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Wednesday, February 15, 2012

Johor property market may face oversupply in the longer term

PETALING JAYA: With the spate of big-ticket projects being launched in and around Johor's Iskandar region, such as Iskandar Waterfront Holdings Bhd's RM80bil transformation of the coastline fronting Singapore, there are concerns that a glut could emerge in the state's property market down the line.

Although an oversupply in the near term was unlikely, valuers and agents said it could materialise in a decade or later as the developments there would have a long gestation period.

“It is a cyclical industry. There could be an oversupply but this will not be for another 10 years,” Zerin Properties chief executive officer Previn Singhe told StarBiz.

Johor Baru-based V. Sivadas, executive director of PA International Property Consultants Sdn Bhd, pointed out that a glut was imminent if buying interest from Singapore, which has thus far led demand, dried up.

“Malaysia's existing population will not be able to absorb all the new properties on their own,” he said.

He noted that if the proposed high-speed rail between the two countries was fast-tracked, it could create an “instant demand” for Johor properties as the two existing highways linking Malaysia to the island state faced heavy congestion.

Another crucial factor, he added, was for the authorities to craft a long-term asset policy that would not dampen interest from foreigners, yet prevent the kind of artificial inflation of prices caused by speculative buying.

Last year, the Singapore government moved to cool its property market by imposing a 10% stamp duty on homes bought by foreigners, effectively raising the purchase price by 10%.

Foreigners, spurred by low interest rates, had snapped up about 9,300 private homes there in 2011, making it a record 31% of all transactions.

While a surfeit in residential properties may not be for some time, CB Richard Ellis (Johor) Sdn Bhd director Wee Soon Chit has some concerns about the service apartments sector.

He said there had been a sudden increase in the supply of service apartments in Johor, which might not be consistent with demand.

Sivadas also observed that service apartments were fetching between RM500 and RM600 psf now, their highest ever.

One thing is for sure the development of Iskandar has led to a marked appreciation in property prices in Malaysia's southernmost state.

UEM Land Holdings Bhd's Imperia@Puteri Harbour, the group's first residential development there, has sold 152 units, or 65%, since its soft launch last September. Singaporeans bought 90 of these units.

CIMB Research said in a report that the original selling price was RM545 psf, but this has risen to between RM700 and RM980 psf, which was a premium over the RM400-RM450 psf price for condominiums in neighbouring Kota Iskandar and Medini.

“One of the semi-detached houses in East Ledang (also by UEM Land) sold for RM1.6mil. This is a new benchmark,” Wee said.

Sivadas explained that all the new properties were priced above the RM400,000 level, and only the older homes could be bought for less than that.

“The prudent investors have mostly purchased completed apartments. It is the speculators who are going after the new launches,” he said.

However, he cautioned that Iskandar as a whole still had a long way to go.

“It will take another 50 years for it to be fully realised. Even though there are lots of plans and it looks good on paper, implementation remains the key.

“Various plans for Johor's development were unveiled years ago, but the Johor Baru skyline has not changed much. What has taken off is just a small percentage of what has been promised,” he said.

By The Star

Penang, Johor growth spurs Dijaya

PETALING JAYA: Dijaya Corp Bhd wants to build up its market presence in Johor and Penang, and expects to see a bigger contribution from the two growth markets.

Although the central region of Selangor is still the biggest contributor accounting for more than 70% of the company's sales and bottomline, Dijaya managing director Datuk Tong Kien Onn is looking at bigger contribution from the northern and southern regions.

Tong: 'We want to take advantage of the strong growth in Penang and Johor.'

“We want to build a stronger presence in these two markets to take advantage of the strong growth in Penang and Johor,” Tong told StarBiz.

Over the next two to three years when the projects started to move, he said contribution from Selangor was expected to drop to about 40%.

Dijaya plans to launch RM1.1bil worth of projects this year compared with about RM700mil last year. For 2012, it is targeting sales of between RM650mil and RM700mil. Last year, it sold about RM420mil worth of properties.

In Johor, Dijaya has two joint ventures with Iskandar Waterfront Sdn Bhd for projects in Danga Bay.

The first project, Tropicana Danga Bay on 37 acres is a 60:40 joint venture between Dijaya and its partner. The project under the joint venture company, Global Corporation Sdn Bhd is located only about five minutes to the Johor-Singapore Causeway. The land was purchased at a cost of RM318mil about 1 years ago.

Tropicana Danga Bay with expected gross development value (GDV) of RM3.8bil will comprise 60% commercial and 40% residential components. It will take eight to 10 years to complete. The first phase comprising a block of 420 service residences was launched last December at average prices of RM620 per sq ft. Tong said about 90% of the non-bumi lots have been sold to-date.

Dijaya also has a 50:50 joint venture with Iskandar Waterfront Sdn Bhd to undertake the 225 acre Tropicana Danga Cove. The land was bought for RM220mil in the last quarter of 2011.

The RM2.8bil development is expected to take 10 to 12 years. Construction of the project may kick off in March with the first phase comprising 3-storey shop offices.

In Penang, Dijaya has set up a 55:45 joint venture with Ivory Properties Group Bhd to buy and develop a 41.02ha site in Bayan Mutiara. The joint venture company, Tropicana Ivory Sdn Bhd paid RM1.07bil for the land and the repayment period will be over five years.

Tropicana Ivory will undertake a mixed residential and commercial property project with GDV of RM9.8bil over the next eight to 12 years.

Last Thursday, Dijaya received the nod from its shareholders to enter into the joint venture with Ivory Properties.

Tong said the master plan for the Penang project would be finalised in the next two to three months and the mixed integrated development is set to showcase some iconic structures.

Meanwhile, in Selangor, projects in the pipeline this year will comprise two new projects in Tropicana Indah Resort Homes namely Golf Villas and Tropicana Garden.

In Subang, Dijaya plans to build three-storey link, semi-detached and bungalow houses, condominiums as well as commercial development on its 35.4ha landbank.

Also in the pipeline will be bungalows, link houses and semi-detached units at Tropicana Cheras and Tropicana Balakong.

By The Star

Mah Sing opens rep office in Shanghai

KUALA LUMPUR: The growing interests from Chinese investors in Malaysian properties has prompted Mah Sing Group Bhd to open a representative office in Shanghai to feature its residential and commercial properties.

The office will serve as a business liaison between Mah Sing, local regulators and local companies in China to explore the property development industry in China.

It will conduct market and product research, marketing, brand promotion and coordination of the group's activities in China.

"In terms of accessibility, climate, culture, livability, and political stability, Malaysia is an attractive avenue for Chinese property investors," said group managing director and group CEO Tan Sri Sri Leong Hoy Kum in a statement.

Leong said the opening of Mah Sing's Shanghai representative office is another milestone for the group to firmly establish Mah Sing as Malaysia's premier lifestyle property developer of choice for Chinese investors.

Some of the projects with potential sales among Chinese investors are resort-style living Icon Residence Mont' Kiara, residential suit and boutique shops MCity Jalan Ampang and mixed commercial development Icon City Petaling Jaya.

By Business Times

UEM Land set to explore new growth markets

In progress: UEM Land is currently developing Nusajaya, one of the five flagship zones of Iskandar Malaysia in Johor.

KUALA LUMPUR: Fresh from the consolidation of its operation after the purchase of Sunrise Bhd, the enlarged UEM Land Holdings Bhd now has a complete set of skills and expertise to scour for opportunities in new growth markets, both locally and overseas.

UEM Land managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said the acquisition of Sunrise last year had resulted in a “full set of skills” for the property group to move to its next level of growth “by leaps and bounds.”

“This is a match made in heaven and the coming together of the expertise of both UEM Land as a township developer and Sunrise's acclaimed reputation in high-rise integrated developments has opened up vast opportunities for us to tap going forward,” Wan Abdullah told StarBiz.

Although it still has much in its plate as far as landbank and projects in Malaysia are concerned, UEM Land has set its sight to venture to other regional markets such as India, Vietnam and Myanmar,

“We are talking to a number of potential partners and will be sending our teams to India and Vietnam to explore the opportunities there,” Wan Abdullah said.

He said as Myanmar was opening up its door to foreign investments, the company was studying how it could partake in the development process of that country.

Locally, Wan Abdullah is confident that having Sunrise under its belt augurs well for UEM Land to bid for landbank and redevelopment projects from the Federal Government and various state authorities.

“Two years ago when we approached these authorities for development opportunities, they have their reservation about what we can offer as a township developer. Today, given Sunrise's expertise in high-rise integrated developments and strong branding, UEM Land is enjoying a stronger profile, skill set and competitive advantage,” he added.

Wan Abdullah said many government agencies owned landbank that were very strategic and would be opening them up for development. “We are knocking on their doors to pursue possibilities of UEM Land acquiring these land or form joint ventures with them.”

In a research note, Maybank Kim Eng said UEM Land was likely to win more government land deals, such as the Rubber Research Institute of Malaysia land in Sungai Buloh and the former Pudu jail development project in Jalan Hang Tuah.

UEM Land is the property arm of UEM Group, which in turn, is wholly owned by Khazanah Nasional Bhd.

The company became the biggest property counter on Bursa Malaysia by market capitalisation after buying over Sunrise. It now has a market capitalisation of close to RM10bil based on 4.324 billion shares issued and closing share price of RM2.31 yesterday.

Wan Abdullah said UEM Land aimed to chalk up another record year of sales of RM3bil this year from RM2.2bil recorded last year.

The company has projects worth RM34bil to be launched over the next couple of years.

It is currently developing Nusajaya, one of the five flagship zones of Iskandar Malaysia in Johor, and also has projects in Bangi, Cyberjaya, Kajang and Mont' Kiara.

Another exciting project to look out for will be the RM1.3bil Angkasa Raya project, which is Sunrise's new landmark project in the Kuala Lumpur city centre. .

For the year ended Dec 31, 2010, UEM Land posted a net profit of RM194.5mil on revenue of RM469.7mil.

Analysts expect the enlarged company to turn in a strong double-digit growth in its financial results in FY2011, mainly due to the consolidation of Sunrise's earnings.

The company will be releasing its final-quarter results for FY2011 on Feb 28.

By The Star

E&O unveils Andaman sea-facing condos

Malaysia-listed premier lifestyle property developer Eastern & Oriental Bhd (E&O) has announced the official launch of Andaman at Quayside, luxurious Andaman Sea-facing condominiums touted to be the finest on Penang Island.

Andaman at Quayside is sited on 8.5 ha. of the final, most-prime plot on E&O’s acclaimed world-class masterplanned development, Seri Tanjung Pinang, with 75 per cent of all suites providing unobstructed views of the sea and the famous Gurney Drive.

Featuring a 1.8 ha. signature waterpark and clubhouse surrounded by an additional 2.8 ha. of tropical gardens along with a world-class retail enclave, Andaman at Quayside offers lifestyle and entertainment experiences by-the-sea.

Eric Chan, Deputy Managing Director of E&O, said, "We conceptualised Andaman at Quayside to celebrate the best facets of island living in Penang.

"The Andaman at Quayside sits within Penang Island’s largest seafront development and most sought-after residential address," he said in a statement here today.

Apart from competitive pricing, the project's interest-absorption scheme offers another incentive for investors seeking to get a slice of vibrant Penang’s property pie with just a 10 per cent initial down payment, while the availability of up to 90 per cent financing (subject to eligibility) makes it even more attractive. For more information, check out

By Bernama

DPMM to build houses again

MALAY Chamber of Commerce Malaysia (DPMM) will again embark on a role as property developer, offering medium- and low-cost terrace houses and apartments at cost price.

Its president Syed Ali Alattas said the properties will be priced less than RM200,000 a unit.

"We were involved as developer in 1975 when our subsidiary Syarikat (Perumahan) Sdn Bhd built 1,340 low medium cost houses in Johor Baru. We sold those houses at cost price, which was not more than RM34,000 a unit then," he told reporters at the DPMM headquarters, yesterday.

Syed Ali said that the chamber intends to collaborate with the various state governments for the housing projects and believes this time around it will also be able to sell the units at almost cost price.

"We will be writing letters to all the Mentris Besar soon to ask them to allocate us land for this purpose," he said.

He said the chamber plans to build 100,000 houses throughout Malaysia including Sabah and Sarawak of which 30 per cent can be acquired by non-Bumiputeras.

He said a website will soon be up, providing more information on the type of properties the chambers would be selling.

DPMM will build the properties under a new subsidiary called Dewan Syarikah Bhd and will start with a project in Johor.

"We are looking at building 220 apartment units in Bandar Uda Utama and believe we can complete the project within eight months," he said.

Syed Ali added that it will carry out a design contest for both the terrace houses and apartments which offers a cash prize of RM15,000 for the winner of the low cost apartment category and RM10,000 for the double-storey terrace house category.

He said the chamber will not be seeking the participation of non-members in the project as its members include 16,000 contractors, 2,000 engineers and 10,000 consultants.

"We've had enough of listening to grouses about sky rocketing house prices ... that is why we are embarking on this project," he added.

By Business Times

Naim Indah most active

TIMBER and property-related Naim Indah Corp Bhd was the most active counter on Bursa Malaysia yesterday with some 315 million shares changing hands.

The stock opened at 56 sen but nosedived to 37.5 sen at the end of the morning session.

The stock bounced back after trading resumed in the afternoon but still closed 14 per cent lower to 48 sen.

Naim Indah's shares have been on the uptrend since February 2 this year and continued to rise after Sagajuta Group's Datuk Raymond Chan Boon Siew emerged as a new major shareholder last week.

Chan bought a 12.11 per cent stake in Naim Indah from the company's largest shareholder Crest Energy Sdn Bhd, which also sold the remainder of its 22.80 per cent stake to a number of other individuals.

He was reportedly said to be planning to inject property developer Sagajuta Sabah Sdn Bhd into Naim Indah.

Last Thursday, Naim Indah closed at 67 sen from just 9 sen a week before. Overall, the stock had risen some 1,240 per cent within a six-month period until last Thursday.

The sharp rise has prompted Bursa Malaysia to caution investors in the trading of Naim Indah stocks. The move raised concerns that the regulator could move to designate the stock and selling pressure has since intensified.

By Business Times

KYM, Perak in land reclaimation pact

PECOH Industrial Development Sdn Bhd (PIDSB) today entered into a Joint Development Agreement (JDA) with the Perak State Development Corporation (PKNP) to reclaim 1,360 hectares of land in Bagan Datoh.

In announcing this, KYM Holdings Bhd said the project is part of the Perak Eco Industrial Hub (PECOH).

Bagan Dato has been identified as an area to initiate projects in PECOH due to its strategic location, and the Perak state government is setting up a heavy industrial zone in its efforts to promote industrial development in the state.

PECOH is a subsidiary of PEIH Holdings Sdn Bhd, which in turn is an associated company of KYM.

By Bernama

Amanahraya REIT pre-tax profit at RM73.6m

Amanahraya Real Estate Investment Trust's (Amanahraya REIT) pre-tax profit for the financial year ended Dec 31, 2011, rose
to RM73.672 million from RM41.401 million in the same period in 2010. Revenue soared to RM65.306 million from RM59.510 million.

The higher pre-tax profit was due to unrealised gains from revaluation of its properties, it said in a filing to Bursa Malaysia.

On prospects, Amanahraya REIT said it was actively identifying good assets for new acquisitions to improve the yield and further diversify the portfolio to minimise the sectoral risk.

"The strategy of having assets with long-term leases by reputable lessees will continue to be Amanahraya REIT's focus to ensure sustainable returns," it added.

By Bernama