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Monday, August 29, 2011

Malton advances on Q4 profit jump

Malton Bhd, a Malaysian property developer, rose the most in more than two weeks in Kuala Lumpur trading after profit in the fourth quarter ended June 30 surged almost fivefold to RM26.8 million from RM5.54 million a year earlier.

The stock gained 4.4 per cent to 47.5 sen at 9:19 a.m. local time, set for the biggest gain since Aug. 11.

By Bloomberg

Saturday, August 27, 2011

IGB plans St Giles in Australia

Prime land: The recently purchased Sydney property has a net lettable area of about 60,000 sq ft (5,436 sq m) with three retail floors and 10 upper levels of office space and a basement parking for 16 cars. IGB bought the building from a Charter Hall Group fund. Savills brokered the deal.

IGB Corp Bhd has submitted plans to the Australian authorities to convert a recently purchased office building into a three to four-star St Giles hotel.

Executive director Tan Boon Lee says the purchase of 34, Hunter Street in Sydney, Australia will be its eighth hotel under the St Giles brand. It was purchased at a price of A$36mil and will be given a A$20mil makeover.

“If we can get an average room rate of A$180 to A$200 for the 250-odd rooms, we would be able to get our money back in seven to eight years, which is normal period of investment,” he said. It is expected to be ready in two and-a-half years.

The real estate developer, with interest in hotels and malls has two St Giles hotels each in London, New York and Makati, the Philippines and is building a seventh in Penang.

IGB Corp Bhd, through its associate company St Giles Hotels, bought two hotels in New York City for US$78mil (RM2.55mil) from Starwood Hotels & Resorts Worldwide Inc in June last year to grow its St Giles brand.

The hotels, located in midtown Manhattan, were previously operated by Starwood under the W brand. Among the group's other brands are the MiCasa and Cititel chains.

“We would like our investments in hotels, offices and retail to contribute a third each to our property investment portfolio,” Tan says.

IGB achieved a net profit of RM174mil for financial year 2010, representing a 10% jump from its RM159 mil net profit in financial year 2009. This expansion in its bottom line was mainly due to improved results from property development and property investment as well as management divisions.

The property investment and management divisions contributed 59.2% to IGB's RM719.4mil revenue for the 2010 financial year.

Its hotel and property development segments contributed 28% and 10% respectively.

“Property development is the icing on the cake. When times are good, we will do more. When times are bad, we will acquire land. We have always liked KL,” Tan says.

IGB has its base in Ipoh. It was founded in the early 1960s by two brothers - the late Datuk Tan Kim Yeow and Datuk Tan Chin Nam. IGB's forerunner, Ipoh Garden Sdn Bhd was named after its maiden Ipoh project. It has since transformed itself from being a mere developer into a mega asset-based company involved in various facades of real estate development here and overseas.

On the purchase of 34 Hunter Street, Sydney, Tan said the group would like to develop “the kangaroo route from Britain to Australia.

“Once we have developed the hotel business along that route with Malaysia being the mid-way point, we can talk about (tourism) packages with the airlines. This will help us to promote our hotels from London to Australia,” he says.

IGB is no stranger to Australia. Among its most priced Australian asset at one time was the Queen Victoria Building (QVB) which IGB restored more than 20 years ago. That property later went to Singapore Government's Investment Corp (GIC) when it bought Ipoh Ltd of Australia. QVB was Ipoh Ltd's core asset.

The recently purchased Sydney property has a net lettable area of about 60,000 sq ft (5,436 sq m) with three retail floors and 10 upper levels of office space and a basement parking for 16 cars.

Tan says they will retain the facade of the building but will retro-fit the inside and have between 240 and 270 rooms with windows to every room as it is a stand-alone building located at the corner of Hunter Street and Pitt Street. It is three to four blocks away from the Sydney Opera House and is located mid-way between the Sydney Opera House and the Queen Victoria Building.

“Location wise, it is very strategic. In terms of timing, the local government there is trying to revive the city's night life. Over the last four years, there has been hardly any hotel so ours will be the only one,” says Tan.

He says there are several hotels in the vicinity. This includes the InterContinental Sydney, owned by Mulpha International Bhd, Grace Hotel owned by the Low Yat group, the Grand Hyatt at The Rocks, Radisson and Four Seasons.

“There is no three to four-star hotels in that area, all of them are five-star hotels. Our strategy is to provide a comfortable business class hotel, with a good bath, bed and free Internet facilities. Breakfast will be simple and our rates will be a third lower than those hotels around us.”

On the group's strategy in today's challenging times, Tan says there are plans to acquire other assets, in order to expand its hotel operations and business.

“Our first preference will be hotels. A lot of funds are selling so it is a good time to accumulate assets. If the site is big enough, then we would like to do a mixed development but for that to happen, it has to be about half or three-quarters the size of the Mid-Valley site (which is about 20 ha).

“Mid-Valley took us 15 years. It is not possible to find a piece of land this size in places like London or Sydney but it may be possible in China. Whatever we do, it must be near a local transportation hub,” Tan says.

By The Star

Demand for residential properties boosts UOA Q2 net profit

PETALING JAYA: UOA Development Bhd saw its net profit for the second quarter ended June 30 grew to RM60mil, which represented an increase of 44.6% from the RM42mil recorded in the preceding quarter.

The property development company had earlier told Bursa Malaysia that its revenue in the quarter had grown 18.9% quarter-on-quarter to RM173.33mil. Residential segment contributed most to the company's total revenue during the quarter in review at 59%, or approximately RM101mil, compared with the 25% contribution (or approximately RM36mil) in the first quarter.

“This is in line with UOA's increasing focus to meet the growing demand for residential properties in the Klang Valley,” the company said in a statement.

Going forward, UOA would continue to actively address the growing demand for commercial and residential properties with the development of its land bank that constituted a saleable area of over 1.4 million sq m, including its flagship project, Bangsar South, and other upcoming developments in key locations such as Taman Desa, Sri Petaling, Segambut and Glenmarie that would form a basis for its growth over the next five to seven years.

The company said it would capitalise on its strong balance sheet and continue scouting strategic development lands, while maintaining a focus on strategic locations within the Greater Kuala Lumpur.

By The Star

What development means to the LDP

TTDI-LDP interchange: It is baffling why the soon to-be-built MRT alignment does not feature in this part of urban development.

Several developments, of considerable scale, will be emerging fairly soon along the Lebuhraya Damansara-Puchong. Some of these developments will be completed in four years, while others will have a longer gestation period.

Four of these projects are being developed by Subang-based developer Empire group. The four pieces of land were purchased from MK Land, who developed Damansara Perdana.

What is visible as one drives along the LDP today is the on-going construction of Empire City on the side of Taman Tun Dr Ismail, Kuala Lumpur. This 23-acre development comprises several high-rise office blocks, serviced apartment blocks, a hotel and a retail area spanning a major portion of the 23 acres and a massive car-park beneath. It is sandwiched between the LDP and tracts of Malay reserved land. Empire City is scheduled to be completed by 2015 and will have about 10 access roads or viaducts leading to and away from.

In Damansara Perdana, on the other side of the LDP, the group has three more pieces of land. Empire Damansara, another mixed development comprising several office blocks, is located next to Metropolitan Square. This is on the outer fringes of Damansara Perdana which sits next to the thriving Kota Damansara township .

The LDP, in other words, besides being a highway, also serves as a sort of border and runs fairly close to the delineation between Kuala Lumpur and Petaling Jaya.

Empire Residence, a high-end gated and guarded development on 19.2ha of land inside Damansara Perdana itself, is being developed together with MK Land in a joint venture. This project will house 750 three-storey units instead of the 3,353 condominium units originally planned.

The Empire group's fourth project is located near the Penchala Toll near MK Land's Flora Damansara. According to an agent marketing one of its projects, the developer plans to fill up a natural lake located on this piece of land. A tertiary development or a resort-like development is being planned. Plans are still hazy.

While the Empire group has set its sights to develop on this side of town, two other developers are also planning their projects further along the LDP heading towards Sri Damansara.

Land & General Bhd (L&G) will be stepping up development of its high-rise condominium projects on 42 acres in the Sri Damansara township. This is expected to be launched towards the end of2011. It is currently known as Meranti and will be built over four phases. About 2,800 units of condominium are being planned.

In Sri Damansara, TA Global will also be offering Damansara Avenue, a 48-acre project comprising several apartment and office blocks, and commercial developments. It is estimated that this will take 10 years tocomplete. There are about four to five blocks of serviced apartments and an equal number of high-rise office blocks.

All these projects will add to the population located along this stretch of the LDP. The majority of the roads accessing these projects, or leading away from these projects, will feed into the LDP. Some will be via the Sg Buloh road. It does seem a scarry propostion for the LDP! One can't help but wonder how the LDP is going to cope with the sure growth in traffic along this short stretch divided by the Penchala toll. As it is, the LDP is terribly congested during peak hours and these develpments are bound to make things worse.

What will it be like in the next couple of years when these projects are ready to host their tenants and owners?

It is also baffling why the soon to-be-built My Rapid Transit (MRT) alignment does not feature in this part of urban development which lies between the PJ-KL border when so many projects have been approved and ear-marked for development.

This takes us to the issue of town and urban planning. We cannot do away with development, modernisationand the pressing need for housing. All these are part and parcel of growth and progress.

But, what the local authorities can do is to consider the pressure such massive projects will add to the road and transport system. Without an integrated public-transportation system, these projects may dilute the livability of the area they are piling their foundations in.

Local authorities and transport planners cannot abdicate their roles as guardians and overseers of this community along that LDP stretch. When planning approvals arrive on their tables, they have to consider these new projects based on what is already existing there. The local authorities have to take into consideration the many condominium developments that are already there, in this case the Damansara Perdana location. They have to consider the limited access into Sri Damansara today and the effects of how two massive projects totalling 90 acres will affect that access.

Assistant news editor Thean Lee Cheng wonders what travelling on the LDP will be like a few years from now.

By The Star

Ibraco to launch next phase of Tabuan Tranquility

PROPERTY developer Ibraco Bhd, which came out of Practice Note 17 (PN17) status three months ago, is capitalising on the high take-up rate of the first two phases of its Tabuan Tranquility project here to launch the next phase of residential development.

Group managing director Chew Chiaw Han said Tabuan Tranquility phase two, which would has more than 255 units of houses, would open for sale before end of this year.

The units are made up of 163 terraced houses, 68 semi-detached homes and 24 detached houses with a gross development value (GDV) of more than RM150mil.

Townhouses will also be built under Phase two but its number has yet to be determined.

“Infrastructure work for phase two development is now underway,” he told StarBizWeek yesterday.

Tabuan Tranquility, a massive commercial, industrial and residential development on 66ha along Kuching-Samarahan Expressway, was unveiled last year under Ibraco's regularisation scheme to take the company out of PN17.

It is the single biggest mixed development ever undertaken by Ibraco, which has built more than 10,000 units of properties in the city over the years.

Tabuan Tranquility, to be developed in five phases up to 2015, will have a total 640 units of double-storey terraced houses, 108 units of semi-detached houses, 60 units of three-storey townhouses, 76 units of four-storey shophouses, 72 units of semi-detached industrial buildings, one office block and a petrol service station.

The entire project has a GDV of RM517mil.

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. It was uplifted from PN17 in late May 2011.

Chew said all the 76 units of shophouses under phase one, priced between RM1mil and RM1.79mil each, had been sold.

“For phase five residential scheme, 90% of the units have been sold,” he added.

Phase five comprising 204 terraced houses and 38 semi-detached houses is due for completion in November-2012.

Chew said Ibraco would launch a new residential project in Stutong here next month. The project will have 67 units of terraced houses and four units of semi-detached houses with a GDV of 15mil.

On Ibraco's plan to venture into mixed property development projects in Bintulu or Miri, he said the company was still working on the proposal.

The company has earlier identified the land and might carry out the proposed development in joint-venture with the landowner concerned.

To diversify, Chew said Ibraco was studying proposals to go into construction business, both infrastructure and civil building works, for the private and public sectors.

For the quarter ended June 30, 2011, Ibraco posted a pre-tax profit of RM3.75mil on a turnover of RM28.5mil as compared with loss of RM798,000 on revenue of RM676,000 in the same period last year.

In an explanatory note, Ibraco said the group's revenue increased to RM28.5mil against RM19.4mil in the quarter ended March 31, 2011 when revenue came from both sales of inventories and Tabuan Tranquility project.

Chew said for the financial year ending Dec 31, 2011,the group was confident of achieving its projected nett profit of RM12mil.

By The Star

Investing beyond the Malaysian shores

The lucrative investments in overseas properties have seen many local developers venture beyond our Malaysian shores. Singapore and emerging countries such as Vietnam, being closer to home, are popular destinations. Further away are India, China, Oman, Pakistan and now gaining popularity are United Kingdom, Melbourne and Sydney in Australia and even as far as Canada.

Well-known local developers such as Sime Darby, SP Setia, YTL, IOI Properties, Genting, Sunway, and Selangor Dredging Bhd (SDB) among others have set foot on these foreign lands and hitherto their investments have proven to be promising.

YTL Corp is noted as the most robust player in its international branding mission with several committed projects in the pipeline including a mega development in Koh Samui, Thailand, a holiday destination in Hokkaido, Japan and several hotels in Shanghai, China and Saint-Tropez, France. Despite the recent global financial crisis, property prices in most cities have recovered, thus, stimulating demand.

To date, the total investment of Malaysian developers in Singapore is estimated to exceed RM28bil. The recent alliance between Khazanah Nasional and Temasek Holdings resulting from the land swap deal and the relocation of the Tanjong Pagar Railway Station is anticipated to generate significant returns to UEM Land. The integrated developments in four land parcels in Marina South and two land parcels in Ophir Rochor are expected to generate a gross development value of S$11bil (RM27bil).

Sailing on a different business model, Sime Darby owns several office buildings in central Singapore. With gross rental rate for prime office space in Singapore ranging between RM25 psf to RM30 psf, net yield is estimated at between 4% and 5%.

Meanwhile, the positive real estate outlook in Melbourne, touted as the fastest growing city in Australia is buoyed by inter alia investor-friendly property ownership regulations. Annually, the population in Melbourne rises by 90,000 with the current population standing at 4 million. It is learnt that to cope with the apparent shortfalls in residential supply, Melbourne requires 35,000 new dwelling units per year. However, only 26,500 units are being completed annually, suggesting a gap of 8,500 units yearly.

High-end condominiums are the most popular property type by Malaysian developers investing abroad. They give the fastest turnaround and are easy-to-sell projects and will create profitable returns. This is evident by several new high-end condominiums being planned, including Fulton Lane and Dynasty Living in Melbourne by SP Setia and Magna Prima and Sentosa Seaview, and OKIO Residence in Singapore by IOI Properties and SDB. The most recent launches are Burwood Rise and Burwood View, 20 minutes from Melbourne's central business district by Malaysian Resources Corp Bhd.

Prices are definitely higher in these cities compared to Malaysia. A high-end condominium unit in Singapore has an average selling price of S$2,700 psf (RM6,600 psf). Meanwhile, a high-end condominium in Melbourne is priced between A$650 psf (RM2,000 psf) to A$850 psf (RM2,650 psf). These prices are drastically higher than the Malaysian average of RM1,200 psf. In the meantime, demand for rental has softened particularly in Singapore due to stricter criteria for foreigners working in Singapore and shrinking housing allowances for expatriates. Increased supply from newly completed residential homes has also added downward pressure on rental. OKIO Residence by SDB near Balestier Road in central Singapore is projecting a typical 5% yield with rental rates from S$3,000 to S$3,600 per month.

Buying activities remain bullish with take-up rates of at least 60% upon launching. Sunrise, a subsidiary under UEM Land, marked the fastest sales performance, whereby 90% of the condominium units in Quintet, outside downtown Vancouver was snapped up in less than one week. Dynasty Living and Fulton Lane, both launched early this year, have to date registered 62% and 70% sales respectively. Projects with a larger proportion of smaller units saw higher take-up rates as these units seem to be more affordable. These projects draw a balanced mix between owner-occupier and investors. Singapore, Malaysia, Indonesia, China and Hong Kong are noted to be the most active destination for investors diversifying their assets overseas.

Moving forward, more local developers are expected to go abroad to enable the companies to achieve their aspired visions. Expanding businesses abroad will generate higher annual growth and, subsequently, establish stronger presence of Malaysian developers in the international arena. Nonetheless, careful consideration, researching and evaluating risks are among the prerequisites before extending the regional reach.

The recent economic problems in the United States would have implications on the financial markets and economies around the globe. The weak US GDP numbers, the Japanese supply-chain disruptions from the March 11 earthquake, financial market jitters over Europe's debt crisis, slower pace of Malaysia's economy with 4.0% GDP reported in the second quarter of 2011 from 4.9% in the first quarter and the weakening of export numbers from the manufacturing sector due to weaker external environments are some of the pertinent yardstick in determining the global endeavour.

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

By The Star (by Datuk Abdul Rahim Rahman)

Sime Darby agrees to acquire 30pc of E&O

Kuala Lumpur: Conglomerate Sime Darby Bhd has agreed to buy 30 per cent of Eastern & Oriental Bhd (E&O), a developer with large projects on Penang island, sources said.

Sime will buy the shares from two parties, believed to be GK Goh Holdings Ltd and Puan Sri Nik Anida Nik Manshor, the wife of Tan Sri Wan Azmi Wan Hamzah.

Based on the latest Bursa Malaysia filings, Nik Anida has an indirect stake of 11.86 per cent while GK Goh Holdings Ltd holds another 11.23 per cent.

Sources said E&O will also issue new shares to Sime. In total, Sime is expected to own 30 per cent of the property developer.

"It is unsure how much the deal is worth. But rumour was that Sime wanted to buy at more than RM2, but the sellers then were not willing to sell. With the current global economic landscape, they may have changed their minds," said a source.

The deal will allow Sime to recognise part of E&O's earnings, but more importantly, it gives Sime the opportunity to take part in the much talked-about Seri Tanjung Pinang 2 project.

That project involves reclaiming 740 acres of land in Tanjung Tokong to develop two islands for mixed development projects. The project has an estimated gross development value (GDV) of RM12 billion.

Yesterday, trading in E&O and GK Goh Holdings Ltd shares were suspended. However, Sime shares were not halted.

Shares of E&O rose 1.4 per cent on Thursday to RM1.45. Over the past 30 days, its shares closed at a high of RM1.70 and a low of RM1.38. On average, it was traded at RM1.38, with a volume of 10.6 million shares daily.

Sime stocks ended unchanged at RM8.80.

Since May, major shareholders of E&O have been accumulating the stock. During the period, Nik Anida has expanded her indirect stake to 11.86 per cent from 9.09 per cent.

AmBank group chairman Tan Sri Azman Hashim had also been on a shopping spree during the period. He raised his stake to 6.25 per cent from 5.1 per cent.

By Business Times

Sime Darby buying 30% stake in Eastern & Oriental?

PETALING JAYA: Trading in the securities of Eastern & Oriental Bhd (E&O) has been suspended since Friday, pending a material announcement.

Shares of the property development company was last traded at RM1.45 on Thursday, which was two sen higher from the previous day. Rumours were rife that conglomerate Sime Darby Bhd would be acquiring a 30% stake in the company from Singapore-listed G K Goh Ltd.

At press time, no announcement has been issued.

Trading in G K Goh had also been suspended pending an announcement.

E&O has several projects, the largest of which is the 980-acre seafront development Seri Tanjung Pinang in Penang. It also has pockets of land in Jalan Kia Peng and Jalan Yap Kwan Seng in Kuala Lumpur and 365 acres at Gertak Sanggul in Penang plus bungalow lots in Damansara Heights.

By The Star

Friday, August 26, 2011

Gurney Paragon Mall’s first phase to be ready soon

GEORGE TOWN: The first phase of the RM450mil Gurney Paragon Mall will be ready by the end of this year.

Group executive chairman Datuk Khor Teng Tong said the 25 retail tenants in that phase would be Italiennes restaurant, Coffee Bean, Pacific Coffee, and TGIF.

The first phase has a net lettable area of 111,000sq ft. The second phase, comprising 599,000 sq ft, will have teants such as Hokkaido Ichiba Japanese restaurant, Urban Fresh supermarket, and TGV Cinemas Sdn Bhd.

“We are now negotiating with Valiram Group to bring in some of their fashion brand names for the second phase,” he said.

Khor said the group's business model was to hold and manage this mall.

“We have experts from Singapore and Kuala Lumpur to advise on the mall's operations.

“The rental income stream from the mall in the future will enable the group to have a strong base of recurring income.

“This will transform the group from a property developer into a real estate landlord,” he added.

On the Gurney Paragon RM480mil condominium project, located within the same premise as the commercial segment, Khor said about 70% of the 220 condominium units had been sold.

“We have also obtained the certificate of fitness for the project,” he said.

Khor added that about RM10mil was in the process of being paid in the form of rebates to some 100 purchasers of the condominium scheme for late delivery.

The condominium project was scheduled for delivery in mid-2010.

It was delayed because of the caving in of an access road in July 2009.

By The Star

UEM Land Q2 net profit soars

KUALA LUMPUR: Property developer UEM Land Holdings Bhd's second quarter net profit more than doubled due to its soaring revenue.

Its net profit for the three months to June 2011 came in at RM88.9 million compared with RM40.35 million in the same quarter a year ago.

Revenue rose to RM509.4 million from RM88.0 million last year.

UEM Land said the momentum in the second quarter of 2011 will provide a strong platform for the current financial year.

For the first six months, UEM Land's net profit stood at RM106.54 million, up from RM43.49 million a year ago.

Group revenue rose to RM697.09 million from RM127.7 million previously.

UEM Land said the total unbilled sales of RM1.53 billion as at June 30 this year will support its revenue and profit for the current and subsequent financial years.

The significantly higher revenue in the quarter under review came mainly from higher direct development projects and developed land sales, UEM Land said in a filing to Bursa Malaysia yesterday.

Higher developed land sales of RM122.1 million compared with immediate preceding quarter of RM7.3 million was mainly attributed to strong sales performance for the Southern Industrial & Logistics Clusters (SiLC).

The high demand for industrial land at SiLC was due to the relocation of Singapore factories to Nusajaya, the company noted.

By Business Times

Trinity to undertake affordable niche projects in Klang Valley

Going abroad:

PETALING JAYA: Up-and-coming developer, Trinity Group Sdn Bhd, is on the lookout for more strategic land in the Klang Valley to develop affordable niche boutique projects.

Managing director Datuk Neoh Soo Keat said the developer was also looking for opportunities in the other active growth markets of Penang and Johor.

“Hopefully in the next two to three years, we will be able to launch a project in Singapore also. To do that, we will need to tie up with a good Singapore partner,” Neoh told StarBiz.

Since it undertook its first development, The Heron Residency in 2004, the company has launched 2,010 property units worth some RM920mil, of which RM320mil have been completed.

It has an undeveloped land-bank of 8ha and a further 7.3ha in the Klang Valley that are under construction.

Neoh said the company hoped to achieve sales of RM520mil this year and RM640mil in 2012. Last year, it recorded RM50mil worth of sales, and its record sales so far were RM250mil in 2009.

While admitting the worsening external economies may affect market sentiment, he said the impact would be more severe on the high-end property market, while the medium-priced sector should be better cushioned against the softening outlook.

Trinity is targeting RM1.33bil worth of new project launches over the next two years. They will comprise residential and commercial projects in Melawati in Ampang, Bandar Putra Permai in Seri Kembangan, USJ 19 in Subang Jaya and Bukit Antarabangsa in Hulu Kelang.

The company plans to build condominiums on its 1.4ha freehold tract in Melawati with an estimated gross development value (GDV) of RM180mil.

The projected GDV of the Bandar Putra Permai project on 1.5ha is RM300mil, the 1.2ha USJ 19 project is worth RM200mil and the Bukit Antarabangsa project on 3.5ha is worth RM700mil.

The response to its latest project, the Z Residence condominium in Bukit Jalil, has been good with some RM350mil of the RM500mil development sold since its soft launch in April. The project comprises 1,136 condominium units on four towers of 26 and 27 storeys on a 2.7ha freehold site.

The first two phases, Towers A and B, featuring 590 units priced at an average RM340 per sq ft (psf), were sold out within a month.

The subsequent phase, Tower C featuring 281 units with built-up ranging from 1,032 to 1,407 sq ft, fetched an average price of RM380 psf. So far, it is about 65% sold.

The final block with 265 units will be launched next month.

Neoh said that to address the concerns of nearby Bukit OUG Condominium residents over the high-density nature of the development, which may cause traffic congestion in the area, Trinity would build a 800m link road costing RM3mil from the project site to Bukit Jalil highway to alleviate traffic congestion in the area.

It is also taking measures to reduce pollution during construction.

By The Star

Selangor Dredging aims for gross development value of RM1bil

KUALA LUMPUR: Selangor Dredging Bhd (SDB) is set to launch several new projects locally and in Singapore to achieve a gross development value (GDV) of RM1bil by the end of next year.

Within the next six months, the developer expects to hit the RM500mil GDV mark through the launches of Hijauan on Cavenagh in Singapore and By The Sea in Batu Feringghi, Penang.

There will also be two more upcoming projects in Cheras and Dengkil to be launched within the first half of next year.

Hijauan was the project SDB had postponed when Standard & Poor's downgraded the United States credit rating early this month. The development located near Orchard Road is slated to be launched next month, with a GDV of RM238mil.

Teh: ‘Despite volatility in the world markets, we have decided to go ahead with the launch.’

“The project was only postponed for a few weeks. Despite volatility in the world markets, we have decided to go ahead with the launch because the market in Singapore was still strong,” managing director Teh Lip Kim told reporters after the group's AGM yesterday.

Teh said SDB was adjusting its income stream to have 50% from Singapore and the remaining half from Malaysia in the next two or three years. Currently, its Singapore developments contribute 30% to SDB's earnings.

“Singapore has the potential to be the next Hong Kong because of it is strong financial standing and the trust people have in their government,” she said.

Chairman Eddy Chieng said SDB branded itself as a niche lifestyle property developer focusing on high turnaround time for all its projects.

SDB does not have large landbanks in Malaysia and Singapore but it acquired land for its projects.

“By not having large landbanks, we do not have huge holding costs and this allows us to have a quick turnaround time for our projects,” Chieng said.

“We have bite-size pieces of land for our niche developments because we are not involved in township development. In Singapore, we are buying on blocks only,” Teh added.

“We are looking to acquire land in Singapore but because the land cost is very high, we have to be very careful. In Malaysia, land would usually cost 30% of the total cost of a development but in Singapore, it could be up 70%,” she said.

On the outlook on local property market, Teh said Malaysia remained good in the next couple of years with generally lower property prices compared to neighbouring countries.

SDB will also be looking into the property market in developed countries including Britain. Currently, it has invested in an office building in London that housed HSBC Bank.

Since moving into property development in 2004, SDB has launched seven projects in Malaysia and three in Singapore with GDV totalling RM2.38bil.

For its first quarter ended June, SDB recorded a net profit increase of 77.7% to RM10.11mil from RM 5.69mil a year ago. Its turnover for the quarter also rose 58.3% year-on-year to RM98.9mil from RM62.48 last year.

The improved performance was due to the good response to 20tree West and Five Stones in Kuala Lumpur and Petaling Jaya as well as Gilstead Two in Singapore.

In the financial year ended March, SDB's net profit was RM30.17mil, 67.9% increase from RM17.96mil achieved last year's. It achieved a turnover of RM346mil for FY2011, a 47.6% increase from RM234.43 in the previous period.

It recommended first and final payout dividendpayout at 5% per share, amounting to RM8mil.

By The Star

Amanresorts awaiting govt approval for Penang Hill project

GEORGE TOWN: World-class hotelier Amanresorts International Pte Ltd's plans to manage and market a proposed resort on Penang Hill are still on track and awaiting government approval.

The company told Business Times yesterday that despite news reports that the luxury Aman Resorts chain may be sold, plans or operations of its resorts are not affected.

"Essentially, the Aman project, which is still to be named, is going ahead pending government approval.

"There is an Aman resort proposal to be submitted on September 5 this year to the (Penang) Chief Minister Incorporated for final approval," Amanresorts Press Office media communications manager Anjali Nihalchand said in an email.

In May, the Penang government had announced that Amanresorts will refurnish the famous Crag Hotel on Penang Hill, which was one of the earliest hilltop homes and later turned into a hotel in 1929. The hotel has been in a neglected and direlect state since 1977 when the International school of Penang (better known as Uplands School) vacated the premises and moved to George Town.

The project was reported to have been awarded in April to Sri Nisuh Sdn Bhd and the company was said to be investing US$12 million (RM35.76 million) to finance the project which was to be completed within 30 to 36 months.

The Sunday Times in London, which did not mention a source for its story, had reported that the luxury Aman Resorts chain may be sold for more than US$400 million (RM1.19 billion).

The report stated that the current owner, Indian property company DLF Ltd, has reportedly been seeking a buyer for Aman and the newspaper reported that it may have asked Goldman Sachs Group and Citigroup to find a strategic partner.

When asked to comment on whether this piece of news would affect Aman's plan for the Penang Hill resort, Anjali said: "No, the shareholding of the parent company of Amanresorts does not affect the plans or operations of the resorts."

In 2007, Khazanah Nasional Bhd announced that it had entered into a heads of agreement with Kota Selat Tebrau Sdn Bhd, Symphony International Holdings Limited and Aman Resorts Limited to develop an Aman Resort in the Iskandar Development Region in Johor.

The proposed resort was to have been the first Aman Resorts property in Malaysia to be built, designed and operated and the hotel was slated for completion in 2009. However, the project did not materialise.

By Business Times

Thursday, August 25, 2011

Nadayu to launch projects worth RM1.5b

KUALA LUMPUR: Nadayu Properties Bhd aims to launch three projects worth a combined RM1.5 billion in the Klang Valley and Penang from next month to grow itself and build its branding.

"We are upbeat on the market. We plan to have a good following and grow the company's net profit and revenue year-on-year.

"We do intend to return dividends to shareholders. I believe overtime, we will have local and foreign funds investing in the company," Nadayu chairman Hamidon Abdullah said.

Hamidon and Nadayu executive director Alex Cheang control 70 per cent of the company.

Nadayu is launching a RM400 million project in Bandar Sunway called Nadayu28, featuring shoplots and high-rise residential units.

Hamidon expects 10 units of five-storey shoplots to be sold prior to the launch based on the number of bookings it has currently.

In Cyberjaya, Nadayu is launching a RM430 million mixed development by November and the first phase will comprise apartments and terraced houses.

By end-2011, it will launch Nadayu290 in Bukit Gambir, Penang, featuring high-rise residences and commercial space. This is 50:50 joint-venture project with Affin Islamic Bank Bhd.

"In the past, our projects were located in Cheras, Gombak and Selayang. We are now moving to where demand is," Hamidon said at the company's shareholders meeting here yesterday.

On the 1.4ha land near Sheraton Imperial Hotel at Jalan Sultan Ismail that Nadayu had planned to buy from UDA Holdings Bhd for RM215.5 million, Hamidon said he is disappointed with the outcome.

Nadayu had formalised the deal with UDA in July and planned to undertake a mixed development worth RM1.2 billion. UDA aborted the deal as it was unable to obtain the approval of its shareholders.

Hamidon said Nadayu is seeking more landbank and may also undertake projects in Penang, involving land reclamation if the opportunity arises.

"As a medium-sized developer, we can pick and choose what we want to do as we have the ability to buy tracts of land. We don't have to scramble for landbank. If we don't lose ourselves, we can progress credibly forward," he said.

By Business Times

Wednesday, August 24, 2011

IJM Land confident of good year despite global challenges

SUBANG JAYA: IJM Land Bhd, the property arm of IJM Corp Bhd, is confident of a good 2011 despite a challenging year brought about by the global economic slowdown and European debt crisis.

IJM Land chief executive officer and managing director Datuk Soam Heng Choon said despite a slowdown in some areas such as the Kuala Lumpur City Centre and Mont Kiara, the property market is still resilient in other areas like Penang and Sandakan.

"Property projects, which cost RM500,000 a unit, are still selling strong and the government's mass rapit transit project and the various economic transformation programmes will have strong spillover and multiplier effects in terms of property value and spending," Soam said after the company's annual general meeting.

Soam said the company, which is 67.07 per cent owned by IJM Corp Bhd, will launch projects with a gross development value (GDV) of RM2 billion and RM1 billion within the current financial years ending March 2012 and March 2013 respectively.

IJM Land has a landbank of 1,943.3ha nationwide with a GDV of more than RM19 billion, enough to keep it busy for the next 12 years.

Soam said the company is still open to mergers and acquisitions despite the failed tie-up with Malaysian Resources Corp Bhd.

It will not expand its overseas projects in China and Vietnam for the time being.

The company expects to register slower growth this year as the property market had stretched last year, which saw 375,000 units of various property units launched with a combined GDV of RM109 billion.

By Business Times

Sunway allocates RM400m for overseas expansion

KUALA LUMPUR: Sunway Bhd, a property and construction group, has allocated some RM400 million for overseas expansion mainly in China, Singapore and India.

Chief financial officer, Chong Chang Choong said RM300 million has been set aside for the Tianjin Eco-City project in China while the rest will be for projects in Singapore and India.

The Tianjin Eco-City project has an estimated gross development value (GDV) of RM5 billion and is due to be launched in the middle of 2012. It will also be completed between five and seven years.

Shares of the group, a merger between Sunway City Bhd and Sunway Holdings Bhd, was relisted yesterday with an opening price of RM2.60 versus its reference price of RM2.80.

It closed 11 per cent or 31 sen down to RM2.49.

Chong said the group expects its overseas business to contribute about 30 per cent of total turnover in the next five years.

"Our core strength will still be in Malaysia. Any investment overseas especially in China will be more of an opportunistic point of view," he added.

Meanwhile founder and chairman, Tan Sri Dr Jeffrey Cheah said the group hopes to win jobs under the mass rapid transit (MRT) project. Sunway recently won a contract under the light rail transit (LRT) extension project.

"Just recently, we won the bidding for the LRT extension...As for MRT, we have very good experiences, very good track record. We worked very hard for it," he said.

The group will be one of the largest property-construction players in the region, with total assets of over RM7 billion and a land bank of close to 891 ha with a potential GDV of approximately RM23 billion.

By Business Times

Sunway makes weak debut

KUALA LUMPUR: The shares of newly-merged property and construction group Sunway Bhd were not immune to the weak market sentiment, closing at RM2.49 on their Bursa Malaysia debut yesterday, down 31 sen from the reference price of RM2.80.

An analyst said investors were still reeling from the recent shocks to the global economy.

Cheah striking the gong at the listing ceremony. With him are the group’s executives and directors.

“The stock is still undervalued compared to its peers as its price to earnings ratio and price to book value are still very attractive. There is more upside when the sentiments improve,” he said.

Trading in Sunway shares kicked off at RM2.60, with 123,900 shares changing hands at the opening bell. It hit an intra-day low of RM2.40.

“We are quite happy with the price at the moment given the circumstances. Markets go up and down, but the merger will make us stronger with more synergy and branding (value),” said executive chairman Tan Sri Jeffrey Cheah at the listing ceremony.

The debut marks the completion of the merger between Sunway Holdings Bhd and Sunway City Bhd, which was initiated in November last year. “With our size, we can now bid for more projects with higher values and access more capital markets, backed by enhanced liquidity and stronger credit profile,” he said.

The group expects to derive 30% of its turnover from overseas investments over the next five years. “In line with that objective, we have allocated RM300mil to RM400mil for our overseas expansion,” said chief financial officer Chong Chang Choong.

Currently, its overseas investment contributes 10%-15% of the group's turnover.

Sunway will be looking at opportunities to expand in growth markets such as China, India and Singapore. Chong said about RM300mil would be utilised to develop the 95-acre Tianjin Eco-City in China which is worth RM5bil in gross development value.

“The Tianjin project is very capital intensive as it involves land and development cost, and that is why we need to set aside such a huge quantum of funds for the project. The balance will go into funding our other projects in Singapore and India,” he added.

The enlarged Sunway Bhd, with total assets of RM7bil and a market capitalisation of RM3.6bil, is also set to leverage on its stronger position and continue its participation in local construction projects.

“We have been pre-qualified to tender for the My Rapid Transit project, and we are confident of clinching some of the contracts based on our good track record and experience,” Cheah said.

Recently, the group was awarded the light rail transit Kelana Jaya extension job valued at RM569mil by Syarikat Prasarana Negara Bhd.

By The Star

Tuesday, August 23, 2011

Sunway eyes 30pc turnover from overseas

Sunway Bhd, an integrated property and construction company, expects its overseas business operation to contribute about 30 per cent of the company's total turnover in the next five years.

Its chief financial officer, Chong Chang Choong said currently, the businesses abroad contributed between 10-15 per cent of group turnover.

To embark on the overseas business operations, Chong said Sunway is investing RM300 million-RM400 million over the next five years.

"From the total investment, some RM300 million will be channeled to our property project in Tianjin, China," he said after Sunway Bhd's listing ceremony today.

Sunway, a merged entity following a merger between Sunway Holdings Bhd and Sunway City Bhd, was listed on the Main Market of Bursa Malaysia Securities Bhd.

Also present at the listing ceremony was the founder cum executive chairman of Sunway, Tan Sri Jeffrey Cheah.

The property development project in Tianjin, named Tianjin Eco City, Chong said, comes with a gross development value of RM5 billion.

The project, which covers about 90-95 acres is expected to be launched in the middle of next year and completed in 5-7 years time, he added.

"Our core business in both the construction and property segments will still be in Malaysia.

"However, we are also looking at overseas expansion, of which China is a very important market for Sunway," Chong said.

He also said after China, Sunway views Singapore as a very vibrant and attractive market.

"We are also allocating some RM100 million for the business expansion plans in Singapore and other countries," he added.

On Sunway's presence in India, he said the amount of investment in the country is relatively small, compared to the others.

"We have done some road projects there. But for the time being, our focus is on China and Singapore," he said.

Sunway debuted on the Main Market of Bursa Malaysia today, with a 20 sen discount against its reference price of RM2.80.

At the opening bell, 123,900 shares were traded.

By Bernama

Sunway falls on debut after property merger

Sunway Bhd fell on its debut on the Kuala Lumpur stock exchange after acquiring and merging two property and construction companies.

The stock slid to RM2.64 at 9:05 a.m. local time, lower than the reference price of RM2.80.

Sunway bought Sunway Holdings Bhd and Sunway City Bhd by offering cash and new shares at RM2.80 each.

The share slump on its debut is due mainly to the “global situation,” executive chairman Jeffrey Cheah told reporters in Kuala Lumpur today.

“We are quite happy with our share price given the circumstances,” he said.

“Markets go up and down. We are not worried too much.”

By Bloomberg

S’pore luxury home prices fall

SINGAPORE: Luxury home prices in Singapore fell during the second quarter as Asia's high-end residental market showed signs of softening amid tighter mortgage lending and rising interest rates, property services firm CB Richard Ellis said.Latest business news from AP-Wire

Singapore luxury home prices declined 1.7% in local currency terms in AprilJune from the preceding quarter, while average rents fell 1.9% as completed units came onto the market, it said in a statement yesterday.

By Reuters

Monday, August 22, 2011

Icon City with GDV of RM3.2bil taking shape at Federal Highway-LDP intersection

New landmark: Chua with a model of Icon City.

PETALING JAYA: The vacant plot of land that used to house Panasonic air-conditioner plant at the intersection of Federal Highway and Damansara Puchong Highway (LDP) will soon get a new landmark with the planned development of the Icon City project.

Built in the 1970s, the plant in SS9, Petaling Jaya, has been left vacant for the past four to five years since Panasonic relocated its factory to an industrial zone in Section 21, Shah Alam.

The 20-acre site was acquired by Mah Sing Group Bhd in 2009 from vendor, Panasonic HA Air-Conditioning (M) Sdn Bhd, for RM89mil or at RM104 per sq ft.

The parcel has a few advantages high visibility with direct frontage to two busy highways the LDP and Federal Highway; good connectivity to multiple highways; and proximity to the KTM stations in Seri Setia, Setia Jaya and Kelana Jaya.

“The plot is sizeable enough for a comprehensive masterplan to optimise the potential of the land for a well-planned and designed integrated commercial development,” Mah Sing Properties Sdn Bhd chief operating officer Andy Chua told StarBiz in an interview.

However, he conceded that one of its main shortcomings was the traffic congestion at the intersection of Federal Highway and LDP.

To improve traffic flow at the junction, Chua said Mah Sing had engaged traffic consultants, who came out with a proposal for a comprehensive traffic dispersal system that would involve about 13 new ramps, two tunnels and road widening work to eliminate the need of traffic lights for cars travelling in and out of the two major highways.

“We are looking at spending RM200mil in infrastructure work with various access points for traffic dispersal,” he said.

On the Icon City development, he said: “It will be the ultimate integrated development in Petaling Jaya, offering an interesting mix of versatile components for a trendy destination for live, work and play under one roof.”

“It will be an architectural marvel within a green and sustainable development and is poised to be among the first in South-East Asia to be certified by Leadership in Energy and Environment Design, USA; Green Building Index, Malaysia; and Green Mark of Singapore,” Chua added.

The project, with a gross development value of RM3.2bil, will be undertaken in two phases over seven to eight years.

The first phase was launched last month and includes 30 units of seven and eight-storey shop offices dubbed the “Jewels”; 46 single and double-storey retail shops, two towers of 411 units of small office-versatile offices (SoVos), two towers of 570 units of serviced residences; and a block of boutique office tower. These properties are expected to be completed in three to four years.

The remaining phase will comprise a hotel, corporate office towers and a retail mall.

There will be three levels of basement parking with 3,800 parking bays in phase 1 and 5,000 bays in the subsequent phase.

Chua said the company also planed to have a green park on top of a four-floor parking podium as open space for recreation.

“The service residences and commercial properties comprising SoHos and SoVos have highly versatile designs to cater to the needs of those in the 30s and 40s age groups. The main focus will be convenience.”

Chua is confident that the properties will be popular due to the affordable pricing and lack of such properties in the vicinity.

“The market catchment is extensive, including matured and affluent neighbours such as Kuala Lumpur, Subang Jaya, USJ, Shah Alam and Damansara,” he said.

Since the launch of Icon City on July 17, close to RM430mil sales have been recorded.

For the current financial year ending Dec 31, Mah Sing has targeted sales of RM2bil, of which Icon City is estimated to contribute RM460mil.

By The Star

Mah Sing gets sales, bookings of RM190.6m

Property developer Mah Sing Bhd has recorded sales and bookings worth RM190.6 million with the launch of a commercial project and previews of two residential projects over the weekend.

In a statement today, Mah Sing Group Managing Director/Chief Executive Officer Tan Sri Leong Hoy Kum said all 78 units of retail lots in Star Avenue@Damansara, Sungai Buloh, valued at RM71.7 million had been snapped up.

The company also recorded a strong take up of close to 75 per cent of the Kinrara Residence luxury bungalows and semi-detached homes in Puchong.

By Bernama

Crescendo plans RM2.5b township

JOHOR BARU: Crescendo Corp Bhd (CCB) is set to launch its new mixed development property project, Bandar Cemerlang township with a gross development value (GDV) of RM2.5bil by the year-end.

Chairman and managing director Gooi Seong Lim said the project would keep the company busy for the next 12 to 15 years.

Once completed, he said the township would have about 15,000 units of mixed residential and commercial properties, of which 90% residential and 10% commercial properties.

The township spans on a 562.51ha site, whereby 349.64ha is located in Mukim Tebrau of the Johor Baru district and 212.86ha in the Kota Tinggi district.

“The completion of the Johor Baru-Kota Tinggi highway in June this year will definitely improve accessibility and connectivity to our project,” Gooi told StarBiz recently. He expects the unique location of the township within Johor Baru and Kota Tinggi districts to be a strong selling point to attract prospective buyers.

“We also see demand for properties in Kota Tinggi is on the upward trend in the recent years due to the district's close proximity to Johor Baru,” he added.

Similarly, he said the company's on-going Nusa Cemerlang Industrial Park (NCIP) in Nusajaya would continue to perform well due to its strategic location to the Second Link crossing.

He said: “We are expecting the relocation of medium-sized enterprises from Singapore to NCIP due to lower land cost, cheaper labour and utility costs as well as better control given the park's close proximity to their base in Singapore.”

So far, 63.97ha of the park's 213.26ha site had been developed, Gooi said adding the company would take about five years to develop the entire industrial park with a GDV of RM1.5bil.

He said Singapore investors currently represented about 44% of industrialists operating at NCIP followed by Malaysians (34%), Germany (6%), the United States (15%) and South Korea (1%).

“We expects NCIP and Bandar Cemerlang to be the main contributors to the company's future earnings in the next few years,'' said Gooi.

For the financial year ended Jan 31, 2011, Crescendo recorded RM39.43mil net profit on RM215.22mil revenue against RM19.35mil and RM160.32mil respectively in the previous financial year.

By The Star

Bandar Sunway - a dream come true, a desire fulfilled

PETALING JAYA: Even as a boy growing up in a small mining town called Pusing in Perak, he was certain of one thing - he wanted to lead.

Tan Sri Jeffrey Cheah, the man behind the development of resort township Bandar Sunway, knew back then he would one day become a leader of some sort.

A business graduate of Melbourne's Victoria University, Cheah started his career as an accountant but soon "became restless" being just an employee.

His wish of becoming a leader began at a derelict tin mine, not far from the busy town of Petaling Jaya, where he dreamed of building something which "I can share with the rest of the world". And the road to that dream was not all a bed of roses.

Recalling his entry into the business world, Cheah said it was not easy as he had approached banks without any track record. However, his determination won the bank over.

Then, the recession came in 1985 and his company lost RM30 million due to its financial leasing business.

A year later, armed with a non-impressive balance sheet, he went to Hong Kong Bank for a loan of RM5 million and a promise that he would pay back every single sen.

"Not once did we ever ask for a haircut and true, we paid all our debts," he said.

But, another economic storm came in 1988, the same year he began his property business. It could not have been any more challenging, he said, but like they say, the rest is history.

Now Bandar Sunway has over 30 million visitations yearly, a thriving RM10.6 billion township and home to over 50,000 people.

Cheah still has plans for the township, hoping to turn it into an education hub or "the Boston of Malaysia" as it banks on five-star ratings of Monash University and Sunway University to grow the number of students to eventually reach 50,000.

"The two trying times were a great lesson for business people like me. I don't believe in regrets but more in the lifelong pursuit of continuous improvements. In business, when you are in a slump, you simply cannot panic ... intelligent failure needs to be embraced."

He noted with pride that in terms of business achievements, building Bandar Sunway and Sunway City Ipoh are his greatest successes.

While his personal success comes from his idea to set up the Jeffrey Cheah Foundation (JCF) - where he had transferred all his shares worth RM700 million previously held under the Sunway Education Fund.

In the JCF, the shares will be held in perpetuity and can never be sold. The foundation will ensure that all assets, funds and operating surpluses are used to perpetuate the cause of bringing quality education to deserving Malaysians.

"I believe the best way to give back to the society is through the gift of education because it has the power to eradicate prejudices, correct biases and move nations."

Cheah said his personal motto of "I aspire to inspire before I expire" has been the key motivator to his passion to succeed and doing business with a heart.

By Business Times

Sunway mulls over India township project

Sunway has been offered a sizeable piece of land in India for a possible township development

Petaling Jaya: The enlarged Sunway Bhd, with total assets of RM7 billion and a market capitalisation of over RM3.5 billion, has been offered a sizeable piece of land in India for a possible township development.

Sunway group founder and chairman Tan Sri Jeffrey Cheah said the development will be in one of India's "major cities".

He, however, declined to disclose more details because no agreement has been finalised.

"But we are looking at the offer seriously," Cheah told Business Times.

Such offers from foreign property players are not uncommon for Sunway, he said, attributing it to his success in developing a piece of derelict mining land into a thriving township, that is Bandar Sunway.

In a recent interview, Cheah said while India is a country with vast opportunities for the Sunway group, moving forward, it will be Singapore and China that it would like to focus on.

"We expect some 30 to 40 per cent from our bottomline to come from China and Singapore by 2015," he said, adding that despite the size of Singapore, Sunway still finds a lot of opportunities in the island.

"Also in Singapore, we learn a lot because they are technologically advanced in many ways."

While in China, the group has signed a collaboration agreement to participate in the development of Tianjin Eco-City with master developer Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd for a RM5 billion gross development value (GDV) project in Tianjin Binhai New Area.

Sunway was chosen to be the only Malaysian developer with other top regional developers, which include among others Singapore's Keppel Land, Taiwan's Farglory Group and Japan's Mitsui Fudosan.

Cheah said in expanding to the region, the group will continue to identify places with high growth in their population and per capita income, and build strong relationships with local partners.

He said the group will definitely leverage on its bigger and stronger merged group to replicate its success here, overseas.

Sunway Bhd, to be listed on Bursa Malaysia tomorrow, will be one of the largest property-construction players with total assets of RM7 billion and a landbank of 880ha with total gross development value (GDV) of RM25 billion and a market capitalisation of over RM3.5 billion.

Within Bandar Sunway itself, Cheah said the group has at least 32ha more to develop, with the remaining GDV more than RM5 billion.

"We want to be a world-class Asian property-construction group and this merger will be our growth catalyst," he said, adding that the group will be on the lookout to acquire other property companies to enhance its shareholders' value.

By Business Times

Hot grabs outside Klang Valley

PETALING JAYA: Major property developers have been snapping up large plots of land worth well over a billion ringgit, even as the global economic scene turned more cloudy. And it is interesting to note that these acquisitions are mainly located outside the country’s largest property market, the Klang Valley.

Mah Sing Group Bhd, Hua Yang Bhd, S P Setia Bhd, Dijaya Corp Bhd, Berjaya Land Bhd and Eksons Corp Bhd are among the noted property developers that have this month announced acquisitions of land for future development projects. According to tabulations of a selection of notable deals by The Edge Financial Daily, five major developers alone have spent some RM1.07 billion to buy 1,502 acres (600.8ha) of land in the past few months (see table on Page 8).

Factors such as scarcity of land in mature markets like Kuala Lumpur and Petaling Jaya, which has led to high asking prices, as well as future economic developments in other regions may have prompted the buying spree. Johor appears to be the new property hot spot now, judging by the rush of developers there.

Analysts said the change of perception towards the southern state was triggered by the rejuvenation of Iskandar Malaysia. They noted that since UEM Land Holdings Bhd’s acquisition of Sunrise Bhd, there has been a more proactive development committee team spearheading the development of Iskandar. Sentiment has also been boosted by warming bilateral ties between Malaysia and Singapore, and maiden investments by Temasek Holdings is seen coming to Iskandar.

In Johor, Mah Sing acquired 83ha (205.7 acres) of prime freehold land in Tanjung Kupang for RM54.7 million in April, or RM6.10 psf, while Hua Yang purchased two prime parcels of land in Johor Bahru measuring 0.8ha for RM10.7 million, or RM117 psf.

Mah Sing’s land is located within the Iskandar Development Region, some 1 km from the Port of Tanjung Pelepas and 23 km to Jurong Industrial Estate in Singapore. It is proposing to develop the land into an integrated industrial and business park named Mah Sing i-Parc, with an estimated gross development value (GDV) of RM610 million.

Last week, Dijaya acquired 92ha of freehold land in Plentong for RM220 million, or RM22.25 psf, in its bid to strengthen its presence in the Iskandar Malaysia development region. The company is building a mixed development named Tropicana Danga Cove with a GDV of RM2.8 billion. Construction of the project will start this year, together with another project called Tropicana Danga Bay, a high-end integrated property development with a GDV of RM3.8 billion.

According to group CEO Tan Sri Danny Tan Chee Sing, Dijaya will be launching more quality properties in the region to ride on its proximity to Singapore. He said Iskandar Malaysia will drive up demand for properties in the region as more investments will be pouring in, especially from neighbouring Singapore. The rising cost of doing business in the island republic has prompted many of its small- and medium-sized enterprises to relocate to Johor due to its proximity to home and lower costs, according to a recent research.

Hua Yang said its Johor Bahru acquisition is in line with its business expansion plan to make the southern region a key revenue contributor to the group. The move is also in line with its vision to become a nationwide community developer providing affordable homes throughout the country.

The land parcels that it recently acquired are located in Jalan Abdul Samad in the Johor Bahru city centre and only 3.5 km from the new Customs, Inspection and Quarantine Complex. The land will be developed into a residential project comprising serviced apartments to cater for professionals working in Johor Bahru and Singapore, with an estimated GDV of RM120 million.

So will the property markets in prime areas such as Kuala Lumpur, Petaling Jaya and Penang island disappear from the property developers’ radar?

Not quite, but with limited large tracts of prime land, developers have been focusing on niche, higher-end projects.

In the heart of downtown Kuala Lumpur, Mah Sing will develop a 1.7ha parcel at the former Tunku Abdul Rahman flats, better known as the Pekeliling Flats, in Jalan Tun Razak, in a joint venture with privately-held Asie Sdn Bhd and Usaha Nusantara Sdn Bhd. The project, tentatively called M Sentral, is estimated to have a GDV of RM9 billion. Mah Sing acquired the land for RM600 psf, and will look to jointly develop the rest of the former Pekeliling Flats land, which measures 58 acres.

Hua Yang also has several projects in the pipeline in Kuala Lumpur, especially those under its RM840 million ‘One South’ integrated development located in Sungei Besi, south to the city centre. The project spreads over 16.7 acres and is currently enjoying high take-up rates, with its Phase 1 comprising retail and office units more than 80% sold.

The group has also acquired 1.55 acres of leasehold commercial land in Desa Pandan, which is located near Jalan Tun Razak and the proposed Kuala Lumpur International Financial District (KLIFD). The land was purchased for RM32 million and the group plans to develop it into affordable serviced apartments with pricing in the range of not more than RM400,000, and a GDV of RM160 million.

With limited prime land left in the urban centres, property developers would have to look much further out to build new townships. And that’s where SP Setia went to Hulu Langat, where it hopes to recreate another “Setia Alam” — its successful transformation of a backwater palm oil estate to a thriving township in less than a decade.

SP Setia acquired 409ha of freehold land in Beranang, Hulu Langat, for RM330.1 million, or RM7.50 psf. The oil palm land will be converted into a mixed residential township with an estimated GDV of RM3.5 billion.

Maybank Investment Bank Research said in a report that the property developer is spearheading a new relatively untapped trend of affordable housing development which will provide steady bread-and-butter sales to the group and support its long-term growth. The research house noted that the land could turn out to be another highly successful “Setia Alam” given SP Setia’s track record and expertise in developing townships.

Up north, Penang continues to draw attention.

Confidence in the state was summed up by Berjaya Group tycoon Tan Sri Vincent Tan. He said he was impressed with the level of cleanliness in Penang; the state has done very well economically over the past few years, having attained the highest level of investments in the country last year with RM12.2 billion.

Berjaya Land Bhd acquired 23ha of land in the famed Penang Turf Club area for RM459 million cash, or RM184 psf for a high-end residential property development.

The group said the project, with an estimated GDV of RM1.52 billion, will be a low-density, exclusive gated housing development comprising bungalows, semi-detached units and low-rise condominiums. The development will take five years to complete.

Not only is the Penang island property market red hot now, the same could also be said about the property market on the mainland, Seberang Prai.

Other than Tambun Indah Land Bhd, which has firmly positioned itself on mainland Penang property market after successfully building several notable townships such as Taman Tambun Indah, Juru Heights, Pearl Garden and Pearl Villas, Hua Yang is also making its foray into the market.

According to the group’s chief executive officer Ho Wen Yan, the group is currently scouting for landbanks on mainland Penang as well as in Kota Kinabalu, Sabah. He said that the group is going to raise RM100 million to fund land bank acquisitions in these two key markets.

“Penang is one of the high growth states in terms of economy and population. It is a target market for us to build affordable housing in the state. In Kota Kinabalu, we will look at building high-rise affordable residential property in the urban centres, whereas if it is outside the urban centre, it would be viable for us to build more landed properties,” he said during a press conference after the company’s annual general meeting last Friday.

However, there are concerns over the various property projects in the more mature markets of Kuala Lumpur and Penang island , giving rise to fears that there will be an oversupply of housing.

Penang, for example, has seen a surge in planned projects over the next ten to 15 years worth RM29.6 billion, according to news reports. At the current level of property purchasing in Penang, which is an all time high, it will take 10 to 11 years for the market to absorb such a large number of projects.

Datuk Jerry Chan Fook Sing, the Real Estate and Housing Developers’ Association (Rehda) Penang chairman, had said property launches should be perfectly timed to suit demand so the many projects would not lead to an oversupply in the island’s property market which will dampen prices/yields.

According to Affin Investment Bank property analyst Isaac Chow, there will always be demand in the medium- and low-cost property markets but the high-end residential property market will see slower demand, as buyers have become more selective and prices will be quite “shaky”, especially for high-rise developments.

“The right property in the right location will see an increase in demand and hence price, whereas the wrong property in the wrong location will see lower demand and the price will decrease,” he told The Edge Financial Daily.

He maintained that property prices in Malaysia are still generally affordable as only about 20% to 25% of a buyer’s monthly disposable income is spent on rent or mortgage payments as opposed to buyers in other countries who would have to spend almost 30% of their monthly disposable income on mortgages.

With the recent turbulence in the global financial markets, amid fears of a recession in the US and Europe, developers are still confident in the property market.

“Development is an industry that cannot slow down. Every 10 to 15 years, we have a downturn but we have to weather it and keep going. For us, it will be business as usual,” Dijaya managing director Datuk Tong Kien Onn told The Edge Financial Daily.

By The EDGE Malaysia (Written by Kamarul Azhar)

Opportunities in Indian property sector

KUALA LUMPUR: Malaysians should invest in India's property sector as prices are expected to increase five or six folds in the next five years, said Deputy Minister in the Prime Minister's Department Datuk S.K. Devamany.

“The prices of properties and land in India are reasonable and can't be manipulated. Malaysians should grab this opportunity,” he said when launching the India Property Investment Fair here on Saturday. The two-day event showcases products of various property firms in India.

Devamany said relations between Malaysia and India had grown stronger with the signing of the Comprehensive Economic Cooperation Agreement (CECA) between the two countries. The CECA envisages liberalisation of trade in goods and services, investments and other areas of economic cooperation.

He added that the sister city agreement between Kuala Lumpur and Chennai, and the Little India in Brickfields had also helped strengthen the relations between the two countries.

The pact presents an ideal platform for the two cities to come together in the fields of art, culture, tourism and economy. “This fair will further strengthen the relations between India and Malaysia,” he added.

By Bernama

Saturday, August 20, 2011

Hua Yang set to maintain double-digit growth

The One South serviced residences in Seri Kembangan, Selangor.

PROPERTY developer Hua Yang Bhd is on track to complete another remarkable financial year, says its chief executive officer Ho Wen Yan.

“We are on track to achieve our sales target of RM350mil (13% year-on-year increase) for the current financial year. Based on the first quarter results, we should hit more than RM200mil in revenue,” Ho says in an interview.

Ho: We do not buy land that is deemed to be expensive.

For its recently concluded first quarter ended June 30, the group achieved sales of RM164mil.

For its first quarter, Hua Yang posted a 135% year-on-year jump in net profit to RM11.5mil while revenue rose 66% to RM61.8mil due mainly to better sales performance, steady construction progress recognition and the completed sale of a 215,186 sq ft plot to Tesco Stores (Malaysia) Sdn Bhd for RM3.23mil at the group's Bandar Universiti Seri Iskandar township development in Perak.

Hua Yang, which is known for developing residential properties in the affordable segment, posted a 117% year-on-year increase in net profit to RM25.1mil while revenue rose 82% to RM188.9mil for the financial year ended March 31 (FY2011).

It was a record-breaking full year financial performance, which was attributed to better sales achieved, since Hua Yang's listing on the Main Board of Bursa Malaysia on Nov 29, 2002.

For FY2011, the group's earnings per share stood at 23.29 sen (117% higher compared with the last financial year) while sales achieved grew by 123% year-on-year (from RM139.3mil to RM310.2mil).

Affordable properties

Founded in 1978 by Ho's late father Ho Mok Heng, Hua Yang's first project was eight units of four-storey shophouses in Ipoh, Perak valued at RM2.4mil.

To date, the group has completed over 10,000 residential, commercial and industrial properties with a gross development value (GDV) of RM1.2bil in the Klang Valley, Johor, Perak and Negri Sembilan.

In the last five financial years, the group has enjoyed compounded annual growth rate (CAGR) in profit after tax of 24%, revenue CAGR of 24% and earnings per share CAGR of 20.6%.

The group aims to be a leading developer in the affordable property segment with an annual revenue of RM500mil within the next five to seven years.

Ho says the group's growth will be driven by demand from young Malaysians in a country with a rapidly growing population.

He points out that the 2010 Population and Housing Census report showed Malaysia's population totalled 28.3 million (23.3 million in 2000).

“So on average, half a million Malaysians are added to the population each year. Another factor is urbanisation more than 70% of Malaysians live in urban areas. Demographics will drive our business of providing affordable housing.”

The group's data shows that most of its customers are first-time property buyers who are owner-occupiers aged from 25 to 40 years old.

Ho says there are good margins to be made in the affordable property segment where current prices are generally RM400,000 and below.

“Last year, our net profit margin was about 13% at group level. This year, we are targetting a higher net profit margin of 15% from greater economies of scale.”

According to him, the group has been able to stick to its affordable property tagline over the years, despite rising land and construction costs, due to prudent acquisition, building design and management policies.

“We do not buy land that is deemed to be expensive. Our land cost is below 20% of the entire GDV of the project. Also, we always try to spot the up-and-coming areas (where property will have strong demand).”

Among the toughest challenges ever faced by the group was rapidly rising building material prices in the period before the global financial crisis hit in 2008.

“It was tough. Our margins were squeezed and contract prices for materials changed every day. That was when we decided to re-engineer some of our building designs to be more efficient in terms of cost. The next step we took was to go direct to the suppliers and negotiate bulk purchases for materials such as cement and steel bars. We locked in the prices and paid directly to the suppliers, who then supply to our contractors. So, this takes away risk from the contractors who can feel more secure in carrying out their jobs.”

Ongoing projects

Presently, the group has an undeveloped landbank of 320ha with a potential GDV of RM2.4bil.

The bulk of its remaining landbank is in Perak (62%, 198ha) and Johor (26%, 84ha).

The group's biggest ongoing project is the 314ha Bandar Universiti Seri Iskandar township in Perak.

Bandar Universiti Seri Iskandar, which started in 2001, is slated to have 6,053 residential and commercial units.

About 63% or 198ha of Bandar Universiti Seri Iskandar remains to be developed, with a potential GDV of RM872mil.

Another major township project is the 193ha Taman Pulai Indah, which is located 28km from Johor Baru.

Development for Taman Pulai Indah also started in 2001, and the township will eventually have 4,942 residential and commercial units.

Another 29ha in Taman Pulai Indah remains to be developed, with a potential GDV of RM157mil. Hua Yang is also developing the 11ha Senawang Link, consisting of 85 units of commercial and industrial lots, located along Jalan Tampin, Seremban and adjacent to the Sungai Gadut KTM train station.

The estimated GDV of Senawang Link is RM45mil, and its first phase of 52 units of one-and-a-half storey terrace factories launched in March last year has a take-up of 23%.

Meanwhile, its first major residential project in the Klang Valley was Symphony Heights in Selayang, Selangor.

The first phase was launched in June 2008, and facilities include a swimming pool, squash courts, a community hall, cafeteria, children's playground and a gymnasium.

Symphony Heights consists of three blocks of 946 service apartments on a 1.2ha leasehold plot with a GDV of RM206mil.

Sized from 863 sq ft to 1,246 sq ft, the units were retailed at prices ranging from RM135,200 to RM306,500.

To date, Symphony Heights has a 94% take-up.

One South

One South is Hua Yang's biggest project in the Klang Valley, with a GDV of RM840mil, consisting of shop offices, service apartments, SOHO (small office/home office) units and office towers on a 6.8ha plot in Seri Kembangan, Selangor.

The response to One South has been strong, with a high take-up for the three phases launched within the past one year.

Last month, the group launched 377 units of Gardenz service apartments, sized from 1,020 to 1,220 sq ft and priced from RM380,000 onwards in One South.

According to Ho, one block of Gardenz units have been fully sold while another block has seen high demand.

The Gardenz serviced apartments feature nine units per floor, served by three lifts, and each unit comes with two covered car park bays.

Facilities will include an infinity edge lap pool, wading pool, jacuzzi, sauna/steam room, gymnasium, a jogging track, two squash courts, a basketball court, indoor badminton courts and a snooker room.

One South is served by the Kuala Lumpur-Seremban and Besraya highways, with landmarks in the area including Palace of the Golden Horses, South City Plaza and The Mines Shopping Mall.

The Gardenz serviced apartments, with a GDV of RM160mil, is the third phase to be launched in One South after retail and office units in Phase 1 and 418 units of Parc service apartments in Phase 2.

The retail units and Parc service apartments have been fully sold while the office units have seen a 73% take-up rate.

The retail and office units are sized from 479 to 2,100 sq ft, and were launched at prices starting from RM750 and RM350 per sq ft respectively.

Phase 4, consisting of SOHO units is due to be launched in mid-2012 while phase 5 featuring two blocks of office towers in 2013.

One South is due to be completed by 2018.

Growth strategies

Ho says Hua Yang's double-digit annual growth strategy was planned about five years ago with major forays into the Klang Valley as a key step.

“Previously, our operations were mainly in Perak and Johor which gave us around RM100mil in annual revenue. Our plan is for the Klang Valley to contribute RM200mil to RM300mil or 50% of group revenue in the coming years.”

This year, Hua Yang aims to launch RM525mil worth of properties.

“Including RM190mil of properties that were launched but not sold last year, this means we have RM715mil worth of properties to sell this year,” he says.

Upcoming launches include 294 single and double-storey terrace houses with a GDV of RM63mil in Taman Pulai Indah, Johor in September 2011.

Also in the works are 147 double-storey houses with a GDV of RM33mil in Taman Pulau Hijauan and 31 semi-detached houses in Polo Park in the fourth quarter of this year. Both projects, with a combined GDV of RM63mil, are located in Johor Baru.

The group has also acquired more land in the Klang Valley this year, with the purchase of a 0.63ha plot in Desa Pandan, Kuala Lumpur for RM32mil and a 1.5ha leasehold site for RM13mil in Section 13, Shah Alam.

Both sites are slated for mixed commercial and residential projects, with estimated GDVs of RM160mil and RM175mil for the Desa Pandan and Shah Alam projects respectively.

He says SOHO units sized between 700 and 900 sq ft are planned for the Desa Pandan project while residential apartments sitting on a podium with retail elements are in the pipeline for the Shah Alam development.

The Desa Pandan and Shah Alam projects are due for launching in 2012 and early 2013 respectively.

“Our developments in the Klang Valley are all high rise, with fast turnaround periods. Due to land costs, it is very difficult to acquire land to build townships in the Klang Valley.”

The group is also looking at acquiring land in Sabah and Penang.

“Regarding these new land, we should have something to announce by the end of this financial year.”

A recent note issued by Inter-Pacific Research says that as at June 30, Hua Yang had total borrowings of RM73.4mil and cash of RM6.2mil, translating to net gearing of 29%.

“Our net gearing is low, and this allows us to acquire land when the time is right,” he adds.

At the moment, Hua Yang plans to remain in the affordable property segment.

“Once we achieve an annual revenue of RM500mil, we will reassess our situation and strategies, and decide on further areas of growth.”

On Tuesday, Hua Yang announced that it had acquired two parcels of land, sized at 2.1 acres in total, in Johor Baru for RM10.7mil.The land parcels, adjoined to each other, are along Jalan Abdul Samad in Johor Baru, and located only 3.5km from the Sultan Iskandar Customs, Immigration and Quarantine (CIQ) complex.

The land parcels are slated for a residential development consisting of serviced apartments, catering for young professionals and families working in Johor Baru or Singapore.

with a tentative selling price range of RM150,000 for a studio apartment and up to RM400,000 for a three-bedroom unit, the estimated GDV of the project is RM120mil.

The business successor

By the end of this month, the 37-year-old Ho would have spent a year helming the group after succeeding his uncle Ho Mook Leong as Hua Yang's chief executive officer in August 2010.

However, the British-trained architect says he cannot claim credit for the group's impressive financial performance in recent times.

“At Hua Yang, we work as a team. Since taking over as the chief executive officer, I only made sure we carried out what was planned earlier and meet our targets.”

Wen Yan, who also holds a Masters of Science (construction economics and management) from University College London, says his career in the group was not planned.

Before joining Hua Yang in October 2003 as a project co-ordinator at the group's Johor operations, he had spent about three years working in London.

“I had an independent career in London. However, after my father passed away in 2002, some family decisions were made and I joined the group,” says Wen Yan.

Later, he became general manager in April 2006 and moved to Kuala Lumpur to help grow the group's Klang Valley operations.

The following year, he was promoted to chief operating officer and executive director.

Ho says his experiences as an architect have helped in giving Hua Yang's properties more contemporary designs.

“I think our product designs are quite up-to-date and modern.”

By The Star

Properties that make sound investment

PROPERTIES, by and large, feature significantly in our lives. A large number of us spend the better part of our lives working to pay off a mortgage.

But the need for a place to live in is no longer the main driving force behind our desire to own a property. In fact, many people now invest in properties for a slew of other reasons.

To meet changing expectations from home purchasers and investors, developers and even financiers have to become more innovative. New ideas, concepts and designs are being introduced regularly to attract the potential buyer.

Apart from making their properties more attractive to potential buyers, developers, in collaboration with financiers, are also making it easier to buy a property.

What then, are the factors that induce the average person to make that commitment to part with a large portion of his future earnings just so he can own a piece of property? What makes him think that this is an investment that is worth making?

The first, for both the home purchaser and the investor, is the hope that the value of the property will rise significantly so it can be sold eventually for a tidy profit. This, I believe, is very clearly reflected in the vibrant property market in Malaysia. Browsing the classifieds pages of the daily newspapers, you will have an idea of how much buying and selling there is in the property market.

There is not very much a developer has to do to convince a potential buyer that the value of his property will be much higher on some future date. Buyers of properties in newly launched projects can even re-sell fairly quickly and in the process make a substantial profit.

For instance, a multi-storey apartment block in a mature part of Petaling Jaya was selling at RM280 to RM290 per sq ft when it was launched in 2007. Just three to four years later, the apartments were already in the secondary market for RM420 to RM490 per sq ft.

To hype up the potential gains, some developers even highlight the quantum of returns an investor can expect to make from their properties.

However, the desire for financial gains is not the only requirement developers have to satisfy if they want to attract more buyers.

Developers have to incorporate new and innovative ideas into the concept and design of their projects to promote a desirable lifestyle associated with their properties.

By incorporating such concepts and designs, developers are differentiating their projects from others. For the purchaser, it is an investment that will eventually offer him the reality of an exclusive lifestyle.

This new lifestyle no longer revolves around (just) an expensive apartment in a posh area in the city, with the requisite swimming pool, gym and private lift. For many high-rise projects, such facilities are now standard.

For some, the apartment must be a sanctuary from the hustle and bustle of city life, never mind that it is located in the city centre. Or it must be designed to evoke a lifestyle from another era.

But even as developers manage to meet all the desires of a potential purchaser, some may still hesitate to take out the chequebook. It is, after all, a huge investment and a commitment that will span many years.

To make it easy for potential buyers to make that commitment, there now are many easy payment schemes that give buyers an extended period of time to pay the first 10% or 20% down-payment. All they need to do is to pay an affordable amount to affirm their desire to purchase the property.

However, there is a downside to this arrangement. People can very quickly commit themselves to several pieces of property and soon find that they cannot actually meet all the long-term financial obligations.

That, too, is not the only way financial institutions have made it easier for people to purchase property. Some banks also offer loans with significantly longer repayment schedules, even stretching over two generations.

This concept is based on the understanding that many parents fear that property could be priced beyond the means of their children in the future. To beat the price increase, parents opt to purchase property now for their children's use when they grow up.

Loans are given on terms that enable the parents to begin the monthly instalment payments until such time when the children start to earn an income so they can take over the responsibility until the loan is fully paid up.

However, there is a risk to this arrangement. It is impossible to foresee how well the children will do in their adult life, whether or not they will find a job that will earn them enough money to take over the commitment. In fact, a child may not even want that property, never mind that it had been purchased at a much lower price.

Easy payment schemes and exclusive lifestyles aside, there are many other issues that matter to home purchasers. Security is one of them. A safe neighbourhood is no longer enough.

Gated and guarded communities have sprung up, taking the lead from high-rises where 24-hour security surveillance was first introduced years ago.

The list of such demands from home purchasers and investors will only get longer. And every new addition or innovation will likely come at a cost. The challenge for developers is to meet these demands without adding too much to the cost.

In the end, if the customer is satisfied, it would have been a sound investment, not just for the homebuyer but the developer as well.

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email to

By The Star (by Teh Lip Kim)