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Monday, January 30, 2012

Another bumper year for mall deals in Malaysia?

If there's is a transaction involving a mall in 2012, expect the deal to be done at a handsome price.

After a record number of deals valued at RM5 billion involving shopping complexes in 2011, this retail asset will continue to
be on the radar of funds and real estate investment trusts (REITs) in 2012.

Allan Soo, managing director of CB Richard Ellis Malaysia, said that since there are not many quality malls to go around, buyers will look at alternative methods of growing their asset portfolio.

“Funds or companies may develop a shopping complex on their own or enter into a joint venture. They could also buy assets that are close to completion,” Soo told Business Times.

If in 2011 we witnessed virtually all major mall deals taking place in Peninsular Malaysia, Soo expects 2012 to see deals also being done for mall assets in Sabah and Sarawak.

And if a mall is available for purchase, Soo said: “It continues to be a seller’s market this year.”

Meanwhile, vice president of Royal Institution of Surveyors Malaysia (Property Management, Estate Agency and Valuation Division) Adzman Shah Mohd Ariffin agrees that 2012 is
a seller’s market.

High prices are also a result of higher land value and costlier construction costs, he added. “Prices are already higher naturally due to higher land values and cost of construction.
Given lower passing rental levels, especially for malls opened in the past two to three years, the yields are likely to be low.

“Even the recent deals in Klang Valley showed yields of about 5.5 per cent to 6.5 per cent only, which is already much lower than most investors’ target of 7 per cent,” Adzman said.

However, he said that malls are dynamic and capable of generating better income if operated well with strong corporate governance and good retail mix. This makes it a good resilient investment in weathering global economic uncertainties.

According to Adzman, it could cost more to build a mall from scratch. As such, it would make better sense to purchase existing malls which are in good condition, location, population
catchment and potential for enhancement and repositioning.

"Purchasers must look beyond the yield at the time of purchase and be prepared to work on the assets for capital appreciation and bettering the income stream in the long term," he said.

Adzman, meanwhile, reckons that purchasers will be from private funds to focus on assets to "warehouse" rather than REITs, which would look for yield-accretive assets.

"Warehouse" is when an asset is held for a period of time in order to nurture it until it produces a better income stream.

After about a dozen deals in 2011, could there be another record set this year?

It is expected to be vibrant but not a repeat of 2011, but deals this year may very well thump last year's in terms of value.

Already, there have been indication that KrisAssets Holdings Bhd, which owns the Mid Valley Mega Mall and The Gardens, will spin off the asset into a REIT. These assets alone are valued at RM3 billion.

We have also yet to hear the outcome of the Bandar Raya Development Bhd (BRDB)'s plan to call for a tender for the sale of the Bangsar Shopping Centre and CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor. These three malls may be valued at another RM800 million.

By Business Times

BSG Property to replicate Precinct 10's success in Malacca

GEORGE TOWN: Boon Siew Group's property arm BSG Property, is looking at replicating its new commercial property development project Precinct 10 in Penang down south at its Melaka Straits City project.

BSG Property's business development manager Koay Wei Loong said the proposed street mall comprising food and beverage offerings in Malacca is likely to be ready by the end of 2013 and the company has earmarked some RM40 million.

"The positive response we have received from tenants of Precinct 10 and customers since we opened in Penang has been encouraging and we see no reason why the same model cannot be successful in Malacca," he told Business Times.

Precinct 10 is located at Tanjung Tokong on Penang island and consists of 2-storey shop offices and F and B outlets.

Since its soft opening last month, the project has seen the entry of Burger King, Chez Weng, Winter Warmers, Old Town White Coffee, Sushi Zento and HSBC Bank as tenants.

"We are looking at potentially bringing in one more financial institution, an Italian food-dominated wine house, and a Chinese restaurant chain here," added Koay.

"With the surface parking offered to customers at Precinct 10, our plan is to enable the medium to upscale eateries transform this location into a Penang version of Bangsar in Kuala Lumpur."

Precinct 10 sits on a 1.7ha area and boasts a net lettable area of 47,000 sq ft.

BSG Property invested RM16 million in the project.

By Business Times

New condo project in Bukit Dumbar open for registration

A condominium with a panoramic view is the latest property offering in Bukit Dumbar in Penang.

The exclusive project — Quattro 360 by Marvellous Land Sdn Bhd — features a total of 38 units with only two units per floor.

Each unit has a built-up space of 1,900sq ft, and comes with four bedrooms, two of which are master bedrooms.

The condo units also come with private lifts and lobbies as well as a double security system.

Marvellous Land director Yeow Jing Hooi said the project was expected to be open for sales by mid-June.

“So far, the response has been good as we have received about 1,000 enquiries already,” said Yeow, adding that the project was now open for registration.

For enquiries, call 04-6605555 or visit its sales office at 8, Jalan Mas, Penang (behind Caltexin Green Lane).

By The Star