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Tuesday, February 28, 2012

IGB planning hotel REIT

Cititel Mid Valley is among the 16 hotel assets under IGB’s hospitality division.

PETALING JAYA: IGB Corp Bhd is said to be mulling over a hotel real estate investment trust (REIT) to unlock the value of its hospitality assets in the country and overseas.

Industry observers said the hotel REIT was likely to come about after the property group's 75%-owned unit, KrisAssets Holdings Bhd, had successfully injected its two retail assets in Mid Valley City - the Mid Valley Megamall and The Gardens shopping mall into a retail real estate investment trust later this year.

The two retail assets have an estimated total asset value of close to RM4bil and the retail REIT is expected to be materialised within this year.

An analyst with a bank-backed brokerage said IGB's new hotel REIT might be the next in line and the plan was an indicator of a positive outlook for the local hospitality sector.

IGB owns a stable of business-class as well as upmarket hotel assets and has been streamlining the assets parked under its hospitality division. Plans for more hotels are also under way.

Last December, IGB acquired a 50% stake in Great Union Properties Sdn Bhd (GUP), the owner of The Renaissance Kuala Lumpur Hotel, for RM277.5mil. Upon completion of the acquisition that is expected in the first quarter of this year, GUP will become a wholly-owned subsidiary of IGB.

According to the company's website, IGB has 16 hotel assets under its hospitality division including nine in Malaysia Renaissance Kuala Lumpur Hotel, The Gardens Hotel & Residences, Boulevard Hotel, MiCasa All Suite Hotel, Cititel Mid Valley Kuala Lumpur, Cititel Penang, Cititel Express Kuala Lumpur, Cititel Express Kota Kinabalu and Pangkor Island Beach Resort.

It also owns seven hotels overseas MiCasa Hotel Apartments Yangon, Myanmar; New World Saigon, Vietnam; St Giles Hotel Makati Manila; St Giles Hotel The Court, New York; St Giles Hotel The Tuscany New York; St Giles Hotel Heathrow, London and St Giles Hotel Central London.

Meanwhile, IGB's unit, Cititel Hotel Management Sdn Bhd (CHM), is said to be building two new hotels in Penang.

The four-star St Giles Hotel and three-star Cititel Express Hotel will cost about RM180mil and they will be ready for business in 2014. The 32-storey St Giles Penang with about 500 rooms will be the first St Giles hotel in Malaysia.

By The Star

IOI gets tenants for mall

An artist’s impression of IOI City Mall.

PUTRAJAYA: IOI Properties Bhd's new shopping mall, IOI City Mall, will be sealing an agreement with one anchor tenant and one key tenant next month. Construction of the mall is on track to be completed by 2014, and will feature a one-of its-kind entertainment park that has yet to be seen in any mall in the Klang Valley.

“By 2014, the mall, along with two office towers will be completed. By 2015, a hotel will be added next to the mall. The mall and the office blocks will be fully leased out. We will only sell the office blocks if we get an en-bloc buyer,” said IOI Properties Bhd senior general manager, Lee Yoke Har.

She added that the total gross development value for the commercial project was some RM2bil, with the mall taking up RM1bil. The mall, the office blocks and the hotel would occupy 36 acres and funding of it will come from internal funds.

Lee Yoke Har

The mall would have a crucial differentiation point that would set it apart from other malls. While refusing to divulge details, she added that the differentiation was in its entertainment park that was targeted at teenagers and young adults.

“If you like adrenaline rush coupled with information technology, then our entertainment park is for you,” said Lee.

Featuring the Garden Mall concept with lots of alfresco dining, the IOI City Mall will have a net lettable area of 1.35 million sq ft, some 350 shops and 7,200 car parks. The mall will be located in IOI Resort City.

“At present, construction of the three basement levels of the malls had been completed, and we are now starting to construct the above level storeys. The mall will have four storeys,” said Lee.

She added that the immediate target market of the mall was the 1.1 million residents living within a 10 minute drive from the Putrajaya area. Once completed, she felt that the mall would play a big role in further stimulating the vibrancy of Putrajaya.

“Actually, it was one of our tenants who suggested that we build the mall here. The southern portion of the Klang Valley is an untapped mall area. Most of them are concentrated in the northern part,” said Lee.

To support the commercial activity of the mall and the office towers, IOI Properties will also be launching condominiums and semi-detached houses in IOI Resort City and 16 Sierra, in 2013.

Lee said that accessibility to IOI City Mall was excellent, and they were targeting people from the KL-Seremban highway. Right now, IOI City Mall's location is five minutes off the Kajang Toll. It is connected to Kuala Lumpur via the Maju Expressway to Putrajaya.

“There will be two new interchanges from the Maju Expressway in the future. One is from the Equine Park in Serdang, where construction has already started.

“The other interchange, which has just received approval, is near the Malaysian Agricultural Research and Development Institute, which is diagonally opposite to us,” said Lee.

Meanwhile, she added that the other exciting project in the pipeline was its IOI Vivo City commercial project in Puchong.

This project, which takes up some 80 acres, will have a high emphasis on the green concept. Infrastructure construction of Phase 1 which consists of some 7 acres, will start by year-end.

“We see demand for a neighbourhood mall in Puchong. A mall which is unlike the family mall of IOI Mall.

The new neighbourhood mall will have a heavy focus on food and beverage with lots of niche offerings for the young adults,” she said.

By The Star

Challenging property market in China

PETALING JAYA: Malaysian developers are vying for a share of the vast China market especially after cooling measures introduced by the Chinese government to curb overheating and flyaway property prices.

An analyst with a local bank-backed brokerage said although China’s 1.3 billion population posed a big market for a broad range of property products, including residential properties, it would not be a bed of roses for developers with projects in China as more challenges had cropped up in the country’s economic front.

China’s economy is facing risk of a hard landing should its manufacturing and export sectors falter further as a result of the eurozone debt contagion. The country’s vast manufacturing sector is facing a drastic downturn in external demand from Europe and the United States .

Leong: ‘In terms of accessibility, climate, culture, livability, and political stability, Malaysia is an attractive avenue for Chinese property investors.’

The analyst said measures to cool the property market introduced since late 2009 had resulted in slowing property demand and falling prices.

“Developers with projects in China will be facing a more challenging market as demand and prices ease. That’s why some prefer to wait and see how the market pans out, “ he added.

Meanwhile, amid the tightening measures, mainland Chinese buyers are looking to invest outside China, and have shifted their attention to markets like Singapore and Malaysia.

But the move last December by the Singapore government to curb foreign purchases by imposing an additional stamp duty of 10% on the value of residential properties sold to foreign buyers meant that Malaysia – which has no such curbs – stood a better chance to win over the Chinese buyers.

According to Mah Sing group managing director and group chief executive Tan Sri Leong Hoy Kum, China’s ongoing efforts to cool its property market by tightening bank loans, restricting purchase of multiple properties and imposition of higher down payments will cause more mainland Chinese to invest in other growth markets like Malaysia.

“There is growing interest for quality properties in Malaysia by Chinese purchasers who are keen to diversify their investments out of China to other parts of the world.

“In terms of accessibility, climate, culture, livability, and political stability, Malaysia is an attractive avenue for Chinese property investors,” Leong added.

Mah Sing has recently set up its representative office in Shanghai to tap and explore opportunities in China’s property market.

Located in Imago Tower in Putuo District, the representative office serves as a property gallery featuring a number of projects including Icon Residence Mont’Kiara, M City Jalan Ampang and Icon City Petaling Jaya.

Leong said the office would serve as a business liaison between Mah Sing and the Chinese regulators and companies.

The office will also conduct market and product research, marketing, brand promotion and coordination of Mah Sing’s activities in China.

By The Star