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Saturday, January 15, 2011

Big change in landscape ahead for Klang Valley

The Klang Valley property landscape is set for a massive change with major government land being open for re-development and a number of new infrastructure initiatives.

They include the mass rapid transit (MRT) system, Greater Kuala Lumpur development plan, the re-development of the Rubber Research Institute (RRI) land in Sungei Buloh and the Sungei Besi airport.

These projects are certainly high-profile and potentially significant as catalysts for change in the interest of a more organised living, working and recreational environment.

The proposed development projects present immense opportunities to both the people and industry players to participate in their planning. As such, their views should be given due attention and incorporated if they proved to be relevant.

They are important to ensure the sustainability and growth of the country's infrastructure development for years to come.

It is not every day that an opportunity for re-development of such massive scale arises; so, it should not be treated as a profit-making venture but a chance to overhaul poorly-planned cities.

The 3,300-acre RRI project has the potential to become a showcase for a well-planned sustainable township that will last for decades.

Besides its potential gross development value of RM10bil, there are many intangible values which should be considered including a safer neighbourhood as well as more accessible, economical and convenient public transport system.

More development projects could also result in more proposed mergers and acquisitions (M&As).

But these M&As have generated both excitement and concerns in the market.

For industry players, those looking to merge their companies may be driven by the need to strengthen their capital base and technical capability.

They believe that by becoming larger developers, they will get to enjoy economies of scale and become more efficient. It will also provide a stronger financial position, healthier balance sheet, larger landbank and management expertise.

Merged entities will also mean larger market capitalisation and liquidity. Their higher profile may also attract interest from investors.

While there may be merits to support the M&As, there are also shortcomings that may de-rail such plans.

The M&A process will become problematic if the enlarged team cannot work as a team as there are bound to be differences in corporate culture, vision, work ethics and practices.

A contentious issue will always be about the controlling stake of the new company. Therefore, it is crucial for the companies to get it right from the very beginning from controlling stake to the right management team.

It will be ideal if the two companies which are going to merge addressed issues concerning their differences and assimilate best practices.

For the public, the formation of bigger entities may mean that there are fewer smaller developers and less competition in the industry.

This scenario is not healthy as the absence of competition means that players need not produce their best product offerings to survive in the market.

Nonetheless, a bigger entity does not necessarily equate a stronger, and more successful company as many mega financial institutions in the West had crumbled during the global financial crisis. More importantly, companies, whether big or small, should conduct their business in an ethical manner.

They should not be guided by the motto of “making profits at all cost” and therefore sacrificing their values and responsibilities to the community at large.

Conglomerates have been known to fall from grace when greed takes over sound ethical values.

I believe companies that grow through the organic process may have smaller capacities but they have built for themselves a strong foundation to face market challenges and uncertainties.

In the property sector, there is certainly a big role for the smaller players who are focused on their strength and in doing what they do best.

The bottomline is to ensure that they deliver good values, quality and wholesome projects to their customers.

Deputy news editor Angie Ng still has faith in the laissez-faire system and believes merits and fair competition is a more sustainable option.

By The Star (by Angie Ng)

Synergy Property eyes Asia-Pacific prospects

SYNERGY Property Development Services Pte Ltd, a leading project management company based out of Bangalore, India, is eyeing growth opportunities in Asia-Pacific, especially Malaysia.

Sankey Prasad ... ‘Our association with Blackstone provides us the expertise of looking at projects that are attractive from an investment perspective.’

Chairman and managing director Sankey Prasad says Malaysia is one of the few countries in the region that remained resilient during the global financial crisis.

“Malaysia showed a lot of stability during the global recession. If you compare with many other markets, this country showed a lot of character and did not suffer any electric shocks of the crisis,” he tells StarBizweek in an interview.

“That's a sign of a good and stable market,” Sankey says, adding that Malaysia's resilience throughout the crisis has allowed the country to remain competitive.

“I think Malaysia has learnt a lot from its mistakes.”

Sankey started Synergy in early 2003 with just 40 people, and the company has since employed more than 600 people, with a resource pool comprising architects, engineers and project management personnel.

Synergy has offices in India (Delhi, Mumbai, Pune, Hyderabad, Trivandrum and Bangalore), Dubai and Malaysia.

On the local front, the company operates in Kelana Jaya, employing a team of 25 people.

The company offers complete project management consultancy, delivering support and design services through all phases of the development process of a real estate project. It also provides turn-key solutions.

In 2008, Blackstone Real Estate Partners, an affiliate of the Blackstone Group (a leading investment and advisory firm), acquired a 35% stake in Synergy.

“Our association with Blackstone provides us the expertise of looking at projects that are also attractive from an investment perspective,” says Sankey.

“We adopt a holistic approach that provides a single point of contact in every stage of the project, starting from inception to project close-out. This approach is practical in giving a detailed outline of the working procedures,” he adds.

Synergy also offers a management information system which is essentially a web portal that allows its customers real-time updates on projects that are being carried out.

“The portal can be accessed anywhere and at any time. Using the Internet, our clients can become aware of any issues,” Sankey says, adding that MIS is developed to create more transparency for its customers.

The company has delivered over 60 million sq ft of projects consisting developments within the retail, information technology, hotels and hospital sectors.

Its clients include Tata, IBM, Goldman Sachs and Deutsche Bank.

Having done projects for clients globally, Sankey says Synergy is constantly looking for opportunities, especially within the Asia-Pacific region to help boost its business.

“In the pipeline, we're looking at large projects. We've got associates and clients that are looking for opportunities in Asia.”

Synergy made its foray into Malaysia in 2007, when it became the project manager for MKN Embassy Techzone, a freehold information and communications technology (ICT) business park in Cyberjaya.

The project is developed by MKN Embassy Development Sdn Bhd, a joint venture between EMKAY Group of Malaysia and Embassy Group of India.

Synergy deals with the pre-construction phase of the project, keeping tabs on the development cost and ensures that it is on schedule.

On a personal note, Sankey says Cyberjaya, despite its potential, has not grown to become “what it should have been.”

“Cyberjaya has the right infrastructure and the dream ingredients but in the past four years that I have travelled to Malaysia, it has not grown as aggressively as it has been portrayed.

Perhaps there needs to be more aggressive marketing on Cyberjaya,” he says.

Sankey also says Synergy has recently been appointed project manager for the development of luxury villas at Bandar Enstek, Nilai, in Negri Sembilan.

The villas are part of a larger project being developed by a consortium that includes Enstek developer TH Properties Sdn Bhd, Ascenteus Holdings Sdn Bhd and Indian developer, Davanam Constructions.

Sankey says ground breaking for the project is expected within six months.

Synergy has also secured the right to become project consultants for the development of two international schools one each in Kuala Lumpur and Johor Baru.

“We will reveal more when the time is right,” he says.

Given Malaysia's growth opportunities, Sankey says Synergy is looking to secure “big” projects.

“We want to take on more niche projects as we also price ourselves that way. We don't do any run-of-the mill jobs.”

Asked about the challenges in Malaysia, Sankey says getting construction materials is a common issue.

“Because our jobs are pretty niche, most of the materials that we require are difficult to obtain locally and require importing.”

On the global front, Sankey says Synergy is cautious about its expansion plans, but adds that the company is looking to offer its services in Mauritius, Indonesia and the Philippines.

“We don't want to go berserk and go everywhere. We need to evaluate the market first and get the right project before we think about expanding into a new market.”

By The Star

Facility for London property purchases

MALAYAN Banking Bhd (Maybank) is anticipating a take up of RM60 million within the next six months for its latest mortgage facility "Overseas Mortgage Loan Scheme" being offered for those purchasing properties in London.

"This is in view of attractive property valuation in London and overseas buying interest to peak before April 2011 when the new 5 per cent sales tax is imposed for properties above STG1 million (RM4.84 million)," Maybank deputy president and head of community financial services Lim Hong Tat said in a statement yesterday.

The key features of the mortgage scheme include repayment in ringgit, high margin of financing of up to 85 per cent, flexible repayment and long tenure of up to 30-years or 70-years of age, whichever is earlier.

The facility will be offered in the form of term loan, overdraft or a combination of term loan and overdraft, he added.
The ringgit mortgage facility will finance completed or under-construction residential and commercial properties in London Zone 1 to Zone 3, covering prime locations such as the City of London, Westminster, Knightsbridge, Kensington and Chelsea.

Maybank's mortgage facility makes it the first Malaysian bank to offer Malaysians a local mortgage loan facility in ringgit for purchase of property in London.

By Bernama