‘Persistent weakness’ in property sector this year

KUALA LUMPUR: The Malaysian property sector will likely see “persistent weakness” for the rest of this year, according to panellists for the discussion on Capitalising on Property and REITs.

Property consultancy Regroup Associates executive chairman Chris Boyd said the country’s property sector had peaked late last year.


Chris Boyd

“We are likely to see a persistent weakness in the market this year. It will be very difficult to buy,” he said, adding that the mid-range segment was “relatively safe” at present.

“The middle class has grown in the past 25 to 30 years, with relatively decent job security that should still sustain the middle market,” he said.

Boyd proposed that “any time this year is a good time to buy” property, but Ho Chin Soon Research Sdn Bhd managing director Ho Chin Soon advised caution.

“I would not ask people to jump in the market just yet. What is the rush? Look around and wait a little longer,” he said. Ho also said that there was no evidence of a property bubble in Malaysia.

Average property prices in major urban areas of Kuala Lumpur, Penang, Selangor and Johor had not seen a sudden surge that indicated a bubble, he noted.

“In fact, Johor has even seen prices weaken (over the past four years). If it were a bubble, there should be a lot of cheap land to buy now, but there is none,” Ho said.

By The Star

SP Setia 1Q net profit at RM31.17m

KUALA LUMPUR: SP Setia Bhd posted net profit of RM31.17 million in the first quarter ended Jan 31 (1QFY09), which was 35% lower than the RM48.52 million a year ago where there was an inclusion of RM26 million from land sale.

It said on March 19 that revenue fell 14.4% to RM259.92 million from RM303.65 million. Earnings per share was 3.07 sen compared with 4.81 sen.

“The group’s profit and revenue were mainly derived from its property development activities carried out in the Klang Valley, Johor Bahru and Penang,” it said.

Ongoing projects which contributed to the Group’s profit and revenue include Setia Alam and Setia Eco-Park at Shah Alam, SetiaHills at Bukit Indah Ampang, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru and Setia Pearl Island in Penang.

On the lower earnings in 1QFY09, it said this was mainly due to the inclusion of profit from the disposal of land in Ulu Kelang Aeon Co. (M) Bhd for RM26 million in 1QFY08.

SP Setia also said the lower profit before tax of RM44.5 million for 1QFY09 was RM58 million lower than the 4QFY08 ended Oct 31, 2008.
This is mainly due to the profit recognition of RM26.9 million on the disposal of the 25.07% interest held in Loh & Loh Corporation Berhad in the preceding quarter and lower profit contribution from property development due to the global financial crisis which negatively impacted sentiments beginning from September 2008 last year.

“Property development segmental margins are also lower at 15.7% this quarter compared to 17.9% in the preceding quarter,” it said.

SP Setia said this was mainly due to lower margins achieved by the initial phases of Setia Eco Gardens and several phases in other ongoing projects which were launched during 1Q and 2Q of FY2008.

“For these phases, building contracts had to be awarded at the height of the construction price increase in order to enable the 24 month delivery period to purchasers to be met,” it said.

Whilst cost pressures had to a large extent abated, the group’s profit margins in the months ahead would also be impacted by the structural shift in its product mix.

“This is because integrated commercial and high rise development projects such as the Setia Walk project typically carry lower margins as compared to landed residential properties. However, due to the much higher density of such projects, the overall yield per acre of land should nevertheless be better,” it said.

By The EDGE Malaysia (by Joe Chin)

Quill Capita falls 9.4% on downgrade

KUALA LUMPUR: Quill Capita share price fell 9.4% 8.5 sen to 81.5 sen in late morning trade on March 19 after a local research house said its valuations appeared demanding relative to other Malaysian REITS in terms of yield.

At 11.32am, it was down 8.5 sen to 81.5 sen. There were 30,000 units done.

RHB Research said on Quill Capita‘s valuation appeared demanding relative to other Malaysian REITs players in terms of yield as its share price rebounded to 90 after the plunge in February.

“We believe the current price level is unsustainable in view of rising concerns on the sustainability and stability of earnings. Chief among the risks faced by the company are occupancy risk where about 25% of total net lettable area (NLA) is up for renewal in 2009;

“Secondly, potential downward pressure on rental rates in view of current economic downturn and increasing office supply. Thirdly, potential devaluation in investment properties which could lead to higher gearing ratio,” it said.

However, RHB Research said QuillCapita’s gearing ratio remained manageable at 0.37 times in 4Q08. The company had low short term debt-to-total debt ratio of 0.23 times, which suggests lower refinancing risk in the near term.

“We expect gearing to improve to 0.35 times in FY09 as we do not expect any new asset injection in the near term,” it said.

The research house said softening in office rental rates due to the current economic slowdown as well as increasing supply did not bode well for Quill Capita.

RHB Research said the company would likely face bigger challenges in achieving higher rental rates for its office buildings.

"Meanwhile, despite the challenging retail outlook in the near term, we believe the long-term lease agreements (for Plaza Mont Kiara and Tesco Hypermarket in Penang) would help to mitigate the negative impact from the slowdown in the retail sector," it said.

By The EDGE Malaysia (by Joe Chin)

Depreciating high-end condos

Property prices in KLCC and Mont’Kiara areas could stabilise if economy recovers

PETALING JAYA: Property values of high-end condominiums in Kuala Lumpur City Centre (KLCC) and Mont’Kiara are expected to retrace by up to 20% to 2006 levels by the first half of next year, according to Kenanga Research.

The average capital values of KLCC and Mont’Kiara in 2006 were RM943 and RM466 per sq ft respectively, compared with RM1,128 and RM564 psf respectively currently.

If the Kenanga Research projection is right, this would mean the luxury residential segment in these prime locations could fall by as much as 16% to 20% over the next year, on top of a 6% to 10% depreciation since their peak.

Average prices in KLCC peaked at RM1,291 psf in the first half of last year; for Mont’Kiara it was at RM598 psf in 2007.

However, the research house in its report on Monday said property prices in these locations could stabilise if the economy recovered earlier and/or investors had strong holding power.

The research house also expected selling pressure to accelerate when an additional 11,000 condominium units are completed in the next two years, with 60% of these units in the KLCC area.

It should be noted that the number of people putting up their properties for sale should not be used as a measure of actual transactions.

“With the rental opportunities and capital values in a downtrend, property investors will be pressured to unlock their cash to fund other investments,” it said.

Khong & Jaafar Sdn Bhd managing director Elvin Fernandez said due to the economic downturn, property values at Mont’Kiara and KLCC could return to levels that may be sustained by rental returns.

“How low they will go and whether they will overshoot on the downside will depend on the severity of the downturn, going forward,” he told StarBiz in an e-mail.

Fernandez noted that prices in these locations had appreciated steeply between 2005 and 2007, and to sustain these high prices, the rentals had gone up in tandem.

“But there was a constraint in the charging of rentals simply because the expatriate community was not about to pay or couldn’t afford such rentals,” he said.

OSK Research analyst Mervin Chow expected at least a 20% downside risk and prices to bottom in 2010.

“About 30% and 40% downside (in property value) is a reasonable expectation,” he told StarBiz.

He said KLCC and Mont’Kiara condominium prices had already come off by 10% to 20% since late last year. Some properties in these areas, however, still enjoy capital values close to their peaks last year.

By The Star (by K.C.Law)

Sime Darby unit achieves RM161mil property sales

KUALA LUMPUR: Sime Darby Bhd’s property division has, as of Sunday, generated RM161mil in sales, exceeding the expectation of the company since the Parade of Homes campaign was launched on March 6.

Attributing the surge in sales to the benefits given to home buyers, Sime Darby Property Bhd said the impressive sales haul was also a sign of a resilient property market.

In a statement, Sime Darby Property managing director Datuk Tunku Putra Badlishah said the main factors contributing to the strong sales were the Parade of Homes’ exclusive benefits, which included an interest rate of base lending rate minus 2.3%, special downpayment scheme, and no interest charged during the construction period.

“In addition to the very attractive financial packages offered, we are also very pleased to note that our customers are buying because of our good track record, quality products, reputation as a reliable developer, and most importantly the trust and confidence in the Sime Darby property brand name,” said Tunku Putra Badlishah.

The Parade of Homes campaign is being held in conjunction with MAPEX 2009 and continues until June 15, covering both residential and commercial properties in Sime Darby’s 10 townships.

Sime Darby Property’s first Parade of Homes campaign was launched in June 2008 and generated sales of RM246mil in nine days. The second campaign in November 2008 generated over RM146mil in sales.

Sime Darby’s freehold properties range from affordable homes to high-end residences in townships in Subang Jaya, Bukit Jelutong, USJ Heights, Bandar Bukit Raja, Ara Damansara, Denai Alam, Melawati, Nilai Impian, Planters’ Haven and Putra Heights.

Sime Darby Property is also organising a property showcase from April 3-12 at the Sime Darby Convention Centre.

By The Star

PNB confirms property merger being finalised

Permodalan Nasional Bhd (PNB) has confirmed it is finalising a merger to create a large property group and says it may undertake an initial public offering when the stock market recovers.

Business Times had reported that PNB was combining Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd under one roof to squeeze more profits from them.

The three firms were taken off the stock market by PNB a few years ago, allowing the merger to be done out of investors’ sights.

President and group chief executive Tan Sri Hamad Kama Piah Che Othman said the move by PNB to make its companies more efficient is an ongoing exercise.

“Not only these counters, but many counters also. We have to keep on looking at things so that we can improve from time to time,” he said at a briefing in Kuala Lumpur yesterday.

As for raising money from an IPO of the merged entity, Hamad Kama Piah said: “It is possible … we have to make sure the right time and so on”.

Based on information from the Companies Commission of Malaysia, the merged entity would have a revenue of RM1.31 billion for 2007.

This means that it could rival SP Setia Bhd, Malaysia’s most valuable property developer, which made RM1.33 billion revenue in financial year 2008.

The property merger is due to be completed next month. It would probably be the second mega mer-ger under the PNB group of companies.

In 2007, the state-run fund manager completed the merger between Sime Darby Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd to create the world’s largest listed plantation group.

By Business Times (by Hamisah Hamid)

PNB merger exercise to be completed by June

PETALING JAYA: Permodalan Nasional Bhd (PNB) will merge the property companies it has taken private and the exercise may be completed by June, according to a source.

“It is true the merger plan is on,” the source said.

“Once the merger is completed, PNB will have one big property company that specialises in investment and township development and (it can) re-develop the massive landbank owned by these three companies.

“It is still a big question whether these companies will maintain their names after the merger,” the source added.

PNB president and group chief executive officer Tan Sri Hamad Kama Piah declined comment on the matter.

PNB wants to merge the property companies it had taken private, namely Island & Peninsular Bhd (I&P), Pelangi Bhd and Petaling Garden Bhd, to create “specialisations” in certain segments of the property sector and to unlock the potential of its landbank, according to the source.

The merged entity would reportedly generate about RM1.31bil in revenue.

I&P, the biggest of the three companies, is highly experienced in township development.

Its projects include Bandar Kinrara in Puchong, Taman Setiawangsa in Kuala Lumpur, and both Taman Inderawasih and Desa Mutiara in Penang.

It has a massive landbank of over 5,263ha in the peninsula.

Pelangi is a renowned property developer in Johor with residential and commercial developments.

The company’s townships include Taman Pelangi, Taman Perling, Taman Rinting and Taman Pelangi Indah.

Its commercial developments include Plaza Pelangi, Pelangi Leisure Mall, Perling Mall, Menara Pelangi and Pelangi Golf Driving Range.

Petaling Garden was a pioneer property developer in Petaling Jaya in 1958.

Its remains focused on property development and has sold more than 10,000 properties, located mainly in the Klang Valley.

By The Star (by Edy Sarif)

IOI extends takeover deadline

PETALING JAYA: IOI Corp Bhd has extended the deadline of its takeover offer for the remaining shares it does not own in IOI Properties Bhd (IOI Prop) by 14 days to March 31, as the acceptance level of 89.68% is not enough to trigger a compulsory acquisition of the latter.

Under the regulations, shares from minority shareholders can be compulsorily acquired by IOI Corp if the company manages to obtain more than 97% of equity in IOI Prop, according to Minority Shareholder Watchdog Group (MSWG) chief executive officer Rita Benoy Bushon.

“The company needs 97% to trigger a compulsory acquisition which would subsequently lead to a de-listing.

“Should it fail to get this by March 31, it has two choices. It can either write to Bursa Malaysia to seek a delisting or it can go through an EGM,” Bushon told StarBiz.

“At the EGM, if 10% dissent, its proposals will not go through,” she said.

“IOI Corp has already acquired 76% of the shares in IOI Prop. For the compulsory acquisition to take place, it requires 90% of the outstanding offer shares of about 24%, which works out to be about 21%,’’ she explained.

Therefore, according to Bushon, this 21% of shares required added to the 76% already obtained in IOI Prop totals 97%. “This means that IOI Corp (which has an acceptance level of 89.68%) needs about 6% more to compulsorily acquire IOI Prop.’’

She said under normal circumstances, a reasonable price to minority shareholders should be at net tangible asset per share. “Given current economic conditions, the discount to IOI Prop’s current net tangible asset per share which is about RM3.90 now, should not be too steep,” Bushon said.

“Boustead Properties Bhd was accorded a premium to its net asset per share when it was taken private last year,” she noted.

In a filing to the stock exchange, IOI Corp said it did not intend to extend the closing date of the offer beyond March 31 and in addition, had no intention to raise the offer price.

IOI Corp had on Feb 4 proposed to privatise IOI Prop, its property arm, at a consideration of RM2.598 per share. The plantation giant made a voluntary takeover offer for the remaining 24% stake it did not own in IOI Prop, payable through a combination of shares in IOI Corp and cash.

Under the buyout scheme, IOI Corp offered IOI Prop minority shareholders to voluntarily swap one IOI Prop share for 0.6 share in IOI Corp plus 33 sen cash.

Shares in IOI Prop closed eight sen higher at RM2.50 while IOI Corp closed six sen up at RM3.80 yesterday.

By The Star (by Yvonne Tan)

Qatar proceeds with multibillion-dollar building projects

LONDON: As Dubai scales back plans to build a waterfront development twice the size of Hong Kong Island, 30,000 workers off the coast of Doha in Qatar are constructing a US$14 billion (US$1 = RM3.67) luxury residential project called the Pearl.

The first residents will move into condominiums costing as much as US$1.4 million on a man-made island this summer, and boutiques including the likes of Sonia Rykiel and Stefano Ricci are already doing business on the marina looking onto the Persian Gulf.

From the quayside, where yachts are moored, building sites are visible in the distance with cranes stretching up into the sky.

Gas-rich Qatar, the Gulf's fastest-growing economy, is spending more than US$100 billion in the next three years on projects including a new financial district and international airport.

This comes as Dubai suffers a real-estate crash spurred by its dependence on banking and tourism, and the region's oil-producing economies, such as Saudi Arabia, dip into reserves to avoid recession.

"Qatar doesn't seem to have any problems; the money is there," said Lionel Scharly, chairman of the French luxury design company Scharly Designer Studio.

After visiting Dubai in December and deciding not to do business, he is bidding for work at the Pearl and plans to open an office in Doha.

"In Dubai, everyone is talking about the crisis," Scharly said from Paris.

A sheikhdom smaller than the US state of Connecticut, with a population of about one million, Qatar last year had the world's second-highest per capita income, at US$101,000, after Liechtenstein.

It is hurt less than neighbours by the slump in oil prices to US$47 a barrel, from more than US$147 last July, because of a bet its rulers made 25 years ago: natural gas.

By Bloomberg

US housing starts jump 22pc

WASHINGTON: US home construction starts and permits saw a surprise jump in February from 50-year low levels in a positive sign for the moribund home market at the epicentre of global financial crisis.

Housing starts - or privately owned new homes on which construction has started - soared 22.2 per cent to a seasonally adjusted annual rate of 583,000 units after seven months of decline, the Commerce Department said.

It was much higher than the revised January estimate of 477,000 and consensus forecast of 450,000.

Permits to build new homes, an indicator of future activity in the housing sector, rose three per cent to a seasonally adjusted annual rate of 547,000 in February, the department said.

It was above the revised January rate of 531,000 and consensus forecast of 500,000.

Starts and permits were at their lowest pace in January since the Commerce Department began tracking the data in 1959.

A home mortgage meltdown triggered financial turmoil and plunged the world's biggest economy into recession in December 2007.

Analysts were baffled by the rise in housing starts led by the notoriously volatile multifamily segment and aided by weather conditions, saying they do not see concrete signs of recovery in the housing market yet.

The real good news, they said, was the slight recovery in single-family building permits - for the first time in nine months - and the stabilisation in single-family starts.

The leap in starts propelled by an 82.3 per cent surge in multifamily sector reversed almost all the drop in starts over the previous three months, analysts noted.

"We see no specific factor that might explain this jump; multifamily starts are always noisy but this is exceptional," said Ian Shepherdson of High Frequency Economics.

"With new home sales still falling and the (inventory) at a record (high) there is no reason for homebuilding to rise," he said.

"This is a temporary rebound, not a recovery, though it likely means the post-Lehman crash is over." The September 2008 collapse of Lehman Brothers, one of Wall Street's most established investment banks, on the heels of the home mortgage crisis sparked turmoil on financial markets across the world.

The latest figures showed that the increase in housing activity was concentrated in the wealthiest Northeast region, where starts jumped 89 per cent.

Analysts were also unsure whether this month's gain - even at a more measured pace - can be sustained in March.

The February figures were "clearly not a sign of an upturn in the sector but could be at best considered as a first sign of stabilisation," Marie-Pierre Ripert of Natixis said.

"We will wait for these data to be confirmed in the months ahead before changing our view on the real estate market," Ripert said.

By AFP

Brisk sales for IJM’s condo

An artist's impression of IJM's Summer Place project

GEORGE TOWN: Eager buyers snapped up about 40% of IJM Land Bhd’s newly launched Summer Place condominium units on the island over the weekend.

The sales translated to about RM70mil of the RM174mil project off the Jelutong Expressway, managing director Datuk Soam Heng Choon told StarBiz.

The 22-storey Summer Place comprises 531 units with built-up areas measuring between 1,012 and 1,464 sq ft, priced from RM273,000 to RM460,000.

Soam said the project was about 40% completed.

Construction work started in the third quarter last year and is scheduled for completion in 2011.

“We are providing free legal fees on the sale and purchase agreement, free legal fees on loan and zero interest till completion of construction.

“The selling point is that it is near the harbour, the Penang Bridge, located along the new promenade off Jelutong Expressway, and is close to town.

“Furthermore, the pricing from RM273,000 is very affordable,” Soam said.

By The Star (By David Tan)

Large cash reserves put I-Bhd on strong footing

SHAH ALAM: Property developer I-Bhd has the chance to grasp opportunities in view of its large cash reserves, said chairman Tan Sri Hamad Kama Piah Che Othman.



“At a time when many companies are facing a credit squeeze, the group remains financially strong with RM120mil cash and no borrowings,” added Hamad, who is also CEO of Permodalan Nasional Bhd (PNB).

Hamad, who was appointed I-Bhd chairman last month, said PNB was the major bumiputra shareholder with an 18% stake in the company,

Although I-Bhd was still small, he noted that it made a record pre-tax profit of RM16mil last year.

He observed that I-Bhd launched i-City three years ago as it re-invented itself from a digital lifestyle products manufacturer into a developer that provides a digital work environment.

“And today, the building blocks are all coming into place,” he told reporters after the company AGM at i-City here yesterday.

In another dimension of development, it is also planned for an International Islamic Financial Hub be set up in i-City.

“In line with this, our first phase of development, which is the Cybercentre 1 Office Suite, is syariah-compliant,” Hamad said.

The establishment of Islamic financial services is part of the national agenda in which i-City has a role to play. “There are many Malaysian companies, including those within the PNB group, which are looking at this sector and I believe there are many opportunities for I-Bhd to work with them to accelerate the i-City development,” Hamad said.

On the impact of the global recession, newly-appointed CEO Lim Boon Siong said I-Bhd was reviewing and adjusting the phases to be launched in view of that.

Even so, the company is sticking to its target to complete i-City, a project with a gross development value of RM2bil by 2015.

Lim, who was appointed CEO last month, said the first phase of i-City was completed just three to four months ago. Following completion of development, tenants are being sought for the offices.

“There are a lot of enquiries. Logica of Britain, for example, is already here,” he said. AmBank Bhd has also signed up.

Signing tenancies for the rest would take longer, which was not unusual at this time, he added.

In a joint venture with the Al Rajhi banking group, 80% of i-City’s phase one was sold to the Middle Eastern group for RM95mil in July last year.

Eu Hong Chew, a non-executive director, said i-City was developed to cater to the knowledge economy and was positioned to uniquely serve such companies with multi-telco and high-speed Internet facilities.

By The Star

I-Berhad may partner PNB firms in developing i-City

I-BERHAD, developer of the i-City project in Shah Alam, may work with companies under the Permodalan Nasional Bhd (PNB) stable to enhance its development, its chairman said.

Chairman Tan Sri Hamad Kama Piah Che Othman, who is also the president and chief executive officer of state-owned investment fund PNB, said I-Berhad wants to rope in more partners in the information technology area and may work with other PNB-owned companies.



"PNB is in many sectors. Some of those in the technology and property area can work with I-Berhad if there is good synergy. We'd want to see more profit for PNB ultimately," Hamad Kama Piah said in a press conference after I-Berhad's shareholder meeting in Shah Alam yesterday. PNB holds 18.5 per cent of I-Berhad.

I-Berhad started as a digital lifestyle products maker, but had three years ago launched i-City as part of plans to re-invent itself into a property developer that provides a digital working environment.
The RM2 billion commercial township has already forged strategic alliances with global leaders in the digital industry, such as Intel and Cisco, and has secured investments from ServCorp of Australia and Al-Rajhi Banking Group of Saudi Arabia.

The company made a record pre-tax profit of RM16 million last year and has over RM120 million in cash with zero borrowings. Its net tangible assets have increased to RM1.54 per share, chief executive officer Lim Boon Siong said, and there is still a substantial part of i-City to be developed.

Only a tenth of the available land has been developed and the first phase, which was launched three to four months ago, has seen good tenant response, Lim said.

The value of the remaining 90 per cent of land at i-City has tripled in value compared to its original cost, Lim said.

The development relies on high technology to help tenants save operation costs, while the syariah-compliant office suite in the first phase helps draw Islamic finance investors.

The two selling points will help the project in an economic downturn, he said, as more cost-conscious companies would prefer i-City while the Islamic finance players are more resilient in this crisis.

By Business Times (by Chong Pooi Koon)

Parade of Homes rakes in RM86m sales in 4 days

Sime Darby Property (SDP), the property arm of Sime Darby Bhd, made sales of RM86 million in just the first four days of its third "Parade of Homes" marketing campaign.

The company started the campaign in June 2008. Malaysia's property market faces soft demand amid an economic slowdown and developers are giving incentives like lower downpayments to pull buyers.

SDP's offers proved to be attractive as almost 1,000 people visited its booth at a property exhibition and its 10 sales galleries, it said in a statement.

Among others, SDP offers a lower interest rate on the loan and buyers can pay the downpayment in 12 instalments. The third campaign started on March 6 and will end on June 15.



"Evidently, our continuous research has given us an insight into property buyers' needs and concerns. These findings have allowed us the ability to offer property buyers unique packages during our Parade of Homes campaign," managing director of SDP Datuk Tunku Putra Badlishah said in the statement.

SDP's first Parade of Homes campaign attracted more than 15,000 visitors and generated sales worth more than RM246 million over nine days.

The second campaign in November 2008 made over RM146 million in sales.

Results of the first two campaigns have also helped SDP to post a 7 per cent increase in revenue to RM566 million in the first half to December 31, 2009.

By Business Times

Casa del Rio Melaka apartments may be sold for RM20m in all

The 32 high-end apartment units in Casa del Rio Melaka, located along the Malacca river, may be sold for an estimated RM20 million collectively.

These apartments form part of the RM102 million Casa del Rio Melaka boutique hotel, mall and apartment project which will open in June 2010.



"The apartment units will measure between 1,134 sq ft and 2,109 sq," Tan Sri Syed Yusof Syed Nasir, group managing director of Casa del Rio (Malaysia) Sdn Bhd, the project developer told Business Times in an interview.

Set to be launched within the next two months, these two-bedroom and three-bedroom units are said to have received encouraging response.

Once they are sold, the buyer has the option of appointing Casa del Rio to manage for them.

The four-storey building will also have 64-bedroom suites that will all sit on 1.29ha along the Malacca River.

Meanwhile, Syed Yusof expects the hotel to register an average occupancy of 60 per cent to 65 per cent in the first year of operations.

This could rise to 70 per cent in the second year.

"We expect a positive cash flow. We are looking at about RM450 per night to RM1,000 per night for the larger suites," added.

Casa del Rio is Spanish for "Home by the River". The hotel has Spanish influences, but also retains the local character in keeping with Malacca as World Heritage site.

Syed Yusof also operates the 570-room Concorde Hotel Kuala Lumpur, the 381-room Concorde Shah Alam and the 338-room Concorde Inn KLIA.

By Business Times (by Vasantha Ganesan)

IOI Corp to stick to offer price

IOI Corp Bhd will not offer more than RM2.598 per share and will proceed with taking IOI Properties Bhd private.

In response to a news report of IOI Prop minority shareholders holding out for better offer, IOI Corp said in the light of the current global economic downturn, the offer is fair and reasonable.

"The offer price of RM2.598 represents a 20 per cent premium over the five-day weighted average price of IOI Prop up to January 30 2009 of RM2.16," it told the stock exchange yesterday.

Based on the annualised first half earnings of IOI Prop's current financial year of 22 sen a share, the offer price of RM2.598 translates to a price-earnings ratio of 11.8 times, comparable to peers listed on Bursa Malaysia.
In August 2008, IOI Prop completed a rights issue to raise funds for its land development in Sentosa Cove, Singapore.

Close to 94 per cent of the total rights issue offered to all shareholders was subscribed by IOI Corp at RM4.85 per share, which contributed to an increase in IOI Prop's net tangible asset.

IOI Prop's obligations to its Singapore joint ventures in Sentosa Cove amounts to S$1.5 billion (RM3.6 billion).

In privatising IOI Prop, IOI Corp's cash outlay is RM64.3 million. If IOI Corp's RM2.598 offer is completely in cash, the outlay would balloon to RM506 million.

Given the current economic conditions and the need to conserve cash, IOI Corp cannot justify such a large cash outlay.

In the recent rights issue of IOI Prop, IOI Corp had already committed RM737 million in cash outlay.

There is high liquidity in IOI Corp's shares. It is easy for minority shareholders to convert their IOI Corp shares to cash, if they wish to.

AmInvestment Bank said to date the level of acceptance from IOI Prop's minority shareholders, including retail shareholders, had been strong.

By Business Times

Sime campaign netts RM86m property sales

Sime Darby Property's latest "Parade of Homes" campaign saw property sales of RM86 million within the first four days, showing the property market to be resilient amid the economic slowdown.

The campaign was held in conjunction with MAPEX 2009 from March 6 to June 15, 2009, covering both residential and commercial properties in Sime Darby's 10 townships.

"The main factors contributing to strong sales are the Parade of Homes exclusive benefits which include an interest rate of base lending rate minus 2.3 pc, special down payment scheme and no interest charge during the construction period," said Sime Darby Property's managing director Datuk Tunku Putra Badlishah.

Its first Parade of Homes campaign in June 2008 attracted over 15,000 visitors and generated sales worth more than RM246 million in nine days, the company said in a statement today.

The second campaign in November 2008 generated over RM146 million in sales even as Malaysians began to face the pandemic effects of a faltering global economy, it said.

"The success of the previous campaigns has contributed to the commendable first half of 2008 financial results of Sime Darby Property," the company said.

Revenue increased by 7.0 pc to RM566 million compared to the first half of the previous year .

Sime Darby's freehold properties range from affordable homes to high end residences with townships in Subang Jaya, Bukit Jelutong, USJ Heights, Bandar Bukit Raja, Ara Damansara, Denai Alam, Melawati, Nilai Impian, Planters' Haven and Putra Heights.

In conjunction with the latest campaign, the company is organising a property showcase from April 3 to 12 at the Sime Darby Convention Centre.

By Bernama

TA may delay REIT launch

TA ENTERPRISE Bhd (TAE), which aims to list its property unit by April, may delay launching a real estate investment trust (REIT) due to unfavourable market conditions, company sources said.

Business Times had in 2007 quoted TAE group managing director and chief executive officer Datin Alicia Tiah as saying that the stockbroker and property developer was aiming to launch a property REIT by this year, with three Malaysian and foreign assets worth over RM1 billion.

But plans have changed in the last one year that the company is now eyeing a hospitality REIT, after buying Coast Whistler Hotel in Vancouver, Canada, now worth C$65 million (RM191 million) and The Westin Melbourne, a five-star hotel in Australia, for RM390 million last year, a source said.

TAE also owns the five-star Radisson Plaza Hotel in Sydney, Australia, currently worth A$120 million (RM286 million).
These brings to total three hotel assets it has to do a hospitality REIT. Its other prime properties are Menara TA in Kuala Lumpur, valued at RM230 million, and Teresan Centre, a triple A commercial building in Vancouver, worth C$180 million (RM529 million).

But a source said TAE is being cautious on its plan as some Malaysian REITs have been sold down and are trading below their net asset values as the property market and rental yields soften.

"There's negative sentiments and I don't think the market place can take too many things now. TAE will, however, continue to work on the plan and play it by ear. It will launch rightfully, to enhance shareholders' value," the source added.

The challenges facing REITs nowadays are the inability to raise capital due to tighter credits and lack of investor confidence.

When contacted by Business Times, Tiah said the company is still looking at launching a REIT.

"We have yet to decide whether it will be a property or hospitality REIT. However, the outcome will depend on opportunity and the market condition," she said in an email reply.

Tiah said the company is now focused on buying more properties in Malaysia and overseas, particularly undervalued or distressed assets in the hospitality industry.

"There are many prime properties held by hedge funds which are currently available and going cheap, following a massive redemption by them," she added.

By Business Times (by Sharen Kaur)

IOI Prop minority shareholders hold out for better offer

RETAIL minority shareholders of IOI Properties Bhd are holding out for a better offer price in the proposed privatisation of the company.

Following a dialogue organised by the Minority Shareholder Watchdog Group (MSWG) on Friday, the retail minority shareholders had expressed the following concerns, according to a statement from the MSWG to StarBiz:

One, they expect a better offer price. Retail minority shareholders prefer to hold out and not accept the voluntary takeover offer (VTO) unless they are given a better offer price.

And second, they believe the offer should come in one preferred option, to be fully satisfied in cash.

These investors had originally wanted to invest in the property sector. The swapping of IOI Prop shares for IOI Corp shares would inevitably expose them to the plantation industry which is now facing a downturn.

IOI Corp had offered to buy the remaining shares it does not own in IOI Prop for RM519mil, through an offer of 33 sen in cash and 0.6 IOI Corp shares at an issue price of RM3.78 each for the remaining stock.

The proposal by IOI Corp to take its property arm private values IOI Prop at RM2.598 a share. IOI Prop closed last Friday at RM2.43. However, the investors view the offer was below IOI Prop’s revised net tangible value.

Moreover, MSWG said: “Retail minority shareholders are now disappointed, given the fact that the board and management of IOI Corp had expressed in early 2007 that they would not take IOI Prop private.’’

IOI Corp executive chairman Tan Sri Lee Shin Cheng had said in October 2006 that there was no plan at the time to take IOI Prop private. However, he added that nothing was static and if there was a need to change the company would do so.

Retail minority shareholders also raised the concern that the acceptance level of the VTO is not disclosed by the board and management of IOI Prop on a daily basis.

“The last disclosure of the public spread of IOI Prop of 23.06% was made on Feb 23 after the notice for the VTO was made on Feb 4.

“In the spirit of transparency, retail minority shareholders have proposed that the acceptance level of VTO be disclosed daily to keep the market fully informed on the progress of the offer,’’ said MSWG chief executive officer Rita Benoy Bushon.

She said MSWG would call the management of IOI Prop today to find out the acceptance level of the offer so as to keep minority shareholders fully informed on the latest status of the offer.

By The Star (by Yap Leng Kuen)

Mont’Kiara’s glooming challenge

Mont’Kiara is a sought after address for high-end condominiums.

The best way to check out a location is to take a drive. If the aim is to determine whether the place is occupied, take that drive at night. And so there is Mont’Kiara ahead of you, nice and sprawling, with a lot of high-rise condominiums, many of them in darkness.

The older and more established ones are about three-quarters full, the newer ones are struggling at between 30% and 50% occupancy. With about 2,000 units added to the market this year, this general average could fall further, says Regroup Associates Sdn Bhd executive director Paul Khong.

As the economic crisis deepens, questions about the state of some locations have risen. Ireka Corp Bhd has been, by far, the most forthright developer about the situation there. Though cautious, executive director Lai Voon Hon admits it will not be rosy for the short term. Ireka has built about 2,000 units there.

“We will see a slow down in the property market in terms of sales volume. That is a result of people’s confidence. But the present scenario will not be as bad as the last 1997/98 Asian financial crisis,” says Lai, who has chalked up six projects there, some of which are joint-ventures with Singapore’s CapitaLand group.

Because of the tough times across the board, buyers are taking a wait-and-see attitude with big purchases such as these. “Sales have been slow,” says Lai.

“Some think the situation will recover in the third quarter, others say it will take a year. But developers are not dropping their prices. It is in the secondary market that buyers may be forced to sell, preferring to convert their assets to cash. We will bound to have that as many units will be completing this year.”

There are about 6,800 completed units there. The ongoing projects will comprise another 5,000 units, out of which about 2,200 units will be handed over this year.

Both developers and analysts say prices there have not gone up as quickly or significantly as KLCC. Most of the prices are close to construction price and land cost.

“Developers are not making super profits. Even if they drop, it will settle at a fair level,” says Lai, adding that the normal profit in Malaysia generally is 5% to 30%.

While Lai and the real estate fraternity believe Mont’Kiara will ride out the downturn, there are several issues brewing there. Several weeks ago, StarBizWeek highlighted the situation in KLCC. But while that location boasts emblems of Kuala Lumpur’s boom and the glittery lifestyle it will one day spawn, Mont’Kiara is not iconic.

For more than a decade, expatriates have singled out Mont’Kiara when posted to Kuala Lumpur. They still do.

Most of the projects have a large expatriate community that accounts for about a third or more of its occupants, a fact that Sunrise Bhd used to be very proud of some years ago.

Sunrise built about 4,000 units of condominiums there, about half of what’s available today. It is the largest developer there. With retrenchment high on the list, some of them may be going home.

Says an analyst: “Mont’Kiara’s saving grace is that it has proven to be a property investment hot spot. Because of the fantastic yield it generated years ago of up to 10% or more, Malaysians and foreigners invested in that market. (The yield is about 7% to 8% today.) Many of them have several units. With retrenchment running high, rental may be an issue. This applies to both the rental and for sale markets.”

Those who bought earlier are also expected to convert their assets to cash. Agents and valuers have mixed views how much prices have dropped but the range is between 5% and 20%, depending on the project, from its peak. There are different grades of condominium in that location, with prices ranging from about RM450 per sq ft to about RM900 psf. If prices and rental continue to spiral downwards, the older units will suffer.

Says Khong of Regroup: “We are currently looking at about 10% to 15% drop in rental rates from the peak at this moment and would expect it to move southwards a bit more when the bulk of the uncompleted units come into the market.

“Previous rentals were trading at about RM3 to RM4 psf for the mid-grade projects and currently we are seeing lower asking rental at about RM2.50 to RM3.50 psf. The older and more established ones are enjoying about 70% to 85% occupancy whilst the new ones are struggling at about 30% to 50% currently. With more and more new projects completed, this general average could be therefore lower.”

Another consideration when buying into that market is Mont’Kiara’s neighbour, Sri Hartamas. The two largest developers there are Hong Kong-based Mayland group which developed the Plaza Damas shopping mall, and Dutaland group with its upcoming Kenny Heights project.

While Mont’Kiara units range between 1,200 sq ft and 3,000 sq ft or more, the units offered by Mayland average about 500 sq ft. On a per acre basis, this means there will be more units.

At this point, the developer has already built 1,800 units above and around Plaza Damas. Another 1,500 units will be added to the Sri Hartamas market in about three years when it completes Hartamas 3, which is located across Plaza Damas.

Dutaland has about 90 acres in Hartamas. It is also expected to have high-rise in that location. While the location is holding out well, the pressure is mounting.

By The Star (by Thean Lee Cheng)

TH bullish about new township

TH Properties Sdn Bhd is confident that the location of its latest project, Bandar Enstek, will attract and boost sales despite the current economic slowdown.

Located 10 minutes from the KL International Airport (KLIA) and 20 minutes from Putrajaya and Cyberjaya, the township is well connected to highways such as the North South Expressway and Express Rail Link.

Chief executive officer Zaharuddin Saidon says about 60% of the buyers are civil servants working in Putrajaya while the remaining worked at the KLIA and other parts of the Klang Valley.


Zaharuddin Saidon

Although the country is starting to feel the impact of the crisis, the company’s target buyers, who are mostly civil servants, are still secure in their jobs, he says.

Bandar Enstek comprises residential, commercial and industrial properties with a gross development value of RM9.3bil.

It is scheduled for completion in 2025.

TH Properties, which has 20 years’ experience as a developer, has other projects including Bandar Muazzam Shah in Pahang and Warisan Puteri township in Negri Sembilan.

Bandar Enstek is now the biggest development undertaken by the company.

The houses at Bandar Enstek are priced from RM170,000 for single-storey houses, RM250,000 for double-storey terrace houses, RM300,000 for super link houses and RM600,000 for bungalows.

“TH Properties is the only developer in the country to offer a five-year warranty for any of its properties.

“Our gearing is zero and our funds are all internal. That’s why not a single project by us has been abandoned, “ he says.

Going forward, he says, TH Properties plans to unlock land belonging to its parent Tabung Haji for development purposes.

It is also moving into other international markets such as Saudi Arabia.

The company will be launching a new commercial building in Kuala Lumpur by April.

By The Star (by Edy Sarif)

Players concerned over speed, efficiency and transparency

To hold back Malaysia from slipping into a recession, the Government has unveiled an unprecedented RM60bil stimulus package, dubbed the mini budget, on Tuesday. But just how effective the measures will be in arresting a decline in consumption and giving a boost to the economy is largely dependent on the speed, efficiency and transparency in the implementation and disbursement of the allocated funds to the targeted industry groups and population.

The sooner the funds are disbursed to the critical sectors, the higher the chance of them being put to good use to retard the fast deteriorating economic and business environment.

Going by the massive debilitating impact of the US-led global financial crisis to the economies of countries around the world, Malaysians and the business people will likely remain concerned over the extent of the impact to the country’s economy in the medium term.

They are not about to lift their guard and start spending just yet as many uncertainties, including potential job cuts and business failures, are still looming and posing a real threat to a demand-led recovery.

As such, the latest measures are not expected to result in a quick recovery in consumption and the economy but it will take time before the funds are trickled down to the people.

Property industry players lamented that the proposed tax relief on interest payment for property buyers will not have a significant impact on property sales as most established developers have already introduced end-financing schemes which fully absorb interest cost during the construction period.

Under the latest measure, the Government has proposed a tax deduction of up to RM10,000 per year be given on housing loan interest for house purchased from developer or third party.

The incentive will be given for three consecutive years from the first year the housing loan interest is paid but is only applicable to resident Malaysian citizens and limited to one residential property with sale and purchase agreement signed between March 10, 2009 and Dec 31, 2010.

Given that the interest saving will only be realised in arrears upon filing of annual tax returns, it is less impactful compared with what the developers are already offering under their 5/95 or 10/90 house financing programmes where house buyers only need to come out with minimal down-payments of either 5% or 10% of the property price, while the full interest payment over the construction period will be borne by the developers.

The tax incentive may at best cushion the impact of falling sales rather than boost it.

To maximise the benefit of fully utilising the tax relief amount of RM10,000, a buyer has to sign up for a house priced at more than RM385,000, while buyers in the low-end segment of property priced at less than RM100,000 will not stand to benefit due to their non taxable income bracket.

Developers were in fact hoping for government grants for first-time house buyers of affordable housing priced at less than RM300,000; further relaxation of Foreign Investment Committee rules, particularly for commercial properties; and a waiver or reduction in stamp duties for homes priced above RM250,000.

Meanwhile, expectations of corporate and individual tax cuts also did not materialise.

With interest rate currently at record low, housing affordability has in fact improved but the main concern of house buyers is the uncertainty of the economic environment as well as their job security.

For a recovery in the property sector, we have to let the dynamics of the market to come into play where supply and prices have to fall to a level from where the next market upturn will take place.

Temporary measures to boost property demand especially high-end and speculative type will only prolong the problem as supply of property currently outstrips demand.

It looks like more effective measures are needed to address the many challenges facing the property sector which has seen a severe contraction in sales since the crunch of the global financial crisis reached the country’s shores in the third quarter last year.

Policy measures should focus on reviving the underlying economy in order to have any effect on the people’s confidence and market sentiments.

Besides allowing housebuyers who have been retrenched to defer the repayment of housing loans for a year, hopefully the government will do more to improve the housing affordability of the low to middle income group to stem the risk of rising non-performing housing loans and massive housing foreclosures from happening.

Deputy news editor Angie Ng believes that property, being a tangible asset, remains one of the most viable investment instruments around during the good and bad times.

By The Star (by Angie Ng)

IGB, KLCC Prop shares soar

IGB Corp, Malaysia's biggest owner of commercial properties, rose the most in more than two weeks in the local bourse after Citigroup Inc said investors should buy shares of asset-owners instead of developers.

Shares of IGB jumped 5 per cent to close at RM1.25, the most since February 24. It's the best performer on the benchmark Composite Index, which climbed 0.6 per cent.

KLCC Property Holdings Bhd, owner of the Petronas Twin Towers in Kuala Lumpur, rose 2.8 per cent, the most in a week.

"We prefer companies with grade-A office exposure and property investment activities, versus developers," Citigroup said in a report yesterday. IGB and KLCC are its "top picks", it said.
Property asset owners with long-term leases have more "defensive" earnings that will better shield them from the slumping economy compared with developers such as SP Setia Bhd which will be hurt by dwindling home sales, HwangDBS Vickers Research Sdn Bhd said in a note to clients yesterday.

Malaysian Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak this week warned that the Southeast Asian nation's economy may shrink this year for the first time in a decade and announced a RM60 billion stimulus plan.

IGB shares also climbed after the Employees Provident Fund, Malaysia's biggest pension fund, bought 1.2 million shares in the company, lifting its stake to 8.1 per cent, a stock exchange filing showed on Thursday.

SP Setia, Malaysia's largest property developer, dropped 3.1 per cent to RM3.08, the lowest level since December 26.

By Bloomberg

Work on new LCCT to start in mid-year

Construction of the new RM2bil low-cost carrier terminal (LCCT) is expected to commence by mid-year for completion in the third quarter of 2011, says builder and operator Malaysia Airports Holdings Bhd (MAHB).

MAHB managing director Datuk Seri Bashir Ahmad says the project will be funded by the company via loans.


Datuk Seri Bashir Ahmad briefing the media on the new LCCT-KLIA.

“We have no debts so it is no problem to raise funds,” he said at a media briefing in Subang yesterday.

To this end, Bashir says the company already has the offer letters.

Contracts to build the new terminal will be tendered out over the next few months, he adds.

The new LCCT, to be built near the KL International Airport (KLIA), will be able to handle up to 30 million passengers when operational, with the potential for 45 million passengers per annum.

Low-cost carrier AirAsia Bhd and Sime Darby Bhd’s proposal to build a new LCCT costing RM1.6bil in Labu, Negri Sembilan, was rejected by the Government last month.

Bashir says the current LCCT will be converted into a cargo terminal.

As for possible lower charges at the new LCCT, Bashir says: “All aeronautical charges will be decided by the Government.

“Our charges are not related to the cost of the new terminal. They (charges) do not go up automatically when we build new terminals.”

To a question on why the cost is higher than the originally proposed RM1.6bil by AirAsia and Sime Darby, Bashir says this is because the terminal will be “bigger” and with more facilities.

“The design of the terminal, to be located 1.5km away from the main KLIA terminal, will have to be worked out but the construction of the new runway can start immediately.

“We are talking to the airlines and finalising the design,” he says, adding that the terminal can be used by both low-cost and full service carriers.

“AirAsia has seen the location of the new LCCT and is happy with it. It has made it clear that it doesn’t want to use aerobridges. We will take its views into consideration but will also be talking to other airlines which may want to use aerobridges. We will see how we can provide that.”

To a question, Bashir says MAHB is in discussions with Express Rail Link Sdn Bhd to extend its current connection to the new LCCT.

On the 50% rebate in landing charges as announced in the mini budget earlier this week, Bashir says it will not affect the company’s bottomline. “We are working with the Government on a revenue-sharing basis for the landing charges,” he says.

MAHB currently makes RM180mil to RM200mil a year from landing charges.

Responding to another question, Bashir says MAHB had in August 2007 appointed the joint-venture company of Netherlands Airport Consultants BV and KLIA Consultancy Services for the preparation of a National Airport Masterplan for the country, which included the development of a LCCT.

“It took us 16 months to study this (LCCT plan). We did it professionally,” he adds.

Separately, he says he anticipates “0% growth” this year for its airports, owing to the economic slowdown which will affect passenger movement. “We do expect to remain profitable.”

Other than KLIA and other domestic and international airports in Malaysia, MAHB also owns stakes in several foreign airports, including India’s Delhi International Airport. It also has other businesses, such as retail.

By The Star (by Yvonne Tan)

Tallest Four Seasons coming up in KL

TWO tycoons and a royalty will go ahead and build the RM2.5 billion Four Seasons Place in Kuala Lumpur although a global economic crisis threatens to hurt demand for expensive hotels and apartments.

The much awaited property, located next to the Petronas Twin Towers, will be ready in 2012, says its developer Tan Sri Syed Yusof Syed Nasir.

It comprises a hotel, apartments and a mall, and will be the world's tallest Four Seasons development.

Four Seasons Place is being built by Venus Assets Sdn Bhd, a firm controlled by Ipoh-born tycoon Ong Beng Seng, Syed Yusof and the Sultan of Selangor.

"We are committed to the project even during the downturn as it has a huge multiplier effect," Venus Assets chairman Syed Yusof told Business Times in a rare interview.

It expects to hire contractors for the building in the third quarter of the year.

Venus Assets bought the prime 1.05ha site for RM90 million in 2003 from the estate of the late Khoo Teck Puat, the former major shareholder of Standard Chartered plc, a British bank.

"We received the development order (last December) and we are now evaluating various proposals from the contractors to do the job. We have completed piling works, he said.

Piling work for the building, located between Wisma Central and Menara Maxis, started in 2007, two years after the project was announced.

"There was a pause in the project only because we were redesigning the building in terms of positioning and the composition.

"Previously, the Four Seasons was supposed to encompass two towers, but now it will all be a single 65-storey tower," Syed Yusof said.

The redesigning meant a new proposal had to be submitted to the authorities for approvals and it took time to obtain the green light.

The building, described as futuristic and sleek, will complement the Twin Towers and enhance the Kuala Lumpur skyline.

"We have included a 150,000 sq ft of retail component into the tower. The hotel will have 250 keys of which 150 are hotel rooms and 100 serviced apartments.

"There will also be 140 units of apartments which will be sold," Syed Yusof said.

The entire component will be ready simultaneously and will be managed by Four Seasons.

The apartments, which start from 3,000 sq ft per unit, will be sold for about RM2,500 per sq ft.

"The cost of construction for all components including land and interior design is RM1.4 billion and the estimated gross development value of the project is RM2.5 billion," Syed Yusof said.

When asked what kind of average room rate the hotel may fetch when ready, he said, "Four Seasons is a rate leader with rates which are usually 20 per cent to 30 per cent higher that the existing rate leaders," he said.

The rate leader in Kuala Lumpur City Centre currently garners between RM600 to RM700 in ARR. This means that Four Seasons may lift the bar to between RM800 and RM900 per night.

By Business Times (by Vasantha Ganesan)

Mixed views on Glomac sale

PETALING JAYA: The real estate fraternity has mixed views about the price tags of RM30mil and RM25mil that Glomac Bhd is asking for its Kelana Business Centre and Glomac Business Centre respectively.

A valuer said it seemed to be comparatively higher than the ones sold earlier which were on a strata basis.

Two agents said the prices were not high.Glomac had, in February, said it was putting up for sale the two business centres located in Kelana Jaya to increase its war chest to prepare the company in the event the economy took a turn for the worst.


Kelana Business Centre

About a month ago, it announced that it had sold its 12-storey Wisma Glomac 3, also in Kelana Jaya where it is headquartered, to Perbadanan Nasional Bhd (PNS) for RM50mil. It is now a tenant in the building.

Group executive vice-chairman Datuk Richard Fong said: “We would like to strengthen our cash position in light of the current economic scenario and to make the necessary preparations for the future.

“We also want to improve our balance sheet. In these bad times, we should be selling whatever we have that is not productive. People may read negatively into this but in these recessionary times, it is best to have as much as you can.”

Glomac’s total bank borrowings have reached RM311mil.

Fong said the company had held on to Kelana Business Centre and Glomac Business Centre for 12 to 13 years.

The rental yields from both are about 7.5% annually.

At RM25mil and RM30mil, a source said, the price would work out to RM265 and RM270 per sq ft respectively.

Another source said there might be a premium because maintenance and control would be in the hands of the landlord.

Rentals payable could be relatively higher as some units might be upgraded from the standard lots, and there might also be provision for centralised air conditioning, he said.

He also said that rentals would remain stable for now but might be pressured downwards when new stocks were added to the market.

Oasis from the Sime Darby Brunsfield group, Symphony House from the PuncakDana Group and new buildings from the Titijaya and Empire Groups in Subang Jaya will be added to the market this year and next.

The Glomac Business Centre has 300 to 350 parking bays while the Kelana Business Centre has over 400. Both are quite well-tenanted.

Glomac may move to the 15-storey Glomac Tower located next to Taman Tun Dr Ismail, which it is building.

Glomac Tower is part of an RM800mil mixed development, Glomac Damansara, which sits on seven acres.

Besides letting go of its assets, the company will continue to launch its projects, though in smaller blocks.

It has projects in Sg Buloh, Johor Baru and Rawang. Instead of double-storey terrace housing, it may also opt to change that to single-storey housing.

As for Glomac Damansara, which it plans to launch in about two weeks, the company will be offering competitive rates.

The offer includes a 10% downpayment and 90% financing.

By The Star

RM1.4b sales seen for apartments

The 140 units of luxury apartments at the Four Seasons Place may fetch as much as RM1.4 billion in sales when they are launched in the third quarter of the year.

"The 140 units will be sold for about RM2,500 psf. The smallest unit size starts at 3,000 sq ft," said Tan Sri Syed Yusof Syed Nasir, chairman of developer Venus Assets Sdn Bhd.

The 65-storey tower will also have apartments which are 5,000 sq ft and 7,500 sq ft in size. Total saleable area is 560,000 sq ft. The only two available penthouses have already been reserved.

The developer is confident of selling the units at that price, despite the gloomy economic outlook, as they have received good response from investors in North Asia, India, Singapore and the Middle East.

By Business Times

Hua Yang sells land to Tesco for RM3.2m

PROPERTY developer Hua Yang Bhd has sold a piece of land in Bandar Universiti Seri Iskandar, Perak to British retailer Tesco Stores (Malaysia) Sdn Bhd for RM3.2 million.

The deal was done by Hua Yang's wholly-owned subsidiary Agro-Mod Industries Sdn Bhd.

The land measures 215,186.4 sq ft, Hua Yang said in a statement.

The 838-acre Bandar Universiti Seri Iskandar township was first developed in 1999 with a gross development value of RM616 million, to cater to the growing university student population of Perak.

By Business Times

New RM2b LCCT to be ready by Q3 2011

The newly proposed Low Cost Carrier Terminal (LCCT) to be built by Malaysia Airports Holdings Bhd is expected to start construction by the middle of this year and completed by the third quarter of 2011.

The airport, which will cost RM2 billion, is expected to be fully operational after that and would be able to cater to 30 million passengers per annum (mppa), with the potential to expand to 45 mppa, MAHB managing director Datuk Seri Bashir Ahmad said today.

He said the full cost of the project, of which its construction would be done via open tender, would be borne by MAHB via loans.

"We will be funding it via loans as we have no debt right now. We have received letters of offer (for loans)," he told reporters at a briefing in Petaling Jaya.

The current LCCT would be converted into a cargo terminal, he added.

He said the cost of the LCCT included a 150,000 sq m new terminal building located 1.5 km west of the main terminal, 70 bays of aircraft parking, a proposed third runway which will be situated only 1.5 km from the second runway, and full parallel taxiways for quick turnaround between both runways.

Bashir said the airport operator was in talks with AirAsia Bhd about the project and added that the low-cost airline was pleased with the progress.

"AirAsia will enjoy greater operational efficiency with the second and proposed third runway just 1.5 km apart. The proposed new runway is also big enough for a B747 to land," he said.

He added that they were also in talks with Express Rail Link Sdn Bhd to extend the connection to the new proposed LCCT, although it would not be included in the total cost of the project.

Asked on why MAHB's cost was bigger than the one proposed earlier for the Labu LCCT, Bashir said this LCCT was bigger and has taken into account passengers comfort in the long-term.

If needed, an adjacent parcel of land to the proposed site could be used for further expansion and could cater for another 25 million passengers.

He added that the soft ground on which the new terminal was to be built was also not a cause for concern as both the existing runways and Bunga Raya Complex were also located on soft ground.

Basir also denied that the issue of Labu LCCT had prompted MAHB to speed up the progress of this new LCCT.

"It took us 16 months to study this and the deadline for it was last December. We did it (study) professionally," he said.

On another note, Bashir said MAH had also proposed to the government the 50 per cent rebate on landing charges as announced in the recent Second Stimulus Package.

He said the rebate, applicable to all airlines, would be of help as the airline industry was going through a difficult time.

"However, this won't affect our bottomline as we are working with the government on a revenue sharing basis for the landing charges," he said.

MAHB makes about RM180-200 million annually from landing charges.

Asked if the airport operator would be reducing other costs such as airport tax since the proposed terminal was for low-cost business, Bashir said aeronautical charges (such as landing and parking fees and tax) would be decided by the government.

He also anticipated that all airports operated by MAHB would have zero per cent growth this year due to the current economic slowdown that has affected passenger movement generally.

However, Bashir expects MAHB to remain profitable following other businesses such as retail.

By Bernama

US home foreclosures up 30pc in Feb

WASHINGTON: Despite halts on new foreclosures by several major lenders, the number of US households threatened with losing their homes rose 30 per cent in February from last year's levels, RealtyTrac reported yesterday.

Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 per cent from January, according to the Irvine, California-based company. While foreclosures are highly concentrated in the Western states and Florida, the problem is spreading to states like Idaho, Illinois and Oregon as the US economy worsens.

"It doesn't bode well," for the embattled US housing market, said Rick Sharga, vice-president for marketing at RealtyTrac, a foreclosure listing firm. "At least for the foreseeable future, it's going to continue to be pretty ugly."

The rise in foreclosure filings came despite temporary halts to foreclosures by Fannie Mae and Freddie Mac, and major banks JPMorgan Chase, Morgan Stanley, Citigroup and Bank of America.

Freddie Mac, the US mortgage- finance company seized by regulators six months ago, said yesterday it needs more financial help from the government and raised doubts about its ability to become profitable again.

Freddie's decision on Wednesday to tap an additional US$31 billion (US$1 = RM3.69) in aid in return for preferred stock will raise its annual dividend payment to the Treasury to US$4.6 billion, a figure the McLean, Virginia-based company said may be beyond its means.

By AP, Bloomberg

Acmar expects RM640m sales from condo project by Q3

ACMAR International Sdn Bhd is optimistic of selling two residential blocks at its D'Rapport @ Ampang project in Kuala Lumpur for RM640 million by the third quarter this year.

The Klang-based developer's confidence is boosted by enquiries from serious buyers in Saudi Arabia, Iran, Pakistan and Korea, group managing director Datuk Steven Tee said.

D'Rapport is designed specifically to cater to expatriates and participants of Malaysia My Second Home programme. It will be developed on 25ha of leasehold land, next to the South Korean Embassy along Jalan Nipah, off Jalan Ampang, in two phases.

The first phase, called Festa and worth RM1.6 billion, is scheduled to complete by December 2010.

It will comprise five 38-storey condominium blocks offering 1,099 units with built-up sizes ranging between 1,100 sq ft and 2,230 sq ft.

Tee said two blocks are open for en bloc buyers. The rest are for individual purchasers.

Since the sales launch four months ago, 200 units worth RM250 million have been snapped up by buyers from Korea, Singapore, the Middle East and Malaysia, Tee said.

"We hope to achieve 100 per cent sales by December, recognised instantly as we bill," he said.

The Festa units are pegged from RM900 per sq ft or RM880,000 each to RM1.98 million. Penthouses, with built-up of 4,496 sq ft, are worth around RM5.2 million.

Perspektif Masa Sdn Bhd, a unit of Acmar, yesterday appointed Asian Finance Bank Bhd (AFB) as the global property distribution agent for D'Rapport, and end financier for prospective buyers.

AFB will market the condominiums in South Korea, Iran and the Middle East.

Chief executive officer Datuk Mohamed Azahari Kamil said despite the difficult economic times, the bank, in its effort to stimulate growth in Islamic financial products, will continue to lend.

"This venture to promote luxurious condominiums to the Korean and the Middle Eastern markets via our home financing should be perceived as the initial step towards promoting Islamic finance to the Koreans for financing their property in Malaysia," he said.

An agreement was also inked with Sabah Development Bank Bhd, which will extend RM601 million in credit facilities to Acmar, to build the five blocks.

Acmar will appoint by next month, contractors from Korea and China for the superstructure work.

By Business Times (by Sharen Kaur)

Acmar unit gets RM601mil loan to build RM1.5bil condo

KUALA LUMPUR: Perspektif Masa Sdn Bhd, a unit of Acmar International, has secured a RM601mil loan from Sabah Development Bank Bhd (SDB) to finance the development of its RM1.5bil D’Rapport luxury condominiums in Ampang here.


Datuk Steven Tee

Acmar International group managing director Datuk Steven Tee said the company was set to launch the first phase of the project in the next four months due to a good take-up rate of 30% during the development’s preview in recent months.

“We are also in talks with foreign parties from Pakistan, Saudi Arabia, Iran and South Korea for possible en bloc sales,” he told a press conference after signing the credit facility agreement of RM601mil with SDB. “We are targeting 80% of the purchases from expatriates.”

The condo units’ current buyers are from Singapore, Middle East and South Korea, he added.

To encourage higher take-up rates from South Korea, Acmar International has invested approximately RM2mil in a new customer service and sales centre in Seoul, Tee said.

Acmar International chairman Datuk Abdul Samad Maharuddin said property prices in Kuala Lumpur remained competitive compared to overseas prices.

The project, jointly undertaken with Permodalan Negeri Selangor Bhd, consists of five 38-storey blocks comprising a total of 1,099 units and a gross development value of RM1.5bil.

Perspektif Masa also signed an agreement to appoint Asian Finance Bank Bhd (AFB) as D’Rapport’s global property distribution agent and end financier.

AFB chief executive officer Datuk Mohammad Azahari Kamil said: “Property market in the right location is still going on strong despite the soft market of the real estate industry. We strongly believe that given the right product, pricing and location, buyers will continue to dominate the market.”

Covering 65 acres of land along Jalan Ampang, the project, also known as Festa, will be completed by 2011.

D’Rapport’s penthouses are priced from RM5.17mil while the suites range from RM880,000 to RM1.98mil.

By The Star

Hua Yang confident of property mart: Chief

HUA Yang Bhd, which plans to launch a project in Sungai Besi with gross development value (GDV) of RM700 million, is still confident about the property market despite slowing economic growth.

Its chief operating officer, Ho Wen Yan, told Bernama in Kuala Lumpur today the company was not badly affected as other developers as it mainly targeted first-time home buyers rather than property investors.

He said the company would continue to look for potential land in Selangor, Johor, Perak and Penang.

"Hua Yang is interested to acquire landbank of between 60 and 120 hectares on the outskirts of Klang Valley, especially in Selayang and Rawang," he said.
Ho said the company currently has a landbank of 400ha nationwide with a potential GDV of RM1.8 billion.

Meanwhile, in a statement in Kuala Lumpur today, Hua Yang said its wholly-owned unit, Agro-Mod Industries Sdn Bhd, has signed a deal with Tesco to open an outlet in the Bandar Universiti Seri Iskandar township in Perak.

It said the outlet would benefit the residents, especially university students in the township, as it would be a one-stop destination for their everyday needs.

Hua Yang said the township was first developed in 1999 with a GDV of RM616 million to cater to the growing university student population of Perak.

"It is strategically located within the education park which consists of higher educational institutions such as Universiti Teknologi Mara and Universiti Teknologi Petronas," it said.

By Bernama

SP Setia, Mah Sing schemes more effective than tax relief

KUALA LUMPUR: Kenanga Investment Bank Research prefers innovative township developers like SP Setia and Mah Sing Group whose attractive packaging is more effective than the tax relief announced under the RM60 billion stimulus package.

It said on March 12 the 5/95 deferred payment scheme, offered by SP Setia and Mah Sing Group, was more of a shot in the arm for the sector as it addressed affordability issues.

“Developers bearing interest cost over the construction period saves relatively more than the tax relief. Consequently, SP Setia chalked up RM300 million sales in less than two months under the 5/95 programme,” it said.

Kenanga Research has a buy call on SP Setia with a target price of RM4.25 and a buy call on Mah Sing at a target price of RM1.96.

The tax relief announced on March 10 is only applicable to new home buyers. The tax relief would only be applicable for new sales and purchase agreements (SPA) signed on March 10 this year to end-2010.

The incentive is only applicable to owner-occupied residential properties; hence, those buying investment or yield accretive properties will not be entitled to the tax relief

Kenanga Research said the tax relief incentive was unlikely to boost property transactions amidst economic uncertainties, particularly when the incentive is only valid for new transactions for less than two years.

“As it is, potential home buyers are adopting the ‘wait and see’ strategy (for example those facing retrenchment or job uncertainties),” it said.

It cited the Australian first home ownership grant scheme, where the

Queensland and New South Wales governments give A$16,000 grant for first time home purchasers in their respective states; equivalent to 5.5% of an average house price of A$290,000.

The research house said would be more effective to boost property transactions. If the grant substantially subsidises the initial down payment (ranging 5% to 20% of selling price), it will spur more property transactions; especially properties become more affordable.

By The EDGE Malaysia

Developers hopeful interest relief will boost house sales

PETALING JAYA: Developers are hopeful that the government’s tax relief on interest paid on housing loans of up to RM10,000 a year for three years which will lower the tax bracket for house buyers, promote stronger buying interest for houses and give a boost to the market.

The latest measure announced under the second stimulus package or mini-budget will lower the cost of owning a property.

“Hopefully the tax relief will also apply to all existing house buyers who have taken loans for their house purchase,” a chief executive of a property company said.

If the tax relief only applies to new housing loans, then the impact would be insignificant as buying activities had slowed down tremendously after the global financial crisis hit the country’s shores around the third quarter of last year, he said.

In welcoming the incentives for the housing sector, Mah Sing Group Bhd managing director Datuk Sri Leong Hoy Kum said the tax relief on interest paid on housing loans of up to RM10,000 a year for three years would result in further savings on the cost of owning a property.

“This will encourage investment in properties which is seen as a good hedge against inflation. We look forward to the further liberalisation of the Foreign Investment Committee (FIC) guidelines which will provide a boost for the property sector,” Leong added.

Khazanah Nasional Bhd’s increased investment for infrastructure projects in Iskandar Malaysia and the expansion of the Penang International Airport will also augur well for the property sector.

He said by allowing house buyers who had been retrenched to defer the repayment of housing loans for a year, it would provide better cashflow to them and lower the probability of loans going into default.

By The Star (by Angie Ng)

Casa del Rio project along river to be operational by mid-2010

The RM102 million Casa del Rio Melaka boutique hotel, mall and apartment will be operational by June 2010.

The four-storey project, involving 64 bedroom suites and 32 apartments, will sit on 1.29ha along the Malacca River. The apartments will be offered for sale.

Casa del Rio (Malaysia) Sdn Bhd group managing director Tan Sri Syed Yusof Syed Nasir said that it had invested some RM10 million to acquire the land, which is in addition to the RM102 million investment into the project.

Casa del Rio (Malaysia) owns and manages Casa del Rio hotel. Casa del Rio is Spanish for "home by the river".
Bank Pembangunan Malaysia Bhd yesterday signed a term-loan agreement of RM50 million with its owner Casa del Rio (Malaysia).

A separate agreement was also inked yesterday between Casa Del Rio and Sin Seong Hin Sdn Bhd, where the former awarded a RM60 million contract to the latter to develop the second phase for main building works.

On why there is a six months delay in the opening of the hotel, Syed Yusof said that it was a result of the piling work as well as the tender process for the job.

Syed Yusof also operates the 570-room Concorde Hotel Kuala Lumpur, the 381-room Concorde Shah Alam and the 338-room Concorde Inn KLIA.

Other hotels operated by the group are the 18-room Lakehouse in Cameron Highlands, the 34-room Casa del Mar Langkawi, and specialty restaurants Saloma Theatre Restaurant and Bistro, Hard Rock Cafe and Planet Hollywood in Kuala Lumpur.

By Business Times

Malacca gets nod for RM65m runway extension

The Malacca state government has received the green light from the federal government to extend the runway at Batu Berendam Airport, which is slated for completion in six months.

Chief Minister Datuk Seri Mohd Ali Mohd Rustam said that the extension at the airport, which will be renamed Malacca International Airport, will cost RM65 million.



The extension is to accommodate larger carriers like Boeing B737 and Airbus A320, in line with its goal of making the historical state a top tourist destination.

"The runway will be extended to 2,200m from 1,800m now. It will cost RM65 million and the state will take a loan from the federal government for this," Mohd Ali said.

This is in addition to the RM135 million grant given to renovate and refurbish the airport, which is operated by Malaysia Airports Holdings Bhd.

Mohd Ali said budget carrier AirAsia has indicated that it will fly to three destinations in Sumatra, Indonesia, namely Pekan Baru, Bukit Tinggi and Medan, from Malacca, once the runway is ready.

"After that, AirAsia plans to fly to Penang and Langkawi and a year after that to Jakarta, Palembang, Balik Papan and Kuching (from Malacca)," he said after witnessing an agreement-signing ceremony between Casa del Rio (M) Sdn Bhd and Bank Pembangunan Malaysia Bhd, and Sin Seong Hin Sdn Bhd.

"Firefly will also be coming in. We now only have Riau Airlines (operating at the airport)," he said, adding that he hopes other charter flights will also operate out of Malacca International Airport.

Mohd Ali said the state recorded a total of 7.2 million tourists last year, of which 6 million were domestic tourists. In the first two months of this year, Malacca has already welcomed 600,000 visitors.

He added that some 70,000 foreign patients sought medical treatment at the state.

"This is only 0.1 per cent of the 7 million rich people who are staying in Sumatra. We need to focus more on Sumatra ... with the new Malacca International Airport, we hope more patients will come here," he said.

By Business Times

Ireka unit ISO certified

KUALA LUMPUR: Ireka Corp Bhd’s property development unit, Ireka Development Management Sdn Bhd (IDM), has received the MS ISO 9001:2000 certification for quality management system from Sirim QAS International and UKAS Quality Management.

The company’s president and chief executive officer Lai Voon Hon said the quality certification was a further testimony to Ireka’s commitment to develop properties of international standards.

IDM is the exclusive development manager for London-listed property developer Aseana Properties Ltd.

Currently, the company is managing four ongoing development projects in Malaysia, consisting of luxury condominiums, integrated commercial and offices and an urban development project.

In a statement, the company said its maiden project for the development of hotel and office towers in KL Sentral, undertaken by Aseana Properties and Malaysian Resources Corp Bhd, was expected to kick off in the first half of the year.

Meanwhile, the company has also received investment licences for two of its upcoming projects in Vietnam.

The MS ISO 9001:2000 quality certification is applicable for six core business processes, namely, business planning, pre-development, sales and marketing, sales and administration, project development and post-development.

By The Star

Rehda says high-impact measures lacking

The Real Estate and Housing Developers’ Association Malaysia (Rehda) said the second stimulus package lacks high-impact measures to stimulate the property sector on a wider scale immediately.

“Rehda was hoping for a comprehensive Home Ownership package, including stamp duty waivers and other measures to generate demand for houses,” its president Datuk Ng Seing Liong said.

However, it hailed measures like the additional RM200 million to build Rumah Mesra Rakyat by Syarikat Perumahan Negara Bhd, saying it will help ease the private sector’s burden of cross-subsidising low-cost housing.

By Business Times

Builders call for speedy delivery system

Master Builders Association Malaysia president Ng Kee Leen welcomes the Government’s larger commitment to help the rakyat but wants a speedy and transparent delivery system as well as a proper project monitoring to ensure effectiveness of the stimulus package.

“The industry could not feel the impact of RM7bil,” he told StarBiz yesterday, pointing out that the peoples’ perception of the first package’s disbursement was slow.

Real Estate and Housing Developers Association of Malaysia president Datuk Ng Seing Liong was disappointed with the announcement as some important issues, such as stamp duty relief and provision of grants to first-time housebuyers, were not addressed.

He said there were only two new policies that would have direct impact on homeowners – the tax relief on interest paid on housing loans of up to RM10,000 a year for three years and the deferred repayment of retrenched workers’ housing loans for one year.

“A lot of money goes into contracts instead. What is important is the money goes to the people on the street so that it will have a better multiplier effect. The impact will then be faster,” he told StarBiz.

By The Star

Nomad purchases property in Jakarta

The Nomad Group Bhd, formerly known as Kuala Lumpur City Corp Bhd, has completed the acquisition of a property in Jakarta for 85 billion rupiah (100 rupiah = RM0.03) from PT Pulo Mas Jaya.

The property, comprising 2,553 sq m land with a nine-storey office building, is known as Menteng Office Park.

The company told Bursa Malaysia Bhd that the purchase of the property, located at Probolinggo 18, Menteng in Central Jakarta, has been completed on March 5.

By Business Times