Waiting game for property buyers

PETALING JAYA: It will continue to be challenging in 2009 for the secondary residential property market as buyers continue to adopt a wait-and-see stance on property purchases due to the global economic slowdown, property experts said.

The degree of softening in property sales would depend on the severity of the economic downturn next year, they said.

Regroup Associates Sdn Bhd executive director Paul Khong acknowledged that the secondary residential property market has been quite slow as potential buyers have been holding off decisions on house purchases.

“This has significantly impacted the property market especially in the current quarter,” he told StarBiz.

“The quiet period is expected to continue through to the first quarter of 2009 after all the holidays are over.”

S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng said buyer sentiment had taken a beating due to the current economic uncertainties.

“It’s a waiting game for buyers. There are even ‘aborted’ cases where buyers have placed an earnest deposit to purchase a property and subsequently pulled out from the transaction, in the hope that prices will come down further or in search of fire-sales while others are uncertain of their job stability and postponing the purchase commitment,” she said.


From left: Paul Khong, Chab Ai Cheng, Eric Lim, Elvin Fernandez and Goh Tian Sui

Nevertheless, Hartamas Real Estate Sdn Bhd managing director Eric Lim is anticipating stable to moderate growth due to bargain hunting in certain segments of the secondary property market, especially landed residential property.

“(However) the market for properties that are purchased for investment and speculation will be slower,” he acknowledged.

The agency experienced a 20% to 30% drop in sales in the second half of the year versus the corresponding period of 2007.

“This is quite substantial for us. Sentiment is still not good,” Lim noted.

CH Williams Talhar & Wong Sdn Bhd managing director Goh Tian Sui concurred.

“The last two to three months have been quite bad – enquiries and sales activities have dropped. Owners are more open to negotiations in pricing,” he said.

The prices of certain secondary residential properties could also face more pressure next year due to a lack of demand and an increase in supply of completed projects.





Citing an example, Regroup’s Khong said the situation for high-end condominiums in the KLCC and Mont Kiara areas were getting critical and there would be more pressure on rental and capital values as many of the projects in the vicinity would be completed within the next one or two years.

“Supply will be mounting on a monthly basis as demand continues to be low and this will eventually translate into lower capital values and rental.

“An easy 15% to 20% shed in values are envisaged for this sector generally,” Khong said.

The asking prices for middle-class residential properties in general, for example, terrace houses in good locations such as Sri Hartamas, Bandar Utama and even Taman Tun Dr Ismail, had already been adjusted 5% to 10% lower to reflect current market conditions, Khong said.

Khong & Jaafar Sdn Bhd managing director Elvin Fernandez noted that prices of high density condominiums with a low occupancy rate in not-so-choice locations were about 10% lower now compared with a year ago.

“Although prices have softened, it is still difficult to sell such properties,” he said.

By The Star (by Elaine Ang and Rachael Kam)

Players: Mature property neighbourhoods remain popular

PETALING JAYA: Some popular locations in the Klang Valley still attract buying interest for secondary properties, either for investment or own occupancy, despite the softening property market in the country, industry players said.

Townships with mature neighbourhoods and high-end residences in Kuala Lumpur which are close to the city centre remain popular secondary property markets, even for next year, according to real estate agents contacted by StarBiz.

Hartamas Real Estate Sdn Bhd managing director Eric Lim said popular locations for landed secondary residential properties in the Klang Valley included Ara Damansara, Bandar Utama, Bukit Jelutong and Kemuning Utama in Shah Alam, with people still buying properties there.

“It is expected to continue to remain active next year as the prices there are affordable versus the more mature residential areas such as Petaling Jaya. “Buyers, especially the young executives, are willing to go slightly further for more affordable property prices,” he said.

For condominiums, Lim is positive about locations such as Bangsar and KL Sentral as fewer launches in these areas in recent years have contributed to a stable supply.

Chester Properties senior real estate negotiator Kam Jun Yin said Petaling Jaya, Subang and Puchong were still the popular locations for those who planned to purchase properties for own occupancy.

Kam observed that the KLCC vicinity and Mont Kiara areas were most popular with buyers who bought for both own occupany and investment purposes, noting that prices in these two high-end locations had risen more than 100% in three years.

Secondary property prices in KLCC vicinity were ranging from RM1,000 to RM1,400 per sq ft, he said.

“Given that most of the new properties in the KLCC vicinity are looking to achieve RM2,500 to RM3,000 per sq ft, perhaps next year, secondary prices may be pushed higher,” Kam said.

According to S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng, Petaling Jaya, Damansara Heights are also attractive to secondary property buyers.

“These locations are well-established with mature neighbourhoods and populated with growing families creating natural demand as well as coveted residential address to match people’s lifestyle and demands today,” she said.


Raymond Phua

J A Valleys Properties real estate negotiator, Raymond Phuah, noted that “coupled with the limited land with freehold title in these areas, Petaling Jaya has attracted a lot of potential buyers for secondary properties.”

By The Star

Four niche market projects

Property developers are constantly coming up with new ideas to meet the expectations of a discerning house-buying public. They have to come up with creative ideas, meet the challenges or perish.

We shall look at four residential developments that target very niche markets and have their unique selling points.

The Regent Residences Kuala Lumpur: Themed “high living re-imagined”, it will be the capital’s newest strata titled and freehold luxury hotel residences schduled for completion in 2011.

The developer KL Landmark Sdn Bhd (an associate company of Dutaland Bhd) has positioned this very high-end project akin to the best in Manhattan and Hong Kong.

It also developed the recently completed K Residences, Kuala Lumpur’s first luxury designer residence and Malaysia’s tallest condominium and is adjacent to the Regent Residences.

The 40-storey hotel residences will comprise of a 230-room Regent Kuala Lumpur and 115 units of Regent branded, 1 to 3-bedroom serviced apartments plus two levels of sprawling penthouse units.

Sizes range from 464 to 2,495 sq ft while the penthouse range from 2,634 to 3,719 sq ft.

The idea is to offer city dwellers with the experience of high living in the privacy of discreet comfort, while having access to the amenities and services of a 5-star luxury hotel.

The Regent Kuala Lumpur will be managed by Carlson Hotels Worldwide-Asia Pacific, one of the world’s largest privately-owned hotel companies, which is expanding its luxury Regent brand into key gateway cities across the region.

The interiors of the serviced apartments will be designed by Sir Terence Conran, one of the world’s best known designers, restaurateurs and retailers, and founder of Conran & Partners.

The design firm has revitalised architectural landmarks such as Michelin House, Butlers Wharf and Bluebird Cafe. Its recent portfolio includes Roppongi Hills and Motoazabu Apartments in Tokyo, and The Great Eastern Hotel in London.

The Regent Residences Kuala Lumpur will be the city’s only luxury residential development with a sky pool, offering panoramic view of the Kuala Lumpur City Centre (KLCC) development.

Kenny Heights: Dutaland Bhd, through its 100% owned subsidiary KH Land Sdn Bhd, has also been quite bold and innovative with its plans for its 88-acre freehold Kenny Heights project in Kuala Lumpur.

I recently viewed its Kenny Heights Estate (one of the phases) show villa (next to the Hartamas Shopping Centre). It comprises 49 units of luxurious four-storey town villas with built-up from 5,300 to 6,700 sq ft. Prices start from RM4.5mil.

Its signature feature is a 36ft-long private swimming pool in a garden of the master bedroom. It has a private lift. The villas are designed by Kengo Kuma.


The doube-storey bungalow that boasts 14 rooms in EduSquare in Taman Tasik Semenyih

EduSquare: BTS Land Capital Sdn Bhd (formerly Bandar Tasik Semenyih Sdn Bhd) has built hostel-style homes in a security guarded precinct called EduSquare in its Taman Tasik Semenyih.

The homes can accommodate students at the Nottingham University (Malaysian campus) just next door.

It has built 18 two-storey semi-detached terrace houses (10 units of 11 to 14 rooms each from 3,199 to 4,169 sq ft and eight units with nine to 15 rooms each from 3,340 to 4,790 sq ft) and a two-storey bungalow with 14 rooms and a big 5,229 sq ft built-up area.

Every room has an attached bathroom.

The unique selling point is that those who buy the fully furnished houses also enjoy guaranteed yield of 7% per annum from rental to students over two years.

Since the varsity came into operation a few years ago, the student population has increased and there is a need for more student accommodation.

The old Broda road has also been widened into a dual carriageway.

Taman Tasik Semenyih is surrounded by greenery with a peaceful, mountain backdrop. It boasts of a nice clubhouse.

Residency @ Park 51: The main feature of this proposed four-block condominium is its huge 132,000 sq ft clubhouse that will feature a large banquet hall, a function centre, gymnasium, food and beverage outlets, a supermarket, retail shops, business function rooms and a near Olympic-size swimming pool/children’s wading pool.

It is part of the Park 51, a five-component mixed residential cum commercial development in Section 51, Petaling Jaya by the Taipan Group.

There is a choice of 15 designs for the 664 units with sizes of 662 to 2,443 sq ft, from studio units to duplex penthouses.

Prices start from RM254 per sq ft compared to nearby offerings of RM300 per sq ft.

By The Star (by S.C.Cheah)

Regroup: Market will take 3 years to recover

Malaysia's property market will take three years to recover from its current slump, the slowest revival in more than two decades, reflecting the reach of the worldwide financial crisis, Regroup Associates Sdn Bhd said.

"In the past four weeks, I've been staring at an abyss," said Allan Soo, managing director and founder of Regroup, a Kuala Lumpur-based property consultant and home seller. "What's changed is the global recession."

A worldwide slowdown has sparked real-estate slumps from the UK to Singapore, causing Malaysian developers such as Magna Prima Bhd to scale back projects. Values of luxury homes in Kuala Lumpur, where prices surged to a record last year, may fall as an oversupply looms, according to Soo, who declined to give a specific forecast.

Malaysia's property market took about a year to recover from the 1997-98 Asian financial crisis, Soo said. The rebound from the latest slump may start in 2010 and take as long as the recovery from the 1985 recession, Soo said.

Compared with 2007, interest from prospective buyers has dried up, Soo said in an interview in Kuala Lumpur last Thursday.
"Inquiries would come in right after we put up a sign board on properties," Soo said. "Now, there's none."

Home prices will come under further pressure as the number of high-end apartments in Kuala Lumpur doubles to more then 30,000 in the next three years, according to Regroup.

Economic growth in Malaysia in 2009 is expected to slow to 3.5 per cent from about five per cent this year, according to the government's estimates. Still, losses for homeowners may be capped because most bought properties in 2006 before the peak for less than RM1,000 a square foot, Soo said. The entry of foreigners last year pushed prices to more than RM2,000, he added.

Signs of fewer home purchases have already emerged. Bank loans approved for Malaysian home purchases in October fell to its lowest since February, according to Bank Negara Malaysia.

SP Setia Bhd, Malaysia's largest developer, expects a 22 per cent decline in property sales to RM1.1 billion in fiscal 2009, Citigroup Inc said last Thursday. SP Setia's officials couldn't be reached in their office last Friday for a comment. The Kuala Lumpur Property Index has slumped 51 per cent this year, outpacing the main index's 40 per cent slide.

Magna Prima said last month it cut the projected revenue from its biggest property development in northern Kuala Lumpur by almost half.

By Bloomberg

Work on RM750m theme park to start 2010

JOHOR BARU: Work on the RM750mil Legoland theme park at Bandar Nusajaya in Iskandar Malaysia will start in 2010 and the opening slated for 2013.

The park, to be built in the city centre of Nusajaya, will have a 5.5 million sq ft of gross floor area within the 58.679ha land dedicated for the lifestyle-theme development.

Merlin Entertainment Group Ltd managing director for Legoland Parks, John Jakobsen said the theme park would create about 1,000 job opportunities in the park itself and it could reach up to 5,000 during construction period and indirectly upon the completion of the project.

Sectors which would benefit from the opening of the park would include retail, hospitality, services and food and beverage to cater for tourists and visitors.

“We want to position our Johor park not only as a leading tourist attraction in Malaysia but also in the region,’’ he said.


John Jakobsen

Jakobsen said the park was expected to attract between one and two million visitors yearly.

“The figure is based from our four existing parks with revenue between US$40mil and US$100mil per park,’’ he said.

Merlin, which is controlled by Blackstone Group of New York, an investment and advisory firm, has 70% equity in Legoland theme parks while Lego Group holds 30% stake.

Legoland has four theme parks.

The park in Billund, Denmark opened in 1968, Windsor, England (1996), California (1999) and Germany (2002) and in Dubai, which will open in 2011.

Other theme parks under Merlin stable include Madame Tussauds, London Eye, Thrope Park, Sea Life Sanctuaries, Dungeons in Europe, 28 aquariums and six hotels across the world.

“We have considered coming to Malaysia about four years ago and we started seriously looking into it about eight months ago,’’ he said.

He said the company’s investment decision in Iskandar was based on the development activities to be implemented.

Jakobsen said the Legoland park in Johor would not only attract visitors from other parts of Malaysia and Singapore but visitors from other countries in the region.

He said visitors from other countries in this region would find it more convenient to come here than going to Europe or North America.

Jakobsen said Malaysia offered a strategic location in Asia with 60% of the world’s population.

“Legoland park is different from other parks as our attractions are made to appear as if they are built out of Lego bricks,’’ said Jakobsen.

He said Legoland park targeted at children aged from two to 12 years old accompanied by their parents or grandparents and not teenagers and young adults which was the main focus of the other theme park operators.

By The Star (by Zazali Musa)

Gamuda's Hanoi project may take centrestage at AGM

PETALING JAYA: The deteriorating global economic climate will likely cause worries among shareholders about the viability of Gamuda Bhd’s overseas projects at the company’s AGM tomorrow, among other key concerns.

Analysts expect the construction group’s investment in the Yen So Park project in Hanoi, Vietnam, to come under investors’ radar.

A senior analyst at a bank-backed research house told StarBiz that with the economy tumbling in Vietnam, he would not be surprised if Gamuda withdrew from that country.

“The Vietnamese stock market is softening and the economy is also currently in a downturn, so they (Gamuda) may reconsider the project,” he said.

Investors were not quite sure what the company was going to do and they might want to seek guidance from the management, he said.

As for the group’s massive double-track rail project in northern Malaysia, the analyst said there was talk it had been scaled down so shareholders would need to know the status of the project.

OSK Research analyst Jeremy Goh noted that part of the Hanoi project entailed Gamuda building a sewerage treatment plant for the Vietnamese government for which the company would be paid in-kind with development land.

“In the current negative global economic environment, it would be prudent to conserve cash,” he said, noting that while there was a possibility of Gamuda selling part of the land for cash, the current economic climate might make it hard for them to get a good price.

Gamuda’s 25 sen per share dividend policy is another major concern.

OSK’s Goh said: “The 25 sen dividend may not be sustainable by our estimates.”

“Maybe they could sustain the 25 sen payout this financial year (ending July 2009), given the special dividend received from (toll operator) LITRAK, a 44.8%-owned associate,” he said.

“However, there is less certainty on Gamuda’s dividend sustainability beyond that. We are more comfortable with a 12.5 sen dividend projection,” Goh added.

By The Star (by Loong Tse Min)

Hillside projects from a developer’s viewpoint

Teh: SDB has complied with all the remedial and safety requirements to certify that its Damansara 21 project (above) is safe for construction

AS one drives along Jalan Damansara towards the city, it is impossible to miss the blue sheets covering parts of Bukit Damansara the last 10 months.

For decades, that location and the larger Damansara Heights has been one of the most upmarket residential suburbs in Kuala Lumpur.

Bukit Damansara is today embroiled in a controversy with angry and fearful residents on one side and a developer on the other, in the wake of last week’s tragedy in Bukit Antarabangsa, Ulu Kelang which took four lives, injured 15 and destroyed 14 houses.

Because SDB Properties Sdn Bhd, a subsidiary of Selangor Dredging Bhd, is currently involved in two hillside developments – Damansara 21 in Bukit Damansara and 20Trees, Taman Melawati – the company has come out on record to give its view to allay fears and further controversy.

Its managing director Teh Lip Kim says Damansara 21 will not suffer the same fate as Bukit Antarabangsa as long as the company’s plans to stabilise the slope continue unhindered.

She also says the company will need six months to complete soil stabilisation works to make the hill safe.

“To stop work now is dangerous and irresponsible. Because we are the landowner, we are responsible for this property,” she says, adding that the company has been around since the 1960s and has a reputation to uphold. Neither would we start a project if it was unsafe,” she says.

The company was slapped with a stop-work order for about 10 months. Work resumed in October.

The luxurious development, scheduled for launch by the second half of next year, comprises 21 multi-storey bungalows with a starting price of RM10mil each.

The project will have a gross development value of RM250mil.

“In today’s economic climate, it will be difficult to sell the bungalows. Yet, we are ready to spend RM30mil to strengthen the slope and ensure that the houses and surrounding areas are safe.

“It would be more dangerous to abandon operations mid-way,” she says.

Teh adds that upon completion of the project, SDB would be setting up a sinking fund to continue slope maintenance in the gated and guarded development.

The company aims to terrace the hill and site the bungalows on flat platforms carved into the hillside.

Teh says the company had complied with all the remedial and safety requirements to certify its Damansara 21 project was safe for construction.

SDB group general manager Loong Ching Hong says apart from city hall, the company has also obtained approvals from 16 other departments.

He adds that SBD has even been accused of bribing its way to obtain the approvals.

“Is it possible to bribe 16 departments?” Loong asks, adding that the Damansara 21 project was on par with the latest engineering standards.

SDB also has another hillside development, 20Trees in Taman Melawati, which comprises low-rise apartments and landed homes. To sdate, Teh says about 75% of this Melawati project has been sold.

Geotechnical engineer Dr Gue See Sew, who has been extensively quoted each time a landslide occurred, says it would be the height of folly to stop work when part of the land is cleared.

“To stop the developer from continuing operations to strengthen the slope is tantamount to doing an operation half way and forcing the surgeons to stop. To do nothing, when the slope is already cleared, is as bad as inviting a disaster. It is dangerous to stop now,” says Gue, adding that it is best the developer continues slope stabilisation work as speedily as possible.

“Caisson piling, which is what is being done on Damansara 21, involves a hand-dug method. It is much like digging a well by hand and pouring concrete and reinforcement into the ground.

“It is unlike bored piling, which uses a huge machine to drive piling into the ground like a hammer on a nail.

“Caisson is a far better option for hillside development,” says Gue, who is an independent source.

Country Heights Holdings Bhd CEO Datuk C. S. Ong, who has been trying for several years to turn Country Heights Damansara into another upmarket development like Damansara Heights, has discovered that his vision remains a distant dream, just as the dreams of land owners who bought that property several years ago.

Of 270 bungalow plots, works have started on only 70 of them.

Only half of which have been completed while the remaining 30-odd remain as work-in-progress.

About 30% of the 270 vacant bungalow plots have a gradient of 26 degrees or more, some as high as 45 degrees, says Ong.

He gave no reasons why the project is taking so long to materialise other than building a house on a slope is not the same as building on level ground.

It takes a very brave landowner to begin construction.

Not only will building on slope cost a lot more – 45% or more compared with constructing on flat ground – landowners are uncertain how to go about it because of the steepness of the slopes.

Geotechnical expertise is a must, even before construction. These reports must be submitted to the authorities.

Says Ong: “Architects think of aesthetics. Geotechnical engineers think of the safety of the slope and construction. There must be regular checks for unstable land conditions even as construction goes on. And when the house is build, checks and maintenance continue to be a must.

“Nature will give man time to remedy. There will be signs and symptoms. The danger is when these signs are ignored,” says Ong.

With the Bukit Antarabangsa tragedy still fresh on people’s minds, what are the options for landowners over at Country Heights Damansara? The price of land there is telling.

If one were to buy land from the developer today, the price of vacant land is between RM250 and RM300 per sq ft.

On the secondary market, it is between RM220 and RM270 psf.

“Slightly cheaper on the secondary market,” admits Ong. It looks as if Country Heights Damansara will remain green for quite a while to come.

By The Star (by Thean Lee Cheng, Eugene Mahalingam and Rachael Kam)

Monitoring, enforcement vital

WHAT is it about hillslope developments which hold so much enchantment for some, developers and house buyers alike, and yet be the source of so much controversy and frustration?

For a certain category of house buyers, the view matters. Because they are prepared to fork out loads for it, developers pander to what some may consider a mere whim.


Banning all the hillside development is not the solution, says Lim.

Says Henry Butcher Malaysia president Lim Eng Chong who lives in Ulu Kelang, which is in the middle of the controversy: “Banning all hillslope developments is not the solution. Developments should still be allowed but with stringent rules and as I have repeated time and again, monitoring and enforcement are crucial.”

Since the Highlands Tower incident in 1993, local authorities have every now and then, “banned” hillslope developments only to quietly issue approvals for hill projects.

The issue is not the fickleness of man in positions of authority and power, but the concerted willpower to monitor and maintain.

Lim says houses and high-rise are built on steeper slopes in Hong Kong, the Mediterranean coast line, the United States and other parts of the Western world, yet there are much less mishaps surrounding them.

“Safety rules are followed and strictly enforced in these countries. Developers are like any kind of businessmen; theirs is to maximise profit. There are the responsible ones and irresponsible ones. They must be guided and overseen by the authorities,” he says.

He says there does not seem to be a comprehensive policy and plan here to minimise such incidents. There is no 100% prevention anywhere in the world but a blanket ban is not the solution.

“We read about express buses getting involved in accidents and lives are lost. Do we ban all such buses? Let us look at the maintenance of these buses and the drivers behind them. In the same way, let us look at the developers and how they go about building on slopes and how the authorities monitor and maintain these slopes,” he says.

Lim says homeowners too need to take action to strengthen the slopes.

“Because it costs money, many prefer to live dangerously rather than to spend the money.The authorities know about it and should have taken action to compel the owners to take preventive measures or do it themselves,” he said.

Following last week’s incident, Lim expects fear to impact demand and prices. Cost is expected to go up as authorities impose stricter conditions.

As homeowners mull over selling out of Bukit Antarabangsa and its vicinity, Lim will buy more as prices drop.

“I love the hills and trees. It’ll be value for money,” he quips.

By The Star

Gaining buyers’ confidence

MORE prompt and effective government measures are needed to address the many challenges facing the country’s economy and property sector today.

The widening impact of the US financial crisis and the gloomy global economic outlook have eroded the people’s confidence to an all-time low.

Much wealth has been lost these past few months as stock and commodity prices around the world plunged and the prevailing mood is to conserve as much cash as possible and refrain from buying any big ticket items, including property.

As a tangible asset, property remains one of the most viable investment instruments to hedge against inflation.

It will certainly help if the Government starts the ball rolling to spur more demand-led growth by making more fiscal expenditure on critical sectors, including development projects with high multiplier effects under the Ninth Malaysia Plan.

With the expected prolonged impact of the global crisis on the local economy, industry players have expressed their concern over whether the Government’s RM7bil economic stimulus package is adequate to give a lift to the economy as governments around the world are making much larger commitments to boost their staggering economies.

They are urging the Government to spend more and ensure the fast and efficient implementation of critical projects that have huge spillover effects on the other sectors.

Given their link to at least 140 other industries, the property and construction sectors have a huge role to play to breathe more life into the local economy.

To encourage the 67% to 70% of the local population who still do not own homes to start buying their own property, a RM10,000 grant given out to all first-time house buyers will help ease the people’s burden and inject a much needed boost to the housing sector. Even the Australian and Canadian governments are rewarding their first time home buyers with grants and the measure had proven to be effective in spurring greater buying activities during the present “credit crunch” times.

Saturday’s pre-dawn landslide in Bukit Antarabangsa that cost at least four lives and immense damage to property value also needs immediate attention and concrete steps to prevent such mishaps from happening again.

The latest disaster has once again cast the spotlight on hillslope developments as residents staying around such projects are rightly worried for their safety and are calling for construction work to be halted immediately.

Meanwhile, developers with approved projects and land in those “critical” zones are not about to give up easily as they have invested in the land and gone through the proper channels to seek the authorities’ approvals for their building plans and projects.

Rather than adopting “knee jerk” responses to address the situation, industry players want to know why the authorities have yet to draw up a “list of dos and don’ts” involving hill land after the collapse of the Highland Towers in Hulu Kelang 15 years ago.

“At least, they should have properly filed records of who are the landowners and developers of projects in the surrounding areas, what is the nature of the soil and other critical information, such as underground water and soil conditions.

Regular checks on these areas should have been carried out after the first landslide to avoid other mishaps,” says Real Estate and Housing Developers Association Selangor chairman Datuk FD Iskandar.

Since these information are still not available, technical experts should be called in to address these issues and draw up consistent and transparent guidelines governing hillslope land, especially those in the landslide vicinity.

And if the Government wants to stop hillslope projects that have been approved by the state authorities from continuing, developers should be compensated accordingly after a valuation exercise is carried out to determine the value of the land.

Angie Ng is deputy news editor at The Star. She believes that Malaysians are a very hardy people and much can be achieved if more focused efforts are expended to mobilise their resourcefulness and potential

By The Star (by Angie Ng)

Goverment freezes Damansara 21 project

PUTRAJAYA: The Damansara 21 hillside project – deemed a high-risk development by the Government and where two landslips have occurred – has been frozen.

The Government has also ordered that the construction of the 34-storey block on Lot PT 21, Persiaran Raja Chulan be halted immediately pending a decision by the Govern­ment.

The developer has been told to take measures to prevent soil erosion.

Federal Territories Minister Datuk Seri Zulhasnan Rafique announced a temporary halt on structural works for the Damnasara 21 – a multi-million-ringgit bungalow project by Selangor Dredging Bhd (SDB) – but declined to say if the project would be shelved.

“The ministry has ordered the developer to continue with slope-strengthening works. The work is due for completion in February,” he told a press conference here yesterday.

The project in Damansara Heights, Kuala Lumpur, involves the construction of five-storey luxury bungalows, priced from RM10mil to RM15mil each on 2.3ha of land.

The number of units was scaled down from 25 to 21 following strong protests from Medan Damansara residents living adjacent to the site. Stop-work orders were also issued to the developer for flouting safety laws.

Zulhasnan declined to comment when asked if the slope gradient for the project was deemed within the unsafe zone.

The service apartment block in Bukit Ceylon, Kuala Lumpur, is one of two other high-risk hillside development projects identified by the ministry. The other is the Bukit Gasing bungalow scheme bordering Selangor.

Meanwhile, KL City Hall has deferred any decision on the Bukit Gasing bungalow project due to a lawsuit filed by residents.

By The Star

All Class IV hillside projects banned

PUTRAJAYA: All hillside projects on Class IV slopes – with gradients above 35° – in Kuala Lumpur, Labuan and Putrajaya have been banned.

Federal Territories Minister Datuk Seri Zulhasnan Rafique said all development on Class III slopes – with gradients between 26° and 35° – have been temporarily frozen until a perfect planning, design and monitoring system is put in place and enforced by the Govern- ment.

“Developers of ongoing projects will be held responsible for carrying out soil stabilising works and building proper drainage systems to ensure public safety,” he told a press conference here yesterday.


Just stop it: Tractors and heavy machinery at work at the site of the Bukit Ceylon apartment project with danger lurking above.

Kuala Lumpur City Hall, Putrajaya Corporation and Labuan Corporation have been directed to implement long-term measures like enforcing scheduled checks and establishing a unit to monitor landslide and sinkhole-prone areas.

Under Section 85A of the Road, Drainage and Buildings Act 1974 (Act 133) property owners of buildings more than five storeys high with the approval to occupy the premises for more than 10 years are to carry out scheduled checks to ensure they were safe for occupation.

“This will first come into force for buildings on hillslopes and former mines,” said Zulhasnan.

By The Star

Sime sells properties worth RM100mil

KUALA LUMPUR: Home buyers and property investors have snapped up over RM100mil worth of properties at Sime Darby Property’s Parade of Homes campaign.

Since the campaign was launched on Nov 14, visitors have been making their way to Sime Darby Property’s 10 townships in prime locations stretching from Shah Alam, Ampang and Subang Jaya to Nilai in Negri Sembilan.

More than 160 properties were sold in a two-week period.

”We’re definitely feeling very upbeat with the encouraging response from home buyers and investors alike,” Sime Darby Property managing director Datuk Tunku Putra Badlishah said in a statement.

According to him, sales to-date showed that Malaysians would continue to invest in the property market, given the right incentives and assurance that they had made a safe investment despite the current economic sentiment.

Sime Darby Property was offering a “guaranteed buy-back” scheme which is valid until June 15, 2009, the statement said.

Under the scheme, purchasers during the campaign period can sell back their properties to Sime Darby Property with “no questions asked”.

By Bernama

Gurney Paragon mall delayed

A model of Gurney Paragon. Inset: Datuk Khor Teng Tong.

GEORGE TOWN: Hunza Properties Bhd has delayed the construction of the RM400mil Gurney Paragon shopping mall on Penang island, said group executive chairman Datuk Khor Teng Tong.

Construction work on the mall was originally scheduled to begin in September, Khor said.

“But we decided to hold back because the cost of building materials is still high,” he told reporters after the group AGM yesterday.

“Although the price of steel has dropped, the other aggregates such as sand and cement are still costly.

“We will review the situation in March before setting a fresh target (for the) completion date.”

He added that “the present cost of building the shopping mall, taking into consideration also the cost of land, is about RM400mil.”

The Gurney Paragon shopping mall, with a gross built-up area of over one million sq ft with 700,000 sq ft of lettable area, was originally scheduled for completion in 2010.

But the construction of two condominium blocks in the Gurney Paragon project, which had a a gross development value of RM400mil, would continue and should be completed in 2010, as planned, Khor said.

“We started work last July and (work) has been going on non-stop since. Some 50% of the 220 units have been sold,” he added.

On the soft property market environment ahead, Khor said the group would still look for land for new projects in prime locations on the island and in the Klang Valley.

“We are also planning new residential projects in Tanjung Bungah on the island, Bertam on the mainland, and in Segambut (in Kuala Lumpur),” he said.

The group still has about 755 acres of undeveloped land in Tanjung Bungah (nine acres), Bertam (400 acres), Juru (40 acres), Sungai Petani (300 acres) and Segambut (six acres).

On its 36-storey “super-condominium” Infinity project in Tanjung Bungah, Khor said the group had recently completed the 26th storey. “It is scheduled for completion next year. About 60% of the project has been sold.”

By The Star (by David Tan)

SP Setia shares rise despite downgrades

On Wednesday, the property developer reported lower fourth quarter and full-year results as costlier fuel and building materials eroded profits. SP Setia's fourth quarter net profit fell 24 per cent to RM76 million.

Aseambankers retained its "sell" call and cut SP Setia's target price to RM2.20 from RM2.70.

"With unbilled sales now at RM950 million, earnings visibility has dropped to less than a year," analyst Ong Chee Ting said.

Credit Suisse maintained its "neutral" call on SP Setia, but lowered its target price to RM3.25 from RM3.50. While expecting consumer sentiment to remain poor, the analyst estimates the current financial year''s new property sales to fall to RM1.1 billion.
"We expect 2009 to be a challenging year for all property developers including SP Setia," he said.

OSK Research downgraded SP Setia to "neutral" from "buy", but maintained its target price at RM3.14.



ECM Libra advised investors to hold SP Setia's shares and kept the target price unchanged at RM2.62. Its analyst said while he likes SP Setia's execution track record, valuations at current levels are not compelling.

By Business Times

Construction firms to gain from Sarawak project

PETALING JAYA: Construction companies such as Hock Seng Lee Bhd, Naim Cendera Holdings Bhd and TRC Synergy Bhd would be the first beneficiaries of the Sarawak Corridor of Renewable Energy (SCORE).

In a company update report yesterday, OSK Research said: “We believe SCORE’s immediate beneficiaries are the construction players as building the necessary infrastructure will be required first, followed by utility players such as Sarawak Energy Bhd as increasing energy demand is needed to support the industrialisation process.”

More housing developments supporting the increasing rural-urban migration and rising income levels would emerge at a later stage, it added.

SCORE, which was the fifth and last development corridor project launched in February, has allocated RM67bil for infrastructure development projects, mostly government-funded.

OSK Research recently brought 16 fund managers to Bintulu, Sarawak, to gain insight on how companies such as Sarawak Energy, Naim Cendera and Hock Seng Lee could position themselves to benefit from SCORE.

“We opine that Hock Seng Lee stands to be a key beneficiary of SCORE by virtue of its strong foothold in the state. The company’s expertise in marine engineering is clearly a plus point given Sarawak’s swampy terrain,” it said.

OSK Research said Hock Seng Lee was likely to gain further margins upside as it secured more jobs as a main contractor as opposed to being a subcontractor.

Hock Seng Lee’s orderbook stood at RM1.6bil, of which over 80% is still outstanding. Its orderbook would keep the company busy until 2010.

Year-to-date, the company has managed to secure some RM868mil worth of jobs, including the RM452mil Kuching wastewater management system job secured last month.

Meanwhile, low-cost housing developer Naim Cendera would also benefit from SCORE as the proposed construction of dams would spur rural-urban migration and relocation of local tribes.

“We will see a lot of potential spillovers in terms of new projects to support one of the largest projects under SCORE, which would be the Salco Aluminium Smelter project in Similajau, that costs about RM7bil or more,” said OSK Research.

The spillover would include the development of new low-cost housing to relocate residents living near the smelter, it said.

With its strong reputation in the low-cost housing segment, Naim Cendera jived well with the rural-urban migration theme in Sarawak, it said, adding that mass market housing remained the key demand segment there.

“Nonetheless, owing to the recent slowdown in Sarawak property market, we project a marginal 4% to 8% growth in sales for its financial year ending Dec 31, 08 (FY08) to FY10,” OSK Research said.

Naim Cendera has also been awarded Phase 1 of a major flood mitigation project in Kuching worth some RM150mil.

OSK Research said economic progress within the three major growth nodes in SCORE, namely Tanjung Manis, Mukah and Similajau, could also have an upward impact on property prices in the areas.

Although the global economic slowdown may have taken its toll in slowing the development of SCORE, the research house believed the availability of cheap power in Sarawak should see investment return, to the benefit of companies such as Sarawak Energy, Hock Seng Lee and Naim Cendera once global credit issues were resolved.

By The Star (by Shannen Wong)

Malaysian construction companies look to SCORE

OSK Research Sdn Bhd says the immediate beneficiaries of the Sarawak Corridor of Renewable Energy (SCORE) are construction players since the necessary infrastructure must be put in place first.

This would then be followed by increasing energy demand to support the industrialisation process, benefiting utility providers like Sarawak Energy Bhd.

"At a later stage, we see a flurry of property developments catering for the migration from the rural to urban areas and rising incomes," it wrote in a report yesterday.

"We believe the SCORE concept makes strong economic sense. We postulate that the initial development of SCORE would be centred on basic and necessary infrastructure such as roads, bridges and ports.
"SCORE's allocation for infrastructure development stands at RM67 billion, which will mostly be government-funded," it added.

OSK Research sees listed companies such as Sarawak Energy, Hock Seng Lee Bhd and Naim Cendera Holdings Bhd benefiting from SCORE.

SCORE is the last of the five growth corridors launched by the federal government.

The targeted investments in SCORE come in second after Iskandar Malaysia's RM334 billion.

The development horizon of SCORE will span 22 years (2008 to 2030). It is expected to generate employment for more than three million people.

The geographical coverage will stretch from Tanjung Manis to Similajau and into the hinterlands, covering 70,000km sq, or 56 per cent of Sarawak.

By Business Times

Quality topics

MALAYSIAN ANNUAL REAL ESTATE CONVENTION (MAREC 09)


In a borderless world, practitioners have an opportunity to market real estate to the region and beyond.

The Malaysian Institute of Estate Agents (MIEA) is the official body that represents real estate agents in Malaysia. For more than 10 years now, MIEA has been organising high quality conventions not just for its members, but also for the public at large.

Re-branded last year as MAREC, an acronym for the Malaysian Annual Real Estate Convention, these conventions continue to deliver quality and high impact topics of discussion. Over the years, many themes have been presented, such as:

*Global Real Estate Trends - Local Applications

*ASEAN Real Estate Practices - Confronting the Future

*Become the Real Estate Shogun

*Globalising Malaysia’s Real Estate Market - Strengths and Challenges

*Regionalising the Malaysian Market - The Reality of Getting There

For the upcoming MAREC 09, MIEA is organising a convention with a difference. With the growing financial and economic uncertainty across the globe, MIEA feels that now is the time for practitioners to look within themselves and re-brand the profession.

The time is now right for practitioners to embrace the latest marketing methods, unique selling propositions and in the process, create a highly specialised and niche market for themselves.

Aptly themed “Reinventing the Profession”, MAREC 09 promises to be a convention that would prepare practitioners to better weather the financial storm ahead. Simply, it is a convention “for the practitioners, by the practitioners”.

The topics at MAREC 09 deal with everyday issues faced by estate agents. Most of the topics will be delivered by practising estate agents who have achieved success in their career. As such, those attending the MAREC 09 can be assured of not just quality topics but presenters and panellists who are themselves practitioners and are up-to-date with current issues affecting real estate agents and the profession itself.

Some of the topics that will be covered in MAREC 09 are as follows:

1)Managing Successful Real Estate Firms

As the market becomes more and more sophisticated and the world continues its unrelenting pace of globalisation, running a real estate agency is no longer the task it was yesterday.

This module attempts to bring the participants skills they will need to cultivate to successfully manage a real estate firm. Practitioners will be taught modern methods of setting goals and applying their mind as well as daily activities to achieve that goal.

2)Managing During Tough Times

As the global economy starts diving into a tailspin in a reaction to the financial crisis in the United States, hard times are expected to hit our shores again.

How do we anticipate what is going to happen? How do we prepare for it? How long is it expected to last? How can practitioners brace themselves during these trying times? These and other questions will be answered and the way forward outlined.

3)New Marketing Tool and Methods

In today’s increasing sophisticated markets, gone are the tried and tested marketing methods that have been the trademark of estate agencies for years. If real estate agents are not willing to reinvent themselves and the way they reach their customers, they will be left behind as dinosaurs in the industry.

This module will attempt to introduce participants to modern marketing tools and methods. It will guide them in embracing these new tools and technologies to enhance their business as well as their professional image.

4)International Marketing – Selling Local Properties Overseas

The world is becoming borderless. International boundaries are disappearing from day to day while the financial markets of the world move seamlessly from country to country, region to region and continent to continent.

International travel has become a way of life for many people. As they travel, they become more aware of opportunities that present themselves.

In this scenario, practitioners have an enormous opportunity to market legal real estate to the region and beyond. The aim here is to provide participants with insight on exactly how they can go about doing this.

5)Amendment to Legislation – The Way Forward

In recent years, there have been several significant amendments to legislation that affect land matters. This module will highlight these amendments and equip participants with knowledge on their workings and implications.

Interested to register for the convention? Between now and January 31, early bird discounts are offered for both members and non-members, so hurry up and take advantage of these promotions!

Sign up now for the Malaysian Real Estate Convention – MAREC 09 to be held on February 14 & 15. For further details, please contact MIEA.

The Malaysian Institute of Estate Agents, Unit C-27-05, Dataran 3 Dua, No. 2, Jln 19/1, 46300 PJ. Tel: 03-79602577 Fax: 03-79603757 Email: secretariat@miea.co.my Website: www.miea.com.my

By The Star

Higher fuel, material costs hurt SP Setia profits

PROPERTY developer SP Setia Bhd (8664) reported weaker fourth quarter and full-year results for fiscal 2008 as higher costs of fuel and materials eroded profits.

It also missed its full-year sales target of RM1.5 billion, reporting a revenue of RM1.3 billion.

"We expect to maintain the group's performance next year by launching a product mix targeted at niche markets according to their need," group managing director and chief executive officer Tan Sri Liew Kee Sin said after announcing the results in Kuala Lumpur yesterday.



SP Setia's fourth quarter net profit fell 24 per cent to RM76 million due to disruption of work in progress led by fuel and energy price increases.
Revenue for the quarter was RM420.8 million, a 33 per cent jump from RM317.2 million previously.

The group's sales were mainly derived from its property development activities in Setia Alam and Setia Eco Park in Shah Alam; Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Baru; and Setia Pearls Island in Penang.

SP Setia has 16 ongoing projects with a combined gross development value of RM30 billion.

Its total undeveloped landbank stands at 1,959ha, inclusive of 223ha in Vietnam.

For the full year to October 31 2008, SP Setia posted net profit of RM213.5 million, 18 per cent lower than what it made in 2007.

Revenue was up 15 per cent to RM1.33 billion.

It has proposed a total dividend payout of 17 sen per share.

Since SP Setia has already launched all its major townships complete with infrastructure, school, hypermarket and other amenities, it will now develop dedica-ted products driven by consumer demand.

"We are also beginning to see construction prices trending down, beginning with the decrease in steel bar prices. We will continue to develop products that suit house buyers' changing lifestyle and affordability," said Liew.

With a net gearing of 0.19 time and some RM593 million cash in hand, SP Setia will continue to look for suitable land in the three states it has already carved its Setia brand.

Commenting on its first overseas venture in Vietnam, Liew said the company hopes to launch the township by the second quarter of next year.

SP Setia has clinched a deal to jointly build a 32ha mixed development in Ho Chi Minh City catering for expatriates and senior staff working in the Saigon Hi-Tech Park.

By Business Times (by Zurinna Raja Adam)

SP Setia embarks on three-pronged strategy

KUALA LUMPUR: SP Setia Bhd is embarking on a flexible three-pronged business model based on cash conservation and generation as it gears up for a challenging year.

The first stage would see it focusing on the middle-income segment locally, which is underpinned by relative job security, supportive demographics and high household savings, the developer said yesterday.

The second part of its strategy will see the company planning marketing strategies and events that are effective and cost-efficient.

The third prong will see SP Setia undertaking judicious implementation of its development plans.

The focus will be on projects that has the least hurdles to take-up rates, the quickest turnaround period and which increase the value of the surrounding area.

SP Setia said the model would enable it to continue to fund its operations, invest in longer-term, yield-accretive projects as well as allowing it to grab good opportunities that might come during these uncertain times.

Group managing director Tan Sri Liew Kee Sin said the company was well-placed to ride out the storm due to its diverse range of strategically-located properties ranging from affordable to mid and high-end segments.

“Our experience during the Asian financial crisis (of 1997/98) and other downturns over the past 10 years has shown that the middle-market segments in Malaysia is very robust,” he said at a press conference to announce its earnings for the financial year ended Oct 31, 2008.

With almost 80% of its land bank in Malaysia under the Setia brand, Liew said the company could easily re-focus on its forte of township development and develop affordable products to suit current market demand.

SP Setia, he said, had a strong balance sheet with RM593mil cash and net gearing of 0.19 times.

SP Setia posted a net profit of RM76.08mil for the fourth quarter ended Oct 31 compared with RM99.78mil a year earlier. Revenue was at RM420.75mil compared with RM317.16mil previously. It proposed a 10 sen dividend per share.



For the financial year ended Oct 31, it posted a net profit of RM213.46mil compared with RM260.07mil a year ago. Revenue was higher at RM1.33bil compared with RM1.15bil.

SP Setia said the drop in profit in FY08 was attributed to lower gross margins and general overheads, as well as marketing expenses.

But despite the trying times and perceived soft market sentiment, total group sales were higher, Liew noted. “This reflects our ability to successfully capture housebuyers’ changing lifestyle needs and aspirations,” he said.

Liew said SP Setia’s profit and revenue were derived from property development in key projects such as Setia Alam and Setia Eco Park.

The group has 10 active projects and 3,975 acres of undeveloped land bank with a gross development value of RM16.5bil.

By The Star (by Eileen Hee)

Developer: Give us six months

PETALING JAYA: The developer of the Damansara 21 hillside project in Medan Damansara needs six more months to complete soil stabilisation works to guarantee the safety of the hill.

Selangor Dredging Bhd (SDB) managing director Teh Lip Kim said it was imperative that work to stabilise and strengthen the slope continue.

“We have spent about RM30mil so far to strengthen the slope because we want to make sure the houses and the surrounding areas are safe,” she added.

Teh explained that the stabilising works included placing 282 pilings along the back of the hill without using machines. Anchors were also driven into the base of the hill.

Group general manager Loong Ching Hong said the portion of the slope between the middle and top of the hill would be removed and the 21 bungalows built on flat ground.

“The bungalows will effectively be built on terraces,” he said, adding that SDB would never compromise on the safety or lives of housebuyers or those in neighbouring areas.

SDB had acquired the land, which came with a development order, from MAA in 2005.

Loong said it was the terrace design, which received support from 16 government agencies, that led to SDB’s amended development order being approved.

On the stop-work order and RM100,000 fine slapped on SDB in April, Loong said the stop-work order, which actually had delayed soil stabilisation works, was lifted in October.

Loong said the plan then was to continue soil stabilisation works at the base of the hill. He added that SDB had received verbal agreement from City Hall to use the access road that cuts through the residential area so that the work could be sped up.

“However, when the residents complained, we were slapped with the stop-work order and fine, with the authorities saying that we had no permission to use the access road.”

Loong said this meant they could no longer touch the site, and what they had feared most – a landslip – occurred.

Teh said SDB had not even launched the Damansara 21 project and yet was spending money to make the hill safe.

By The Star

Aeon confident on Malaysian retail industry

JOHOR BARU: Aeon Co (M) Bhd remains bullish on Malaysia’s retail industry despite the gloomy global economic outlook, says chairman Datuk Abdullah Mohd Yusof, adding that the industry was valued at about RM70bil annually.

Managing director Nagahisa Oyama said apart from Klang Valley and Penang, the company was focusing on Johor Baru as part of its mid-term plan until 2010 for future expansion.

With South Johor being developed into a retail hub, Iskandar Malaysia offered good business prospects for retailers, he said.

He said over five years, Aeon had opened four shopping centres within Iskandar Malaysia at Taman Universiti, Permas Jaya, Tebrau and Bukit Indah.

“We believe the retail sector in Iskandar Malaysia will continue to grow in years to come in tandem with the growth of the corridor,’’ Oyama said at the tree planting ceremony to mark the opening of Aeon’s Bukit Indah shopping centre last Saturday.

The RM300mil shopping centre on 15.132ha is Aeon’s 21st Jusco store. To date, 95% of the three-storey shopping centre has been taken up by 200 tenants.

Oyama said the shopping centre would open for business on Dec 19 in time for Christmas while the grand opening would probably be early next year.

Meanwhile, Johor Mentri Besar Datuk Abdul Ghani Othman said many local and foreign retailers would be opening in Iskandar Malaysia be it shopping complexes, hypermarkets or supermarkets.

He said a world renowned property group would open a premium outlet in Iskandar Malaysia soon, making it the first premium outlet in South-East Asia.

Ghani said the outlet would also attract shoppers from this region as similar outlets had proved popular in cities like London, Tokyo, New York and Seoul.

By The Star (by Zazali Musa)

TH Properties and mSET team up

KUALA LUMPUR: TH Properties Sdn Bhd, the property arm of Lembaga Tabung Haji, will be tapping the expertise of the Malaysian Society for Engineering & Technology (mSET) for continued value-add to its development projects.

TH Properties chief executive officer Zaharuddin Saidon said it was vital for a developer to look at quality and not just the bottom line.

“The tie-up with mSET will help us better identify building procedures and improve construction efficiency and quality,” he told a press conference announcing the tie-up with mSET yesterday.

Set up in December 2007, mSET comprises a large pool of engineers, quality surveyors, architects, engineering technologists, technicians and allied professionals.

Its president Prof Abang Abdullah Abang Ali said mSET was formed to reach out to the large number of engineers, engineering technologists and technicians who were not professionally networked.

“Collaborating with TH Properties will help improve the level of performance of our professionals,” he said.

Zaharuddin said TH Properties would be seeking mSET’s assistance in the development of all of its projects. Besides its flagship project in Bandar Enstek, Negri Sembilan, the company also has a number of projects in the Klang Valley.

“We will seek its (mSET) assistance as and when necessary,” he said, adding that mSET was well-connected with foreign-based professional organisations.

“Finding the right consultants can take time and delay projects. Through mSET, we can have speedy access to a host of local and foreign professionals,” he said.

He added that by having a pool of consultants at its disposal, TH Properties could carry out its construction works more prudently.

On another note, Zaharuddin said it was premature for the Government to consider reviewing all existing developments near hillslopes following the landslide at Bukit Antarabangsa last Saturday.

“Projects should not be halted just because of a disaster. Land is scarce and we still need to develop projects on hillsides.

“This is where engineers and architects play a crucial part in giving good advice to developers on their projects,” he said.

By The Star

New retail outlets set to boost MAHB growth

MALAYSIA Airports Holdings Bhd (MAHB) has completed the first phase of its satellite retail optimisation project (SROP) at the KL International Airport (KLIA) in Sepang, which began in May this year and due for completion end-2009.

With the completion of the East Zone, the airport operator will continue to work on the West, South and North zones soon.

The East Zone boasts more than 12 new outlets at the satellite building, including Choc Shop International, Dome, Eraman Malaysia, Harrods and Pusrawi Medicare.

The launch of East Zone yesterday also marked the start of the second phase of the KLIA Shopping Campaign, which offers RM2.7 million of prizes at the KLIA and the low-cost carrier terminal LCCT.
MAHB managing director Datuk Seri Bashir Ahmad said the company is expecting a one to two per cent growth in passenger arrivals at all 39 airports it operates in the country in 2009.

"The growth will partially be attributed to the availability of more retail space and reduced operating costs," Bashir told reporters after the launch of the East Zone retail units.

By Business Times (by Zuraimi Abdullah)

Investing in the British market

BUYING property in another country is not for the faint-hearted and even professional institutional investors spend a great deal of time and money researching the markets they are interested in before committing. This article will focus on advice for individual investors interested in the British market.

Historically, Malaysians have purchased property overseas for various reasons, the most common of which is to diversify their property portfolio and to invest in more stable and transparent markets than many in Asia.

Homes are also purchased overseas as corporate residences or to provide accommodation for children studying in foreign universities. Part of the joy of buying overseas can be the research into the market and enjoying a working holiday.

A great deal has changed in the British economy since early 2007.

In summary, the British currency has weakened, the capital value of homes has dropped and the economy registered zero economic growth in the second quarter and into negative growth of -0.5% in the third quarter.

The pound recently slid beneath the US$1.80 mark for the first time in two years and dipped to a new record low against the Euro.

Attention is increasingly turning to the extent to which house prices must fall before confidence is regained. Savills’ expectation is that values of prime property in London will fall by 25% over the course of 2008 and 2009 and marginally less so in the regions.

Only in the very top of the market have prices held firm, with the £10mil-plus market in London and £4mil-plus market in the country continuing to show marginal growth (1.2% and 0.7% respectively in the first half of 2008).

On a more positive note, Savills’ research in London estimate that the recovery in the housing market will be led by London and the South East of England and by 2012 house prices will have recovered to those of pre-slump levels.

Changes in the law have made buying a home easier and more transparent, which should appeal a great deal to foreign investors. Investors must always ask the selling agent for a Home Information Pack (HIP), which became compulsory since Dec 14, 2007.

Following the start of the global credit crisis in 2007, activity in Britain’s commercial development sector started to fall steeply.

On average, prime offices have become 20% cheaper across Europe as at end of the third quarter with average prime central business district yields of 6%.

The City of Birmingham seems to be bucking this trend, with a take up 606,292 sq ft of Grade A office space in the third quarter and an upward pressure on rents, the highest rent secured this year was £33 (RM179) per sq ft per month.

Despite this, there are many ways to invest in unique commercial opportunities, from Britain’s fledgling real estate investment trust market to direct commercial property ownership.

While much residential property investment is driven by expectations of the growth of its capital value, commercial property returns are more focused on their rental income.

In conclusion, history has shown that the only certainty in the future is that capital values will bounce back and the rental market should strengthen in the immediate term since the introduction of tighter lending criteria.

Investing in the British market must be carefully timed to make the most of the weak currency and falling prices and as always the right location is paramount.

By The Star

YTL Land to push ahead with Pantai Peak launch

YTL Land & Development Bhd, the property arm of YTL Corp Bhd, will push ahead with the launch of the last phase of its Pantai Hillpark development in Kuala Lumpur next year despite the global financial crisis.

Dubbed Pantai Peak, the RM500-million project features a 16-ha gated community, which will be located on YTL Land's final parcel of land in Pantai Hillpark.

It is set to be the latest icon in the area, with 233 units of luxury three-storey hillside semi-detached homes and bungalows with a variety of layouts and design options.

Deputy managing director Datuk Yeoh Seok Kian said each home will be priced from RM2 million.



"It will come with a lap pool and a stunning panoramic view of the Gasing green belt and the entire Petaling Jaya landscape" Yeoh told Business Times in an interview in Kuala Lumpur recently.

The main board-listed developer is optimistic that the property market will improve as banks revise their base lending rate from 6.75 per cent per year to 6.50 per cent per year this month.

This is following Bank Negara Malaysia's recent downward revision of the Overnight Policy Rate by 25 basis points to 3.25 per cent to uplift the country's economic activity.

"It will boost the sector as bank loans will be cheaper for home buyers. While we are more liberal than Singapore, we have to internationalise our properties."

YTL Land, which has locked-in sales of RM100 million from its Sentul East project in Kuala Lumpur, expects its financial performance to remain flat this year due to fewer launches than the previous year.

For the 12 months to June 30 2008, it posted a net profit of RM10.3 million and revenue of RM336.1 million.

"We had lesser launches due to the US-led subprime crises. We hope America will clean up the mess so that there will be a quick chance of recovery. If the prices of petrol and interest rates can remain low, we will be able to recover fast," Yeoh said.

Meanwhile, YTL Land will pace itself with the market for new launches at its on-going 120ha Sentul East and Sentul West project, and 48ha Lake Edge project in Puchong, to ride out the current crisis.

"We will continue to introduce high-end products. Malaysia has not gone through a bubble like that in the US, the UK and Singapore. Prime locations with good product packaging will suffer the least and pick up the fastest," he said.

Yeoh said Malaysian properties are still more competitive than those in Singapore and Hong Kong.

"People with money should buy properties but selectively, to hedge against inflation," he said.

Hot property areas in the Klang Valley remain in Sri Hartamas, Mont' Kiara, Damansara Heights, Bangsar, Sentul, Taman Seputeh and the Kuala Lumpur City Centre area.

By Business Times (by Sharen Kaur)

Ireka laying groundwork for projects in Vietnam

IREKA Corp Bhd, which has over RM500 million worth of construction jobs in hand in Sabah and the Klang Valley, is preparing to work on new projects next year including in Vietnam.

Its associate firm, London-listed Aseana Properties Ltd, is finalising the master layout plan for approval for a 32ha seafront resort and residential development in Kota Kinabalu, Sabah, worth more than US$200 million (RM728 million).

The project will be developed in two phases, which involve building villas, a hotel and resort homes, executive director Lai Voon Hon said.



"We are currently working on the submission of plans and will assess the market conditions before launching this project," he told Business Times.

In Vietnam, Aseana has plans to launch seven property projects in Ho Chi Minh City, Hanoi and Danang worth a combined US$2 billion (RM7.28 billion). It has submitted development plans for most of the projects to the local authorities in Vietnam for approvals.

Lai said it expects to launch by next year Queen's Place and Hi-Tech Healthcare Park, worth a combined US$650 million (RM2.36 billion), in Ho Chi Minh City.

Queen's Place will comprise twin residential towers, offices, serviced apartments and retail space.

Other projects in the pipeline are Wall Street Centre, Nam Khang Resort & Residences and One Saigon.

In addition, Aseana's stake in Nam Long Corp, Vietnam's leading property developer with over 500ha under its belt, will hold water.

Lai said through the partnership, Aseana expects to co-develop at least four property projects in Ho Chi Minh City and in neighbouring provinces.

There is currently a shortage of housing in Ho Chi Minh City and Hanoi, which are attracting Malaysian developers such as WCT Engineering Bhd, SP Setia Bhd and Bina Puri Holdings Bhd to those areas.

Prices of high-end residential condominiums in Ho Chi Minh City remain high at US$1,500 (RM5,460) to US$4,000 (RM14,560) per sq m, while Grade A office rental rates reflect an upward momentum. Demand is growing but there is tight supply.

People's Committee of Long An Province in Ho Chi Minh City vice-chairman Nguyen Thanh Nguyen said Vietnam is opening its doors to foreign investors for infrastructure and building works in the country.

"Foreign direct investments in Vietnam has grown from US$20 billion (RM72.8 billion) last year to US$60 billion (RM218.4 billion) year to-date. Our local and foreign banks are lending. We have a few Malaysian firms looking for investments here now," he told Business Times via email.

By Business Times (by Sharen Kaur)

Pacific Regency looking for small boutique hotels

PACIFIC Regency Hotels & Resorts Sdn Bhd, the hospitality arm of Pan Global Bhd, is looking to expand its hospitality business, particularly into boutique hotels.

The group, which operates the Pacific Regency Hotel Suites on Jalan P. Ramlee, Kuala Lumpur, is keen to own and operate hotels on islands off the east coast of Peninsular Malaysia.

"We set up Pacific Regency Hotels & Resorts earlier this year to manage new and upcoming projects. We are now looking for small boutique hotels on islands in the east coast to buy and manage," its general manager Kenny Teo said in an interview with Business Times.



Teo said that it was keen on taking over existing properties to grow the business faster.

"We are looking at properties with 50 to 60 rooms, which are exclusive," he said.

These properties would be able to offer an average room rate (ARR) of RM1,000 to RM1,500 per night.

Teo said that earliest possible date when this plan may materialise is in 2010.

Meanwhile, Teo has put in place strategies to help its existing 153-suite Pacific Regency ride through a possibly trying times in 2009.

Based on the current scenario, the hotel hopes to be able to increase its ARR by about 20 per cent in 2009. It expects to finish 2008 at an ARR of RM245 per night and an average occupancy of 85 per cent.

"We are not worried about our occupancy (in 2009). We have no reason why it will not fill up ... we are more concerned about the rates," he said, saying that competition would get stiffer in terms of rates if the impact of the worsening economy hits Malaysia further.

Up to 70 per cent of the hotel's business comes from the corporate market, mainly from France, Italy, Australia and the UK.

For next year, the hotel plans to tap into the Scandinavian countries, Spain and Portugal as well as the Asian market including Indonesia and Thailand.

Pacific Regency will also look at locking in more long-term guests. This group now makes up 30 per cent of its room inventory.

Pacific Regency is like a serviced apartment in its set-up of rooms and offers a fully-equipped kitchen. At the same time, it offers the services like in a hotel including laundry, food and beverage outlets and room services.

Teo said that creating awareness of the brand has been a challenge even though the hotel is a homegrown brand and 14 years old.

By Business Times (By Vasantha Ganesan)

Bandar Raya set to clinch tower sale deal with foreign firm

PROPERTY developer Bandar Raya Development Bhd (BRDB) is tipped to sign a deal with a foreign firm to sell a residential tower at its RM2 billion CapSquare integrated development in Kuala Lumpur.

It is understood that the buyer is from the Middle East, who is looking to acquire Six CapSquare.

It is one of two residential towers at the CapSquare development. The other is known as CapSquare Residences, which has been constructed.

The two parties are negotiating on the price, but are expected to conclude a deal by the first quarter of next year, a source told Business Times.
"Based on the estimated purchase price and size of the 36-storey tower (featuring 170 exclusive units), the deal may equate to a value of RM600 to RM700 per sq ft," the source said.

BRDB chief executive officer Datuk Jagan Sabapathy declined to comment, except to say that the company has been talking to people for one of its condominium blocks at CapSquare.

"But we have not finalised any deal yet. We are still in talks on several matters," Jagan said.

CapSquare, located between the city's Golden Triangle and central business districts, is a 6.1ha freehold project with 3.8 million sq ft of space.

It comprises a 300-metre long retail street, two Manhattan-inspired residences, four signature offices, two eight-storey corporate offices, two high-rise office towers including Menara Multi-Purpose, a four-storey mall and an entertainment complex.

The properties are attracting investors due to its appeal and location.

In January, Union Investment Real Estate AG, one of Europe's leading real estate investment management companies, had signed a deal with BRDB to acquire a high-rise office tower (Tower 2) for RM440 million.

Tower 2, which is scheduled for completion by 2010, is a 41-storey Grade A office building with nett lettable area of 600,000 sq ft.

Meanwhile, BRDB is expected to do better this year, thanks to higher property sales and effective cost management.

For the first nine months of its current fiscal year ending December 31 2008, BRDB posted a net profit of RM60.7 million from RM46.5 million last year.

Revenue was RM709.1 million, up from RM513 million, thanks to sales of properties at CapSquare, One Menerung in Bangsar and Troika in Kuala Lumpur.

By Business Times (by Sharen Kaur)

Proposed Act to protect contractors

The CIPAA will help contractors to survive the current difficult economic environment — AFP

There are signs that deteriorating economic conditions have begun to hurt the construction industry despite the Government’s injection of an additional allocation of RM7bil into the economy.

This is indeed worrying for the industry as it continues to deal with eroded profit margins, escalating costs and diminishing of projects.

A main issue affecting the construction industry has always been the problem of delayed as well as non-payment. Partly because of the complexity of construction work and partly because of financing issues, there are bound to be disputes relating to non-payment.

Remedies such as suspension of work and direct payment are difficult to be properly and lawfully exercised unless there are expressed provisions in the contract and the disputes are resolved by an independent third party.

What is needed is an avenue where dispute resolution methods can be quickly effected and are affordable. More importantly, the disputes must be resolved quickly as and when they happen.

Existing dispute resolution mechanisms in the construction industry such as arbitration and litigation are time-consuming and are often expensive.

The arbitration or litigation process normally takes two to five years or longer to be resolved and costs tens or hundreds of thousands of ringgit which will further eat into contractors’ already thin margins.

In fact, arbitration and litigation often take a long time because a detailed meticulous fact-finding process is required since the decisions are final.

Another issue is that most standard terms in construction contracts stipulate that arbitration can only commence after the project is completed or terminated.

This may be due to the fact that prolonged arbitration or litigation during the construction stage can be very disruptive.

As a result, cash flow of contractors will be affected and this will inevitably affect the progress of construction.

Consequently, innocent third-parties, such as the purchasers, are often the victims of delayed or abandoned projects.

The existing related statutory laws such as the Contracts Act 1950, Sale of Goods Act 1957 and Arbitration Act 2005 can be applied generally and are not efficient enough to deal with current problems.

To address the problem, various recommendations were made during a construction industry roundtable in June 2004 which was chaired by the former Works Minister Datuk Seri S. Samy Vellu.

One recommendation was for the creation of a Malaysian Construction Industry Payment and Adjudication Act (CIPAA).

It must be noted that there are already similar acts in Britain, Australia, New Zealand and Singapore. These include:

# Building and Construction Industry Security of Payment Act 2002 (Victoria, Australia)

# Construction Contracts Act 2002 (New Zealand); and

# Building and Construction Industry Security of Payment Act 2004 (Singapore).

All these countries recognise that timely payments are vital to the very survival and continuity of business of the construction industry. Clients are under contractual obligation to pay contractors, within the stipulated period, for services rendered and issuance of certificates of payment.

The construction industry has been waiting for far too long for the Act to be in place as it has been more than four years since CIPAA was mooted. In fact the draft for CIPAA was circulated for comments early last year.

Based on the feedback, certain parties have some strong reservations on the proposed Act. It must be stressed that they are not the main players who are being aggrieved in this regard.

The Act should be seen as vital to protect the interest of the primary players in the construction industry and more so when the contractual bargaining powers of the primary players are often not equal.

It is understood that the proposed CIPAA is now awaiting submission to the Cabinet for approval and directive so that a formal Bill can be presented to Parliament.

MBAM, therefore, urges the Government to facilitate the speedy enactment of CIPAA as the Act will help contractors across the board from G7 to G1 to survive during this difficult period where banks may adopt more prudent lending policies and the overall expected outlook for 2009 does not seem rosy.

The Act would provide some relief if contractors are assured or given some security and remedies in the key issue of payment.

Without any security of payment and quick justice through adjudication, the unpaid party either suffers in silence or is put out of business at the end of the current dispute resolution through arbitration or litigation.

In conclusion, the problems on payments in the construction industry as identified above cannot be effectively resolved contractually thorough provisions in the standard terms of construction contracts.

The most effective solution is, therefore, to enact a separate and specific Act of Parliament to address the problems.

MBAM sincerely hopes that the Government and all parties concerned will work together to get CIPAA enacted in the soonest possible time for the benefit of the industry.

By The Star