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Monday, September 24, 2012

Are there too many malls in Penang?

PENANG'S retail scene appears to be on the boil, if the number of shopping or lifestyle malls which have sprouted or are being constructed are anything to go by.

Just how well these establishments and their tenants are doing is anyone's guess, even if some of the major ones found on the island and Seberang Prai appear to not be lacking in terms of human traffic.

The island is currently home to less than 10 shopping malls, while Seberang Prai has about half the number. Not all these establishments are raking in high profits. Those which are managed by professionals and boast solid anchor tenants are the ones who are finding themselves profitable.

Others have been known to be spiraling downwards due to poor management and inadequate planning. Tenants in these centres are finding themselves left with no choice but to move out or come up with novel ways of luring consumers to survive.

A check on the type of merchandise stocked in some outlets reveal that stock has not been refreshed for some time. Others, by virtue of in-store promotions and sales are seeing a little better business although the general consensus is that retail shoppers are not buying as much as they used to.

While some food and beverage establishments with vantage locations continue to see a constant flow of diners, others are lamenting the fact that things have slowed down.

Others doing relatively well as those offering entertainment options like cineplexes, beauty and fitness outlets and also good bookstores.

Some tenants who find themselves struggling appear to be those who are faced with increased rentals and a shrinking pool of patrons (who tend to flock over to the next mall when a new one opens).

For those those living in neighbourhoods within close proximity to shopping malls, especially on the Penang island, their regular gripes these days are centred on horrendous traffic jams in their areas, especially during long weekends and peak hour.

These residents are forced to contend with haphazard parking by those who opt not to park in the generous number of parking bays provided by shopping mall operators.

In order to save parking fees, shoppers have no qualms in parking illegally in a residential area for hours on end, sometimes even blocking the entry way of house owners into their own properties.

Questions being asked about Penang malls are:

* Does Penang need more shopping malls which essentially mirror each other when it comes to tenant mix?

* Are traffic dispersal systems taken into consideration by the local authorities when giving planning permission for projects which generate massive traffic flow into an area?

* Whose responsibility is it - the local government or the business operator's - to ensure that the quality of life enjoy by those living in the vicinity of malls are not adversely affected when a property developer decides to build a neighbourhood mall in their midst?

As traffic congestion in Penang is now getting to unbearable levels during festive and holiday periods, perhaps a review is needed on where future malls should be located, and if these malls are even needed in such great numbers in the first place.

Like most other Malaysians, Penang residents love their malls and their shopping habits sometimes have a tendency to spur a mall-building boom.

The financial shape of retailers and both national and international property developers must also be looked into when shopping malls are being proposed.

Also to consider should be the fact that Internet shopping has and continues to grow by leaps and bounds and that the retail sector would likely be one of the first casualties during an economic downturn.

This in turn, will likely see a state or country left with an increasing number of abandoned - or dead - malls.

By Business Times

In Ipoh property boom prices up more than 30%, on par with KL and Penang

One of the many new developments in Ipoh – The Enclave along Jalan Sultan Azlan Shah is sought after.

IPOH: The prices of properties in Ipoh have skyrocketed in prime locations to be almost on par with those in Kuala Lumpur and Penang.

“Ipoh is now bustling with activities. There is no sign of prices coming down,” said Oriental Realty agent Gladwin Agilan.

Gladwin said the demand was not only for new developments but in the secondary market.

Gladwin: ‘There is no sign of prices coming down.’

Among the factors that have contribute to the upward trend in the demand for properties were better transport facilities including direct flights to Singapore, the electric train service, the state being an education hub and a high number of foreign companies investing in the state.

Condominiums or high-rise apartments, once considered unprofitable, are now in demand as people look for amenities such as swimming pools, gymnasium, and restaurants at their doorsteps.

The prices of properties in Canning Gardens have been increasing by 10% annually for the past three years.

He said people chose to own properties in the area due to its location, which is near the city, and because of its freehold status.

Gladwin, who is the head of the sales division, said the latest transaction showed the price of land was RM144 per sq ft for a single-storey semi-detached house.

“Surprisingly these houses are purchased by Perakians who are in their late 30s to mid-40s.

“Many of them have returned to their hometown due to better job opportunities.

“Foreign companies such as Vale iron ore distribution centre in Teluk Rubiah have also created demand,” he said.

The type of residential units being sought after has also changed. There is demand for condominiums, gated-and-guarded landed properties as well as properties that have easy access to amenities.

Gladwin said new developments such as the Haven Lakeside Residences in Tambun, Meru Hills in Meru Valley and The Enclave along Jalan Sultan Azlan Shah, Somerset at Thompson off Jalan Sultan Azlan Shah, Casa Bintang near the Ipoh Swimming Club in Jalan Raja Dr Nazrin Shah, were gaining popularity.

He added that developments were now taking place in the outskirts such as Klebang, Kledang, Pasir Putih and Sunway in Tambun.

Gladwin said the perception of owning a property in Ipoh, and not being able to rent out was incorrect as the demand for rented housing was overwhelming especially in Meru Valley and the Sunway area.

“Foreigners working in the state prefer to stay in bungalows or condos in such serene areas.

“It offers a higher yield of between 7% and 10%, which is considered good, as only commercial properties offer such attractive returns,” he added.

He said besides Ipoh, the next upcoming market is Manjung, located about 90km from the city. Other potential areas for development included Lumut, Teluk Batik and Pangkor.

Another real estate agent P.Ranganathan agreed that the prices of properties were going up in certain parts of the city.

He said the prices of property had increased by up to 30% in the last three years.

“Those that have made up their mind to purchase properties in the city should do so fast as the prices of building materials are increasing.

“With steel bars and other building materials on the rise, the prices of properties are also expected to increase,” he added.

Datuk Bandar Datuk Roshidi Hashim said the skyline of Ipoh would change by 2014.

He said this was visible from the rapid development that was taking shape in the city.

“We are expecting more development to take place in the city,” he said.

By The Star

Developers want to hand over the baton

Private developers want the government to take over the responsibility of building low-cost houses, but say they are willing to partly contribute to such projects.

Glomac Bhd's group managing director and chief executive officer Datuk FD Iskandar said this role can be taken up by Syarikat Perumahan Negara Bhd (SPNB), a government-owned entity.

SPNB, a wholly-owned subsidiary of the Minister of Finance Inc, was established in 1997 with the objective of building quality affordable homes.

However, Iskandar said, SPNB should not be left on its own to raise fund for the low-cost homes. Developers should partly contribute to such projects as part of their social obligation.

Iskandar is also the Real Estate and Housing Developers' Association deputy president.

Towards this end, he suggested that developers pay certain amount to be channeled to SPNB, in lieu of not building such homes.

"There is already a formula in Kuala Lumpur where for every low-cost (unit) developers don't build, they have to pay to Kuala Lumpur City Hall (DBKL).

"For example, say you have to build 100 low-cost units and you don't want to build them ... In lieu of not building them, for each of the low-cost unit, you have to pay RM3,250 to DBKL.

The money collected should be channeled to SPNB so that it can build low-cost units elsewhere, he added.

He said it makes sense for the government to build affordable houses for the lower income group, with private developers helping with the funding.

Private developers lose RM15,000 to RM50,000 for each low-cost unit they have built. "Stop, don't ask us to build anymore low-cost (units) as the demand is no more there," he told Business Times in an interview recently.

Iskandar said private developers do not try to run away from their social obligation, noting that they have, in fact, over-achieved in delivering the low-cost housing targets.

The government, in 1982, imposed the 30 per cent low-cost housing quota on developers as a social obligation. Since then, developers have been building low-, low-medium and medium-cost houses at prices that have been maintained at between RM42,000 and RM99,000 each.

Under the Eighth Malaysia Plan (2001-2005), developers built more than double the target 40,000 units by delivering a total of 97,294 houses.

Between 2006 and 2010 under the Ninth Malaysia Plan, developers again exceeded the target by building 78,500 compared with 77,700 imposed by the government.

"For the hardcore and urban poor, they cannot buy a house (even) at RM42,000 as they don't have the capacity to buy at that price," said Iskandar.

He noted that places like Bukit Beruntung, Klang, Semenyih and Bukit Sentosa have thousands of low-cost units priced at RM42,000, which are empty.

"Today, when the low-cost houses are auctioned, they're only sold at RM12,000 to RM15,000 ... so there is no demand," he said.

Furthermore, he said, what is more worrying is that most low-cost apartments in Malaysia are not well maintained.

Iskandar said the registration and distribution system of low-cost housing leaves much to be desired, with many units not fully taken up by low-income households.

"As business entities, we have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations," he said.

By Business Times

'Malaysia, Singapore can be the Orlando of SE Asia'

NUSAJAYA: International theme park operator Merlin Entertainments Group foresees Malaysia and Singapore as among the world's most important tourism markets.

Its chief executive officer, Nick Varney, dubs the southern part of Peninsular Malaysia and Singapore as the future "Orlando of Southeast Asia".

Orlando in Florida, the US, currently has more theme parks and entertainment attractions than anywhere else in the world.

The UK-based Merlin, which is focusing its expansion in the Asia-Pacific region, is actively seeking opportunities in Malaysia and Singapore.

"We see Singapore-Malaysia as a nexus for, I think, of what could become the most powerful tourism market in the world," Varney said in an interview at Legoland Malaysia family theme park here.

He said the Universal Studios Singapore (USS) and Legoland Malaysia complement each other and that other developments will follow on the back of these two international theme parks.

"I believe this region, the southern part of Malaysia and Singapore, is really destined to (be) what I call the Orlando of Southeast Asia. I think this would be the destination of choice for families not only from Malaysia and Singapore, but (also) from big markets like China, India, Indonesia and Australia," he said.

Legoland Malaysia, the first in Asia and the sixth in the world, is owned by Khazanah Malaysia Bhd's unit, Themed Attractions and Resorts Sdn Bhd (TAR), Iskandar Investment Bhd (IIB) and Merlin.

Spanning over 30ha land within the Iskandar region, Legoland Malaysia is the largest family theme park destination in Southeast Asia.

Speaking to Business Times just hours before the official launch of Legoland Malaysia on Saturday, Varney said the Malaysia-Singapore region would see at least another big theme park and other smaller ones.

Merlin itself, which operates more than 90 attractions, seven hotels and two holiday villages in 21 countries across four continents, is keen to increase its presence in Asia.

"At the moment, we are looking at the midway attractions. We think that can complement the development of a resort that is taking place here. And also what are other opportunities available in Malaysia generally," he said when asked to comment on talks between Merlin and TAR to bring other attractions to Malaysia.

For the Merlin group, "midways" refer to indoor attractions or near-city centres with a visit time of several hours such as the Dungeons or Sea Lifes. Resort theme parks, meanwhile, are attractions set up for longer visits of one or two days.
Legoland parks are in the third category, which is a homogenous global set of attractions on the theme of Lego bricks.

Varney said the group is also seeking other opportunities available in Malaysia.

"We're also very interested in the Singapore market and have been talking to Singapore Tourism Board for some time on the opportunities there.

"Quite naturally, with brands like Madam Tussauds and Sea Life as well as other brands that we own, we'd like to bring those to that market (Malaysia and Singapore)," he said.

Besides the wax museum and the Sea Life aquarium, other brands under the Merlin group, which attracted over 46 million visitors last year, include London Eye, Gadaland, Alton Towers Resort, Legoland Discovery Centre, Warwick Castle, Thorpe Park, Blackpool Tower, Heide Park, Wild Life Sydney, Siam Ocean World and Busan Aquarium.

By Business Times

Rest of Bandar Seri Putra will be ready in next 5 to 7 years

UNITED Malayan Land Bhd (UM Land), a property developer, expects the entire Bandar Seri Putra development to be completed within the next 5-7 years.

The company, which started developing Bandar Seri Putra in 1997, has currently developed about 283.28ha in Bandar Seri Putra, with a gross development value of more than RM1.75 billion.

"We expect the approximately 80.93ha of remaining land in this township to be developed over the next 5-7 years. These developments are expected to generate more than RM700 million in gross development value," said chief executive officer Charlie Chia after the launch of Bandar Seri Putra's new sales gallery on Saturday.

The new sales gallery was officiated by UM Land chairman Tun Musa Hitam.

Located on the ground floor of a three-storey building with a mezzanine floor, the new sales gallery showcases products offered within the township of Bandar Seri Putra, UM Land's flagship township in Selangor.

"This three-storey building packs a simple but yet elegant design. It demonstrates the simplicity and practicality that we have infused in our various developments in Bandar Seri Putra," said Zulkifly Garib, UM Land's director of operations.

Over the next three years, the company plans to develop apartments and bungalows in the township - with the balance of land to be developed into commercial buildings.

"Bandar Seri Putra is strategically located and easily accessible. Located within the Multimedia Super Corridor, it is easily accessible from the Putra Mahkota interchange, along the KL-Seremban highway and adjacent to the township.

"Residents will enjoy fast and easy access to Putrajaya, KLIA, and the nearby education institutions encompassing various universities and colleges such as Universiti Putra Malaysia, Universiti Kebangsaan Malaysia and Kolej Universiti Islam Antarabangsa Selangor," Zulkifly added.

By Business Times

China firm may invest RM1b in Terengganu

NANNING: A public-listed company from China has begun talks with the government to invest RM1 billion in Terengganu for an aquaculture development project.

Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said discussions were on going and the potential investor has been to Malaysia to study the project.

However, he pointed out that it was still early to disclose the identity of the company.

At the same time, the Malaysian government would also need to ensure it secures the best deal through the development which may stretch up to five years.

A plot of land has been identified by state government for the development which will be coordinated by the East Coast Economic Region Development Council.

"We are not just looking into the investment or the employment opportunities it may bring. We also need to look into how we can benefit through the spin-offs that can be generated from the deal."

Mukhriz said this after attending the 9th China-Asean Expo at the Nanning International Convention and Exhibition Centre which was launched on Friday and ends tomorrow.

A total of 136 Malaysian traders are taking part in the expo at the Malaysia Pavilion, which is coordinated by the Malaysia External Trade Development Corporation.

Meanwhile, Mukhriz attended the China-Asean Advanced Manufacturing Forum where he called on East Asian countries to lend their support to an economic initiative that could transform the region into a single market covering more than 45 per cent of the global population.

He said the regional comprehensive economic partnership involving Asean, China, Japan, Australia, New Zealand, Indonesia and Korea for one deserves to be considered.

"As you are aware, discussions are now taking place to coordinate, rationalise and improve the principles and policies governing these agreements. It is an initiative that deserves our wholehearted support."

Also present at the forum held at the Guangxi People's Hall were the China vice Industry and Information Minister Su Bo and Guangxi Autonomous Region vice chairman Yang Daoxi.

The foundation for economic cooperation between countries in East Asia has been built up over the centuries and delivered development and prosperity as well as weathered difficult times, Mukhriz said.

"It has helped us weather the impact of the current economic crisis in the West, for example.

"However, this problem is not going to disappear any time soon. Europe is still unable to agree on a lasting and permanent solution to the problems of the euro. In the United States, the economy remains tepid," he said.

By Business Times