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Tuesday, May 31, 2011

Mixed views on two offers

PETALING JAYA: Reactions of analysts are mixed about whether minority shareholders of Asia Pacific Land Bhd (AP Land) and OSK Property Holdings Bhd should accept takeover offers for the property developers.

Some opine that shareholders should ask for a higher price for the takeovers, considering that both offer prices are at significant discounts to the book values of the two companies.

On Friday, OSK Property’s major shareholders offered to buy up the remaining of the company they do not own for RM120mil or 87 sen per share.

The stock closed at 79.5 sen just a day before the offer was made. This means that the offer price by OSK Property’s major shareholders was at a mere 9% premium over the last traded market price.

Against OSK Property’s latest net assets per share of RM1.74, the offer price is a 50% discount.

For the financial year ended Dec 31, 2010 (FY10), the company posted revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.

As at the end of FY10, OSK Property’s cash and cash equivalents stood at RM53.2mil.

The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.

Interestingly, the offerors did not provide any rationale for making the offer to take over OSK Property.

Considering the offerors for OSK Property – led by Ong Leong Huat – is making a general offer for the shares of the former, they would need to secure up to 90% acceptances before they can take the company private. This would mean that shareholders have ample room to reject the offer on the table if it is not up to expectations, explained an analyst.

In the case of AP Land, the offer was at 45 sen per share, which is a 9.8% premium over AP Land’s last traded price of 41 sen before the announcement was made, but only 7.7% over yesterday’s closing price of 41 sen.

AP Land’s net asset value per share has stayed above RM1 since 2005.

Under the new takeover rules, offerors will need at least 75% of non-interested shareholders to accept an offer before it can go through.

“This puts more power into the hands of minority shareholders, who can insist of a higher price for the assets of their company,” said one analyst.

On the other hand, the takeover offers do provide an exit opportunity for minority shareholders in companies whose share prices have not performed.

Analysts said that in general, the rationale for these exercises was that both companies had failed to attract market attention and therefore the value of their shares did not reflect the companies’ underlying strengths.

AP Land’s offeror is its parent company, the Low Yat group, which stated the following as the rationale for its exercise: “The liquidity of the trading of AP Land shares has been relatively low, with a trading volume of approximately 349,429 AP Land shares per day during the past one year.

“Therefore, it may not be easy for the shareholders of AP Land to be able to realise their investments in AP Land on the open market.

“The proposals will accord an opportunity for all AP Land shareholders to realise their investment in the company in the short to medium term at a reasonable premium above the historical market prices of AP Land shares ...”

AP Land’s major property projects include Bandar Tasek Puteri in Rawang and a residential development comprising luxury apartments in the Niseko region of Hokkaido, Japan.

Properties under OSK Property’s stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.

By The Star

Analysts have mixed views on Genting’s land purchase in Florida

PETALING JAYA: Genting Malaysia Bhd's land acquisition in Miami, Florida for US$236mil received mixed reactions from analysts while the move is seen as the way to diversify its earnings base and spur growth going forward.

ECMLibra Investment Research viewed the move positively given the choice location of the waterfront property, adding that Florida attracted up to 82.3 million visitors in 2010, of which 87% were local visitors.

“The announcement has made no mention of casino operations but we view that the announcement will be in due course as licences would be required from the Miami-Dade County,” it said in a report yesterday.

Reported in the South Florida Business Journal, Resort World Miami (RWM) president Mike Speller said Genting Malaysia would fund the US$2bil development cost of the project without stating the funding details.

Kok Thay ... ‘Downtown Miami has experienced dramatic residential and commercial growth in recent years.’

CIMB Research is neutral on Genting Malaysia's acquisition and the research house thinks that the deal positions Genting Malaysia to capitalise on the potential liberalisation of “resort-style” gaming in Florida.

It pointed out that there was a question mark over whether the Florida state government would liberalise such gaming in the state.

“This purchase, however, is sizeable, indicating the group's confidence in the success of the mixed development project, in our opinion,” it said.

CIMB left its earnings projections unchanged, pending more details on the acquisition.

“Assuming bank borrowings of US$200mil (85% of total price), we estimate that its net cash will fall by about 33% to RM1.5bil. The total price accounts for less than 1% of the group's shareholders' equity,” it said.

HwangDBS Vickers Research said: “While it is still early to assess earnings impact for RWM, we do not expect any meaningful contribution over the next two to three years. Genting Malaysia's foray into the United States, if successful, will help diversify earnings base and spur growth.”

Genting Malaysia announced last Friday that its subsidiary Bayfront 2011 Property LLC had purchased 13.9 acres in Miami for US$236mil, with plans to build a mixed-use development.

The land includes the building currently housing The Miami Herald Media Company and an adjacent parking lot.

It said in a press release that it was working towards developing a comprehensive master plan for RWM, as the development would be called, which would include hotel, convention, entertainment, restaurant, retail, residential and commercial facilities.

The project aims to capitalise on Miami's standing as one of the world's leading tourism hubs.

Its chairman and chief executive Tan Sri Lim Kok Thay said: “Downtown Miami has experienced dramatic residential and commercial growth in recent years, and we believe the addition of a large-scale mixed-use and entertainment complex will be a welcomed addition, further elevating the area's status as a global destination.”

The acquisition is an integral step for Genting Malaysia as it seeks to expand internationally in the leisure, hospitality and entertainment industry.

The envisioned RWM represents Genting Malaysia's second venture into the United States, after Resorts World New York at the historic Aqueduct Racetrack in the city of New York.

By The Star

Monday, May 30, 2011

When developing a luxury resort is a hobby

KUALA LUMPUR: Cardiologist Dr N.S. Dhaliwal has ventured into a hobby which most people would call a business.

Sixty-five-year-old Dr Dhaliwal has decided to turn his passion for building houses into a project.

Together with two other partners, Michiel Leo Philip and Roger Mauclair Deslorieux, the team is building a luxury development with a gross development value of RM200 million in Kudat, Sabah. It is called the The Nyior Luxury Villas Borneo Beach Resort.

The project, which is expected to be launched in the third quarter of this year, will have 43 villas and 57 serviced suites. It will include a club house.

The project is being developed by Borneo Eco-Green Resorts Sdn Bhd, in which Dr Dhaliwal has a 40 per cent equity interest, Leo Philip 30 per cent and Deslorieux 30 per cent.

Built on a 10.13ha fronting the Marudu Bay, the two-, three- and four-bedroom villas will have a built-up of between 2,500 sq ft and 5,000 sq ft. However, each lot in itself is double the size of the built-up.

"They will be sold from RM2.5 million to RM5 million," Dr Dhaliwal, who is the managing director of the property, said.

It has already hired a marketing firm in the UK to handle the sale of the property.

The company is targeting to sell the property to specific markets like the UK, Russia, the Middle East and other high-profile buyers.

The Nyior, he said, is not to be confused with an earlier project called Kudat Riviera, launched by another developer. This project is said to have been abandoned.

The Nyior resort is said to be private and exclusive, and those who land at the Kota Kinabalu airport will then be transported via a 20-minute helicopter ride.

"We were looking for a place for us ... and realised this was quite big and decided to develop a resort instead," Dr Dhaliwal said.

The sea-front resort, he said, would give access to diving, particularly wreck-diving where shipwreck is explored.

The entire project could take three years to complete.

By Business Times

M’sians in S’pore can help promote housing scheme

SINGAPORE: Malaysians residing in Singapore can assume a vital role in promoting the “Malaysia My Second Home Programme” (MM2H) among Singaporeans, says Tourism Malaysia director in Singapore Zalizam Zakaria.

He said Singaporeans were among the top ten purchasers of properties in Malaysia under MM2H followed by Japanese, British, Americans, Chinese nationals, Iranians, Pakistanis, Bangladeshis, Indian nationals, Australians and South Koreans.

The programme is promoted by Malaysia to allow foreigners, who fulfill certain criteria, to stay in Malaysia for as long as possible on a 10-year multiple-entry social visit pass which is renewable.

Open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age, applicants are allowed to bring their spouses and unmarried children below the age of 18 as dependants.

The Malaysian High Commission in Singapore, in collaboration with Tourism Malaysia briefed Malaysians living in the city-state at its monthly “Malaysians Get Together” on the advantages of owning a house in Malaysia.

According to Zalizam, Malaysians should do a “sales pitch” among their Singapore friends by highlighting that the Government would continuously seek to improve the programme.

Quoting International, Zalizam said Malaysia ranked the 16th most preferred top retirement haven in the “Annual Global Retirement Index” in 2009.

Apart from a relatively low cost of living, he said it was worthwhile to note that those who qualified would be able to bring their immediate family members along, own freehold property in Malaysia, import worldly goods and even purchase a brand new car, tax free.

“They can also enjoy all the multiple benefits that Malaysia offers to its citizens,” he said, explaining further that Malaysia had an efficient and affordable healthcare system.

By Bernama

Strong interest to jointly develop 50 acres near KLIA2

PETALING JAYA: Twenty companies have collected request for proposal (RFP) documents to partner Malaysia Airports Holdings Bhd (MAHB) to develop 50 acres near KLIA2 in Sepang.

Due to the large number and requests from the companies interested to be developers, MAHB has extended the closing date of the RFP to July 4 from June 1.

MAHB posted the RFP notice on its website on March 31 and documents were available for collection from April 4 onwards. The airport operator had also briefed interested parties on its requirements in April.

The RFP is for the privatisation of the 50-acre commercial development that would comprise premium factory outlets centre, a food and beverage centre and an auto city. Since it covers a big area, several parties may be selected.

Bashir ... ‘The 50 acres form the first phase of the entire development.’

“The 50 acres form the first phase of the entire development. We will provide the land (and partner parties that will develop the land). We have completed levelling the land recently,'' MAHB managing director Tan Sri Bashir Ahmad told StarBiz in an interview.

The 50 acres is part of the 6,750-acre landbank that is earmarked for development around KLIA and this development dubbed KLIA Aeropolis falls under the wholesale and retail initiative under the NKEA. It would transform KLIA into a diversified airport city, providing significant opportunities including employment, leisure and tourism.

KLIA2 is 1.5km from the KL International Airport (KLIA) main terminal building. KLIA2 is the new low cost carrier terminal (LCCT) that is under construction and it would be able to cater up to 30 million passengers.

MAHB is asking the Government for an extension on the lease of the land identified for development from the current 25 years to 60 years.

After the RFPs are in, the evaluation process will begin and the key would be to select the right partner and bring in appropriate brands and retailers.

“(A lot of it is about) selling the right product and getting the model right from the onset. It is not (merely) about opening shops but the right shops, the right products and location,'' he said.

The targeted completion date of the 50-acre development is in 2013.

The commercial development has been identified as the key driver to help the airport operator boost revenue in the long term while it maintains competitive aviation charges for airlines and passengers.

In its 2010 annual report, MAHB quoted Datamonitor Retail as saying that the global airport retail market was expected to grow by 60% in 2015 and be worth US$44.1bil. In 2010, a 8.4% global growth rate for airport retailers was fuelled by the Asia Pacific, Middle East and African regions. MAHB is positioning itself to take advantage of the opportunity and thus the greater focus on its commercial business.

“We will get rental income and royalties from this land venture,'' Bashir said, but did not elaborate as the RFPs are not in yet.

Over the past year, MAHB has increased retail space in both the LCCT and KLIA substantially. There is equal contribution from both commercial and aeronautical businesses to revenues but the plan is to drive commercial revenue contribution to reach 60% by 2014.

MAHB hopes to also more than double revenues to RM3.2bil by the same time and expects its earnings before interest, tax and amortisation (EBITDA) to hit RM1bil by then.

For the financial year ended Dec 31, 2010, MAHB recorded RM1.8bil in revenues, RM378mil in net profit and EBIDTA stood at RM706mil. The company is scheduled to announce its first quarter results tomorrow. The full year estimates for 2011 by an analyst are that revenues should increase to RM1.9bil and net profit to RM472mil while EBIDTA should reach RM783mil.

There will be other phases in the development of KLIA Aeropolis which would include a commercial business district which houses office parks, retail/commercial centres, an auto mall, exposition/convention centre, medical centre, training centre complex and service apartments. There are also plans to build golf courses, a boutique hotel and a theme park as well as agro-tourism tracts of land.

Last year, all 39 airports operated and managed by MAHB nationwide handled a total of 57.8 million passengers and Bashir said he would not be surprised if they manage 60 million this year.

By The Star

Saturday, May 28, 2011

Quality of housing stock already makes KL a global city

The Binjai Residency in Kuala Lumpur.

In a recent report from the UK, it was stated that the quality of a city's housing stock plays an important role in boosting its attraction and making it more competitive in global terms. Malaysia has slipped in global competitiveness according to both The Institute of Management Development and World Economic Forum but does this mean the quality of housing stock is still not of global standards?

It is arguable that London is one of the top global cities and it has recently been reported that the housing stock in London continues to sell well and at prices equal to, or even above, pre-recession levels. This may be testament to the quality of homes in central London they are so desirable because of the quality of design, finishing and of course location in a vibrant city.

Kuala Lumpur is not a global city yet but there are examples of high quality housing stock that should be contributing to its global competitiveness. For example, The Troika is designed by British firm Foster & Partners in cooperation with local firm GDP and such a building in London, New York and Paris would be five or six times more expensive to buy or rent. Probably the most expensive apartment transaction in the country was at a price of RM2,657 per sq ft for a penthouse unit at Binjai On The Park and the next closest in value would be The Troika.

The buyer is a corporate figure who has been on Forbes magazine's list of wealthiest people. On June 22, 2010, he bought the triplex penthouse, measuring 14,300 sq ft, on the 42nd floor of Binjai's Tower B. The price tag of RM38mil meant the penthouse was sold for almost RM2,660 per sq ft. At the time, the marketing and sales manager was quoted in The Star as saying “The buyer bought the penthouse to stay. He fell in love with the 360-degree unobstructed view of the KLCC skyline right at his doorstep” similar to views offered by the likes of London's One Hyde Park. “Binjai On The Park was just like one of his other homes around the globe,” said Terri Har, marketing and sales manager of Layar Intan Sdn Bhd, the developer.

The “Global Cities Review” published by Savills in the UK compares prices of residential units bought by CEO level executives in London, New York, Moscow and Hong Kong, and KL pricing is still 50% more affordable than in New York which was the only city not to show any price gains over the last five years. Indeed, the value of a CEO's home in New York last year was still down 7% on 2005 prices.

London's wealthy residents, whether they own or rent, are likely to live in a house and it is “landed property” in Malaysia that is still the most sought after and valuable in the country. The so-called “bungalow in the sky” concept for some KLCC apartments has sold well and make wonderful accommodation for owner occupiers but investors have found it difficult to let at rents that would give acceptable returns.

Only 40% of 5mil plus purchases in London were made by British buyers in 2010 and this is exactly what Malaysia needs more foreign buyers of residential accommodation and more foreign tenants from multinational corporations. The quality of the housing stock is present and getting better all the time and we look forward to more liberalisation of the business sector and the attraction of more foreign investment to boost the luxury housing market and improve the country's competitiveness.

London is the world's largest financial centre alongside New York and there are more overseas banks in London than any other international city. Obviously the attempt to base an Islamic “mega bank” in Kuala Lumpur is welcome and may make Kuala Lumpur the global centre for Islamic finance. Life in London is very busy with Heathrow being the world's busiest airport and London having more than 300 languages spoken. Malaysia has embraced multiculturalism and so this is not likely to hinder progress towards being a global city.

Just like London, the hunting grounds for wealthy families to live in large houses in KL are well established residential areas characterised by wide roads and plenty of parks or trees Areas in London for houses like Belgravia, Holland Park, Regent's Park, Chelsea and Mayfair are the equivalent of our Bukit Tunku, Ampang Hilir, Bangsar and Damansara Heights. Well-planned new townships like Desa Park City may well become the equivalent of Chiswick in West London one day and will undoubtedly help Kuala Lumpur become a global city!

Senator Datuk Abdul Rahim Rahman is the executive chairman of Rahim & Co group of companies

By The Star

Glenmarie plans RM1b projects over next 5 years

SHAH ALAM: DRB-HICOM Bhd's property subsidiary, Glenmarie Properties Sdn Bhd (GPSB), aims to launch projects with a total gross development value (GDV) of about RM1 billion over the next five years.

"We're going to launch about 3,500 units of commercial/residential developments over 3,300 acres of land. That's the projection for the next five years," said Siti Mariam Mohd Desa, group director for property, asset and construction.

GPSB, formerly known as HICOM Properties Sdn Bhd, is known for its riverside and gated resort-style development here in Glenmarie, near the Subang airport.

It still has a balance of 200 acres in Glenmarie that can be developed, she said.

Siti Mariam spoke to reporters here yesterday after GPSB and Bank Muamalat Malaysia Bhd, another DRB-HICOM subsidiary, formalised an agreement to develop a home-financing package.

The package, available at selected Bank Muamalat branches in the Klang Valley, is designed for potential buyers of two of GPSB's developments, namely Glenmarie Gardens and Laman Glenmarie.

Glenmarie Gardens consists of 70 units of bungalows that will be launched in three phases. The first phase is fully sold, while the second phase is expected to be launched next week and the final phase, in 2012.

Laman Glenmarie comprises 385 units of two-storey link houses covering 70 acres of land at Section U1A here.

"Competitive financing rates, convenience of online repayment and a longer financing tenure of up to 70 years of age, or maximum financing duration of 40 years, are some of the package's attractive selling points," Bank Muamalat's chief executive officer Datuk Mohd Redza Abdul Wahid said.

He said buyers could be eligible for funding of up to 95 per cent of the home value.

Bank Muamalat has a financing portfolio of over RM8 billion, of which half is in consumer loans.

Mortgages make up "at least 50 per cent to 60 per cent" of its consumer loans, he said.

Mohd Redza said the bank's consumer loans are expected to grow by up to a fifth this year.

By Business Times

Tower of sustainability

An artist’s impression of Menara Binjai.

When the idea was conceptualised to develop a 35-storey grade-A office building along Jalan Binjai in Kuala Lumpur, the plan was to construct a “tower of sustainability” rather than a mere “structure with windows”.

“We wanted to build something that was tall, striking and beautiful with lots of glass, not a building with small windows,” says Khor Joo Saik Sdn Bhd director Jackie Chua.

The office tower that the company is building is Menara Binjai, which is scheduled for completion by the fourth quarter of this year.

Fellow company director Chua Guan Hock says a lot of thought has gone into making it “as green as possible”.

“Going green was not an afterthought. It was planned from the beginning. By doing this (going green), we felt that we would be able to improve the quality of the working environment for potential tenants.

“Construction began in 2008 but it has been on the drawing board since 2004,” he says.

According to Guan Hock, Menara Binjai complies with strict environmental regulations that comprise reducing the impact of its construction on the surrounding area and adopting a low carbon footprint approach.

Key green features of the building include low-E double-glazed windows for optimum heat and sound insulation, energy-saving air conditioning (which uses a centralised water-chilled air conditioning system), destination-based lifts (which allows customised floor selection to minimise waiting and stopping times, with drive motors that enable up to 30% savings in electricity consumption) and energy-saving lighting.

Guan Hock adds that incorporating green features into the building allows the company to be more “disciplined”. “It made us more aware on the impact that we had on the environment, so this made us (more conscious) in saving water and reduce unnecessary wastage of raw materials used.”

According to the company's brochure, the host of green features at Menara Binjai permits sustainable, energy-efficient operation with up to 25% savings on electricity and air-conditioning consumption.

From left: Khor Joo Saik project manager David Hong, Jackie Chua and Chua Guan Hock.

The building has also received the Green Mark Gold Certification (Provisional) from the Singapore Building and Construction Authority as well as provisional certification from Malaysia's Green Building Index, making it the first dedicated office tower in the country to receive both awards.

Multimedia Super Corridor-status accreditation for Menara Binjai is pending, according to Guan Hock.

The building, which has a gross development value of RM180mil, will be targeted mainly at tenants in the oil and gas, financial, services and trading sectors.

Strategically located at the junctions of Jalan Binjai, Jalan Tun Razak and Jalan Ampang, Menara Binjai will comprise four levels of basement parking and another four levels of podium parking.

The office floors, which have a net lettable area of 12,000 to 13,000 sq ft, start from level six. Project manager David Hong says the company has also invested in a centrally-located data centre on the fifth floor of the building.

“Instead of having our tenants set up their own server rooms, we felt that it made business sense to have them park their facilities in one common data centre,” he says.

Menara Binjai today stands on the site where the family home of the late physician Dr Chua Boon Teck used to be. Boon Teck's father was Chua Cheng Tuan, one of the co-founders of Cycle & Carriage Co, now known as Cycle & Carriage Bintang Bhd.

The old Chua family home used to sit where Menara Binjai now stands.

Boon Teck's wife, the late madam Khor Joo Saik (whom the company is named after), was said to be a formidable nyonya businesswoman who acquired substantial plantation and property plots for the Chua family, including heritage sites where the Coliseum Cinema and Coliseum Cafe are located.

Guan Hock and Jackie, who are descendants of the Chua family, says they have no plans to sell Menara Binjai.

“We don't intend to sell the building. It's for the long term,” says Jackie, adding that since they own the land, they are able to provide a competitive rate of RM7.50 per sq ft for their would-be tenants.

“The land is a legacy of the family,” she says.

By The Star

Housing for average income earner

REAL estate industry players are asking the authorities to step in to control the spike in housing. International Real Estate Federation (Fiabci) Malaysia president Yeow Thit Sang says it is time the authorities look into the matter.

“Home prices have gone up so much that it has reached a ceiling to the point that high-end housing developers must give a 20% rebate in the condominium segment or there will be no sales,” says Yeow.

House prices have gone up many times beyond the average household income.

Yeow...‘We are in a situation where people are using the property market to gamble.’

Yeow says the scenario of low-occupancy and falling prices can be found in KL City Centre and Mont'Kiara. “Overall, developers need to slow down,” he says, adding that KL Sentral is another area where office and retail properties are undergoing continuous development.

Yeow says the Housing and Local Government Ministry and the relevant authorities can play a greater role in controlling prices. They can do this by studying the needs of the market the take-up rate, the number of people entering the Klang Valley to seek employment, the number of expatriate entering or leaving the country, and which type of housing is facing a shortage.

“They can approve or not approve applications by developers. For example, there are too many condominiums in the KLCC area which cost millions of ringgit,” says Yeow.

He says expatriates are the ones who mainly occupy these units. Many who bought into that location are local and foreign investors who expect a certain yield. When they do not get the yield they want, they may decide to sell it instead of holding on. When this happens, there is always the possibility of prices coming down.

In London, Hong Kong, Singapore, China and Australia, the authorities will study the housing needs of cities. “We must do the same,” says Yeow. Currently, this is being done on a five-yearly basis, which is far from the ideal, says Fiabci Asia-Pacific executive director Yu Kee Su.

The people need medium-range housing priced around RM300,000, says Yeow.

Khong & Jaafar managing director Elvin Fernandez says some form of measures targeted at the property sector should be put in place.

“It would be difficult for the authorities to know when to apply the brakes and when to lift the foot off the pedal if we are to use demand and supply to control prices. A better measure would be to bring back the real property gains tax on a graduated level to help curb speculation.

“A second measure would be to extend the 30% downpayment requirement for second property instead of the third and subsequent residential purchase,” says Fernandez.

Last November, Bank Negara required buyers of third and subsequent residential properties to pay a minimum downpayment of up to 30% while the remaining 70% constitutes a loan. Analysts say this is just a temporary setback.

Fernandez also suggests doing away with mortgage brokers.

“Banks want to increase their share of property loans and engage mortgage brokers, who are not bank staff. These brokers' interests are not aligned with the long-term interest of the banks. They only want their commission.

“The services of mortgage brokers is something that came out of the United States. Are these mortgage brokers doing a service or a disservice to our banking system and to the house buyers?”

Yeow reiterated the need for housing to be priced in the medium range of about RM300,000 because this is what the average wage earner can afford even in the Klang Valley.

However, he notes that it is difficult to find houses with this price in the Klang Valley or Penang and this is worrying. Yeow says that the most pressing issue now is escalating prices and the question of affordability among the ordinary wage earners.

His concerns are very real. House prices have moved far ahead of wages. Yeow says the average monthly household income is about RM7,500 while Fernandez puts it at close to RM6,000. He is quoting a private survey done for the Klang Valley this year.

RAM Holdings Bhd economist Jason Fong says that at the national level, the average monthly household income in 2009 was RM4,025. Putrajaya has the highest monthly average wage of RM6,747 while Kelantan has the lowest at RM2,536.

On a sectoral basis, Fong says the average wage for manufacturing sector (March 2011) is RM2,240 while for wholesale and retail (fourth quarter 2010) is RM2,219 and for rubber plantation (March 2011) is RM826.

Kuala Lumpur has the highest average transacted property price at RM488,536 last year, says Fong. This is the least affordable relative to income levels in Malaysia in 2009.

In the east coast, the lowest transacted price in Terengganu was RM74,063 while in Kelantan was RM82,337 both were relatively affordable.

Fernandez says there is a need to look at housing from the perspective of the ordinary wage earner with an average income of about RM6,000 or less because of the relatively low wages in the country. “We cannot look at housing from the perspective of those earning RM15,000 or more a month. In 2008, only 1.7% of the entire population drew a monthly income exceeding RM15,000, and only 5.2% earned more than RM10,000.

“In the Klang Valley, only about 3% earn more than RM15,000. This means there are not many rich people in Malaysia,” says Fernandez.

He points out two fundamental factors that drive house prices household income and rental returns.

House prices, as against annual household income, is normally calculated at three to four times. For example, if a household monthly income is about RM6,000, which is what the average Malaysian household earns, at four times, the price of the house should be about RM300,000 (6,000 x 12 = 72,000 x 4 = 288,000).

In the Klang Valley, this has gone up to 15 to 20 times. In places like Kajang, house prices against annual household income is about four times. “Such areas are relatively untouched by the rapidly rising prices in other parts of the Klang Valley. Their yield is, therefore, higher, at 3%.”

While housing prices have gone up, rental has not.

A double-storey house in Petaling Jaya was priced at about RM500,000 about two years ago while rental was between RM1,500 and RM1,700.

Today, that same house is priced at about RM800,000 but the rental is only RM1,800 to RM2,000. So although house prices have gone up, rental rates do not reflect that rise.

Condominiums used to have yields of about 8% while landed housing about 4%. Both have fallen to about 4% and 2% respectively today.

RAM Rating Services Bhd head of real estate and construction ratings Shahina Azura Halip says the affordability issue is expected to persist as prices of residential properties, especially landed units, are likely to increase this year but at a much slower pace than last year.

This is fuelled by the keen demand, higher land prices and construction costs, as well as the scarcity of landed properties in prime locations.

“Bank Negara's 70% cap on the loan-to-value ratio for buyers' third residential property mortgages will deter speculation to some extent particularly in the high-end segment although the impact is not expected to be as significant in the long run, given the strong fundamentals supporting demand for homes,” she says.

Meanwhile, Shahina says, the Government's recent announcement on the My First Home Scheme, which will enable those earning less than RM3,000 per month to obtain 100% financing for the purchase of their first house costing RM100,000 to RM220,000, is a positive move for the market.

“The main consideration, however, is the availability of either landed or strata-titled units in this price range, especially in Kuala Lumpur, Selangor, Penang and Johor,” she says.

Both Yeow and Fernandez are of the view that, at the rate house prices are moving now, those who have not bought their houses will not be able to afford one because salaries are not growing in tandem with inflationary pressures.

Says Yeow: “We are in a situation where people are using the property market to gamble.

“It is purely to flip. This is bad because it will only drive prices higher. This deprives the average wage earner of buying his own house.

“The Government is trying to stem the bubble with various measures,” Yeow adds.

By The Star

Sharp property price hike puts a damper on affordability

The fact that the average salaried workers are ready to buy into properties many times their annual income is food for thought.

LONG-TERM sustainable house prices ought to be determined by two key fundamentals household income and rental returns. The relationship between household average annual income and property prices is an important one as it measures affordability levels.

If the average annual household income in the Klang Valley is RM72,000, this means the family can afford a house that is three to four times the annual income; that is, a property priced between RM216,000 and RM288,000.

This is just a rough guide. If commitments are high in other areas, they may not be able afford a property priced within this range.

For a long while in Malaysia, this number hovered between three and four times. In the United States, it was about eight times in many of the overpriced cities just before the financial crisis hit the property market.

Last year, certain parts within Petaling Jaya began to inch up to five and six times. This means households had to fork out more in order to buy properties priced between RM360,000 and RM432,000.

At that time, the property consultant who did the study said that at five to six times, this was still managebale and was not a cause for concern.

About two months ago, another study was done by the same consultant. This time, more areas within the Klang Valley were included. It was during the course of this study when it was found that within the Klang Valley itself, the prices of certain locations have gone up far ahead of others. This is not something new, all of us know that. But what is startling is that property prices that used to be five to six times a household's annual average income has gone up to 11 times about two months ago.

While Kajang continues to have a household income/property price ratio of 4 times, in other parts of the Klang Valley, this has gone up to as high as between 17 and 20 times in some areas. There is a caveat: all of this is viewing house prices from an average household income of RM6,000 a month or RM72,000 a year.

As with the use of any statistics, there is always a margin of error. The prices of properties are for all to see in the classifieds. The question is: What is the average income in the Klang Valley?

The company which did the study used RM6,000 as an average monthly income in the Klang Valley. Another property-related professional said it is about RM7,500 a month, while an economist says it is slightly more than RM4,000. The figure varies even more for different states (see table Monthly average household income by state on page 24).

The fact that we, the average salaried workers, are ready to buy into properties that are many times our annual income is food for thought and cause for concern.

The other fundamental governing house prices is rental returns. In most of the areas that were included in this analysis between house prices and household income and rental returns, the trend is clear over the last 10 years, the returns are dropping.

In many of the areas where prices have increased, the rental returns of the typical terrace house have dropped below 3% net. In some areas, it is about 2% net.

With the situation the way it is today, real estate professionals are calling for the authorities to put in place greater measures.

In China and Singapore, various measures have been put in place to cool prices the past year or so. Since last year, the Chinese government has introduced a series of policy measures to cool the market. This includes raising interest rates, raising down-payment requirements, directly restricting home purchases, imposing price control targets in Beijing and Shanghai and finally charging a real estate tax, albeit on a trial basis, in Shanghai. Nevertheless, prices remain stubbornly high.

Early this year, the Singapore government required those who buy, and sell, residential properties within four years to pay a stamp duty, up from the previous requirement of three years. Other measures include making it mandatory for individual buyers, who are still servicing an existing loan, to borrow only up to 60 % of the new property's value, down from 70% previously. For corporate investors, the loan-to-value limit has been cut to 50%.

What is emerging today is Chinese developers and owners of malls are now offering investors their assets. According to a fund which is on an acquisition trail in Asia, the company is looking at commercial properties at a “flow rate” of one property a day, which, according to the source, is very high.

These developers and owners essentially want to make their exit. In the commercial segment in Malaysia, developers here are also beating a path to the same fund to sell their assets. Thankfully, not at a flow rate of one per day.

Assistant news editor Thean Lee Cheng is wondering what it takes to douse this madness.

By The Star (by Thean Lee Cheng)

Dijaya plans RM3.5bil projects

PETALING JAYA: Dijaya Corp Bhd will launch property projects worth RM3.5bil over the next two years.

The projects include W Hotel and Residences Kuala Lumpur, serviced apartments in Tropicana Danga Bay, Tropicana Gardens commercial centre, Tropicana Avenue business and retail centre, Tropicana Bayou mixed development and Tropicana Cheras bungalows, semi-dees and linked houses.

“With all these projects in the pipeline, the company is poised for growth,” said managing director Datuk Tong Kien Onn in a statement yesterday.

Meanwhile, for its first quarter ended March 31, Dijaya's net profit surged to RM18.14mil from RM464,000 previously.

The improvement is attributable mainly to higher profit margin contributed by its new property launches such as Tropicana Grande condominiums, Casa Tropicana Block E condominiums, and Pool Villas.

However, revenue fell to RM57.68mil from RM58.37mil previously.

By The Star

OSK Property receives takeover offer

PETALING JAYA: OSK Property Holdings Bhd executive director Ong Leong Huat and Land Management Sdn Bhd have offered to buy up the remaining OSK Property shares they do not own for RM119.56mil.

In a filing with Bursa Malaysia yesterday, the company said both Ong and Land Management collectively owned 49.96 million shares of RM1 in OSK Property, representing a 26.66% stake, and was looking to buy up the remaining 137.42 shares in the company for 87 sen per share.

They are also looking to buy 47.81 million warrants not owned by them for some 6 sen per warrant.

Ong is also a substantial shareholder and director of OSK Investment Bank and OSK Holdings Bhd as well as a director of Bursa Malaysia.

The shareholders of Land Management Khor Chai Moi, Ong Yin Suen, Ong Yee Ching, Ong Ju Yan, Ong Yee Min and Ong Ju Xing also held direct stakes in OSK Property amounting to 5.43%. Yin Suen, Yee Ching and Ju Xing are also directors of Land Management.

OSK Property's share price gained 7.5 sen within the day to end at 87 sen yesterday on news of the proposed takeover. Based on Thursday's closing of 79.5 sen, the offer price provides a 9% premium but that premium was wiped out yesterday when the company saw its share price end at the offer price of 87 sen.

For the financial year ended Dec 31, 2010 (FY10), the company posted a revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.

As at the end of FY10, OSK Property's cash and cash equivalents stood at RM53.2mil.

The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.

Properties under the group's stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.

Proposed privatisation of smaller property companies seems to be picking up steam following an announcement earlier this year that Low Chuan Holdings Sdn Bhd, owned by the founding family of the Low Yat Group, was looking to privatise Asia Pacific Land Bhd.

The Low Yat Group had offered 45 sen per AP Land share, pricing the stock at 0.43 times its book value of RM1.05.

By The Star

Genting plans to build ‘Resorts World’ in Florida

PETALING JAYA: Genting Malaysia Bhd plans to build “Resorts World Miami” in Florida after buying a 13.9-acre land for some US$236mil from a US newspaper publisher, The McClatchy Co.

The company told Bursa Malaysia yesterday that its subsidiary, Bayfront 2011 Property LLC purchased the land, which includes a building currently housing The Miami Herald Media Co and an adjacent parking lot, with plans of building a mixed-use development.

Genting Malaysia said it was working towards developing a comprehensive master plan for the project called “Resorts World Miami”, which will include hotel, convention, entertainment, restaurant, retail, residential and commercial facilities.

The project aims to capitalise on Miami’s standing as one of the world’s leading tourism hubs.

“The acquisition involves large prime freehold waterfront properties facing the scenic Biscayne Bay. Located in downtown Miami, the properties are close to commercial, residential and shopping areas and are bordered by an extensive road network linking to Miami International Airport and South Beach, one of the world’s top beach destinations,” the company said.

The land is located directly across the street from the Adrienne Arsht Center for the Performing Arts of Miami-Dade County, which is among America’s largest performing arts centres. Miami’s new Museum Park development, the future home of Miami Art Museum and Miami Science Museum, is located immediately to the south.

Genting Malaysia is looking to fund the purchase through bank borrowings and internally-generated funds. It said that bank borrowings of US$200mil to partly fund the purchase, Genting Malaysia’s consolidated gearing ratio of 8.3% as at Dec 31 will increase to 12.4%, on a proforma basis.

“Resorts World Miami will be a landmark mixed-use development for Miami, Florida and the United States,” Genting Malaysia chairman and chief executive Tan Sri Lim Kok Thay said.

“Downtown Miami has experienced dramatic residential and commercial growth in recent years, and we believe the addition of a large-scale mixed-use and entertainment complex will be a welcomed addition, further elevating the area’s status as a global destination.”

Genting Malaysia said it was seeking to expand internationally in the leisure, hospitality and entertainment industry. The envisioned Resorts World Miami represents Genting Malaysia’s second venture in the US, after Resorts World New York at the historic Aqueduct Racetrack in the City of New York.

The seller of the land is the third-largest newspaper publisher in the US and is listed on the New York Stock Exchange. It is also the parent company of Miami Herald.

An analyst said based on the little information provided from the announcement said he was netural on the deal.

“It seems cheap, considering that they are buying at a property down cycle in the US and that this is prime property.”

However, he added, that it is not clear if Genting would be issued with a gaming licence. “If a casino is in the plans, then the move is a good one, considering that Miami is a top tourist site. But let’s see the details.”

By The Star

Friday, May 27, 2011

Tanco to resume property projects after settling debt

PUCHONG: Resort operator and developer Tanco Holdings Bhd plans to proceed with some of its property projects once it has paid its RM144.58mil debt to Lehman Brothers Commercial Corp Asia Ltd by the third quarter of 2012.

At an EGM on Tuesday, Tanco shareholders approved the ordinary resolution in relation to the proposed settlement scheme to Lehman Brothers.

Tanco group managing director Datuk Tan Jing Nam said the company's land was now locked up in the lengthy litigation process.

Tan says the company ’s land is now locked up in the litigation process.

The land bank includes 430 acres in Palm Springs Resort City, Port Dickson, and 170 acres in Duta Lakes, Lake Kenyir, Terengganu.

“From the waiver of the remaining secured debts pursuant to the settlement scheme, Tanco will have net exceptional gain of some RM118mil that will improve the company's net tangible assets by 35 sen per share,” Tan told StarBiz.

Group executive director Datuk Lynne Tan said there would also be a significant drop in the company's net gearing ratio to 0.09 from 1.83 now.

Tanco had, on Feb 21, reached an agreement with Lehman Brothers for the settlement sum of RM144.58mil which would involve RM44mil cash as well as the transfer and vesting of certain properties at an agreed value of RM100.58mil.

According to Tanco's circular to shareholders, these properties include parcels of land, houses and shophouses in Rawang and Seremban as well as a parcel of beachfront vacant resort development land in Port Dickson.

Tanco and its affected subsidiaries have signed a settlement agreement with Lehman Brothers Commercial, Lehman Brothers Pan Asian Investments Ltd and Malaysian Trustees Bhd to formalise the settlement scheme.

The settlement sum of RM144.58mil was arrived at on a negotiated basis.

Lynne said the cash settlement sum would be paid in five instalments over 12 months from the date of “consent judgment”.

The cash settlement sum would be funded through internal funds and bank borrowings.

“There is also the possibility for the cash settlement sum to be settled earlier,” she added.

Lehman provided a two-year loan facility of about RM239.6mil in November 2007 to repay Tanco's debt obligations which saw Tanco coming out of PN17 classification on Jan 17, 2008 after completing its debt restructuring exercise.

By The Star

Dijaya Corp to launch projects with GDV RM3.5b

KUALA LUMPUR: DIJAYA CORPORATION BHD reported net profit of RM18.54 million in the first quarter and announced projects with gross development value (GDV) of RM3.5 billion over the next two years.

It said on Friday, May 27, that its earnings jumped 489% from RM3.15 million a year ago, boosted by higher profit margin contributed by its new property development launches.

The earnings were underpinned by the new launches including Tropicana Grande golf-fronted condominiums and Casa Tropicana final Block E condominiums at Tropicana Golf & Country Resort as well as Pool Villas at Tropicana Indah Resort Homes.

Dijaya added the 3Q earnings included net gain of fair value adjustment of RM5.16 million arising from marketable securities and recognition of RM4 million in liquidated and ascertained damages compensated from a contractor.

Its managing director Datuk Tong Kien Onn said that given the current set of results and the good location of the company’s current development, he was optimistic Dijaya would continue to post an improving set of results.

“The Company also has projects under planning to be launched over the next two years worth RM3.5 billion in GDV.

“These projects include W Hotel and Residences Kuala Lumpur, serviced apartments in Tropicana Danga Bay, Tropicana Gardens commercial centre, Tropicana Avenue business and retail centre, Tropicana Bayou mixed development and Tropicana Cheras bungalows, semi-dees and linked houses. With all these projects on the pipeline, the Company is poised for growth.”

By The EDGE Malaysia

China, Malaysia to develop industrial park

China is looking to incorporate a joint venture company with Malaysian developers to undertake the construction of the Qinzhou Industrial Park (QIP), said Deputy Director Qinzhou Municipal Commerce Bureau Xiao Xiao.

She said the joint venture company would cooperate in land acquisition, infrastructure construction and investment promotion.

"We chose Malaysia as our JV partner as it our biggest trading partner in the China-Asean Free Trade Agreement with bilateral trade having grown eight times since 2000.

"Qinzhou offers easy access via multiple options, including direct sea route, Pan-Asia railway and the highway network," she told Bernama in an interview today.

She said the QIP was planned to focus on equipment manufacturing, electronic information, new energy and materials, agriculture products, food processing and modern services industries.

"In terms of industrial layout, we welcome any constructive suggestion and advice from Malaysia," Xiao added.

She also said to formulate preferential policies, the bureau has defined three aspects which included sharing land development profits, local tax revenue and to strive for early harvest.

"Tax revenue retained for local public finance, in the start-up stage, will be granted to the JV company as follow-up development funds," she said.

In order to promote practical progress in the joint development of QIP, Malaysians enterprises that invest in Qinzhou can enjoy a favorable industrial land price of RM35 per square metre.

QIP, to be sprawled over 50 square kilometres, will be developed over 10 to 15 years close to port and high-tech industries, and have an anticipated population of between 300,000 and 350,000.

By Bernama

Tycoon Li Kashing firm buying malls in Malaysia

PETALING JAYA: Singapore-based ARA Asset Management Ltd, which is linked to Hong Kong tycoon Li Kashing, is in different stages of negotiation to buy between five and 10 malls throughout Malaysia.

Its CEO (ARA private funds) and director (corporate office) Ng Beng Tiong said its second Asia Dragon Fund has a fund size of US$1bil to buy Asian assets. Its first Asia Dragon Fund has a fund size of US$1.1bil. ADF is the flagship private real estate fund of ARA.

ARA Asset Management is an affiliate of Hong Kong's Cheung Kong Group, which is controlled by Li.

ARA was set up in 2002 when Li and its other founder, John Lim of Singapore, came together at a time when Cheung Kong was primarily a conglomerate focusing on buying and selling land for development. From a zero base, ARA currently has assets in Singapore, Hong Kong and China exceeding RM44bil in value.

“We don't want to set a limit but we do have a country limit. Nevertheless, that is a lot of firepower given the size of the fund,” said Ng yesterday, adding that they were at different stages of negotiations.

He was in Malaysia to launch 1 Mont'Kiara Mall (1MK), which was purchased by the Cheung Kong Group last year for about RM333mil.

This will be ARA's third property, the other two being the AEON Mall in Malacca and Summit in Subang Jaya.

Ng said they liked well-located community malls which serves the upper middle-class group, with single ownership and management.

“We like community malls because they serve a local need. In that sense, they are stable and defensive. We are also prepared to buy older malls and refurbish them,” he said.

Ng said ARA was looking for economies of scale and they had not limited themselves to just the Klang Valley. Instead, they are considering having assets throughout Malaysia as there is always the possibility of tenants following them. He said there were looking at a risk-return profile with an upper limit of an internal rate of return of about 20%.

“This is an opportunistic fund, meaning we are looking at buying assets at a higher risk, which brings with it a higher return,” Ng said.

In the case of 1MK, it was under construction when the Cheung Kong Group bought it. “We saw the potential and we liked the location. We put in a lot of hard work, brought in the tenants, did the advertising and promotion, and today it is about 60% tenanted. By the end of the year, it will be about 90% tenanted. In three to five years, this mall will be stable and we will have achieved our rate of returns.

ARA has 25 malls throughout Asia 14 in Hong Kong, four each in China and Singapore and three in Malaysia.

Its primary business includes real estate investments trusts, private funds and real estate management services.

By The Star

Recurring income seen from Nu Sentral

KUALA LUMPUR: Nu Sentral, a retail mall under construction at Kuala Lumpur (KL) Sentral, is expected to generate RM70mil recurring income annually from 2013.

It is a joint venture between Malaysian Resources Corp Bhd (MRCB) and Pelaburan Hartanah Bhd (PHB).

MRCB chief executive officer Datuk Mohamed Razeek Hussain said the group planned to increase recurring income contribution to its turnover.

“We have already embarked on acquiring the properties for the purpose of leasing,” he told reporters after the signing ceremony with NU Sentral retail tenants yesterday.

The mall is managed by Nu Sentral Sdn Bhd of which MRCB and PHB hold 51% and 49% stakes respectively.

MRCB planned to increase the contribution of its recurring income to between 20% to 25% of its total income in two to three years from 10% currently.

“We will be selective in the tenants which will be selected based on the reputation of the brand,” he said adding that 60% of the NU Sentral floor area had been taken up.

Among the tenants that signed up yesterday were Golden Screen Cinema, MPH Bookstore, Parksons, Wangsa Bowl and AMP Square Premium Karaoke. MRCB had 28 new tenants yesterday.

The seven-storey retail mall aims to be the first in the country which has the Singapore BCA Green Mark compliance and Malaysia Green Building Index certification.

By The Star

Thursday, May 26, 2011

Mah Sing earnings up on existing projects

PETALING JAYA: Mah Sing Group Bhd's net profit jumped 47.6% to RM41.1mil for the first quarter ended March 31 due to progressive recognition of development revenue and contribution from its property projects in the Klang Valley, Penang and Johor Bahru.

The company said in a statement yesterday that revenue for the quarter rose to RM311.7mil against RM238.3mil a year ago. Earnings per share stood at 4.95 sen.

Mah Sing said projects that contributed to the group's profit and revenue included Perdana Residence 2 in Selayang, Garden Residence in Cyberjaya as well as Hijauan Residence and One Legenda in Cheras.

“Also contributing are projects such as Residence @ Southbay and Legenda @ Southbay in Penang as well as Sierra Perdana, Sri Pulai Perdana 2 and Austin Perdana in Johor Bahru.

“Our plastics division also contributed positively to revenue and profit,” it said.

The developer added that its balance sheets remained healthy with net gearing ratio at 0.32 as at March 31.

“The group has 22 ongoing projects and another seven in the pipeline for continued earnings growth in the near and medium term,” it said.

As at May 13, Mah Sing achieved RM975mil in sales, meeting 49% of its full-year sales target of about RM2bil. The group has unbilled sales of about RM1.6bil as at March 31.

By The Star

Fresh new start for Ibraco

KUCHING: Property developer Ibraco Bhd, which has exited the Practice Note 17 (PN17) list, will embark on a new residential project in Stutong here.

The company also plans to extend its property development activities to other major towns in Sarawak and venture into construction business.

Chew says Ibraco will launch the Stutong project in July.

Chief executive officer Chew Chiaw Han said Ibraco would launch the proposed Stutong housing project, comprising 77 single-storey terraced and semi-detached houses, in July.

“The project will have a gross development value (GDV) of about RM15mil,” he told StarBiz.

Bursa Malaysia on Tuesday removed Ibraco from the PN17 classification, about six months after the company completed its regularistion scheme.

Ibraco was classified a PN17 company after its revenue for the financial year ended Dec 31, 2009 fell below 5% of its paid-up capital.

The company's regularisation scheme involved the development of Tabuan Tranquility, a massive commercial, industrial and residential project along Kuching-Samarahan Expressway.

The mixed development on 66ha will comprise 640 double-storey terraced houses, 108 semi-detached houses, 60 units of three-storey townhouses, 76 units of four-storey shophouses, 72 semi-detached industrial buildings, an office block and a petrol station.

Tabuan Tranquility, to be developed in five phases up to 2015, has a GDV of RM517mil.

Chew said all the 76 shophouses priced between RM1mil and RM1.79mil had been sold. These shophouses are expected to be completed in July.

“About 85% of the Tabuan Tranquility phase 5 residential development, comprising 204 terraced houses and 38 semi-detached houses, have been booked,” he added. These houses are expected to ready by November 2012.

Chew said Ibraco also planned to undertake its first mixed property development in Bintulu or Miri.

He said the company had identified the land and might carry out the development via a joint venture with the landowner.

Although the plan has yet to be finalised, he hoped the project could take off this year.

To diversify its activities, Chew said Ibraco planned to venture into construction, including infrastructure and civil building works, for the private and public sectors.

“We are actively studying it. Ibraco is an experienced contractor and has all the expertise,” he added.

Ibraco, which has built about 10,000 properties over the years in the Tabuan area here, has a land bank of about 285ha, mostly in Kuching and Lundu.

By The Star

Prinsiptek in RM90m Bangkok project

SHAH ALAM: Prinsiptek Corp Bhd will embark on a mixed development project in Bangkok next month with a gross development value of RM90 million.

Its group managing Datuk Foo Chu Jong said the mid-range development should be completed within three to four years.

"The land for the Bangkok project is about 12.15ha and is only half an hour away from the city. It is at a very good location and is right beside a highway," he told Business Times after the company's annual general meeting, here yesterday.

Foo said the company has been constructing low-cost housing in Thailand (prior to this development) in a joint venture with the Thai government.

Prinsiptek expects to clock in double-digit growth this year from several developments and construction projects it had undertaken both locally and abroad.

Last year, the company bounced back with a net profit of RM2.27 million after recording a loss in 2009.

On local projects, Foo said Prinsiptek will embark on Vue Residences Service Suits in Jalan Pahang, Sri Gombak, Bangi in Selangor and Pahang in the coming months.

He said the company's current order book for construction stood at RM220 million while for development projects, RM489 million.

Foo added that its property projects were a mix of both leasehold and freehold developments.

Prinsiptek, he said, was in initial talks with the Sabah state government on a private finance initiative project that will enable the company to build government buildings and lease them back to the state government for the next 30 years.

Foo also said that it was looking for land to build more affordable houses under the My First Home Scheme.

"We are currently in talks to develop a leasehold housing area in Kajang under the My First Home Scheme," he added.

By Business Times

Fajarbaru JV buying 44ha site in Balik Pulau

It is understood that the JV intends to undertake medium- to high-end property development projects, which collectively boast a gross development value exceeding RM3 billion.

Kuala Lumpur: A joint venture (JV) between Fajarbaru Builder Group Bhd and Sagajuta (Sabah) Sdn Bhd is on the verge of buying 44ha of land in Balik Pulau, Penang, via a private tender, people familiar with the matter said yesterday.

At least two people with direct working knowledge of the two companies independently confirmed the JV's plan to acquire the land from a local non-government organisation in a cash deal valued at around RM200 million.

According to land brokers, land in Balik Pulau sells at between RM16 per sq ft (psf) and RM35 psf, depending on the type of land.

Among factors taken into consideration are if the land is leasehold or freehold, and whether it is agriculture, industrial, estate, orchard or housing land.

Business Times was told that an announcement by the JV on the matter will be made by as early as next month.

It is understood that the JV intends to undertake medium- to high-end property development projects, which collectively boast a gross development value exceeding RM3 billion.

Securing the project will be a critical boost for Fajarbaru, which is partly controlled by Datuk Low Keng Kok, former managing director of Road Builder (M) Holdings Bhd.

Fajarbaru is a successful medium-sized construction company, but it has been facing a margin squeeze as construction margin here is not as lucrative as before.

For the nine months ended March 31 2011, Fajarbaru posted a lower group level pre-tax profit of RM15.75 million versus a group pre-tax profit of RM19.31 million in the same period a year ago.

This is despite revenue for the period under review growing marginally to RM126.01 million from RM121.27 million before.

Analysts said construction margins are currently between 8 per cent and 12 per cent, while margins for property development vary from 18 per cent to as high as 30 per cent.

The planned township, which will take five to 10 years to develop, will comprise landed and high-rise residences, a commercial hub, mall and leisure properties, a source said.

Zerin Properties founder and chief executive officer Previn Singhe said with strong demand for landed properties in Penang Island, the project will be well-received if given the approval.

"Penang is a strong market. If you build good condominiums, people would buy. We expect sales to be very domestically-driven," he said.

Fajarbaru's partner in the JV, the privately-held Sagajuta, recently gained prominence after it emerged that the Sabah-based company had identified Robert Kuok Hock Nien's Jerneh Asia Bhd as a possible reverse takeover target.

Both companies are now in the midst of trying to finalise the deal, Jerneh Asia's filings to the stock exchange show.

One of the key driving forces of Sagajuta is its managing director Datuk Chan Boon Siew.

In Sabah, Sagajuta is famous for its 1Borneo development project, the first and largest lifestyle hypermall in the land below the wind.

By Business Times

Wednesday, May 25, 2011

Developer sees 10% rental yields from office tower

An artist’s impression of Khor Joo Saik Sdn Bhd’s Menara Binjai

KUALA LUMPUR: Property developer Khor Joo Saik Sdn Bhd expects to generate a rental yield of 10% within three years of operations of its Grade-A office tower, Menara Binjai.

The building, which has a gross development value of RM180mil, is strategically located along Jalan Binjai and Jalan Ampang, and will be launched in the final quarter of this year, according to director Chua Guan Hock.

“Our building is strategically located on prime (KLCC) land with a lot of amenities and a good transportation network,” he told StarBiz in an interview, adding that potential tenants would be offered a competitive rate of RM7.50 per sq ft. Khor Joo Saik Sdn Bhd owns the land where Menara Binjai is being built.

“Good thing we don't have to buy the land with heavy borrowing costs. (Because of this) we have the strength to be very competitive with the rentals,” said Chua.

Chua said he expected 75% of the offices to be taken up within the first year of operations, adding that the company was looking to attract tenants within the oil & gas, finance, services and trading sectors.

“We have had enquiries from multinational companies as well as embassies as many of them (embassies) are located nearby. We're looking at a good balance of locals and expatriates (as tenants),” he said.

Chua said another factor that made Menara Binjai appealing to potential tenants was the fact that it was a certified green office tower.

The tower has received the Green Mark Gold Certification (Provisional) by the Singapore Building and Construction Authority (BCA) as well as the provisional certification from the Malaysia's Green Building Index (GBI), making it the first dedicated office tower in the country to receive both awards.

The 35-storey Menara Binjai will have four levels of basement parking and another four levels of podium parking. The office floors, which have a net lettable area of between 12,000 sq ft and 13,000 sq ft, start from level six onwards.

“We're hoping to launch the building on Nov 11, which is a very auspicious date,” said Chua.

By The Star

MCL Land gets good response to Singapore Terrasse condo

SINGAPORE: Encouraging home sales continued over the weekend with MCL Land's Terrasse in Hougang finding buyers for more than 150 apartments.

The homes at the 414-unit project in Hougang Avenue 2, whose preview started on Saturday, were sold at an average price of S$950 per sq ft.

The 99-year leasehold project has homes ranging from 506 sq ft one-bedders to five-bedroom penthouses of about 2,210 sq ft. Ground-level garden duplexes have yet to be released.

The Straits Times understands that a one-bedder will start from S$580,000 while a five-bedroom penthouse will start from S$1.85mil.

All unit types received even interest, with 90% of the buyers locals and permanent residents. The rest were foreigners from countries including Malaysia and China.

Far East Organization also saw 30 units across its properties snapped up by home buyers last week, excluding sales at Eight Courtyards in Yishun. Its Waterfront collection in Bedok Reservoir Waterfront Isle, Waterfront Key and Waterfront Gold sold 15 units in total while The Greenwood and Suncottages sold two units each.

Woodhaven in Woodlands and Seastrand in Pasir Ris will start sales in the first and second half of next month respectively, The Straits Times understands. Online marketing material suggests Seastrand prices will start from S$850 per sq ft. Woodhaven's average price will range from S$900 to S$1,000 per sq ft. These prices do not factor in any possible early bird preview discounts.

On the public housing front, this year's first executive condo launch, Belysa in Pasir Ris, had attracted 520 e-applications as of 8:30pm on Monday. This is about 1.7 times the number of units in the 315-unit project at the junction of Pasir Ris Drive 1 and Elias Road, which experts say is a healthy figure.

Belysa illumination in Swedish will offer only three and four-bedroom apartments to cater to three-generational living. Priced at an average of S$670 per sq ft, the indicative price of an 829 sq ft three-bedder starts from S$574,000 while a 1,335 sq ft four-bedder starts from S$882,000. Sales bookings for units will start tomorrow.

Experts said buying interest was still healthy for projects that were reasonably priced and in a good location.

PropNex chief executive Mohamed Ismail said buyers had begun to accept that prices especially in mature estates, even in suburban areas could be about S$1,000 per sq ft.

By Straits Times

Tuesday, May 24, 2011

Bina Darulaman, Belleview ink deal

BINA Darulaman Bhd has signed a joint development agreement with Belleview Bina Sdn Bhd to develop two high-rise condominium blocks in Kedah with a gross development value of about RM109.55 million.

The condominium, comprising 277 units, will be built on a land already owned by Bina Darulaman, measuring 1.45ha.

Construction work is expected to start in November this year with target completion in November 2014, the company told Bursa Malaysia yesterday.

By Business Times

Mitrajaya wins RM46m hospital project

MITRAJAYA Holdings Bhd has bagged a RM46.4 million project to build a private hospital in Rawang, Selangor, which is expected to be completed in 18 months.

In a statement yesterday, Mitrajaya said its wholly-owned subsidiary Pembinaan Mitrajaya Sdn Bhd had accepted the letter of award from Rawang Specialist Hospital Sdn Bhd yesterday.

It will build an eight-storey hospital with two-storey basement at Section 16, Rawang. The contract will start on June 6 , Mitrajaya added.

By Business Times

Monday, May 23, 2011

Mah Sing to launch RM2.5bil projects

Tan Sri Leong Hoy Kum with a model of Icon Residence@Mont’Kiara

PETALING JAYA: Mah Sing Group Bhd will launch RM2.5bil to RM3bil worth of projects in the Klang Valley, Penang and Johor this year to meet its sales target of RM2bil for the current financial year ending Dec 31.

Group managing director and chief executive Tan Sri Leong Hoy Kum said the projects would comprise an array of commercial, residential and industrial properties.

The two commercial projects are Icon City Petaling Jaya and Star Avenue@D'Sara, while the industrial project is iParc 3@Bukit Jelutong.

Residential projects lined up for launch in the Klang Valley include Hijauan Residence in Cheras, Kinrara Residence, Aman Perdana, Bayu Sekamat, M Suites@Jln Ampang, M City@Jln Ampang and Garden Plaza in Cyberjaya.

There are also three residential projects to be launched in Penang Legenda@Southbay, Icon Residence and Ferringhi Residence. The project in Johor Baru is Sierra Perdana.

Leong said Mah Sing's RM2bil sales target for this year was higher than the record sales of RM1.5bil achieved last year.

As at April 11, the developer recorded sales of RM738mil, which was about 37% of its sales target for this year. Mah Sing also has unbilled sales of RM1.3bil as at Dec 31, 2010 that will be realised over the next two to three years.

For the financial year ended Dec 31, 2010 (FY10), Mah Sing achieved profit after tax and minority interest of RM118mil, a 25.5% increase over RM94mil in 2009. Group revenue for FY10 was also higher at RM1.1bil against RM702mil previously.

Leong said Mah Sing would aggressively expand its land bank and was now looking for suitable prime land in greater Kuala Lumpur, Penang island and Johor Bahru.

Last year, the group undertook 10 land acquisition exercises. This year, it has so far signed one deal.

“These are prime land which can yield remaining gross development value (GDV) and unbilled sales of about RM14.1bil. It should keep the group busy for the next seven years,” he added.

Leong said Mah Sing aimed to buy land that could provide GDV of RM7bil to RM12bil this year. He said the group had the resources to fund the acquisitions.

Besides making outright land purchase, the group is also open to joint ventures with land owners.

“We are scouting for land near the proposed MRT stations, as the new transport infrastructure would create higher value for these land,” he added.

Mah Sing's upcoming projects that are located near the proposed MRT stations along the Sungai Buloh-Kajang line include Star Avenue@D'Sara (near Taman Industri Sungai Buloh station) and One Legenda and Hijauan Residence (near Taman Suntex station).

Projects along the proposed circle line include M Suites (near Great Eastern mall stop), M City (near Ampang point station) and Icon Residence Mont Kiara (near Matrade stop).

Star Avenue@D'Sara, the first night-guarded concept shop-office development, is one of the first new commercial projects coming up along Jalan Sungai Buloh. The RM402mil project comprises 3-storey shop offices and retail lots.

The RM980mil Kinrara Residence is a medium-high-end residential project on about 139 acres in Puchong. It comprises superlink residences, semi-detached units and bungalows.

M-City@Jalan Ampang will feature residential suites, designer small-office home-office (soho), sky villas and boutique retail units on five acres of freehold land.

The RM1.2bil project is targeted for preview in the second half of this year. Its first-phase preview will be designer soho and 3-storey boutique retail shops.

Icon Residence Mont' Kiara will feature 260 partially-furnished residences with a GDV of RM408mil. The development will offer about 200 different unit layouts in three iconic towers of 26, 28 and 36 storeys.

Dubbed garden terraces in the sky, the residences will have price tags from RM1.148mil.

By The Star

Bolton suffers drop in profit to RM20.3m

Bolton Bhd's pre-tax profit for the financial year ended March 31, 2011 fell to RM20.34 million from RM50.7 million the previous year while revenue fell to RM243.23 million from RM257.47 million.

For the fourth quarter period ended March 31, its pre-tax profit dropped to RM4.84 million from RM16.66 million in the same period last year.

Revenue increased to RM87.51 million from RM74.17 million previously, the company said in a filing to Bursa Malaysia today.

It attributed the lower profit to mainly to the current work in progress for the new launches with all being at their initial stages.

Its new property launches are Arata (100 units of high end condominiums) located at Bukit Tunku, another 215 units of service apartments at Jalan Ceylon and the Wharf (a mixed commercial and residential development) located at Taman Tasik Prima, Puchong.

By Bernama

BDB to build condos in Alor Setar

Bina Darulaman Bhd (BDB) together with Belleview Bina Sdn Bhd (Belleview) will be developing a condominium here in the near future.

Work on the two-block unit named Kondominium Amansuri Residences, estimated at a cost of RM110 million, is expected to start in November with completion due in 2014.

Chairman of BDB Datuk Mohd Saad Endut said the proposal to build the condominium came about with plans to redevelop the existing Kompleks Tunku Yaacob and build an international standard hotel on a piece of land owned by the Kedah State Development Corporation (PKNK) and left idle the past 16 years.

He said the condominium will be built on a 1.469 hectare piece of land.

All the three projects will be built along the same row, he said during his speech at the signing of an agreement here today between BDB and Belleview for the joint development.

"The condominium will comprise two blocks of 22-storey and 25-storey respectively and will house a total of 227 residential units including six units of penthouse," Mohd Saad said.

Among the buildings' features would be car parks, swimming pool,
multipurpose hall, a pavilion, gymnasium and other facilities on par with the best condominiums around the country.

The condominium will also be gated and have tight security, he added.

With BDB's success record in Kedah and the achievements of Belleview in Georgetown, Mohd Saad said he was confident that the project would be a huge success.

"It would change the skyline of Alor Setar city besides increasing the state's coffer through tax collection and so on," he said.

Mohd Saad said that although the sales price has not been fixed for the condominium, he was confident that the price would be lower compared with prices in Kuala Lumpur and Georgetown.

Kedah Sato Sdn Bhd, a wholly owned subsidiary of BDB will be undertaking the construction of the condominium.

Meanwhile, Menteri Besar Datuk Seri Azizan Abdul Razak said the process of taking over the site of Kompleks Tunku Yaacob was going on and the request for the takeover of the building had already been sent to the state government.

"We expect that only in August we will be calling the involved family for the provision of compensation and we have not decided on the form of compensation that would be given," he said.

He also added the project had been delayed due to several unavoidable problems.

By Bernama

YNH Property enjoys higher Q1 pre-tax profit

YNH Property Bhd achieved a higher pre-tax profit of RM21.43 million for the first quarter ended March 31, 2011, compared with RM20.55 million registered in the previous corresponding quarter.

However, revenue declined to RM55.26 million, from RM93.80 million, registered previously.

In a filing to Bursa Malaysia today, the group said its performance was mainly derived from the recognition of progressive sales of its inventories, development properties and commercial properties.

It said the global economic climate remained challenging after almost three years from the 2008 financial crisis.

"Notwithstanding the challenging environment, the group had been achieving strong demand for its projects such as Manjung Point Seksyen 5, Taman Seri Melor, Taman Sejati III and Taman Pantai Remis in Seri Manjung as well as the balance units in Ceriaan Kiara in Month Kiara," it said.

The company expects sales from both the township projects in Manjung and Klang Valley to continue its contribution to the group's income.

By Bernama

iProperty launches GPS-based Android app Malaysia, the country’s number one online property portal, recently launched Southeast Asia's first Android app for property search.

The new product was designed to give users real-time access to over 255,000 properties for sale and rent, Malaysia Sdn Bhd said in a statement today.

It said the launch followed the its very successful unveiling of its iPhone and iPad real estate search apps last year.

"Since its debut, these apps have seen tens of thousands of downloads and have been ranked number one in the Lifestyle Category in the iTunes App Store," it added.

A highlight of the Android app is its Global Positioning System
(GPS)-supported feature, enabling users to view in real time properties on the market near their current location via Google Maps.

By Bernama

Saturday, May 21, 2011

Malton plans RM2.2b launches over next 3 years

PETALING JAYA: Malton Bhd plans to launch eight property development projects worth some RM2.2 billion over the next three years, as well as beef up its construction division.

Executive director Hong Lay Chuan said Malton's construction unit has about RM200 million-odd worth of jobs in hand and that the division currently contributes some 30 per cent to group revenue.

Hong told reporters after the company's shareholder meeting here yesterday that Malton is bidding for design and build projects from the private sector.

He did not rule out tendering for government projects, especially those that come under the Economic Transformation Programme.

"We are bullish on both sectors and hope to do better this year. We do anticipate high cost in land and raw materials but if market sentiments hold up, we should do okay," he said.

For the nine months to March 31 2011, Malton's net profit increased threefold to RM45.7 million on a revenue of RM294.5 million.

On property development business, Hong said Malton foresees the market to be strong this year as demand for new houses is increasing.

Malton's eight new projects comprise medium to high-end residential and mixed property developments, the majority of which are located in the Klang Valley and some in Penang.

Hong said Malton is poised to benefit from the new launches, based on the success of its existing projects in the marketplace since mid-2010.

Malton has five on-going residential and mixed development projects worth some RM1 billion in the Klang Valley.

Hong said the projects in Bukit Rimau and Mutiara Indah in Puchong, which consist of 101 units of shop units and terraced houses respectively, were sold out even before the launch.

"We are looking for landbank to expand our property development division hence the need to raise funds," he said.

Yesterday, shareholders approved Malton's plan for a rights issue to raise between RM139.3 million and RM156.6 million.

Malton will use part of the money to buy land and undertake property development projects. Some RM60 million will be used to pare debt.

By Business Times

E&O to venture outside Penang, KL

Eric Chan with an artist’s impression of Quayside condominiums in Seri Tanjung Pinang phase one.

EASTERN and Oriental Bhd (E&O) will be leveraging on its expertise and reputation as a lifestyle developer to undertake more upmarket projects outside its traditional markets of Kuala Lumpur and Penang.

Deputy managing director Eric Chan says the group is ready to take the next step to move beyond its traditional markets and that includes venturing overseas.

E&O's foray overseas will commence with the opening of an E&O Property Gallery and the first offshore Delicious cafe in Singapore in November.

“We hope this step-by-step initiative will promote the E&O brand and its unique lifestyle experience to the regional and global market,” Chan told StarBizWeek in a recent interview.

Through its range of lifestyle property and other related activities, he says E&O has set new industry benchmarks in terms of concept, quality, design, service and values.

“We have two hotels, the Delicious chain of restaurants, a marina and a shopping mall to complement our property development initiatives to promote a unique lifestyle experience for our buyers,” Chan adds.

In F&B, the Delicious Group is embarking on an expansion drive that will see the opening of more outlets, both locally and regionally.

Presently it operates five Delicious cafes, a Reunion Chinese restaurant, a DISH steakhouse and a Delicious Ingredients gourmet grocer in the Klang Valley.

The first Delicious cafe outside the Klang Valley was opened at Straits Quay festive retail mall in Penang early this month.

A new Delicious cafe will be opened in Sunway Pyramid in August. It will also cross over the causeway in November when a Delicious cafe makes its debut in Singapore.

Chan says E&O is also looking to expand its capacity in the hospitality sector by adding new rooms and service suites to its two existing hotel properties in Penang.

The Loan Pine hotel just underwent a major refurbishment and expansion which saw the number of its rooms increased to 90 from 50 previously,

E&O Hotel will have another 139 suites added to the existing 100 suites once the Victory Annexe block is completed next year. There will also be new facilities including retail outlets.

Chan says it is a natural progression for E&O to leverage on its hospitality management expertise honed through the years to introduce the E&O Concierge Services that provide pay-on-demand concierge services, starting with the Suites at Straits Quay.

E&O is also targeting to manage the serviced suites at St Mary Residences (if it clinches the management contract for the property), and its other future developments.

Its ongoing property projects include the Seri Tanjung Pinang phase one in Penang that will take another three to five years to complete and St Mary Residences in Kuala Lumpur.

E&O's Seri Tanjung Pinang phase two is currently at the masterplanning stage.

Among the Kuala Lumpur projects in the pipeline include condominiums at Jalan Yap Kwan Seng and Jalan Kia Peng, as well as the sale of prime bungalow plots in Damansara Heights.

Chan says although property development is local in terms of supply, “the demand is actually global.”

“Singaporeans make up about 30% to 50% of our total foreign sales, and there is also growing potential to be tapped from other emerging markets like buyers from China and India,” he adds. Chan attributes the strong foreign interest to the relatively lower Malaysian property prices compared with those in other regional markets such as Singapore, Hong Kong and Thailand.

“Liquidity is ample and banks offer friendly financing. At the same time, Malaysian developers continue to innovate and offer quality products which are on par with international standards. Given the reasonable price levels, they present an attractive value proposition to property purchasers,” he explains.

In particular, Chan is upbeat on the Kuala Lumpur and Penang property markets, with the ongoing public sector and infrastructure transformation plans for Greater KL which he says will draw investors and support the property market.

“Kuala Lumpur and Penang are among the most liveable cities in Asia. They emerged in the 8th position in 2010 according to EAC International (an agency that rates living conditions in major cities for expatriates),” he points out.

Citing figures from Malaysian Investment Development Authority, Chan says Penang's growing popularity among foreign investors, having emerged as the state with the highest inflow of foreign direct investment (FDI) totalling RM12bil last year, will give a boost to the property market.

“Another RM7bil of FDI has been committed to be invested in the state which will generate a wave of expatriate workforce for the island within the next three years,” he adds.

Other supporting factors include the ongoing improvements in Penang's key public infrastructure such as the international airport expansion project targeted for completion this year end, the construction of Penang's second bridge (by end 2013) as well as the enhanced connectivity to the state with more air flights into the island.

“Penang's heritage and cultural appeal (as a Unesco World Heritage site) has won it many accolades, including the 2011 vote by Yahoo as one of the Top 10 Islands in the World to visit,” Chan says.

By The Star