Slight rise in demand for cement this year

The Cement & Concrete Association of Malaysia (C&CA) expects domestic cement demand to grow marginally by 3% to 5% to about 16.33 million tonnes this year versus 15.86 million tonnes in 2007 due to a lacklustre construction industry.

Chairman Tan Sri A. Razak Ramli said cement demand had remained stagnant at 15 to 16 million tonnes a year since 2003.


Tan Sri A. Razak Ramli

“Despite an encouraging growth in the first half of the year, we will only see a relatively small growth in demand this year due to the slowdown in the construction industry. We hope things will be better next year. If the economy picks up next year then construction should also,” he told StarBiz.

In addition to a lack of demand, the local cement industry has been a much misunderstood industry.

Various accusations have been hurled at industry players including increasing cement prices after liberalisation and creating artificial shortages through orchestrated plant shutdowns.

There have also been calls by various parties for the Government to remove all import duties for cement, impose an export or windfall tax and/or impose an export ban on clinker and cement to ensure sufficient domestic supply.

To Razak the allegations are baseless.



“There can never be a shortage of cement in Malaysia as the cement installed capacity is very high at 28.3 million tonnes,” he said.

In 2007, cement production inclusive of export was only 19.48 million tonnes of which 15.86 million tonnes were consumed locally. Razak said the forecast production this year would be slightly higher at 19.62 million tonnes as domestic consumption was expected to increase to 16.33 million tonnes. Cement export is expected to increase to 14.7% of production this year, up from 14% last year.

“The Government should also not impose an export ban on cement because manufacturers can easily meet domestic demand and export the excess,” Razak said.

Moreover, the Government is in full control of clinker and cement exportas every tonne can only be exported with an export license from the International Trade and Industry Ministry supported by a letter of no objection from the association.

Razak said cement manufacturers were also not intentionally creating shortages by simultaneously shutting down plants for maintenance.

“No manufacturer would shutdown their plants unnecessarily thus incurring production losses and additional costs including high fixed costs. Kilns require a minimum of three days to heat up to the desired temperature of 1,500 ºC.

“All cement companies notify the Domestic Trade and Consumer Affairs Ministry on their scheduled plant maintenance shutdowns. The plants would also have stocked up to ensure sufficient supply,” he said, adding that unscheduled plant breakdowns, however, were beyond the manufacturers’ control.

He said complaints of tight cement supply, especially in Peninsula Malaysia, was actually due to the fact that “bagged cement was not moving fast enough.”

“With the increase in fuel price, many transporters are reluctant to carry bagged cement as cargo as they are low value, bulky items. Otherwise they will try to overload the lorries. There is also a lack of lorries, drivers and licences,” he added.

Road Transport Department operations on overloaded tankers and lorries carrying cement and its related raw materials also added to the industry’s transport woes.

Razak pointed out that although the Works Ministry had gazetted an additional 20% loading from the present permissible weight for lorries/tankers on all federal roads in Peninsula Malaysia, federal roads in east Malaysia and state roads nationwide were not covered.

To help ease supply issues, the C&CA is in the midst of setting up a public hotline centre to assist those in Peninsula Malaysia who have trouble with cement supply.

“Through the centre, Class F contractors will have a direct avenue to obtain cement. We will also be able to capture and build a database on public complaints on cement supply,” Razak said.



On cement price increases, Razak said the industry did not raise prices indiscriminately and exorbitantly despite having absorbed cost increases of more than 60% from 1995 to 2007.

There were only two price increases between 1995 and 2006 when cement prices were under the Price Control Act - 10% in August 1995 and an average of 9% in December 2006.

Following cement price liberalisation on June 5, prices were only increased twice - 15% to 20% country-wide in the same month as well as an average 8% in Peninsula Malaysia in August due to an unprecedented 63% diesel price hike and a 26% rise in electricity tariff. This price will hold until December.

Despite the price liberalisation, the return on investment (ROI) for the cement industry has only increased to 6% to 10% from the previous 3%.

“This is still insufficient to encourage reinvestment by industry players,” Razak said, adding that the cost of a 1.2 million tonne integrated plant was about RM1bil currently.

“This is why there has been no expansion programme or new plants coming on-line since 1997 although manufacturing licenses for the production of more than 14 million tonnes of cement have been issued by the Government.

“There has been some re-investments and upgrades but returns and demand are too low to encourage new expansion.”

By The Star (by Elaine Ang)

PJ8 stands out impressively

Fronting the Federal Highway, PJ8 is highly visible. The project comprises a serviced suite block and three blocks of offices.

As one cruises along the Federal Highway towards PJ Hilton, an iconic structure rises high above the horizon. Known as PJ8, the project lies smack opposite the five-star hotel fronting the highway.

Cycle and Carriage office marketing Mercedes Benz used to occupy part of the site. PJ8 in Section 8 Petaling Jaya, undertaken by IJM Properties Sdn Bhd, comprises a 38-storey block of service suites, a 12-storey office suite block and two blocks of office tower with a gross development value of RM250mil.

The 4-acre IJM project is prominent by any standard and its completion is expected to give the main PJ a lift. It will help to rejuvenate what used to be a thriving PJ New Town but now perceived by many to be a little tired.

At 38 storeys, the service suite block may well be the tallest. It comes with three blocks of offices.

Its completion and eventual occupation will set new benchmarks, in more ways than one, sources say.

For a long while, much of the attention has been focused on Bandar Utama and Mutiara Damansara,

While there have been pockets of change and redevelopment in other parts of PJ, much of these have been drowned by the hype and activities in the new townships in PJ North simply because of the malls in that area.

The status quo is expected to remain. Nevertheless, PJ8 will add some sparkle amidst the current gloom in the sector.

Says Jones Lang Wootton executive director Malathi Thevendran: “Multinational corporations (IT, media, professionals, finance & banking, airlines), oil and gas companies, embassies and offices of foreign governments will prefer a Kuala Lumpur location.

“Those that are service-orientated €“ marketing, advertising, support services, data centres, backroom offices €“ will prefer PJ. Historically, the demand has been for smaller, cheaper office space which resulted in the development of shop offices.

“Today, we are seeing the move towards quality corporate office towers,” she says.

The PJ makeover started several years ago as new residential areas took shape and the spending power of its population grew.

Old factories were done away with and replaced by a new commercial landmark.

As families upgrade and move to better housing, the older established residential areas began to take on a rather exhausted facade. Time for change!

The old and the new

Be it food and beverage outlets, retail or services, the demand of the PJ population have grown by leaps and bounds as its middle class ballooned.

Other growth areas around PJ that Malathi likes include Mutiara Damansara, Bandar Utama and Damansara Perdana.

“There are an abundance of amenities there. It is close to the highway network and offers a big residential catchment. The upcoming LRT will boost its popularity.”

Mutiara Damansara, says Malathi, has an edge over Bandar Utama and Damansara Perdana, as it is one of the best and systematically planned commercial and residential enclave in Petaling Jaya.

The other areas she likes is Section 13, with its cauldron of commercial activities. But the local council will have to monitor accessibility and traffic in the years to come as more high rise commercial developments in the pipeline are completed.

Jerome Hong, managing director I (agency & corporate services) of PA International Property Consultants (KL) Sdn Bhd says the eventual occupation of PJ8 will increase the number of office workers and residents travelling in and out of its immediate area. Traffic congestion may be an issue.

Hong says although the developer has created several access roads into PJ8 from the flyover off Federal Highway and from Jalan Barat, the local council should address the traffic issue in this area as it is one of the main arterial roads leading to the main PJ centre.

“There will need to be better traffic management for the long term,” he says.

Hong says its location and access is second to none. It is close to all forms of public transport and other public amenities. It is also more visible, he says.

Between PJ8 and Malton Bhd’s VSQ, another commercial project across the Federal Highway near the Tun Hussein Eye Hospital, Hong prefers PJ8.

“VSQ is not so accessible in terms of road network or public amenities. The large multinational companies will also prefer floor plates in excess of 10,000 sq ft,” he says. While PJ8 is a mixed development comprising offices, retail outlets and serviced suites, VSQ offers only office facilities and a bit of food and beverage.

PJ8’s serviced suites are more than 80% sold, with the remaining units now selling at an average of RM500 per sq ft compared to RM350 psf in its early days, says S K Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng.

It has only one office suite left. IJM recently sold Tower C in PJ8 en bloc for about RM600 psf, setting a new benchmark. Its offices suites were tagged at RM430 psf when it was first launched.

Chan says most developments will take time to occupy. In this case, its visibility and accessibility will quicken the process. Jaya33 is in the region of RM3.50 psf to RM4 psf.

3 Two Square offices in the region of RM2.30 psf to RM3.50 psf.

“We can expect PJ8 to fetch rentals in the region of RM4.50 psf,” says Chan.

By The Star (by Thean Lee Cheng)

Reassessing Indonesia

Malaysia and Singapore have a unique relationship. We are like squabbling in-laws, but we know we cannot and will never divorce each other.

You live with the tension and exchange of barbs. The ties between Malaysia and Indonesia are quite different. The animosity at times can boil over. Grudges are harboured and allowed to fester. There is a genuine fear of, and sometimes loathing for, each other.

Most of that is at the political and policy levels. Many Malaysians and Indonesians love to visit each other’s country. Indonesia to Malaysians in general, is a bit of an underachiever. Naturally, Malaysia to Singaporeans, is also a bit of an underachiever.

It’s time to reassess Indonesia. In many ways, the country is moving in the right direction business-wise.

Recently, Qatar and Indonesia set up a US$1bil fund to invest in energy and infrastructure. Qatar is the world’s largest exporter of liquefied natural gas (LNG), while Indonesia is third. Both countries are also members of the Organisation of the Petroleum Exporting Countries (OPEC), though Indonesia has just opted out.

Qatar will contribute 85% of the funds for the new fund and Indonesia the remainder. Qatar’s state investment fund, the Qatar Investment Authority (QIA), has teamed up with Abu Dhabi state enterprise International Petroleum Investment Co in March to launch a US$2bil fund.

The QIA has also set up joint funds with Oman and Dubai.

Indonesia is pro-Western, much like Malaysia, and could be a model for a modern Muslim nation, provided nationalist Islam (not radical Islam) doesn’t become too powerful a force in Indonesian society.

Following the aftermath of the Sept 11 attacks, many were outspoken on the various failings of Muslim nations. Indonesia is a dominantly Muslim nation, with the largest Muslim population in the world, but it also has small but strong Hindu, Christian and Buddhist communities.

Malaysia has generally enjoyed a better perception in the eyes of international travellers and global investors.

Indonesia has had to contend with thorny events such as the Bali bombings and the East Timor massacre. If investors are to be influenced just by these events, they would be doing Indonesia and themselves a disservice.

There is still pockets of “nationalistic fervour” among the political voices in Indonesia.

Health Minister Siti Fadilah Supari commented in April that regional governments in Indonesia should be on their guard whenever they dealt with international investment proposals.

She said the following should be considered by provincial governors and regents in respect of foreign investment plans:

· Would the international investors take control of Indonesian resources?

· Would the foreigners be prepared to be on an equal footing with Indonesian partners, or would they adopt a lordly, colonialist stance?

· Would a particular foreign investment benefit Indonesians or harm them?

· To what extent would Indonesians gain from the investment? Foreign investors often lie about this matter.

For example, South Kalimantan’s coal needs were less than 1 million tons per year and there was an electricity shortage crisis. Yet, at the same time, 70 million tons of coal was taken out of the province and sold internationally.

Indonesia has been beset by an autocratic regime for a long time. We need to reassess the country now as the country is certainly moving away from the authoritarian system to a more democratic one.

It is still taking baby steps but press freedom and the media’s brutal honesty and bravery has paved the way for a more civil society. This is an important aspect of a decentralised power system, which accords more voice to a wider spectrum of leaders and the disenfranchised.

Meanwhile, according to an AT Kearney study of the top 25 most attractive investment destinations in the world, Indonesia ranks 21st. The rankings for 2007 are based on a survey of 1,000 CEOs around the world. In 2006, Indonesia did not make the top 25. Thanks to a well-respected Finance Minister in Sri Mulyani Indrawati, there has been significant economic liberalisation.

Quasi-monopolies have not been protected and are expected to compete with new foreign companies.

The boom in commodities over the last five years has helped the country infuse more strength into its underlying economy. Indonesia is at or near the top in palm oil, rubber, base metals, coffee and cocoa.

Sustainability of global investments

Corporate investors across all regions are concerned about the sustainability of the global economic order. Is Indonesia the flavour of the month only because of the commodities boom? I think not, as most experts can see a sea of change enveloping the country.

The commodities boom only hastens the benefits of such changes.

The country is confident enough to implement several years of mandated increases in minimum wages. While some industries may have shifted or closed operations because of these new rules, these measures have also forced investors and businesses to move up the value-add curve.

There has also been a decentralisation of budgetary systems, which has allowed local leaders to better manage resources and spending to their localities.

Over the last three years, Indonesia has managed to enjoy more stability politically, in its currency and in economic viability. This lessens the discount on businesses in valuation models, thus resulting in better confidence among foreign investors going forward.

Corruption is still a problem but one can easily see a more transparent era for Indonesia. More bigwigs have been hauled up and tainted politicians have lost their seats with greater frequency.

Major business entities

Since beginning of 2007, there has been more than US$20bil in mergers and acquisitions and capital raising, which drove the corporate sector to new levels.

The corporate sector is no longer dominated by seasoned players from the Suharto era. If you put the top business groups next to Malaysia, the latter pales in comparison.

The Salim group tops the ladder with US$7.3bil (RM24.8bil) in revenues annually and is in agriculture, distribution, property management, financial services and telecommunications in Indonesia, Hong Kong, China and Singapore.

Next is the Sinar Mas group with revenues of US$4.77bil (RM16.2bil), which was forced to sell Bank Internasional Indonesia (BII) following the 1997 financial crisis but has since rebuilt itself in banking with the acquisition of Bank Shinta.

The Sinar Mas group can be said to have been most affected by the 1997 financial implosion as their Asia Pulp & Paper had a staggering debt load of US$14bil. Following years of negotiations and restructuring, the company has thrived. It is also the biggest national player in palm oil, with land bank of more than 1 million hectares.

I could go on and on, but a summary of local companies with annual revenue of at least US$1bil each would be better for now (major assets/annual revenues):

Salim: consumer goods, agriculture/US$7.3bil

Sinar Mas: pulp and paper, agriculture/US$4.7bil

Djarum: cigarette, Bank Central Asia, Cipta Karya Bumi Indah/US$3.7bil

Gudang Garam: cigarette, plantations, paper packaging/US$3.5bil

Bakrie: coal, Bakrie Brothers/US$3.1bil

Lippo: regional property developer, healthcare, financial services/US$2.7bil

Raja Garuda Mas: pulp & paper, plantations, energy/US$2.4bil

Triputra: coal, agro-industry, manufacturing/US$2.3bil

ABC: consumer goods, battery/US$2.1bil

Saratoga Capital: coal, Adaro, palm oil, infrastructure/US$1.9bil

Para: consumer goods, property, mining, financial services/US$1.6bil

Sampoerna: agro-industry, telecommunications, forestry and property/US$1.4bil

Ometraco: animal feed/US$1.2bil

Khazanah Nasional Bhd has a hefty profile in Indonesia. The businesses under Khazanah has an annual revenue of US$1.8bil. Its stakes include those in Bank Lippo, Bank Niaga, Excelmindo Pratama and infrastructure joint ventures (JVs).

Surprisingly, Temasek’s holdings in Indonesia has only a total annual revenue of US$1.5bil. It has stakes in Bank Danamon, BII, and various property and energy JVs.

Still, the key point here is the number of business entities that have substantial revenues. How many Malaysian businesses have combined revenue of more than RM3.4bil annually? Size matters, especially when they are headed in the right direction with the proper masterplan.

State-owned enterprises (SOEs)

The government has also planned to privatise a number of SOEs, which in itself is a grand plan to better manage resources, inject competition and promote efficiency in government. All in, 37 SOEs have been identified for privatisation and/or restructuring. There has been some delay in that certain factions of the government have been delaying the process.

Last year, 10 SOEs were scheduled for privatisation. However, only five are now ready to go to IPO this year: Krakatau Steel, Bank Tabungan Negara, and National Plantation Enterprises III, IV and VII. Needless to say, intense lobbying by the affected SOEs and maybe even “vested interests” must have been a large part of the delay.

Still, it’s hard to deny that the country is moving in the right direction.

By The Star (by S. Dali)

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 ...

Government gives RM100m more for housing scheme

PUTRAJAYA: The government will allocate an additional RM100 million for this year and next to implement the Rumah Mesra Rakyat (RMR) housing scheme, said Finance Minister Datuk Seri Najib Razak.

In announcing this yesterday, he said the allocation would enable some 1,500 units to be built nationwide under the RMR scheme by Syarikat Perumahan Negara Bhd (SPNB), a wholly owned subsidiary of Ministry of Finance Inc.

“The RMR scheme is aimed at helping the rakyat who have less than RM1,500 household income to own a more comfortable home,’’ he said, adding that these people would find it hard to secure loans from financial institutions.

Najib, who is also deputy prime minister, said applicants for the housing scheme must, however, own the land on which the house would be built or obtain statutory consent to occupy the land owned by their close relations.

“The applicants must also be aged between 21 and 65 in order to be eligible,’’ he added.

Najib said that the land owner would bear only two-thirds of the cost of building the house in the form of an interest-free loan through the Al-Qardhul Hassan concept while the balance would be borne by the government.

He said the owner was required to pay RM150 per month for a period of 23 years to 29 years for a house measuring between 700 sq ft and 900 sq ft. The cost of building a house is estimated at RM70,000 to RM80,000, depending on the location.

Najib said that since the introduction of the scheme in 2002, 6,551 units had been built at a cost of RM310 million while a further 6,263 units costing RM425 million were under construction and expected to be completed by March next year.

By The EDGE Malaysia (by Yong Min Wei)

Sunway bags RM1.8b deal

BIGGER PRESENCE: (From right) Silver Coast managing director Shaher Awartani, Capitala acting CEO Heang Fine Wong and SunCon managing director Kwan Foh Kwal pose next to a model of Rihan Heights.

Sunway Holdings Bhd has bagged a RM1.8 billion contract to build part of a mixed development project in Abu Dhabi in the United Arab Emirates (UAE).

The contract marks its second job in the Middle East as the group seeks to expand abroad. It has already carried out projects in Singapore, India and Trinidad and Tobago.

In recent years, Malaysian builders have been expanding overseas as large construction projects become scarce at home.

Sunway Holdings' latest project involves works at Rihan Heights, phase one of the Arzanah mixed use integrated development.

It will be carried out by the Silver Coast-Sunway Innopave joint venture.

The joint venture is a 60:40 partnership between Sunway Innopave Sdn Bhd and the Abu Dhabi-based Silver Coast Construction and Boring LLC.

Sunway Innopave is a subsidiary of Sunway Construction Sdn Bhd (SunCon), which in turn is wholly owned by Sunway Holdings.

The contract will boost SunCon's order book to about RM3.3 billion and keep the group busy for the next three years.

"This project represents another step in Sunway group's globalisation plans under which SunCon is expanding our business interests and construction expertise to more countries," SunCon senior managing director Datuk Tan Kia Loke said.

It will also pave the way to more jobs in Abu Dhabi in future.

The contract was awarded by Mubadala CapitaLand Real Estate LLC (Capitala).

Capitala is a joint-venture company between Mubadala, a business development and investment company in Abu Dhabi, and Singapore's CapitaLand.

Mubadala holds the majority 51 per cent stake in Capitala, with the balance held by CapitaLand.

Tan said the project, to be led by Sunway Innopave, is strategically located at the gateway on Abu Dhabi island and is part of the fully integrated, mixed use development surrounding Zayed Stadium.

"Our contract will involve the construction of five residential towers, a three-level podium, 14 townhouses, a clubhouse and 1,208 parking bays together with associated landscaping, external works and services," he said.

SunCon had first ventured into Abu Dhabi to build five towers on Al Reem Island under a group.

However, the Arzanah Development-Rihan Heights project is the first that the company is spearheading with a local partner.

Tan said the Abu Dhabi government is committed to non-oil economic diversification, which is expected to reach 60 per cent in 2013, through investments and projects in the agriculture, industry, real estate and service sectors.

"This provides excellent opportunities for SunCon to further build our brand reputation in the international construction market," he added.

Some 60 per cent of the RM3.3 billion order book is from overseas, and 40 per cent of it comes from jobs in the Middle East.

By New Straits Times

Business park Southgate to be completed by 2011

Southgate Commercial Centre, an integrated business park developed by the Mah Sing Group Bhd’s wholly-owned subsidiary Jastamax Sdn Bhd, is expected to be completed by 2011.

The gross development value of this project is estimated at RM380 million, the company said in a statement today.

Southgate, a commercial development project in Kuala Lumpur, has received an overwhelming public response.

Mah Sing Group managing director Datuk Seri Leong Hoy Kum said the project is being developed to meet the needs of investors and also companies wanting to own office space in the city.

The group is targeting corporate as well as high net worth customers, including professionals, investors and entrepreneurs as Southgate is suitable for different business ventures.

By Bernama

SBC plans two more projects

KUALA LUMPUR: SBC Corp Bhd aims to launch two mixed development projects with an estimated total gross development value (GDV) of RM800mil by next year in southern Selangor and along Jalan Kuching, Kuala Lumpur.

“We estimate our future projects over the next five years, inclusive of these two projects, to have total GDV in excess of RM1bil,” said managing director Sia Teong Heng after the company’s AGM yesterday.


Sia Teong Heng (left) and SBC deputy COO Yap Wei Yee at the AGM.

SBC’s future projects would be “integrated” with transport links such as the light-rail transit, he added.

He cited the success of the company’s PJ Exchange (PJX) office tower project in Petaling Jaya which has attracted requests from corporate clients to replicate the model.

“We are currently in talks with a few parties and hope to close some deals by next year,” he said.

In view of the softening property sector and rising raw material prices, Sia said SBC planned to overcome that problem by looking out for good locations.

“We are working hard to look at some good locations and we believe that long-term investors would invest in good locations,” he said.

SBC currently has a total landbank in excess of 700 acres in the Klang Valley and Kota Kinabalu, Sabah.

On overseas markets, Sia said the company would continue to explore opportunities in Bangkok but had no immediate plans to go beyond Thailand.

By The Star

Major renovation of Golden Sands

An aerial view of the Golden Sands Resort

GEORGE TOWN: Golden Sands Resort is investing about RM38mil to renovate its 390-room hotel in Batu Ferringhi.

The exercise would involve re-doing all the rooms, expanding the coffeehouse, establishing an Italian restaurant and restoring the public spaces.

General manager Andrew Whitaker told StarBiz that the hotel would start renovating its rooms in February next year.

Andrew Whitaker

“Some 14 of the 390 rooms would be converted into suites for families. The other rooms would be given a face-lift to reflect the unique and popular interior decoration themes used in Malaysia,’’ he said.

“For example, dark wood carvings and colourful fabric would be used to give the rooms the outlook of a contemporary Malaysian home.’’

Whitaker said the hotel would not be closed during the renovation period. “We are targeting for the renovation of the rooms to be completed by February 2010,” he said.

He said the famous Peppino restaurant would be closed next year and would be replaced with a new RM4.2mil two-storey Italian restaurant by the beach.

The present Sigi’s by the Sea restaurant would be removed to make way for the new Italian restaurant, which has yet to be named.

“Sigi’s by the Sea will be closed in October 2008, so that construction work can start on the new Italian restaurant, which is scheduled to start operation next May,” he said.

Whitaker said the new coffeehouse, currently undergoing renovation, would be reopened soon.

“It has been expanded and will feature open cooking areas,” he added.

The last time Golden Sands Resort underwent a major renovation was in 1992.

By The Star (by David Tan)

Mah Sing wins three awards

KUALA LUMPUR: Mah Sing Group Bhd has won three awards at the Euromoney Liquid Real Estate Awards 2008 event, including the highest honour of the Top Developer Overall Malaysia.

In a statement, Mah Sing said the other two awards were the Best Office/Business Developer Malaysia and the Best Mixed-Use Developer Malaysia.

The award ceremony will held as a gala dinner in London on Oct 2. Selection of winners is based on surveys and assessment of the real estate sector’s performance and achievement over the past year.

“It is a testament to the talent and hard work of our entire organisation, to build a leadership position for Mah Sing and the quest to be a regional, world-class developer,” group managing director and group chief executive Datuk Seri Leong Hoy Kum, said.

The company said the top developer award was the single most important category for developers and honoured only one company in each country.

“The recognition is attributable to Mah Sing being a consistent provider of high quality and profitable real estate projects,” it added.

Mah Sing currently has 14 projects in the Klang Valley, Johor Baru and Penang.

By Bernama

CLSA Capital builds war chest for Asia property

HONG KONG: Private equity house CLSA Capital Partners is building a war chest to invest in property in Japan, China and India next year, expecting cheaper deals, and will pour more money into firms it sees as recession-proof.

Mosquito coils, ceiling fans and light switches were the type of “things you can touch” that CLSA Capital sought out as it supplied venture capital for Asian manufacturers, and its chairman, Richard Pyvis, said he wanted more of the same.

But the firm has about US$100 million to spend on property, freed up by divestments last year, and is looking to raise more money for a region-wide property investment strategy.

“We’ve got a war chest but we’re unlikely to deploy it until next year, until real estate prices settle down,” Pyvis told a media briefing in Hong Kong.

“I wouldn’t want to be sitting on a long real estate portfolio right now.”

Pyvis would not give details of planned funds, citing regulatory issues, but saw few difficulties in capital raising for long-term, closed-end funds despite the turmoil in financial markets.

He said one of CLSA Capital’s open-ended funds, for investment in clean resources, had “one or two minor" redemptions, but that these had been off-set by new subscriptions.

CLSA Capital, which has about US$2.5 billion under management, would look to buy old buildings and refurbish them in Japan, as well as build top-notch office blocks in the biggest cities in India and China.

“Japan is certainly going to be very interesting next year,” Pyvis said. “As inflation comes into the equation, it will flow into real estate.”

With banks scaling back on loans to the property sector, second-grade buildings in Tokyo have seen a drop in values, sending rental yields up by as much as 100 basis points in the last year.

In China, land prices have dropped thanks to government austerity measures, including a clampdown on lending to developers for land purchases and the introduction of various taxes to deter speculation.

And Indian property prices have also fallen as much as 25 per cent this year after a surge since 2005, because of overbuilding in some areas and a funding crunch for developers.

CLSA Capital, part of the Asian investment banking arm of French lender Credit Agricole, would invest more in companies considered the most immune to a global economic slowdown, Pyvis said.

He cited past investments in a Chinese firm that made fire engines, in a manufacturer of eyedrops for conjunctivitis, and in an Indian firm that produced the oil for transformers used on the country’s fast-growing power grid.

“There’s no question we’re seeing a slowdown, and there are going to be some sectors that are losers,” he said.

“So our investment rationale is very simple: the old economy, domestic growth and demand, things you can feel and touch.”

Pyvis said he expected a CLSA Capital fund that provides mezzanine financing to flourish after a rise in the cost of debt and share market slides.

The fund had found it difficult to source deals, he said, but companies were now keen on mezzanine funding.

“Because there’s been a great delineation in the prices of debt and equity, mezzanine is really coming into its own,” he said.

By Reuters

Mid Valley City gets cybercentre status

PROPERTY developer IGB Corp Bhd has pumped RM15 million into Mid Valley City, to enable fibre-optic connectivity through-out its mixed-development hub.

Mid Valley City recently received MSC Malaysia Cybercentre status on September 11 under the MSC Malaysia National Roll-Out plan.

The Garden Towers are designated to house the MSC Malaysia-status companies, with rental averaging between RM6 to RM7 per sq ft.

These rental prices are similar to Grade A buildings located in Kuala Lumpur.

"We have reserved some 300,000 sq ft of office space exclusively for these companies," said Mid Valley City Gardens Sdn Bhd chief executive officer Anthony Barragry during the MSC Malaysia status launch in Kuala Lumpur yesterday.


TECHNOLOGY GROWTH: Barragry says that to remain ahead, Mid Valley City Gardens has invested in broadband services due to keen demand.

Barragry said he was confident that this rental would provide the firm with a sustainable yield, adding that they were currently in talks with potential tenants.

The 35-storey North and South Towers have more than one million sq ft of gross lettable area.

"In the last 10 years, there has been a massive growth in technology. For us to remain ahead, we have invested in broadband (services) as there was keen demand for it," said Barragry.

Mid Valley City has high speed broadband access for firms as well as incubation facilities to help small and medium industries.

Multimedia Development Corp chief executive officer Datuk Badlisham Ghazali said several mutinational companies have shown strong interest in setting up shop at Mid Valley City.

"Many companies are looking at centralised business community portals. Currently, there are 15 cybercities and cybercentres in the country," he said.

Also present to officiate the launch was Science, Technology and Innovation Deputy Minister Fadhillah Yusof.

By New Straits Times (by Jeeva Arulampalam)

Mid Valley City gets MSC status

KUALA LUMPUR; Mid Valley City, an integrated urban development in the Klang Valley, has received MSC Malaysia Cybercentre status.

Mid Valley City Development chief executive officer Antony Patrick Barragry said RM15mil had been invested to enable the Mid Valley City to offer competitive Internet data centre rates and high-speed broadband access.

”Together with partners Macro Lynx Sdn Bhd, infrastructure manager and service provider for Mid Valley City, and 3Com, the infrastructure enabler, we will be providing world-class services to businesses,” Barragry said during a ceremony to highlight Mid Valley City’s MSC Malaysia Cybercentre status yesterday.

Barragry said some 300,000 sq ft of office space was reserved exclusively for MSC Malaysia status companies

”To date, we have received expressions of interest from a number of parties,” he said.

“The MSC Malaysia Cybercentre status given to Mid Valley City will assist MSC Malaysia status companies remain closer to their customers, as many businesses are located in the city centre and the Klang Valley,” he added.

By Bernama

Sime Darby among firms keen to develop Jerejak

SIME Darby Bhd is one out of four investors that are keen to develop Pulau Jerejak in Penang.

Chief Minister Lim Guan Eng yesterday said the other three investors are foreigners which will be backing local firms.

The foreign parties are from the Middle East and the Asia-Pacific region.

Without revealing details, he said Sime Darby plans to invest in a tourism-related project and this is linked to the Northern Corridor Economic Region (NCER).

"We have received tremendous interest for the holistic development of Pulau Jerejak from Middle Eastern investors and Sime Darby is the first local conglomerate to express its interest," Lim told a press conference at Kompleks Tun Abdul Razak after receiving Sime Darby's president and group chief executive Datuk Seri Ahmad Zubir Murshid.

Present was Invest-in-Penang Bhd executive committee chairman Datuk Lee Kah Choon.

The NCER blueprint which was launched last year by Prime Minister Datuk Seri Abdullah Ahmad Badawi states that Pulau Jerejak, which once served as a penal and leper colony, has been earmarked for a premier medical tourism centre.

The 362-hectare island, which is off the coast of Penang island, has so far seen only 32ha jointly developed by the Penang Development Corp and USA Holdings in the form of the Jerejak Resort and Spa.

Lim said the development of Pulau Jerejak would run into billions of ringgit and would span 10 years.

"The state government will likely open a tender for this project by the end of the year and all interested parties can forward their proposals then," he added.

Meanwhile, asked to comment on a news report that monorail system supplier Scomi Engineering Bhd is still keen on Penang, Lim said:

"Who is going to fund this monorail system? Previously, the federal government said it would fund the capital expenditure for this project but it has since said no."

By New Straits Times (by Marina Emmanuel)

UK housing mart' on its knees'

LONDON: House prices in Britain fell for the fourth consecutive month in September, as the credit crisis continued to worsen and the country's largest mortgage lender was forced into a takeover, the property website Rightmove reported yesterday.

Average house prices across the country fell one per cent in September to STG227,438 pounds (STG1 = RM6.27).

New listings per estate agent dropped to the lowest level for September that the index has ever recorded.

"The housing market is on its knees and will remain so until financial institutions address the disastrous state of the mortgage funding markets," said Miles Shipside, commercial director of Rightmove.

By AP

Residential market continues to face challenges

The market for residential properties has softened since the beginning of this year and is likely to continue into 2009, market experts say.

The potentially negative influence on the sector is supply, said real estate valuer Regroup Associates Sdn Bhd executive chairman Christopher Boyd.

In a recent survey undertaken by Regroup, it showed that there is an existing supply of 19,183 condominium units in Kuala Lumpur, with 13,902 units more under construction.

The new projects launched were Gaya Bangsar, Twins @ Damansara Heights, Regalia @ Sultan Ismail, 9Madge, NorthShore Gardens, Sunway Vivaldi and Panorama in the City Centre and Mont Kiara/Sri Hartamas.

The average occupancy rate for established condominiums in the city centre, Ampang Hilir, Mont Kiara, Bangsar, Kenny Hills and Damansara Heights was about 80 to 85 per cent.

"Strong upmarket areas such as Damansara and Kenny Hills have limited new supply as approval for high-rise condominiums in these areas is seldom given by the planning authorities. Investors should look for quality projects here as they are extremely lettable," Boyd told Business Times.

Boyd also said there will be a gradual appreciation of values in properties in Kuala Lumpur, spurred by a higher level of inflation, and because developers will not be able to restrain prices as production cost is rising.

Demand from foreign investors will also increase in years to come, he added.

"We have seen buyers this year from South Korea, Singapore, Hong Kong and the Middle East. While a liberal policy on foreign ownership brings a far wider market to our doorstep and encourages more and better quality development to meet international standards, it exposes the development industry to changes in the global market sentiment," Boyd said.

For IJM Land Bhd managing director Datuk Soam Heng Choon, he believes that the outlook for the residential market remains strong.

"If buyers like a product in a certain location, they will go for it. Demand for landed properties is still better than high-rise condominiums," he said.

He said medium- to high-end properties priced from RM400,000 still have a strong market going, but sales of houses below RM400,000 are affected as buyers with a household income of less then RM5,000 hold back on buying.


LEONG: The medium-to high-end segment has a pool of buyers who are more resillent to inflation

Mah Sing Group Bhd managing director and chief executive Datuk Seri Leong Hoy Kum said while the outlook is challenging, residential projects by branded developers, especially for landed properties, are still doing well.

Leong said investors looking for capital appreciation and buy-to-stay would generally look at landed residential properties as condominiums are more for rental yield.

"There are still transactions, albeit at a lower pace, as the medium- to high-end segment has a pool of buyers who are more resilient to inflation," he said.

There are also foreign buyers who are still picking up the units, although not in the quantum of about a year ago.

He said the mid- to high-end residential projects are more resilient to inflation and weak sentiments, and are seeing better sales.

By New Straits Times (by Sharen Kaur)

Mah Sing is 'Top Developer Overall'

Property developer Mah Sing Group Bhd has swept three awards out of seven categories at the Euromoney Liquid Real Estate Awards 2008, including the highest honour of "Top Developer Overall Malaysia".

The other two awards were "Best Office/Business Developer Malaysia" and "Best Mixed-Use Developer Malaysia".

Currently in its fourth year, the awards cover developers, lenders, advisory firms, investment banks, investment managers and property management firms from more than 50 countries, across a variety of regional categories.

The organiser, Euromoney Liquid Real Estate, is a leading publication focused on international real estate financial markets.

The Top Developer Award is the single most important category in the developers' award and honours only one developer in each country. Mah Sing Group is recognised as the nation's major builder of quality luxury homes and forward-thinking business/commercial developer.

Mah Sing currently has 14 projects in the Klang Valley, Johor Baru and Penang. The group's platter of luxurious, quality ho-mes and prime commercial projects is focused on the medium- to high-end property segments in Malaysia.

The Euromoney Liquid Real Estate Award is based on surveys and assessments of real estate's sector performance and achievements over the past 12 months, and the winning companies are selected through an annual real estate awards poll organised by Euromoney magazine's research team.

Target respondents include real estate developers, advisers, financial institutions, investors and the end-users.

The official award presentation will be held at a gala dinner in London on October 2.

By New Straits Times

Pullman Putrajaya to open doors in November

The long abandoned hotel project in Precinct 5 Putrajaya will finally open its doors on November 1 - some seven years after the project started.

Previously known as Alam Warisan, the hotel is now rebranded as Pullman Putrajaya Lakeside. The hotel is owned and developed by Putrajaya Holdings, while French hotel and services group Accor SA will operate it.


SIBOURG: The hotel, which is an upscale hotel with business people in mind, will open in phases between November 2008 and January 2009.

General manager Patrick H. Sibourg said the hotel, which is an upscale hotel with business people in mind, will open in phases between November 2008 and January 2009.

"Originally, there were four different blocks with four different hotels - the China Block, the Indian Block, the Borneo Block and the Malay Block. However, it is difficult to have four different hotels in the same compound.

"So the direction was changed to have one hotel, but to keep the identity of the hotel and the unique experience of Malaysia's multicultural background," Sibourg told Business Times.

Accordingly, the four blocks, which have also had a name change to Lotus Wing (China), Bunga Tanjung (Malay), Jasmine Wing (Indian) and Rafflesia (Borneo), will be run by a single operator.

This hotel has 283 rooms, including 34 serviced apartments and 24 suites. Each block portrays the respective ethnicity in the architecture and ambience.

The hotel's target group is the meeting, incentive, convention and exhibition (MICE) market. For a start, it will be ready to accommodate delegates of the International Water Skiing Festival to be held at the Putrajaya Lake.

"On November 1, we plan to open the Jasmine Wing and the Rafflesia with a total of 165 rooms. The opening will be in time for the International Water Skiing Festival to be held between November 7 and 9 at the lake in front of the hotel," Sibourg said.

Meanwhile, Sibourg is positive on the performance of the hotel despite adding to the number of rooms already available in the Putrajaya.

In 2009, he expects the hotel to achieve 65 per cent occupancy and an average room rate of RM230.

When asked where the confidence on its performance stems from, he said: "We are the only large international hotel in Putrajaya."

Pullman Putrajaya expects to attract a huge corporate and government crowd predominantly from Cyberjaya and Kuala Lumpur while a smaller number of leisure travellers is expected on weekends.

The hotel has 21 meeting rooms and five food and beverage outlets called The Village (a floating restaurant), China Bar and Lounge, B's (a 220-seat restaurant with a show kitchen), The Deli @ Pullman and Bar On Third.

It also has a 250-seater lakefront and open-air amphitheatre as well as team-building facilities.

By New Straits Times (by Vasantha Ganesan)

Exciting times ahead for hospitality sector

The Klang Valley hospitality market can look forward to exciting times ahead with more new hotel developments and the entrance of more prestigious hotel players.

Over the next three years, Klang Valley will see an addition of close to 5,600 hotel rooms with four and five-star rating.

Those that will be completed this year include Hotel Grand Mercure Putrajaya Lakeside owned by the French-based Accor Group, Maytower Hotel Service Apartments owned by Mayland Group, Royal Chulan Tower Hotel & Residence owned by Boustead Group and Gardens Hotel and Residences owned by IGB Group.

Among the world-renowned brands that will make their debut are the 240-room Four Seasons Hotel in the KLCC vicinity that is scheduled for completion in 2013, while the St Regis Hotel in KL Sentral, with a minimum of 200 hotel rooms, is scheduled to open for business in 2014.

According to Zerin Properties chief executive officer Previndran Singhe, the entrance of more prestigious hotel players in the local market would act as a magnet to attract other international brands such as InterContinental, Sofitel and The Raffles to Malaysia’s shores.

“There is still good growth opportunities in the local hospitality market, especially for niche players such as luxury heritage hotels in Kuala Lumpur,” Previn told StarBiz.

Knight Frank Ooi and Zaharin Sdn Bhd managing director Eric Ooi said the announcement of the luxury brand, St Regis, had enhanced Malaysia’s regional standing in the five-star hotel category.


Eric Ooi

“Several five-star hotel players made some exciting announcements in the first half of this year.

“They include the approval for the 450-room Grand Hyatt Hotel at Jalan Pinang, Kuala Lumpur, and the entry of the prestigious St Regis Hotel,” Ooi said.

The 40-storey Grand Hyatt Hotel, to be developed by the Brunei Investment Agency, will house 450 rooms and estimated to cost RM360mil.

Another proposed project is the redevelopment of Bangunan MAS by Permodalan Nasional Bhd (PNB).

PNB acquired Bangunan MAS from Malaysia Airlines Bhd for RM130mil two years ago and intends to redevelop the 35-storey building into a hotel and apartments.

Knight Frank Research, in its latest Real Estate Highlights, said with rising operational cost and tougher economic environment, the local hotel industry was expected to undergo challenging market conditions in the second half of this year.

It noted that the current supply of five-star and five-star hotel rooms in Kuala Lumpur stood at 6,760 and 9,120 respectively, with the bulk of the supply located within the tourist belts in the city such as Jalan Sultan Ismail, Jalan Ampang, Jalan Bukit Bintang and the KLCC locality.

The five-star 438-room One World Hotel in Bandar Utama made its debut in January.



The average occupancy rate for both four-star and five-star hotels in the city during the first six months of this year was 70%, which was 2% higher compared with the same corresponding period in 2007.

Several hotels, including the Impiana KLCC, Berjaya Times Square Hotel and Renaissance Kuala Lumpur, are embarking on refurbishment works.


Renaissance Kuala Lumpur is being refurbished at a cost of RM153mil.

Impiana KLCC will be adding another 180 rooms to its current 335 rooms while Berjaya Times Square Hotel & Convention Centre’s three-phase refurbishment and redevelopment exercise costing RM20mil is expected to be completed in September.

The Renaissance Kuala Lumpur’s RM53mil facelift will be completed next year.



The report said the average room rate (ARR) for five-star hotels during the January to June period was RM370, higher than RM320 recorded for the corresponding period in 2007.

The hotels which recorded ARR above RM300 in the first half of 2008 include Hilton Kuala Lumpur (RM460), JW Marriott (RM390), Mandarin Oriental (RM650) and The Westin (RM450).

The ARR for five-star hotels during the same period was RM200, 10% higher than RM180 recorded last year.

Several hotels that achieved ARR of more than RM200 during the first half of 2008 were Hotel Maya (RM320), Traders Hotel (RM320), Concorde Hotel (RM250) and Boulevard Hotel at Mid Valley (RM220).

Higher tourist arrivals and receipts in the first six months of 2008 have contributed to the strong performance by the hotels.

The full year tourist arrivals for 2008 is expected to reach 22.5 million against 21 million in 2007, while tourist receipts will increase to RM50bil this year from RM45.7bil in 2007.

Meanwhile, the setting up of Pemudah, a special taskforce to reduce red tape in the application of licenses and permits for the setting up of new hotels, in February is expected to give a boost to the local hotel market’s competitiveness in the region.

By The Star (by Angie Ng)

Strong brand can win the day for developers

Branding has become an important pillar in the property development business with more industry players jumping onto the “branding” bandwagon.

The “location, location, location” mantra while still preached by many real estate “gurus” seems to be less prominent. Instead the “location, concept, branding” mantra has been the battle cry over the past several years.

However, it is foolhardy to believe that one could have a successful brand overnight without earning it.

Developers must ensure that they have the right kind of products and services to earn them a good reputation.

There is no short cut to success.

You can have the best advertising company to map out your branding strategy but if you fail to deliver on time, have an inferior product and poor after-sales services, no amount of branding promotions can earn you the trust and respect from your buyers.

This applies to all businesses as well as professional services. Thus, branding should be a constant reminder of the special strength of a company and not mere visual recognition of a logo.

Take the case of a famous Japanese brand that I have been supporting for many years. The power of its brand was so strong that I subconsciously bought all three video cameras from the same brand.

When the first video camera developed faults after three to four years, I bought the second one but this too developed faults after the second year.

Again I bought the third video camera but this too had problems just after a year and repair bill came to more than a third of the original price. Enough is enough. I dumped the brand.

A product must not only look good but also durable and competitively priced. This is why developers who build quality houses find many repeat buyers who also encourage others to buy from the same developer.

Developers like SP Setia, Sunrise, I&P, Sime Darby Property,Titijaya, Naza TTDI, Brunsfield and Sunway City have such strong brands because they do not compromise on quality. However, maintaining that brand image is even more difficult as people has high expectation.

That is why many of the reputable developers continue to promote their brand and win strings of awards.

Naza TTDI Sdn Bhd (formerly TTDI Development Sdn Bhd), despite having proven itself the past 35 years, is not resting on its laurels.

“We have a strong passion to deliver quality consistently. We ensure that every new projects is better than the preceding one,” said Datuk Johan Ariffin, managing director of Naza TTDI.


Datuk Johan Ariffin

Johan said during The Edge Malaysia Top Property Developers Awards 2008 that Naza TTDI was rated 21st among all listed and unlisted property developers in the country. Among the unlisted participants, it ranked third.

“Considering that there are over 1,000 property developers in Malaysia today, the 21st ranking puts Naza TTDI in the top 2% of developers in Malaysia.

“We will strive to do better for our purchasers and hope to further improve on our ranking in 2009,” he added.

Meanwhile, newcomers like the Amarin Group have also raised its profile when it launched a major branding exercise recently. The exercise saw the launch of its website www.amarin.com.my and its latest project website www.amarin.com.my/wickham.

The group has been actively branding itself since late last year.

Its Amarin brand is synonymous with indulgent, luxurious, innovative lifestyles.

The company sold out its first development Amarin Kiara in Mont’ Kiara.

Its second project, Amarin Wickham is a low-density, low-rise luxury development of only 21 units of duplexes and triplexes in Kuala Lumpur’s prestigious embassy district in U-Thant. Units with sizes from 3,000 to 9,000 sq ft are priced at an average of RM4mil per unit.

Its executive director Lee Vun-Tsir said international investors would seek products that have the best value.


Lee Vun-Tsir

“From our experience, they place tremendous importance on investing with branded developers, as the value they offer is more easily communicated and reinforced thus giving buyers more confidence in the developer’s name and ability to deliver on their promises.”

By The Star

Mutiara Goodyear posts RM5.8m Q1 profit

PROPERTY developer Mutiara Goodyear Development Bhd recorded a net profit of RM5.8 million in the first quarter ended July 31 2008, up 163.7 per cent from RM2.2 million registered in the previous corresponding period.

This was achieved despite a revenue drop of 42.6 per cent to RM35.6 million, from RM62.0 million in the same period last year.

Chief executive officer Kee Cheng Teik attributed the profit growth to sales derived from its Mutiara Gombak project, which comprises 140 units of semi-detached houses and 181 units of terrace houses.

This project has been fully sold at a good profit margin.

In a statement issued last Friday, Kee said Mutiara Goodyear remains optimistic of its performance in future.

The group is encouraged by the recent overall take up rate of over than 60 per cent of its Prima Avenue, Kelana Jaya, project.

Prima Avenue is a commercial development consisting of business suites and retail outlets with an overall gross development value (GDV) of RM120 million.

Meanwhile, the group is also finalising a number of projects to be launched next year with a total GDV of RM2.5 billion.

They include Nadayu Melawati in Kajang and mixed residential projects in Seberang Prai and Penang Island as well as a commercial development in Sunway Commercial Centre in Petaling Jaya.

By New Straits Times

SkyPark set to inject new life into Subang Terminal 3

INTEGRATED AVIATION EXPERIENCE: An artist's impression of SkyPark Subang Terminal

SKYPARK Subang Terminal will be a dominating landmark at the refurbished Terminal 3 of the Sultan Abdul Aziz Shah Airport in Subang, Selangor, when it rolls out a new frontage that accentuates the airport as a modern and contemporary icon.

Armed with an overall investment of RM300 million and a 59-year lease, the transformation of Terminal 3 is carried out in stages over three years.

The first phase of the redevelopment of Terminal 3 is almost complete, with the launch of SkyPark fixed-base operation and the RM40 million refurbishment of Terminal 3, which will be completed in October this year.

Work on Phase 2 of the redevelopment will start soon. It will entail the creation of a regional aviation centre with maintenance, repair and overhaul facilities, a dedicated hangar and corporate aviation-related industries.

Subang SkyPark Sdn Bhd chief operating officer Janardhanan Gopala Krishnan said SkyPark Subang will bring back life to Terminal 3, which has long been regarded as a tired old airport after all passenger jet operations shifted to the Kuala Lumpur International Airport in Sepang.

"Subang has been quiet for the last 10 years, but we plan to put it back on the world aviation map," he told Business Times in Kuala Lumpur recently.

He said once completed, SkyPark Subang Terminal will not only be utilised by air travellers, but people around the area as a shopping haven.

The entire set-up of the facility is aimed at creating a trend-setting destination that is tourism lifestyle-centric and a distinction for today's discerning travellers and consumers alike.

Elaborating on the whole scheme concept of the new terminal, Arcradius Sdn Bhd project director Kamal Hussin Abdul Hamid said the company had developed a scheme to retain the existing fabric enclosure of the 110,000 sq ft terminal - by building "boxes in a box", while transforming the interior.

In the main terminal, spaces are rearranged by consolidating and creating new mezzanine planes opening into a well-lighted two-storey single-volume atrium with internal garden conservatory.

On the one-million-sq-ft commercial nexus to be located opposite the terminal, HL Design Group director Martin Haeger said it will house world-class facilities such as a boutique hotel, an aviation-themed park, gourmet restaurants and cafes, food court, and retail and service outlets.

"We will link the terminal with the commercial nexus via an elevated bridge. Elevated car parks with 1,600 parking bays are also provided to enable passengers and customers enjoy a seamless shopping experience," he said.

By New Straits Times (by Azlan Abu Bakar)

Mulpha mulls REIT acquisition

PETALING JAYA: Mulpha International Bhd (MIB) may acquire strategic stakes in real estate investment trusts (REITs) to expand its existing portfolio of properties, capitalising on undervalued entities in the Asia Pacific seeking to deleverage amid a global credit rout.

The diversified firm is already a seasoned real estate investor in the region. Its portfolio of residential, commercial, industrial properties besides hotels are located across several countries including Malaysia, Singapore, Vietnam, Hong Kong, China and Australia.

Hence, the idea of owning a REIT could be deemed feasible should MIB decide to unlock the value of its assets and, at the same time, hold a strategic equity interest in a property trust into which the assets would be injected.

MIB executive chairman Lee Seng Huang said the company was eyeing property-related opportunities in Asia Pacific with indirect exposures to the US and European markets. Although real estate prices in the US had fallen due to the subprime loan crisis, he said it was not feasible to make a direct foray into the country as the Malaysian firm lacked operating experience there.

“In general, it will be real estate including real estate companies, real estate funds and REITs. We are not targeting one particular kind of asset class,” Lee told The Edge Financial Daily here recently via video conferencing from Singapore.

Lee added : “It would be cheaper to buy a REIT right now than actually launch it. There are REITs out there which are trading substantially below book value.” He did not elaborate.

MIB is not new to property trusts. The Malaysian firm owns 17% of Australia-listed FKP Property Group which wholly owns the FKP Property Trust. The trust owns diversified assets in the office, retail, and bulky goods segments in eastern Australia, according to FKP’s website.

Note that the Malaysian firm is contemplating the sale of its shares in FKP. Based on FKP’s closing price of A$4.77 last Thursday and MIB’s stake of some 45.11 million shares in the foreign entity, the seller stands to rake in more than A$200 million (RM573 million) from the disposal.

However, the Malaysian firm is not discounting the possibility of raising its stake in the Australian firm.

In a filing to Bursa Malaysia in August this year, MIB had indicated it might buy more shares in FKP from the open market, a move which may trigger a mandatory general offer for the remaining shares it does not own in the Australian entity.

Should MIB decide to sell the shares, the proceeds will be used to finance its working capital needs, and repay bank borrowings. Last Thursday, (Sept 18), MIB obtained its shareholders’ consent giving it authority and flexibility in dealing with the FKP stake.

In Malaysia, MIB’s existing real estate portfolio includes its current headquarters, comprising an office and warehouse, in Jalan Semangat, Petaling Jaya.

The leasehold property has a net book value (NBV) of RM7 million as at December 2007, acccording to the firm’s annual report. Upcoming entities include Menara Mulpha, a new freehold 23-storey Grade A office tower in Jalan Sultan Ismail, Kuala Lumpur. The tower, to be launched in the third quarter of this year (2008), has some 270,000 sq ft of lettable area.

Notable entities within MIB’s overseas portfolio are its assets in Australia. It owns several hotels which include the Intercontinental Hotel Sydney, Hilton Melbourne Airport and Hyatt Regency Sanctuary Cove. These hotels have a combined NBV of RM918.59 million as at the end of last year.

MIB also owns the RM4 billion Norwest Business Park in Sydney, and RM2.5 billion Sanctuary Cove integrated resort in Gold Coast. Works are in progress to transform a vacant building next to Intercontinental into a Grade A office building with about 73,000 sq ft of lettable area for launch next year.

On a larger scale, the diversified commmercial interests of MIB include property development via its 55.56% subsidiary Mulpha Land Bhd. MIB is also into power plant construction via its 23.4% stake in Mudajaya Group Bhd.

Hong Kong-listed Greenfield Chemical Holdings Ltd, a 62.5% entity of MIB, undertakes the manufacturing and sale of industrial paints, besides coal-mining operations.

MIB’s earnings rose in the second quarter ended June 2008, with net profit more than doubling to RM38.58 million from RM16.87 million a year earlier, helped by better performance from its Australian operations. Revenue rose 2.1% to RM245.33 million from RM240.36 million.

Cumulatively, first-half net gain advanced 11.4% to RM43.19 million from RM38.77 million, while turnover was up 13.5% to RM512.6 million from RM451.55 million.

The stock rose 3.5 sen to 98 sen, with 263,100 shares traded last Friday.

By The EDGE Malaysia (by Chong Jin Hun)

Retail sector outlook murky

PETALING JAYA: The country’s retail sector has moderated in the face of higher fuel and electricity prices and the outlook for the industry remains murky as inflation catches up with consumer sentiment and retailing costs.

The latest industry report put out by Retail Group Malaysia (RGM) on behalf of the Malaysian Retailers’ Association (MRA) showed that industry sales for the first six months (1H) grew 6.9% year-on-year, even as the rising price of energy and food took a big bite out of consumers’ disposable income.

But with inflation hitting 7.7% and 8.5% in June and July, respectively, it was unclear whether the 6.9% rate growth could be sustained, said MRA president and Sogo (KL) Department Store Bhd chief operating officer Eddy Chan.

“I would say that retailers are not as gung-ho as before, but I’ll settle for 6.9% for the year,” he said. “The outlook is still optimistic for certain categories such as pharmaceuticals and those in the supermarket business — the essentials. But areas such as fashion are still suffering.”

Chan said retailers were only now beginning to feel the pinch of the hike in energy prices, which might translate into a slower growth rate for 2H08. More importantly, Chan felt that the sudden hike in prices had dampened consumer sentiment.

“There’s no excitement in the market. Retail has to create excitement, but there is currently too much uncertainty in the market,” he said.

Chan hopes that the implementation of the Malaysia Savings Sale at the end of the year would inject some excitement into the retail industry, and enable the local industry to compete with regional retailers.

Coming off a bumper year in 2007 where sales grew by 12.8%, the highest since 1992, retailers had initially forecast 12% growth prior to June, said RGM managing director Tan Hai Hsin in the industry report.

“Malaysia’s retail industry had strong sales during the first quarter of this year, but slowed down considerably in the second quarter. The second-quarter performance was most affected after the sudden fuel price hike in early June,” he noted.

Tan added that all the different sub-sectors of the retail industry had reflected growth in 1H08, with some areas doing better than the others. He expects retail growth to be maintained through 2H08, and estimates 7% retail growth for the entire year.

The continued growth of the retail industry was unexpected, given the sudden and steep rise in fuel costs in June. In fact, OSK Research said there had been some contrary data emerging from the last quarter.

“Consumer sentiment and retail sales usually track each other but it has been showing a negative correlation,” said an OSK analyst.

“We believed (in an earlier report) that the fuel prices would impact retail sales but statistics are showing that sales are still intact. Month-on-month growth is still in the double digits and oil prices are coming down.”

She added that the festive seasons in 4Q would also boost sales, although numbers could be further improved by another reduction at the fuel pump, which may just be round the corner. Also, she was optimistic that the year-end sale would help boost numbers leading into 2009.

By The EDGE Malaysia (by Fong Min Hun)

China builder BUCG eyes jobs in Malaysia

BEIJING Urban Construction Group Ltd (BUCG), one of China's biggest construction players with US$4 billion (RM13.8 billion) annual revenue, wants to invest in Malaysia.

The China-listed firm, established 30 years ago, is eyeing highway and building construction jobs here, said its assistant president Andy Zhao.

He said BUCG, which is an expert in architectural design, wants to transfer its expertise and has targeted Malaysia as a new growth market.

Today, it has investments in 20 countries including China, the Middle East and Africa, building highways, subways, hotels, residences and corporate towers.

"We feel that now is the right time to enter Malaysia as other foreign investors are pulling back from investing due to global uncertainties.

"We are unfazed by what's happening and as investors, we need to constantly look for new opportunities," Zhao said.

He was speaking to Business Times in Kuala Lumpur at a recent signing ceremony appointing BUCG as main contractor for The Pearl @ KLCC by project developer Ceramic Home Tiles Sdn Bhd (CHT).

The Pearl @ KLCC is BUCG's maiden development in Malaysia and is being built for a Kuwait Finance House-led consortium which bought it en bloc from CHT.

Zhao said the company is looking at building a long-term partnership with CHT to work on the latter's future projects.

"We were invited by CHT to participate in the project and this is just the beginning," he added.

Zhao also said BUCG wants to build ties with local construction players and developers and is talking to main board-listed developer Malton Bhd to explore opportunities in Malaysia.

"We are interested in good projects. We have the money and want to invest it wisely," he said, adding that the company is keen to work on projects in Iskandar Malaysia, Penang and the Klang Valley.

By New Straits Times (by Sharen Kaur)

Hopewell to raise China expressway investment

HOPEWELL Holdings Ltd, a property company controlled by billionaire Gordon Wu, said it agreed to invest 4.64 billion yuan (US$680 million) more on an expressway in southern China, part of a project linking cities in the Pearl River Delta.

The total investment in the second and third phase of the project will be increased to 12.8 billion yuan, Hopewell said in a statement to Hong Kong stock exchange yesterday. The expressway is a venture between Hopewell and Guangdong Provincial Highway Construction Ltd, it said.

The increase was necessary as the venture had acquired more land and construction material costs had risen, the statement said.

By Bloomberg

Mah Sing sweeps 3 awards

KUALA LUMPUR: Mah Sing Group Bhd has swept three awards out of seven categories in the Euromoney Liquid Real Estate Awards 2008 including the highest honour of “Top Developer Overall Malaysia”. The other two awards are “Best Office/Business Developer Malaysia “Best Mixed-Use Developer Malaysia”.

In a statement yesterday, Mah Sing said currently in its fourth year, the awards covered developers, lenders, advisory firms, investment banks, investment managers and property management firms from more than 50 countries, across a variety of regional categories.

The Euromoney Liquid Real Estate Award is based on surveys and assessments of real estate’s sector performance and achievements over the past 12 months, and the winning companies are selected through an annual real estate awards poll organised by Euromoney magazine’s research team.

The official award presentation will be held in a gala dinner in London on Oct 2.

By The EDGE Malaysia

SunCity delays launch of REIT to next year

KUALA LUMPUR: Sunway City Bhd (SunCity) will delay the launch of its real estate investment trust (REIT) to next year on current weak market sentiment, says HwangDBS Vickers Research.

“We expect the REIT to be delayed again but it should be at a better value,” it said in a report yesterday.

The research house said the listing was likely to be in Malaysia (instead of Singapore) as all SunCity’s RM3bil assets were based in Malaysia and the recent positive policy changes to improve Malaysian REITs’ competitiveness vis-à-vis regional peers.

“SunCity would likely maintain a 33% stake in SunCity-REIT while we expect GIC (Government Invest Corp of Singapore) to take up a sizeable stake as well,” it said.

Assuming SunCity-REIT is launched next year at 7.7% yield, HwangDBS Vickers expected a one-off gain on disposal of RM29mil.

“Although our expected yield of 7.7% is at a premium to the sector, we believe it is justifiable given SunCity-REIT’s size and its potential RM3bil pipeline,” it said.

HwangDBS Vickers said SunCity-REIT had the potential to double its asset size to RM5.5bil, almost on par with some of the mid-sized Singapore REITs.

“We have applied a 7% yield to value Sunway Pyramid (a SunCity asset), based on Country Heights’ sale of Mines Shopping Fair (a retail mall inSeri Kembangan) to CapitaLand in August 2007.”

By The Star (by Edy Sarif)

Penang surfers to enjoy free wireless Internet

PENANG became the first state in the country yesterday to offer free Internet wireless broadband services on Wi-Fi, with the launch of its `Wireless@PENANG' initiative.

The two-pronged Wireless@PENANG project is made up of two components. The first is wiring up the whole state with free access using Wi-Fi technology while the second is a paid service for faster access in some areas using WiMAX technology.

Wi-Fi allows Internet access over limited distances or hotpots while WiMAX covers a much bigger area.

Penang will not spend any money for the initiative since the free Wi-Fi services will be provided by Hotgate Technology (M) Sdn Bhd.

Hotgate, a wholly-owned subsidiary of US-based Hotgate Technology Inc, is partnering with REDTone Telecommunications Sdn Bhd, to offer free Wi-Fi services to 750 hotspots over the next 15 months.

The REDTone-Hotgate consortium will invest RM10 million initially for more than 400 sites within the next six to nine months, chief executive officer Wei Chuan Beng, said.


WEI: Over time, low-cost housing areas and food centres will also be wired up while the company hopes to make money from advertising revenue

In the next four weeks, the following sites in Penang will have free Wi-Fi. They are Queensbay Mall, Jalan Macalister, Jalan Burma, Gurney Plaza and Gurney Drive, Bukit Jambul area and Bukit Jambul Complex, Universiti Sains Malaysia and its surrounding areas, Butterworth in Seberang Prai and Tanjung Bungah.

"Over time, low-cost housing areas and food centres will also be wired up," said Wei. The company plans to make money from advertising revenue.

He was speaking to reporters at a media briefing in George Town.

Chief Minister Lim Guan Eng who launched the initiative, said next week the state plans to unveil the "WiMAX @PENANG" project, catering to the serious mobile Internet users who require better speed.

Although Lim did not name the party partnering Penang for this effort, it is learnt that the company is Green Packet Bhd.

By New Straits Times (by Marina Emmanuel)

Berjaya in venture to build Hanoi hospital

BERJAYA Corp Bhd plans to build a specialist hospital in Hanoi together with its associated company TMC Life Sciences Bhd and a local Vietnam construction firm.

Spending on the 300 to 500-bed hospital may range from US$50 million (RM172.5 million) to US$100 million (RM345 million), executives of the companies said.

The plan, however, depends on a feasibility study that could stretch to one year, they said. Construction itself should take another two to three years and several phases before full completion.

"The feasibility study is expected to start next month," TMC managing director Dr Colin Lee said after the signing of a Memorandum of Understanding for the project in Kuala Lumpur yesterday.


LEE: Feasibility study expected to start next month

Under the pact, BCorp is to own half of a possible joint venture company with a capital of US$30 million (RM103.5 million). TMC and Viet Ha Corp will hold 30 per cent and 20 per cent respectively.

The potential venture will mark BCorp's return to the hospital business, although it will indirectly operate one soon via 27.41 per cent-owned TMC.

BCorp used to own Pantai Holdings but sold its stake in the owner of the Pantai Medical Centre chain about 10 years ago.

TMC is poised to open Tropicana Medical Centre in Kota Damansara by the year-end. It will have 52 specialist clinics and 180 in-patient and day-care beds.

"There is an increase in demand for quality healthcare and medical services in line with the higher standard of living in Vietnam," BCorp chairman and chief executive officer Tan Sri Vincent Tan said in a statement.

"The increase in demand would be significant with Vietnam's large population base of 86 million," Tan added.

BCorp already has various ongoing projects in Vietnam. Through Berjaya Land Bhd, BCorp had received the nod to undertake four property projects there valued at over RM30 billion.

Dr Lee is also bullish about the joint venture's prospect, despite the current uncertainties in the global economy.

"Vietnam is regarded as one of the emerging economies in the region, with gross domestic product growth of 6.5 per cent in the first half, in addition to the rising income level," he said.

By New Straits Times (by Zuraimi Abdullah)

Ireka has buffer to counter material costs

KUALA LUMPUR: Ireka Corp Bhd, whose construction order book has surpassed the RM1bil mark, has a “healthy buffer against the volatile prices of raw materials,” said group managing director Lai Siew Wah.

With an order book worth RM1.14bil, the company would be kept busy through to 2011.

“Since most of our contracts do not allow for a variation of price (VOP) option, we have built in a healthy buffer in case material prices go up,” Lai said.

The current easing in the prices of some raw materials such as steel was a “good sign”, he said, adding that “we are actively managing the costs.”

And with a healthy gearing of 0.3 and a locked-in order book, Lai said the company was in a good position to weather tough times, hence, prospects looked “quite bright” for the next two to three years.

Ireka’s current portfolio of construction works include luxury condominium projects in Mont’ Kiara namely, Tiffani by i-ZEN and SENI Mont’ Kiara and the Sandakan Harbour Square urban renewal project.

Lai said the company would continue to bid for new projects although it was being “very selective” given these trying times.

Asked to elaborate, he said: “We have actually pre-qualified for two (local) projects but it is too preliminary to reveal details.”

As for overseas plans, he said Ireka would continue to look for opportunities in the Asian region.

“Vietnam is where we are currently focused on. We have been studying the market for the last two years and established a good network of contacts there,” Lai said.

For the financial year ended March 31, the group made a net profit of RM152.9mil on revenue of RM299.7mil.

It also announced a dividend policy to distribute at least 40% of its net earnings to shareholders.

By The Star

Ireka’s order book surpasses RM1b mark

KUALA LUMPUR: Ireka Corporation Bhd has achieved the RM1 billion mark for its construction order book, which will keep it busy through 2011, the company said yesterday.

In a statement issued in conjunction with its 32nd AGM here, Ireka said at RM1.13 billion, its order book included luxurious condominium projects in Mont’ Kiara, namely Tiffani by i-ZEN and SENI Mont’ Kiara; integrated offices and retail mall, One Mont’ Kiara and the Sandakan Harbour Square urban renewal project.

Ireka said the outstanding order book currently stood at RM950 million.

Ireka chairman Abdullah Yusof said the company was beginning to see a positive turnaround in its focus to be an asset-light construction and property development player. It recently announced a dividend policy to distribute at least 40% of its net earnings to its shareholders.

For the year ended March 31, 2008, the group recorded a net profit of RM152.9 million on the back of a RM299.7 million revenue. The FY08 earnings included a one-off gain of RM206 million arising from the disposal of two property companies.

In the first quarter to June 30, 2008, Ireka posted a net profit of RM3 million on the back of a RM62.9 million turnover.

Abdullah said the company would continue to focus on Malaysia and Asia, specifically Vietnam, for its construction and property development activities.

“The rising building material costs and external pressures are felt by most industry players, but the group has taken an astute approach in value-engineering technique for its construction activities and become more selective in the projects that we undertake,” he said.

Ireka has a 19.6% stake in Aseana Properties Ltd, which was listed on the Main Board of the London Stock Exchange on April 5, 2007. Aseana has appointed Ireka unit Ireka Development Management Sdn Bhd as its exclusive development manager, responsible for the day-to-day management of its property projects in Malaysia and Vietnam.

By The EDGE Malaysia