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Monday, January 10, 2011

Boustead in talks to buy army base land for RM8b project

Boustead Holdings Bhd may build mixed commercial and residential properties worth more than RM8 billion on the 98ha Batu Cantonment army base at Jalan Ipoh, Kuala Lumpur.

The group's main shareholder Lembaga Tabung Angkatan Tentera (LTAT), which holds a 59 per cent stake, is in talks with the government to buy the land and is close to sealing the deal.

Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin is hopeful that it will be involved in the land development.

"Hopefully the deal could be secured soon. Everyone is working hard to make it happen. If LTAT can buy the land, we will do a feasibility study to decide on the most viable properties to build," he said.

"It is a good site for a mixed development. It would be the kind of project that one would want to pursue on this prime land," Lodin told Business Times.
He said Boustead may build medium to high-end houses, commercial and residential towers, shophouses, small office/home office and a mall.

The government is selling some of its prized land bank around Kuala Lumpur and the Klang Valley at current market value for redevelopment.

These include the Batu Cantonment land, 24ha at Jalan Cochrane, the 1,320ha Rubber Research Institute land in Sungai Buloh, and smaller parcels at Jalan Stonor, Brickfields, and Bukit Ledang, off Jalan Duta.

It is unclear how much the Batu Cantonment land is worth but according to Previn Singhe, founder and chief executive officer of Zerin Properties, the market value for unconverted land at Jalan Ipoh is now between RM40 and RM80 per sq ft.

Previn said the development will attract foreign investments as it is closely located near the KLCC.

"The shear size of the development offers a lot of promises. Prices of real estate along Jalan Ipoh have always been stable with good movement ... it's not as docile as how one thinks.

"This project will have a positive impact on Jalan Ipoh if done well and if the developer can tap on the commuter line nearby, and the proposed Kepong-Kajang line," Previn said.

The Batu Cantonment army base, which has been there for over 40 years, will be relocated.

In 2002, the Perak state government had earmarked a 680ha site in Batu Gajah for the relocation.

By Business Times

IJM Land’s big plans for 2011

PETALING JAYA: The ending of the proposed merger between IJM Land Bhd and Malaysian Resources Corp Bhd (MRCB) has come as a disappointment for the former’s shareholders.

Investors had expected that a merged IJM Land-MRCB entity, which would have been the de facto property arm of the Employees Provident Fund (EPF), would play a major role in the major development planned for the 3,300 acres of Rubber Research Institute Malaysia (RRIM) land in Sungai Buloh, Selangor.

The expectation was driven by the fact that the EPF holds the mandate for the RRIM land and is a controlling shareholder of MRCB with a 41.63% stake, as well as a substantial shareholder of IJM Land’s parent IJM Corp Bhd, with a 16.3% stake. EPF also owns a 7.5% direct stake in IJM Land.

But with the merger called off, IJM Land’s investors have had their expectations curtailed.

It is still possible for IJM Land to revisit a merger with EPF-controlled MRCB, perhaps at a later stage, but until that happens, it will not be sitting still waiting for big projects to drop into its lap.

In fact, IJM Land’s prospects are looking as strong as ever as it kickstarts new development projects for this year and next. Meanwhile, it still has its crown jewel, the 2,000-acre Canal City township project in Kuala Langat, Selangor, which it co-owns equally with Kumpulan Europlus Bhd, an associate company of IJM Corp.

Canal City, which is adjacent to Kota Kemuning, has a total gross development value (GDV) of more than RM10 billion. It is IJM Land’s largest ever township project and one that is no less significant than the proposed development for RRIM’s land. Other than the vast size of the township, the low holding cost of the Canal City land, at RM5 per foot, means that the project could potentially be lucrative in terms of development margins.

Interestingly, the first phase of the Canal City will be pushed out to the market in 2012, earlier than the RRIM project, which is still believed to be on the drawing board.

In an interview with The Edge Financial Daily, Datuk Soam Heng Choon, IJM Land managing director, confirms that the Canal City project will be pushed to the market in 2012. He says the company is in the final leg of sorting out the development plans and getting the necessary approvals for the project.

“It will be our anchor project, along with The Light in Penang (with a GDV of RM4.9 billion),” says Soam, adding that the project will have a long development cycle of 10 to 15 years.

Canal City is expected to give IJM Land a strong boost from next year onwards. That aside, the company has also lined up property launches with a GDV of RM2 billion this year alone, which is its highest ever, Soam adds. The RM2 billion to be launched this year does not include the Canal City township project.

The value of launches planned by the company this year is significant compared with the RM1.4 billion in GDV launched last year. With its current unbilled sales at RM900 million, which is also a record, further major launches would create ever greater momentum for IJM Land in terms of revenue and earnings growth going forward.

“Property development is a cyclical sector. Now it is in a strong cycle and we are confident of launching more products into the market, or else we would not be doing our shareholders a favour,” says Soam.

While he reckons that the commercial property segment has turned soft, Soam says there is still huge potential in Malaysia’s housing market due to its young population, consumer confidence and low interest rate environment that is likely to continue this year.

While the loan-financing cap on the acquisition of third properties has resulted in purchases in certain segments slowing down, Soam says demand is still strong from those purchasing properties for their own occupation.

“With new households being formed at 200,000 a year, it is inevitable that these young families need homes, and this will continue to prop up demand for homes,” he says.

While he does not elaborate on the value of the maiden launch for Canal City next year, Soam says the company is looking at building landed terraced homes there for between RM400,000 and RM500,000 for a start. Soam says margins for the Canal City township could be lucrative, given the low land-holding costs on its book.

The IJM group and Kumpulan Europlus secured the land parcels in Canal City from the Selangor government as payment in kind for their involvement in the flood mitigation works and construction of the Shah Alam-Shah Alam 2 Expressway. The cost of the projects, undertaken by the IJM group and Kumpulan Europlus, translates into about RM5 psf for the 2,000 acres of land in Canal City, now jointly owned by both IJM Land and Kumpulan Europlus.

In east Malaysia, IJM Land also has a township project in Sandakan, Sabah, with properties selling for RM600 psf. In total, the company is looking at launching RM500 million worth of properties in Sandakan and Kota Kinabalu this year.

As for its development in The Light II, Penang, Soam says RM420 million worth of properties are expected to be launched this year, with selling prices of between RM600 and RM900 psf. In Sebana Cove, Johor, IJM Land has earmarked an enclave for the development of vacation or retirement homes.

Apart from the Canal City land and other parcels that have low holding costs, and where development could be stretched over many years to maximise value, Soam says the company prefers to adopt a fast-turnover development strategy for most of its landbank. The purpose of this is to recycle the company’s capital quickly enough to undertake new projects in order to sustain its high growth rate.

“At this stage, we are not keen on developing or expanding our portfolio of investment properties. Our strategy now is to develop and sell the properties we have built. Only after we have attained a critical mass for, say a township development, will we develop and keep a portfolio of investment properties for recurring income,” he says.

With the proposed merger with MRCB having been called off, IJM Land is “single” again, Soam quips.

“We are not ruling out the possibility of merger opportunities with other players, but it is not the case where we are going to call up every property player in town next, to see if they are interested in a marriage with us,” Soam adds.

He stresses that despite the IJM Land-MRCB deal having been called off for now, the relationship between the two property developers has not soured.

“Even though we may not form a company together, we are still open for joint ventures and partnerships with each other,” he says.

Investors continue to closely watch IJM Land to see if it might still be able to participate in the development of the RRIM land. But for now, this remains guesswork at best as the EPF has yet to officially indicate how it wants to carry out development of the land.

On what investors had expected before the deal was called off, Soam clarifies that the merger between IJM Land and MRCB was planned without factoring in the RRIM land development.

“For all intents and purposes, the merger was good for both companies, as it would have beefed up our balance sheets to take on bigger projects, especially those overseas such as in China, where land acquisition could easily cost billions of yuan,” Soam says.

That said, he adds that IJM Land is still interested in bidding for the projects on the RRIM land, as the developer has a proven track record and the balance sheet for the job.

IJM Land closed three sen higher last Friday at RM2.88. It is trading at 18.8 times estimated earnings for FY2011 ending Mar 31, and at 1.92 times book value, based on its net assets per share of RM1.50 as at Sept 30.

By The EDGE Malaysia

UEM Land jumps as Sunrise bid completes

UEM Land Holdings Bhd, a Malaysian property developer, rose to a record in Kuala Lumpur trading as it’s close to completing a takeover of Sunrise Bhd.

The stock climbed 1.7 per cent to RM2.94 at 9:16 a.m. local time.

The takeover offer closed on Jan. 7 and it will now invoke a compulsory purchase order for all remaining shares of Sunrise, it said in a statement.

By Bloomberg

China may launch first-ever property tax in 1Q

SHANGHAI/BEIJING: China is set to further clamp down on the country's buoyant housing market by imposing a long-debated property tax for the first time in the southwestern city of Chongqing, domestic media reported on Monday, Jan 10.

Chongqing has "in principle" won approval from the Ministry of Finance and may introduce the property tax as early as this quarter, the China Securities Journal cited the city's government as saying.

Analysts expect the tax to be about 1 percent, the Journal said.

China has debated for many years about having a property tax but held back out of fears it may seriously harm the market.

Domestic media reports in recent months suggest, however, that China's government is finally warming to the idea and may impose a property tax on a trial basis in several cities including Chongqing, Shanghai, Beijing and Shenzhen.

The China Business News said on Monday that Chongqing is likely to only tax high-end properties, in contrast to Shanghai, which reportedly will only tax selected second homes.

ChiĆ¾na has taken a slew of measures to cool its red-hot property market since late 2009 as part of efforts to fight speculative "hot money" flowing into the country.

Despite the measures, house prices in China's major cities soared by more than a fifth last year.

Analysts welcomed the tax as a way to restrain the market.

By Reuters

Three awards for hotel

Proud moment: One World Hotel director of rooms Kenneth Perreau receiving the award from editor of Expatriate Lifestyle Magazine Matt Bellotti.

One World Hotel, Petaling Jaya, has managed to bag three awards at the recent Expatriate Lifestyle magazine’s Best of Malaysia Travel Awards 2010.

The awards’ results were announced in the October 2010 issue. The hotel’s management said it was honoured and proud to have won these highly prestigious awards which were voted by hundreds of thousands expatriates living in Malaysia.

One World Hotel received an Excellence Award in Best City Hotel category, Zuan Yuan Chinese Restaurant was awarded the Excellence Award for the Best Hotel Restaurant category while Thann Sanctuary Spa was recognised as the Best City Spa.

For the past four years, Expatriate Lifestyle magazine had their readers cast votes for their favourites in the Best of Malaysia Awards — an annual travel and hospitality awards. It is a form of recognition and gratitude to efforts in offering the best in meeting with international standards and expectations.

This year’s voting has been exceptional with increased number of votes compared to 2009.

One World Hotel is the only independent hotel in Petaling Jaya to have won the Best City Hotel Award for the second consecutive year. These awards have certainly endorsed the hotel’s position as the leading five-star hotel in Selangor and a tribute to One World Hotel for

providing the highest standards of services and facilities to guests.

Its general manager Ho Hoy Sum said the hotel staff’s steadfast commitment to excellence and consistency in standards earned them these prestigious awards and winning the Best City Hotel award for consecutive years was indeed an inspiration to motivate them further in their commitment to excellence and to ensure that guests receive only the very best service from the hotel.

By The Star