Konsortium Logistik hopes to get RM65m from land sales

KONSORTIUM Logistik Bhd, a logistic company, plans to sell several pieces of land in Indonesia, Thailand and Malaysia for an estimated RM65 million.

The sale of its land in Jakarta, Indonesia is due to be finalised within a couple of months, said its chairman Ismett Azyze Hamad Abbdul Azyze.

"We are looking to dispose no-yield or low-yield assets ... it is not a fire sale, we will sell if the price is right," Ismett told Business Times.

"We have land in Thailand, Indonesia and Penang (Seberang Prai) with an estimated value of RM45 million. We also have other pockets of land in Port Klang and Johor worth another RM15 million to RM20 million," Ismett added.

"We have agreed on the pricing for the land in Indonesia. It will go for about RM13 million or RM14 million. Hopefully, the deal is done within one or two months," he said.

For the land in Sadao, Thailand measuring 32.4 ha and in Seberang Prai measuring 12.2 ha, Konsortium Logistik has received various enquires and offers, none of which is the price the company is seeking.

"We are likely to make a small margin from the sale," Ismett said.

Meanwhile, the firm is also exploring the possibility of selling another piece of land measuring 3.65 ha and valued at RM42 million in Puchong, Selangor.

"We are looking at the operational requirement of the group. If we do not need the warehouse (in Puchong), we may move to another location," he said.

Ismett said that it had received an offer to set up a real estate investment trust for the land in Puchong and in Port Klang but it put the option on hold.

By New Straits Times (by Vasantha Ganesan)

A frank assessment of property & construction

According to census only 5% of households in the country have a monthly income of RM10,000 or more. You would think the figure was a lot higher judging from the number of property launches over the last 2 years with condos, semis and bungalows selling for over RM1mil.

If you bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

The recent fuel price hike coupled with higher cost of living and inflation may require a sober assessment of the local property and construction sectors.

There are about 4 -5 million households in the country, so we are talking of just 200,000 to 250,000 households with income of more than RM10,000 a month.

A property purchase of RM1mil on a 30-70 deposit-loan ratio would be staring at a RM700,000 mortgage. That would be a monthly payment of RM7,000 - RM9,000. Even if you bring that down to RM400,000 it is still RM3,500-RM5,000 a month.

Hence one can safely conclude that it’s a market for rich folks and foreign buyers mainly. Rich folks being those who can put up all cash or 50% deposit hoping for a nice fillip in the near future.

According to the Masters Builders Association of Malaysia, building material cost for local contractors have risen by 25% on average since January this year. Following the recent electricity tariff hike, they should be looking at another 5%-10% hike in the coming months.

Coffee shop talk has it that contractors are already putting requests for price variations of a 30%-40% hike on the original contract.

Over the last few weeks more than 200 contractors have turned down letters of award for government projects. Some are asking for mutual termination.

Let’s look at some building material cost items:

Sand (washed)/t: 2006 24.00 / Q108 27.00 / June08 34.00

Readymix Concrete 40 M3: 2006 152.00 / Q108 186.80 / June08 234.00

Re-bar High Tensile/t: 2006 1,855.00 / Q108 3,169.00 / June 08 4,050.00

Property companies have been jumping on the super luxury market as the trend and sentiment were on their side. The huge success of casinos in Macau followed a very spectacular property boom in Singapore triggered by the IRs over the last 2 years. Hence some spillover effect is understandable.

Currently property prices in Asia-Pacific is still high but largely flat in recent months. The proverbial stuff has not hit the fan as yet. The wait and see attitude is masking grave dangers.

The big fallacy is to see property companies reporting enormous profits. Do bear in mind these are profits booked for the past 12 months.

Naturally developers would be the last people who would want to come out and sound the alarm bells. Many property companies in Asia-Pacific have delayed their IPOs over the last 6 months. These are the alarm bells.

We have to remember that property affordability and property speculation have a high correlation to local stock markets performance. In particular, it is more prevalent for Asia-Pacific because we tend to have a large portion of our GDP being listed, plus the fact that Asians prefer to do direct investments themselves.

Just look at the equity markets from 2005-2007 and note the markets’ performance. Now look at the markets’ performance over the last 6 months. The doldrum is only just working its way into the financial economy.

Looking ahead, we will still have firm commodity prices, high inflationary expectations and likely higher interest rates – all not exactly friendly to stocks or property markets. Enough said.

In fact the real demand in the market place is for properties between RM300,000 to RM700,000 which has been sorely lacking. Even semis in Balakong and Rawang are nearing the RM1mil in new launches. It all boils down to affordability, and that’s the affordable range.

If you had bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

Ask anyone in property about the price for concrete and steel bars, and you will get a good idea of the huge jumps in construction and material costs. All things being equal, higher material cost should mean that your existing property should be worth a lot more as the replacement cost has gone up significantly.

If you bought 12-24 months ago, technically speaking your house is worth a lot more based on higher building materials’ cost alone.

Why then is the property market flattening out? When things dictate that property prices should move higher, but it doesn’t, then something is very wrong. It’s an old adage but worth repeating here (for property and equity investors): If something that is supposed to go up doesn’t, it is very likely to go down.

Sub contractors are now more willing to give up on the jobs secured, even paying the penalties and giving the jobs back to the main con because cost of building materials have gone up so much that they will be making losses if they go ahead. Just look at the run up in billing estimates for the second Penang bridge and you will have a good idea what we are dealing with.

For the super luxury market, probably less than half will be tenanted if at all. One can expect more to come back onto the market place in the coming months even though the replacement cost for these properties are actually higher.

The merry-go-round has stopped for super luxury items. Just witness the property markets in Singapore, Hong Kong, Thailand, Indonesia, China and even Australia.

The only sub-sector that may hold up well might be commercial buildings but that’s largely due to under-investment the few years following the Asian financial crisis of 1997.

As things stand today, just in Selangor alone there are already 140 abandoned projects from the previous cycle, involving the 47,000 odd units worth RM2bil. The huge cost run up will increase the likelihood of more new abandoned projects.

We Asians tend to view property investments differently. We tend to do it with minimal discussions with friends or relatives, as if its a crime to let others know that we are buying properties.

Maybe people will think we are rich, or too rich. In the end we end up discussing property investments with property agents, and reading tomes from property magazines. Just note the number of new property magazines launched over the last 2 years. After all, this is probably the most important financial decision we make in our lives.

The probable consequences in coming months

· Properties having sold 100% off the plan will see some of the developers starting to lose money if they are less than halfway through their projects as they may not have secured the building materials cost budgeting.

· Some smaller developers will be hit even harder and there will be more abandoned projects. Better to run than to continue the project. Developers cannot really go back and ask buyers to pony up another 30% to their purchase price, or can they?

· A substantial portion of the economic vibrancy in Asia-Pacific over the last 3 years has been due to strong property prices. A similar contraction effect will happen if things slow substantially in the property and construction side.

· Luxury properties will see at least a 15%-20% easing in the coming months even though the holding power is stronger. 15%-20% is about the loss that speculators are willing to take going forward.

· Real affordability is between RM300,000 to RM700,000. Anything above that is a different market, but they will still be affected. Completed units will have to be left empty or be rented at cut-rate prices. Maybe we can rent a RM1.5mil house in a gated community at RM3,000 ? who knows.

· Affordability is a function of outlook on inflationary expectations as well, and that’s not looking good

· Government construction projects will have to be revised higher to be viable or else the successful bidder will just walk away, even with penalties. Construction spending will rise in the coming budget but not in actual number of projects. Just accommodating the higher costs alone will move the budget a lot higher.

· Developers who sold 100% off the plan over the last 12 months may now be looking at making losses just to complete the projects.

· Coming months: a slowing US economy; higher inflationary expectations; commodity prices to stay firm; global equities under pressure.

· Rental market is a lot better in Hong Kong and India, showing a preference to defer property purchase. Expect that trend to be replicated in Singapore and Malaysia as well.

· While Asia-Pacific has weathered the US sub prime implosion well enough, the recent Vietnam implosion has rattled some feathers of regional developers.

· Be prepared for margins destruction, projects disruptions and scrapped/deferred projects.

Things we need to do now

· Lower your leverage and borrowing substantially, even if it means making some loss.

· By lowering your leverage, you are basically making it available at a future point in time to capitalise on probable better opportunities in stocks and property.

· Re-evaluate your property portfolio, be careful if there are yet to be completed properties you have bought.

· Be very wary of buying from smaller developers as the risk quantum has increased substantially.

· The state and federal government should start imposing adequate “capital requirements” for existing projects and new projects. Don’t wait till they abandon the projects. It is a lot harder to revive once abandoned.

· Think about the potential jobs constriction within the property and construction market place and plan your policies to mitigate those effects on the broader economy.

· Even developers with overseas projects may not be immune unless the rise in material cost has been factored in fully. Even if they were factored in, a 50% jump in cost may make many of these projects unviable. Only places such as the Middle East countries swishing in petrodollars can maintain the aggressive infra spending plans over the next 1-3 years.

· The economy may hold up a lot better than the general population as oil and gas receipts and plantation receipts will be positive. Generally speaking the general public’s wallets does not have a high correlation to oil or CPO prices, if there is even a correlation at all.

· Authorities should only allow build-and-sell developers over the next 3 years. As consumers, buying from the secondary market place would be a much better option than off the plan.

· A three-year contract in the Middle East with lucrative terms on a construction related job should look a lot better now.

· The government should defer the big projects which may not be the priority now. Instead it should spend more on Klang Valley’s transportation system.

By The Star (by S.Dali) (Article posted on 20 July'08)

S Dali is a pseudonym. He is an ex analyst/fund manager and active blogger. (malaysiafinance.blogspot.com) who says he is too young, too old, too sarcastic, too dark, too funny, too charismatic, too poor, too Cantonese, too Malaysian, too frank, ...too bad ..

Danga City Mall to add hotel, serviced apartments

JOHOR BARU: Danga City Mall Sdn Bhd (DCMSB) plans to build a hotel tower and serviced apartment block as part of its Danga City Mall development.

Managing director Gary Lee Seaton said the project would be located on the mall's existing outdoor car park, measuring about 40,000 sq ft.

The interior of Danga City Mall.

“The retail and hospitality sectors in Johor Baru will chart a good growth with the influx of local and foreign investors to Iskandar Malaysia,” he said.

Johor would also benefit from the spillover of the tourism sector in Singapore if local retail and hospitality players worked together to tap this market, he said.

Seaton said this during a preview of the newly refurbished mall, opening for business on Aug 31.

The mall, formerly known as the Best World Plaza, closed down two years after its opening in 1996 due to the Asian financial crisis.

DCMSB, which is closely linked to the developers of Danga Bay waterfront project, acquired the building in 2005 from Pengurusan Danaharta Sdn Bhd.

The former has spent RM100mil on the mall, including a RM50mil makeover, to reposition it as the city’s premier retail complex.

Located along Jalan Tun Abdul Razak, the mall has a gross built-up area of one million sq ft and 500,000 sq ft of lettable space over seven floors.

“The upgrading of the road to give the mall greater accessibility is our main priority as previously shoppers had problems coming to the mall,” said Seaton.

He said Metrojaya would be the main anchor tenant, occupying 120,000 sq ft.

Seaton said Metrojaya would have a 1,500-sq-ft café within its premises – the first of five such Metrojaya stores in Malaysia.

The other stores are at Mid Valley Megamall, Berjaya Times Square and Bukit Bintang Plaza in Kuala Lumpur, and Island Plaza Penang.

By The Star (by Zazali Musa) (Article posted on 20 July'08)

Floored by the pure beauty and warmth of solid wood

Wood flooring is renowned for its natural beauty, versatility, strength and endurance. It creates an ambience of warmth and vibrancy.

Solid timber is 100% natural and extremely durable.

There are many different wood species to choose from, each with its own character and identity.

Add that to today’s huge range of stains and finishes, the possibilities are endless and exciting.

Therefore, wood flooring blends in seamlessly with any style and décor.

Solid timber is 100% natural, extremely durable and can last for generations.

It can also be refurbished many times over and has real market value as it is a commodity.

Maintaining wood flooring is easy; you just need to dry mop or vacuum twice or thrice a week and clean up spills as soon as possible before they dry.

There are cleaning products which are specially designed to ensure your floor sparkles and looks great.

To refurbish wood flooring, you can either do light sanding and varnishing or grinding and varnishing, depending on the level of damage.

At Asia Timber House, you can find a range of high quality wood floorings that will suit any preference.

All the wood here is kiln-dried for the Malaysian climate, resulting in wooden floors that are more stable and stronger, with smoother finishing.

As Asia Timber House is a wholesale company, their wood is also budget-friendly.

They offer personalised consultancy to cater for different environments and design requirements of each home.

By The Star

Pelangi sees GDV of RM55m

JOHOR BARU: Pelangi Bhd sees D'Serambi, its last residential project in Taman Perling near here generating gross development value (GDV) of RM55mil.

Chief executive officer Azmar Talib said the project comprised 116 double-storey link houses priced from RM420,000 and would be completed in the next two years.

Datuk Ahmad Zahri Jamil (left) with Azmar Talib looking at a model of the D’Serambi project in Taman Perling

He said the gated and guarded project featured homes that combined modern needs with traditional values and classic architecture.

“Taman Perling’s close proximity with Bandar Nusajaya in Iskandar Malaysia and Singapore via the second crossing are the strong selling points of the project,” Azmar said at the project launch by the Local Government, Housing, Arts, Culture and Heritage committee chairman Datuk Ahmad Zahri Jamil on Saturday.

Azmar said the modern Malayan Homes concept was chosen as it brought back the good old days of living in government quarters where residents of all races mingled freely.

D’Serambi was the first residential project in Johor to have landscaped gardens in its back lanes, he said, adding that Pelangi wanted to be at trendsetter in property development in Iskandar Malaysia.

“The construction will involve minimum cutting down of trees as we want to preserve most of the 20-year-old mahogany trees on the 3.642ha site,” said Azmar.

He said the project had received good response, mostly from existing residents of Taman Perling who wanted to upgrade to high-end properties.

He said the recent completion of the Perling Highway and the good accessibility to the Johor Baru city centre, Senai Airport, Singapore and Pasir Gudang would add to the project's attraction.

Azmar said Pelangi was also planning to redevelop Perling Mall in view of several new retail complexes opening in the nearby Bukit Indah, Taman Sutera Utama and Taman Nusa Bestari.

He said the opening of the state new administration centre, private medical centres, foreign universities, resort style living projects, waterfront development and industrial estates in Nusajaya would have a positive impact on the retail sector in the nearby areas.

By The Star (by Zazali Musa)

Boustead close to privatising property arm

BOUSTEAD Holdings Bhd (BHB) says it is on course with its plan to successfully complete its privatisation of Boustead Properties Bhd, having gained 97.4 per cent control of the property arm.

In a statement in Kuala Lumpur today, BHB said it was confident that the remaining shareholders who have yet to accept its offer under its voluntary takeover exercise of Boustead Properties will accept its attractive offer which is open until July 24.

The privatisation move is in line with the group’s efforts to streamline and drive its growth.

“The offer for shareholders to take this up is now deemed unconditional.

All shareholders will begin to receive payment for their shares or receive their BHB share entitlement over the next 21 days effective July 16,” it said.

“We have been given to understand by our advisors that the small portion of shareholders who have yet to accept this offer are in the process of doing so.

“On this premise, we would like to accommodate them to provide them with sufficient time to take up our offer,” group managing director, Tan Sri Lodin Wok Kamaruddin said.

BHB launched a voluntary take-over of Boustead Properties on June 5, where Boustead Properties shareholders were offered a premium of 31 per cent above the company’s five-day weighted average market price with a strike price of RM5.50 compared to the said market average of RM4.20.

Kamaruddin said with the take-over plan, the group was confident of growing organically and further strengthening its business.

“This will be complemented by the synergies in terms of consolidation of assets within the larger BHB group,” he said.

By Bernama

Kumpulan Hartanah agrees to sell land

KUMPULAN Hartanah Selangor Bhd (KHSB) has agreed to sell a piece of land in Pulau Indah, Selangor, to Inai Kiara Sdn Bhd for RM30.1 million cash.

The 50.2ha land at Section 11, Pulau Indah, is still undeveloped, KHSB said in a statement to Bursa Malaysia yesterday.

"The sale of the land will accelerate the development of Pulau Indah and help to enhance the economic level in Pulau Indah by providing job opportunities," KHSB said.

By New Straits Times

New ideas to beat higher costs

KUALA LUMPUR: The rising cost of building materials provide the best opportunity for developers to be innovative and seek other alternatives to overcome the current situation.

The Institution of Surveyors, Malaysia (ISM) former president Datuk Abdullah Thalith Md Thani said new ideas needed to be injected for developers to cover higher costs.

Abdullah Thalith Md Thani

“Developers need to find ways to tackle the rising costs by focusing more on research and development (R&D). Engineers also need to look for alternatives building materials to tackle this problem,” he told a press conference here yesterday.

The press conference was to announce the 19th National Real Estate Convention (NREC) to be held on Aug 26-27 in Petaling Jaya.

The convention is jointly organised by the International Real Estate Federation (FIABCI), ISM and Association of Valuers and Property Consultants in Private Practice Malaysia.

FIABCI Malaysia president Datuk Richard Fong said the convention would address current issues faced by the real estate industry and strategies to counter them.

“The current construction costs have increased by about 30%. Now it's either build smaller houses at the same price or increase the price for better quality houses,” he said.

However, this was the good time to buy houses as developers would surely increase the prices for new project launches, he said.

The theme for this year's convention is “ Real Estate Leadership - Strategies for the 21st Century”.

NREC is expected to attract 600 delegates from Malaysia and around the region.

Registration is RM599 per person and includes convention materials, tea breaks and lunch.

By The Star

Developers holding back projects amid rising costs

The housing sector will suffer from a lack of new products as developers are holding back projects amid rising costs.

The number of projects abandoned by developers may also rise as they are not able to sustain the development cost, said the Malaysian head of Fiabci, an international real estate federation.

"While some developers are increasing selling price by 30 per cent due to higher costs, others may build smaller homes, or one third of the current size and maintain prices, to remain profitable," said Datuk Richard Fong, who is also Glomac Bhd group executive vice-chairman.


Fong: A slowdown in the housing sector will have a cascading effect

Fong was briefing the media on the upcoming 19th Real Estate Convention Conference (NREC 2008).

Besides cement price, which has gone up by 50 per cent in the last three months, and steel, which has doubled to RM4,000 per tonne, developers are burdened with more expensive copper wires, cables and transport charges.

"Some developers are taking the stand to postpone launches until prices stabilise," he added.

Fong said a slowdown in the housing sector, which encompasses 140 sub-sectors, will have a cascading effect on real estate, engineers, architects and consultants.

Banks and transport firms will also suffer unless the market improves, he said.

"The market is still sound. It's a good time to buy houses which have been launched as the next time a developer launches a new project, it will cost 30 per cent more," added Fong.

Institution of Surveyors Malaysia immediate past-president Datuk S.R. Abdullah Thalith Md Thani said new launches will slow down unless prices in the secondary real market rises, encouraging developers to launch again.

"The current scenario is an opportunity for the industry to innovate. In these challenging times, the government should revise the quota for low-cost housing and Bumiputera ownership," he said.

"The country is not facing a recession but cash flow problem," he added.

NREC 2008, which will be held at One World Hotel from August 26 to August 27, is organised by Fiabci, ISM and the Association of Valuers and Property Consultants in Private Practice, Malaysia.

It will address current industry concerns and strategies, among others.

More than 600 local and foreign delegates are due to attend the event, which will be launched by Minister of Housing and Local Government Datuk Ong Ka Chuan.

By New Straits Times (by Sharen Kaur)

Gamuda’s earnings to take a hit

PETALING JAYA: Gamuda Bhd’s earnings growth will be affected by lower domestic property sales and tougher competition for jobs in the construction sector, both locally and abroad.

MIMB Investment Bank in a report said escalating prices of raw materials, such as steel, would affect the operating cost of Gamuda and grind down its profit margin.

“Gamuda may not be able to reload its order book as well to maintain its construction earnings growth due to the grim outlook for the sector currently,” the report said.

Gamuda registered positive growth as net profit in the third quarter ended April 30 increased to RM76.7mil on revenue of RM562.3mil compared with RM45mil and RM297.3mil respectively in the previous corresponding period.

The company attributed the better performance to higher contributions from all divisions, namely construction, property and infrastructure concessions.

Going forward, MIMB noted that to sustain its earnings, Gamuda needed to have a strong balance sheet to hedge or even stock up raw materials.

On a positive note, Gamuda’s electrified double-tracking project from Ipoh to Padang Besar was running on schedule, it said, adding that 75% of its contract works and services had been awarded to various subcontractors and suppliers.

“However, Gamuda is still finalising the concession and power purchase agreement for its hydropower dam project in Laos,” MIMB said.

On the Vietnamese front, MIMB noted that Gamuda was confident of the long-term growth of its economy and the long-term viability of its projects there remained unaffected despite the current inflationary pressures and its currency crisis.

The company has a total land bank of 1,400 acres in Vietnam with a gross development value of RM12bil.

Gamuda’s share price had plunged more than 45% since March on concerns relating to Vietnam’s unstable economy. It closed at RM2.43 yesterday from a high of RM3.54 in early March.

Aseambankers in its report said Gamuda was significantly undervalued since the plunge, and maintained its “buy” recommendation on the counter with a target price of RM2.90.

Meanwhile, MIMB said the counter was due for a price correction since its sharp drop and maintained its “buy” call with a target price of RM3.04.

By The Star (by Laalitha Hunt)

CapitaLand sets up US$1b China fund

SINGAPORE: CapitaLand Ltd, Southeast Asia's biggest developer by sales, said it set up a US$1 billion (RM3.23 billion) private equity fund to invest in properties in Chinese cities.

The Raffles City China Fund will initially own the developer's 55.9 per cent stake in the Raffles City development in Shanghai and buy the three Raffles City projects that are being developed in Beijing, Chengdu and Hangzhou, it said in a statement to the Singapore stock exchange. The assets are valued at about US$2 billion, CapitaLand said.

CapitaLand, which owns more than 70 malls and developed homes in cities such as Shanghai and Beijing, made close to 30 per cent of its revenue in China last year, up from 20 per cent in 2006. China's economy may grow 10.1 per cent this year, following the 11.9 per cent growth in 2007 that was the fastest in 13 years, according to economist estimates in a Bloomberg survey.

By Bloomberg

Iskandar Malaysia woos RM33m investments

ISKANDAR Malaysia has attracted RM33 billion investments so far or 70 per cent of the RM47 billion needed to develop the region, the Dewan Rakyat was told today.

Deputy Minister in the Prime Minister’s Department SK Devamany said the government had provided “adequate and comfortable” infrastructures to woo more foreign investors to invest in the area.

The government had allocated RM4.3 billion to finance infrastructure projects in Iskandar, he said when tabling the Supplementary Supply Bill 2008 at committee stage.

Devamany also said projects approved for implementation at the East Coast Economic Region (ECER) have started operations.

Among them are agropolitant projects to eradicate poverty in the agriculture sector and setting up of the Centre for Academic Excellence at Universiti Malaysia Kelantan to stimulate human capital development.

Projects at other development corridors were still at planning stage, he said.

Devamany said the government would ensure development plans for all the corridors were implemented well to generate economic activities and woo investments to the areas.

The government had set aside RM173.2 million to meet the operational expenditures of the Iskandar Regional Development Authority, Northern Economic Development Council and East Coast Economic Regional Development Council besides financing the Managed Portal Services project, expanding rukun tetangga sectors and voluntary patrol scheme, added the Cameron Highlands MP.

By Bernama

Asian shopping mall operators meet to tackle issues

ASIA'S shopping complex operators will meet on October 29 to discuss current and future shopping trends and find ways on how to tackle the various challenges.

Malaysian Association for Shopping and Highrise Complex Management president Joyce Yap said among issues facing mall operators include rising inflation, dwindling tourist arrivals, rising costs, poor sales, staff-pinching and intense competition among Asia's shopping complex operators.

"Malaysia's 200,000 shopping tenants, for example, are not sure about the impact of the recent political uncertainty which could lead to a drop in tourist arrivals and shopping activities.

"We will get a clearer picture once the Mega Sales, which started on July 5 ends on September 5," Yap told Business Times in Kuala Lumpur yesterday after a preview of the upcoming conference.

Organised by the Council of Asian Shopping Centres, the three-day conference, which will be held at One World Hotel, Petaling Jaya, will be launched by Tourism Deputy Minister Datuk Seri Sulaiman Abdul Rahman.

Council members include the shopping centre associations of Malaysia, Singapore, Indonesia, Hong Kong, China and the Philippines.

During the conference, working papers will also be delivered by speakers like Limkokwing University of Creative Technology founder Tan Sri Dr Lim Kok Wing, AirAsia group chief executive Datuk Seri Tony Fernandes and Metro Kajang Group managing director Datuk Eddy Chen.

By New Straits Time (by Zaidi Isham Ismail)

Nomad aims Bangsar serviced apartments at expatriates

KUALA LUMPUR: The Nomad Residences Bangsar, the first serviced residency in the area, hopes to tap the rising number of expatriate business travellers converging in the city.

Nomad Group Bhd general manager of service residences, Jimmy Chow, said the apartments provided everything a hotel could offer with its fully furnished units and other services that suited this business group.

Nomad Group is the owner and manager of the residency.

“Bangsar is always a favourite area among the expatriates because of its location and easy access to shopping malls, dining and entertainment. However, there are no serviced residences in this area.

“We are the first to open, taking advantage of the location and people's lifestyle,” he said at the launch of the residency yesterday.

With the choice of 10 one-bedroom units and 48 three-bedroom units, the tenancy tenure is flexible.

A one-bedroom unit costs RM5,500 while a three-bedroom unit is RM9,500 per month. The rates include utility charges, housekeeping services and maintenance.

“Our philosophy at The Nomad Residences is simple – just bring your luggage and nothing else. Everything is provided here at a very affordable rate,” Chow said.

Formerly Bangsar Suria, The Nomad Residences Bangsar has recorded an average occupancy of 28% since it was refurbished and opened for business early this month. In two months, the occupancy is expected to double.

“After spending about RM15mil on renovations, we are really happy with the feedback. We are targeting 70% occupancy by year-end, based on the good response, especially from expatriates,” he said.

By The Star

Bandar Sunway to be first integrated wireless township in Malaysia

PETALING JAYA: The Sunway group will turn Bandar Sunway into the first integrated wireless township in Malaysia by year-end.

The group will provide 30,000 Bandar Sunway residents and two million visitors yearly access to the Internet without boundaries.

The group with its partner, Packet One Networks (M) Sdn Bhd (P1), had just completed the first phase of the township’s wireless broadband development while the second phase is expected to commence soon.

Sunway Group President Datuk Chew Chee Kin( (right), Subang Jaya Assemblywoman Hannah Yeoh (centre) and Packet One Networks Sdn Bhd (P1)CEO Michael Lai exchanging souvenirs after an MOU signing between P1 and the Sunway Group and the launch of the wireless broadband services at Sunway Resort Hotel & Spa in Petaling Jaya - Starpic by Brian Moh

Sunway group president Datuk Chew Chee Kin said currently 60% to 70% of the township, minus the residential areas, had the Internet service.

“We have set up 100 wireless fidelity (WiFi) hotspots, benefiting business users, students and visitors. At the moment, you can access the Internet for free at Sunway Pyramid,” he said after Sunway group signed a memorandum of understanding with P1 to continue with the second phase of broadband development yesterday.

“After 20 years of developing this city to epitomise ‘resort living within the city’, we are moving ahead to become the first integrated wireless township in Malaysia and maybe in the region too,” he said.

P1 is a subsidiary of Green Packet Bhd, which was awarded one of four worldwide interoperability for microwave access (WiMAX) licences by the Government last year.

P1 chief executive officer Michael Lai said the first phase of broadband development cost about RM5mil while the second phase’s cost had yet to be worked out.

“The current phase involves deploying (WiMAX) to cover more areas within this 800-acre township, complementing the WiFi usage that had been used in the first phase,” he said. The areas covered in the first phase include Sunway Pyramid Shopping Mall, Sunway Lagoon Theme Park, Monash University Sunway Campus, Sunway University College, Sunway Metro and Sunway Mentari.

By The Star

P1’s WiMAX to complete Bandar Sunway’s broadband coverage

PETALING JAYA: Packet One Networks (M) Sdn Bhd (P1) is deploying its WiMAX facilities to offer complete broadband coverage of Bandar Sunway, Malaysia’s first “integrated wireless community.”

P1 chief executive Michael Lai said the company would only start the project in Bandar Sunway after it launches its WiMAX services in the next two months.


From left: Packet One Networks (M) Sdn Bhd CEO Michael Lai, Sunway Group president Datuk Chew Chee Kin and Subang Jaya state assemblywoman Hannah Yeoh at the signing ceremony yesterday between Sunway Group and Packet One Networks at Sunway Resort Hotel to offer complete broadband coverage of Bandar Sunway.

“WiMAX services would be deployed to cover more areas in Bandar Sunway and it will be done by year-end,” Lai said after signing a memorandum of understanding (MoU) with Sunway Group yesterday.

He said P1 was still calculating the cost of setting up the WiMAX services in the 320-hectare township.

WiMAX, short for Worldwide Interoperability for Microwave Access, is a standards-based technology that enables delivery of last-mile wireless broadband access as an alternative to cable and digital subscriber line (DSL). It is enables quad play — voice, video, Internet and mobility.

P1 and Sunway Group signed the MoU to extend wireless services to the entire Bandar Sunway through the second phase of their project. They started the first phase of the project early this year to provide wireless coverage by using mash WiFi technology.

The wireless broadband coverage is currently accessible in Pyramid Mall, Sunway Lagoon Theme Park, Monash University, Sunway University College, Sunway Metro and Sunway Mentari.

The two companies invested some RM1.5 million for the first phase of the project, which was completed in the second quarter. Both parties declined to reveal the funding proportion.

“Over 100 WiFi hotspots have been activated within these areas, currently benefiting business users, students and visitors to Bandar Sunway. This will also benefit some 30,000 residents and two million visitors to Bandar Sunway,” Sunway Group’s president Datuk Chew Chee Kin said.

“We will cover as much as we can. Of course we won’t cover places with no usage,” Chew said, adding that the wireless services currently covered 60% to 70% of the township, excluding the residential areas.

Users can get free WiFi access with speed capacity of 128 kilobytes in Pyramid Mall. Nevertheless, users from the other five locations need to pay for the wireless access of up to 512 kbs. P1 charges RM5 for 24-hour usage, RM10 for seven-day usage and RM20 for 30-day usage.

“The first thing we should have is connectivity. Once we have the connectivity, we can go to the next step by improving the (speed) capacity to serve the community,” Lai said.

Subang Jaya assemblywoman Hannah Yeoh, who witnessed the signing ceremony, said she would like to see other corporates offer similar services in other areas in Subang Jaya.

“It is very handy and convenient because people can work from anywhere. They can work from a café or restaurant,” Yeoh said.

By The EDGE Malaysia (by Racheal Lee)

HK investors for business centre

IPOH: Hong Kong investors have teamed up with a local developer to help transform the quiet town of Simpang Pulai into a bustling commercial area with the development of Simpang Pulai Business Centre at a cost of some RM500mil.

Hong Kong-based investment firm Jerard Co Ltd will be funding 28% of the 43ha project, undertaken by Glamour Ideals Sdn Bhd.

Glamour Ideals managing director Joseph Chin said the business centre would be built in three phases.

“The first phase of 68 shoplots is already sold out. It costs up to RM438,000 per unit,” Chin said after the project ground-breaking ceremony on Saturday.

The second phase would comprise the remaining 102 shoplots and the third phase would be a hotel and villas to be launched later this year.

The project is Jerard's second investment after a condominium project here called Damaipuri Condominium.

Director Dr Ho Hau Wong said Jerard was set up for investments in Malaysia and planned to be involved in other projects in and around Ipoh.

“I find Ipoh a beautiful place that is natural disaster-free and the people very warm,” said Dr Ho, who also gave away donations totalling RM88,000 to various charitable organisations and schools here.

Perak Mentri Besar Datuk Seri Mohammad Nizar Jamaluddin (centre) with Hong Kong investor Dr Ho Hau Wong (right) and Glomour Ideals Sdn Bhd managing director Joseph Chin (left) at the ground-breaking ceremony of the Simpang Pulai Business Centre development project near Ipoh.

Perak Mentri Besar Datuk Seri Mohammad Nizar Jamaluddin was also present to witness the groundbreaking ceremony.

Dr Ho, who plans to retire here, said Jerard was involved in two projects in the city centre - a service apartment, and hotel and villas development.

Other projects were semi-detached houses and villas in Menglembu and semi-detached houses and bungalows in Bercham, he added.

By The Star (by Hah Foong Lian)

Mah Sing completes sale of The Icon

The Mah Sing Group has announced the completion of the sale of its 20-storey Grade A office, The Icon Jalan Tun Razak (East Wing), to Kuwait Finance House K.S.C (KFH) and Autron Corp Ltd for RM255 million.

In a statement, Mah Sing said the payment of 18 per cent of the sale consideration of RM237.092 million (excluding the cost of RM18 million for car park) amounting to RM42.676 million will be payable within seven days from the date of the supplemental agreement signed yesterday.

“The balance 82 per cent, amounting to RM194.415 million shall be paid within seven days from the issuance of the project architect’s certificate of practical completion,” the company added.

Group managing director/chief executive Datuk Sri Leong Hoy Kum said the building is expected to be completed in the first half of next year.

He added that proceeds would be optimally utilised to capitalise on business opportunities in line with the group’s business strategy.

“Together with the en bloc sale of the West Wing to Koperasi Permodalan Felda for RM174.4 million in July last year, The Icon Jalan Tun Razak has reaped RM429.4 million in gross development value (GDV) for Mah Sing within 13 months of purchasing the prime land in October 2006,” Leong pointed out.

Leong said the group is financially strong and would continue to build its strong balance sheet by capitalising on any business opportunity.

The group has 14 residential and commercial projects, of which nine are in the Klang Valley, four in Johor Baru and one in Penang with a remaining GDV of RM2.98 billion.

“This represents a total GDV of approximately RM4 billion which ensures the group’s earnings visibility for seven years,” Leong explained.

By Bernama

Mah Sing agrees to waive RM194mil bank guarantee

PETALING JAYA: Mah Sing Group Bhd has agreed to waive its proposed bank guarantee of RM194.41mil from Prompt Symphony Sdn Bhd over the proposed en bloc sale of 263,435 sq ft of The Icon@Tun Razak.

Mah Sing said in a statement yesterday the RM194.41mil was 82% of the RM238.09mil sale consideration of the property to Prompt Symphony, a special purpose vehicle set up to acquire the property.

Mah Sing said the parties had signed a supplemental agreement allowing Prompt Symphony’s request for the waiver in order not to incur additional bank commission and costs under the bank guarantee.

Prompt Symphony would then release RM42.67mil within seven days from the date of signing of the supplemental agreement.

The remaining 82% or RM194.41mil would be paid seven days from the date of issuance of the architect’s certificate of practical completion.

Prompt Symphony is a unit of Autorn Corp Ltd, which is listed in Singapore and Australia. Upon completion of the joint venture agreement Prompt Symphony will be 80% owned by Kuwait Finance K.S.C. and 20% by Autron.

Work on The Icon@Tun Razak is at level 17 of the 20-storey office and it is expected to be completed in the first half of next year.

By The Star

Pasdec to start 46ha Bukit Tinggi project next year

KUANTAN: Pasdec Holdings Bhd remains committed to its core strength in property-related activities such as construction and management of resorts and building.

Its projects include a tourism-related development on 46ha in Bukit Tinggi, Bentong, by 70%-owned subsidiary Bentong Aquarium & Sanctuary Park Sdn Bhd.

If all went well, construction would commence next year, Pahang Mentri Besar and Pasdec chairman Datuk Seri Adnan Yaakob told reporters after the company AGM recently.

Asked if the project could take off following tremors recorded in Bukit Tinggi, he said its structural design would be styled after buildings in Japan so that it could withstand any future tremors.

Group managing director Yusof Ali Mohamed Zain said the project, costing about RM85mil, would feature an aquarium with 5,000 types of fishes including sharks and fresh-water fish.

“It will also include banquet and conference facilities that can accommodate up to 1,000 people,” he said.

Yusof Ali also said there were plans for a heritage water park comprising landscaped pools with streams, waterfalls and a tropical rainforest reserve with eco-park and botanical garden.

He added that it could provide education and training and had the potential to be a centre for captive rehabilitation and breeding programmes.

“There are plans to work with local learning institutions involved in aquaculture and veterinary sciences,” he said.

By The Star (by Roslina Mohamad)

IJM falls after earnings target downgrade

IJM Corp, Malaysia’s second-largest builder, fell in Kuala Lumpur trading and was the sixth-biggest decliner on the benchmark Composite Index.

Macquarie Group Ltd cut its earnings forecast for the company on costs and political turmoil.

At 11.42am, the stock slid 15 sen, or 2.9 per cent, to RM5.05.

IJM, based in Petaling Jaya outside capital Kuala Lumpur, is down 41 per cent this year, compared with the Kuala Lumpur Composite Index’s 21 per cent decline.

IJM’s earnings per share forecast was cut by 27 per cent for fiscal 2009 and 26 per cent for 2010, according to the Macquarie report published today. It also cut the share-price estimate to RM6.30 from RM9.85 in the next 12 months.

“Recent events such as political uncertainty and inflation have caused us to reduce our estimates for the construction and property businesses,” the report said. It kept its “outperform” rating on IJM.

By Bloomberg

New office buildings unlikely on Penang island due to glut

A model of the Penang Times Square

There is unlikely to be new purpose-built office building projects on the island in the near future in view of the glut of office space and high construction cost.

On the island, there is an overhang of 2.8 million sq ft of office space with occupancy rate of 74%, compared with about 72% in 2005.

The total available purpose-built office space in George Town as at end last year was about 11 million sq ft, a large portion of which is in purpose-built office buildings developed 10 to 15 years ago.

“These properties are not in demand because they lack information technology (IT) infrastructure and facilities and are not well maintained,” Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat told StarBiz.

Developers were also unwilling to launch more of such buildings due to the high construction cost, he added.

“The construction cost and land value for per square foot of commercial space is about RM210, while the selling price per sq ft of the commercial space is RM250 to RM300, which is less than the 30% profit margins generally looked for by developer,” he said.

He said current rentals of conventional purpose-built office space on the island ranged between RM1.50 and RM2.50 per sq ft while the modern purpose-built office buildings with IT features command a rental of above RM3 per sq ft.

The modern purpose-built office building projects being developed on the island were now in Bayan Baru. They include the recently completed SunTech and the IJM headquarters in Metro-East.

The 23-storey RM100mil SunTech by Emerald Capital Group is almost 100% sold. “The building has the latest IT-MSC infrastructure and facilities. The rental is RM2.60 to RM4.20 per sq ft,” he said.

Teoh said demand for pre-war properties was slightly stronger as there was limited supply of such properties for commercial use.

“Many of these houses are also highly sought after because they are strategically located on main roads,” he added.

The present value of a pre-war property in George Town is around RM600 per sq ft. “A 3,200 sq ft pre-war property on Campbell Street was recently sold for about RM2mil,” he said.

On the retail sector that also faces a glut (occupancy rate is 70% compared with 72% in 2005), Henry Butcher Malaysia (retail) managing director Tan Hai Hsin said there was 13.9 million sq ft of retail space, of which 70% was occupied while new supply stood at 1.2 million sq ft.

The new retail space include such projects as Jusco in Bandar Perda, Penang Times Square, D'Piazza, Wikiworld, Mutiara Parade, Farlim Megamall, Gurney Plaza Phase 2, and Gurney Paragon.

“The oversupply situation has not improved since 2005 as the market is still tough,” Tan said.

“The rising cost of living and declining purchasing power have worsened the situation. Many Penangites will visit shopping centres during weekends, but their expenditures are expected to drop in the next few months,” he said.

Tan said ground floor rentals ranged between RM9.50 per sq ft and RM30 per sq ft for malls in prime locations such as the Queensbay Mall and Gurney Plaza. Meanwhile, those in the heart of George Town ranged between RM4 per sq ft and RM28 per sq ft.

“The average rental rate has remained more or less the same over the last few years, “ he added.

Meanwhile, Real Estate Housing & Developers' Association (Penang) chairman Datuk Jerry Chan said the state government should work with the private sector to revive George Town by having new business themes for different precincts in the inner city.

The state government could offer incentives for businesses like traditional medicine, souvenir or local produce and designating certain streets in George Town for them.

“This type of planning would help absorb the existing commercial properties in the inner city and enhance George Town’s appeal as a tourist hub,” he said.

“Sustainable development, in the form of environmentally friendly policies, is key towards unlocking the value of commercial properties in George Town,” he added.

C.A. Lim & Co proprietor Lim Chien Aun said there was also a need for more parking facilities, improved drainage system to overcome flash flood, and quality public transport.

By The Star (by David Tan)

Mulpha Land plans four new high-end projects

MULPHA Land Bhd will be launching four new high-end projects in Kuala Lumpur over the next two years with a total gross development value (GDV) of RM500mil.

They include three residential projects in Ampang, Bangsar, and Bukit Tunku and an office tower in Jalan Sultan Ismail.

Mulpha International Bhd executive chairman Lee Seng Huang said the very high-end Bukit Tunku development on 2.5-acre freehold land, would have bungalows priced around RM15mil each.

Lee Seng Huang

“We will build only eight bungalows of 10,000 sq ft to 12,000 sq ft built-up area. We plan to launch the project in the fourth quarter of this year or next year. It will be a special product. We have not given it a name yet as we want to get everything right first,” Lee told StarBiz.

As for the Bangsar project (opposite Tivoli Villas), he said only seven units of three-storey bungalows priced at RM9mil to RM10mil would be built in the gated and guarded community.

It will have a lot size of 7,576 sq ft to 8,012 sq ft and built-up area from 8,510 sq ft to 9,588 sq ft.

“This is about S$4mil which probably can’t buy you a penthouse in Singapore. Malaysian property is relatively cheaper than other countries,” he said, adding that each bungalow would have a unique design.

The 1.54-acre freehold, gated and guarded development with a Green Architecture Concept, is located at Jalan Medang Tanduk in Bangsar. The main commercial centre of Bangsar Baru, Bangsar Village and Bangsar Shopping Complex are within 500 metres radius.

Features will include open Garden Spine with water features, individual lap pool with koi pond, and private glass lift for each unit with four to six car parking bays.

Each bungalow will also have a solar heater, jacuzzi, water filter, AV room, WiFi, chauffeur’s room, workshop and a garden yard/roof storage areas among others.

Another upmarket development is the Raintree Residence, opposite the Raintree Club at Jalan Wickham in the diplomatic enclave of Ampang Hilir and U-Thant. Kuala Lumpur City Centre is about 3km away.

It will have 12 units: four units of five bedroom duplex penthouses (3,691 sq ft) priced at RM4.4mil each or RM1,200 psf, and eight units of four-bedroom apartments (2,000sq ft) priced at RM2mil each or RM1,000 psf.

Each unit comes with a Raintree Club membership.

Lifts will open to the private foyer of each unit that will be fully fitted with interior built-ins and selected electrical appliances. Standard units are given two parking bays each while penthouses get four bays each.

Facilities include a swimming pool, two security guardhouses, gymnasium and two lifts serving each unit.

Lee said the project, to be launched soon, would target people who did not want to live in a big house after their children had grown up and moved elsewhere.

Mulpha will also build a Class “A” Green office building called 12 Jalan Sultan Ismail. The 23-storey building with four basement-parking levels has a lettable area of about 270,000 sq ft. It fronts Jalan Sultan Ismail and also Lorong Perak (opposite Shangri-La Hotel).

Lee said the land, bought in 1996 for about RM1,000 psf, had probably doubled in value now. The GDV is RM350mil.

“We are holding it for rental income. Renowned New York architects Kohn Pedersen Fox who designed the Shanghai World Financial Centre, The Pinnacle in Britain, and Roppongi Hills Mori Tower in Tokyo is the designer. It will be the first Kohn Pedersen Fox building in Malaysia,” he said, adding that there was still good demand for quality office space in Kuala Lumpur

Lee, who spends most of his time abroad to seek out the “vast opportunity overseas” said Malaysia faced stiff competition from other countries and needed to do things faster with less red-tape.

Although he shares the same concern with other industry players over rising fuel prices, Lee believes that Mulpha’s products would be able to sell as they are very niche and the company is resilient.

On its 474ha award-winning Sanctuary Cove on Queensland’s Gold Coast, Lee said sales had been very good and the whole area was one of the fastest growing in the region.

He said there were still 600 to 700 bungalow lots to sell. Some of the lots would be sold with houses.

“We have not started on the apartments. There is a village with a community centre. The hotel zone will take at least another 10 years to develop,” he added. Sanctuary Cove achieved A$80mil (about RM250mil) sales last year.

An artist’s impression of the Pinggiran Bayou Village Homes in Leisure Farm, Johor

Mulpha Land Bhd is the property arm of the Mulpha group and is listed on the second board of Bursa Malaysia. Its flagship Leisure Farm Resort in Johor has won many property awards including two FIABCI Malaysian Chapter awards.

By The Star - StarBiz - (by S.C.Cheah)

I-Bhd takes intelligent city project to next level

If you were a new kid on the block but eager to show that you have what it takes to turn vision into reality, what would you do?

For I-Bhd, it got world renowned architect Jon Jerde to design its RM2bil i-City in Shah Alam, entered into strategic partnerships with Intel, Telekom Malaysia and Universiti Industri Selangor, won an MSC status for the freehold commercial township and positioned itself as an ICT-based developer.

It showed its sound finances by completing Phase 1 of its Cybercentre offices in i-City under a “build-then-sell” concept. A party is going to buy the offices en bloc while an international shopping centre operator is looking at developing the mall in i-City.

Come September, tenants will be moving into its 44 Cybercentre offices.

The public-listed company recently hosted a 20-member media study tour to Sydney to visit the offices of its latest partners, Servcorp (world's second largest managed serviced office operator) and Cisco (worldwide leader in networking).

The aim was to show the advanced technology to be offered by Servcorp and Cisco in i-City, dubbed the No. 1 Technology City in the region. It also showed the Concierge services, wireless 10mbps and the One Network technology powered by Cisco, to be provided in i-City.

After a six-day trip, I must say I was “blown away” not so much by riding a Harley-Davidson over the Sydney Harbour Bridge, sliding down a giant sand dune in Port Stephens, having lunch in the observation deck of Sydney Tower nor even dining in The Great Cask Hall of Hope Estate in Hunter Valley.

Indeed, all the five-star experience as part of I-Bhd's branding exercise, including jetting in the A380, dolphin watching or hand-feeding sharks, probably threw some of us off our feet.

What blew me over was the IT experience at Servcorp and Cisco that showcased cutting edge IT that can be applied to offices and the homes.

For example, at Servcorp, the media saw how its Concierge service could offer human and technical help to firms at a much affordable cost.

As I-Bhd chief innovation officer Ricky Lim said with i-City's MSC status, tenants could enjoy many benefits including super broadband with Gigabit connectivity, no import duties for multimedia equipment, 15 minutes emergency response, no restriction on recruitment of foreign workers, and 10-years tax exemption.

Lim Boon Siong (right) exchanging documents with Marcus Moufarrige

“We are also providing 100% power backup supply in 15 seconds. All buildings in i-City will be connected,” he said. It would also have an integrated data centre (under construction), online portal for one bill payment, concierge, plug-and-play services, redundant broadband and Cisco Unified Communications.

I-Bhd and Servcorp signed an agreement during the trip for Servcorp to provide the concierge service, the first of its kind in Malaysia.

The media was also shown Cisco's latest telepresence technology where reporters talked to a virtual life-size manager from Cisco Singapore in an identical boardroom as the one in Sydney.

We also visited Australia's most intelligent strata office building, the new 10,000 sq m, seven-level Nexus Norwest in Norwest Business Park. Developed by Capital Corp with Office Squared (a Servcorp subsidiary), it has an integrated managed network and advanced Protocol (IP) telephony system from Cisco.

Interviews with several tenants indicated a high level of satisfaction.

Bet Choice Corpo CEO Mark Morrissey praised the fast-speed broadband for his horse-betting business.

For Jacqui Gibbs, director of a small marketing firm, relocating her business from home in the city to Norwest enhanced her firm's image, saved her travelling expenses and time, enabled her to tap into a pool of clients in the business park and run her business more efficiently.

As Office Squared CEO Marcus Moufarrige said organisations could save 30% to 55% per-workstation costs by having a pre-installed infrastructure and a managed network.

This trip showed that real estate is not just brick and mortar but to compete, developers must differentiate and IT can add value to property and is the way to go.

“I-City is on track. We are creating a special niche by investing in technology that can add value to our property and benefit our tenants and purchasers,” said I-Bhd deputy chief executive officer Lim Boon Siong.

Like Nexus Norwest, i-City is about doing business in a faster, cheaper and simpler way and relocating to a new growth suburb has its advantages.

The difference between the two is that Nexus Norwest is merely a third the size of i-City's Phase 1. The 72-acre i-City will be a connected “intelligent city” that will take the next generation of business space to another level.

By The Star

Contractors see risk of abandoned projects

The construction industry wants the Government to resolve the current crisis immediately. Otherwise, its players may be forced to abandon their projects, leading to an entire collapse of the industry.

Escalating building material prices, which had increased by an average of 25% this year, and a serious shortage of workers would be a double blow to lead to this collapse.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen in issuing this warning said the Government must stabilise the high material prices, in particular steel and cement, which were crucial for the construction industry.

Ng Kee Lean

MBAM, he said, had proposed to the Government to address the high prices of building material prices but no action had been taken so far.

“There is only so much that the MBAM can do. If this (rising costs) persists, the whole industry may collapse,” he said.

Ng said the industry also faced a serious shortage of workers. “In 2006, about 30,000 professionals from the construction sector left for Singapore to seek employment,” he said.

Meanwhile, MBAM secretary-general Yap Yoke Keong urged the Government to remove the 10% import tax on cement and impose export taxes to ensure sufficient domestic supply for the local construction industry.

“The MBAM submitted a memorandum to the relevant government agencies asking them to remove the import tax as it is not economically viable,” he said.

He added that many countries, including China and India, had imposed export taxes to help their own industry.

“We are surprised why such a practice has not been implemented in Malaysia,” he said, adding that political instability due to the outcome of this year's general elections had also affected the construction and property sectors.

“Because of the political situation, projects in certain states are not proceeding and many local developments face the risk of being scrapped.”

Yap said many construction players, especially those with sound financial standing, might have to go abroad as the local construction sector was shrinking.

Bina Puri Holdings Bhd chief operating officer Gan Hwa Kian said many contractors were cautious when tendering for projects on concerns that building material prices might continue to escalate.

He said many projects would be abandoned, as contractors could not afford to complete them. “The Government must step in and address this,” he said.

Al-Ambia Sdn Bhd executive director Tang Juang Yew said high material prices had eroded the profit margins of most construction companies.

“Construction cost in the last two months has increased between 18% and 22%. Developers will raise their prices and at the end of the day, it is the purchasers who will suffer.”

By The Star

Investors divided on timing of purchase

Workers pour concrete at a construction site in Kuala Lumpur. Some experts believe property prices are determined by demand and not by raw material prices – Reuters

With inflation expected to have surged to 6% in June from 3.8% in May and looming recession, investors are unsure whether to enter the property market.

S.K. Brothers Realty (M) Sdn Bhd chief executive officer Charlie Chan said political concerns, high cost of living and rising inflation were affecting the real estate sector.

“Investors and purchasers are divided over what is the right thing to do. Some people believe that the time is right to buy for fear that prices will escalate further while some feel that now is the right time to sell,” he said.

Chan said while there were still a lot of uncertainties, he was optimistic that property in the RM150,000 to RM400,000 bracket would still experience brisk sales.

“Transactions within the Kuala Lumpur city centre should remain steady and relatively unaffected,” he said, adding that due to the fuel price hike, people were more likely to buy property that was either within or close to the city.

“We see an increase in demand for property closest to the city as transportation cost has become an issue after the oil price increase and more people will be looking to live closer to their workplace,” he said.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz had said last week that she expected inflation to hit 6% in June following the increases in fuel prices and that domestic inflation was expected to rise until early next year.

She had said the inflationary pressure was also following the increase in electricity tariffs from July 1, with tariffs up to 18% for households and an average of 26% for some commercial and industry users.

DTZ Nawawi Tie Leung Sdn Bhd investment executive director Brian Koh believes sentiment towards the property sector is generally negative and properties costing below RM250,000 would be most affected.

He said those planning to buy houses below RM250,000 might hesitate as their household income had shrunk due to high food and fuel prices.

Reapfield Properties Sdn Bhd president David Ong did not foresee a drastic fall in property transactions, as there would always be some people who would still buy while others might remain cautious.

“Property is one of the best investments in time of inflation. Any time is a good time to buy,” he said.

According to Ong, the high cost of living would impact property within the low-end and medium-end range.

However, sales of high-end properties should continue to remain stable as the wealthier investors were unaffected by the high cost of living, especially with the recent fuel price hike.

Ong said there were also “pros and cons” on purchasing residential properties within the city as it might help to minimise transportation cost but properties in such locations were also too expensive for the average city worker.

On property prices, PPC International Sdn Bhd executive director Thiruselvam Arumugam said they were determined by demand and not by raw material prices.

“Transactions are slowing down because of the cautious approach by investors and buyers. Developers can increase the property prices but the demand will just not be there.

“This will result in an overhang and eventually, prices will have to come down,” he said.

On the market outlook, Thiruselvam said the industrial and manufacturing sectors would be most affected whereas the commercial and residential sectors were still in good demand despite the current situation.

Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said as a result of weaker market conditions, the take-up rate for homes could drop in 2008 as buyers took a more cautious stance.

“Confidence in the economic climate is vital for a buoyant property market. People will buy property if they see that there is room for capital appreciation,” he said, adding that investors and purchasers were more likely to invest in established locations where demand was strong.

“Popular and prime locations like Bangsar, Damansara Heights, Mont Kiara, Bandar Utama and Mutiara Damansara will continue to receive strong interests as investors can still enjoy decent yields while waiting for the market to improve.”

By The Star (by Angie Ng and Eugene Mahalingam)

Strategies to survive the property slowdown

A filepic shows the crowd at a property fair in Penang. The high cost environment will be here to stay for a while unless global demand and speculative activities for some of the key commodities such as oil and steel slow down

Mounting inflationary pressures following the sharp rise in the price of construction materials, oil and food are creating much anxiety among the property and construction industry fraternity.

To mitigate the adverse impact of the rising cost and softening market sentiment, developers are resorting to more ingenuous strategies and measures to ride out the tough times.

The threat of stagflation – high inflation without demand growth – is also looming and developers are faced with rising costs and slower take-up of their property products.

The big jump in the price of key construction materials, especially steel and cement by between 30% and 40% in the last six months, has resulted in slower progress of work on site.

It looks like the high cost environment will be here to stay for a while unless global demand and speculative activities for some of the key commodities such as oil and steel slow down.

According to SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin, the company has incorporated cost escalation clauses into fixed-price contracts for a few key construction materials (steel and cement) to alleviate cost pressures on contractors while avoiding over-pricing of overall contracts.

“We will also take advantage of our strong financial position to offer to purchase construction materials on behalf of our subcontractors to enable works to progress expeditiously on site.

“By doing bulk material purchase, we can enjoy the economies of scale and command better bargaining power with suppliers,” Liew told StarBiz.

Concurring with Liew, Sunway City Bhd managing director Ngian Siew Siong said: “To lessen the impact and to help contractors contain costs, we encourage them to buy materials in advance and have enough materials in stock so that there is a lesser impact on rising costs.

“We also leverage on our financial capability and pay our contractors in advance to buy their materials. In the long run, we want to ensure that all parties are affected as little as possible.”

Mah Sing Group Bhd president and group chief executive Datuk Sri Leong Hoy Kum said competitive funding costs and good payment terms for land acquisitions have helped the company to keep costs in check.

“We have set up a specialized material sourcing team which works together with suppliers and contractors to ensure the best pricing and bulk purchase discounts,” he added.

SP Setia's Liew said the company has restructured and streamlined its operations to strive for higher cost efficiency and productivity improvements.

“We are also expediting the provision of key infrastructure and amenities in the company's various townships and improve our product offerings to achieve greater value creation for customers.

“This will facilitate justifiable price increases to be passed on to purchasers,” Liew said.

Meanwhile, Glomac Bhd group managing director Datuk F.D. Iskandar has called for more proactive measures to address the country's high prices of construction materials and attract greater interest in real estate.

He said tax discrepancy between the import and export of steel has contributed to the high price of steel in the country. In the last six months, the price of steel bars jumped 45% to RM3,000 per tonne.

“While imported steel products are subjected to a 20% tax, steel products bound for the export market are not taxable.

“Political will and more concerted efforts are necessary to address the steel issue. More priority should be placed on local needs. It will certainly help if both import and export of steel are subjected to the same quantum of tax rates,” Iskandar said.

On measures to promote greater demand for the country's real estate, he said concerted efforts to attract more multinational corporations to set up regional offices in the country would create demand for a broad section of properties, including office space and residences.

“Malaysia My Second Home (MM2H) programme has great potential to attract high net worth and other potential foreigners to invest in the property market.

“However, to reap its full potential, the programme has to come under the purview of the Prime Minister's Department and get full co-operation from all the other agencies,” he said.

Another area that offers great potential is turning Malaysia into a reputable Islamic financial hub to attract the huge reserve of “oil money” from big institutions and investors in the Middle East.

“There is growing competition for these investments from other neighbouring countries and Malaysia should leverage on its position as a model Islamic country to attract more such funds,” he said.

By The Star (by Angie Ng and Eugene Mahalingam)

Y&Y upbeat on returns from Shamelin Heights

Y&Y PROPERTY Development Sdn Bhd is confident of returns from its RM150 million Shamelin Heights Business Park in Cheras, Kuala Lumpur, as it is the only low-density industrial property in the area.

In fact, Singaporean institutional funds have approached to buy the park from the company but it’s not selling for now.

The company plans to lease the properties to industrial players and multinational firms, said Y&Y sales and marketing manager Mike Hue.

“We will have better bargaining power with the institutional investors for a REIT (real estate investment trust) when the business park is fully tenanted with good recurring income,” Hue told Business Times in an interview.

The project encompasses 30 units of three-storey semi-detached corporate industrial buildings and a three-storey standalone industrial bungalow on 5.04 hectares of freehold land in Taman Shamelin Perkasa.

Each unit has a built-up area of 8,500 sq ft to 20,400 sq ft except for the bungalow, which offers 7,800 sq ft.

“Land is scarce in Kuala Lumpur and cost has gone up. Industrial properties are limited in the market and under City Hall’s Kuala Lumpur 2020 City Plan, there will be no new area for industrial projects.

We believe we will benefit from this,” he added.

He also said the project will not be affected by rising raw material costs as it is half way developed.

Some 15 buildings have been constructed while 16 more will be ready for occupation by early 2009.

Shamelin Heights’ joint exclusive leasing agent BT Properties principal Billy Tan said the buildings are suitable for service centres, storage, warehouse and corporate offices, making it ideal for logistics, especially under rising fuel and operational costs.

The buildings are available for rent with monthly rates starting from RM18,800 to RM28,000.

Other industrial properties in the area are being leased at RM20,000 and above, Tan said.

About 15 units will have textile firms, a halal food processing company and a mattress maker, as tenants, among others.

“Shamelin Heights is not only a guarded business park. All tenants will have their own loading and parking bays,” he said.

The low-profile Y&Y is owned by the Yong family. It started as a textile manufacturer, trader and garment retailer in the 1980s. The company then diversified into property development in the 1990s.

By New Straits Times (by Sharen Kaur)

Opportunities in high-end segment

Mass townships such as Setia Alam that are equipped with all the elements for healthy living, learning, work and play will become more sought

Although the increase in the price of petrol and escalating cost of living has affected sentiment in the property market, especially for the lower to medium-priced property, there are still pockets of opportunities to be tapped.

Developers said housing products priced at less than RM300,000 a unit now take more than nine months to be fully taken up while those priced between RM300,000 and RM800,000 take about six months to a year.

However, demand for houses priced at more than RM1mil remains good and these high-end units usually take only a week to be fully taken up.

According to Glomac Bhd group managing director Datuk F.D. Iskandar, since the 30% rise in construction cost and 40% fuel hike in the past six months, developers of medium-range residential properties priced between RM250,000 and RM300,000 were the worst hit.

“This is because 60% to 70% of the country's population belong to the middle class. Potential buyers have turned cautious since the rising inflation and they have changed their priorities to lower their financial commitments.

“With interest rates expected to start rising in the coming months to curb rising inflationary pressure, market sentiment is expected to soften further for the lower-to-medium property sector.”

On sustaining interest for properties in the Kuala Lumpur City Centre (KLCC) area, Iskandar said given the competitive pricing of residences around the KLCC compared with other global cities, investors saw good upside potential for these properties and the response had been good.

Concurring with Iskandar, SP Setia Bhd group managing director Tan Sri Liew Kee Sin said higher-end property buyers were more resilient and recession-proof.

“While buyers in the medium-range market comprised mainly end users now, high-end investors are driven by the opportunity to invest in property as a hedge against rising inflation.

“Those who are serious investors always have an eye for premium properties at attractive entry price to enjoy good capital appreciation potential or rental yields,” Liew said.

He foresees that the fuel price hike would result in more pronounced demand for properties in areas that provide integrated amenities in a single location.

“Mass townships such as Setia Alam that are equipped with all the elements for healthy living, learning, work and play will become more sought-after, as residents and businesses find it more cost-effective to move into well-connected suburban townships with main highway arteries,” Liew said.

Mah Sing Group Bhd president Datuk Sri Leong Hoy Kum said developers should look into offering good value products to help ease the people’s burden.

To suit the needs of the current times, Mah Sing is redesigning its property offerings which has given rise to new trendy design elements such as the use of windows extension to promote cross ventilation and lower electricity consumption.

Leong said innovative and cost efficient designs that embrace practicality and sustainability were important considerations for house buyers these days. “Ecologically friendly and passive, low energy designs will make their way into homes,” he added.

Sunway City Bhd managing director Ngian Siew Siong said the property market was getting more competitive and newer properties with facilities that promote quality lifestyle, well-designed and sustainable products, as well as safe environment would be much sought after.

“By offering value innovation in our product offerings and consistent delivery of quality products and services, we aim to set new benchmarks in new growth markets,” Ngian said.

Gamuda Land Sdn Bhd managing director Chow Chee Wah said the company also placed much importance on sustainable living environment in its developments.

These include providing efficient road network systems with dedicated interchanges, reliable traffic management systems, modern facilities and commercial centres.

By The Star (by Angie Ng and Eugene Mahalingam)

MAHB to commercialise land around airports

MALAYSIA Airports Holdings Bhd (MAHB) plans to commercially utilise its reserved land around airports, especially the land around the KL International Airport (KLIA), with the view to increasing its income.

General Manager of MAB Land Management Muhd Najib Mohd Rawi said apart from being developed into oil palm and coconut plantations, the land will be also developed with commercial buildings to house offices and industries.

“We have seen in overseas, the land near airports have very high value due to the easily available transportation facility for the marketing of products,” he told reporters after launching the Smart Programme organised by MAB at the Pengkalan Chepa secondary school in Kota Baru today.

Muhd Najib said KLIA had reserved land amounting to 7,200 hectares with a large part of it planted with oil palm besides housing the Sepang International Circuit, hotels and commercial buildings.

“The available land will be commercialised based on the agreement set by KLIA given its increased value now,” he said.

As for the Sultan Abdul Aziz Subang Airport, it has been developed into the country’s aerospace centre besides being a training centre for flight trainings, as well as the repair centre for helicopters and aircraft and it also has several office buildings.

By Bernama

World-class luxury project on Pulau Banding

ECO-Tourism Destination: Sultan Azlan Shah (second from right) being briefed by Mustapha Kamal (right) on the herbal garden concept at the opening of the Belum rainforest resort and Pulau Banding Rainforest research centre recently.

MKN Group Sdn Bhd aims to put its mixed development project on Pulau Banding, Perak, on the map as an exclusive world-class luxury project.

The 10-year project, which has yet to be named as the proposed master plan, is pending local authority approval, would have a gross development value of at least RM600 million, said Tan Sri Mustapha Kamal Abu Bakar, who controls MKN.

The project, which will be gated, would have 45 homes with each unit sprawled over 1.6 to 2.4 hectares.

According to Mustapha Kamal, the houses will be worth US$3 million to US$5 million (RM9.75 million to RM16.25 million) each and MKN will target mainly foreign buyers.

The project will also have two five-star boutique resorts operating under international brands, 35.2ha for eco-tourism activities and a rest and recreation centre.

"MKN will minimise the felling and cutting of trees through professional planning during the development process. FRIM has done its audit on the island and we will adhere to all guidelines in environmental conservation and sustainability," Mustapha Kamal told Business Times during a site visit to the island recently.

He said the development was expensive because the properties will all be sited and positioned according to the natural ground terrain and alignment. This means the environment, consisting of endemic tree, exotic and endangered species, will not be destroyed.

Pulau Banding, covering an area of 250.4ha, is located 330km north of Kuala Lumpur and is situated on Temengor Lake. It is at the heart of the 130 million-year-old Belum-Temengor rainforest complex.

The rainforest complex comprises the Royal Belum State Park, the Gerik Forest Reserve and the Temengor forest reserve.

MKN's parent, the Emkay Group, had bought some 117.6ha from Fima Group for RM15.8 million in August last year, including the 27-room Banding Island Resort.

More than 120ha was awarded to Emkay by the Perak state government to transform the island into an eco-tourism destination.

By New Straits Times (by Sharen Kaur)

MK Land to be taken private?

Tan Sri Mustapha Kamal Abu Bakar, a co-founder of MK Land Holdings Bhd, may take the troubled property developer private as part of plans to turn it around, a source close to him said.

The businessman holds 47.4 per cent of MK Land and he has taken over the company's leadership as chief executive on June 25.

He replaces his partner Datuk P. Kasi who was redesignated as a non-executive director. Kasi holds 25.4 per cent of MK Land.

"As a majority stakeholder of MK Land, it's logical for him to come back and return the company to the black," the source said.

Mustapha could not be reached for comment.

However, it is learnt that he will study the company's situation before making major moves.

Contractors and consultants for some of MK Land's projects are expected to be called for a meeting soon.

"After leaving MK Land for so long, Mustapha Kamal wants to study the nitty-gritty of the company," the source said.

In May, MK Land asked its bondholders for permission to delay debt repayments by up to a year.

The company had in 2001 and 2002 issued two tranches of RM150 million each of serial bonds, with the final maturities due in August this year and September 2009.

MK Land said it was seeking an indulgence from bondholders to defer payments for a total of RM60 million to two separate sinking fund accounts.

By New Straits Times (by Sharen Kaur)