowledgement of the increasing importance of Kota Baru as a travel and tourist destination with vibrant commerce and business sectors."

Lankester said although the hotel chain was targetted at leisure travellers who accounted for about 70 per cent presently, it was drawing an increasing number of guests from the business sector.

"Business organisations need their people to travel all over the country but to keep down their costs, they are putting up at Tune Hotels," he said.

On a related note, Lankester said Tune Hotels had eliminated administration fees for room reservation across all of its hotels effective from January 5.

"As we open more hotels, we have become more cost efficient. We have found that the fees are no longer relevant and the savings will be passed on to our guests," he said.

By Business Times

Bina Puri looks to Mideast, Thailand for new jobs

Construction outfit Bina Puri Holdings Bhd hopes to maintain the rate of new contracts this year by securing RM2.5 billion worth of work.

Group managing director Tan Sri Datuk Tee Hock Seng said the group is leaning towards the Middle East and Thailand for new jobs this year.

This is because he does not expect major projects to be announced in Malaysia, apart from the RM40 billion mass rapid transit system.

Bina Puri anticipates more jobs in Saudi Arabia, where its government has announced new infrastructure projects worth US$60 billion (RM183.6 billion).

It won its first project in Saudi Arabia late last year, a RM5.7 million storm water pipeline project.
"Last year was an exceptionally good year for us with both the the Ampang light rail transit line extension and the new low-cost carrier terminal in Sepang coming on board at the same time," he said.

In 2010, the group secured projects worth RM2.5 billion.

Other projects it won are the Kuala Lumpur-Kuala Selangor Expressway privatisation job as well as building ramps and a main line bridge for the Eastern Dispersal Link in Johor.

In an interview with Business Times last week, Tee said Bina Puri has bid for building and infrastructure projects worth over RM2 billion, in Malaysia, Thailand, Brunei and the Middle East.

So far, it has won a RM62.8 million contract for structural and architectural works for Phase One of a condominium project in Thailand.

By Business Times

Monday, January 24, 2011

Elegant and fashionable

Posh: The semi-detached houses by BSG Property in Tanjung Bungah.

BOON Siew Group Property’s (BSG) NineTen project comprising 40 semi-detached houses located in Tanjung Bungah will be completed by July.

The project, which is part of the upcoming 48.5ha Permai Village township, will have the Tunku Abdul Rahman College (TARC) and Tenby International School (scheduled for completion in August) as “neighbours”.

BSG property business development manager Koay Wei Loong said the units, aimed at the middle and upper middle class, have been bought by locals and foreigners mainly from Europe, Hong Kong and Singapore.

“We made sure that everything is of the highest quality, because these buyers are usually very choosy. Most of our buyers are also repeat customers.

“Besides buying for occupancy or as a holiday home, the customers will sometimes buy it for investment,” he said after holding a private preview for selected guests recently.

BSG property executive director Alfred Chew said that the units priced from RM2.4mil to RM5.8 mil are almost completed.

Luxurious: Houses in NineTen project come complete with swimming pool.

“We have sold 60% of the NineTen project. Landed property in Penang is in demand because of land scarcity on the island. These days, we see that buildings in Penang are moving upwards,” Chew said.

By The Star

GUH seeks more land for property projects

WHILE GUH Holdings Bhd continues to look at its printed circuit board (PCB) division as the primary driver of growth this year and in years to come, the firm continues to expand its landbank for other activities.

Managing director Datuk Kenneth H'ng Bak Tee said for its PCB business, the company will move into niche, better pricing and future trend products such as light emitting diode (LED)-based special tuners and power supply.

"In further restructuring our clientele base," he noted, "we are moving away from Taiwanese and Chinese clients who are generally known for their low pricing and being bad paymasters."

While South Korean clients are basically associated with average pricing and are good paymasters, H'ng said the focus would be more on Japanese, the US and European clients who are known for not only good pricing, but also for being good paymasters.
On the property development side, GUH is looking at acquiring land in the Klang Valley, Penang island and upcoming spots in Seberang Prai.

He said GUH's Taman Bukit Kepayang development in Seremban, has so far seen development of 120 hectares and there was a balance of about 108 ha left to be developed over the next six to seven years.

"We want to maintain our current build-and-sell strategy for residential and commercial development," he added.

On GUH's plantation activities, H'ng said the 154 ha of plantation land in Kedah, acquired as a testing ground, had proven to be very successful and boasted industry-standard yields.

"We are now looking to increase the estate size to between 1,200 ha and 2,000 ha in order to achieve meaningful economics of scale," he added.

By Business Times

Oversea Enterprise To Sell Shop Offices For RM5.65 Million

KUALA LUMPUR -- Oversea Enterprise Bhd's wholly-owned subsidiary, Restaurant Oversea (Imbi) Sdn Bhd, has proposed to dispose off four units of two-storey shop offices located in Kuchai Business Park here for RM5.65 million.

The sale and purchase agreement was entered into with Yayasan Dazhi Monday, Oversea Enterprise said in a filing to Bursa Malaysia.

It said the properties were acquired on Feb 21, 2006 and its disposal would result in a loss of RM3,000 to Restaurant Oversea.

"The proceeds arising from the disposal is intended to be used for the working capital of Restaurant Oversea and is expected to be utilized within a period of 24 months from the date of the sale and purchase agreement," it said.

As for the rationale for the disposal, it said: "The location of these properties were found to be unsuitable for the intended business activities of Oversea and its subsidiaries and the current rental income derived from these properties was low.

"The disposal would generate additional cash reserves for Restaurant Oversea's working capital purposes."

By Bernama

Saturday, January 22, 2011

Naim to develop RM300m mixed project in Kuching

SARAWAK-based Naim Holdings Bhd (Naim), a property developer and construction group, will develop prime land in Batu Lintang, Kuching, into the state's biggest comprehensive mixed development project, costing more than RM300 million.

Managing director Datuk Hasmi Hasnan said the proposed development would be sprawled over 13.597ha and be completed over 20 years.

The project will comprise a four-storey shopping mall with basement car park, office tower block, hotel tower, a 36-storey office tower with basement and elevated carpark, showroom, 18-storey condominium block and a 27-storey high-rise apartment.

"We will incorporate a water theme park, a roof garden and incorporate plenty of greeneries so as to come out with a development that is eviromental friendly and one that the local populace can enjoy and benefit from," he said.
The project will be developed on a joint venture basis between Naim, Sarawak Mosque Welfare Trust Board and Tabung Baitulmal Sarawak.

The three parties signed a memorandum of understanding to facilitate the venture witnessed by Chief Minister Tan Sri Abdul Taib Mahmud.

Hasmi said Sarawak Mosque and Tabung Baitulmal will each have a 15 per cent equity in the project venture while Naim would hold the remaining 70 per cent.

"We estimate employment for more than 2,000 people in the project," he said, without disclosing, when the construction will begin.

By Bernama

Can the MRT address the long-term transport problem?

MUCH will be said and written about the mass rapid transit (MRT) in the next several months with construction expected to begin in July this year. Some will be for it, others will be against it.

At RM36.6bil, the public transport system will be one of the country's largest infrastructure projects. But this figure is for the civil works only. The prices of the trains and land acquisition have yet to be factored in. So the figure will certainly swell.

Why not have more cars fitted to the two-car system?

The building of this new MRT line as opposed to the current monorail and light rail transit must be seen from the perspective of what we know today as our public transport system.

When the monorail and LRT were built in the mid-1990s, Klang Valley has a population of about 3 million. Today, we have a population of 6.6 million. By 2020, it is estimated to be 8 million.

While we were building our monorail and LRT in the mid-1990s, Singapore was extending their MRT system with the first portion of the line ready for service in the late 1980s. Despite a population of just over 3 million in 1990, they opted for the MRT in the 1980s, and not the LRT, monorail or whatever. Today, Singapore's MRT is serving a population of more than 5 million people and that network is constantly being extended.

Over in the Klang Valley, we were building two systems, the monorail and the LRT line. At that time, questions arose why we needed two systems and fragmentise public transport further. Why not have just one system? This question was never answered. The two systems lack integration. To use the monorail, one has to get off and get out of the LRT station, and walk some distance to get on the monorail line, for example between Dang Wangi and Bukit Nenas station.

The people who designed, planned and built the LRT and monorail also did not factor in park-and-ride facilities. They just built a station where they can, put in a line and expect everyone to walk there in the sun and rain.

The result is that today, there are cars parked under the electric lines which electrify the LRT and there is a charge to this. So, in addition to spending about RM5 on a return ticket, there is the RM5 parking charge.

If one has to fork out RM10 to use the LRT or the monorail and yet at the same time, having to bear with the inconvenience, they may as well spend a bit more to have the convenience of driving to the city. That explains our low ridership. For every one ticket we sell, Singapore sells nine, London 16 and Tokyo 48.

All of us know there is a cost to infrastructure. Whether it is road network, bandwidth or public transportation system, it is a sunk cost. As with most public infrastructure projects, there is no profit to be made from it.

So the thing for the Government to do is to consider it as an investment for future years, for future generations. London's underground is about 150 years old. It was the first underground railway system in the world. Today, it serves the Greater London population of more than 7 million, which is about equivalent to Klang Valley's population. Greater London did not have a population of nearly 8 million some 150 years ago, yet they opted to build the underground. Closer home, Singapore did not have a population of 5 million 25 years ago.

When and if we build this MRT, it will not be for the next 30 or 40 years. It is for posterity. In that sense, it need not be wasteful.

But there is a need to be focused here. Do we want to sell more made in Malaysia cars to Malaysians or do we want to improve public transport? It is not possible to have both.

One may ask, why not have more cars fitted to the present two-car LRT system? The LRT started with a two-car system. It can be fitted to a maximum of four cars. The LRT platform is designed to fit only four. The LRT has a carrying capacity of about 30,000 per hour per direction for a two-car system. So there is a cap to capacity. The MRT has 50% more carrying capacity and the car is 50% wider.

What is wasteful is spending money on piecemeal solutions the LRT and monorail, for example to solve a eternal question that hovers around population growth and the need for public transport.

What is wasteful is having two MRT stations just 400m apart from each other.

What is wasteful is building the MRT, while ignoring and not improving the bus, taxi and Komuter system.

Assistant news editor Thean Lee Cheng thinks there is a need to think very long term when investing in infrastructure projects.

By The Star

Bina Puri unit buys land in KK for RM4.5m

KUALA LUMPUR: Bina Puri Holdings Bhd said its wholly owned subsidiary, Bina Puri Properties Sdn Bhd has acquired a parcel of land in Kota Kinabalu, Sabah of about 1.95 acres for RM4.5mil.

Group managing director Tan Sri Tee Hock Seng said in a statement yesterday that the land would be developed into a serviced residence, with an estimated gross development value of about RM60mil.

The land will be used for the development of one block of service apartments consisting 100 units with sizes ranging from 1,500 sq ft to 4,500 sq ft.

The land will be developed into a serviced residence, with an estimated gross development value of about RM60mil.

By The Star

Equine unit to develop land

EQUINE Capital Bhd’s wholly-owned subsidiary, Equine Park Country Resort Sdn Bhd, has signed a joint development agreement with Revenue Concept Sdn Bhd to develop a 3.6ha in Subang Jaya, Selangor, into a RM1 billion mixed commercial and residential development.

The project will be carried out in phases over seven years, Equine said in a filing to Bursa Malaysia yesterday.

By Business Times

Tesco plans 3 more stores in Penang, Kedah

TESCO Stores (Malaysia) Sdn Bhd is expanding its business in the northern region by opening three more outlets in Penang and Kedah within this year.

Tesco Malaysia chief operating officer Tim Golding said the company wanted to bring its Tesco offers to more customers and the new outlets will be opened at Seri Tanjung Pinang in George Town, Penang, and in Kulim and Alor Star, Kedah.

He said the new outlet at Seri Tanjung Pinang is expected to open in June.

The company has invested RM20 million on setting up the leased outlet, making it a long-term tenant at the development, which has been said to be the largest seafront project in Penang's history.

"Tesco Malaysia also has further developments in Alor Star and Kulim, where two more of our outlets will be opening this year. Both projects cost about RM50 million each," he said at the official launch of Tesco Bukit Mertajam at Jalan Rozhan yesterday.

Tesco Bukit Mertajam, which measures 9,000 sq m, opened for business on September 23 last year and is Tesco Malaysia's 36th outlet in the country and Penang's fourth.

Apart from more than 60,000 product lines in fresh food, groceries, apparel, electrical appliances, furniture and health and beauty items, the outlet also features over 50 shop units and 30 pushcart stalls.

Golding said the new Alor Star outlet will be located in the Stargate township, a 124ha mixed development in Tandop.

Tesco Kulim began constructions in September last year in Taman Lembah Impian. The two-storey hypermarket is expected to be completed in the second quarter of this year.

Golding said Malaysia was a fantastic market for Tesco, which plans to open seven to eight new outlets annually. The company is presently in planning stages for the new outlets nationwide.

He added that Tesco Malaysia also boasts a 100 per cent local employment rate, with Malaysians filling various positions in the company across the country.

Tesco Malaysia government relations and legal affairs director Azlam Shah Alias said for 2011, the company would invest an estimated RM500 million.

It was reported earlier this month that Tesco Malaysia has plans to invest RM280 million and open four more hypermarkets over 12 months starting from March, bringing the total number of stores it has nationwide to 40.

Tesco Malaysia started operations here in 2002 with its first store in Puchong, Selangor, and has invested over RM3 billion since. Last year, it recorded RM3.6 billion in revenue.

By Business Times

GSB to sell land, hotel for RM22mil

KUALA LUMPUR: GSB Group Bhd's unit, Serta Usaha Sdn Bhd (SUSB), has entered into a conditional sale and purchase agreement with Leopad Holdings Sdn Bhd to sell its property, comprising land and a 13-storey hotel, for RM22mil cash.

The property is situated in Jalan Kapar, off Jalan Syed Putra, in Kuala Lumpur.

GSB, in a filing to Bursa Malaysia yesterday, said the proposed sale is expected to be completed within eight months from the date of the agreement.

By The Star

CapitaMalls confident of meeting payout target

KUALA LUMPUR:CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM), the manager of CapitaMalls Malaysia Trust (CMMT), is confident of achieving its target of 7.45 sen distribution per unit (DPU) amid the positive microeconomic outlook for Malaysia this year.

CMMT, a shopping mall real estate investment trust (REIT), recorded a total annualised DPU of 7.26 sen for last year, exceeding its forecast of 7.16 sen as stated in its listing prospectus.

CMRM chief executive officer Sharon Lim said the company’s strong operating performance demonstrated its ability to proactively manage its assets and create value for unitholders.

“Ours malls maintained close to full occupancy (98.3 per cent), while shopper traffic grew to 16.2 per cent (13.1 million) in the fourth quarter ended December last year compared to the year before (11.3 million).

“We also expect to complete our proposed acquisition of Gurney Plaza extension by this year,” she told reporters during a briefing on the company’s fourth quarter results here yesterday. Sharon said CapitaMalls Asia’s recent acquisition of Queensbay Mall in Penang would form the seed asset for its planned RM1bil Malaysia retail property fund, which would provide a pipeline of assets for CMMT to acquire.

“CMMT will continue to actively pursue acquisition opportunities on its own, to increase its asset size and strengthen its position as Malaysia’s largest ‘pure-play’ shopping mall REIT,” she said.

For the fourth quarter of 2010, CMMT achieved a distributable income of RM24.8mil which was 3.1% higher than its forecast of RM24.1mil while DPU was recorded at 1.84 sen, 3.4 per cent higher than its forecast of 1.78 sen.

CMRM chairman Kee Teck Koon said: “With our quality portfolio of three strategically located shopping malls in the higher growth urban centres of Penang, Kuala Lumpur and Selangor, CMMT is well positioned to capitalise on the expansion in Malaysia’s retail sector.”

By Bernama