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Monday, October 31, 2011

Dijaya aims to raise market cap to RM3bil

PETALING JAYA: To beef up the financial muscles and market presence of mid-cap property company Dijaya Corp Bhd, its group chief executive Tan Sri Danny Tan aims to enlarge the company's market capitalisation to between RM2bil and RM3bil in the next five to six years from about RM900mil now.

Tan says Dijaya has beefed up its management team to oversee the upcoming projects

Tan believes the target is achievable if Dijaya adopts the right land-banking expertise to buy land in the right location and leverages on its strong brand advantage.

To raise fund for new land acquisition, Dijaya is undertaking a private share placement exercise to expand its share base from the current 457 million shares to 594 million shares.

The exercise, which has been approved by the Securities Commission and company shareholders at an EGM recently, is to be completed within a year. Dijaya targets to raise up to RM200mil from this exercise.

Tan said the exercise would also serve to raise the company's share liquidity and promote greater investor interest in the company.

Upon conclusion of the exercise, Tan's 67% stake in Dijaya will be reduced to 51%.

According to Tan, Dijaya is actively looking for opportunities to further expand its land bank in the growth markets of the Klang Valley, Johor and Penang.

In the last five to six months, Dijaya acquired 569 acres in the Klang Valley and Johor to bring its total land bank to 708 acres.

The land will be able to yield a gross development value (GDV) of RM18bil over the next eight to 10 years, and contribute to stronger earnings streams for the company.

Tan said that on an annual basis, Dijaya can look forward to between RM1.2bil and RM1.3bil in new project launches, compared with RM800mil for the current financial year ending Dec 31, 2011 (FY2011).

It is targeting sales of RM500mil for FY2011, RM820mil in FY2012, and RM1.24bil in FY2013. As at September 2011, the company has unbilled sales of RM472mil.

To oversee the upcoming projects, Tan said Dijaya had beefed up its management team. Three executive directors have been appointed to take care of the northern, central and southern regions of Peninsular Malaysia.

“We now have a strong team backed by years of experience in each of their field of expertise. In terms of project planning, we also have to be far-sighted and innovative to continue to excite our property buyers in different locations.

“This will greatly strengthen our performance and lead the company to new heights,” Tan told StarBiz.

He said another of Dijaya's advantage is the Tropicana brand which is already at least 18 to 20 years in the market, with two signature projects to its name the 625-acre Tropicana Golf & Country Resort and 409-acre Tropicana Indah Resort.

Tan said Dijaya would launch RM800mil worth of new projects this year, RM1bil next year and RM1.3bil in 2013.

The first to be rolled out around mid-November will be Tropicana Avenue in Tropicana Golf and Country Resort comprising two floors of retail podium with offices and soho units above the podium block. The RM412mil project is targeted for completion in 2013.

The integrated commercial development of Tropicana Danga Bay on 37 acres will be unveiled in Iskandar Malaysia, Johor in December. The RM3.8bil development will comprise service apartments, hotel, office tower, shopping mall, and retail cum office lots. It will take over 12 years to complete.

Early next year, the 26-acre Tropicana Cheras comprising terrace and semi-detached houses and bungalows worth RM185mil will be launched.

The 227-acre Tropicana Danga Cove in Johor with GDV of RM2.8bil will be unveiled in the first half of 2012.

Two other project launches are also slated for next June. The first will be the 88.5-acre Tropicana Hills in Subang with upper medium range of mixed residential and commercial development. The RM3.5bil project will take eight to 10 years.

Tropicana Bayou, a gated and guarded residential project on 66 acres in Balakong with GDV of RM400mil, is scheduled for launch next June.

Following which will be the Tropicana Gardens commercial centre on 14 acres opposite Giza Sunway in Kota Damansara. The lake-fronting project with GDV of RM1.8bil will feature service apartments, soho units, offices, a hotel and lifestyle retail space. It will take over eight years.

By The Star

Glomac eyes land in Greater KL for integrated mixed projects

PETALING JAYA: Armed with a net cash position of RM361.6mil as at July 31, 2011, Glomac Bhd is on the lookout to buy small land parcels with fast turnaround and high gross development value potential in the Greater Kuala Lumpur area.

Group managing director and chief executive officer Datuk Fateh Iskandar Mohamed Mansor said negotiations were under way for some suitable sites to be developed into integrated mixed projects.

Iskandar: ‘This strategy will contribute to a solid balance sheet.’

He said there were some “under-rated” sites where Glomac could use its expertise to enhance the land value through innovative infrastructure, branding, marketing and design.

“At the same time, this strategy will contribute to a solid balance sheet while keeping down the company's debt position,” he noted.

Glomac is also keen to participate in government land privatisation and is looking at some of the projects.

Based on a consistent growth in profit over the past three years, the company is confident of posting a double-digit growth in its earnings for its financial year ending April 30, 2012 (FY2012).

Glomac recorded a profit after tax of RM32mil for FY2009; RM41mil for FY2010; and RM63mil for FY2011.

“For FY2012, Glomac is looking to launch up to RM1.2bil in new projects comprising affordable housing units, medium to medium upper range of properties and commercial projects.

The developments slated for launch this year include projects in Glomac Damansara (RM250mil), Mutiara Damansara Residences (RM250mil), Glomac Utama Phase 1 (RM250mil), Glomac Cyberjaya 2 (RM100mil) and townships in Rawang, Sungai Buloh and Johor (worth a combined RM295mil).

“Having achieved RM100mil in sales for the first quarter ended July 31, Glomac is on track to achieve its sales target of RM500mil for FY2012,” he added.

The company raked in sales of RM418mil in FY11. As at July 31, it has unbilled sales of RM550mil.

Iskandar said Glomac's landbank of close to 404.68ha had an estimated GDV of RM3.8bil. The landbank will keep it busy for the next six to seven years, and he expects Glomac to undertake projects worth some RM600mil a year.

Glomac assistant general manager, group corporate communication and corporate marketing, Fara Eliza FD Mansor said the company would be unveiling its latest property projects at The Star Property Fair 2011 to be held from Nov 25 to 27 at the Kuala Lumpur Convention Centre.

The projects to be exhibited include Glomac Damansara, the company's flagship mixed development on 2.75ha fronting Jalan Damansara.

Fara said the project with a GDV of RM898mil, offered a hybrid mix of business and leisure property.

“Glomac Damansara Residences comprise two blocks of service apartments. The 356 apartments with built up of 876 sq ft to 2, 529 sq ft are priced from RM581,660, or around RM650 per sq ft. So far, 75% of the units have been sold,” she added.

Also sold are the five and eight-storey shop offices (GDV of RM54mil), and the 25-storey corporate tower office suites (GDV of RM171mil) which was sold en-bloc last year.

Glomac Damansara will also have a 16-storey office block and a boutique retail mall (with a total GDV of RM388mil) that will be launched later.

Fara added that the other projects to be showcased at the property fair will be Glomac Utama's double-storey shop offices and service apartments; Mutiara Damansara Residences, consisting of 299 units of 1,200 sq ft to 1,600 sq ft of freehold service apartment project; Sinaran@Suria Residen a gated and guarded development in Cheras and three to 41/2-storey shop offices at the RM250mil Glomac Cyberjaya 2 project.

By The Star

Kosmopolito to expand in Malaysia

Hong Kong's Kosmopolito Hotels International is optimistic of Malaysia and growth in the three- and four-star hotel category

Kuala Lumpur: Hong Kong's Kosmopolito Hotels International Ltd (KHI) aims to expand its hotel portfolio in Malaysia, either by building properties from scratch or taking over abandoned buildings.

President Winnie Chiu Wing Kwan said the company may also buy hotels that are not performing well, and turn around the properties by strategising on its key brands.

"We like distress properties and are interested in three- and four-star hotels. We believe in turning around. Our group also has the experience to convert industrial and office buildings into hotels, so there are a lot out there for us.

"We are optimistic of Malaysia and growth in the three- and four-star hotel category. Budget airlines like AirAsia and FireFly have revolutionised this place and contri-buted to industry growth," Chiu told Business Times in an interview recently.

Currently, KHI has five hotels in Malaysia - Dorsett Regency Hotel Kuala Lumpur, Grand Dorsett Subang, Grand Dorsett Labuan, Dorsett Johor and Maytower Hotel and Serviced Residences - all opera-ting in the three- and four-star ca-tegories.

Chiu said the company is looking to set up more hotels in the Klang Valley and Sabah.

KHI is also interested in management contracts to boost income, she said.

By the third quarter of next year and in 2013, the company expects to manage two new hotels under Malaysia Land Properties Sdn Bhd (Mayland) in Cheras and at Plaza Damas 3 in Sri Hartamas, Kuala Lumpur.

In Cheras, Mayland had acquired Phoenix Plaza, now called Cheras Central Shopping Mall, in 2009 for some RM80 million.

Mayland is re-modelling the complex for more than RM120 million and the new set-up will include a shopping mall and a four-star hotel, which will operate under the Dorsett Regency brand.

At Plaza Damas 3, MayLand is also building a four-star hotel, which will carry the same brand name.

By Business Times

Developer says no more work being done as contruction completed

Easy to get lost: Poor signage at Solaris Dutamas has become a bane for both tenants and visitors.

Claims made by the tenants and owners of commercial units in Solaris Dutamas Kuala Lumpur about their problems with the joint management of the retail and office has been refuted by the developer and management of the development.

The developer and management of Solaris Dutamas, Sunrise Bhd community and customer development general manager Anne Tong denied that there was still construction works and flying debris as claimed by the stakeholders.

“It is impossible that at this stage there is still construction works and debris as the development is already completed.

“Whatever works done in the development at the moment are the renovation works within Publika, which is the shopping mall within the Solaris Dutamas development.

“Some of the works are by the individual retail outlets done by the tenants or shop owners themselves,” she said during an interview which was also attended by Segambut MP Lim Lip Eng, in respond to the claims made by the stakeholders.

However, Tong admitted that there were problems with the signage in the development which was also one of the problems cited by the stakeholders.

“We understand that the signage here can be a bit difficult. However, we have engaged a consultant from Singapore to work on upgrading the ‘wayfinding’ signage for the development. As this is an ongoing exercise, changes will be gradual,” she said.

Tong added with regards to the high parking rates and claims, that the revised rates would not encourage more customers and they would resort to other malls claimed by the stakeholders were incorrect.

“The revised parking rate is fixed at RM1 for the first three hours and RM2 per hour for the subsequent hours not RM1 for the first hour.

“We believe this price is reasonable as it is comparable to other shopping malls in the Klang Valley and it is relatively cheaper than several shopping complexes nearby,” she said adding that the parking rate is maintained at RM1 per entry during the weekends to attract and encourage more shoppers.

When asked about the claims by stakeholders that their units are not given proper publicity, Tong said they could not allow the business operators to hang their own buntings and banners along the corridors and the car park as it would affect the outlook of the development.

“Just like any other shopping areas, we cannot let them place their buntings and banners as the outlook and appearance will be affected.

“We have to maintain and control this,” she said adding that they have also given publicity for many of the outlets in Solaris Dutamas by featuring them in the Sunrise news bulletin without charging them.

Some 200 tenants and owners from Block C and D signed a petition recently to the management of the development and organised a press conference with Segambut MP Lim Lip Eng to highlight the issue.

Most of them said there are several things that have hampered their business in the area with one of the most pertinent problem was the delay in the completion of Publika shopping mall and the commercial units claiming there was debris flying around that was affecting their business.

The tenants and owners claimed that the construction was still going on although the works at Solaris Dutamas should have been completed two years ago.

They are also unhappy that their units are not given proper publicity and are treated as a separate entity from Publika that has received numerous advertisements and articles in the local media.

Deciding to take matters into their own hands, the business operators printed their own buntings and banners along the corridors and the car park. However, they were told they could not do that and the security guards had gone around collecting the banners and placing them in the carpark to be picked up by respective owners.

By The Star

Saturday, October 29, 2011

Budget 2012 boost to property and construction sectors

Abdul Rahim Rahman expects Budget 2012 to boost the property and construction sectors.

The RM232.8bil budget tabled by Prime Minister Datuk Seri Najib Tun Razak on Oct 7 was formulated with the theme National Transformation Policy: Welfare for the rakyat; well-being of the nation”.

It aims to implement development plans such as projects and programmes under the Second Rolling Plan (RP2), National Key Economic Areas (NKEA), National Key Result Areas (NKRA) and Strategic Reform Initiatives (SRIs) focusing on the well-being of the general population and aiming at stimulating the domestic economy.

The Government is targeting GDP growth of between 5.5% and 6.0% for 2012. However, our external environment has become increasingly challenging with the economic slowdown in the United States, Europe and Japan, inflationary pressures due to rising commodity prices, and the European debt crisis.

The International Monetary Fund revised its projected world economic growth to 4% and world trade to 5.8%. The Malaysian Institute of Economic Research (Mier) has revised the country's gross domestic product (GDP) growth to 4.6% this year compared with an earlier forecast of 5.2% due to slowing exports and weaker domestic demand stemming from a volatile global outlook.

Next year's GDP has also been revised to 5% from 5.5%. In view of these challenges, it is critical that the Government implement measures to stimulate the domestic economy, both public and private investments.

The momentum for the construction industry is expected to accelerate with various projects to be implemented under Budget 2012. While contribution of the construction industry to GDP has always been small, it is projected to grow by 7% in 2012, the highest growth compared with all other sectors.

Its multiplier effect has always been large, involving 146 sub-sectors. Therefore, we expect the special stimulus package worth RM6bil for the construction industry to have positive effects on the economy. The construction projects announced by the Government will benefit not only big players but also the entire value chain including small players.

The RM40bil MRT project is expected to stimulate property development along the MRT line with some developers trying to take this advantage by building affordable homes in the suburbs near the MRT line. It was announced recently that Mah Sing has entered into a share sale agreement to acquire the entire stake in Semai Meranti Sdn Bhd, which is the beneficial owner of a piece of freehold development land (with development order) in Rawang, measuring 225.7 acres, at a total purchase consideration of RM92mil.

The land will be developed into a self-contained township named M Residence@Rawang, offering entry level homes priced from RM390,000. SP Setia has also recently announced its second land deal in the Semenyih-Kajang corridor buyinga 269.3ha site for RM381.26mil in Ulu Langat to be developed into a township with an estimated gross development value (GDV) of RM4bil.

The land is adjacent to its current development, the Beranang Land with an estimated RM3.5bil GDV. The site is about 13km south of Kajang town and homebuyers are expected to benefit from the proposed MRT station in Kajang. SP Setia plans to build affordable homes to cater to first time home buyers.

The Federal Government's proposal to liberalise 17 services sub-sectors in phases next year has also received positive reactions from investors. This liberalisation will benefit private hospital services, medical and dental specialist services, engineering, accounting and taxation, and legal services. Looking at the real estate side, we expect more new township developers will include private hospitals and other medical services as part of their development components in their effort to create self-contained townships.

The implementation of main projects under RP2 such as Gemas-Johor Bahru double track rail project, Lebuhraya Pantai Timur Jabor-Kuala Terengganu, Lebuhraya Pantai Barat Banting-Taiping, Lebuhraya Segamat-Tangkak and Lebuhraya Central Spine as well as the construction of Kota Marudu-Ranau road will create greater accessibility to less developed areas in Malaysia, which will then spur development in these areas.

The RM978mil allocated to implement projects such as Johor Bahru-Nusa Jaya coastal highway in Iskandar, Johor, heritage tourism development in Taiping in the Northern Corridor, agropolitan scheme in Besut in the East Coast Economic Region, palm oil industrial cluster project in Lahad Datu in Sabah Development Corridor and Samalaju water supply in the Sarawak Corridor of Renewable Energy is expected to accelerate development in the five regional corridors and this will help the Government to achieve its development objective of creating more balanced regional development in the country.

Incentives offered to KLIFD-status companies not only emphasise the Government's effort to turn Kuala Lumpur into a global financial centre but also attract more investors to participate in the development of the project.

The project is aimed at enabling Malaysia to capitalise on its international Islamic financial products and and this is further strengthened with measures proposed in the budget to stimulate the sukuk market and provide the seed money for shariah-compliant exchange traded funds (ETFs).

The incentives are a 100% income tax exemption for a period of 10 years and stamp duty exemption on loan and service agreements for KLIFD-status companies, an industrial building allowance and accelerated capital allowance for KLIFD Marquee Status Companies; and income tax exemption of 70% for a period of five years for property developers in KLIFD. It is hoped that with these incentives, KLIFD will be able to compete with other financial centres in Asia.

The real property gains tax (RPGT) is also proposed to be revised as one of the measures to cool the property market. In Budget 2012, it was proposed that the RPGT on properties held and disposed of within two years be raised from 5% to 10%, 5% tax to be maintained for properties disposed after three to five years and no tax for properties disposed after the fifth year.

From a macro-economy perspective, a higher RPGT will reduce speculative buying, which will then stabilise property prices and this will avoid “property bubbles” from bursting. This step is necessary as property prices, especially in prime areas such as in Klang Valley, Penang and Johor have increased over the last two years between 30% and 50%, depending on location and type of property. This measure is considered “mild” compared with more stringent measures imposed by other countries such as Singapore, which imposes a lower loan-to-value ratio (60%) for borrowers with more than one outstanding loan and higher seller's stamp duty.

As one of the NKEAs, the tourism industry will also receive a shot in the arm. For example, RM420mil will be allocated to launch the Langkawi Five Year Tourism Development Master Plan. Among the initiatives to be undertaken are the restructuring of the Langkawi Development Authority, setting up a park rangers unit, upgrading museums, beaches and small businesses as well as providing a more efficient transportation system.

In my view, to create a more supportive environment for the tourism industry, it is of high importance for the Government to also re-look at current restrictions on buying and investing in properties in Langkawi. The island has great potential; however, more needs to be done to attract hotel operators as well as investment in tourist-related activities as the current regulations are considered as “unfriendly” to foreign buyers or investors.

In an effort to attract high-spending tourists and to encourage investment in hotels at par with international standard, the Government also proposed that 4- star and 5-star hotel operators in Peninsular Malaysia be given pioneer status with income tax exemption of 70% or investment tax allowance of 60% for 5 years.

This incentive is expected to encourage more hotel development, which many hesitate to venture into because the payback period is normally as long as 10 to 15 years.

Overall, I would conclude that Budget 2012 is very comprehensive and the Government has focused on every aspect that will stimulate the country's economy considering the many external challenges that we are facing now.

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

By The Star (by Datuk Abdul Rahim Rahman)

Klang Valley’s impending transformation

It is undeniable that Klang Valley's built environment is on the threshold of some major changes with ongoing plans to improve the infrastructure network, such as the My Rapid Transit (MRT) project and the planned redevelopment of some of the Government's land.

The days of the present property landscape may be numbered as old and dilapidated buildings may be demolished to make way for other new projects and buildings. In this regard, it is imperative to ensure that historical buildings should be spared and property owners of buildings that need to make way for this development process, will be duly consulted and compensated.

While the pursuit of new development projects is well and good in the name of growth and development, we must ensure that at the end of the day the projects will offer more greater good to the larger populace.

The gauge on how successful the project will turn out should not be just based on its quantum of material or monetary benefit, but what is equally important is that it must offer a greater net benefit after weighing both the economic and monetary, as well as non-monetary components.

Ultimately the success of a development project should be measured by the accrued benefits to the people and how it will help towards adding value to their overall well-being.

As such, when assessing the viability of projects, instead of just considering the monetary costs and benefits, it is equally important to give due consideration to the non-monetary and social benefits and costs.

Project planners should ensure that the total accrued benefits will at least equal or outweigh the total cost. In this regard, it is important to bring to bear all the components of the costs and benefits in their assessment.

One good example is the need for a workable national public housing programme. If the project's viability is just measured based on the total monetary benefits against the costs, it won't be surprising to see that the cost-to-benefit study will turn up negative to show that the cost outweighs the benefit.

Given that these housing units have to be priced affordably at a certain price threshold, it may fail on the benefits side of the equation if it is just based on the monetary benefits. But adding up all the social benefits of a well run public housing programme will show that it is a highly desirable and beneficial project to the public.

This is because as far as the benefits are concerned, it is not just about the total income or profit to the developer, but it is also about how a wholesome, safe and well built environment will benefit and help the average Malaysians and their families to thrive and make good in life.

If these public housing projects are well designed with reasonably sized built-up to fit at least three rooms, have space for community and sports activities, and are safe and well managed, the benefits will come in manifold. These include thriving, happy and closer knit families; more responsible adults and parents; less divorce cases; better behaved and high performing children; and less cases of truancy, dropouts and other social menaces.

I always believe that the foundation for a thriving and healthy society starts with the family unit. As long as we continue to keep our family unit functional and thriving, many of the ills facing our society today will be nipped in the bud.

Given the wide ranging benefits of having a well planned social housing programme, it should be accorded top priority and more resources should be allocated to ensure its success. Likewise, there are also many non-monetary benefits from a well integrated and efficient public transport system that warrant it being placed on the priority list as well. These include less hassle and stressful city living; higher productivity if the people can move around with ease which means spending less time on the road; and hopefully they can also save up money for rainy days (by not having to own and maintain a car).

To ensure its success, the whole array of public transport network should be integrated and be complementary to each other, instead of competing with each other for business. It can be likened to the chicken or egg situation. Once the infrastructure is in place and running efficiently, I believe many Klang Valley folks will voluntarily resort to using public transport.

Come to think of it, the construction of the new MRT stations and tunnelling works will no doubt cause massive traffic jams and congestion when the time comes.

This is not something Klang Valley folks are looking forward to, and it is imperative that advance arrangements are made to redirect traffic flow and ensure the construction work will not be disruptive to road users. As it is, many roads in the capital city are already heavily choked by the heavy vehicle traffic especially during rush hours. The current wet spell only serves to worsen the situation.

Deputy news editor Angie Ng looks forward to a holistic, wholesome and sustainable living environment that will be functional and relevant for many years to come.

By The Star (by Angie Ng)

Jaya One to expand

An artist’s impression of the new phase of Jaya One in Section 13, PJ.

JAYA One, one of several developments in Petaling Jaya's Section 13, will be increasing its footprint with a new phase of commercial development to complement the current five commercial office buildings located at the junction of Jalan 13/6 and Jalan Universiti.

Construction of the new phase has already started and will comprise 400 retail, residential and office units on an additional four acres of land, says Tetap Tiara Sdn Bhd executive director (Jaya One) Charles Wong.

Wong: ‘When we launched the first phase of Jaya One in 2004, it took a bit of convincing the market then that office properties would sell.’

“When we launched the first phase of Jaya One in 2004, it took a bit of convincing the market that office properties would sell. We did not do residential because we knew that it would not work. Now that we have completed the first phase, we are ready to launch residential units in the form of serviced apartments,” he says.

The new phase will comprise 30 units of retail and 130 office units. There will also be 240 units of serviced apartments spread over two blocks. The new phase will consist of a gross built-up area of about 993,000 sq ft, bringing the gross area up to about 1.7 million sq ft.

Prior to the development of Jaya One, the 11-acre site was occupied by a factory.

The retail portion is priced between RM850 and RM1,300 per sq ft. Sizes range from 1,200 to 3,500sq ft. The office portion is priced at RM580 per sq ft. The first residential tower of 13 storeys is priced at RM600 to RM650 per sq ft while the four-storey, second residential block is priced at RM600 per sq ft.

“Section 13 will be a dynamic market as the local authorities have put many new requirements in place. There are several serviced apartment projects coming up. Among the new requirements is the need for developments to be inter-connected with one another. The most practical way will be the provision of bridges to link the projects together. We will be building connecting bridges to neighbouring developments to allow easy access and movement among the buildings within Section 13,” says Wong.

He says there will be greater setbacks between neighbouring lots and internal roads are being planned to avoid adding pressure to the current three roads that service the area. Currently, the three roads are Jalan Universiti, Jalan Kemajuan and Jalan Semangat. Internally, Section 13 is served by Jalan 13/6.

Wong says the authorities are trying to get land owners to amalgamate pieces of land to avoid ad hoc development.

The gross development value for the new phase is RM360mil for the portion of the development the company is selling. The company will retain a certain portion for recurring income as it did with Palm Square, which comprises mainly food and beverage outlets in the first phase of the project.

Wong says thus far, most of the buyers are investors with about 20% buying for their own use. The first phase is currently fully occupied with offices being rented out between RM2.50 and RM2.80 per sq ft, retail outlets at RM6.50 and RM7 per sq ft and Palm Square RM8.50 and RM10 per sq ft.

Wong says a large number of those who bought into the new phase had previously bought into the first phase. Besides Tetap Tiara's serviced apartment blocks, there are currently two other serviced apartment projects being planned for Section 13.

By The Star

Smart City-Smart Village to contribute RM95bil to economy by 2020

KUALA LUMPUR: Smart City-Smart Village, the second high-impact project to be implemented through Global Science and Innovation Academy Council (GSIAC), is expected to contribute RM95bil to the national economy by 2020.

It was also expected to increase opportunities in the service industry and create employment across the value chain for 420,000 people, GSIAC said in a statement.

“The Smart City-Smart Village project aims at balancing development in the urban and rural areas, focusing on the use of green technology and information and communications technology (ICT).

“The goal of the initiative is to improve everything from energy use to healthcare, education, traffic and shopping by doing it ‘smart’ with the help of ICT and green technology,” it added.

GSIAC yesterday hosted a Smart Communities Workshop together with the Malaysia Industry-Government Group for High Technology (MIGHT) and New York Academy Of Sciences to gather inputs for the implementation of the Smart City-Smart Village projects in Malaysia with other key stakeholders.

MIGHT president and chief executive officer Mohd Yusoff Sulaiman said “green field” and “brown field” projects had been identified for the Smart City programme.

“In a green field project we find there’ll be a very good opportunity to develop new cities like the Iskandar region and cities near the Greater Kuala Lumpur area.

“In a brown field project such as the present city of Kuala Lumpur, we see a need to also see beyond the elements of infrastructure such as social development, culture and the value we can add to the existing city development to raise the quality of life,” he added.

By Bernama

Lau: Fee for land status transfer up to developer and residents’ lawyers

The Selangor state government has no power to fix a flat rate or offer discounts for residents of the Sri Aman low-cost flats in Section 22, Petaling Jaya, who are having difficulty paying for their transfer of land status to strata title.

Kampung Tunku assemblyman Lau Weng San, in rebuking a statement made by Selangor MCA Public Services and Complaints Department deputy chairman Kelvin Chong Seng Foo, said the state government was not involved in matters pertaining to payments to obtain the strata titles by the residents.

Two weeks ago, Chong, who is Kampung Tunku co-ordinator, urged the state government to fix a flat rate and “to be fair to all low-cost unit owners” as they all have different rates to pay for the transfer of strata title.

Lau rebutted by saying that this was an issue between the residents, the Sri Aman low-cost flat developer and their respective lawyers who are handling the transfer of land status.

“It is incorrect for Chong to say that the state government is charging a high fee for the residents for the transfer of land status to strata titles.

“However, I have made a request to the state government to extend the Oct 15, 2011 deadline for the residents to settle the fees for the strata title allocation.

“In this matter, we do have the power to make the time extension under Section 40A (2) of the Strata Titles Act 1985,” explained Lau after meeting with the residents of Sri Aman low-cost flats.

He also urged the residents to settle their outstanding debts to the Sri Aman Joint Management Body (JMB) to expedite the process of obtaining their respective strata titles.

“Some of them have yet to pay up their maintenance fees which includes the sinking fund and water bill.

“This will only slow down the process of getting the strata titles. It is not possible for the state government to help the residents pay for their outstanding arrears because it will be unfair to other low cost unit owners who have settled their debts,” added Lau.

In October last year, all 342 households of Sri Aman flats received notices from the developer requesting them to pay the processing fees to exercise the transfer of land status to strata titles.

The residents were given a year to settle the processing fees which range from RM500 to RM2,000.

By The Star

Vietnam property seen rising again in two years

Cool market: Four years after a real estate boom that saw investors camp in the streets to pay cash for unbuilt apartments, Vietnam’s once hot market is in a chill. — AFP

FOREIGN property developers should take a serious look at Vietnam despite the country's macro-economic challenges amid a struggle to subdue double-digit inflation without dampening growth, according to commercial real estate firm Colliers International research director Naim Khan-Turk.

While noting that the property market in Vietnam is currently in a downturn, Naim is expecting the situation to improve in two years.

Naim's expectations are not without foundation as a few years ago, Vietnam was seen as a fast-growing “Asian tiger” with an emerging market of about 86 million people and a low-cost labour force.

Today, Vietnam is grappling with rising consumer prices, a weakening currency and a tight credit policy while trying to revive optimism concerning its economic growth.

Naim, who has been based in Ho Chi Minh City for more than seven years, recalls that from 2005 to 2009, it was a boom time for the development and growth of the real estate market in Vietnam.

“A few years ago, at the peak of the cycle in the real estate market, there was plenty of money swimming around for developers to use. At that time, we had every fund in the world coming into Vietnam wanting to do this and that. Now, the situation has gone the other way, and developers cannot get their hands on money to finance their projects,” says Naim, who spoke to StarBizWeek on the sidelines of the two-day Mixed-Use Development 2011 conference, organised by Trueventus Sdn Bhd in Kuala Lumpur, which gathered experts in property development in the Asia-Pacific region.

In October, inflation in Vietnam accelerated to 21.59% from a year earlier.

The high consumer price index (CPI) for October meant that inflation had slowed for a second month, after climbing to a high of 23% in August.

This month, in order to subdue Asia's highest rate of inflation, Vietnam's central bank also raised its refinancing rate to 15% from 14% previously, while maintaining its base interest rate at 9%.

“What this means is that the credit crunch in Vietnam has resulted in the real estate market becoming very compressed, and a lot of property developments are slowing down or not starting. Certain projects are still moving along but things have been put on hold to a certain degree,” says Naim.

Naim also reiterates that property development in Vietnam is a long-term process for investors.

“In the past, many foreign investors did not realise how things in Vietnam work. Things do not happen quickly - planning, purchase of land, construction permits and licensing - it could be over two years in some cases before you get to the ground.”

He cites examples of companies such as CapitaLand Ltd. “They have been in Vietnam for five years now, and had to spend their time getting the projects through.”

Naim says foreign property developers in Vietnam need to allocate time to build their networks, establish contacts and secure land.

“What you can obtain is a 50-year lease term on the land. In some cases, it can be up to 70 years. That allows you to develop.”

According to Naim, the process of obtaining an investment license in Vietnam has been made easier nowadays.

“It used to take up to a year. Now, as long as your paperwork is in order, getting an investment license should take between three and six months.”

He points out that Vietnam is an emerging market offering many opportunities.

“It is a question of whether you are willing to overcome the hurdles or not. It is not for the faint-hearted or those with the mentality that they can just walk in there and do something; then they are going to come unstuck.”

Naim says foreign companies that have been successful in Vietnam are the ones that took the long-term view, and cites Malaysian examples such as SP Setia Bhd, Berjaya Corp Bhd, Gamuda Bhd, WCT Bhd and Ireka Corp Bhd.

“Although the real estate market does not look very rosy now, this is the right time to come in because of the time scale it takes to get projects going in Vietnam. Land can be acquired at much cheaper prices compared with a few years ago.”

According to Naim, margins can be 23% to 25% for a typical property development in Vietnam.

Also, he says there is strong demand for office space. “At the moment, occupancy is around 85% across all grades of office space. Following the global downturn in 2008, Grade A office rentals are now around US$35 (RM109.40) per sq metre.”

He recalls that office rentals in Ho Chi Minh City peaked at US$70 (RM218.80) per sq metre before the global financial crisis in 2008.

“One of the things that made Vietnam so attractive was that a few years back, office rents were one of the highest in the world, in Ho Chi Minh City and also Hanoi.”

Naim notes that new commercial buildings are steadily growing taller and with more modern designs.

“The 68-storey Bitexco Financial Tower in Ho Chi Minh City is Vietnam's tallest building (opened late last year). There will be a taller 72-storey structure in Hanoi soon.”

By The Star

Friday, October 28, 2011

Home is where the Arte is

Designed to promote uniqueness: An artist’s impression of Arte@Kuchai Lama project.

WOULDN’T you like to own a home that is futuristic in its architecture as well as unique in art form? Property developer Nusmetro Group is launching its latest development — Arte@Kuchai Lama, this weekend to promote its new Art Series brand of homes.

Nusmetro, with its philosophy of Branding Homes, will be using Arte as its platform to launch its Art Series brand.

“As the name suggests, Arte will have strong elements of artistic living and art architecture. The Art Series brand is the new addition to the existing category of Signature Homes and Contemporary Homes,” said Nusmetro managing director Thomas Chan.

What makes Arte unique is its strong product differentiation, be it from artistic architecture to unique interior design of its lobby to the egg shape pavilion lounge.

“Sculptures from renowned names like Sculptura, Frank Woo and designer lighting names like Artemide and Tom Dixon are fitted into the lobby and lounges of Arte to give the project a distinctive identity.”

This development is the first of its kind in terms of architecture. Functionality of space was also given much thought as every unit, in two blocks of 23 and 25 storeys, comes with a private lift lobby and most units adopt a wide angle layout concept with a 7.62m-wide balcony which promotes spaciousness of space.

“Arte, with its low density of only 250 units and 15 different types of layout, is designed to promote uniqueness and strong capital appreciation as there are limited units within each type of layout,” added Chan.

Why art? “I travel quite a bit so wherever I visit, I always bring back some ideas to include in our developments,” he said.

The price for each unit starts at RM380 per square feet.

“The pricing for our Arte series is competitive and the 50% release to its registered buyers have been fully sold prior to this weekend launch,” said Chan.

Arte@Kuchai Lama is due to be completed in the third quarter of 2014.

“We are instrumental in creating unique and specialised units so as to not make them identical like what you would find in other condominiums. It is an expensive move to incorporate into the development but we think it will increase capital appreciation,” said Chan.

With a track record of completed properties exceeding 5,000 units valued over RM1.5bil, Nusmetro’s philosophy of Branding Homes is poised to carve its name in the local property scene.

The launching this weekend will be at the Nusmetro sales office in Unit 105 & 106, Block E, Phileo Damansara 1, Jalan 16/11, off Jalan Damansara, Petaling Jaya, from 9am to 6pm (Saturday and Sunday).

By The Star

New commercial project in Cyberjaya

Property developer, Glomac Berhad is launching a freehold commercial project in Cyberjaya at the end of this month.

The site for Glomac Cyberjaya 2 was acquired shortly after the highly successful launch in its maiden project in Cyberjaya.

“To further capitalise the momentum and success of Glomac Cyberjaya Phase 1 & 2 and to continue to develop more shop offices, we acquired the adjacent second plot of land due to its successful take-up rate,” said Glomac group managing director/CEO Datuk FD Iskandar.

Glomac Cyberjaya Phase 1 & 2, which sits on part of the 3.64ha tract, features 63 units of three-storey shop offices is fully sold. It is due to be completed by end of this year.

Glomac Cyberjaya 2 will consist of 55 units of three-storey, three- and-a-half and four-and-half-storey of shop offices and a 24-storey office tower, each with a sophisticated modern facade that more than match its illustrious surrounding neighbours.

The built area is from 3,300sq ft onwards and the range of price starts from RM1.29mil onwards.

This development will present a wider range of investment opportunities that are ideally suited for small to medium-sized businesses seeking a stylish business address in the heart of Cyberjaya.

The entire development of Glomac Cyberjaya is strategically located along Persiaran Apec.

This ideal development is within the address of technological excellence, Cyberjaya, with HSBC, Ericsson, IBM and DHL as its surrounding neighbours.

For more information, call 03-7801 9000.

By The Star

Garden-themed M City sold out

Mah Sing Group has garnered RM412mil sales from its garden-themed mixed development, M City Jalan Ampang which is located less than 5km from KLCC.

First previewed in June this year, all 401 units of designer SoHo (small office, home office) suites worth RM295mil have been taken up.

Response to the 24 retail units worth RM117mil launched a few weeks ago has also been overwhelming, with the 15 units of three-storey boutique retail, four units of single level retail, four kiosks and supermarket fully sold.

The 39,000sq ft supermarket was acquired by gourmet supermarket chain Village Grocer.

“The location and concept of M City dovetail with the business strategy for our gourmet supermarkets,” said Village Grocer managing director Ong Kim Too.

“We operate in prime developments as anchor retailer/tenant, at sites with a concentration of our target customers,” he added.

A mixed development comprising designer SoHo suites, residential suites, sky villas and boutique retail, M City Jalan Ampang which sits on a 2.02ha freehold site has an estimated gross development value of RM1.4bil.

Located along the famed Embassy Row, M City is a stone’s throw away from Ampang Point which has a proposed MRT station, and is less than 2km away from Gleneagles Hospital, Great Eastern Mall and M Suites. With such an attractive location, there is a catchment of more than 500,000 from the surrounding matured developments.

Mah Sing group managing director Tan Sri Leong Hoy Kum said, “M City is Kuala Lumpur city’s one and only garden city community, and the first ever to boast multi-level thematic hanging gardens in Malaysia.

“We have various thematic hanging gardens spanning over 1.61ha for every sixth floor, with concepts such as sky garden, tropical sanctuary, spring park, bamboo groove and lagoon park which has become the talk of the town and a key selling point. A four-tier clubhouse houses a gymnasium and an infinity pool with an excellent city and lake view has been planned for the enjoyment of residents. The project is also designed to achieve the Green Building Index (GBI) Gold standard by increasing the efficiency of resource usage.”

More than 2,500 parking bays have been allocated for residents, tenants and visitors of M City, with separated residential and commercial parking lots and parking entry points.

He added, “We have carefully planned the project and most of the units are smaller sizes to meet current market need. With such good response to our SoHo and retail units, we intend to launch our residential suites in our sales gallery in Icon Jalan Tun Razak soon.”

The new launch are residential suites priced from RM550,000.

Buyers shall be spoilt for choice with the numerous configurations available, from studio units (506sqft) priced from RM550,000, 1 bedroom (674sqft), 2 bedroom (886sqft) and 3 bedroom units (1,653sqft). All these options are also available as duplex units to ensure that discerning buyers can get exactly what they need.

These units are semi-furnished and amongst the furnishings and electrical appliances to be provided by Mah Sing include bedroom wardrobe and vanity cabinet with mirror, kitchen cabinets, air conditioners, refrigerator, washer cum dryer, microwave oven, built in hood and hob as well as water heaters. Mah Sing shall also absorb the legal fees for sales and purchase agreement.

By The Star

Axis REIT to buy property from DHL for RM48.5m

Axis Real Estate Investment Trust has proposed to buy a three-storey office and warehouse in Penang from DHL Properties (Malaysia) Sdn Bhd for RM48.5 million to expand its business.

At the same time, Axis will lease the property back to DHL for five years. It will have an option to renew the lease for another five years.

"The acquisition is accretive with an unleveraged triple net yield of 8 per cent which will have a long term benefit to the Fund.

"Furthermore the lease has annual built in rental growth which will enhance earnings," Stewart LaBrooy, chief executive officer of Axis REIT Managers Bhd, said in a statement.

The property, located in Bayan Lepas, has a gross built up of some 231,940 sq ft and comes with a 60 year leasehold title which will expire in 2062.

Axis-REIT will use existing bank loans to fund the deal. This will raise its gearing level to 40 per cent.

The latest purchase will boost the fund's asset under management to over RM1.39 billion, upon completion by December 31, 2011.

By Business Times

Thursday, October 27, 2011

Kosmopolito to launch five hotels

Expansion plan: Kosmopolito inte nds to develop service apartments on a site near the Dorsett Regency Kuala Lumpur.

KUALA LUMPUR: Kosmopolito Hotels International Ltd (KHI), which has 17 hotels primarily in Asia, has at least five ongoing projects in Malaysia that it plans to launch within the next 12 to 24 months.

KHI vice-chairman Datin Jasmine Abdullah Heng said the company was also looking for land in Malaysia to set up either hotels or serviced apartments.

“We would have more (than five projects) in the pipeline if we can secure the land,” she told StarBiz during a donation ceremony and visit to the National Heart Institute (IJN) on Tuesday.

Its ongoing Malaysian projects include the renovation of Phoenix Plaza in Cheras and the renovation of the Sri Jati serviced apartments in Kuala Lumpur into a hotel cum service apartments.

Jasmine also said KHI intended to develop service apartments on a site near the Dorsett Regency Kuala Lumpur.

“We also plan to launch service apartments within the Grand Dorsett Subang area by year-end and (also) have an on-going project in Sri Hartamas (in Kuala Lumpur),” she said.

“We are also looking at potential projects in Kota Kinabalu (Sabah), Penang, Langkawi, Kuantan (Pahang) and Malacca. We're aggressive on our expansion plans,” she added.

KHI, a subsidiary of Far East Consortium International Ltd (FEC), was set up in January 2007 and listed on the Hong Kong Stock Exchange in October 2010.

The company owns and manages four key hotel brands in different market segments Boutique Series by Kosmopolito, Grand Dorsett, Dorsett Regency Hotels & Resorts, and Silka Hotels, which can be found in Hong Kong, Shanghai, Chengdu, Wuhan, Singapore, Malaysia and London.

On the local front, KHI's properties are the Grand Dorsett Subang, Dorsett Regency Kuala Lumpur, Grand Dorsett Labuan, Silka Hotel Johor Bahru, Maytower Hotel & Serviced Residences Kuala Lumpur and Damas Suites & Residences Kuala Lumpur.

Jasmine declined to comment on an old report that FEC was planning on a real estate investment trust (REIT) listing that would include the Malaysian properties.

Meanwhile, KHI on Tuesday donated RM6,000 to IJN as part of the former's corporate social responsibility initiative. Earlier this year, the National Heart Institute received a donation amounting RM30,000 from KHI.

Chiu will be elected president of the company effective Nov 1

KHI executive director Winnie Chiu, who will be elected president of the company effective Nov 1, said: “We are committed to this good cause. We're supportive of this and will continue to support (IJN) going forward.”

By The Star

KL Metropolis expected to woo RM3.5b foreign investments

Foreign companies may invest that amount to build properties, either on their own or in partnership with Naza TTDI

KUALA LUMPUR: The Naza Group's KL Metropolis project is expected to lure foreign investments of some RM3.5 billion over its 15-year development period.

Foreign companies may invest that amount to build properties, either on their own or in partnership with Naza TTDI Sdn Bhd, the property arm of Naza Group.

"While we can build the structures on our own, we want to give opportunities to others for transfer of technology and expertise," Naza TTDI group managing director SM Faliq SM Nasimuddin said af-ter the project's launch on Tuesday.

The RM15 billion project is located next to the existing Matrade building off Jalan Duta and is touted as a new business district.

It will feature 22 office and residential towers, which include a 100-storey building and three hotels, as well as the new one million sq ft Matrade centre and two retail centres with more than two million sq ft of space on 30 hectares.

Launched by Datuk Seri Mustapa Mohamed, the Minister of International Trade and Industry (Miti), the project will be developed in three phases.

Phase 1 will comprise the exhibition centre, two residential towers, two hotels, two office towers and a retail centre, worth a combined RM6 billion.

Faliq said tenders to cons-truct the buildings will be called next month. It has appointed a local contractor to do the piling work.

Naza TTDI will borrow from banks and use internal funds for the initial stages of development, after which it may raise more money from a bond sale. The company is expected to invest RM500 million on infrastructure alone.

"We aim to complete Phase 1 by 2014/2015," he said.

Naza TTDI is already in talks with several foreign investors to build the retail and com-mercial properties in a joint venture.

It is also in discussions with a few five-star international hotels and mall operators to manage some of its properties.

"We are seeking five-star hotel operators and good retail partners for the project. We want to make this a world-class business and tourist destination," Faliq said.

Naza TTDI will announce several deals before the end of this year or early next year.

Faliq said Phase 2, which will start in 2015, will have five residential towers, three office blocks, a boutique hotel, a healthcare centre and the 100-storey building, worth RM4 billion.

Phase 3, worth RM5 billion, will start in 2019, consisting of three residential towers, three office buildings and a retail centre, he added.

“We have attracted a lot of local and foreign interest for this project, repositioning Malaysia on the world map. We expect several en bloc deals coming in,” Faliq said.

KL Metropolis is designed to Malaysia’s Green Building Index requirement and is also the first registered LEED for Neighbourhood project in Malaysia.

The LEED certification is an internationally-recognised green rating system that incorporates the principles of smart growth, urbanism and green building.

By Business Times

Naza TTDI's next step is to get listed

KUALA LUMPUR: After launching its biggest property project so far, Naza Group is aiming to list its property unit on the local stock market in about three years.

Naza TTDI Sdn Bhd's initial public offering (IPO) is also expected to be among the largest property IPOs on Bursa Malaysia, joint group executive chairman SM Nasarudin SM Nasimuddin told Business Times.

"Now that we have launched KL Metropolis, the next step is to take Naza TTDI to new heights and to do that, we will need the IPO," he said on Tuesday after the launch of the project by Minister of International Trade and Industry Datuk Seri Mustapa Mohamed.

Business Times first reported that Naza TTDI wanted to list in 2008 but this was postponed due to weak market conditions and also because it wanted to build its asset base.

It had hired CIMB Investment Bank Bhd to arrange the IPO and planned to raise more than RM1 billion.

"With the KL Metropolis development, Naza TTDI is a step closer to becoming a sizeable property group," Nasarudin said.

Naza Group, founded by the late Tan Sri Nasimuddin Amin in 1974, is well-known as an automotive player. It ventured into property development by acquiring Naza TTDI more than five years ago.

Meanwhile, Naza TTDI is well-known for the development of Taman Tun Dr Ismail in Kuala Lumpur.

KL Metropolis is currently the single biggest integrated mixed development in Kuala Lumpur for Naza TTDI and piling work has started.

The RM15 billion development is almost four times bigger than Naza TTDI's ongoing Platinum Park project in the Kuala Lumpur city centre, which is worth RM4 billion.

KL Metropolis will have 18 40-storey office and residential towers, a 100-storey building and three hotels, as well as the new one-million-sq-ft Matrade centre and two retail centres with more than two million sq ft of space.

By Business Times

Axis REIT to buy RM48.5m assets

KUALA LUMPUR: Axis Real Estate Investment Trust (REIT) has proposed an acquisition and leaseback of a three-storey office block and a logistic warehouse complex for RM48.5mil cash from DHL Properties (M) Sdn Bhd.

The agreement was entered into by OSK Trustee Bhd, the trustee for Axis REIT.

The 3.083ha land is located in Barat Daya district, Penang, Axis REIT said in a statement on Tuesday.

“The proposed acquisition and leaseback of the properties is consistent with the investment objective and strategy of Axis REIT and it will be accretive to Axis REIT's distributable income.

“It will also diversify and enlarge Axis REIT's portfolio of properties and is expected to benefit in the long term from economies of scale,” it said.

By Bernama

Wednesday, October 26, 2011

Kuala Terengganu City Centre to give real estate a boost

KUALA LUMPUR : The Kuala Terengganu City Centre (KTCC) project by the East Coast Economic Region Development Council (ECERDC) will have a significant long-term impact on Terengganu’s property market.

The region will be able to attract more local and foreign investments into Terengganu’s real estate sector via this landmark development which has a gross development value of RM5 billion.

Foo Gee Jen, managing director of CH Williams Talhar & Wong, a renowned property consultancy, said KTCC’s trickle-down effect on the local property sector was already seen in Kuala Terengganu where the prices of land and homes had increased significantly.

By Bernama

Tuesday, October 25, 2011

KL Eco City to get off the ground early 2012

Kuala Lumpur: After more than a decade of delay, property developer SP Setia Bhd expects to start working on the RM6 billion KL Eco City, opposite Mid Valley Megamall in Kuala Lumpur, by early next year.

The land, where the development is to take place over 12 years, has been cleared and is currently vacant.

SP Setia first announced its intention to develop the land almost a decade ago, but had faced problems with squatters in the area, among other things.

In its filing to the stock exchange yesterday, SP Setia said Kuala Lumpur City Hall or Dewan Bandaraya Kuala Lumpur (DBKL) had finally formalised the privatisation of the 10ha cluster of land parcels in the Kampung Haji Abdullah Hukum area.

The land is being alienated to KL Eco City Sdn Bhd (KLEC), which is owned by SP Setia and Yayasan Gerakbakti Kebangsaan on a 60:40 basis.

With net saleable area of 5.7 million square feet, SP Setia proposes to build a retail podium, three boutique office blocks, strata-titled office suites, three office towers, three residential towers and a serviced apartment tower.

The proposed development will also include a new KTM Komuter train station that will be integrated with the existing Abdullah Hukum LRT station.

Railway Asset Corp (RAC) has mandated SP Setia to deposit RM42.09 million in land bond to ensure construction of the train station.

Under the privatisation agreement, SP Setia must pay DBKL RM105.92 million, less the premium already paid, over 36 months.

As soon as SP Setia starts construction, it has to deposit RM10.55 million as performance bond with DBKL.

It also has to cough up a minimum guaranteed profit of RM191.96 million for the proposed development.

These are in addition to the initial agreement that DBKL be taking 20 per cent of the project's net profits.

The privatisation is conditional upon SP Setia paying DBKL RM11.4 million, being the difference between the actual construction cost of the low medium cost Apartment Abdullah Hukum 1 and the purchase price offered to the squatter families on the DBKL land.

The deal also requires SP Setia to pay RM10.59 million, being 10 per cent of the residual land value and RM1.62 million, being the land value for Plot F of the DBKL cluster of land.

SP Setia said these payments to DBKL will not have a material effect on its gearing for the year ending October 2011.

SP Setia estimates the KL Eco City's gross development cost to total RM5 billion.

By Business Times

Naza seeks investors for RM15b project

Naza Group, Malaysia’s biggest luxury vehicle importer, is seeking to draw local and foreign investors for a proposed RM15 billion property project in Kuala Lumpur.

Naza is in talks with local and international investors who are “serious” in taking part in the project, which may include a 100-floor tower, Naza Group Joint Executive Chairman SM Nasarudin SM Nasimuddin told reporters in Kuala Lumpur today.

Naza won land rights in 2009 from the government in return for building an exhibition center. The company will develop the land in three phases over 15 years, it said in a statement.

By Bloomberg

SP Setia unit in development deal with KL mayor

PETALING JAYA: SP Setia Bhd's subsidiary KL Eco City Sdn Bhd (KLEC) has entered into a privatisation agreement with Datuk Bandar Kuala Lumpur for the development of about 24.88 acres in Kampung Haji Abdullah Hukum in Kuala Lumpur.

In a statement, SP Setia said the privatisation agreement was done in pursuant to a memorandum of understanding dated Aug 21, 2007 between the Datuk Bandar and KLEC, then known as Pelita Dunia Sdn Bhd.

SP Setia group owned 4.38 acres of the piece of land in Kampung Haji Abdullah Hukum, while Datuk Bandar owned the remaining 20.5 acres. KLEC has proposed to develop an integrated commercial and residential development with a net saleable area of about 5.7 million sq ft on the said land.

The proposed development, worth a gross development value of RM6bil and a gross development cost of RM5bil, would comprise a retail podium; three boutique office blocks; strata-titled office suites; three office towers; three residential towers and a service apartment tower.

By The Star

HK office space still costliest

HONG KONG: Hong Kong continues to be the most expensive place in the world to rent office space, according to research from a property brokerage.

And despite an expected slowdown over the next 12 months, Hong Kong would likely retain its world-leading position, Colliers International said yesterday.

Hong Kong again topped the rankings for the world’s most expensive cities to rent office space, ahead of London’s West End, Paris, Tokyo and the City of London, according to Colliers.

By Reuters

Monday, October 24, 2011

More Malaysians buy properties in London

KUALA LUMPUR: There has been an influx of Malaysian buyers for properties in central London in the last two years, driven by the favourable exchange rate and long-term investment appeal, says Savills Inc director James Talbot.

Talbot said more Malaysians are buying properties in London to spread their investment risk.

"There is also the feel-good factor of owning a property in central London, being an international financial district," he said in an interview recently.

Talbot said property prices in central London have appreciated by 13 per cent over the last three years and are forecasted by Savills Research to grow by 6 per cent per year over the next five years.

Rental yields have also increased from 3 per cent five years ago to about 5 per cent, he said.

"London is a good and safe place to put your money. If you compare with Australia, it is easier to buy and sell a property in London.

"For Australia, as a foreigner, you can only buy properties that are under construction and sell to an Australian and pay tax on profits. There is no such ruling in the UK," Talbot said.

Savills, a global real estate service provider with over 200 offices and associates around the world, is introducing a new project in central London called Caro Point to Malaysian investors.

Caro Point offers 84 apartment units, priced between STG355,000 (RM1.7 million) and STG11 million (RM55 million).

Talbot said 26 units have been sold to investors in the UK and nine in Southeast Asia.

The STG100 million Caro Point is part of the Grosvenor Waterside development in central London.

Talbot said Savills will continue to introduce new projects in London to Malaysian investors despite the global uncertainties. The group has introduced some 20 projects in Malaysia in the last five years.

By Business Times

Damansara Realty gains most in 28 months

Damansara Realty Bhd, a Malaysian builder and property developer, rose to its highest level in more than 28 months after The Edge reported that its parent Johor Corp may transfer property projects to the company.

The stock gained 6.7 percent to 88 sen at 9:16 a.m. local time in Kuala Lumpur trading, set for the highest close since June 16, 2009.

By Bloomberg

iProperty bags website award

KUALA LUMPUR: iProperty Group bagged the "Digital Media Company of the Year" award in the Property and Real Estate in Malaysia category and " as Property Portal of the Year 2011" in Hong Kong.

Group chief executive officer Shaun Di Gregario said the fact that the group garnered the respect of the industry was proof that iProperty Group was the clear market leader in a highly competitive property arena.

"Our mission is to continue to deliver first-class customer service and highly innovative products that will create a more engaging experience for property buyers and investors, helping them make a more informed decision," he said in a statement.

This was the third time iProperty Malaysia had won this highly coveted award on being recognised as the Digital Media Company of the Year for advertising and marketing.

Aside from this prestigious award, Malaysia magazine was also voted the No. 1 magazine for the third year running for advertising and marketing in Malaysia.

With the leading market position among consumers and real estate professionals alike, being dubbed as "Property Portal of the Year 2011" further strengthens leadership position in Hong Kong.

"The accreditation of this award is recognition of the great work that team has done over the recent times," Di Gregario added.

By Bernama

Saturday, October 22, 2011

Consider the rentability of an affordable commercial property

Although global sentiments remain weak for the moment, it is business as usual as developers move ahead with their property launches. In the Klang Valley in the next couple of months and even into the new year, developers will be offering apartments with small built-up areas.

These are essentially serviced apartments but developers prefer to call them by various other names.

Some of these names include the following - versatile office suites, small office home office (or Soho), lifestyle suites, small office versatile office or office suites. Whatever names they are called, all of them share several features.

These properties are built on commercial titles, not residential titles. Because they are on land with commercial title, utility charges will be 25% to 30% higher than if they were built on residential land. And because they are located on commercial land, developers offer that “office” component, hence the name small office, home office. Maintenance charges will also be higher compared with projects on residential titles.

A second feature they share is the built-up area. Most of these units are sized between 400sq ft and 600sq ft. Some may be as large as 800sq ft or even larger. Generally, however, they tend to hover around 500sq ft. Most of them will be one-room or studio apartments. Those with larger built-up areas may have two rooms.

One may ask, if they are so small, how can it be a home and an office at the same time? This goes back to the land title again.

The built-up of these properties are cut rather small because of high land cost. If the developer were to offer a three-bedroom apartment of about 1,200sq ft, these properties may be out of the reach of many. As it is, it is the smaller units which tend to sell faster.

A close scrutiny will show that most of these units are located in pretty urban or commercial areas which means there are conveniences close by. In the case of Section 13, Petaling Jaya, properties like Centrestage, which is currently being constructed, will be close to the Section 14 commercial area.

But besides Section 14, there are also the commercial areas of Section 17, Section 19 and SEA Park within a 10km radius.

The project will, therefore, leverage on the old commercial areas in the vicinity. Two blocks are being developed by Tetap Tiara Sdn Bhd, the developer who built the Jaya One commercial blocks located at the Jalan University-Jalan 13/6 corner. Other serviced apartment projects are being planned in Section 13.

Over in Ampang, Kuala Lumpur, serviced apartment projects are being planned in and around that area. The projects will leverage on the commercial areas in that locality. Developers are also featuring its proximity to the Petronas Twin Towers as a selling point.

Serviced apartments are also being launched in relatively new areas in and around the Klang Valley. This includes Empire City by the Subang-based Empire group. Empire City is located on 25 acres of commercial land opposite Damansara Perdana. Blocks of office towers, serviced apartments and a hotel will be located along the Lebuhraya Damansara-Puchong.

In Sri Damansara, TA Global Bhd will be having serviced apartments too. There will be other similar projects in Kota Damansara.

The proliferation of these 500 sq ft apartments is also as a result of the financial crisis. Developers have learned that smaller units are easier to rent and sell than a 2,500 sq ft unit. The many empty condominiums around the Petronas Twin Towers is an example. Most of the units there are 2,000sq ft and above. Now those who are planning projects there are building units under 2,000sq ft. By cutting the size small, these smaller units are also more affordable.

Here then is the catch. Buyers, fearing that property prices may go up further, are going for these smaller units with the hope to either flip sell them after completion, or to rent them out. But while developers are able to make their projects affordable, can they make them rentable?

Most of these small units are priced around RM500,000. At that price, they have tempted many into signing on the dotted line. But the buyer must also consider the fact that instead of one big 2,500sq ft unit, there are now five small units, which means there are now a large number of small apartments.

The density has increased. The higher the density, the longer it will take to rent out that unit, or to sell later on. Instead of one owner offering to rent or sell his 2,500 sq ft unit, a buyer is now competing with four others to rent, or to sell, their units.

So do not make a decision because you can afford that RM500,000 unit, but consider rentability and other factors that contribute to that rentability, like accessibility and the availability of basic amenities.

Assistant news editor Thean Lee Cheng suggests that potential investors consider rentability, and not just affordability.

By The Star

The case for green buildings

Yeang: ‘Green buildings provide better cost savings in the long run.’

As a world-renowned eco-architect, Datuk Kenneth Yeang truly believes that buildings with environmental features are more than just about design and aesthetics.

To him, there are definitely pure economic benefits from having green structures.

“There is definitely a strong commercial case for green buildings,” he tells StarBizWeek in an interview.

“Green buildings provide better cost savings in the long run and provide better indoor air quality. With an environment that’s less polluted, there is a lower chance of your staff getting sick, which also means better productivity for your business.”

Yeang feels that the benefits of green buildings are still not properly communicated to the general public.

“The benefits of investing in green buildings needs to be communicated better to investors and end-users.

“Unless this is done, banks would not want to provide loans for such projects and developers would won’t want to be involved in it.

“At the end of the day, it’s about education.”

Yeang also says that there are too many buildings that are rated green but “don’t look green enough.”

“You may have a structure that is rated green but it does not portray that image and just looks like any other building around.

“Developers (of green buildings) should be more explicit with their designs in portraying it (that it is a green building) because the public expects it.”

Yeang was recently bestowed the prestigious Merdeka Award in the Environment Category for his outstanding contribution to the development of design methods for ecological design and environmental planning.

No stranger to winning accolades for his work, Yeang is humble about his latest achievement.

“People ask me how I feel, but I’m still the same person I’ve always been.”

Yeang, who pioneered the application of ecological principles to skyscrapers for more than three decades, has received awards for landmark buildings that include the Spire Edge Tower in Delhi, India, the National Library in Singapore, as well as the DiGi Technical Operation Centre in Subang Jaya.

Yeang says Malaysia is ahead of many countries in promoting green buildings, adding however that there is more that can be done.

“We have a Green Building Index and the Government also provides tax incentives for green buildings.

“In the last 10 years, there has been an increase in demand for green buildings.”

T.R. Hamzah & Yeang Sdn Bhd was co-founded in 1976 with Tengku Robert Hamzah in Kuala Lumpur.

The firm now has four offices in China, a sister office in Britain and associate offices in Japan and Australia. He says there are no immediate plans to expand further.

Three decades

The firm has been in existence over three decades, with projects in Europe, the United States and Asia. Key projects include the high-rise National Library Board building (Singapore), the 40-storey Eco-Tower at Elephant & Castle, the 24-storey IBM Building (Malaysia) and 15-storey Mesiniaga Building (IBM franchise) (Malaysia) and the Wirrina Cove Condominium (Australia).

Yeang considers the profession a business and an art and he feels that having business knowledge is essential to be a successful architect.

“Business knowledge is very important for an architect.

“After my first year (as an architect), I took up business classes in the evenings for two years.

“It was a big help. Architecture is not just an art, it’s a business as well.”

Yeang says he also took up a one week business course at the Harvard Business School in 2002 to hone his “business skills.”

“It cost me US$13,000 but it was worth it!

“In fact, I should have done it earlier! It changed my outlook and made me realise that architects are quite silly, really,” he enthuses.

Being conned

Yeang says that architects are so engrossed in their work that they fail to realise it when they are being conned!

He also notes that the architect profession is a stressful and competitive business – more so today than when he first started out.

“When I first started, there must have been 40 or 50 firms in Kuala Lumpur. Today, there are about 500!”

When not designing concepts for environment-friendly buildings, Yeang writes about them.

In 1997 he published what is considered the seminal book on skyscrapers – The Skyscraper: Bioclimatically Considered: A Design Primer. Yeang has already written 12 books.

In measuring success, Yeang says what clearly defines winners and losers is that winners “keep getting back up.”

“It does not mean that winners never lose. Winners lose too but the difference is that they always pick themselves up and continue fighting. Losers stay down and never get up,” he says.

By The Star

Malaysia funds' appetite for overseas properties

Kuala Lumpur: More Malaysian investment funds are buying properties overseas to diversify risk and portfolio and the trend is set to continue in 2012.

Rahim & Co managing director Robert Ang said they are taking advantage of the current global downturn which has forced owners to sell properties below market price.

The UK is still the hottest market for Malaysian investment funds and plenty of buildings are for sale currently, especially in London.

“The banks are not lending as they used to. In fact, they are trying to recover some loans so there is a lot of pressure from owners to sell now,” he told Business Times in an interview yesterday.

“The simple investment strategy is to buy at low prices and sell at a handsome profit. We can expect major deals next year,” Ang said.

The Employees Provident Fund (EPF) has in the last eight months bought five grade A commercial buildings in central London for about RM5 billion.

This is after the government allocated some RM10 billion for the pension fund to buy properties overseas to diversify its portfolio so it could earn better.

The pension fund last year appointed ING Real Estate Investment Management and RREEF as consultants.

Ang said the EPF is currently looking for commercial buildings in London, Australia and Europe to spend the balance RM5 billion.

He also said that Permodalan Nasional Bhd, which has invested in properties in Australia last year, is eyeing several buildings in the UK.

Last year, PNB bought an upmarket office block in Brisbane, Australia, called Santos Place, reportedly for more than A$290mil (RM928 million).

The 37-storey building has 373,508 sq ft of lettable space with about two-thirds of that leased to Australian oil and gas giant, Santos.

Ang said the Retirement Fund Inc (KWAP) has also expressed interest to buy properties in London while pilgrims fund Tabung Haji is looking at syariah-compliant buildings in Australia.

He said KWAP is seriously looking at buying something in London and is mulling setting up a representative office there.

Rich Malaysians are also snapping up properties for their personal investment in the same markets.

"We have major shareholders of listed companies who are buying properties in London and Australia as part of their private investment. There were several deals done recently where they paid RM50 million to RM100 million for several properties," Ang said.

By Business Times

Malaysia’s biggest development projects in China

NANNING: The China Malaysia Industrial Park in Qinzhou, Guangxi Zhuang Autonomous Region, will become Malaysia’s biggest development projects in China with a total area of 55 sq km.

Leaders from both countries have agreed to turn the industrial park, near a deepwater sea port at the southern tip of Guangxi, into the iconic project for Sino-Asean cooperation.

Prime Minister Datuk Seri Najib Tun Razak said the project had great potential as the park was located strategically close to the Asean market and north of Hainan Island, which is earmarked as China’s latest recreational resort.

Najib said the initial stage of the development had already started and he hoped that the parties involved would finalise their plans and launch the project as soon as possible.

Chinese Premier Wen Jiabao said the project would be the first industrial park joint venture between China and its Malaysian counterpart in the western region of China.

Najib and Wen witnessed the signing of the agreed minutes on the industrial park during Najib’s one-day working visit to Nanning for the 8th China-Asean Expo and China-Asean Business and Investment Summit.

Meanwhile, Najib announced the appointment of Malaysia China Business Council joint-chairman Tan Sri Ong Ka Ting as prime minister’s special envoy to China.

By The Star

Rimbunan Hijau shortlisted as lead company

Rimbunan Hijau will invite other Malaysian companies to jointly develop the Qinzhou-Malaysia Industrial Park in China

Nanning (China): Rimbunan Hijau Group has been shortlisted as the lead company from Malaysia to jointly develop the 55 sq km Qinzhou-Malaysia Industrial Park in south-west China, Prime Minister Datuk Seri Najib Razak said.

Najib said Rimbunan Hijau will invite other Malaysian companies, which can include government-linked companies, to participate in the development of the industrial park.

"They (Rimbunan Hijau) have strong financial back-up and good networ-king in China," he told the Malaysian media here yesterday.

The Chinese government has invited Malaysian companies to take up a 49 per cent stake in the joint-venture company to develop the park. The first phase of the park, covering 15.1km area, costs about 4.8 billion reminbi (RM2.37 billion).

Najib said works on the large-scale industrial park have started and the project will be launched soon.

He said the project is significant in the cooperation between Malaysia and China and will enhance trade between Asean and China as the park is near to Asean and is supported by a deepwater port.

Malaysian companies will be able to demonstrate their expertise to handle projects of such a scale, he added.

The prime minister said he has asked Malaysia-China Business Council chairman Tan Sri Ong Ka Ting to give special attention to the project.

"I will appoint him as Prime Minister's Special Envoy to China, so that he will have more influence to deepen the relations between Malaysia and China," he said.

The development of the industrial park, which will be done in three phases, is scheduled to be completed within 15 years.

By Business Times

Malaysians invest in UK, Aussie assets

The strengthening ringgit is encouraging Malaysians to invest in overseas properties. — AFP

MALAYSIANS with deep pockets are making inroads into overseas property markets, especially in the United Kingdom and Australia, to take advantage of the low prevailing prices and potential for capital appreciation.

Property consultants and agents have reported a growing interest in overseas properties.

“Melbourne and Sydney have seen strong foreign demand over the last 18 to 24 months. However, due to the recent crisis in Europe, some funds have already divested out of Australia. In the UK, especially London, demand is strong from foreign high net worth individuals and private and sovereign funds,” CB Richard Ellis (CBRE) Malaysia executive director Paul Khong tells StarBizWeek in a recent interview.

“We are seeing a positive trend of Malaysians heading overseas to the UK, Australia and even Singapore. Large funds like Permodalan Nasional Bhd (PNB), the Employees Provident Fund (EPF), Tabung Haji and Kumpulan Wang Persaraan are moving overseas and even private sector players TA group, SP Setia, Glomac and many more are heading in that direction.

“On the residential front, we also see strong interests from individual investors continuing through to 2012,” he says.

Khong says the pulling factor attracting locals to venture and invest in overseas properties is the strengthening ringgit factor given that the pound sterling is trading below RM5 along with more upcoming attractive launches.

According to him, a key survey from Nationwide indicated that house prices in the UK fell 0.6% in August from July with an average price of a home costing about 165,900 (RM822,860).

In Australia, he says although the currency is getting a “little expensive”, there are still good assets in the market for investment.

“Brisbane is one of the fastest growing regions in Australia with a high population growth, and with the mining and resources boom, it will continue to enjoy a massive injection of government funds to ramp up mining related civil construction,” he says, adding that in Gold Coast, the market is much softer due to a slight oversupply.

“In Australia, investment grade assets give attractive yields of more than 7% with a fixed yearly increment, compared to the UK at about 6% or less,” he says.

Hahn: ‘The attraction to investing overseas is the opportunity to balance a portfolio of investments.’

He advises investors putting their money into foreign properties to do extensive research on their targeted investments before proceeding.

“Investing anywhere is how one views and predicts the property market in that particular location and time. The principle is, of course, to “buy low and sell high”. This billion-dollar question is difficult to answer.

“We predict that with the weak pound now and the worsening market conditions in Europe, London is a good destination to head to, but the crucial decision is on the type, location and quality of asset being considered and the final purchase price being agreed upon. Reference must be made to both exchange rate and yields,” Khong stresses.

Last year, international property consultancy group CB Richard Ellis accounted for 44% of the total investment transactions worth 5.18bil in the London investment market in 2010, including the transaction of EPF's 1 Sheldon Place.

Savills Rahim & Co head of overseas business development Christopher Hahn concurs that there is an increasing trend of Malaysians buying overseas property, and it is likely that interest will grow in North America also, but mainly from very experienced investors.

“The attraction to investing overseas is the opportunity to balance a portfolio of investments that probably includes investments in Malaysia. As we are still in a recession, that means better currency exchange rates, lower prices and more distressed sellers,” he says.

He says the attraction of foreign property has been amplified by the strength of the ringgit combined with a drop in capital values.

He says the overall market outlook in Australia and UK is bad, and only gateway cities like London, Sydney, Melbourne are doing well.

Hahn says Malaysians are attracted to these gateway cities as they are more familiar with them given the strong business and historical ties and a similar legal system with Malaysia which makes investment easier.

“The economic uncertainties should not deter people from investing overseas because the fundamental benefit of investing in property (instead of stocks or high interest account) is still sound,” he says.

He notes that most investors are interested in the good capital appreciation which in hot mature markets should average 10% a year over a 10-year period, while rental yields will be usually much lower.

“The local market offers good rental yields, provided investors can secure a tenant. However, it has an oversupply of apartments and vacancy periods are likely to be very high. In contrast, London apartments are in high demand with very little vacancy but yields may be lower than a good Kuala Lumpur apartment with a good long-term tenant,” he says.

The international property investment consultant and its associate Savills recorded about RM1.5bil in sales for Australia and UK since 2009, including a land transaction by SP Setia Bhd. SP Setia purchased a piece of land in Melbourne for A$30mil (RM96.6mil) in March 2010.

Malaysian institutional funds have been snapping up premium properties in strategic cities across the world, targeting premium properties for their yields.

Last year, PNB bought an upmarket office block in Brisbane called Santos Place, reportedly for more than A$290mil (RM934mil) from its previous owner Nilson Properties.

The 37-storey building has 373,508 sq ft of lettable space with about two-thirds leased to Australian oil and gas exploration giant, Santos. The national oil corporation, Petroliam Nasional Bhd is also one of the tenants there.

“Based on current conversion rate, PNB has made a paper gain of about 10% from this transaction,” said Khong.

The acquisition marks PNB's first acquisition Down Under.

Similarly in London, the EPF has been aggressively adding assets into its portfolio.

The pension fund has so far confirmed the purchase of four British properties costing a total of 634mil. The EPF has allocated 1bil for its British property investment arm to utilise.

Most of Tabung Haji's overseas investments are in Mecca and Madina in the Middle East.

Recently, 1 Kingdom Street in London was also said to have caught the eyes of Malaysian institutional funds. The 235mil Grade A office building on Paddington Central Estate is located directly opposite the EPF's 1 Sheldon Square.

With such buzz and interest, these gateway cities will continue to draw the interest of foreign investors, especially those flushed with funds from Asia.

It would be interesting to see how this episode will pan out and how many of the landmark assets will become foreign-owned.

By The Star