Condo prices in Mont’ Kiara, Sri Hartamas hit new high

Artist's impression of II Mont Kiara

The high-end property boom of the last few years, particularly in the top two prime locations in the Klang Valley – KLCC and Mont' Kiara/Sri Hartamas, has made it increasingly more expensive to own a condominium, serviced apartment or landed property.

In the case of Mont Kiara (MK) and its adjacent Sri Hartamas, an affluent neighbourhood popular with expatriates, prices of newly launched condominiums have shot up to over RM800 psf with some hitting the RM900 psf mark!

In the early 1990s, condominiums built by the Sunrise Bhd Group such as the MK Pines and MK Palma were around RM300 psf.

Despite fears of over building, soaring prices and congested vehicular traffic, this neighbourhood has continued to attract both investors and home owners, Today, it has evolved into a very self-contained, much sought-after residential enclave of top quality condominiums, bungalows/villas and other high-end residential properties.

As Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said there was now a greater variety of property types available compared to the early days of Mont' Kiara's development.

“While the earlier developments have average built-up areas of 1,200 to 1,800 sq ft (MK Pines, MK Palma and Vista Kiara) catering to small and medium sized families, the newer projects that have been launched in Mont' Kiara and Sri Hartamas offer a greater variety of unit types catering to different budgets and preferences,” he said.

They range from very small studio units of 400 to 600 sq ft (Mayfair and Dorchester) catering to singles; small units of 600 to 800 sq ft (Verve Suites, One Kiara) catering to singles and newly married couples; standard sized units of 1,000 to 2,000 sq ft units (One Kiara, Kiara 3, Cerian Kiara) catering to small and medium sized families and large units of 2,000 to 3,000 sq ft units (11@MK, Seni Mont' Kiara) catering to more well off families.

“There are also the super large units of above 3,000 sq ft (Matahari, MK10) for the well heeled. As the prices of the condominiums in Mont' Kiara and Sri Hartamas have gone up, the profile of the buyers also indicate that they are now of a higher income group,” he said, adding that condominium prices in Mont' Kiara have gone up significantly.

“While the prices of condos in Mont' Kiara used to be around RM300 to RM600 psf in 2006, newer projects launched since 2007 have pushed the prices to new threshold levels of RM600 to RM900 psf.”

“Some of these new projects are Sunway Vivaldi (RM800 to RM900 psf), Palazzio (RM840 psf), and Matahari (RM800 psf). Generally for a RM1mil property, based on an 80% loan and an interest rate of 5% per annum for 20 years, the qualifying monthly income is RM15,000 whilst the monthly income required to qualify for a 80% loan for a RM2mil home will be RM30,000,” he said.

According to Tang, the nearly sold-out Kiara 1888 that Henry Butcher marketed has risen 25% to 30% although it is still under construction while Kiara 9 has been released at new benchmark prices.

Meanwhile, the current economic uncertainties have seen some people adopting a “wait-and-see” attitude. There are also signs of over-building in many places including Mont' Kiara.

Tang agreed that while rentals have remained stable, vacancy rates appeared to have increased due to the large number of units that have been completed in Mont' Kiara.

“One of the chief concerns of potential investors is the fear of oversupply of condos in Mont' Kiara and whether the rental market will hold. Another concern is the worsening traffic congestion due to the increased number of residents in the area,” he said.

With scarcity of land in Mont' Kiara, industry observers believe that developments in Mont' Kiara will spill over to Segambut.

“We believe that in years to come, Mont' Kiara and Segambut will be linked up in a seamless corridor by the new developments. For the moment there is still a price disparity as projects at the Segambut side are still significantly cheaper. In future this price disparity may be narrowed although we believe that there will always be the price differential,” he added.

Tang said overall the property market would be soft, in view of the political uncertainty as well as the slow down in economic growth but the Mont' Kiara/Sri Hartamas area would still continue to attract interest.

“However, investors are now more cautious and will be more selective. Projects with more innovative concepts undertaken by reputable developers will still be able to attract interest, provided that investors are convinced that the pricing is fair value vis a vis the design and quality of the project,” he said.

By The Star (by S.C.Cheah)

Building frenzy in Mont’ Kiara

The feverish pace of development in Mont' Kiara and Sri Hartamas in Kuala Lumpur is astounding.

Many new condominium, bungalow and commercial projects are turning this neighbourhood into a vibrant international community.

Although this neighbourhood had witnessed many developments over the past decade, this is probably the first time that construction of so many condominiums, bungalows and commercial projects are in full swing.

There is an “explosion” of commercial projects: the swanky Solaris Mont' Kiara (with its touristic Soho KL dining-entertainment facility and tenant Cold Storage supermarket) have been newly completed while the big Solaris Dutamas (400 shop lots, 900 office suites, 800 designer suites plus two open piazzas) and Verve Shops are nearing completion.

Ireka Land and CapitaLand are developing the One Mont' Kiara, retail, office suites and residential project opposite Sunrise's Plaza Mont' Kiara.

It will boast of a 250,000 sq ft specialised retail mall with luxury serviced residences i-Zen@Kiara 1 and i-Zen@Kiara 2 behind.

Over at Sri Hartamas is the proposed Plaza Damas 3 by the Mayland Group, opposite the Hartamas Shopping Centre.

The current spate of developments can be divided into three areas:

Sunrise Mont' Kiara Integrated Global Village:
This is where Sunrise Bhd, the original and biggest developer in Mont' Kiara, has its flagship developments on both sides of busy Jalan Kiara 1.

Today, Sunrise is launching projects that are even more high-end in Mont' Kiara like the 10' Mont Kiara, 11 Mont' Kiara, 28 Mont' Kiara and the Mont' Kiara Meridien condominiums.

Its older condominiums (all with the words Mont' Kiara in front) include Sophia, Pines, Palma, Astana, Bayu, Aman, Bayan and Damai.

Projects by other developers have also mushroomed amidst this “global village”.

Aseana Properties is developing the Tiffani by i-Zen and Seni Mont' Kiara. Some of the earlier projects here include Almaspuri and Angkupuri condominiums and UOA Holdings's bungalow project, Villa Mont' Kiara, completed in 2004.

One end of Jalan Kiara 1 is seeing a burst of new projects including the Lumina Kiara, Sunrise's The Residence @ Mont' Kiara (2 and 3-storey bungalows), Tiffani by i-Zen (both under construction), fairly new La Grande Kiara and Wedgewood Serviced Residences.

There is also the newly completed Kiaraville (by Ireka), facing the Solaris Mont' Kiara, i-Zen @ Villa Aseana, Puncak Kiara (by Merge Power) and PJD's Regency project.

Sunway City's high-end projects in the area include Kiara Hills, Casa Kiara 1, 2 and 3, Palazzio Sunway and the Sunway Vivaldi (with units priced from RM2.59mil to RM6.29mil!).

Mont' Kiara at Jalan Kiara 3 and 5:
Several new condominiums are also coming up or completed along Jalan Kiara 3 that leads to Segambut via Kampung Segambut Dalam.

From the junction of Jalan Desa Kiara and Jalan Kiara 3 (on the right) are the Lanai Kiara, Flora Murni (by Tian Global), Vista Kiara (Asia Quest), Laman Suria (Sunrise), Ceriaan Kiara (YNH Property) and Kiara 1888 (Mitraland) while on the left are the Garden International School, Kiara Designer Suites (Sunrise) and Kiara 9 (Mitrajaya). Asia Quest's Kiaramas is on a low hill.

Behind this road is Jalan Kiara 5 where Bukit Kiara Properties Sdn Bhd's three projects, the Aman Kiara (first gated community in the area with bungalows and condovillas), Hijauan Kiara and the Verve Suites are located.

Sri Hartamas:
Desa Sri Hartamas is a “hip and happening place” with lots of F & B outlets while Taman Sri Hartamas has the Hartamas Shopping Centre (Taylor's College recently opened a new campus there) and Plaza Damas shop offices (both by the Mayland Group).

Mayland's latest project, Plaza Damas 3 offers five-star freehold shop offices with separate strata titles and 1,500 parking bays.

Checks showed that almost all 72 units of shop offices have been sold with only six units left. There will also be 1,450 serviced apartment units.

Glomac also has a proposed commercial project called the Glomac Galleria here.

Maymont Development Sdn Bhd's 158-unit Matahari, luxury super condominium in Desa Sri Hartamas recently won the CNBC Asia Pacific Property Awards for the Best Apartment (Malaysia category).

With only two units per floor, the minimum built-up is about 3,900 sq ft to the biggest of 10,700 sq ft! The price range is from RM3.1mil to RM10.77mil!

A new player next to Hartamas Shopping Centre is Duta Land Bhd's proposed Kenny Heights Estate, an upmarket private sanctuary, along Jalan Hartamas.

It offers 49 residences each with its own private pools, elevator, sundeck bath, and two garages. The gated community will also have a pool house, with a 30m-sky pool and spa pool. There will be 20 limited edition villas designed by Kengo Kuma.

Adjacent to it is S. P. Setia Bhd's Duta Tropika and Duta Nusantara bungalow projects. Further down the road are the Hartamas Heights bungalow enclave and the Hartamas Regency 1 and 2 condominiums that meet up with Jalan Kiara 1.

Bukit Kiara Properties Sdn Bhd managing director N.K. Tong said Mont' Kiara is thriving because it is an “oasis of innovative developments” by a growing number of developers.

Competition is intense because of the number of developments there.

“However, each developer has found its own unique niche. This has resulted in a growing suburb that rivals KLCC in attracting foreign investment,” he said.

Tong said with three top international schools, Mont' Kiara has become a sought-after address for expatriates. “The social infrastructure is further strengthened with new commercial developments, retail opportunities and recreational facilities,” he said.

Although there are fears that Mont' Kiara is becoming a “concrete jungle” there are also mitigating factors like continuous improvements to the road system.

By The Star

Y&Y Property plans 2nd boutique hotel in KL

FIRST SHOPPING MALL: Hue pointing at the model of 1 Shamelin in Cheras, which is due to be completed in the middle of 2009

Y&Y Property Development Sdn Bhd plans to build its second boutique hotel in Kuala Lumpur as it seeks to take advantage of the growing tourism industry.

It is also a new venture for the company, which mainly builds industrial properties.

“Hotels have good returns and Y&Y has been mulling to build them for a long time.

When it identified strategic locations and older buildings for conversion, it decided to move in,” Mike Hue, Y&Y sales and marketing manager told Business Times in an interview recently.

Y&Y was founded by the Yong family. The company started as a textile manufacturer, trader and garment retailer in the 1980s.

It is now building its first boutique hotel for some RM30 million at Tengkat Tong Shin off Jalan Bukit Bintang. The hotel will be run under the Hip Hotels brand, a popular name in US and Europe.

The eight-and-half-storey building, which will be completed by September, will be open by December. It will have 117 rooms priced from RM88 each per night.

Hue said Y&Y has initiated plans to build a second Hip hotel in the city next year.

The company, he said, had bought an old six-storey office block near the Masjid Jamek light rail transit station on Jalan Tun Perak. It will be converted into a Hip hotel in the second half of 2009.

Apart from the hotel, Y&Y Property is also building its first shopping mall in Cheras, named 1 Shamelin.

This is due to be completed in the middle of 2009.

The company has also earmarked a plot of land it owns opposite the Putra World Trade Centre in Kuala Lumpur for its second mall.

By New Straits Times (by Sharen Kaur)

CapitaLand banking on midas touch and strong branding

Leveraging on its residential, office, retail, and hospitality development competencies, CapitaLand Ltd is keen to expand its foray to more growth markets overseas, a senior company executive said.

By market capitalisation, CapitaLand is the largest real estate company in Southeast Asia.

Of its total assets of S$25bil, S$16.2bil or 65% of the total are invested overseas in over 20 countries and over 120 cities.

Its core businesses in real estate, hospitality and real estate financial services are focused in growth cities in the Asia Pacific, Europe and the Gulf Co-operation Council (GCC) countries.

CapitaLand's real estate and hospitality portfolio spans more than 110 cities in over 20 countries.

“The company has the experience and expertise along the entire real estate value chain and exporting real estate expertise overseas has been the company’s forte.

“Being an investor, developer, operator and manager of real estate, we also provide financial solutions across sectors and geographies,” the executive said.

CapitaLand believes in leveraging on its huge asset base, real estate domain knowledge, financial skills and extensive market network to develop real estate financial products and services in Singapore and the region.

Since its formation at end-2000, CapitaLand has consistently leveraged on its multi-sector strategy, and its expertise and experience across the whole real estate sector to create shareholder value of over S$19bil.

With more than 70 malls and residential developments in Chinese cities such as Shanghai and Beijing, CapitaLand achieved close to 30% of its revenue in China last year, up from 20% in 2006.

The Singapore-based developer is one of the largest retail real estate owners and managers in the region with more than 115 malls in Singapore, China, India, Malaysia and Japan.

“Essentially the success factor is CapitaLand’s track record of innovative asset enhancements be it in Singapore, China or Malaysia.

“These asset enhancement initiatives create significant value at these malls through proactive management and retail real estate management expertise,” the executive said.

He added that China was an excellent example of CapitaLand’s growth overseas by exporting its real estate value chain.

CapitaLand has been in China for over 13 years, with the country accounting for 30% of the company's total assets in the first six months of this year.

“We have an extensive presence in China. We enjoy a stable operating environment in Shanghai, Beijing, Guangzhou and healthy fundamentals in inner cities such as Chengdu and within the Henan province.

“As the largest foreign player in Chinese shopping malls, CapitaLand’s retail footprint now extends beyond 70 malls across 28 cities, with most of the malls anchored by Wal-Mart, Carrefour or Beijing Hualian,” he said.

CapitaLand recently signed a cooperative agreement with China Vanke Co. Ltd., China’s largest residential developer, to acquire new and existing retail components within Vanke’s townships.

On the commercial property sector, CapitaLand owns Raffles City Shanghai and Capital Tower Beijing. Under development are three more Raffles City developments in Beijing, Chengdu and Hangzhou.

These highly integrated developments comprise retail, commercial and serviced residence components. Each development is strategically located in the core central business district and at the nodes of main transport networks.

By The Star

Bukit Kiara Properties Sdn Bhd's sells 40% of latest Vogue Tower

Bukit Kiara Properties Sdn Bhd's (BKP) has sold about 40% of its latest 255-unit Vogue Tower in Verve Suites that was previewed on June 21 to an exclusive group without any advertisements.

This is the third of the four-tower Verve Suites on a 5.87-acre freehold land and is BKP's third project in Mont' Kiara. The first two are the Aman Kiara and Hijauan Kiara that are fully sold and completed.

BKP managing director N. K. Tong who is pleased with the sales over four weekends said the company has over 13,000 registrants, many of whom were repeat buyers.

The Verve Suites was planned to have 881 units in the four towers. However, Tong said the number of units in the fourth block called Vox Tower had not been decided yet.

As expected, BKP has increased its price where the average selling price of the Vogue Tower unit is about RM930 psf (minimum is RM850 psf) for the two unit size of 462 sq ft (one bedroom) and 932 sq ft (two bedrooms) with prices from RM399,000 to RM988,000.

Although the price is higher than the 240-unit Viva Tower (first block/initial RM570 psf) and the 188-unit Vibe Tower (second block/initially RM650 psf) that were launched in 2006 and 2007 respectively, the Vogue Tower's pricing is deemed “reasonable” considering that all Verve Suites units come with top quality furnishing and fixtures including Bosch kitchen appliances.

There are four interior design themes: Centro Jazz and Cosmo Grove (both 462 sq ft type) and Verdant Luxe and Metro Bliss (both 932 sq ft type).

BKP has demolished its Pavilion show gallery and moved to an even bigger show gallery with four Vogue Tower show units on the first two floors of the Verve Shops (a 60,000 sq ft of retail space for lease only) where construction had reached the roof level.

A posh show kitchen with Gaggenau (the Rolls Royce of kitchen systems) appliances for the Vibe Tower's Hypercube sky lounge is also on show at the new gallery.

The Vogue Tower also has a sky lounge like the other two towers. It's called The Garden of Concentrico on the 31st floor that provides a “Back-to-Nature” escapade with facilities like the Aqua Gym, Cinema Paradiso, Podium Panorama and Dinner Alfresco.

The Metro bliss is one of the four interior designs of Vogue Tower

There will be a range of aqua exercises including water aerobics that the family will enjoy at the Aqua Gym. At the Cinema Paradiso, one can enjoy a big screen movie under a starry night setting or view the entire Mont' Kiara while lying on a hammock at the Podium Panorama. You can also dine at the Dinner Alfresco under the open sky amidst a green setting.

By paying only 33psf service charge (inclusive of sinking fund), Verve Suites residents can have access to all the sky lounges that are the signature selling points. Instead of having a big living space in one's unit, one can have huge and varied dining, recreational and entertainment facilities in all sky lounges including the ample facilities such as two tennis courts, squash courts, badminton court, multi-purpose hall and two swimming pools at the recreational deck below.

The third swimming pool is at the Vibe Tower's Hypercubes Lounge on the 27th floor that also boasts of its unique entertainment concept.

Meanwhile, BKP's Aman Kiara (completed nine months ahead of schedule) became the first bungalow and duplex condovillas project in Kuala Lumpur to obtain approval for its strata title application recently.

By The Star (by S.C.Cheah)

Verve Suites beats the odds in weak market

The success of the Verve Suites in the high-end Mont' Kiara neighbourhood has proven once again that product differentiation is vital in today's stiff competition.

Instead of building another condominium, Bukit Kiara Properties Sdn Bhd (BKP) continued its tradition of offering niche and innovative products, this time in the form of fully furnished serviced suites and introduced sky lounges each with a different concept.

BKP managing director N. K. Tong said when Verve Suites was first conceptualised over three years ago, it set out to create something different, exciting and innovative.

N.K. Tong

“What has happened since has even caught us by surprise. Verve Suites first introduced the concept of the sky lounge; with the Vertigo Living Concept spread over 6,000 sq ft. It was a bold move because we gave up the most valuable piece of saleable real estate, the penthouse, to be a common facility,” he said.

“Since then, we have introduced two other living concepts, the Hypercubes Living Concept and the Concentrico Living Concept in the subsequent blocks in Verve Suites,” he told StarBiz.

What will be the living concept for the fourth and final block?

Well, Tong is keeping mum except to say that it would be very much based on feedback from customers and the BKP team.

On rising construction costs, Tong said all Verve Suites phases were moving according to schedule.

“Rising prices are a challenge and a fact of life. It will have a direct impact on costs, reduced profit margins, and rising selling prices. Each successive block of Verve Suites has continued to appreciate in price, and our customers are understanding and philosophical in their approach,” he said.

Tong said some had bought units in all the three Verve Suites blocks, and were looking forward to the preview of the fourth block, even acknowledging that the price would further increase.

“This is a good time to buy properties. While costs continue to rise, we at BKP have to accept reduced profit margins but continue selling at today's pricing. This will benefit our customers as they lock in properties at historical prices, while costs continue to rise,” he added.

Tong said Mont' Kiara's success was also reflected in the increasing land prices over the years: from RM5 to RM10 psf in the early 1990s to RM50 to RM70 psf at the end of the 90s and into the early 2000.

“Today, the prices are probably around RM200 to RM250 psf. This increase has forced developers to develop new projects with larger units, to defray the high cost of land. This trend works in favour of Verve Suites as its compact units become highly sought after, being unique as well as affordable,” Tong said.

Recent secondary transactions of BKP's Hijauan Kiara units have reached close to RM660psf, a 40% capital appreciation from the original RM470 psf when it was first launched in mid-2005.

Tong believes that Mont' Kiara and the KLCC were both critical in putting Kuala Lumpur and Malaysia on the global real estate investment map.

“Ironically, Kuala Lumpur has been previously bypassed by foreign investors, retailers and institutions alike, because we were not big enough, from a visibility point-of-view. With the thriving development in the KLCC and Mont' Kiara areas, more foreign investors are beginning to take notice, beyond the usual Singaporean investors.”

By The Star (by S.C.Cheah)

Glomac to launch REIT in Thailand by October

PROPERTY developer Glomac Bhd plans to launch a 1.5 billion baht (RM158.70 million) real estate investment trust (REIT) in Thailand by October.

Business Times understands that it will launch the REIT with its partner Warehouse Asia Alliance Company Ltd (WAA), a leading Thai company in warehousing and logistics services.

The main-board developer and WAA will initially inject a 600,000 sq ft warehouse near the Bangna-Trad highway in the Samutprakarn province in Bangkok, worth RM150 million, into the REIT.

The warehouse, which is 49 per cent owned by Glomac and 51 per cent by WAA, was constructed by the two firms for RM125 million in April.

It is currently fully tenanted to Diethelm Ltd, an international pharmaceutical company, for 15 years, with rental yield of 13 per cent.

The source said Glomac and WAA will increase the REIT size, possibly to six or seven billion Thai baht in three to four years.

Glomac group executive vice-chairman Datuk Richard Fong and group managing director Datuk Fateh Iskandar Mansor were not available for comment at press time.

"The two firms want to set up similar warehouses in Thailand as it is a profitable business and there is demand. They are looking for land in Bangkok and may finalise a deal soon," the source said.

Fateh had said that Glomac had received offers from several multinational firms involved in automotives and pharmaceuticals to build more warehouses and distribution centres in Thailand.

He said the logistics and distribution businesses are picking up in Thailand, especially those near Suvarnabhumi Airport.

Thailand is the second overseas venture for Glomac after Australia, which is contributing marginally to group revenue.

By New Straits Times (by Sharen Kaur)

Study: Global commercial real estate sales halved

NEW YORK: World sales of major commercial properties fell 49 per cent to US$306 billion (US$1 = RM3.30) in the first six months of 2008 from the same period last year, as sales in developed countries were hit hard by the credit crisis and slowing economies, a report released on Friday said.

Real Capital Analytics said dramatic shifts in the capital flows for commercial property became evident in the first half of 2008 as Tokyo overtook London and New York as the most active sales market and investors began favouring Asian markets.

Sales activity fell sharply in many developed Western economies while Brazil, Russia, India, China and most other emerging markets posted gains.

Emerging markets accounted for 25 per cent of all property sales in the first half of 2008, up from 10 per cent in the same period a year ago, according to the report that tracks transactions worth at least US$10 million.

Development sites were the only type of property to see a rise in sales, up 11 per cent and led by a record US$2.3 billion paid for Chelsea Barracks in London.

"However, with new developments in Europe being delayed and new regulations limiting land sales in China, this sector may soon experience the same declining investment other property types have," the report said.

Overall office sales were down 60 per cent in the first half of the year versus a year ago, and sales of hotels were off 68 per cent.

By Reuters

Softer market as buyers take cautious stance

Market demand for top-tier luxury condominium and serviced apartment units is expected to soften as purchasers become more selective and discerning while developers become increasingly cautious over over-supply concerns, leading to slower sales.

CH Williams Talhar & Wong Sdn Bhd (WTW) senior executive director P’ng Soo Theng said factors that led to such a weak market could be attributed to the country facing a great deal of uncertainties this year. They include:

P'Ng Soo Theng

·The 12th general election in March which was met with unprecedented results;

·A 41% petrol (63% diesel) price hike in June;

·The consumer price index in June hit a 26-year high of 7.7%

·Rising defaults on subprime mortgages in US which triggered a global crisis leading to a gradual withdrawal of investment funds in the region.

Under such circumstances, affordability is now of great concern as daily living expenses, particularly so for the middle to lower income group, form a larger portion of their disposable income and the sales of “big ticket” items are cautioned.

The KLCC area represents the top-tier condominium and serviced apartment market in the country. In the last two years, prices have doubled breaching the RM2,000 per sq ft benchmark.

Foreigners (from Singapore, Hong Kong, South Korea and the Gulf nations) make up about 30%-40% of purchasers, as prices are still considered affordable by regional standards.

The exemption of real property gains tax and lifting of the need for approval from the Foreign Investment Committee are factors attracting foreign investors.

With the global financial situation still unsettled, the current political climate in the country and imminent key interest rate hike, many are now adopting a “wait and see” attitude.

Possibility is greater that purchasers will refrain from buying rather than cancelling their bookings or purchases.

With the uncertainty from spiralling costs, pressure on building materials and electricity tariff hike, purchasers would probably switch to purchasing units in prime locations as landed properties in prime locations are considered a hedge against inflation.

KLCC condominium properties have not gone up in price in the last two months. There actually have been no new launches within the KLCC area in the first half of 2008.

“We believe that buyers are in a position to 'pick, choose and negotiate' in the current scenario,” advised Png.

“The immediate response to the current scenario has already been observed during the first five months of 2008 where fewer developers are launching residential units.

“Having monitored the daily print media on new residential schemes advertised for sale, our findings reveal that from January to May 2008, some 3,333 residential units were launched in the Klang Valley.

“These include terraced, semi-detached and detached houses as well as town villas and condominiums or apartments in areas extending to Shah Alam, Semenyih, Klang, Sungai Buloh, Bangi, Rawang, Puchong and Putrajaya.

“In contrast, about 10,780 residential units were launched from January to June 2007.”

By The Star

E&O Property to be delisted

KUALA LUMPUR: E & O Property Development Bhd (E&O Prop) will be delisted from the Bursa Malaysia main board today.

Eastern & Oriental Bhd (E&O) said in a statement yesterday the delisting marked the completion of the merger exercise between E&O Prop and E&O.

The enlarged entity would enable the group to consolidate its financial and operational expertise and resources to better seize growth opportunities in the increasingly competitive local property landscape.

By The Star

Steel bar supply in Malaysia adequate

There is no shortage in the supply of steel bars to the local construction industry, says Malaysian Iron and Steel Industry Federation (Misif).

The supply trend is consistent in the local market whereby installed capacity from all mills for steel bars is recorded at 3.5 million metric tonnes and capacity utilisation as at 2007 was only at 56 per cent for steel bar rolling, Misif said.

Although there have been allegations of shortages in the supply of steel bars, steel millers' requests for quantities of requirements for various projects have not been forthcoming and unless steel suppliers have forecasts of customer requirements, manufacturers are forced to make alternative business plans, it said.

"Then the issue arises that since shortages have not been proven, why the need for an export tax or ban?" it asked in a statement issued in Kuala Lumpur yesterday.

It said that as a manufacturing concern, and like any other industry, the steel industry cannot afford to just depend on domestic market and need to expand markets to include exports which will help the industry to be competitive through better utilisation of its capacities.

"Generally, steel prices are dictated by iron ore prices negotiated between the three major world ore suppliers with key users whereby in February 2008, top steelmakers in Asia had agreed to pay 65 per cent more for iron ore, setting a global benchmark for raw material prices.

In Malaysia, steel mills import more than three million tonnes of scrap annually and the prices of which have swung from US$350 (RM1148) per tonne in June 2007 to US$725 (RM2378) per tonne in June 2008.

By Bernama

KLCC condos: The path ahead

The Idaman Residence project in KLCC is expected to be completed by early 2009 and will have 248 condo units that span 800sq ft to 1,900sq ft.

With the weakening property market, the next six months will be an interesting period for luxury condominium developments in the Kuala Lumpur City Centre (KLCC) area as investors, speculators, developers and property agents assess whether the market can sustain current prices and maintain projected yields.

According to SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng, buyers of KLCC condos belong to a very specific segment of the property market. They would only be marginally affected by economic conditions. They would have the necessary “buffer” to cushion themselves against any market uncertainties and sail through.

Chan Ai Cheng: Whether KLCC condos - priced at around RM2,000 per square foot - are still worth buying will depend on the “investment appetite” of the buyer.

KLCC condo prices are still the cheapest in the region, and with rising construction costs which have gone up 30-40%, it is very unlikely to see prices falling. Some units are going to be owner-occupied, therefore it is not a 100% investment market for KLCC condos. Owner-occupiers want the address and location. Yield doesn’t matter to this category of owners.

In the long term, property prices will still be on an upward trend. With rising inflation, the value of money will go down. Therefore, there are people who want to buy property now. Of course, those who are apprehensive of the weakening property market situation will hold back.

Those who have booked condominium units in the KLCC area are generally deemed to be steady investors. They are unlikely to cancel. Their purchase considerations are different from property speculators. But speculators will try to off-load at this point as they went in with very little.

Flippers

Developers refer to speculators as “flippers”, meaning those who will flip a purchase for an immediate profit. And this becomes more apparent when the condo units are handed over and the bank loans need to be serviced. And if there are many competing units offered for sale, buyers in a weak market situation can drive a harder bargain. In any case, speculators who booked a KLCC condo for only RM600 or RM700 per square foot -- some 24 months before the hand-over -- will still make a profit, as prevailing market prices would be at least RM1,000-RM1,200 per square foot or more now.

As to whether prices for KLCC condos have gone up in recent months, Chan can’t rule out such a possibility.

“Why not? In terms of land value, new benchmarks are being set with each new transaction such as Sunrise Bhd’s recent RM180mil purchase of the Wisma Angkasa Raya building (on 1.56-acre freehold land) directly opposite the Petronas Twin Towers for RM2,600 per square foot. Also, the YTL Group paid RM85 million to the Eng Lian Group for a one-acre plot on Jalan Stonor, which works out to RM2,000 per sq ft. There are still a few more parcels of land along Jalan Ampang under negotiations. Developers are not going to price themselves down.”

Chan is also of the opinion that it is unlikely that developers within the KLCC area and the vicinity, will be unable to meet their construction schedule.

“Not that I know of,” said Chan, “In any case, developers in the KLCC area are ‘branded’ with good track records and are considered financially sound. Quite a large majority of the developments are nearing completion around this time. The concern for investors is the issue of ‘rentability’, yield and profitability. But since the initial investment was at a low-entry level, yield should still be okay. That is, if they bought at the initial launch price.”

Whether KLCC condos -- priced at around RM2,000 per square foot -- are still worth buying will depend on the “investment appetite” of the buyer. The purchase will depend on the perceived value of the property to the investor. Different condo projects offer different features.

The fundamental question is the purpose or objective of the purchase. Is it for investment, rental or capital return. The buyer needs to inform the property agent:

· purpose of purchase

· investment criteria that includes size and special features required

· how to finance - with cash or high margin of finance?

If a buyer is in doubt, always go back to the fundamentals which are specific to each individual. Even in bad times, some people can still do well in the property market. But rental yield does not go up in tandem with capital appreciation. This means that if an investor bought a property at a low entry level price, the rental yield will be much more lucrative compared with buying a similar property from a third party.

By The Star (by Johnni Wong)

How to pick KLCC Condos

There had been no increase in the cost of KLCC condominium properties but prices remained stable.

There is still interest in Malaysian real estate especially in the Kuala Lumpur City Centre (KLCC) area among foreign buyers.

According to Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng, investors were now more cautious in view of the current political and economic uncertainties. The investors were also concerned about the large number of units that would be completed within the next 12 months and the possible impact on the rental market and yields.

Tang advises investors still keen on buying KLCC properties to look out for projects that stand out from the rest.

On a regional context, prices of Malaysian top-end condominiums were still very cheap, being only 20% that of Singapore and about 12% that of Hong Kong.

Foreign investors were still keen to invest but the level of interest was less compared to the strong surge in foreign interest in the 2nd and 3rd quarters of 2007.

Cancellations

“After the results of the general election,” pointed out Tang, “We actually had a couple of purchasers who cancelled their bookings for one of the projects that we were marketing. However, we suspect that they were probably only using the election results as an excuse. Once things settled down and people accepted the results, we had no more issues.

“Sometimes it’s a knee-jerk reaction. On the whole, we have not heard of situations where a developer faced a significant increase in cancellation of bookings.”

The current uncertainties in the political arena, added Tang, as well as the softer economic conditions obviously resulted in some investors adopting a wait-and-see attitude as far as property investment was concerned. The impact was felt more strongly in the low and medium cost sector as the target buyers were more adversely affected by the rise in the cost of living.

Well-heeled investors were however still investing in the upper medium-cost and high-cost sectors but they were now more selective over location, pricing and the developer’s track record.

There had been no increase in the cost of KLCC condominium properties but prices remained stable, said Tang. “We were told that the developer of K Residence marketed their second residential tower called Regency overseas at a price of RM2,500 per sq ft upwards. This will be an increase over the pricing of their earlier tower. As for the other condominiums, prices have by and large remained at the same levels.”

Tender difficulties

Tang said he had not heard of any specific examples of developers falling behind or being unable to meet their construction schedule. But from market talk, he understood that some developers faced difficulties in getting contractors to tender for their projects. There had been cases where the contractor turned down the award after they were informed that they were the successful in the tender exercise.

“I also heard of a developer whose contractor stopped work after the project was 80% completed and the developer had to continue the construction work on his own.”

At this point in time, investors who were still keen on buying KLCC properties ought to look out for projects that would stand out from the rest, advised Tang.

“Look for distinguishing factors, for example, branding, architectural features and design. Although there are many Grade A prime office buildings in KL, there is only one Petronas Twin Towers. In that sense you have no competition and therefore you are in a position to dictate your own price and rental.

"Secondly, unless it is a project undertaken by a financially strong and capable developer, it is safer to invest in an already completed project as you do not have to worry about the project being abandoned and whether the workmanship is of the right quality.

“Thirdly, if you are investing in a project which is not completed yet, choose a developer who has the financial capability as well as the track record in handling similar projects. A developer who does not have the experience of developing high-end projects may not be able to deliver the right quality.

“Lastly, the investor would obviously have to do his homework thoroughly to make sure that the price that he is paying is a fair price and that his desired return on investment is achievable.”

Pointless

Although the property market could see a reduction in the volume of transactions compared to 2007, Tang believed that property prices would unlikely go down due to the significant rise in construction costs.

“As the current fixed deposit and savings rates of banks are below the real inflation rate, it is pointless to keep money in the bank. Property has always proven to be a good hedge against inflation so it will be a good move to look for outstanding buying opportunities in the property market. However, investors will have to choose their investment wisely.”

FOREIGN BUYERS APPROVED BY KL LAND OFFICE

YEAR: APPROVALS

2005:1,954

2006:1,660

2007:4,035

2008*:935

* For period Jan to April 2008

Source: Henry Butcher Marketing Sdn Bhd

By The Star (by Johnni Wong)

Slower luxury condo sales expected

There have been no new launches within KLCC in the first half of 2008.

Market demand for top-tier luxury condominium and serviced apartment units is expected to soften as purchasers become more selective and discerning and developers become increasingly cautious over over-supply concerns, leading to slower sales.

C H Williams Talhar & Wong Sdn Bhd (WTW) senior executive director P’ng Soo Theng said factors that led to such a weak market situation could be attributed to the country facing a great deal of uncertainty this year.

P'ng says buyers are in a position to “pick, choose & negotiate” in the current scenario.

• Malaysia prepared for its 12th General Elections in March 2008 which was met with unprecedented results

• Malaysia faced a 41% petrol (63% diesel) price hike in June 2008

• The Consumer Price Index in June hit a 26-year high of 7.7%

• Rising defaults on sub-prime mortgages in the US triggered a global crisis leading to a gradual withdrawal of investment funds in the region

Under such circumstances, affordability is now of great concern as daily living expenses, particularly so for the middle to lower income group, forms a larger portion of their disposable income and the sales of “Big Ticket” items are cautioned. The Kuala Lumpur City Centre (KLCC) area represents the top-tier condominium and serviced apartment market in the country.

In the last two years, prices have doubled breaching the RM2,000 per sq ft benchmark. Foreigners (Singapore, Hong Kong, South Korea and the Gulf nations) make up about 30-40% of purchasers as prices, despite the increase, are still considered affordable by regional standards.

The exemption of RPGT (Real Property Gains Tax) and lifting of the need for approval from the FIC (Foreign Investment Committee) are factors attracting foreign investors.

With the global financial situation still unsettled as well as the current political climate in the country together with imminent key interest rate hike, many are now adopting a “wait-and-see” attitude.

Possibility is greater that purchasers will refrain from buying rather than cancelling their bookings or purchases.

With the uncertainty from spiralling costs, pressure on building materials and electricity tariff hike, purchasers would probably switch to purchasing units in prime locations as landed properties in prime locations are considered as a hedge against inflation.

KLCC condominium properties have not gone up in price within the last two months. There actually have been no new launches within KLCC in the first half of 2008. “We believe that buyers are in a position to “pick, choose & negotiate” in the current scenario,” advised P'ng.

“The immediate response to the current scenario has already been observed during the first five months of 2008 where fewer developers are launching residential units.

“Having monitored the daily printed media of new residential schemes advertised for sale, our findings reveal that during the months January to May 2008, some 3,333 residential units were launched in the Klang Valley. These included terraced, semi-detached and detached houses as well as town villas and condominiums or apartments in areas extending to Shah Alam, Semenyih, Klang, Sg Buloh, Bangi, Rawang, Puchong and Putrajaya.

“In contrast, about 10,780 residential units was launched from January to June 2007.”

Launch Period: Residential Units Launched

1st Half, 2007: 13,780

2nd Half, 2007: 6,599

Jan–May 2008: 3,333

Source: Daily monitor of the print media compiled by WTW

By The Star (by Johnni Wong)

Mutiara Goodyear to launch two projects

KUALA LUMPUR: Mutiara Goodyear Development Bhd will launch two projects this year despite rising building material costs, says chief executive officer Kee Cheng Teik.

Kee Cheng Teik

He said it would launch Prima Avenue within two weeks and a residential project in Melawati by year-end or first quarter of next year.

“We think it is a good time to launch now because there are not many projects currently. As long as our projects provide value for money, I think we still can stand well,” he said after the company EGM yesterday.

He said Mutiara Goodyear was confident of its product designs, good mix of properties and good locations.

It was not so concerned about building material prices because they would settle down at a certain level eventually, he said.

Kee said the company had started making arrangements, like direct purchase of materials from factories, to mitigate the higher costs but it was happy with its current profit margin.

“We foresee healthy property demand in the Klang Valley and Penang,” he said.

He added that the recent oil price hike did not really impact the property sector n the two areas.

However, the uncertainties might put purchasers' plans on hold for a while, he said.

The freehold Prima Avenue at Dataran Prima, Tropicana, comprises two towers of office suites and retail lots, and has a total gross development value (GDV) of RM120mil.

The 80-acre Melawati project, which has yet to be named, will consist of bungalows, link houses and commercial lots, with a total GDV of RM800mil.

Kee said after disposing of 253.72 acres in Seberang Perai Selatan to Tambun Indah Development Sdn Bhd for a joint-venture project, Mutiara Goodyear had about 45.6 acres left in Bandar Tasik Mutiara.

The group has a total of about 891 acres land bank in Penang and the Klang Valley. With an estimated total GDV of RM4.1bil when fully developed, the projects would be launched within five years, he added.

By The Star

Mutiara Goodyear has undeveloped land worth RM4b

PROPERTY developer Mutiara Goodyear Development Bhd said it has 360.5ha of undeveloped land in hand with a gross development value (GDV) of RM4.1 billion, that will keep it busy for the next five years.

The plots of land are located in Penang and the Klang Valley, said its chief executive officer Kee Cheng Teik.


KEE: The demand (for property) is quite real. We do not see much bubble in the industry

Despite rising building material costs, the company is going ahead with the launch of two major projects in the Klang Valley this year.

It will launch a 1.38ha commercial development called Prima Avenue in the next two weeks, followed by Melawati development, which features luxury residential properties on 32.4ha, by the end of this year or early next year.

The projects have a combined GDV of RM920 million.

Kee is optimistic that the two projects will be well received for their strategic location and product mix.

He added that although uncertainties in the market may hold up decisions on property buying, it is only for the short term.

"We notice that the demand (for property) is quite real. Honestly, we do not see much bubble in the industry," he told reporters after the company's extraordinary general meeting in Kuala Lumpur yesterday.

"Where there is real demand, we see holding power. People buy for the value of the project. Hence, we are holding a longer term view on all the projects that we develop," Kee added.

Kee said Mutiara Goodyear has made provisions to purchase raw materials such as steel bars and cement directly from suppliers for its new projects.

Amid the present challenging scenario, he said, the company is managing its margins well.

Meanwhile, Mutiara Goodyear is exploring opportunities to develop properties overseas such as in Vietnam and China.

Kee said it is in talks with "some parties but no time frame has been set".

By New Straits Times (by Rupinder Singh)

Developer sets sights on JB

JOHOR BARU: Tanah Sutera Development Sdn Bhd wants to position its Taman Sutera Utama development as the “central hub of Skudai”.

General manager Steven Shum said the development on a 48.562ha site would offer business, entertainment and education facilities.

“Being located along the Johor Baru-Skudai-Senai Growth Corridor within Iskandar Malaysia augurs well for its future growth,’’ he told StarBiz.

Sutera Mall at Taman Sutera Utama that will be opened on Friday.

Shum said the catalyst of the hub would the RM75mil Sutera Mall, Johor Baru’s latest retail complex that would be opened tomorrow.

The three-storey mall with 27,870sq m floor area offers a wide range of tenant mix from 250 outlets.

Shum said it was well linked to matured and developing residential estates – Taman Ungku Tun Aminah, Taman Sutera, Mutiara Rini, Bandar Selesa Jaya, Nusa Bestari, Bukit Indah, Taman Impian Emas, Tampoi, Kempas and Senai.

He said these estates had a population of 500,000 , which offered a ready market.

“The mall is easily accessible from the city centre via Jalan Skudai, Perling Highway, North-South Expressway and Singapore by the Second Link crossing,” he said.

He said the company would be launching the RM60mil Entertainment City project year next to the mall next year.

The proposed project includes cinemas, a bowling alley and food court with office and hotel blocks.

“The retail sector in Johor Baru has the potential to grow but it is still largely untapped unlike Kuala Lumpur and Singapore,” said Shum, adding one way to grow the sector was for the state government to have more friendly policies.

Tanah Sutera Development is a consortium of local and Singapore-based companies, namely Permodalan Nasional Bhd, Lembaga Tabung Angkatan Tentera, CapitaLand, Keppel Land and Lee Rubber Co (Pte) Ltd.

By The Star - StarBiz - (by Zazali Musa)

RM410m expansion plan for Kulim Hi-Tech Park

AN INTERNATIONAL school, two hotels, medical facilities for chemical-related injuries and a dedicated police station are among the amenities being planned under the fourth phase of the Kulim Hi-Tech Park in Kedah.

Kulim Technology Park Corp (KTPC) group chief executive officer Datuk Ahmad Shukri Tajuddin said the federal government had earlier this year allocated RM145 million for the fourth phase of the science park, which covers 156ha.


AHMAD SHUKRI: A more concerted skills development centre at the park is being worked out

"A fifth phase covering 422ha was also announced with a RM265 million allocation," he told Business Times.

Ahmad Shukri said the park's third phase - which covers 172ha - can accommodate another five new tenants and then it will be full.

He said the ELC International School is scheduled to begin in September and teachers and staff are currently being shortlisted.

"Construction work on a two-to three-star category hotel, boasting 100 rooms, is expected to take off by the end of this year with development costs tagged at RM40 million," Ahmad Shukri said, adding the proposed hotel project will be carried out by Alor Star-based property developer MBAS Jaya Sdn Bhd.

The proposed hotel will take around one-and-a-half years to be completed.

Also on the drawing board is a 200-room new hotel.

Meanwhile, a RM5 million two-storey hostel is also being planned in Phase 4 of the park.

The 31-bedroom hostel, for which construction will begin by the end of this year, will be managed by KTPC, which oversees the management of the park.

Ahmad Shukri also said that plans are afoot to meet the human resource needs of the park's tenants.

"A more concerted skills development centre at the park is being worked out with the cooperation of the Northern Corridor Implementation Agency and the Kedah Industrial Skills and Management Development Centre," he added.

By New Straits Times (by Marina Emmanuel)

Boustead REIT buys plantations for RM192m

The Islamic-based Al-Hadharah Boustead Real Estate Investment Trust (REIT) is increasing its plantation size from 12,000ha to 16,000ha by acquiring the Bebar and Malakoff estates in Pahang and Penang for RM192 million.

The purchase of the two estates, aimed at increasing unitholders value, will be funded by syariah- compliant loans and issuance of new REIT units.

In a statement yesterday, it said the REIT continues to chart positive growth based on its financial performance for the six months to June 30, 2008.

The fund posted an unaudited revenue of RM36.3 million, 57 per higher than the same period last year, derived from its current eight oil palm plantations and two palm oil mills.

Out of the revenue, RM15.5 million stem from its performance-based profit sharing structure while RM20.8 million was achieved from rental income.

The fund was able to achieve an actual average palm oil price of RM3,026 per tonne against the reference price of RM1,500 per tonne in the first six months of 2008.

Due to this performance-based profit-sharing mechanism, the additional profit in excess of RM1,526 per tonne translated to a sterling gain for the fund.

As a result, its net earnings per unit for the period under review was 7.13 sen, marking an increase of 34 per cent over the same period last year.

"We have seen very strong growth over the first six months of this year, thanks to crude palm oil (CPO) prices. Unitholders are enjoying significant returns because of our winning profit-sharing structure," Boustead REIT Managers Sdn Bhd chairman Tan Sri Lodin Wok Kamaruddin said.


"The fund will maintain its prudent approach when it comes to forward sales without affecting our growth strategy" Tan Sri Lodin Wok Chairman Boustead REIT Managers Sdn Bhd

"While there may be cyclical and speculative pressures on CPO prices in the future, we are optimistic that pricing for this highly sought after commodity will remain strong. The fund will maintain its prudent approach when it comes to forward sales without affecting our growth strategy," he added.

In tandem with the fund's performance, the managers have proposed a distribution of 3.69 sen per unit in respect of the period under review, which will be paid on August 29 2008.

By New Straits Times (by Sharen Kaur)

UEM Builders completes phase 2 of agro expo park

UEM Builders Bhd has completed phase two of the Malaysian Agro Exposition Park Serdang (MAEPS) worth RM221.5 million.


UNCONVENTIONAL ENGINNERING SYSTEM: The MAEPS complex will host Malaysia's biggest agricultural exhibition this month

In a statement, the company said it took them only seven months to build the complex since the contract was awarded in early December 2007.

UEM, which was commissioned by the Agriculture and Agro-based Industry Ministry had earlier completed the RM45.6 million phase one of MAEPS in November 2006, ahead of schedule.

UEM Builders managing director Datuk Ridza Abdoh Salleh said its project team applied an unconventional engineering system to reduce the construction period, at the same time not compromising on any components, especially quality of work.

"We had applied the Engineering Formwork Systems for columns and slabs. This reduced the construction period even though many of the buildings under construction are scattered within the location," he said in a statement.

MAEPS will host Malaysia's biggest agricultural exhibition, namely the biannual Malaysian Agriculture, Horticulture and Agrotourism Exhibition this month.

MAEPS is owned by the Ministry of Agriculture and Agro-Based Industry and occupies a build-up area of 42,000 sq m.

It is located on a 129ha of Mardi's land, adjacent to the Kajang - Puchong Highway.

On the international front, the group is expected to strengthen its position in India and the Middle East and is pursuing new construction and infrastructure projects in India, Singapore and Indonesia.

By New Straits Times

Local steel supply still okay

PETALING JAYA: The liberalisation of the domestic steel market has not resulted in an artificial shortage of the commodity or higher steel exports as claimed by local housing developers and construction industry players.

Malaysian Iron and Steel Industry Federation (Misif) president Chow Chong Long maintained that there was no steel shortage in the country as steel millers had continuously increased their capacity over the past few years.

Misif represents 150 members, including five of the largest local steel millers – Lion Group, Kinsteel-Perwaja, Ann Joo Resources Bhd, Southern Steel Bhd and Malaysia Steel Works (KL) Bhd (Masteel).

Chow told StarBiz that Misif did not foresee any problems in supplying steel bars based on the Construction Industry Development Board’s (CIDB) forecast 2.1 million tonnes in 2008.

In the first half, steel millers had confirmed the supply of 1.2 million tonnes.

According to Chow, many previous claims of steel shortage had never been independently verified.

Over the last few weeks, orders received by steel millers were 30% below normal and “we even need verification whether this downtrend is likely to continue,” Chow said.

This was despite the move by the Master Builders Association of Malaysia (MBAM) and Real Estate and Housing Developers Association (Rehda) calling on the Government to impose a 15% export duty on billets and steel bars, or even banning the export of the latter, implying a shortage in steel supply.

Chow had suggested an independent study to confirm the shortage or oversupply of steel.

In addition, the Government could appoint Misif and CIDB as mediation agencies to help contractors negotiate with the variation orders (VO) with the developers, while steel mills could facilitate the VO computation by publishing its monthly prices to serve as a benchmark.

The lifting of the local steel ceiling price on May 12 has seen the commodity soaring by 55% to RM4,000 per tonne currently, moving in tandem with the international price of about US$1,200 to US$1,300 per tonne.

The impact of soaring prices has resulted in housing developers and construction players putting pressure on MBAM and Rehda to look for amicable solutions pertaining to the escalating raw materials, claims on artificial steel shortage and steel millers opting for exports due to the higher international selling price.

In the past one month, MBAM and Rehda had put forward a series of proposals to the Government, including a temporary ban on exports of local steel, allowing steel imports, tax-free import of steel that meets Malaysia’s standard MS146 or equivalent to BS4449 standard, establishment of a steel stockpile and export quota on steel millers.

The latest is a request for a six-month lead-time announcement on price increase to enable contractors to make provisions to mitigate the rising costs.

On Tuesday, two separate closed-door meetings were held among the International Trade and Industry Ministry, officials from MBAM and Misif.

Another was held between the Housing and Local Development Ministry and MBAM representatives.

An industry source told StarBiz that ministry officials had cautioned MBAM to be “guarded” with its stand and various proposals to the Government, which could affect investors’ confidence in Malaysia’s credibility.

“They must understand that the Government cannot keep on changing its policies overnight. All must be taken into consideration to ensure parties involved are well taken care of,” she said.

Meanwhile, Masteel managing director and chief executive officer Tai Hean Leng concurred that there was no steel shortage.

“Contractors are trying to pressure steel mills to reduce prices by using claims of shortage and high prices to get the Government to impose export tax.

“A quick check on the delivery lead time of mills will show that they have high stocks and make deliveries within a week of receiving orders. Steel millers are exporting because there is not enough demand from local contractors,” he added.

After the liberalisation, Tai said steel bars were being imported as verified by most local customers.

For flat steel products, an industry player said there had been some operational disruptions in terms of delivery and production since late 2007, which led to price increase for hot- and cold-rolled coil in the past six months.

However, the problems had been resolved and supply was back to normal, he said. The major producer is expected to upgrade its plant by end-August, which may tighten supply.

As for long steel products, he said: “The slowdown within the construction and building materials sectors has led to weaker demand, and this caused local prices to continue to trade below world prices.”

Under such circumstances, he said, steel millers would find it more attractive to export.

An analyst with a local brokerage said local millers would rather sell locally to avoid freight charges.

“There is no acute shortage of supply as demand is slowing due to contractors re-drawing orders. Many projects are either delayed or put on hold.

“The smaller contractors are facing cash flow issues, as millers prefer cash transactions to avoid credit risk,” he said.

He said millers had their own business risks and it would be unfair to clip their wings by imposing a ban on exports or reversing to the ceiling price mechanism.

“It must be a free market. If the contractors feel the local prices are too high, they can source elsewhere,” he added.

Another analyst asked: “If there is a shortage locally, where is the demand?”

There is always a delivery lag of eight to 10 weeks even for international suppliers.

There is a shortage worldwide because demand is growing at 6% to 7% per annum while new capacity is only coming in in two to three years.

“Prices will continue to remain high and a reprieve is unlikely unless there is a global slowdown,” he said.

The millers also face high freight charges and long delivery time as they source more than 70% of scrap from abroad.

He pointed out that liberalisation was the best option as players could have a free hand in choosing where to source their materials.

By The Star - StarBiz - (by Hanim Adnan & Yeow Pooi Ling)

Malton villas lure buyers

A waterscape villa at The Grove @ SS23, Petaling Jaya

PETALING JAYA: Malton Bhd has received overwhelming response for its latest high-end project, The Grove @ SS23, since it was opened for registration recently.

It is understood that many of the over 300 registrants had booked some of the 35 waterscape villas.

“We expect 70% of the 35 units to be taken up, leaving possibly only the bumiputra-quota units,” said sales and marketing director Tracey Lai.

The prestigious gated residential development on the last parcel of freehold land in SS23 offers units priced from RM3mil.

The main features include security alarm system with central monitoring option, CCTV at perimeter fencing, intercom system linked to the guardhouse, motion detector light, as well as jacuzzis.

“The Grove revolves around a tropical garden living experience and each unit is adorned with harmonious water features and provisions for a feature lift.

“Each home comes with two luxurious master bedrooms with jacuzzis,” Lai said.

The show unit should be ready in the next few months. Malton has also engaged TID, a renowned international interior designer from Singapore, to add further value to the project, which is accessible through the Damansara -Puchong Highway, Federal Highway and North Klang Valley Expressway.

The project would be completed ahead of schedule in 2011, like its prestigious Pearl Villas @ Section 16, which was sold out through private invitation, Lai said.

On the property market, she said it was “challenging” due to the upheaval in fuel price and rising construction cost.

“However, Malton remains focused on the high-end sector and we continue to see the opportunity as both bright and rewarding.”

She said The Grove not only clearly exemplified Malton’s strategic direction but also showed the company’s belief and confidence in the high-end property market despite the current economic uncertainties.

Malton had always focused on product differentiation and branding, Lai said.

“Malton is very market-driven, creating up-market lifestyle products that are customer-centric. We believe in continuous innovation of new products and the creation of value that embraces practicality and sustainability. All these have been well received by our buyers.”

By The Star (by S.C.Cheah)

Malaysia needs to win back confidence

KUALA LUMPUR: Malaysia needs to regain foreign investors’ confidence to spur the current property market, says Selangor Dredging Bhd (SDB) managing director Teh Lip Kim.

Teh Lip Kim standing in front of Park Seven Residences

“They feel insecure here because of the current political instability. Instead, they prefer to invest in other countries such as Singapore,” she said after a media tour of its Park Seven Residences at Persiaran KLCC.

Sold out since early last year, Park Seven received its certificate of fitness for occupation on April 22.

Teh said Malaysia still offered cheaper properties than Singapore and she believed the demand for niche market was still present.

“There are still people with money in the market. When they want to buy properties, they become more selective.

“That’s why SDB always believed in branding to attract them,” she said, adding that its on-going projects in Malaysia and Singapore would always focus on the niche market.

“What makes us different from the other players is the concept that we introduce every time we launch our projects.

“By doing that, we usually manage to sell 30% to 40 % more than our competitors,” she said.

On the increase in construction cost, she said developers would have to pass part of the burden to buyers.

SDB would be developing its land bank in Taman Melawati, Jalan Ampang, Damansara Heights and Petaling Jaya soon, Teh said.

“Apart from that, we are looking to invest in countries that are more transparent and have stable financial systems, such as Australia, Thailand and Vietnam.”

By The Star

Mah Sing mulls RM1b Vietnam venture

Mah Sing Group Bhd, a Malaysian developer, is considering a Vietnam venture valued at more than RM1 billion (US$310 million) for its first step overseas, as a faltering home economy slows the company’s sales.

“You need to diversify your earnings stream by going overseas,” group managing director Leong Hoy Kum, 50, said in an interview in Kuala Lumpur yesterday. “We can’t depend only on Malaysia for our growth. The foreign market is a must.”

Mah Sing, which cut this year’s revenue forecast by half because of rising building costs and Malaysia’s slowing economy, is looking to expand across Asia to almost triple sales within five years to as much as RM1.5 billion. Its stock has tumbled 25 per cent this year, faster than the benchmark Kuala Lumpur Composite Index’s 22 per cent slide.

“It’s very bold and a bit too optimistic,” said Fatimah Zahra Fadzil, an analyst at Inter-Pacific Capital Sdn. who has a “neutral” rating on Mah Sing stock. “These are volatile markets. It’ll be very difficult to achieve that target.”

Malaysia’s economy is stumbling as higher fuel prices weigh on consumer spending, Second Finance Minister Tan Sri Nor Mohamed Yakcop said August. 4. A 41 per cent increase in gasoline prices to trim fuel subsidies in June pushed inflation to a 26-year high, leaving Malaysians with less to spend.

Mah Sing is exploring India, China and Indonesia, Leong said. Overseas sales will account for 20 to 30 per cent of the group’s total in the next five years, he said. The company is seeking revenue growth of 20 per cent each year, he said.

“If Malaysia is on a weaker growth path, then the other Asian countries could beef up” its earnings, said Ong Chee Ting, an analyst at Aseambankers Malaysia Bhd. “It’s a good diversification strategy, it could possibly bring it close to its RM1.5 billion target.”

‘Overheating’ Opportunity

Vietnam is Mah Sing’s priority as the “overheating” in its economy provides chances to buy land more cheaply, Leong said.

“We won’t simply venture into a country without a good reason,” the Mah Sing CEO said.

The company is examining a joint-venture to build homes on 300 to 500 acres of land in Ho Chi Minh City, he said. It may later build offices at a separate location there.

Vietnam’s “long-term growth story looks quite decent, looking at the very young population and the housing requirements,” said Aseambankers’ Ong. “The overheating could slow the pace of development for the next two years or so.”

Malaysian Plan

Ong recommends buying Mah Sing, estimating its shares will rise to RM1.74 from RM1.44. The stock has slid 23 per cent since he started coverage with a “buy” rating, according to data compiled by Bloomberg. He has a “hold” recommendation on SP Setia Bhd, Malaysia’s largest property group, expecting its shares will decline to RM3 from RM3.14.

Mah Sing is rated a “buy” by nine of thirteen analysts who cover the stock and SP Setia has a similar recommendation from 10 of 24 analysts, according to Bloomberg data.

At home, Mah Sing plans to buy land that will generate gross development value of at least RM600 million each year, Leong said.

He wants to bolster Mah Sing’s market value within five years to RM5 billion, which is more than SP Setia’s current worth of RM3.2 billion.

“If you don’t have a dream or vision, there’s no direction for my group to move forward,” he said. “It’s a management objective.”

By Bloomberg

Country Heights wins CNBC property awards

PROPERTY developer Country Heights Holdings Bhd has won two awards at the CNBC Asia Pacific Property 2008 event.

In a statement today, Country Heights said its luxury properties — Country Heights Damansara and Borneo Highlands Resort — were chosen as four-star winners at the gala ceremony last month.

“Both Country Heights Damansara and Borneo Highlands Resort clinch the coveted accolades after competing with the best property developments in Asia Pacific,” it said.

Country Heights said the achievement would further strengthen its strong brand name as a leading and luxury green developer.

“It is further testament and recognition of our approach to property development, which is to create masterpieces of luxury that embody love, style, nature, quality and excellence,” the company said.

By Bernama

Axis REIT in talks to buy RM566m properties

AXIS Real Estate Investment Trust (Axis REIT) is in talks to buy properties worth RM566 million as it seeks to boost the size of its portfolio.

Out of that amount, it hopes to complete deals worth RM180 million by the middle of next year. By that time, its total property portfolio would rise to some RM844 million.

The trust currently has 20 buildings worth RM663.89 million.

"The current slowdown gives us an opportunity to add assets at attractive prices," its chief executive officer Stewart LaBrooy told a press conference yesterday.


RECLASSIFIED: La Brooy (left) and Lim talk about purchase plans

It will partly fund the purchases with money raised from the proposed sale of 120 million new units, which at current prices could raise some RM193.2 million.

Part of the unit sales will also be used to settle its debt.

"Our gearing is about 31 per cent now. We have two deals which are yet to be completed that will increase gearing to 35 per cent, and could complete the acquisition of two other buildings that will further increase our gearing to 41 per cent," Axis REIT Managers Bhd chief financial officer Lim Yoon Peng said.

However, a softer market may make it difficult to raise funds. That is why Axis REIT decided to reclassify itself as a syariah-compliant REIT, from conventional.

The reclassification will enable it to widen its investor base to include locally-based syariah funds as well as develop investor interest from foreign syariah funds.

It could also attract investments from pilgrim fund Lembaga Tabung Haji and the Armed Forces Fund.

This would make it the first office industrial REIT in the world to comply with syariah principles, LaBrooy said.

It has appointed Abdul Raman Saad & Associates to conduct due diligence and help it comply with the necessary rules. It hopes to be syariah-compliant by the year-end.

In the first half ended June 30 2008, Axis REIT's property income rose 37.6 per cent to RM30.1 million (from 17 properties) compared with RM21.87 million (from nine properties) in the previous corresponding period.

Income after tax was RM18.62 million, up 47.3 per cent from RM12.64 million.

LaBrooy also said that he hopes the government will announce the removal of the withholding tax for individuals investing in REITs in the coming budget.

Malaysia imposes a 15 per cent withholding tax and 26 per cent tax on foreign investors and 20 per cent on institutional investors. In Singapore, there is no withholding tax on individuals and only 10 per cent tax on other investors.

By New Straits Times (by Vasantha Ganesan)

Axis REIT seeks to buy more assets worth RM560mil

Axis REIT seeks to buy more assets worth RM560milKUALA LUMPUR: Axis REIT Managers Bhd, which expects to complete by year-end the acquisition of three properties worth about RM40mil, is eyeing another RM560mil worth of assets.

Chief operating officer Stewart LaBrooy said Axis REIT aimed to expand its portfolio by RM180mil by the first half of next year and manage more than RM1bil in assets by end-2009.

Briefing reporters yesterday on the earnings for the second quarter ended June 30, Labrooy said: “We are in negotiations for three assets worth about RM240mil.”

However, he declined to disclose details of the proposed acquisition.

It also planned to acquire eight completed projects valued at RM320mil from private equity, he said.

Axis REIT owned 17 properties worth RM651.4mil as at June 30, compared with 15 properties valued at RM608mil on March 31, he said.

LaBrooy also said Axis REIT expected to complete by year-end the acquisition of three smaller properties valued at RM39.6mil, increasing its total assets to RM690.9mil.

To reduce borrowings and finance more acquisitions, Axis REIT planned to raise RM200mil by placing out of 120 million new units, he said.

“The placement is likely to be done in two tranches of 60 million units each. The first tranche will be in the fourth quarter of this year and the second in the second quarter of next year,” he said.

On its proposed reclassification as a syariah-compliant REIT, LaBrooy said Axis REIT hoped to get Bursa Malaysia approval by next year.

With the reclassification, Axis REIT hoped to widen its investor base to include local syariah funds as well as develop investor interest from foreign syariah funds, he said, noting that Axis REIT would appoint a syariah advisor to oversee the REIT's operations.

On Axis REIT's wish list for Budget 2009, LaBrooy said he hoped the withholding tax would be removed to attract more investors to the REIT market.

The current withholding tax rate for individuals and foreign institutions in Malaysia is 15% and 20% respectively compared with Singapore's 10% for foreign institutions.

For the first half year, Axis' net profit rose 47.31% to RM18.62mil from RM12.64mil a year ago.

By The Star

Maleki builds a future with 'green' materials

MALEKI GmbH, a Germany-based building materials manufacturer, aims to generate revenue of euro100 million (RM508 million) in five years, as demand for environmentally-friendly building materials grows.

"Our company is a start-up company. We have been around for more than a year and so far have sold little as our focus has been on product development.

"But we are confident of generating a revenue of more than euro100 million within five years, based on our innovative technology," Maleki strategic director Matthias Gelber told Business Times in an interview.


ENVIRONMENTALLY FRIENDLY: Gelber demonstrating the use of Maleki's green'cement

The company designs formulas for "green" cement, renders, protective coatings and self-levelling flooring compounds.

"You can call our technology disruptive technology as I am convinced it will replace currently dominant technologies, such as epoxy floors for high performance industrial flooring. That's because our material is as good as epoxy, but better in terms of environment, health, safety and far cheaper to manufacture," he said.

The company is in talks with local and foreign companies, mainly cement producers, on possible strategic tie-ups.

These may involve the local partner mass producing the green building materials using Maleki's formula via a licensing agreement. This means the more Maleki building materials are produced, the more revenue it makes.

"We are currently in talks with several major companies that want to license our technology. Talks are still in early stages. We hope something will materialise sometime next year," said Gelber, who declined to reveal the name of the companies.

Interest in Maleki's products has grown over the last few months as more countries and companies are placing more emphasis on environmentally-friendly initiatives.

"We are more environmentally friendly, have lower manufacturing cost and better product performance than currently dominating technologies in the market," Gelber added.

By New Straits Times (by Goh Thean Eu)