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Saturday, June 23, 2012

Glomac sees better times with more projects and bigger landbank in the Klang Valley

An artist impression of landed units that will be built by Glomac in its recently acquired Puchong land.

By next week, right after its analysts and fund managers' briefing on Tuesday, June 26, Glomac Bhd will be making preparations to move to its new headquarters in Damansara opposite Tropicana City Mall in Petaling Jaya. The briefing, held in conjunction with the release of its financial results for its fourth quarter, and the move to its new premises, are in a way, the beginning of a new chapter for the medium-sized developer with market capitalisation of around RM550mil.

The last several years, Glomac has been riding high on a buoyant property market. It is expected to announce strong results again, due very much in part to the multiple projects it has undertaken. Prior to 2009, results were a bit flat. But in the three years starting 2009, the net profit and revenue have been strong.

“We were not doing well because we undertook few projects. Today, we have 10 to 15 on-going projects, which account for our strong balance sheet,” says Group managing director and chief executive officer Datuk FD Iskandar.

FD Iskandar: ‘Today, there is a huge appetite for landed housing and we are going to provide this.’

In and around Petaling Jaya, Glomac has some pretty interesting projects. In February of this year, it launched high-rise apartments, Reflection Residences in Mutiara Damansara, which is expected to be completed at the end of 2015 starting from RM800 per sq ft. There are few units left.

It is also developing Glomac Centro in Bandar Utama, another serviced apartment from 1,175 sq ft to 1,162 sq ft with two-storey shop offices between RM700 and RM800 per sq ft.

Its third commercial project in Petaling Jaya is Damansara Residences project opposite Tropicana City Mall where its new headquarters is located. It is currently developing the fourth of a six-phased project here.

The interesting part about all three of these projects is connectivity. They will have a My Rapid Transit (MRT) station several hundred metres away, a fact that FD Iskandar is very pleased about.

Its Damansara project started out with a gross development value (GDV) of RM500mil. Today, it has nearly doubled to about RM900mil for a seven-acre site.

“Our (projects') GDV has gone up from RM3bil to RM7bil in a matter of a few years. Which brings me to this point: You can have 10,000 acres but what is important is WHERE is your land bank?”

Besides these projects, which comprise mainly serviced apartments with commercial retail element, the company will be moving into township development.

In the last 18 months, Glomac has bought three pieces of land, each about 200 acres, in Sungai Buloh, Puchong and Dengkil, Sepang.

“Landed housing is what the people want today. Two years ago, the hottest thing in the property market was commercial properties. Last year, it was three to five-storey houses. Today, there is a huge appetite for landed housing and we are going to provide this,” he says.

As for condominium developments, this will be popular in specific locations, and this can be seen in the demand for high-rise residential living in Petaling Jaya.

“Landed housing, however, is always popular. Because of that, the three pieces of land we bought will focus on landed properties and part of it, commercial projects.”

The company extended further its project in Bukit Saujana by another 240 acres, having paid RM45mil for it. Bukit Saujana is about 1,000 acres now.

It recently completed its sale and purchase for 200 acres in Puchong for RM77mil. The land is near Tesco Puchong and there are plans to have rail transport, either the LRT or MRT, about 200 metres from the site.

“In that respect, there will be good access and connectivity which will increase the value of our Puchong site. Also, this location is in Puchong proper and not far away in the peripheral of Puchong. So that makes the development noteworthy,” says FD Iskandar.

The third piece of land in Dengkil, Sepang, about 3km from Cyberjaya and 4.5km from the K L International Airport, was acquired for RM67mil. “The Sepang parcel, of about 191 acres, will be our project for the future,” says FD Iskandar.

At the same time, Glomac is keen to replenish its land bank in the Klang Valley.

On whether it is on a land buying spree, he says: “I won't call it that. We have been developing properties for the last 24 years. We have to replenish land banks.

“Why sit on cash? We have about RM350mil in cash and we must replenish. We saw our opportunities the last 12 months. Land prices are going up too high. Owners thought their land was gold, especially early this year.

“There has been tightening in lending, which we have taken note of. But the domestic economy has been good though the situation in Europe has not been addressed.”

FD Iskandar says the company is taking cognizance of these factors but it has also to consider the cash pile it is sitting on, and the gearing, which at 0.1 times can be increased to 0.5 times.

The company has seen tremendous growth in the last three years and FD Iskandar attributes this to the multiple projects the company has embarked on. Prior to this, the company had few projects.

Today, it is simultaneously developing more than 10 projects of different sizes.

Its unbilled sales have been hovering around RM300mil since 2000 and presently it is about RM700mil and still climbing.

“Unbilled sales will turn to revenue next year,” he says.

On its focus to purchase more land in the Klang Valley and not move in the same directio of other developers who have ventured into Penang and Iskandar Malaysia, FD Iskandar says the company is familiar with Klang Valley.

“We are aware of the pockets of growth in Penang and in the south in Iskandar, but 67% of the RM107bil residential sales for the whole of Malaysia last year are from within the Klang Valley. This is where the action is. This is the first point of entry.”

On his outlook for the rest of the year, FD Iskandar expects the property market to remain stable.

“There will be growth but the increase will not be as fast as in 2010 when Klang Valley property prices went up 20% to 30% .

“Prices rose last year too, but not as much as in 2010. It is expected to continue to grow this year,” he says.

By The Star

MRCB to develop prime Bangsar land?

Malaysian Resources Corp Bhd has emerged as the frontrunner to develop a prime 8.09-ha site on Jalan Bangsar in Kuala Lumpur where the Unilever headquarters and factory once sat.

Sources said MRCB is close to inking a deal with landowner Pelaburan Hartanah Bhd (PHB).

They added that MRCB plans to build several office towers, a
serviced apartment-cum-hotel, a retail mall and boutique outlets on the plot.

The project is expected to rake in more than RM5 billion in gross
development value (GDV), they said.

“It will be an extension of the KL Sentral development in Brickfields, and may be linked to the Bangsar LRT station,” said a source.

MRCB is the developer of KL Sentral, an integrated transport hub with GDV of over RM10 billion. The project is slated to complete in 2016.

The sources said MRCB is fine-tuning its masterplan for the project and expects to submit to the relevant authorities soon.

It is still unclear if MRCB will acquire the land outright or develop it in a joint venture with PHB.

“PHB may give the land to MRCB in exchange for properties in the development and cash. It may also develop the land jointly with MRCB,” said the source.

Business Times had reported early this month that PHB was studying a few proposals it had received to develop the area.

PHB had pre-qualified more than five property developers last year, to submit their proposed masterplan for the land development, before shortlisting the list to three.

The three are MRCB, SP Setia Bhd and Mah Sing Group Bhd.

Formerly a well-known landmark housing Lever Brothers’ soap and margarine factory, the land has been left unoccupied since Unilever Malaysia moved out in 2003.

The land used to belong to Railway Asset Corp (RAC) but came under the ownership of PHB in early 2011. PHB bought the land from RAC at about RM150 per sq ft two years ago.

PHB is a subsidiary of Yayasan Amanah Hartanah Bumiputera, created under Budget 2006 with an initial capital of RM2 billion, to promote Bumiputera ownership of prime real estate.

According to Zerin Properties chief executive officer Previndran Singhe, the land, if it has been converted to commercial use, could fetch about RM600 psf, given its frontage to the busy Jalan Bangsar.

"If it has not been converted to commercial use, then I reckon it could be worth RM400 psf to RM450 psf," he told Business Times.

As a perspective, SP Setia had paid under RM400 per sq ft for a 10.1ha land on the former Kampung Haji Abdullah Hukum site along Jalan Bangsar, not too far from the former Unilever headquarters.

It is developing KL Eco City, with a projected GDV of RM6 billion on the site.

The land is said to be currently worth around RM600 per sq ft, given that several phases of the project have been launched.

By Business Times

Penangites go for leasehold projects

Kamarudzaman, with an artist impression of Darra, says that UDA’s Brezza comdominiums, located where Darra is going to be built, was sold out in a year.

UDA Land (North) Sdn Bhd plans to launch a RM650mil condominium project on a leasehold site in Tanjung Tokong in the first quarter of next year in view of the strong demand for high-rise residence in prime locations and the changed perception towards leasehold properties among Penangites.

UDA Land chief operating officer Kamarudzaman Mohd Zain says in an interview that the project, Darra, located by the sea will comprise condominiums with built-up areas ranging between 1,400 sq ft and 1,800 sq ft and are priced above RM800,000.

“The layout plan is in the final stages of approval. The project is expected to be launched in the first quarter of 2013,” he says.

Kamarudzaman says that with the right pricing residential properties located in prime locations are still selling very well.

“For example, Brezza, comprising 312 condominium units of between 1,250 sq ft and 1,450 sq ft in the same location as Darra, was sold out in a year to mainly local buyers.

“The selling price in the sub-sales market for Brezza units has appreciated to about RM700,000 from the initial pricing of between RM350,000 and RM500,000 per unit in late 2010,” he says.

The demand for commercial properties in the right location is still strong, despite a slowing economy with an anticipated GDP of 4.6%, compared to over 5% in 2011.

The Vantage Desiran Tanjung, comprising a four-story business centre with 120 units of shop office, although 80% completed, is already 100% sold. The price for a standard ground floor unit is around RM1.2mil. The units on the higher floors are priced lower.

“The RM87mil Vantage Desiran Tanjung sold well because of its broadband facilities, ample car park bays. The project's proximity to a hospital, international hotels, botanical gardens, and renowned project Straits Quay mall in Tanjung Tokong were plus points,” he says.

Registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun says the value of properties on leasehold land in the island has appreciated substantially. This shows that Penangites, who have always been reluctant to invest in leasehold properties, have changed.

“Leasehold properties in prime locations are now appreciating faster than freehold properties in a non-prime location. Actually, the leaseholds in neighbouring countries have appreciated very well. For example, the land in Hong Kong island is leasehold and yet the value of properties on the island is among the highest in Asia.

“A lot of the land in central London, for example, is leasehold too, but the value of property is very high,” he says.

Raine & Horne Malaysia director Micahel Geh says Penangites now give more importance to the location of the property rather than to the status of the land on which it sits.

“They are now looking for conveniences and amenities like easy access to shopping malls, food and beverage outlets, banks, cinemas, and hospitals.

“Some of the leasehold projects on prime locations in the island have been appreciating at over 10% per annum over the past two years,” he adds.

In Seberang Prai, UDA Land plans to launch a RM33mil four-storey commercial mall come end of 2012, known as TPJ Business Park, in Jalan Baru, a prime location.

“The mall will have about 8,500 sq m of gross built-up area that can accommodate 76 commercial lots of 1,160 sq ft and 2,100 sq ft. We are planning more commercial projects on our remaining land bank of about 20 acres. These commercial schemes are to support the needs of the residential community in Seberang Prai,” he says.

Kamarudzaman says UDA Land also plans to submit the building plan for the RM98mil Serambi project soon to the local authorities.

The project, which is on a 16-acre site, comprises three-storey semi-detached, terrace, and bungalow units. “The plan for the project has received the green-light,” he adds.

He says UDA Land will launch the RM22mil Arcaria project early next year. It comprises 26 units of three-story semi-detached, three-story super-linked, and bungalows.

The terrace units will be priced from RM725,000 onwards, a semi-detached for about RM900,000, and bungalow units from RM1.4mil.

Meanwhile, Fook Tone Huat of Henry Butcher Seberang Prai says property prices in central Seberang Prai have appreciated by about 20% since 2010.

“In prime locations of Seberang Prai, a semi-detached house is priced at about RM750,000. A terrace house in similar locations is now priced at about RM280,000, compared with about RM350,000 two years ago. Similarly, a bungalow has a price tag of RM1mil now, about 20% more than two years ago,” he says.

The value of commercial properties in Seberang Prai has also appreciated by about 20% from 2010, Fook adds.

“A three-storey shop lot in a business park in Bukit Mertajam is now priced at RM700,000, approximately 20% more than in 2010. People are buying properties on the mainland for investment, as the second bridge is scheduled to be completed soon. More funds are coming into the industrial park south of Seberang Prai,” he says.

By The Star

Developers: Consumers don’t want low-cost homes

PETALING JAYA: While house buyers are seeking more affordable homes, developers do not want to be bound into building low- and medium-cost homes.

In its memorandum to the Finance Ministry, Real Estate and Housing Developers Association (Rehda) said it wanted to develop affordable homes in line with the increased household income instead of being compelled to build low- and low-medium cost units, which it said consumers did not want.

“Unoccupied and excess low-cost units are a waste of resources. They are cross-subsidised by both developers, through lower profit, and lower tax collected by the Government and buyers of non-low cost units, in additional tax,” said Rehda president Datuk Seri Michael Yam.

“They are either vacant or abused by being rented to foreigners. The hardcore poor group, which is falling in numbers, can be housed in the government-built social housing (PPR).”

He said Rehda had also proposed a lower stamp duty, with buyers of cheaper units paying less.

“The ceiling for higher priced units should be lifted as inflation and higher costs have increased the prices of even affordable homes,” he said, adding that more incentives were needed to encourage faster adoption of the Green agenda.

Yam said Rehda had also suggested an auto release mechanism for Bumiputra units, which were not sold after a certain period.

“Penalties should not be imposed for such releases as it is caused by low demand,” he said.

National Housebuyers Associa-tion (HBA) secretary-general Chang Kim Loong said the organisation had not submitted a memorandum for the upcoming Budget as its previous request for the enforcement of the “build-and-sell” system had yet to become a reality.

“Although Sharia-compliant housing using the BTS system was announced in Budget 2012, it is yet to be implemented,” he said.

It was reported that the ministry had approached HBA early this month for recommendations on how to reduce the price of homes.

Among its 10 recommendations, HBA urged the Government to unlock its land banks in various locations and give priority to affordable housing projects instead of high-end properties.

By The Star

Realising a dream city

Looking ahead: (From right) Saifuddin Ahmad from PAM, Tong, Norliza and C.M Chan from Rehda showing pamphlets on the conference.

AN INTERNATIONAL conference on sustainable cities will be held in Kuala Lumpur on Sept 25 and city dwellers and other stakeholders are invited to take part.

The World Class Sustainable Cities 2012 (WCSC 2012) conference is appropriately themed ‘Cities for the People’.

It will be held at the JW Marriot Hotel Kuala Lumpur, with some 500 participants expected to attend.

It is being co-organised by the Real Estate & Housing Developers Association Wilayah Persekutuan Kuala Lumpur branch (RehdaKL) , the Malaysian Institute of Planners (MPI) and the Malaysian Institute of Architects (PAM). The conference is endorsed by Kuala Lumpur City Hall.

N.K. Tong, the co-organising conference chairman for RehdaKL, said the conference hopes to connect with people that matter.

“This conference is unique because it brings together all the city’s stakeholders,” he said.

Tong noted that while WCSC’s past conferences had focused on various topics, including the transformation of Cheongyecheon River in Seoul, South Korea, the city transportation solutions for Curitiba, Brazil, and the metamorphosis of Kaohsiung, Taiwan, from an industrial polluter to an ecological tourist hub, this year’s WCSC 2012 will focus on people as the theme suggests.

Norliza Hashim, the co-organising chairman for MIP also said:

“It will be exciting to see the outcome of this year’s conference on KL city’s development.

“In previous years, our conference speakers have had an influential impact in shifting public perception to the Kuala Lumpur projects that followed. The Cheongyecheon River restoration was a great prelude to our KL River of Life project, and the Curitiba experience, in transforming our city’s MRT and covered walkway systems.”

This year’s conference will feature two world-class speakers from two cities globally renowned for their livability and transformation — Copenhagen, Denmark and Bilbao, Spain.

Award-winning Danish architect Dr Jan Gehi, of Gehi Architects, will share his rich experience on his work in transforming cities such as New York, London, Melbourne, Perth, Adelaide, Sydney, Auckland and Christchurch.

Another world renowned architect, Alfonso Vegara of Fundacion Metropoli, will present a paper titled ‘Bilbao Next — Regenerating Cities’, illustrating the transformative work that the city of Bilbao has undertaken to bring it to its enviable status among global cities today.

“In line with the conference theme focusing on people, the two key speakers will help refocus our attention on creating streetcapes friendly to people living in urbanised areas,” added Norliza. “In the pursuit for a world-class city, we may sometimes forget about the basic needs of its citizens. In many cities today, people compete with vehicles; roads are too wide for people to cross, communities are divided by one-way traffic flows; public open spaces and green spaces where communities can meet and interact freely are few and scarce; access to affordable housing, clean water and cheap food become increasingly challenged,” she noted.

In conjunction with the conference, a photography competition and essay competition entitled “Cities for People” was launched at the press conference.

Attractive cash prizes will be given out to winners and their photographs would be featured during WCSC 2012, whereas the essays would be compiled in a book.

By The Star