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Tuesday, September 18, 2012

Sime eyes Aussie, Singapore projects

MAJOR PROPERTY DEALS: Part of company's blueprint to hit RM1b profit, says source

SIME Darby Bhd, Malaysia's oldest conglomerate, is eyeing a major property project in Australia and an urban regeneration project in Singapore.

The projects will cost Sime Darby a few billion ringgit over their short- to medium-term development period, a source familiar with the group said.

"This is part of Sime Darby's five-year blueprint to achieve a pre-tax profit of RM1 billion from its property division by 2016 from RM460 million achieved in its latest financial year ended June 2012," the source said.

The source said the group plans to increase contribution from property investment to 20 per cent in 2016 from about five per cent of overall group revenue now.

"Property development accounts for about 95 per cent of Sime Darby Property's revenue," the source added.

Sime Darby's potential venture in Australia especially will bolster Malaysia's property acquisitions there.

Malaysians are the fourth largest group of buyers when it comes to snapping up residential and commercial properties in Australia, according to Jalin Realty International.

Jalin Realty told Business Times recently the figures were derived from the Foreign Investment Review Board, a non-statutory body that advises the Australian government on foreign investment policy and its administration.

Meanwhile, the source noted that the Battersea Power Station (BPS) project in London is also part of Sime Darby's blueprint to achieve the RM1 billion profit.

Sime Darby is part of a Malaysian consortium that owns the BPS, one of London's landmark buildings.

The consortium, which includes SP Setia Bhd and the Employees Provident Fund (EPF), paid STG400 million (RM1.97 billion) for the 15.78ha site.

Sime Darby and SP Setia each owns a 40 per cent stake in the joint-venture company, Battersea Project Holding Company Ltd, that will redevelop the site. EPF holds the remaining 20 per cent.

The gross development value of the 15-year project is expected to be around STG8 billion (RM40 billion) with the maiden launch expected in the first half of 2013.

By Business Times

TRX set to win green certification

KUALA LUMPUR: The Tun Razak Exchange (TRX) is set to bag an acclaimed international certification for sustainable green development.

The TRX master plan underwent a rigorous evaluation by the prestigious US-based Green Building Council (USGBC) on its overall impact beyond individual buildings.

The council examined the buildings' locations, the way they relate to each other and qualities of the public spaces that knit them together.

“Sustainability has been foremost in our plans every step of the way.

“We want to push the envelope in green development in Malaysia. This world-class recognition reflects our commitment to a green future,” 1MDB Real Estate Sdn Bhd chief executive officer Datuk Azmar Talib said in a statement.

The council has granted TRX a Leadership in Energy and Environmental Design (LEED) for Neighbourhood Development (LEED-ND) Plan Gold Level Conditional Approval.

This puts TRX on the penultimate stage of being pre-certified. - Bernama

LEED is an internationally recognised green building certification programme with a rating system for designing and constructing the world's greenest, most energy efficient and high performing buildings.

LEED-ND certification evaluates a whole township or district level not limited to individual buildings.

It is a global benchmark certifying a development as embracing world-class sustainability principles, smart growth and best practice urban planning.

LEED-ND development emphasises vibrant and healthy communities in a walkable mixed-use space.

It recognises buildings and infrastructures that reduced energy and water use while promoting other sustainable best practices.

The certification requires independent and third party verification that a development's location and design meet high standards of environmentally responsible and sustainable development.

1MDB is the master developer of the 70-acre international financial district, which was formerly known as KLIFD.

The strategic development is a national initiative to spur sustainable growth in new areas and lead the way for the federal capital to be a sustainable, smart and liveable city.

The masterplan provides for a 30 per cent of the TRX to be open spaces, including a 14-acre signature public park.

The TRX will apply cutting-edge technologies in energy, water and waste management, among others.

Smart systems, well-designed infrastructures and a centralised control and command centre will reduce carbon emissions by 40 per cent, total water demand by 60 per cent and divert 70 per cent waste from landfill.

By Bernama

It's business as usual for UMLand despite buyout

KUALA LUMPUR: United Malayan Land Bhd (UMLand) will stay focused on its business expansion including diversifying into new areas, despite being taken private by its major shareholders.

Tycoon Tan Sri Syed Mokhtar AlBukhary and Singaporean Datuk Ng Eng Tee, who each owns 28.1 per cent and 35.76 per cent stake in UMLand, are buying out the company at RM2.50 per share.

They are buying the shares from Temasek Holdings (Private) Ltd, which has a 20.75 per cent UMLand stake held via CapitaLand Ltd.
According to UMLand group chief executive officer Charlie Chia Lui Meng, the privatisation deal will be completed within the next two to three months.

Trading in the shares of UMLand has been suspended with effect from September 5 2012 and the company will be delisted from Bursa Malaysia.

"Business will be as usual for UMLand. I do not foresee any changes after it has been taken private," Chia told Business Times in a recent interview.

Chia said UMLand is diversifying its revenue stream with the setting up of an investment portfolio, which will comprise a series of hotels.

"There is a lack of hotel rooms in Johor Bahru and this is a good business area to go to as there will be demand with spillover from Singapore, thanks to the Iskandar Malaysia development," Chia said.

UMLand is one of the largest property developers in Iskandar, with a total landbank of over 900 hectares.

The Iskandar land represents 90 per cent of its undeveloped landbank.

The company has several new projects coming up in Iskandar in the next two years and there are plans to build up to five four-star hotels, Chia said.

Chia added that the hotels will be managed by UMLand, in partnership with several hotel operators.

UMLand has also set up a leasing arm to operate serviced apartments, retail malls and offices.

"When we build, we will retain some properties for rental yield. And when we sell, there will be an option to lease back the properties. As a property developer, we need to diversify at one point and look at recurring income," Chia said.

In February, UMLand launched Sommerset Puteri Harbour in Iskandar comprising 204 serviced apartments worth a combined RM220 million.

The units, sold under a leaseback arrangement, will be operated by The Ascott Group of Singapore.

By Business Times

Malaysia stamps mark in London

BRITISH ALLURE: Malaysians have found Britain, especially London, extremely attractive as an investment (and playground) location. Zuraimi Abdullah was in the city recently and came back with some ideas as to why Malaysia is well on its way to become the world’s top buyer of London properties this year.

"MALAYSIA has come to London", to borrow a quote from Datuk Seri Idris Jala, one of our brightest and "fun to hear him talk" ministers.

The arrival alluded by Idris Jala is not that typical one made by Malaysians en route to Bicester Village (about an hour's drive from London) to buy designer brands at half the prices than that in Kuala Lumpur. Neither was it by those who are there to spend Hari Raya or Christmas with their sons and daughters working or studying in the British capital.

It is also not a leisure trip by hardcore football fans to watch Arsenal, Chelsea or Tottenham slugging it out to be London's top Premier League club.

The arrival in question is by Malaysian investors who have made London a safe haven for their burgeoning cash pile.

The list of Malaysian investors in the city is extensive, from the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) to IJM Land Bhd, Oriental Holdings Bhd and Eastern & Oriental Bhd.

PNB already has three properties in London in One Exchange Square, 90 High Holborn and Milton and Shire House.

In early August, Amcorp Properties Bhd said it was forming a joint venture to buy a freehold office building in London's trendy Mayfair district. This was followed by IJM Land Bhd's disclosure of a mixed development on Royal Mint Street.

Genting Malaysia Bhd, meanwhile, is investing STG120 million (RM592 million) to develop a leisure and entertainment complex in Birmingham.

Non-property wise, Berjaya Group founder Tan Sri Vincent Tan has already bought Welsh football club Cardiff City.

So has AirAsia's Tan Sri Tony Fernandes with his London-based Queens Park Rangers.

Malaysia was ranked second only to the United States in a list of the top five property investors in London by total investment volume between 2010 and the second quarter this year, with STG2.35 billion and STG3.53 billion ploughed in by both countries, respectively.

Rounding off the list were Germany with STG1.29 billion, Saudi Arabia with STG969 million and Qatar at STG750 million, according to an independent report.

But in the first seven months of the year, Malaysians bought STG1.3 billion worth of London properties, more than British buyers and beating the US (STG793 million) into second place among overseas investors, research by property consultant CBRE Group showed.

Analysts said the favourable exchange rates the European financial crash had created is a big draw for investors. The British pound's exchange rate has remained below or around the RM5 mark since last year.

A STG400 million deal concluded by Sime Darby Bhd, SP Setia Bhd and the EPF to buy the iconic Battersea Power Station in London earlier this month could have pushed Malaysia further from the US as London's top investor year to date.

Malaysia's growing appetite will be boosted by several potential deals by year-end.

Tabung Haji is currently finalising its first commercial property acquisition in London, estimated to be worth STG165 million.

The proposed acquisition, part of the pilgrimage fund's plans to splash some RM1 billion on overseas investments, is expected to be sealed this month.

Syarikat Takaful Malaysia is scouting for commercial buildings or offices in London, too.

Kumpuan Wang Amanah Pencen (KWAP) is rumoured to have just made its first foray there, with the acquisitions of three properties.

The pension fund reportedly plans to spend up to RM1 billion on London assets.

Analysts said central London has been the focus of Malaysian and other Far Eastern investors in recent years. They were looking to benefit from the city's perceived safe haven appeal and the iconic nature of some of its real estate.

A weak British pound, coupled with low interest rates, make London a compelling location, they added.

"Despite the current economic contraction, UK properties remain favourable, given the ultra-low interest rate environment, ongoing geo-economic uncertainties and relatively weak British pound," a local analyst said.

"Malaysians are attracted to London's property market by the weakness of sterling and the fact it is a liquid and transparent investment in a relatively stable political environment, often providing better returns than Asia's more volatile and smaller markets," he added.


Malaysia's appetite in property investment in London increased dramatically when the Sime Darby-SP Setia-EPF consortium won the bid to redevelop the iconic Battersea Power Station.

Apart from the STG400 million paid for the site, the consortium will contribute another STG200 million towards building an extension of the Northern Line of the London underground railway system, making the total effective cost some STG600 million.

It is a major coup for Malaysia as various development plans for the site, which once graced the cover of British rock group Pink Floyd's "Animals" album in 1977, had been shelved over the years due to financial issues.

The Malaysian consortium will create a new town centre with retail, commercial and residential components totalling eight million sq ft. The redevelopment will churn out an estimated gross development value (GDV) of STG8 billion over 15 years.

A recent visit to the Battersea site made it very clear why this piece of real estate was coveted by so many: its strategic location, size and value.

At 15.8ha, including 6ha for the old powerplant with prime riverfront access, the site is perhaps the largest piece of land left for redevelopment in central London.

The site is located south of the River Thames, and just east of Chelsea Bridge, which links it to the upmarket neighbourhoods of Chelsea, Kensington, Knightsbridge and Belgravia.

The world-famous Harrods, Harvey Nichols and the high-end shops of Sloane Street are all located in less than a 20-minute walk.


EPF chief executive officer Tan Sri Azlan Zainol said it would not have got involved in the project if it were not convinced with its prospects and the partners behind it.

Azlan said the combined financial strength and experience of SP Setia and Sime Darby, both of which are backed by cash-rich PNB, are key factors.

The EPF itself is not a poor organisation.

According to a Towers Watson report, the EPF was the world's ninth biggest retirement fund in 2010 with investment assets of RM489 billion as at March 31, 2012.

CIMB Research estimates that the Battersea project can fetch a 25 per cent profit margin, but said earnings contributions will not trickle in until three years later, in 2016.

The total net internal area of the project is about 6.3 million sq ft, of which close to 60 per cent is residential.

The launch of the development's first phase is set for the second quarter of next year.

Phase One will be a self-contained development made up of multiple residential buildings with a total of 800 apartments, standing above a commercial podium with a GDV of STG1 billion.

The project development cost for the first two years is estimated at STG200 million, CIMB Research noted.

"Overall, we remain optimistic of the project's prospects. We like the location and (the project's) low land costs compared to its peers.

"We gather that the average selling price for residential properties will be about STG1,100 psf, broadly in line with other launches in the vicinity," the firm said.

By Business Times