Freebies, low interest rates pamper house buyers

IT looks like potential house buyers are having the best deal ever — they are being courted by developers who are eager to seal more sales by offering better terms, including freebies, as well as financiers who have brought down interest rates to among the lowest since 1980.

At rates as low as base lending rate (BLR) of 5.25% minus 2.3%, buyers can lock in their loans for the whole of their loan tenure.

This is made possible by the all-time low overnight policy rate at 2% per annum now.

This compares with the previous rates of BLR plus a certain percentage of spread in the past two to three years.

The high liquidity in the local banking system as a result of the people’s high savings rate, coupled with a low loans growth in the past three to four quarters, has resulted in banks having huge cashpiles.

As at Feb 28, the loans-to-deposits ratio stood at only 73.6%, compared with 92.8% during the 1997 Asian financial crisis and 85.9% in 2001 during the dotcom bust. The banking system is flushed with total deposits of RM976.5bil while total loans disbursed amounted to only RM729.2bil.

This means close to RM250bil is still available for financing purposes.

Amid the global financial crisis and the adverse impact on the local economy, loans for most business sectors, including for small and medium enterprises, are expected to slow down further.

Property loans are still a major source of financing for local financial institutions but since last October, the monthly residential property loans growth has contracted by 5% to 27% on a year-on-year basis.

The low loans rate reflects the people’s cautious sentiment on the state of the economy and their unwillingness to spend on big-ticket items, including property.

Besides new property loans, banks are also looking at the refinancing market as more borrowers are considering the option of re-financing or re-mortgaging their properties to benefit from the existing low interest rates.

If one were to opt for a new loan facility from another bank, the borrower has to be prepared to pay penalty charges for early redemption of the loan. This usually works out to between 3% and 5% of the outstanding loan or the total amount taken.

Depending on the loan tenure and financing rates one has signed up for, it looks like most borrowers will opt to refinance their property as it will still work out to be cheaper for them, even after paying the penalty charges.

In view of the current challenging times when most people are watching over their spending, any amount of savings will be welcomed.

It is understood that some banks have offered to absorb the loan processing fees and penalty charges if the borrower switched to their loans.

With the many financing packages available today, the onus is on the borrowers to weigh all the costs and benefits before signing on the dotted line.

Angie Ng is deputy news editor at The Star

By The Star (by Angie Ng)

Paramount Venue plans to build apartments in Sentul

Developer Paramount Venue Sdn Bhd aims to launch six blocks of low-cost and low-medium cost apartments worth RM62 million collectively in Sentul, Kuala Lumpur, over the next 8-15 months.

The company will launch four blocks of low-cost apartments, comprising 850 units worth RM42,000 each, by year-end.

It expects to launch two blocks of low-medium cost apartments featuring 320 units, each priced at an average of RM80,000, by early 2010, project director Mohd Zainudin Badarudin said.

The properties will be built within its ongoing RM1 billion Bandar Sentul Utama township project, located close to the YTL Sentul east and west developments.

Mohd Zainudin said the low-cost apartments are primarily for squatters occupying several sites at the township while the low-medium cost apartments are to cater to the low-income group.

"We are in the midst of submitting the building plans to City Hall for approval," he said yesterday after handing over keys to buyers of Sentul Utama condominium at the township, witnessed by Datuk Bandar Kuala Lumpur Datuk Ahmad Fuad Ismail.

The 28ha Sentul project was supposed to have been developed in 1997 but failed in 1994 as its developer, Sentul Murni Sdn Bhd, a unit of Mycom Bhd, was dragged into a legal battle by squatters located within the township.

To rid itself of assets that are slow to develop, the ailing public-listed Mycom sold Sentul Murni to Paramount Avenue in 2005.

At the time when Paramount Avenue took over the project, only the first phase comprising low-cost apartments had been completed, while 80 per cent of Phase Two namely the Sentul Utama Condominium and the following phases were abandoned.

In less than 30 months after Paramount Venue took over, it completed three 17-storey blocks (Sentul Utama Condominium), totalling 720 units.

It hopes to start constructing the final block, or Block D, by August.

"We are waiting for building approvals and for the squatters to relocate. Block D will have 240 units with added features, each priced from RM180,000. We have Singaporean investors who are keen to buy the units," Mohd Zainudin said.

Earlier at a press conference, Ahmad Fuad said a programme has been put in place to help relocate squatters in project areas.

"Between 1990 to 2007, there were 270 abandoned projects in the Federal Territory, majority of which have been revived. We need more white knights like Paramount Venue to take over abandoned projects for the sake of buyers," he said.

By Business Times (by Sharen Kaur) (Posted on April 28, 2009)

Ken looks to RM80m HQ for recurring income

Property developer Ken Holdings Bhd will build its RM80 million headquarters in Taman Tun Dr Ismail to help provide recurring income for the group.

The 12-storey office block, to be ready in three years, is expected to provide an annual rental income of RM12 million to RM15 million.

Construction of the office block will begin by the year-end or in the first quarter of next year.

"We target to build a Grade A and green-mark office block which promotes environmental awareness. We plan to rent out about 90 per cent of the space to tenants," Ken Holdings managing director Kenny B.K. Tan told reporters after its shareholder meeting yesterday in Kuala Lumpur.

Tan said the development will probably be financed using internal funds. The group has zero debt.

Initially, Ken Holdings was supposed to build two 20-storey buildings - an office tower and serviced apartments - on about 5ha along Jalan Burhanuddin Helmi.

It had purchased the land from Prokhas Sdn Bhd for RM15.8 million.

However, the plans came to a halt when residents in the vicinity protested against the development.

On its financial outlook, Tan said the company will be able to sustain its performance with the projects in hand.

It posted net profit of RM6.3 million against revenue of RM39.1 million in the financial year ended December 31 2008.

The gross development value (GDV) of its ongoing projects in the Klang Valley and Penang are estimated at RM700 million and will keep the company busy for five years.

"We will also finish our serviced apartments, known as Ken Bangsar, in Bukit Bandaraya by the third quarter of 2009," Tan added.

The project, with a GDV of RM120 million, comprises 14 floors with 80 units. Prices range from RM650 to RM1000 per sq ft.

The take-up has been close to 50 per cent as Ken Holdings has had two soft launches.

Tan also said that the group was looking to expand its landbank, but only at the right location and a good price.

Ken Holdings has a landbank of 56ha in the Klang Valley, Penang, Genting Highlands and other strategic locations.

Tan said that property prices in prime areas such as Bangsar, Mont'Kiara and the Kuala Lumpur City Centre were still holding firm.

"I can see the low- and medium-end housing being affected compared to high-end projects. However, the property market will probably be a bit more stable by year-end," he said.

By Business Times (by Jeeva Arulampalam) (Posted on April 28, 2009)

IRDA keeps options open on Cityscape Dubai 2009

DUBAI: Iskandar Regional Development Authority (IRDA) is keeping its options open on its participation at Cityscape Dubai 2009 in October to further promote Iskandar Malaysia, a special economic corridor being developed in southern Malaysia.

"We're keeping an open interest about taking part in Cityscape Dubai, unless something very negative happens," IRDA's strategic communications chief Jameson Pias said on the sidelines of Cityscape Abu Dhabi 2009 which concluded in the UAE's capital last week.

He said that continuous efforts must be made to raise the profile of Iskandar Malaysia, a 2,217sq km mixed development planned for completion in 2025.

Alluding to the current global property slowdown, Pias said: "There will be glitches here and there in the property market but this shouldn't be a basis for us to be discouraged. It's a question of how you manage the situation and look for niches."

He said future participations in events like Cityscape would convey the message that IRDA was committed to its Middle Eastern partners in Iskandar Malaysia and, at the same time, present an opportunity to seek out new partners in the project that offers good investment possibilities in other economic segments besides property and real estate.

The economic zone is being developed based on nine pillars, namely health services, educational services, financial services, information and communications technology and creative industries, electrical and electronics, petrochemical and oleo-chemical, food and agro-processing, logistics and related services, and tourism.

"Certainly some people have been hurt by the global economic crisis and credit crunch but there are others who have been prudent, and in times like these they may be the ones who'll take the opportunity to look for value investments, which Iskandar is offering," said Pias.

According to him, feedback from IRDA partners present at Cityscape Abu Dhabi indicated good response from visitors.

By Bernama

Association wants govt decision on hill slope projects

SUBANG JAYA: The Government should make a decision quickly on hill slope developments that have been halted since December last year, as it is causing hardship to developers.

Real Estate and Housing Developers’ Association national treasurer Muztaza Mohamad said it should state its hill slope requirements clearly, so that developers could carry on with their planning.

“The Government cannot have a wait-and-see attitude, it has to make a decision. To stop class three (25 to 35 degrees gradient) and four (above 35 degrees gradient) slope development, it will cause hardship to developers, as people have already invested millions.

“They (developers) have to move on,” he told reporters on the sidelines of the seminar on “New Approach in Land Development 2009”, officially launched by Natural Resources and Environment Ministry’s deputy director general of land and mines Datuk Azemi Kasim yesterday.

Muztaza, who is also Fairview Group of Companies group managing director, said the Government could utilise world-class Malaysian engineers to speed up introduction of new technical requirements.

The Government has stopped some of the hill slope developments in the Klang Valley for safety concerns after the Taman Bukit Mewah, Bukit Antarabangsa, landslide on Dec 6 that killed five people and destroyed about 14 bungalows.

During the seminar, an official of SDB Properties Sdn Bhd, whose bungalow development at Damansara Heights was temporarily halted, had expressed concern about the government’s inaction.

He said the company had spent about RM67mil on the 5.75-acre site but the future of the project was uncertain pending the issuance of new guidelines on hill slope development.

In the meantime, SDB Properties continued incurring costs on slope strengthening and stabilisation works, he added.

Meanwhile, the ministry’s mineral and geoscience division under- secretary Dr Azimuddin Bahari said Malaysia should learn and apply Hong Kong’s hill slope development management, as its soil composition was similar with our country.

“We can look at Hong Kong as a benchmark,” he said, adding that it provided online all the necessary information on hill slope development.

Azimuddin said Hong Kong had a building ordinance and it was mandatory for owners to comply, which Malaysia lacked.

However, he advised Malaysians to change their attitude and tackle landslide and soil-related issues seriously.

He said all parties – government authorities, developers and house owners – were responsible for safety of hill slope developments.

By The Star (Posted on April 28, 2009)

Amarin to unveil super luxury housing project

A model of the Amarin Wickham. All the penthouses will have private pools, jacuzzis, a roof sun deck and garden for private entertaining

It wants to tap on the dearth of new launches in inner city of KL

The Amarin group plans to launch its latest super luxury residential project, Amarin Wickham in the coveted Jalan U-Thant embassy enclave in July.

The move is to take advantage of an absence of new project launch in Kuala Lumpur’s inner city since the third quarter of last year following the global financial meltdown.

The enclave of 21 residences are located in the capital city’s prestigious embassy district and within the proximity of the Kuala Lumpur city centre (KLCC) and Bukit Bintang.

According to managing director Lee Vun-Tsir, there were signs that the global economy and capital market were stabilising and “we want to be among the first to catch the worms before other developers start coming back into the market.”

He said unless things turned for the worse, the company would be keeping to its target launch of July 7, adding that the months of June to September were considered good time for new project launch as things started to get back on track after all the festive breaks.

“As we are still in the early days of a potential market recovery after so much uncertainties caused by the global crisis, we will be monitoring the market closely and hope the project will be on track,” Lee added.

The residences will have various built-up from 2, 848 sq ft to 4,792 sq ft for the duplex units; and 3,489 sq ft to 5,527 sq ft for the triplex units. There are also seven triplex penthouses with sizes from 6,682 sq ft to 6,965 sq ft. The most exclusive unit is the premier penthouse with a built-up of 9,258 sq ft.

All the penthouses will have private pools, jacuzzis, a roof sun deck and garden for private entertaining. There will also be a common gymnasium, swimming pool and landscaped garden facilities for all the residents.

The residences will be in two five-storey blocks with the penthouse units build on top of the duplex units.

They will be priced at around RM1,000 per sq ft for a gross development value of RM140mil. It is expected to be completed in 2011.

To attract buyers to take up the premium units first, the penthouses will be the first to go on sale.

“We want to be different from the other developers who will typically launch their least expensive units first and keep the most premium units for the later phase. With Amarin, investors will be able to select the best units first,” Lee said.

When it comes to finishings and fixtures such as kitchen appliances and choice of tile quality and colour, the developer Amarin Wickham Sdn Bhd will allow for some degree of customisation by buyers.

The company has teamed up with a panel of financiers to offer the 10:90 financing package where buyers only need to make a 10% downpayment of 10% of the property price while the developer will bear the interest costs during the project’s construction. Buyers will only start to service their loans after receiving the vacant possession for their property.

The Amarin group was established in 2003 by Lee and two other friends who share a passion for luxury property development.

Lee said Amarin which meant “heavenly” in Sanskrit symbolised a commitment to innovative design, contemporary lifestyle concepts, exemplary quality, above the line finishing and an overall promise of great value for the buyer.

On other potential projects, he said the company was also planning to launch a resort development comprising bungalows, villas and semi-detached houses in Cherating, Pahang. The 10-acre project is expected to start by year-end or early next year.

Its Amarin Kiara project, which comprises 30 semi-detached units with built-up of 3,000 sq ft to 5,000 sq ft, was launched early last year and all the units have been sold.

By The Star (by Angie Ng)

SunCity keen to export project expertise

SUNWAY City Bhd (SunCity) is keen to export its expertise in development and investment projects to the potentially high-growth markets of China, India and Vietnam.

Managing director for property investment Ngeow Voon Yean said that besides having the right project plans, the other main challenge in the company’s overseas pursuit was identifying the right joint-venture partners.

“Having good local partners there will be a significant help for our success overseas as they know all the practices of the market and this will help to shorten our learning curve,” Ngeow told StarBiz.

Building up its overseas presence will enable SunCity to replicate its success as a Malaysian community master developer in the other countries in the region.

“These overseas projects will also contribute towards widening our earnings base. In the next five years, some 30% of SunCity’s revenue will be contributed by our overseas projects,” he added.

Ngeow said the global financial crisis had resulted in more favourable costs for new project start-ups as there were better deals around.

“We have been receiving many foreign visitors from the private sector and government-linked companies who are in Malaysia to explore joint-venture opportunities and to find out more about SunCity’s property projects,” he said.

SunCity has been engaged for two commercial projects – involving property designing and management services in China and as a consultant for a hotel development in Vietnam.

“We have the hardware and software to advise our clients on every aspect of a project’s development – from design planning to integration of facilities, marketing and property management. Given our expertise in theme park projects, there is also potential for this kind of management projects in those countries,” Ngeow said.

The contract for the Shenzen Holiday Plaza, a mixed development comprising retail, hotel and office suites, was inked two years ago. The project was opened to the public last September.

In March 2007, SunCity clinched the contract for the Chongqing project which comprised of retail space, hotels and residences.

It is also in the final stages to undertake a five-star hotel development in ChongSan, China.

In Vietnam, the company has been awarded the contract for a four-star city hotel that is under development by VIPTOUR group. SunCity is also working on securing other management contracts for another two or three hotels there.

In property development, SunCity has made inroads into China’s market through a joint venture with Sunway Holdings Bhd’s subsidiary, Sunway Mas Sdn Bhd, and Shanghai Guanghao Real Estate Development Group Co Ltd for a mixed high-rise development in Jiangyin New Harbour City in Jiangsu Province.

The resort-style project on 6.8ha will comprise 1,110 medium- to high-end condominiums with an estimated gross development value of RM473mil. Overseas projects, especially from India and China, will contribute 30% to property sales in the next five years.

Ngeow said locally, SunCity was looking for ways to expand the market for its hotels, shopping complexes and hospital facilities to improve its income streams.

“We have invested close to RM5bil in our property investment assets in the Klang Valley, Penang and Ipoh, that comprise office buildings, shopping complexes, university campuses, a medical college, hotels, theme park resorts and convention and exhibition centres.

“The management will ensure the necessary efforts are expended to optimise the operational efficiency and productivity to derive higher yields from all our assets and projects,” he added.

Under the company’s plans to unlock the value of its property investment, assets to the tune of RM3.1bil will be injected into a real estate investment trust (REIT) that was initially planned for a listing in the second half of last year. The listing had to be postponed when the local market succumbed to the impact of the global financial crisis.

Ngeow said the company would closely monitor the economic and market conditions before deciding on the listing plans for the REIT.

“We are not in a hurry to list the REIT as we can still depend on our strong rental income to ride out the financial crisis,” he added.

About 75% of SunCity’s operating profit of RM175mil for the first two quarters ended Dec 31, 2008, was from property investment assets and the balance from property development.

For the current calendar year, SunCity can look forward to total rental income of RM285mil, of which 70% will be from Sunway Pyramid Shopping Mall.

An analyst with a local brokerage said earnings from property investment were expected to remain resilient with the full occupancy of the 1.7 million sq ft net lettable space in Sunway Pyramid while rental rates remained firm.

“With a beta of 1.37, SunCity is a good proxy for a property sector recovery play. Our ‘buy’ call on SunCity is re-affirmed and it remains our top pick for the sector,” he added.

By The Star (by Angie Ng)

Glomac mulls expanding Sg Buloh township project

PROPERTY developer Glomac Bhd may expand its ongoing 440ha Bandar Saujana Utama township project in Sg Buloh, Selangor, as demand soars.

The RM1.3 billion township, which is 80 per cent developed, is focused on providing affordable homes priced from RM230,000 to RM400,000.

During an economic downturn, houses in that price range usually move faster.

Glomac has 88ha of undeveloped land within the township but it will use it to build terraced houses, semi-detached homes, shopoffices and apartments, worth RM90 million, from early 2010.

Thus, it would need to buy land to build more houses within the township if it decides to expand it.

Corporate communications director Fara Eliza Tan Sri FD Mansor said Glomac has offers from banks, landowners and receivers, to buy 40ha to 200ha of land, surrounding the township.

"We are considering the offers. This is a matured township and there is soaring demand for properties. The township has attracted civil servants, who are not severely affected by the recent economic downturn," Fara said.

She said the 400ha Universiti Teknologi Mara (UiTM) in Puncak Alam would be a catalyst for further growth at the township.

Bandar Saujana Utama, which now has a population of 60,000, began in 1998 via a joint venture with private landowners.

When Glomac first started on the project, it had 80ha. The company formed a joint venture with the farmers association to accumulate 200ha, while 160ha was bought from private landowners.

Year to date, Glomac has built and sold RM970 million worth of properties.

Fara told Business Times during a recent tour at Bandar Saujana Utama that the township contributes RM8 million to 10 million a year to the company's gross profit.

She said under construction are 208 units of semi-detached homes, priced from RM398,000, and 84 units of single and double-storey shopoffices, worth more than RM252,000 each. Glomac is also building 85 units of double-storey terraced houses, priced from RM252,800 to RM428,730.

Fara said 65 per cent of the terraced houses were sold within three months from the launch last November. She expects a similar take-up rate for the semi-detached homes which will be launched in May or June.

By Business Times (by Sharen Kaur)

I&P to offer incentives to push sales

STATE-OWNED Island & Peninsular Bhd (I&P), one of Malaysia's largest property groups by landbank, will launch a stimulus package to push property sales as it grapples with a slowing economy and fragile consumer confidence.

Group managing director Datuk Jamaludin Osman said he hopes to achieve higher property sales this year.

In 2008, I&P, a wholly-owned unit of Permodalan Nasional Bhd, sold 544 houses for RM245 million collectively, in Selangor and Kuala Lumpur.

"We will offer incentives for our properties. The business needs to go on despite concerns of slower economic growth," Jamaludin told Business Times in an interview in Kuala Lumpur recently.

I&P will keep property prices competitive and offer, among others, a discount on stamp duty, and incentives such as zero per cent interest during construction.

Separately, despite the company's huge untouched landbank of 5,263ha, it will pace out its launches and release units in smaller quantities this year.

"We will not launch and have balance of stocks as it will lead to cash flow problems," Jamaludin said.

He said the focus this year will be to launch double-storey terraced houses and semi-detached homes within its four townships in Puchong, Klang, Shah Alam and Bangi, Selangor.

I&P is targeting to launch 400 houses, worth a combined RM250 million, by the end of July. It will launch 34 units of terraced houses, priced from RM416,000, and six units of semi-detached homes, worth about RM1.1 million each, in Bandar Kinrara, Puchong, by end-April.

Around the same time, it will launch 76 units of terraced houses in Bayumas, Klang, priced from RM230,000.

Depending on take-up, it will launch 110 units of terraced houses in Bandar Kinrara in June, for RM60 million collectively.

In Alam Impian, Shah Alam, I&P will launch Nukilan 2, featuring 71 units of terraced houses, from RM500,000 each, and Chanting 2, comprising 103 super link-homes that will cost below RM500,000 each.

"We are ready to launch and are optimistic about the rate of sale, especially in Bandar Kinrara, as we have over 1,000 registrations. But we reckon it would be a little slow in Bayumas, although it has cheaper houses," Jamaludin said.

He said buyers are confident of the company's product offering as the properties have proven to have good capital appreciation value.

By Business Times (by Sharen Kaur)

Langkawi still developers’ attraction

RIDING on its status as a duty-free port and as an internationally-known resort island, Langkawi is still attracting developers from Penang and Kuala Lumpur despite the economic crisis.

The attraction of Langkawi is that the imported and high-quality finishings used for development are sold without duties and sales tax, which enables developers to price high-end properties very attractively, compared with those in Penang.

This advantage offsets the 10%-15% higher construction cost in Langkawi, which is due mainly to the transportation of raw materials.

For example, a terraced property in a prime location in Langkawi could be obtained for about RM230,000, compared with about RM280,000 for a similar property in Seberang Prai. Similarly, a 1,000-sq-ft serviced apartment in downtown Langkawi could go for about RM250,000 against about RM480,000 on Penang island.

Langkawi’s reputation in the region as a Malaysia My Second Home destination and as a holiday getaway has also of late, attracted foreigners in the sailing fraternity to purchase or rent properties there.

The economic crisis has yet to affect properties in Langkawi. According to Penang-based valuer C.A. Lim & Co proprietor Lim Chien Aun, property prices in Langkawi have yet to drop.

“However, the volume of transactions and enquiries has declined by about 80% for the first three months of 2009,” he said.

In Langkawi, developers are focusing on serviced apartments and landed properties, such as double-storey terraced and semi-detached houses, as they attract the most demand.

One project that should boost Langkawi’s tourism industry is a high-end commercial scheme from Thong Sin Development Sdn Bhd, a Penang-based property group.

Managing director K.C. Tan said the project, to be named San Marina, would be located on an 4.6-ha site facing the Andaman Sea.

“About 55% of the area would be used for serviced apartments, and the remaining 2ha for commercial development.

“We plan to model the resort after some of the sea-fronting Mediterranean towns in Europe, with the serviced apartments on top of the commercial properties,” he said.

“There would be around 170 units with a gross built-up area of about 300,000 sq ft. We have not decided on whether to sell or rent them out.”

Tan said the commercial properties would be rented out to enable the group to have a balanced tenant mix.

“The commercial properties will be designed to suit a particular business theme, that includes al fresco dining and boutiques. The plan is also to have a state-of-the-art convention centre to house a recreation clubhouse, a spa, restaurants and meeting rooms,” he said.

All apartments would overlook Pulau Dayang Bunting, Pulau Tuba and the harbour of Kuah town, Tan said.

“This is our second serviced apartment project in Langkawi, following the 147-unit Century Suria Serviced Apartments launched nine years ago. We have sold a significant portion of the Century Suria apartments, the remainder will be sold or rented out.

Other serviced apartments in Langkawi include the Sri Lagenda, Perdana Beach Resort and Kondo Istana, all of which were developed in the early to mid-1990s.

The monthly rentals for serviced apartments generally start from RM1,200 on the island.

Intra Harta (North) Sdn Bhd registered valuer Muzlini Said said the value of serviced apartments had appreciated by 10%-20% over the past three years.

“The Century Suria, for example, priced at about RM200,000 a unit in 2006, is now selling for RM290,000. The Perdana Beach Resort, about RM190,000 in 2006, is now at RM250,000.

“These apartments have built-up areas of 930 to 1,100 sq ft and have two or three bedrooms,” she said.

For landed residential properties, the launches are usually small, from 60 to 80 units per launch.

Bertam Development Sdn Bhd property manager Tan Cheng Chooi said the company’s recent launch of 59 double-storey terraced houses and eight double-storey semi-detached houses in Taman Bukit Indah, an established residential enclave close to Kuah town, had received very good response.

Bertam Development is a subsidiary of Kuala Lmpur-based property group Bertam Alliance Bhd, which is listed on the second board.

“We have sold all the non-bumiputra units. The houses will be completed by August,” he said.

Muzlini said the appreciation of landed residential properties in Langkawi had been about 15% in the past five years.

“The selling price of a terraced property has increased to about RM230,000 from RM180,000 five years ago, while a semi-detached house is now RM320,000 from RM250,000 before,” she said.

By The Star (by David Tan)

Ken's RM700m projects enough for 5 yrs

KUALA LUMPUR: Ken Holdings Bhd expects to sustain its revenue and dividend payouts for the next two to three years despite a slowdown in the property market.

"The projects in hand will be able to sustain us for the next few years. So for this year and the next two to three years, we will be able to sustain revenue and dividend," chairman and managing director Tan Boon Kang said after its AGM on April 27.

The group had projects in hand with gross development value of RM700 million in the Klang Valley and Penang enough to keep the group busy for the next five years.

It was completing its project comprising of 80 luxurious service apartments in Bangsar with a GDV of about RM110 million and it would be officially launched in the third quarter, Tan said.

"The take-up rate was quite good during the soft launch but there has been cancellation of orders especially from foreigners.

"And we have had to spend some extra RM20 million for this project. So we may have to raise the price of the property at the official launch. But we have a special scheme for purchasers and we are quite confident take up would be good," he said.

For financial year ended Dec 31, 2008, KHB recorded lower net profit of RM6.3 million from RM8.4 million last year. Revenue dropped 35.7% to RM39.1 million from a year ago. A first and final dividend of four sen was proposed.

"This is a good opportunity to expand our landbank. As long as it is in a good location and at a fair price, we don't mind the cost. We have strong cash flow and zero gearing," Tan said.

Ken Holdings had over 138 acres of land in the Klang Valley, Penang and Genting Highlands. As at end-2009, it had RM22.2 million cash.

"People are not optimistic about the property market. But even during this time, some segments are still doing well and we believe property will further stabilise in the later part of the year," Tan added.

By The EDGE Malaysia

RM120m Ken Bangsar to complete by Q3

KEN Holdings Bhd's (KHB) exclusive service apartments project, Ken Bangsar, located at Bukit Bandaraya in Kuala Lumpur is to be completed by the third quarter of this year.

The company's managing director, Kenny Tan Boon Kang who disclosed this, said the project has a gross development value (GDV) of RM120 million comprising a block of 14 floors of 80 units.

Speaking to reporters after the company's annual general meeting (AGM) today, he stated that during the soft launch, about 50 per cent of the units had been taken up.

According to Tan, the company has a landbank of over 138 acres in the Klang Valley, Penang, Genting Highlands and other strategic locations in Malaysia.

He said Ken Holdings has plans to expand its landbank and is looking to purchase at a good price.

The company has projects in hand in the Klang Valley and Penang with a GDV estimated at RM700 million to keep it busy for the next five years.

On the property sector, Tan said there are certain areas like the KLCC and Bangsar, where prices are still firm.

"I foresee low and medium end housing being affected rather than that for the high-end properties," he said.

Ken Holdings will spend RM80 million for the construction of its new headquarters at Taman Tun Dr Ismail. It will have a block of 12 floors of office space.

The project is expected to be completed in three years and construction will start by the end of the year or in early 2010.

By Bernama

Lowyat eyes 50pc management service take-up

The Lowyat Group is targeting a 50 per cent take-up rate by year-end for its Fairlane Hospitality, a premier management service.

"Basically we are going the extra mile in rendering such a service to help our customers in getting higher rental returns and better capital appreciation," said the group's general manager, business development and marketing, Daniel Ong.

"Fairlane Hospitality is a rental management service to help owners get the best returns for their property investments. It is not a guaranteed return scheme as we don't force customers to lease back their properties," he said.

Currently, the group is offering the service to all the owners of Bintang Fairlane Residences and the group expects a take-up rate of 70 to 80 per cent by early next year.

Ong said all the 256 units in the project had been sold and response to the management service has been good.

"We had a briefing two days ago and many owners turned up. I would say that 70 to 80 per cent of them are keen to let us manage their properties," he said.

He added that the serviced apartment owners will be looking for both short- and long-term tenants to get income from their properties.

Moving forward, the group will also extend its management service to the myHabitat serviced residences located in Jalan Tun Razak here.

The service will be made available as an option for the myHabitat purchasers.

"We have just started on this, and by focusing on what we have on our plate now which is Bintang Fairlane, and myHabitat by next year, it would be enough to keep us busy," Ong said.

About 70 per cent of the owners from the two properties are expected to opt for Fairlane Hospitality within a three-year period, he said.

"Our vision is to grow this business not only locally but internationally as well. With the current projects, we will grow it strongly in Malaysia and then gradually expand to the international market," he added.

Bintang Fairlane Residences consist of 256 units of serviced apartments with a gross development value of RM160 million.

Scheduled to be opened for tenancy by next month, the project is developed by Hotel Fairlane Sdn Bhd, a member of the Lowyat Group.

The myHabitat project consist of about 168 residential units for Tower 1 which is to be completed by end of next year and Tower 2 with 215 units, with a total gross development value of RM400 million.

It is being developed by APL Development Sdn Bhd, a subsidiary of AP Land.

By Bernama

Industrial property sector resilient

AMID the struggling economy, the local industrial property market seems to fare better than office and residential properties although industry players expect the market for this asset class to remain flattish this year.

They concur that the current slowdown in manufacturing orders has not impacted industrial property as tenancy contracts for industrial property are locked in for a longer period of between five and 10 years compared with two to three years for office space.

They say these long-term tenancy commitments reduce any panic selling or “irrational transactions”, thus sustaining the prices and rental rates of these properties.

This property sector has remained relatively resilient because landlords are more willing to work out “win-win” solutions with their tenants during the current difficult times and tenants are allowed to pay up when business conditions recover.

“Landlords are more inclined to help roll-over rentals because capital expenditure (capex) for signing up new tenants is quite high,” an analyst from Kenanga Research tells StarBizWeek.

The reason for this is that industrial property space is usually tailored for specific tenants and any changes in tenancy will incur additional costs of construction and renovation.

The gross yield for industrial property is around 7% to 13%, with rental rates averaging at between 80 sen and RM1.75 per sq ft.

Association of Valuers and Property Consultants in Private Practice Malaysia (PEPS) president James Wong, who thinks the impact of the global financial crisis has not been fully felt yet, says industrial property prices are stable and have not declined.

However, he says with the full impact of the global recession to be felt in the second half and drop in domestic investments in the industrial property sector to RM7.8bil from RM13.9bil, “the industrial property market for this year will be affected.”

“We foresee that there will be a slight drop in prices, demand will be weakened and new launches of industrial property are likely to be deferred until confidence returns to the market.

“The volume of transactions of industrial properties will also contract. Although the industrial property market in the Klang Valley is expected to be the most resilient, a mild drop in prices seems inevitable,” he tells StarBizWeek, adding that the property market for next year will fare worse than this year.

“By then, quite a number of manufacturing companies will close down and go into receivership. This will result in forced sale by the banks, which will bring down industrial property value further,” he says.

Manufacturing output has fallen from a year ago. In January, exports plunged 28% to RM38.3bil from a year ago, while imports fell by 32% to RM29.5bil.

Wong adds that unlike the Asian financial crisis in 1997/98 period, the global slowdown is expected to prolong.

“We do not foresee a recovery in the industrial property market before 2010,” he says.

The industrial property sub-sector is a relatively small sector in the property market. In 2008, there were 8,126 transactions worth RM7.9mil out of a total 340,240 transactions worth RM88.34bil.

In tandem with the economic slowdown, the unsold units in the industrial market sub-sector increased by 30.7% to 2037 units last year compared with 1557 units in 2007.

Penang is the most affected as demand has dropped by over 50% in core industries such as electrical and electronics, plastics and metal.

“The performance of the industrial property market will depend on the performance of the manufacturing sector,” he says.

Wong suggests seeking new export markets as one of the ways to boost industrial property such as the Asean-Australia-new Zealand Free Trade Agreement. Others include setting up small and medium-scale industrial parks with subsidised grants, hi-tech and science parks.

International Real Estate Federation vice-president for marketing and networking Michael Geh expects demand for industrial property to start rising after the first quarter of next year.

Reapfield Properties Sdn Bhd president David Ong says it will be a great challenge for the industrial sector going forward as there is a possibility of some factories ceasing operations due to drop in demand for their products.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam says if the economy does not improve, he expects industrial property to feel the impact by the fourth quarter this year. However, he says factories have not closed down yet although they are laying off workers.

“The situation is not clear but I understand banks have not foreclosed any property yet because a lot of factories and businesses are still paying their rentals,” he says, pointing out that the Government’s stimulus plan is to make sure factories will not shut down.

Colliers International Property Consultants managing director Teik Bin Teh says demand for industrial property is on the decline but the exact number is unclear.

“Prices have not dropped because there is no transaction. We are unable to judge the price trends with only a few transactions. But prices are certainly not going up,” he says, adding that there is no oversupply of industrial properties because not many new industrial estates have been developed in the past five to six years.

By The Star (by K.C.Law)

Selangor Prop sees sales boost from Aussie project

SELANGOR Properties Bhd (SPB), one of the largest landowners in Damansara Heights, Kuala Lumpur, expects to beat last year's revenue, driven by property sales in Claremont, Australia.

SPB, in which the Employees Provident Fund holds a 3.7 per cent interest, made a net profit of RM118.6 million on revenue of 210.6 million for its fiscal year ended October 31 last year.

The company is redeveloping a retail centre in Claremont. It is building 82 apartment units in two phases for A$69 million (A$1 = RM2.57), and a 300,000 sq ft retail mall worth A$174 million.

The apartments have been fully sold, and A$41.2 million, being the first phase of the development, will be recognised this year, financial controller Lee Boon Kian said.
Lee said the second phase, worth A$27.8 million, will be recognised in 2011.

"I don't think we can match our profits for last year, which was partly contributed by foreign exchange and exceptional gains. But we will be profitable this year, and expect revenue to do better," he said after the company's shareholders meeting in Kuala Lumpur yesterday.

The company also aims to sell a total of 270 houses, priced from RM280,000 to over RM400,000 per unit, within its RM400 mil-lion Bukit Permata mixed deve-lopment in Gombak, Kuala Lumpur, before embarking on new projects.

These are unsold stocks that the company has been unable to sell since its launch in early 2008, Lee said.

"We used to sell 20-30 units a month, but due to the current economic climate, we are only able to sell half of that," Lee said.

Its pipeline projects include a new phase within its ongoing RM350 million Selayang Mulia residential project in Selayang.

It is also planning a mix housing development on a 55.6ha in Ulu Langat, Selangor, featuring two-storey terraced houses and semi-detached homes.

In Damansara Heights, SPB will construct a condominium block at Jalan Batai, comprising 107 units, each priced from RM1 million; and office and condominium towers at Jalan Semantan.

"The launches will depend on the market, which is still very cloudy. The projects are on the drawing board. We are waiting for approval," he added.

Meanwhile, Lee ruled out the company is being taken private by its major shareholders.

By Business Times (by Sharen Kaur)

Level playing field

It’s time to have consistent bumiputra housing quota policy nationwide.

The Government’s decision to scrap the 30% bumiputra equity requirement for 27 services sub-sectors is a step in the right direction to raise Malaysia’s competitiveness in the global business front.

But in order to bring back the spotlight on the country as the place to do business and to attract more foreign direct investment (FDI), there should be proper follow through to unshackle the mantle of protectionism in the other economic sectors and create a more level playing field. One area is the property industry.

The world is certainly going through very troubled times and we have to gather all our resolve and resources to ensure the country is favourably positioned for a comeback when the global economy finally recovers.

Despite some signs of economic stability due to stimulus measures undertaken by the authorities, the International Monetary Fund sees long months of economic distress before the world economy recovers in the first half of next year.

Having lost much wealth and resources to the global financial crisis, countries worldwide will be desperately seeking to rebuild their strengths and sharpen their competitiveness to make a quick comeback when the world economy shows any signs of a recovery.

In order not to be left behind, Malaysia has much to catch up with the rest of the countries, including those in the region such as Vietnam, Thailand and Indonesia, which are making big strides in their competitive rankings.

To ensure a more competitive playing field for our local businesses and foreign investors, all the stifling rules and guidelines that affect the efficiency and competitive edge of businesses and industry groups should be removed eventually.

Given its link to the other 160 industry sub-sectors, the property industry has a huge role to play to breathe more life and activities in the local economy. But it also one of the most regulated industries and is made to fulfil various socio-economic objectives.

The local property industry is one of the most impacted by the global financial crisis as the people’s confidence in the state of the economy and their well-being nosedived since the middle of last year.

With plunging property sales and having to slow down or defer their projects, developers are bracing for tougher days ahead and do not want to be further burdened by some of these practices.

While the national housing policy should help all needy Malaysians to own their own homes, and if the bumiputra housing quota has to be continued, it should be streamlined so that there will be a consistent one across all the states in Malaysia.

Both the Federal and state governments should work together to streamline and have a consistent policy and implementation across the country.

Without clearer and more consistent implementation of the bumiputra quota policy, it will be hard for developers to continue their projects successfully and offer their best to buyers.

At present, the quota for bumiputra buyers ranges between 30% and 70% of the number of houses built, while price discounts for bumiputra buyers vary between 5% and 15%.

Although most states adhere to a 30% quota, it is 40% in Johor, while in some suburbs in Selangor such as Shah Alam, it is between 50% and 70%.

Industry players want the quota to be standardised at 30% while discounts for bumiputra buyers should be capped at 5% and should only be applicable for houses priced at RM250,000 and below. Buyers of houses that are priced higher than that are more financially secure and do not need such discounts.

An automatic bumiputra quota release mechanism that is standardised and transparent should also be in place. There should be an automatic release of the quota units after six months of a project’s launch or when a project has reached 50% of construction.

As property remains one of the most viable investment instruments around, there is huge potential to be tapped from raising Malaysia’s profile and competitiveness as a property investment hub.

To attract more foreigners to invest in Malaysian real estate, more consistent policies to attract FDIs should be implemented.

Developers lament that the policies in the various states contradict the Federal Government’s initiatives to attract foreign investors.

The abolishment of Foreign Investment Committee approval for foreigners purchasing properties priced at more than RM250,000 and the exemption of property gain tax on sale by foreigners reflect the Government’s initiative to promote FDI in real estate.

However, state governments still impose their own rules on foreign property sales and purchase. Such foreign quota restrictions make it hard for developers to sell properties to foreign buyers.

While more enabling and liberalising measures by the Federal Government are expected to be announced soon, the success of such measures, especially those pertaining to land matters that come under the purview of the state governments, is dependent on the willingness and efficient implementation by all involved.

● Deputy news editor Angie Ng believes that regardless of the good or bad times, much more can be achieved when all Malaysians unite and forge ahead as one.

By The Star (by Angie Ng)

PK Resources plans RM58m 4-star hotel

PK RESOURCES Bhd is investing RM58 million to build a four-star hotel adjacent to the Nilai Springs Golf & Country Club in Putra Nilai, Nilai Springs Resort Sdn Bhd general manager G.K. How said yesterday.

Construction of the nine-storey 183-room Nilai Springs Resort Hotel was progressing smoothly since last year and was nearing completion.

"According to our plan, we are to do the soft launch on June 8. The hotel is slated to start full commercial operations in September," he said.

How said the hotel would have the "Azuma Fusion Restaurant" serving a variety of Japanese, South Korean and Chinese food and western food by "Springs Cafe".
The stall-styled "Golfers' Terrace" will serve local cuisines. There are also "Fairway Lounge" and "Splash Station.

"For the next two years, our occupancy projection is 55 and 60 per cent. We are confident of achieving this target as the hotel has only 183 rooms.

"In fact, we have already received bookings from several F1 racing teams coming for the F1 championship at the Sepang International Circuit next year.

The optimism to woo hotel guests stems from the hotel's strategic location proximity to the KL International Airport in Sepang, Low-Cost Carrier Terminal, Sepang International Circuit, Cyberjaya Intelligent City and Putrajaya federal government administra-tion centre.

PK Resources (formerly known as (Peladang Kimia Bhd), a property developer, is currently focusing on Putra Nilai (new name for Bandar Baru Nilai) township via its wholly-owned subsidiary BBN Development Sdn Bhd.

Putra Nilai is one of the largest townships within the Multimedia Super Corridor and is strategically located in the vicinity of the Kuala Lumpur International Airport, Putrajaya and Cyberjaya.

By Bernama

EcoFirst eyeing projects worth over RM200mil

MAIN board-listed EcoFirst Consolidated Bhd, which is undergoing a corporate restructuring exercise, is eyeing various mid-sized projects worth over RM200mil.

Executive director and group chief executive officer Tiong Kwing Hee says the group is in advanced talks on construction work for a new hospital and an educational institution.

“We are awaiting approval from the relevant bodies and expect to conclude both deals by next year,” he tells StarBizWeek after the official launch of Edu Mall @ South City yesterday.

As part of its turnaround plan, the group has rebranded its key property asset South City Plaza in Seri Kembangan to an educational mall with a view to increasing its occupancy rate to 90% by year-end from 75% now.

Tiong says the group hopes to raise about RM80mil to RM100mil through the issuance of sukuk bonds by year-end to finance the building of two high rise buildings on top of the mall as well as the mall’s refurbishment.

To reform its business model, the group has identified food ration and manufacturing as new income generating divisions.

“We plan to invest about RM40mil to RM50mil to acquire two manufacturing companies by the middle of next year and have identified three potential candidates.

“We are also currently negotiating for a long-term food ration supply contract. We anticipate an average additional income of RM3mil per annum from both divisions,” says Tiong.

Meanwhile, the group is also looking to establish a 50:50 joint venture in engineering, procurement, construction and commissioning (EPCC) under its construction division.

“We are talking to some government agencies to do EPCC work for government ports,” says Tiong.

To date, the group has completed about 60% of its total government contracts worth some RM70mil.

“We hope to return to the black after the restructuring exercise is completed by the middle of next year,” says Tiong.

EcoFirst currently operates four divisions – property investment, network marketing, construction and education.

By The Star (by Shannen Wong)

Novotel Hydro Majestic Hotel put up for sale

Hotel operator and property developer Pulai Springs Bhd has put its two-year-old Novotel Hydro Majestic Hotel in Kuala Lumpur up for sale, sources say.

It is believed that the owners are asking an estimated RM200 million for the four-star 291-room hotel located along Jalan Kia Peng, a stone's throw from the iconic Petronas Twin Towers.

According to sources, Pulai Springs has received several offers for the hotel.

One source said that the Johor-based company had in fact identified a buyer. Pulai Springs officials could not be contacted for confirmation.

It is also unclear why it wants to sell the property. It is probably trying to cut debt. Its current liabilities, or what it needs to pay in a year, stood at RM193.6 million as at December 31 2008. In contrast, its current assets amounted to RM71.4 million.

Novotel Hydro Majestic is operated by France's Accor group.

Pulai Springs' main property is the Pulai Springs Resort in Johor. It also operates the The Pulai Desaru Beach Resort.

In the financial year ended December 31 2008, Pulai Springs' net loss widened to RM8.36 million on revenue of RM80.81 million.

Its resort and hotel division recorded net loss of RM4.69 million on revenue of RM67.36 million.

According to its 2007 annual report, Novotel Hydro Majestic contributed RM20.7 million in revenue.

Penang's Mah family, which runs Hydro Hotels Sdn Bhd, bought the abandoned hotel building and completed it.

It was sold to Pulai Springs for RM10 million in 2006. The price took into account the fair market value of the land and hotel of RM130 million and the total development cost of the hotel of RM120 million.

Pulai Springs was listed on the main board in December 2002.

By Business Times

Selangor Prop to clear residential stocks

SELANGOR Properties Bhd (SPB) wants to clear the residential property stocks in its current projects before launching new development phases as sales have plunged almost 50 per cent.

"People are more cautious. Average sales used to be 20 to 30 units a month but now it has been reduced by 50 per cent despite attractive interest rates," financial controller Lee Boon Kian said after SPB's annual general meeting in Kuala Lumpur today.

SPB has two ongoing projects at Bukit Permata in Gombak and Selayang Mulia, with both developments comprising about 40 hectares each.

The Bukit Permata development is 75 per cent completed while Selayang Mulia is half completed.

Lee said out of the residential 560 units in Bukit Permata, 270 units were unsold.

"There are plans to launch the next phase of development in Bukit Permata and Selayang Mulia and another project in Ulu Langat but these are all in the planning stage," he said.

According to Lee, the new phases and project may be launched late this year or early 2010.

He said the Ulu Langat project will be a mixed property development.

For the financial year ended Oct 31, 2008, the group recorded a net profit and minority interests of RM118.6 million based on a turnover of RM210.6 million.

On the outlook, Lee said: "We can't match that kind of profit (for the current financial year) as part of last year's profit came from foreign exchange gains."

Besides property development, SPB is also involved in the education business.

On talks that the company will be privatised, SPB corporate affairs manager Chong Koon San said there was no such plan.
Asked if SPB planned to acquire more land, Lee said it was looking for such opportunities in the Klang Valley "but prices have not come down that much yet."

By Bernama

Nilai's four-star hotel nears completion

PK Resources Bhd is investing RM58 million to build a four-star hotel adjacent to the Nilai Springs Golf & Country Club in Putra Nilai, Nilai Springs Resort Sdn Bhd general manager G.K. How said today.

Construction of the nine-storey 183-room Nilai Springs Resort Hotel is progressing smoothly since last year and is nearing completion.

"According to our plan, we are to do the soft launch on June 8. The hotel is slated to start full commercial operations in September," he said.

How said the hotel would have the "Azuma Fusion Restaurant" serving a variety of Japanese, Korean and Chinese food and western food by "Springs Cafe".

The stall-styled "Golfers' Terrace" will serve local cuisines. There are also "Fairway Lounge" and "Splash Station".

The hotel also has facilities for golfing on a 27-hole golf course, badminton, tennis and squash courts, swimming pool, gymnasium, jaccuzi, sauna, spa and a health centre and children water play park.

"Other facilities are a ballroom that can accommodate 550 people at one time and 12 meeting rooms. We also have facilities for team-building such as wall climbing, rappelling and flying fox, he said.

How said the accommodation package at the hotel was open to all including flight transit passangers, cabin crew, golfers, foreign tourists, businessmen and Formula One riders and spectators during the Petronas Malaysia Grand Prix F1 championship at the Sepang International Circuit.

How said under the current uncertain global economic climate, Nilai Springs Resort, a wholly-owned subsidiary of PK Resources, was optimistic the hotel investment was a viable and profitable venture.

"I believe after the challenges and pressures posed by the global economic turmoil end in two years, we expect a good occupancy of 75 to 80 per cent.

"For the next two years, our occupancy projection is 55 and 60 per cent. We are confident of achieving this target as the hotel has only 183 rooms.

"In fact, we have already received bookings from several F1 racing teams coming for the F1 championship at the Sepang International Circuit next year.

The optimism to woo hotel guests stems from the hotel's strategic location proximity to the KL International Airport in Sepang, Low-Cost Carrier Terminal, Sepang International Circuit, Cyberjaya Intelligent City and Putrajaya federal government administration centre.

PK Resources (formerly known as (Peladang Kimia Berhad), a property developer, is currently focusing on Putra Nilai (new name for Bandar Baru Nilai) township via its wholly-owned subsidiary BBN Development Sdn Bhd.

Putra Nilai is one of the largest townships within the Multimedia Super Corridor and strategically located in the vicinity of the Kuala Lumpur International Airport, Putrajaya and Cyberjaya.

Spanning over 6,200 acres of freehold land, Putra Nilai is today a diverse, modern township with a multitude of residential, commercial, recreational, educational and administrative amenities and a well landscaped environment.

By Bernama

Malton wins RM175m mall job

MALTON Bhd through its wholly-owned subsidiary, Domain Resources Sdn Bhd, has been awarded a RM175.0 million contract to build a seven-storey shopping mall in Petaling Jaya, Selangor.

In a filing to Bursa Malaysia today, the company said the project will start in August this year.

It is scheduled for completion in November 2011.

The project is expected to contribute positively to the earnings and net assets of the group.

By Bernama

Still some shine in Sunway City

ECM Libra Research has reaffirmed its buy call on Sunway City Bhd albeit with a lower target price of RM2.96 (RM3.60 previously) on expectation that the property sector would be finding a floor soon from which steady recovery can be built upon.

Like most property developers, Sunway City has seen demand for its properties take a tumble amid fast deteriorating economic conditions.

However, ECM expected work progress to pick up in the months ahead following the decline in building materials prices. Sunway City’s property development earnings in the near term will be underpinned by strong unbilled sales of RM869 million which is more than 1.2 times property development revenue in FY08.

The research house added that recurring income from its property investment division was also looking strong having more than doubled since the completion of the expansion of Sunway Pyramid and opening of Sunway Carnival in late 2007.

“We expect 49% of its Ebitda (earnings before interest, tax, depreciation and amortisation) in FY09 to come from property investment. Its jewel in the crown is Sunway Pyramid shopping mall which is contributing over 70% of Ebitda from property investment,” it noted.

ECM also said that it was only a matter of time before Sunway City becomes the largest Malaysian real estate investment trust (M-REIT).

“While the company’s plan to list its vast investment properties into a REIT last year was derailed by the global economic downturn, we remain optimistic that this will happen once confidence returns to the capital market.

“Based on our estimate by using a cap rate of 7%, the size of its REIT could be around RM3.1 billion which will put Sunway City as sponsor of the largest REIT in Malaysia,” it said, noting when that happens, intrinsic values of its properties would be unlocked, adding 45 sen per share.

Considering its resilient property investment earnings and potential value enhancement upon listing of its REIT, ECM said Sunway City was significantly undervalued, trading at a valuation of only 0.5 times its book value — equivalent to the valuation last seen during the minor property downturn in 2001.

“Furthermore, Sunway City is a good high beta play on recovery of the property sector. Despite its resilient earnings from property investment, its beta of 1.37 is the highest among property investment vehicles such as KLCC Property, IGB, KrisAssets as well as REITs,” said the research house.

Despite having gained 37.2% over the last one month, ECM believed Sunway City still has further upside potential due to improving investor sentiment of late.

“Further upside will be supported by our revised net asset value (RNAV) estimate of RM5.48 as well as positive earnings growth delivery and announcement of REIT listing,” it added.

Sunway City climbed 13 sen to close at RM2.19 yesterday.

By The EDGE Malaysia

Rehda: Lifting of 30% bumiputra equity will encourage competition

KUALA LUMPUR: The Real Estate and Housing Developers’ Association Malaysia yesterday welcomed the lifting of 30% bumiputra equity condition on 27 services sub-sectors.

Its president Datuk Ng Seing Liong said the liberalisation would have a positive impact and attract more foreign investments.

“The liberalisation will not only promote Malaysia as a hub for investors to carry out business but also encourage a healthy and competitive environment among local entrepreneurs, especially during this softening global economy,” he said in a statement.

Ng said the move would also help grow businesses and, in turn, boost demand for real estate.

He hoped that the housing and property development sector would also be liberalised in the future.

Meanwhile, the Malaysian Investors Association also welcomed the move.

President Datuk Dr P.H.S. Lim said many foreign multinational companies (MNCs) preferred to have 100% equity ownership in order to have a free hand in their corporate management.

He said MNCs also found it hard to attract good partners.

Lim said Malaysia needed further liberalisation of investments following the globalisation of the economy.

He said that in the mid-1980s, the country was in pole position when it came to foreign direct investments because at that time, China and other Asean countries had poor infrastructure and were not competitive.

“Today, these countries have advanced and are competitive,” he said.

By Bernama

MBSB plans to finance RM300mil property project

PETALING JAYA: Malaysia Building Society Bhd (MBSB) is looking to finance a property project worth RM300mil under its newly launched MBSB Musharakah Joint Venture Programme.

“We are talking with a company, with the involvement of government-linked companies,” chief executive officer Ahmad Zaini Othman said after the soft launch of the programme here yesterday.

MBSB, a 52.9% subsidiary of the Employees Provident Fund, specialises in personal financing, mortgage and corporate businesses, as well as treasury and structured funds.

Ahmad Zaini said the latest programme was in line with MBSB’s new direction to reposition itself in the Islamic financial market.

Considered the first of its kind in Malaysia, the programme offered partnership in property development, contract financing and object/asset financing, especially to developers, land owners and contractors, he said.

According to Ahmad Zaini, the programme offers attractive margin of financing and assured project completion.

“It will enable MBSB to undertake corporate financing activities on a joint-venture basis, using the underlying Islamic financing contract of musharakah,” he said.

He said for MBSB to gain a stronger footing in musharakah, the company was now in talks with a local Islamic bank to form a partnership.

“We hope for the partnership to take shape in May or June, which will provide us with an avenue for greater resources,” he said.

By Bernama

MBSB set to build RM300m property via musharakah

MALAYSIA Building Society Bhd (MBSB), a finance company, said it is poised to partner a government-linked developer to build a RM300 million property under its latest Islamic finance product.

It launched the musharakah programme yesterday, basically a joint venture concept where the lender and partner work on a venture and share the profits and losses, unlike conventional banking.

This is the most preferred and globally accepted financing structure, especially in the Middle East. However, it has yet to make it big in Malaysia.

"This is an untapped market and we are excited of the prospects for our programme," MBSB chief executive officer (CEO) Ahmad Zaini Othman told a briefing after the launch in Petaling Jaya yesterday.
Last year, musharakah made up only 3 per cent of the total approved Islamic financing of RM30 billion in Malaysia.

"Ours is a business model, not a lending model. We have an investment committee and not a credit committee like banks do," he said.

Ahmad Zaini, who was formerly AmIslamic Bank CEO, said since MBSB is not under Bank Negara Malaysia, there was no need for the central bank's approval for its musharakah programme.

MBSB is exempted from the banking law and it reports to the Finance Ministry and not Bank Negara.

Ahmad Zaini said the approval process for this financing will be rigorous as MBSB only wants genuine partners.

"We have to do this strategically and be a responsible partner."

MBSB is 67 per cent owned by the Employees Provident Fund and about 15 per cent by Permodalan Nasional Bhd.

By Business Times (by Roziana Hamsawi)

Tanjung Manis Halal Park rakes in RM9b

The Tanjung Manis Halal Park, located on the west coast of Sarawak, has attracted RM9 billion in investments since its launch in February this year.

The Halal Industry Development Corporation (HDC) chief executive officer Datuk Seri Jamil Bidin, who disclosed this said, the investments comprised RM6 billion from six Taiwanese companies and the remaining by local ventures.

The companies concerned are involved in agriculture, biotechnology and food-related businesses, he told reporters after the launch of the World Halal Forum in Kuala Lumpur today.

The Tanjung Manis Halal Park is the first one-stop halal park in East Malaysia for upstream and downstream halal food and manufacturing.

By Bernama

Binaik fourth to be taken private this year

Binaik Equity Bhd, a property developer, is set to be taken private in a deal worth some RM19 million, making it the fourth company that wants its shares to be taken off Bursa Malaysia this year.

Minority shareholders will be offered 75 sen a share, 23 per cent higher than its last closing price of 61 sen on Monday.

The stock was suspended from Tuesday and will resume trading today.

Binaik's major shareholder, Yeo Brothers Sdn Bhd (YBSB), has sent a letter to the board, asking the company to consider the privatisation.
The main reason for this is the poor trading volume of its shares.

"The average daily trading volume of Binaik shares for the past three years up to April 20 was approximately 37,000, representing only 0.15 per cent of Binaik's current public shareholding spread of 25 million shares," the company said in a statement to Bursa Malaysia yesterday.

Binaik will carry out a selective capital repayment exercise for the privatisation. This means that the company will return its capital to shareholders, excluding those who will not participate, normally the major shareholders.

YBSB and its related parties, which hold a total of 74.41 per cent of Binaik, will not take part in the repayment.

The Johor-based Binaik will use internal funds, borrowings, or a loan from YBSB to fund the repayment.

The company was barely profitable last year. It made a net profit of RM41,000 compared with RM1.3 million in financial year 2007. Revenue, however, increased to RM80 million from RM72.2 million in 2007.

Binaik will have to hold a shareholder meeting to seek approval for the capital repayment. It has hired HwangDBS Investment Bank Bhd as its adviser and expects the deal to be done by the end of September.

By Business Times

Sime seeks buyer for hotel

Conglomerate Sime Darby Bhd has put up for sale its decade-old hotel in the heart of historical Malacca.

The five-star 496-room Hotel Equatorial Melaka will probably be sold for an estimated RM180 million, or roughly RM363,000 per room, sources told Business Times.

The sale is said to to be in line with Sime Darby's intention to sell non-core businesses.

Hotel Equatorial Melaka is owned by Syarikat Malacca Straits Inn Sdn Bhd, in which Sime Darby holds 55 per cent and the Malacca state government 30 per cent. The rest is held by Hotel Equatorial (M) Sdn Bhd, which is also the operator.
Sime Darby officials were unavailable for comment.

Sources close to the deal said that Zerin Properties has been appointed as the exclusive agent for the sale. Zerin Properties could not be reached for comment.

A source, who disclosed that several offers have been received for the property, said the agent was hopeful of completing the deal by the year-end.

If Sime Darby got its asking price, based on its interests, it could get as much as RM99 million from the sale.

It is believed that the hotel, with average occupancy of more than 60 per cent and average room rate of RM180 per night, made some RM37 million revenue in its last financial year.

Its earnings before interest, tax, depreciation and amortisation last year stood at around RM11 million.

Malacca, the third most visited state after Kuala Lumpur/Selangor and Penang, was proclaimed a World Heritage Site by the United Nations Educational, Scientific and Cultural Organisation (Unesco).

Last year, it welcomed 7.2 million tourists. It projects 8.4 million arrivals this year. By 2010, it hopes to attract 13 million tourists.

Hotel Equatorial Melaka, located in Bandar Hilir, is a 22-storey building with three basement floors for parking. It has seven food and beverage outlets and a ballroom seating capacity of 1,300.

The hotel is within walking distance of the A Famosa fort and the Stadthuys.

According to a Sime Darby website, its hospitality involvement includes the PNB Darby Park Executive Suites in Kuala Lumpur, Harvard Suasana Hotel in Kedah and Darby Park Executive Suites in Singapore.

By Business Times (by Vasantha Ganesan)

Property prices, rentals take dip

KUALA LUMPUR: The Valuation and Property Services Department is already seeing signs of a decline in selling prices and rental yields within the Malaysian property market in the first quarter of 2009.

Director-general Datuk Abdullah Thalith Md Thani attributed the reasons for the price and rental dip to the global economic downturn and the poor market sentiment locally.

Deputy finance minister Datuk Wira Chor Chee Heung (left) officiating the launch of the 2008 Market Report with Valuation and Property Services Department director general Datuk Abdullah Thalith Md Thani (right). Looking on in the background is Valuation and Property Services Department deputy director for valuation Abdul Hamid Abu Bakar.

“Given the choice, I want conditions to improve tomorrow. But I don’t want to speculate when it (the economy) will recover,” he said at the launch of the 2008 Property Market Report yesterday.

He said he expected both the (RM7bil and RM60bil) stimulus packages and the on-going projects under the Ninth Malaysia Plan to help cushion the effects of the global financial crisis.

He also said he was optimistic about the number of property transactions during the first three months of 2009. The local property market recorded 340,240 transactions valued at RM88.34bil in 2008. The transaction volume recorded a 9.9% increase (2007: 309,455 transactions), while value grew by 14.5% against 2007’s RM77.14bil.

The residential property sub-sector remained the most dominant sub-sector in 2008, comprising 63.7% of total volume and 46.8% of total value of transactions.

In total, 216,702 transactions worth RM41.30bil were recorded in 2008 against 199,482 transactions worth RM36.5bil in 2007. By price range, houses costing below RM200,000 continued to be the most sought after, comprising 75.1% (162,689 transactions).

The agricultural property sub-sector was the next most transacted, forming 20.3% of total transactions, followed by commercial property at 9.3%, development land (4.3%) and industrial property (2.4%).

Abdullah said the industrial property sub-sector would be the most vulnerable in 2009.

“It (the industrial sub-sector) has been affected for quite some time already and its contribution to economy is not big. But I am not so concerned about this sector because an industrial development can always be redeveloped for different sector usage,” he said.

He also said the high-end segment of the residential property sub-sector was most likely to be affected, given the current economic situation.

Deputy Finance Minister Datuk Wira Chor Chee Heung, who graced the event, expressed optimism about the local property market.

“Malaysians have a high savings rate. The stimulus package should also help to spur the local property market. In terms of demand, property in large populated cities like Kuala Lumpur and Johor Baru will also continue to sell,” he said.

By The Star (by Eugene Mahalingam)

EcoFirst rebrands education mall

PETALING JAYA: EcoFirst Consolidated Bhd aims to achieve a yield of up to 7.5% annually for its South City Plaza in seven years after the rebranding of its key property asset into an educational mall due for launch on Friday.

Tiong Kwing Hee (inset) says South City Plaza will be rebranded as Edu Mall @ South City.

Executive director Tiong Kwing Hee said the rebranding of the Edu Mall @ South City was part of the group’s restructuring exercise to give a good return for its long-term investment in the property.

“We aim to sell the property to real estate investment trusts once we achieve our targeted yield within seven years,” he told StarBiz.

Currently, about 4,000 students are receiving higher education and vocational training offered by eight institutions at the five-storey mall in Seri Kembangan, Selangor.

Among them are EcoFirst’s 27%-owned associate SEG International Bhd (SEGi), International College of Health Sciences and Summit Multimedia Education Sdn Bhd.

The group targets to increase the number of students at the mall to 6,000 by year-end and 10,000 by end of next year.

“We have allocated about 25% of the total lettable area of the mall, or 200,000 sq ft, for these educational providers, which received competitive rental rates of RM1.50 per sq ft from us,” said Tiong.

“We still have about 70,000 sq ft reserved for educational tenants.”

To enhance the value of its property, EcoFirst plans to build two blocks of 13 to 14-storey apartments which can house about 3,000 students on top of the mall to be leased to SEGi.

With a gross development value of RM75mil to RM80mil, the serviced apartments were expected to be completed within 24 months after construction starts in the fourth quarter.

“We plan to take about RM50mil in bank loans to fund the project, which would cover about 73% of the costs,” said Tiong.

“We are confident that the serviced apartments would give 6.5% to 7% returns to SEGi yearly.”

EcoFirst had last year invested about RM5mil to give the mall a facelift.

By The Star (by Shannen Wong)

Property market expected to fall slightly this year

MALAYSIA'S property market is expected to worsen this year as the global economic uncertainties deepen.

The Valuation and Property Services Department of the Finance Ministry director-general Datuk Abdullah Thalith Md Thani said the local property market will fall moderately further this year, with signs of pressure looming.

This is based on data collected by the National Property Information Centre in the first quarter of this year.

"It showed negotiated price and rental rates are heading downwards," he said at the launch of the Malaysian House Price Index and the Property Market Report 2008 by Deputy Finance Minister Datuk Chor Chee Heung in Kuala Lumpur yesterday.
Abdullah Thalith said the number of new housing projects launched in 2009 will remain as last year.

But property transactions and value are expected to drop by 5-10 per cent in the current year, unless the government's RM67 billion stimulus packages bear fruit soon.

"The effects of the stimulus packages will have to kick in soon to cushion off the effects in the global economic crisis and for the property market to recover," he added.

Last year, the property market recorded 340,240 transactions with a total worth of RM88.34 billion, indicating a growth of 10 per cent and 14.5 per cent respectively.

The residential segment was the most dominant sub-sector, accounting for 46.8 per cent of the transactions and 63.7 per cent of total volume.

Abdullah Thalith said the industrial sub-sector will be the most pressured this year as the majority of the companies are service or export-oriented and affected by market turbulence.

A total of 8,126 transactions worth RM7.9 billion were recorded last year, which was an increase in volume by 2.6 per cent and 11.5 per cent respectively.

In line with the dismal outlook in industrial activities, the number of industrial overhangs, unsold under construction and unsold not constructed units grew by 30 per cent.

Earlier, Chor urged developers to weigh a project's viability thoroughly and innovate where possible, before embarking on new developments.

"Lower costs will enable you to offer buyers attractive packages. Make less profit now, but build your goodwill so that when the economy uplifts, you will be the property provider of their choice," he said.

Chor said there is no doubt that demand for all properties will go through a slow period. But there are no signs of a bubble development as the government is stabilising property prices.

He said based on the Property Market Report, the average price of all property sub-sectors in 2008 was on the uptrend.

By Business Times (by Sharen Kaur)

iProperty.com unveils one-stop MM2H website

PROPERTY online portal iProperty.com Malaysia has launched a one-stop website for Malaysia My Second Home Programme (MM2H) to educate and help foreigners interested in the programme.

The group has teamed up with iHome Management & Services Sdn Bhd to jointly launch the online portal in www.iproperty.com.my.

“It will serve as a link between potential participants and the agents who will educate them about the programme and assist them in the application process,” iProperty.com group executive chairman Patrick Grove said in a statement.

By Business Times

Property mart to see moderate growth in 2009

The property market looks set on the path of moderation in 2009 with prices and rentals correcting and construction activities easing slightly amid the current economic situation.

However, it is unlikely that prices and rentals will plunge in the coming years, said Valuation and Property Services Department, Ministry of Finance in its report released today.

The department said the residential sector is expected to gain from several measures under the Budget 2009.

For 2008, the property market recorded 340,240 transactions valued at RM88.34 billion, it said.
The transaction volume recorded 9.9 per cent increased from 309,455 transactions while value grew by 14.5 per cent from RM77.14 billion.

During the year, the primary market did not perform as well as the previous year as there were 48,830 new housing units offered for sale, of which only 21,725 units taken out.

In tandem with the dismal performance of the primary market, the number of residential overhang increased by 9.1 per cent to 26,029 against 23,866 units in 2007.

The report was launched by Deputy Finance Minister Datuk Wira Chor Chee Heung.

By Business Times

I&P turns bullish on sales

The property developer now expects to maintain revenue of RM750 million that it made last year, thanks to the good response to its Mad About Homes campaign

PROPERTY developer Island & Peninsular Bhd (I&P) has turned bullish on sales this year, thanks to the good response to a promotion campaign it launched in February.

It now expects to maintain revenue of RM750 million that it made for the year to December 31 2008. In March, I&P's chief told Business Times that the company was expecting revenue to fall by a third due to slower sales.

"Cautiously, we will try to maintain last year's revenue. We have a few strategies. We will be more innovative and may extend the campaign to boost sales," managing director Datuk Jamaludin Osman told Business Times in a recent interview in Kuala Lumpur.

I&P, a wholly-owned unit of state-owned fund manager Permodalan Nasional Bhd (PNB), has been getting good responses from the public since launching its Mad About Homes campaign.

In just two months, it sold 77 units of double-storey terraced houses and semi-detached homes, worth almost RM35 million. These are units within its Bandar Kinrara, Alam Impian and Alam Sari townships in Puchong, and Shah Alam and Bangi in Selangor.

I&P is also selling more bungalow lots this year.

It is releasing 15 lots for sale by way of tender, with reserve price starting from RM546 to RM572 per sq ft, at its 17.01ha Seri Beringin development in Bukit Damansara, Kuala Lumpur.

The company normally sells about five to seven lots a year.

Jamaludin is optimistic of selling all the 15 lots by the end of this year. Since 2005, the company has sold 54 bungalow lots in Seri Beringin.

I&P, which is focused on developments in the Klang Valley, is also reaching first-time buyers from outside the region.

It is collaborating with PNB to promote its products and developments. To do this, it is participating in Minggu Saham Amanah Malaysia (MSAM) 2009 in Johor Baru, Johor.

Jamaludin said I&P is taking the opportunity to participate in MSAM as it will be a good opportunity to showcase its properties.

"By participating in MSAM, people can identify PNB, not just as a unit trust conglomerate, but having companies who are reliable and giving dividends to the group. We hope to also get more exposure and recognition from Johor market and increase our database," he said.

I&P has been participating in MSAM since the first exposition in Kuala Lumpur in 2000.

By Business Times