SP Setia shares down 12.3pc on lower Q2 profit

Shares of SP Setia Bhd, the country's biggest property developer, slid 12.3 per cent yesterday after its second quarter net profit came in below market expectations.

It fell 54 sen to RM3.84, making it the second biggest loser in the stock market.

Its net profit for the quarter ended April 30 fell by 16 per cent to RM40.5 million because of lower profit margins as the price of building materials rose.

"It is on track to meet its RM1.1 billion sales target (this year) but at the expense of profit margins," analyst Ong Chee Ting of Maybank Investment Bank said in a report yesterday.

He retained a "sell" call on the company but raised his target price to RM2.90 from RM2 given recent market liquidity and good sales achieved.

Credit Suisse downgraded the stock to "underperform" from "neutral", saying that despite strong property sales, its profit margins are under pressure.

By Business Times

IJM-LFE joint venture secures Abu Dhabi job

The joint venture between IJM Corp Bhd and LFE Corp Bhd has received a AED318.38 million (AED100 = RM99.28) contract from Tamouh Investments LLC of United Arab Emirates for reinforced concrete substructure and superstructure works.

The project, under the first phase of Plot 1, Zone E2 hotel development at Al Reem Island, Abu Dhabi, is expected to be completed on February 28 next year.

The joint-venture company is 70 per cent owned by IJM Corp’s wholly-owned subsidiary, IJM Construction Sdn Bhd (Abu Dhabi Branch), and 30-per cent owned by LFE Corp's wholly owned subsidiary, LFE Engineering Sdn Bhd (Abu Dhabi Branch).

By Business Times

SP Setia falls on profit drop, rating cut

SP Setia Bhd, Malaysia’s biggest property developer, fell to a 10-day low after saying fiscal second-quarter net income dropped 15 per cent and JPMorgan Chase & Co downgraded the stock.

The shares slid 3.7 per cent to RM4.22 at 12:30pm break, set for the lowest level since June 9. The stock is the worst performer on the benchmark Kuala Lumpur Composite Index today.

The shares, which have surged 36 per cent this year, outpacing the benchmark index’s 21 per cent advance, have taken into account the outlook for earnings and the prospects for a liberalisation in government policies that may benefit the property industry, JPMorgan said in a report today.

“The good news has been priced in,” Simone Yeoh, an analyst at JPMorgan, said in the report. The shares have outperformed and trade at 25 times 2010 expected earnings, she said.

SP Setia’s price-to-earnings multiple is double the average of 13 times among Malaysian property stocks in Malaysia, according to data compiled by Bloomberg. Yeoh cut her rating on the company to “underweight” from “neutral” and lowered the target price to RM3.60 from RM3.80.

SP Setia in April led a rally among Malaysian property developers that made them the country’s best performers for that month, after central bank data showed loans approved for home purchases in March jumped the most in at least a year.

Luring Investors

SP Setia’s profit in the three months ended April 30 dropped to RM40.5 million because of lower profit margins as the cost of building materials rose.

While the company’s sales momentum has picked up, “aggressive” incentives are putting profit margins under pressure, according to the JPMorgan report.

SP Setia raked in RM803 million of sales as at June 15, as the company, in its property campaign, absorbed buyers’ stamp duties, legal fees and interest costs during the construction period.

The company is boosting sales by “sacrificing margins,” Ong Chee Ting, an analyst at Maybank Investment Bank Bhd, said in a report today. The shares are “way too expensive,” he said.

By Bloomberg

IJM joint venture wins hotel job in UAE

KUALA LUMPUR: IJM Corp Bhd said its joint venture has won a RM303mil contract from Tamouh Investments LLC to help build a hotel at Al Reem Island in Abu Dhabi, the United Arab Emirates.

The contract, awarded to a company owned by IJM and LFE Corp Bhd, involves the construction and completion of one block of 34-storey five-star hotel tower on three-storey podium, a 24-storey hotel apartment on a three-storey podium, two levels basement carpark and other associated foundation and external works.

The package one project is expected to be completed on Feb 28, 2010.

The joint-venture company is 70:30 owned by IJM Construction Sdn Bhd and LFE Engineering Sdn Bhd, which are wholly owned units of IJM and LFE Corp respectively.

By The Star

IJM shares up on Mideast delight

IJM Corp, Malaysia’s second biggest construction company, rose for the first time in seven days after OSK Research Sdn Bhd raised the stock rating on the builder’s RM303 million (US$86 million) Abu Dhabi project.

The shares added 1.8 per cent to RM5.55 at midday break, bound for the largest increase since June 10.

The “Middle Eastern delight” led Jeremy Goh, an analyst at OSK Research, to upgrade IJM to “trading buy” from “neutral” and raised the stock’s target price to 6.10 ringgit from 6.0 ringgit.

Petaling Jaya, Malaysia-based IJM said yesterday a joint venture owned by the company and LFE Corp won the contract to build a hotel in Abu Dhabi from Tamouh Investments LLC. The project is expected to be completed by the end of February next year, IJM said.

“We expect subsequent awards to flow over the coming months” following this contract, said Goh, who also raised his forecast for IJM’s 2010 and 2011 profits to RM318.9 million and RM353 million, respectively, on the expectation that the builder will secure more projects worth about RM1.7 billion by the end of the year.

“This amount is expected to include two contracts that could be substantial in value,” Goh said. He also expects IJM to participate in the Light Rail Transit extension project in Kuala Lumpur.

By Bloomberg

Halal hub project to help KHSB return to profitability

KUMPULAN Hartanah Selangor Bhd (KHSB) is set to return to the black by end-2009 as it starts to gain from the development of its industrial properties, especially the Selangor Halal Hub (SHH) in Pulau Indah, Klang.

The property arm of the state's investment firm Kumpulan Darul Ehsan Bhd also plans to dispose of non-strategic properties to improve its financial standing after suffering a loss of RM35 million in the last financial year ended December 31 2008.

"We have fully sold Phase 1 of SHH comprising 88ha of industrial land within four years, worth a total of RM133 million," said its executive chairman Datuk Abdul Karim Munisar.

He said Phase 1 is expected to bring in direct investments worth more than RM1 billion, creating about 2,000 new jobs.
Abdul Karim said major players that will operate in the area include Ramly Food Industries Sdn Bhd, Felda, Mara and PML Dairies.

"All facilities have been put in place. It's only a matter of time before these companies start construction of their facilities. One company has started construction and is expected to begin operations in two years," he said.

Speaking to reporters after KHSB's annual general meeting in Shah Alam, Selangor, yesterday, Abdul Karim noted that reclamation works for Phase 2 which involves 97.6ha of industrial land with a gross development value (GDV) of RM234 million have been completed.

"Negotiations with potential foreign and local investors are still ongoing, and we expect to conclude sales worth at least RM70 million this year," he said.

Abdul Karim said construction of the South Klang Valley Expressway is also expected to enhance the accessibility to Pulau Indah and will be a catalyst of growth for the Pulau Indah development.

"We expect to fully sell off Phase 2 within five years," he said.

With a land bank of more than 1,600ha, KHSB, together with Kumpulan Darul Ehsan, are also looking into the possibility of venturing into sand and minerals exploration and exploitation to diversify its cash stream.

"Besides the 1,600ha of land we have now, the state agency is expected to transfer another 2,000ha of land to us to help improve the cash flow of the company in the future," he said, adding that the firm is in the midst of acquiring a strategic land in Petaling Jaya for a proposed mixed development with a GDV of RM600 million.

For financial year ended December 31 2008, the company's revenue dropped 60.08 per cent to RM96.1 million from RM240.8 million previously.

By Business Times (by Azlan Abu Bakar)

KHSB banks on land sale, halal hub

SHAH ALAM: Kumpulan Hartanah Selangor Bhd (KHSB) is set to return to the black in the current year ending Dec 31 (FY09) after it disposes of land and reaps profit from its ongoing projects.

“Our focus will be on industrial properties, particularly in the Selangor halal hub project on Pulau Indah, Klang.

“We also plan to dispose of non-strategic land,” executive chairman Datuk Abd Karim Muniar said, without elaborating.

Speaking after a shareholders’ meeting here yesterday, he said the property unit of Selangor’s state investment arm Kumpulan Darul Ehsan Bhd had already locked in sales of RM133mil for its Selangor halal hub.

“Phase 1 comprising 220 acres has been fully sold, yielding sales of RM133mil.

“The total gross development value of the 244-acre Phase 2 is RM234mil and sales are expected to be completed in three to five years,” Abd Karim said.

Talks were ongoing with both foreign and local parties and KHSB expected to secure sales of RM70mil from the second phase of the Selangor halal hub project by the year-end, he said.

“Phase 1, which is expected to commence business in the next two years, is projected to bring in direct investment of RM1.06bil to Pulau Indah and create at least 2,000 jobs,” he added.

Among the major players that would operate there are Ramly Food Industries Sdn Bhd and Felda Holdings Bhd.

KHSB recorded a net loss of RM38.5mil on revenue of RM93.4mil for FY08 mainly due to provisions and impairment losses.

The company currently has a total land-bank of 4,000 acres, largely in Selangor.

Abd Karim said KHSB was in discussions to acquire a 9.5-acre in Section 14, Petaling Jaya, for a mixed property project with an estimated gross development value of RM600mil.

He said the company was also exploring opportunities in the sand and minerals exploration.

By The Star

WCT sets sights on new LCCT

SHAH ALAM: WCT Bhd has set its sights on taking part in the construction of the proposed RM2 billion low-cost carrier terminal (LCCT) in Sepang.

Its deputy managing director Goh Chin Liong said yesterday that WCT, as one of the largest construction and property developers in Malaysia, would want to bid for the construction of the new LCCT.

“They have started to call for the pre-qualification exercise of the project through the newspapers and we will just continue to pursue,” he told reporters after the company’s AGM yesterday.

Last month, Malaysia Airports Holdings Bhd (MAHB) announced that open tenders for the new LCCT would be out this month and a project management company was appointed.

Goh said most construction companies locally were trying to get part of the contract. However, he said it would take several months before WCT received feedback about its interest in the project.

While WCT had placed its hopes on securing the new LCCT project, the company was on track to reach its targeted order book of RM1 billion for this year alone, Goh said.

The company had earlier in the year secured additional works for the Abu Dhabi F1 circuit and the new Doha International Airport project which amounted to nearly RM500 million.

As of March this year, WCT’s order book of RM2.9 billion was sufficient to last until end-2010, he said.

“We have cash and bank balances with fixed deposits totalling about RM650 million as per the first quarter of 2009.

It is certainly a strong and healthy cash flow,” he said when asked to comment on WCT’s balance sheet.

On recent analysts’ reports that WCT was close to securing a billion ringgit infrastructure project in Sabah, Goh neither confirmed nor denied WCT’s involvement but said WCT was among the more active construction players in that state.

“If we have secured such a project, we will announce at the appropriate time to Bursa Malaysia.

The analysts might not have gotten the information from us and sometimes they speculate,” he pointed out.

On the RM720 million upgrading of the Kota Kinabalu International Airport, Goh said WCT had finished building the new wing at the terminal building and it had completed 80% of the refurbishment in the old wing.

Goh also said WCT’s objective was to improve its earnings for the financial year ending Dec 31, 2009, despite posting a 29.5% lower net profit to RM39.22 million in the first quarter ended March 31, from RM55.58 million in the same quarter last year.

Last year, WCT posted a net profit of RM101.33 million on the back of a RM3.71 billion revenue.

WCT fell 16 sen to RM2.03 with 7.03 million shares done yesterday, in line with the weaker overall market.

By The EDGE Malaysia (by Yong Min Wei)

WCT on lookout for jobs in Mideast

SHAH ALAM: WCT Bhd has given a sombre outlook for the year as big construction jobs get harder to come by and the property market has turned softer.

Hazy order-book visibility for WCT and the construction sector as a whole, however, did not hamper the Employees Provident Fund’s (EPF) appetite for WCT shares.

Latest filings with Bursa Malaysia showed the pension fund now owns the single largest block of shares in WCT with a 26.3% stake. The EPF started the year holding 18.77% in the company.

“It (the EPF) had not asked for board representation,” chairman Datuk Ahmad Sufian Abdul Rashid told a press conference after the group’s AGM yesterday.

WCT’s share price took a beating in January and drifted below RM1 by early March on a massive sell-off following the termination of a contract at an on-going project to build a race cource in Dubai.

The case is currently under arbitration.

Despite the setback, deputy managing director Goh Chin Liong said the group was still actively scouting for new jobs in the Middle East.

Earlier this year, it bagged a total of RM500mil worth of new contracts in Abu Dhabi and Qatar. The contracts are additional jobs given by its existing clients.

“We are very cautious about taking on new ventures” in view of the weak global economic situation, Goh said.

WCT is targeting to achieve RM1bil worth of new order book this year, which is in line with analysts’ expectation.

As at end-March, the group’s total outstanding order book stood at RM2.9bil. This includes some RM750mil worth of internal jobs such as The Paradigm commercial development project in Kelana Jaya, Selangor.

Several brokerages, including Maybank Investment Bank and RHB Research, had recently linked WCT to upcoming huge infrastructure development projects in Sabah and Sarawak.

“All that we can say is that we are active in Sabah,” Ahmad Sufian said.

Currently, WCT is involved in ongoing works at the Kota Kinabalu International Airport and a water supply project in Kudat. In September last year, the company launched a high-end residential project called d’Banyan Residency@Sutera in Kota Kinabalu.

Consensus estimates put WCT’s current financial year ending Dec 31, 2009 (FY09) earnings per share at 17.3 sen, but falling to 15 sen per share in FY10.

WCT’s share price had doubled from its low point in March, and was up 34% year-to-date at RM2.03 yesterday.

By The Star (by Izwan Idris)

What will houses and buildings look like in the future?

Ten years from now, we will probably be eating food that has yet to be invented. Even if it’s green gunk cultured in a petrie dish, we will eat it with gusto, knowing that we are helping to save the planet.

Similarly, after a hundred years under a rock, the motor vehicle industry is beginning to evolve, despite the design of the latest Proton Saga which looks like something my father would have been proud to own. In 10 years, we may all be driving hybrids or electric cars.

The traditional rowdy Mat Rempits may have given way to a new generation who will steal up behind old ladies in their silent electric MPVs and flatten them before they have a chance to look round. Nevertheless, this will all be accepted as the price of progress.

A fight for survival is the most powerful incentive to evolution, whether you’re a microbe or a personal financial consultant. Sadly there is a complacency pervading the housing industry which has produced little innovation in the last 30 years.

Arguably, those who live in link houses will only aspire to bigger ones. The more fortunate in life will buy a bungalow with lots of roof, windows from Alcatraz and corinthian columns framing the entrance portico.

But there is little experimentation. Cluster houses were a flop, timber is passé, and “modern tropical” has become a catchphrase for koi ponds and bathrooms for exhibitionists.

Even though speculative housing needs to have broad appeal, niche developers have been slow to emerge with a response to the fundamental changes in the Klang Valley demographics. A younger middle class may not be so obsessed with the ownership of landed property and may focus more on lifestyle. The Verve Suites in Mont Kiara are a rare and successful example of this philosophy.

Britain has seen an interesting response to changing demand patterns. The high divorce rate has produced a huge band of middle-aged singles looking for companionship, but blended with a desire for some privacy. The emergent real estate solution is a small group of separate living units, linked to a communal lounge and recreation area. This sounds to me a lot like my student digs of the 1960s. I’m sure it’s much more sophisticated although it doubtless shares the same cherished objective of mindless bonking.

If one is looking for a single major evolutionary shift in global real estate markets, the buzzword is probably ‘sustainability.’ Exactly what comprises sustainability is well illustrated on this chart.

Phrases such as “best practice” and “diverse and flexible workplace” may sound alien and idealistic but they are objectives which are rapidly becoming the expectations of any multinational company. This year’s expectations are next year’s demands, so we need to be aware of these changing standards and plan for them.

In practical terms, the “triple bottom line” involves three elements: high technical specifications, environmental responsibility and financial viability.

A need for high technical specifications now applies to practically any new office development. Few businesses can now operate without IT. Even suburban buildings which are traditionally the refuge of the cost-conscious, now have to meet minimum technical requirements.

Environmental responsibility encompasses the provision of a pleasant workspace and office buildings with in-house facilities such as a gymnasium, senior staff canteen and even a swimming pool are becoming popular.

Equally importantly, energy-saving is becoming and will remain a major issue, particularly with the introduction of internationally accepted “green” standards by which buildings can be graded.

Finally of course, financial viability is paramount. “Green” buildings with attractive facilities are not cheap to develop and so far, the only incentive to incurring this additional cost is the belief that sustainability will become crucial to lettability. Over time, I believe this extra cost will be accepted as inevitable and capital values will rise, like social values, to meet the market.

● Chris Boyd is executive chairman of Regroup Associates Sdn Bhd property consultants. We welcome your feedback on this article. Please write to starbiz@thestar.com.my

By The Star (by Chris Boyd)

Deal with Dubai developer collapses

Property developer UEM Land Bhd's plan to sell 17.4ha of land to one of Dubai's largest private developers for RM396.5 million has fallen through.

The deal, which was first struck in June 2008, was for Damac Properties (Malaysia) Sdn Bhd to develop three parcels of commercial land that forms part of Puteri Harbour at Nusajaya in Johor.

Under a sale and purchase agreement (SPA) signed in June 2008, both sides were to have agreed to the conditions of the agreement by June 2009.

"The termination will have no impact on our financial results as the expected revenue from this proposed transaction has not been recognised in our accounts," UEM Land managing director and chief executive officer Wan Abdullah Wan Ibrahim said in a state-ment yesterday.

UEM Land and Damac had been in discussions on certain issues relating to the conditions of the deal. However, they were not able to come to an agreement on these issues and have now agreed for the SPA to be terminated.
Damac on June 16 told UEM Land it did not agree to further extensions of the extended approval period, causing the SPA to lapse.

"Given the current global economic conditions and the impact on many companies and countries including those in the Middle East, we felt that there is no point in pursuing the matter and that a termination of the SPA was in UEM Land's best interest," Wan Abdullah said.

"Our aim is to accelerate the momentum of development and investment in Puteri Harbour. The foundation has already been laid and we have received strong interests from potential investors to partner us in developing the area. We are confident of concluding some of these deals in the near future," he added.

News reports as recent as April had already raised questions regarding the deal, given Damac's troubles following the property bubble bursting in Dubai beginning end of last year.

In December 2008, Damac cut 200 jobs or 2.5 per cent of its workforce.

The company has also called off its Palm Springs project, a 25-storey residential and resort development, planned for the Jebel Ali Palm in Dubai.

UEM Land has another Dubai-based partner in Limitless LLC as a major investor in Nusajaya. Its joint venture is through Haute Properties Sdn Bhd, which will develop a 44.4ha residential project in Puteri Harbour with an initial investment of RM241.8 million.

It is understood that a layout for this project has already been submitted, and will continue as planned, with completion scheduled for 2013 with an estimated gross development value of more than RM1.5 billion.

By Business Times

UEM Land, Damac sale agreement lapses

PETALING JAYA: UEM Land Bhd’s agreement with Damac Properties (M) Sdn Bhd for the RM396mil sale of 43.5 acres in Puteri Harbour, Nusajaya has lapsed.

UEM Land told Bursa Malaysia yesterday Damac had failed to resolve issues relating to the conditions of the purchase agreement within the agreed period.

Managing director and chief executive officer Wan Abdullah Wan Ibrahim said the termination would have no impact on the company’s financial results as the expected revenue from this proposed transaction had not been recognised in its accounts.

“The exit of Damac would not impact the development of Nusajaya as we are currently in talks with new developers to take over its place,” it said.

According to sources, developers from Australia and Singapore have expressed interest to purchase parcels of land in Puteri Harbour, the waterfront development in Nusajaya.

By The Star

UEM Land down after Dubai firm pulls out of RM396m deal in Nusajaya

KUALA LUMPUR: UEM Land Holdings Bhd share price fell this morning after Damac Properties (M) Sdn Bhd, which is part of Dubai's Damac Group, pulled out of a deal with UEM Land to acquire a piece of land for RM396.44 million in Nusajaya, Iskandar Malaysia.

At 9.40am, UEM Land was down 9 sen to RM1.74. It was also among the most actively traded counters with 10.22 million shares done in early trade.

Yesterday, UEM Land said it had received notification on Tuesday that Damac would not be interested in further extending the sales and purchase agreement (SPA), which was signed on June 12 last year.

The company told Bursa Malaysia that under the terms of the SPA, the period to fulfil the condition would expire 12 months from the date of the SPA unless extended by mutual agreement by both parties.

"The parties had been in discussions on certain issues relating to the conditions precedent and a possible extension of the extended approval period. However, on Tuesday, UEM Land received notification stating that they are not agreeable to further extension of the extended approval period," it said.

UEM Land said the SPA relating to the proposed disposal had lapsed and was of no further effect.

By The EDGE Malaysia (by Surin Murugiah)

Genting: Sentosa project on track, within increased budget

The gaming group says the casino project in Singapore is set to have its soft opening in the first quarter of next year

GAMING group Genting Bhd says the casino resort it is building in Singapore is on track for a soft opening in the first quarter of next year and that its construction cost is within the increased budget.

"Genting International revised the budget earlier because the project had overrun the initial budget. At this point, it is within the enlarged budget," Genting chairman and chief executive Tan Sri Lim Kok Thay told shareholders during its annual meeting in Kuala Lumpur yesterday.

Genting International, recently renamed Genting Singapore plc, said earlier this year that its investment in the casino resort on Sentosa Island was expected to increase to S$6.6 billion from S$6 billion (RM16 billion from RM14.5 billion).

"The cost has increased because we have added and changed some specifications so that we will end up with a much, much better project from the original," Lim said.
He added that the project, which boasts of a Universal Studio theme park, Hard Rock Hotel and the world's biggest oceanarium, will open in stages, starting with the casino.

"This is a large project. It is not prudent to launch all at one go although that's the ideal. The plan is to open the gaming part first to get cash flow intact," Lim said.

Genting Singapore is a 54.4 per cent-owned subsidiary of the group.

Lim quelled speculation that Genting was eyeing an ultimate investment in Macau through the recent purchase of a 3.2 per cent stake in MGM Mirage and US$100 million (RM353 million) of its bonds.

MGM Mirage, a major casino operator on the Las Vegas strip, is part of a joint venture in Macau.

"We are treating it as an investment at the moment, to maximise returns on cash rather than keeping it in deposits. The plan is no more than that," he said.

"The bond is secured against two top quality assets and, if repayments failed, we can collect the collateral. The management recognises that this is a good investment.

"As we get to know MGM better, we hope we can strike out some marketing alliances."

Lim also said that despite the recession in the UK, the group expects its investments there "to turn in profits at the same time as projected when it made the acquisitions".

The group acquired control of Stanley Leisure, the UK's largest casino operator, in October 2006.

"The business has got a lot of potential," Lim said. Already a major player in the UK, the unit can later expand to Europe, which is a "greenfield for gaming".

"It will be good to get the timing right for investment, but no one has predicted this round of financial crisis."

On another development, Lim said that Genting was just a "minor player" in Rank Group, the UK's bingo hall operator in which Tan Sri Quek Leng Chan's Guoco has reportedly built up a 24.1 per cent stake as of last October.

Genting owns about 11 per cent of Rank, according to media reports.

By Business Times (by Chong Pooi Koon)

Serviced apartments in Hong Kong more resillient

KUALA LUMPUR: The serviced apartment sector in Hong Kong has been relatively more resilient than the luxury residential market during the current economic downturn, according to real estate services agency Colliers International (Hong Kong) Ltd.

According to the "Serviced Apartments Overview - June 2009" report published by Colliers International recently, between August 2008 and April 2009, the average rental of serviced apartments registered a -12.9% fall compared with a fall of -24.6% for luxury residential leasing property.

The pace of serviced apartment rental decline slowed to -1.7% month-on-month (m-o-m) in April 2009 to HK$44.78 psf per month.

The average rental of serviced apartments decreased 6.4% quarter-on-quarter (q-o-q) in 4Q2008 and 5.4% q-o-q in 1Q2009. Average luxury residential rentals fell 13% q-o-q in 4Q2008, while its downward adjustment narrowed to 8% q-o-q in 1Q2009 as inexpensive opportunities were snapped up by early-bird occupiers.

The rate of decline in rentals tapered off further to less than 2% m-o-m, with average unit rate at HK$34.87 psf per month. Individual serviced apartments of medium-to-large sizes experienced a double-digit fall in rental.

Director of research and advisory Simon Lo said in a statement that a number of occupiers had chosen to relocate to cheaper areas, or to downgrade their accommodation in terms of size or quality due to the general tightening in housing allowances.

"Sustained weakness in occupational demand and the cost-cutting initiatives among multinational companies remain the major challenges for the overall residential leasing market," he added.

Colliers said the leasing demand has dropped significantly, and some vendors have changed their leasing strategies by offering competitive rentals to fill their units in view of a demand contraction.

Some 75% of serviced apartment tenants have also chosen short term leases of less than six months, it added.

Colliers expects rentals in the luxury residential market in Hong Kong to fall 12% over the next 12 months, while the potential rental downslide in the serviced apartment sector will be limited to 8% during the same period, as the latter will continue to be resilient with its services and flexible lease terms.

By The EDGE Malaysia (by Racheal Lee)

I-Bhd to offer IT solutions to others

From left: Eu Hong Chew, Tan Sri Hamad Kama Piah Che Othman and Datuk Seri Kong Cho Ha looking at a model of i-City after the launch of the iO2 system Tuesday.

SHAH ALAM: I-Bhd, the developer of i-City commercial project, is looking to offer its digital technology solutions to other developments in the region.

Speaking at the launch of the I-Office Squared (iO2) system yesterday, chairman Tan Sri Hamad Kama Piah Che Othman said this would be a technology-based income for the company.

“I-Bhd will have another revenue stream to complement the one from property development when this roll-out is fully operational,” he said.

The system was launched by Housing and Local Government Minister Datuk Seri Kong Cho Ha.

Hamad said tenants at i-City would be offered a range of built-in facilities and services that would enable them to lower operational costs.

I-Bhd has teamed up with Cisco and Australia-based Servcorp to set up a joint-venture, i-Office2 Sdn Bhd, to provide managed services to i-City and other property projects in the country.

The iO2 is a multi-tenant managed service system. The key tenant service offerings include high-speed Internet access, IP telephony and unified communications, wireless/mobility solutions, network and physical security and control over their office environments.

I-Bhd CEO Eu Hong Chew said the company would focus on local markets for its technology solutions services before venturing into other countries in the region.

“We will probably have the first roll out of the iO2 system beyond i-City by early next year,” he told StarBiz in a phone interview.

He said I-Bhd was looking to either invest and provide its solutions to projects undertaken by other developers or license the products to them.

By The Star (by Rachael Kam)

I-Bhd plans digital expansion outside i-City

GOING BIG ON DIGITAL... I-Bhd is planning to expand its digital technology solutions beyond i-City, says its chairman Tan Sri Hamad Kama Piah Che Othman (3rd from left) at the launch of the property developer’s i-Office2 system in Shah Alam yesterday. At the event, Housing and Local Government Minister Datuk Seri Kong Cho Ha presented a certificate of recognition to Hamad for i-City’s unique and innovative property development. Also present were (from left) I-Bhd non-executive director Eu Hong Chew, Shah Alam mayor Mazalan Md Noor and I-Bhd deputy chairman Datuk Lim Kim Hong. Photo by Abdul Ghani Ismail

SHAH ALAM: Property developer I-Bhd is looking to expand its digital technology solutions to other development areas in the country and the region.

Speaking at the launch of the i-Office2 (iO2) system here yesterday, I-Bhd chairman Tan Sri Hamad Kama Piah Che Othman said the company’s latest endeavour would provide it with technology-based income.

“When this rollout is fully operational, I-Bhd will have another revenue stream to complement the one from property development,” he said.

Hamad Kama Piah said the built-in facilities and services of i-City would enable clients to save costs due to the extensive planning, significant economies of scale and strategic alliances with partners. iO2 is the result of a joint venture between I-Bhd and Australian virtual business offices creator Servcorp to deploy network and telecommunication services throughout the i-City development.

Housing and Local Government Minister Datuk Seri Kong Cho Ha, who launched the iO2 system, said it was not surprising that digital technology was incorporated into property development.

“This ICT-enabled commercial development will act as a catalyst to spur more growth for activities driven by economies of knowledge especially in the IT-related sector,” he said.

By The EDGE Malaysia

I-Berhad upbeat on new revenue

I-BERHAD, developer of the RM2 billion i-City project in Shah Alam, Selangor, will have a new income stream starting next year that will improve its revenue and net profit, a top official said.

Already the company is expecting revenue to improve this year, mainly because it has, in the past six months, leased 300,000 sq ft of office space in i-City, an MSC Malaysia Cybercentre.

By December, I-Berhad will complete and lease an additional 200,000 sq ft of office space, its director Eu Hong Chew said.

In the past, I-Berhad's income was mainly from property sales. It posted a net profit of RM15.3 million on revenue of RM95.8 million last year.

Chairman Tan Sri Hamad Kama Piah Che Othman said I-Berhad, in partnership with Australia's Servcorp, will offer its managed office system, a digital technology solution that has been the tackling point for i-City, to developers involved in commercial projects.

Initially, I-Berhad and Servcorp, through i-Office 2 Sdn Bhd, their 35:65 joint-venture firm, will offer the technology to developers in Malaysia. It may branch out to Southeast Asia in a few years and target high-end residential developments, too.

Hamad added that i-Office will invest RM100 million over the next 10 years in information technology infrastructure, equipment and services in i-City for the roll-out plan.

"We will roll out the services beginning the first quarter of 2009. When fully operational, I-Berhad will have another revenue stream to complement the one from property development," he said at the launch in Shah Alam yesterday by Housing and Local government Minister Datuk Kong Cho Ha.

Under the plan, i-Office will deploy an IP-based open network platform in i-City that allows building technologies such as heating ventilation and air-conditioning and CCTVs, among others, to be integrated with traditional IP-based communications systems on a common network platform.

"When tenants relocate to i-City, they would be offered a range of built-in facilities and services, enabling them to lower their operational costs by 33 per cent. The same goes to tenants in other developments, which have applied our technology," said Hamad, who is also the president and chief executive officer of state-owned investment fund Permodalan Nasional Bhd.

By Business Times (by Sharen Kaur)

KYM to sign RM300m medical hub deal soon

The medical complex project in Malacca is expected to see KYM back in the black as early as next year, says KYM group managing director

Property developer KYM Holdings Bhd is expected to sign an agreement as early as next week to help build a RM300 million medical complex in Malacca, its group managing director Datuk Raymond Chong Thin Choy said.

"Construction of the medical hub should start by early next year," Chong told Business Times in an interview.

The federal government-funded project, under the Ministry of Health, will include construction of a state health administration centre, nursing institute and public health laboratory.

KYM, controlled by Datuk Lim Kheng Yew, will have 70 per cent stake, while its partner in the venture, Yayasan Melaka, a state government agency, will hold the remaining 30 per cent.
The project is expected to see KYM back in the black as early as next year, said Chong.

"We are targeting to break even in the financial year ending January 31 2010 and rake in sustainable profits from 2011 onwards."

KYM last reported a profit of RM28.7 million in 2006.

Its return to profitability and planned transformation from property developer to infrastructure player hinge largely on the sale of its landbank in Perak to Brazil's Vale SA, the world's biggest iron ore producer.

Completion of the multi-million-ringgit deal will help KYM degear itself, bringing its gearing ratio to as low as 0.41 time, or RM29.08 million, from the current 8.94 times, or RM209.73 million, while its net tangible asset is poised to rise to 89 sen a share from 29 sen.

The metal producer, which intends to pump in as much as RM9 billion into the Perak economy, has agreed to buy land in the silver state from KYM for RM101.9 million.

Vale also has an option to buy more land from KYM for RM93.7 million.

"It's truly a godsend," said Chong, adding that KYM is hoping to get as much as 10 per cent, or RM900 million worth, of the construction contracts on offer by Vale.

Securing RM900 million worth of jobs could help keep KYM busy for the next three years. Vale is expected to start developing the land as early as next year.

Chong also said that KYM in-tends to venture into quarrying in Perak to complement Vale's operational needs.

By Business Times (by Francis Fernandez)

US housing construction rebounds sharply

WASHINGTON: US housing construction rebounded sharply in May from all-time lows, official data showed yesterday, stoking hopes the real-estate crisis at the heart of the recession may be easing.

The Commerce Department reported construction starts on privately owned homes vaulted 17.2 per cent in May from the prior month to a seasonally adjusted annual rate of 532,000, marking a third consecutive month of gains.

Building permits, an indicator of future activity, leapt to a seasonally adjusted annual rate of 518,000, an increase of 4.0 per cent from April.

By AFP

Mah Sing buys land next to Sri Pulai Perdana 2

MAH Sing Group Bhd has bought a 2.3ha freehold land next to its existing Sri Pulai Perdana 2 project for about RM2 million.

This brings the total land size of Sri Pulai Perdana 2 in Johor Baru to about 29ha, with RM225 million estimated gross development value.

“The increase in gross development value of Sri Pulai Perdana 2 arising from future development on the (purchased) land is expected to enhance the future profit and net assets of Mah Sing Group,” the company said in a statement to Bursa Malaysia.

By Business Times

Cool roofs for hot climates

Heat absorbers: Concrete surfaces absorb heat, causing the heat island effect. If roofs and buildings are painted white, they will reflect the heat instead.

The stifling heat might have gotten some of us thinking about how best to cool our homes without pushing up the electricity bill in this time of financial crunch.

Dr Gary Theseira thinks he has the answer – simply reflect the light and heat back to the atmosphere. He suggests that we look at the potential of our roofs – that space that is directly exposed to the sun and absorbing vast amounts of heat during the day – as a reflector.

He says conventional tiles absorb heat as almost all are made from material that do not reflect heat and the heat absorption is intensified manifold with the dark-coloured tiles preferred by most Malaysians.

The botanist with the Forest Research Institute of Malaysia (FRIM), who has represented Malaysia at several United Nations climate change negotiations, is frustrated that no one take is taking him seriously about making changes to our roofs.

Theseira feels the world is giving disproportionate attention to the loss of white snow cover at the poles, and is failing to address the heat island effect of cities at the Equator, where the heat intensity is 2.5 times higher than at the pole.

“If we at the Equator bounce off the light and heat back to the atmosphere, that would really help,” he explains.

Having designs on the roof as a climate change mitigating tool is not a new idea but it hasn’t caught on in a big way. In fact, the roof is not the only building surface that can help lower the temperature of buildings.

“In the Middle East and Mediterranean, for thousands of years, buildings have been traditionally white-washed to keep them cool in the summer,” says Dr Hashem Akbari, who heads the Heat Island Group of the Lawrence Berkeley National Laboratory at the University of California, Berkeley, California, in the United States.

(Heat island is a phenomenon where an urban centre is significantly warmer than its surrounding rural area due to the modification of land surfaces and heat generated by high energy usage.)

Akbari is known for his relatively simple idea to cool the earth’s urban surfaces: make all rooftops and paved surfaces white. He is pioneering the white-roof concept and recently launched the 100 Cool Cities programme to get homeowners to switch to white roofs or at least a cool-coloured roof. No cities have signed on, however, despite showing interest.

“I am hoping to create an international programme to recruit as many large cities as possible. My current focus, in addition to the US cities, are China, India, Brazil and the Middle East. I would like to make sure that the building standards in all these countries prescribe white or cool-coloured materials for roofs,” he says in an e-mail interview.

Akbari found that communities with white roofs and cool pavements are a few degrees cooler, thus requiring less air-conditioning in the summer. Also, a lower ambient temperature reduces the reaction rate of smog-producing pollutants, leading to better air quality.

Akbari’s work shows that replacing 10sqm of a dark roof with a reflectivity of 0.15 albedo (reflecting only 15% of incoming solar radiation) with a white roof with a reflectivity of 0.55 will offset about one tonne of carbon dioxide (CO2) emissions.

White is best

“If all cities in hot and temperate climates were to use white material on their roofs or cool-coloured materials, we can offset about 24 gigatonnes of CO2 emissions which is equivalent to over 10 years of emissions from all cars in the world. The current world emission is about 27 gigatonnes, ” he says.

He says a white roof has an initial reflectance of about 0.7 to 0.85 albedo. Over time, its reflectivity drops (due to dust collection) to about 0.55 to 0.65 albedo, depending on the location and climate.

Globally, roofs account for 25% of the surface of most cities, and pavement accounts for about 35%.

“I call it win-win-win,” Akbari says. “First, a cooler environment not only saves energy but improves comfort. Second, cooling a city by a few degrees dramatically reduces smog. And the third win is offsetting global warming.”

He says some leading industries are pushing the idea while some, who are afraid of losing market share, resist.

His colleague Arthur Rosenfeld, who is a commissioner with the California Energy Commission, told the San Francisco Chronicle in an interview, that the team estimated that a worldwide conversion to white rooftops would take at least 20 years.

Rosenfeld said California is the only state to embrace white roofing, at least for commercial projects. In 2005, with the aid of Akbari’s research, the state passed a building standards law that requires all builders to first consider cool colours for major retrofits or new buildings.

Akbari says the roofing industry responded well, designing new materials and cooler colours to appeal to builders and homeowners seeking cost-savings and ecological benefits. Cooler colours refer to paint with cool pigments that reflect more of the near-infrared part of the solar spectrum. Painting or coating roofs is one option, he adds.

While costs (without incentives from the government) is prohibitive, there are Malaysians who have embraced the idea at their own expense. When Tony Cheah of Taman Tun Dr Ismail in Kuala Lumpur decided to renovate his single-storey link house two years ago, he came across a UV-resistant roof coating called Tileflex.

“Replacing the whole roof would have cost me in excess of RM25,000, not to mention the mess I would have had to endure. I had no intention of changing the original tiles which were still in excellent condition,” he says, adding that he ended up paying RM6,500 and got a new coating for the roof in three days.

While Cheah couldn’t specify the savings in electricity bill or provide a reading of the ambient temperature in the house post-renovation, he says the house “is considerably cooler”.

Lim Voon Bin, director of Nuruf Sdn Bhd which distributes Tileflex, says electricity savings will be apparent in the long run. He claims the product reflects up to 3°C of heat.

Lim ran a roof-making business for 30 years before he closed down his factory in Nilai in 2004 when he realised that he would be helping the environment if he could “restore roofs rather than replace them”. So far, he has restored 150 houses since 2005, as eco-consciousness takes root among Malaysians.

By The Star (by Hilary Chiew)

Scomi eyes US$2.5b monorail job in Brazil

Scomi Engineering is banking on its excellent delivery time track record to win the tender for the first phase, which will open in the middle of next month.

Scomi Engineering Bhd is confident that it can win a US$2.5 billion (RM8.8 billion) job to set up a monorail system in Sao Paulo, Brazil's largest city, says president Hilmy Zaini.

The tender for the first phase, which will open in the middle of next month, is part of a 100km monorail project to be commissioned by the State of Sao Paulo in preparation for the 2014 World Cup, to be held in Brazil.

Scomi Engineering will be the systems supplier and designer of the project, while CR Almeida will work on the civil construction.

The state government has earmarked some US$10 billion (RM35.2 billion) to design monorail lines and modernise its metro lines.
The US$2.5 billion is for the first 45km of the monorail line.

"We are banking on our excellent delivery time track record to be a main attraction, because of the June 2013 deadline the Brazilian authorities have, as well as the fact that we have a very strong civil construction partner in CR Almeida," Hilmy said.

This in turn will provide numerous opportunities for implementing monorail systems in the 12 cities selected to host the games.

The city of Sao Paulo is set to host the opening match.

Scomi Engineering is hosting the Brazil Monorail Consortium delegation comprising officials from the transportation and planning departments of the city and State of Sao Paulo on a visit here since June 11.

The visit is part of a fact-finding mission. The delegation will also go to India to view Scomi's project in Mumbai in addition to visiting Japan.

The delegation will not only meet with embassies and senior management but will also stop by the Asian Oil & Gas exhibition, take a ride on the Kuala Lumpur Monorail and visit Scomi's North KL facility.

Sao Paulo Metro's director of metropolitan transport planning and expansion, Jair Felipe Molina, said it hopes to announce the winner of the tender between end-August and mid-September and have construction start by January next year.

SP Trans SP Brazil's director of transportation, Pedro Luiz de Bnida Machado, said there were also plans for another monorail line in the south zone of Sao Paulo, estimated to be worth US$4 billion (RM14 billion).

By Business Times (by Presenna Nambiar)

Piling starts on Johor's biggest condo project

Construction has started on the RM650 million Iskandar and Oakwood Residences in Danga Bay, touted as Johor's biggest condominium development.

The contract for piling works was awarded to Econpile (M) Sdn Bhd, a specialist piling contractor, which is expected to finish the job by October.

Actual building of the three-tower project, comprising about 750 luxurious units, will begin soon. Completion is scheduled for 2012.

The condominium project, taking up 2.5ha, is being developed by Global Corporate Development Sdn Bhd, a joint venture between Iskandar Waterfront Development Sdn Bhd (IWD) and Danga Bay Sdn Bhd (DBSB).

IWD is majority owned by Iskandar Investment Bhd, in which Khazanah Nasional Bhd holds a 60 per cent stake; the Employees Provident Fund, 20 per cent; and Kumpulan Prasarana Rakyat Johor, a state government-linked company, 20 per cent.

Johor Menteri Besar Datuk Abdul Ghani Othman, who is also Iskandar Regional Development Authority (Irda) co-chairman with the Prime Minister, visited the site last Saturday.

Present were IWD chairman Arlida Ariff and chief executive officer Datuk Lim Kang Hoo.

The 28-storey Oakwood Residence, with 230 units, is the southern region's first high-end serviced apartments to be managed by Oakwood Asia Pacific Pte Ltd.

The other two 38-storey towers, called Iskandar Residences, will have 523 residential units.

The podium block will offer a wide range of shopping, food and beverage facilities. Also available will be some 150,000 sq ft of corporate suites for local and multinational corporations keen to set up office in Iskandar Malaysia.

Several other signature waterfront developments in Danga Bay will be announced soon, including at least three hotel properties, an international convention and exhibition centre, office towers, and a wet and dry theme park.

By Business Times (by Sim Bak Heng)

UEM Land in talks with 3 foreign parties for tie-up

KUALA LUMPUR: UEM Land Bhd, the master developer of Nusajaya, is in talks with three foreign parties on possible strategic partnerships for its Puteri Harbour project.

Managing director and chief executive officer Wan Abdullah Wan Ibrahim said the company hoped to conclude the deals this year.

“We hope to seek greater foreign participation besides our existing two Middle Eastern partners,” he said in an interview.

Spanning over 688 acres, the Puteri Harbour waterfront development consists of high-end residential, commercial and retail properties, resorts, hotels and a convention centre.

Wan Abdullah said the group would proceed with all its development plans regardless of the weakening economy.

“We have no choice but to continue with our projects because our company is still growing as a property developer.”

Unlike more established property developers, UEM Land could not afford to defer its projects as this would have a severe impact on its medium-term growth, he said.

“However, we believe the biggest challenge for us this year is to manage our cash flow well in order to meet our business targets,” he added.

On its new project line-up this year, Wan Abdullah said preparation was currently under way for the launch of Phase 2 of its East Ledang project with an estimated gross development value (GDV) of RM195mil.

East Ledang would be developed in seven phases with a total GDV of RM2.4bil. It is a gated high-end, low-density, resort-style residential development that covers 275 acres comprising 861 units.

Phase 1, launched in February last year comprising 139 units, has a take-up rate of 80%.

Wan Abdullah said the group was also expected to launch next to East Ledang soon the Ujana, comprising a 23-storey residential tower with 172 executive apartments and four penthouses.

The company had identified a gap in the market and planned to launch residences comprising medium-cost housing with a GDV of RM630mil by the fourth quarter, he said.

“We will move into more medium-cost housing projects as this is what the market needs right now. More affordable housing, priced from RM140,000, will be built in the next few years at our schemes,” he added.

The medium-cost precinct will cover 261 acres along the Pontian Link that has not kicked off yet.

By The Star (by Shannen Wong)

YNH’s serviced residences to be managed by Fraser & Neave

GEORGE TOWN: YNH Property Bhd rebranded a month ago its RM350mil 163 Seviced Suites project as the five-star Fraser Place Kuala Lumpur to be managed by Frasers Hospitality Pte Ltd, the hospitality arm of the Fraser & Neave Group.

Fraser Hospitality manages four and five-star serviced residences equipped with hotel facilties worldwide under its prestigious Fraser Place, Fraser Residence, Fraser Suites, and Fraser Resort brand names.

Fraser Place Kuala Lumpur is scheduled to commence operations and grand opening in November 2009.

“We brought in Fraser Hospitality to manage because this will enhance returns and add value to our investors from the rentals of the serviced suites,’’ YNH corporate services head Daniel Chan told StarBiz.

“We estimated that for the location – Jalan Perak – where the project is located, which is five minutes from the KLCC shopping complex, the yield generated from rental is between 6% and 10% per year based on the purchase price of the units.

“Fraser Place Kuala Lumpur will be one of the higher-yield generating properties based on the purchase price of the units, which ranges from RM600,000 to RM2mil,” he said.

Chan said Fraser Place Kuala Lumpur was sold out, leaving only about RM80mil in unbilled sales to be recognised.

YNH started selling the project back in late 2005, and completed the sales only recently.

“The investors, both local and foreign, have agreed to lease their properties back to us, as they realised that they could generate higher returns through Fraser Hospitality management,” he said.

Fraser Place KL offers 217 rooms, comprising studios with one and two bedrooms and luxurious penthouses, with built-up areas ranging from 450 to 4,000 sq ft.

Chan said the group had also engaged Fraser Hospitality to manage its 446-unit serviced residence development to be known as Fraser Residence Kuala Lumpur, off Jalan Sultan Ismail, next to Renaissance Hotel.

The RM550mil project, comprising two 30-storey towers with one and two-bedroom serviced apartments, features a sky gymnasium, infinity lap pool, whirlpool and sauna.

“It is scheduled for completion in four years,” Chan said.

On the group’s 95-acre land in Genting Highlands, he said YNH planned to develop residential cum commercial projects with an estimated gross sales value of RM2bil.

On the group’s other projects, Chan said YNH had recently achieved sales of RM300mil for Menara YNH’s retail podium, which measures 180,000 sq ft.

“The offer from Kuwait Finance House to take up 50% of the office space in Menara YNH is expected to be finalised this year,” he said.

On the Kiara 163 project, located next to Plaza Mont Kiara, Chan said the group had achieved sales of RM200mil for the commercial component measuring 480,000 sq ft.

“We will launch the residential component, comprising serviced apartments, soon as there are a lot of enquiries from the local and overseas market,” he added.

By The Star (by David Tan)

Three-star Hotel Sentral targets budget travellers

HOTEL Sentral (KL) Sdn Bhd, a privately-held company controlled by the Ta family, has opened the RM80 million Hotel Sentral, a three-star property in Brickfields, Kuala Lumpur, aimed at budget travellers.

The 192-room 16-storey hotel is located behind the monorail station, which is opposite the Kuala Lumpur Sentral development.

The company's managing director and founder May Ta said she has no qualms about opening the hotel now eventhough city hotels are suffering from low occupancy due to poor market sentiments.

Ta told Business Times that the company is branding the property as a value-for-money destination.

"While we are a three-star property, we are providing in-room safe, an LCD flat screen television in each room, and WIFI services. The hotel is located within walking distance to KL Sentral and public transporation," Ta said.

Walk-in room rates start from as low as RM138 nett for a standard room, to RM345 nett for an executive suite.

Ta added that Hotel Sentral is expected to achieve 60 per cent occupancy at an average room rate of RM110 by December 31 2009.

"We have been operating for just a month and are running at more than 60 per cent currently. We are enjoying from AirAsia's night flights. The first place travellers want to go to upon reaching KL Sentral is to the nearest hotel. This will contribute to growth for the property," Ta said.

Since its opening, Hotel Sentral has received guests from New Zealand, Australia, Japan and India.

Ta said she is optimistic the company will be able to recoup its investments in the hotel over the next 8-10 years.

"Brickfields will be the future Little India and this will encourage more travellers to come towards this part of Kuala Lumpur. We will be investing a lot over the next one year to position the hotel," she said, adding that the rich heritage of Brickfields will bring customers to the hotel's doorstep.

The hotel was officially opened by former Tourism Minister Datuk Tengku Adnan Tengku Mansor on Saturday, witnessed by ex-Inspector General of Police Malaysia Tan Sri Norian Mai, and Datuk Ruslin Hasan, former mayor of Kuala Lumpur.

Ta's father, Tan Sri Ta Kin Yan was also present.

By Business Times (by Sharen Kaur)

Hotel Sentral plans to go regional in 3 to 4 years

The Ta family has been involved in operating hotels and resorts in Malaysia for over 15 years and is planning to branch out to Southeast Asia in three to four years.

Hotel Sentral (KL) Sdn Bhd managing director and founder May Ta said the family wants to continue its legacy to provide value-for-money destinations for all groups of people internationally and not restricted to Malaysians.

"We feel operating budget hotels and three-star properties is the best business to be in whether in Malaysia or overseas. There are many budget travellers looking for the best deals," she told Business Times.

The hotel is headed by Ta, a 25-year-old with a degree in international business from Perth, Australia.

Ta is not new to the hotel business. She has been involved in the hotel business since 12, following her family's footstep, especially her father, Tan Sri Ta Kin Yan, on his business rounds.

"I have always liked the hospitality industry. I like to interact with people. It is very challenging that way. My grandfather used to run Hotel Lido in Brickfields but sold his stake several years ago. I learnt a lot from him," she said.

The Ta family owns among others, the three-star Olympic Hotel and New Winner Hotel in Brickfields, Puduraya Hotel in Kuala Lumpur, Pulau Redang Resort in Terengganu, and Wenchang Golf Club in Hainan Island, China.

Ta said the properties are 60-70 per cent occupied currently despite the slowdown in the economy.

"We have always been involved in running budget hotels and three-star properties. We plan to move up a notch and venture into four-star hotels and resorts soon. We are targeting Malaysia, China and Thailand, but much will depend on opportunities," Ta said.

By Business Times

Reconsider height limit on hotel projects, Penang council urged

The Real Estate and Housing Developers' Association Malaysia (Rehda) has called on the Penang Island Municipal Council to reconsider the restriction made to limit Penang's inner city hotel projects to 18m height or five-storey.

"We respect the decision made by the Penang state authorities to preserve George Town as a world heritage site, but the restriction is unfair to the industry," Rehda president Datuk Ng Seing Liong said in a statement.

The association said it is concerned that the state planning department is now applying the 18m height blanket restriction despite having given approval for the four projects initially.

"It is premature for the state to pre-empt Unesco's decision on the status of the four projects. This is because Unesco has yet to decide how the 18m height restriction would affect the four approved projects in the state's heritage and buffer zones," Ng said, referring to the RM400 million The Pier Hub @Weld Quay project, the RM140 million Boustead Royale Bintang Hotel in Lebuh Downing, the E&O Hotel's extension project and a 23-storey hotel in Jalan Sultan Ahmad Shah.

He stressed that the state should protect the concerned projects, if it believes in the benefits to be generated by the projects.

Ng said it is important to know Unesco's view on the shortcomings of the heritage listing application with regard to the 18m height restriction.

"The state authorities should seriously review and study the need for such restriction. There shouldn't be any assumption that Penang will lose its world heritage status if the projects are carried out," he said.

By Business Times

PHBB in talks to buy prime KL land for RM250m

The deal to acquire the Railway Asset Corp-owned commercial land by Pelaburan Hartanah Bumiputera Bhd has yet to be done despite news about it three years ago.

Pelaburan Hartanah Bumiputera Bhd (PHBB) is in talks to buy a piece of prime land in Bangsar, Kuala Lumpur, for an estimated RM250 million, a deal that has yet to be done despite news about it three years ago.

The 3.6-hectare commercial land is owned by Railway Asset Corp (RAC), a body set up by the Ministry of Transport to help the government, Keretapi Tanah Melayu Bhd and other railway firms develop railway infrastructure.

An official from RAC told Business Times that RAC had been approached by several developers but it was not ready to sell. The official declined to be named because he is not authorised to speak to the media.

PHBB, which was set up with RM1 billion in hand, is meant to help raise the Bumiputera share of the commercial property market.

While it has made some progress buying prime properties in Kuala Lumpur from private companies, deals with government agencies have been slow.

It was back in 2006 that former prime minister Tun Abdullah Ahmad Badawi said PHBB was in the process of buying several prime land in Kuala Lumpur to be developed as commercial buildings and offices.

The list included the KTM land in Jalan Bangsar, Dataran Perdana in Jalan Davis and the Rubber Research Institute land in Jalan Ampang.

PHBB, a unit of Permodalan Nasional Bhd, has bought the Menara Bumiputra-Commerce in Kuala Lumpur from CIMB Group for RM460 million in 2007.

It is also buying CP Tower, an office building in Section 16, Petaling Jaya, from CIMB-Mapletree Management Sdn Bhd for RM200 million.

Sources said PHBB wants to build properties that are almost similar to the thriving Mid Valley City, which comprises malls, apartments, hotels and office buildings, on the KTM land in Bangsar.

It is unclear if PHBB will develop the project on its own or in a joint venture with RAC. It may well ask builder Malaysian Resources Corp Bhd (MRCB) to help since both are partners in existing projects, the source said.

Together, they are developing a retail complex at Kuala Lumpur Sentral in Brickfields.

They are also developing the RM2 billion Penang Sentral transportation project. PHBB officials were not available for comment.

By Business Times (by Sharen Kaur)

Pavilion KL – meeting needs and demands

Pavilion KL has been earmarked by the Tourism Ministry as a tourism asset, testimony to the value it brings to the Golden Triangle and its surrounding areas.

AS the first employee of Kuala Lumpur Pavilion Sdn Bhd when she became its leasing and marketing director nine years ago, chief executive officer for retail, Joyce Yap, certainly knows what it takes to turn a shopping centre into an award-winning destination.

Joyce Yap... The aim is to build the best retail landmark for the city

She was involved in the project planning and designing of the integrated Pavilion KL development from day one.

Yap came on board Kuala Lumpur Pavilion in 2000 and was involved with the project planning and designing team to conceptualise the layout and positioning plans for the shopping centre.

“Right from the project’s conception, we abide by the principle of ‘form follow function’ which needs an indepth understanding of how a retail centre should function and be operated to cater to the needs and demands of all the stakeholders.

“There are many moving targets involved and we are still improving on our hardwares and softwares that include the building facility, environment, customer service, retail mix and merchandise,” she relates in a recent interview.

Yap says the bosses’ priority then was to put together a strong and high calibre team to translate their plans and vision for Pavilion KL into reality.

“The aim is to build the best retail landmark for the city of Kuala Lumpur. We have taken pains to ensure that all our planning, designs and construction are of world-class standards, comparable with the best in the world,” she adds.

The shopping centre opened its doors in October 2007 and a year later, it took home the FIABCI Malaysia Property Award 2008 under the retail category, which qualified it to enter the world-level FIABCI Prix d’Excellence.

On May 29, it brought home the industry’s Oscar – the FIABCI Prix d’Excellence Award 2009, also under the retail category. China’s Shanghai Wanda Plaza in Shanghai emerged as the second best winner.

With the award, Pavilion Kuala Lumpur is now on the map of world-class shopping centres. Other past winners from Malaysia include 1-Utama and Suria KLCC.

The prestigious award recognises projects that excel in the areas of architecture and design, development and construction, community benefits and environmental impact, and financial and marketing.

Yap says Pavilion KL is the first retail centre in Kuala Lumpur to feature sleek and ultra-modern street front duplex stores and home to flagship stores of international designer brands.

“We are currently operating at 100% occupancy with a total 450 tenants. Plans are afoot to expand the retail space by another 30,000 sq ft through the exercise of space planning.

“New stores scheduled to open in the shopping centre in the coming months include international brands like TUMI, Van Laack Swarovski, and Austin Chase Coffee,” she adds.

Yap says international shoppers should not forget Kuala Lumpur as a value-for-money shopping destination that offers a great variety of brands and shopping experience.

“In terms of retail infrastructure, Kuala Lumpur is already at par with other cities like London, Tokyo, Singapore and Hong Kong.

“Malaysia offers the cheapest branded cameras and watches although for certain branded fashion products, our prices are about 5% to 10% higher than the Hong Kong Price Index. The country also has some of the finest airports, roads, hospitals, golf courses and international schools.”

Yap stresses that to give a boost to the country’s retail potential, private retail players and the Government should work closely to package all the resources and promote them to the world.

By The Star (by Angie NG)

Redeveloping and conserving Penang’s heritage

It is long overdue for Penang to come out with holistic and well thought out plans and programmes for the redevelopment and rejuvenation of George Town’s inner city.

Proactive and concerted efforts by the state government, the private sector and Penang folks should be initiated soon for a workable blueprint in order for the state to regain its glory as the “Pearl of the Orient”.

In the drawing up of a blueprint for the redevelopment, it is important that all stakeholders, especially property owners and those living, working, and operating their businesses around the inner city perimeters, be consulted and their concerns duly addressed.

Many Penangites, especially those who are illiterate or don’t have the time to read up on current issues, are still in the dark over Penang’s world heritage status and what it means to them.

George Town was declared a World Heritage Site by the United Nations Educational, Scientific and Cultural Organisation (Unesco) on July 7, 2008.

It will do the people good if those involved in the planning of George Town’s growth and development take the initiative to organise roadshows and public education programmes to highlight the salient points and issues to the people, and at the same time get their feedback for the blueprint.

The state government should come out with a referendum and consult all the stakeholders, business guilds, clans, associations, and non-governmental organisations (NGOs) that are working towards conserving Penang’s heritage while ensuring it stays relevant in these modern times.

Although it is important to conserve Penang’s old world charm, rich heritage and culture in keeping with its status as a Unesco World Heritage Site, there should be avenues for the new and modern side of Penang to co-exist with the old to ensure the people’s changing lifestyle and livelihood will not be jeopardised.

As a Penang girl, I am certainly proud of the state’s rich Straits Settlement cum Baba Nyonya heritage and culture that dates back to so many generations of the early settlers from China, India, Indonesia and the Arab continents, among others.

Many Penangites who are now residing in other parts of the country (me included) and overseas always have pangs of nostalgia when recalling their younger days in good old Penang.

Besides the lure of the good Penang cuisines, there are many beautiful historical buildings that were built many centuries ago that are still around in various parts of the island, including the inner city, today.

But there are also many pre-war buildings that are left in very dilapidated conditions after their tenants left those buildings when rentals soared after the repeal of the Rent Control Act in 2000.

Many of these buildings have become hazardous and are unfit for occupancy after their owners failed to upkeep and maintain them.

The introduction of clear and transparent guidelines on what can and cannot be done in the redevelopment of these ageing buildings will revitalise and bring back life to the inner city.

Penang can take a leaf from many cities around the world including London, Sydney and Singapore that have successfully rejuvenated and redeveloped old parts of their cities while maintaining the rich heritage and history for the present and future generations to enjoy.

While many of the historical buildings should be conserved in their current original form such as the restoration of the Cheong Fatt Tze Mansion and Khoo Kongsi buildings, those that are too dilapidated should be redeveloped.

Retaining the original facades of these old buildings while allowing new extension annexes within the permissible heights to be built is one practical way of adding value to these buildings.

Buildings that are too old to be restored should make way for new ones that incorporate the elements of Penang’s “old world charm” in the building’s architecture and facade and are within the permissible heights to blend in with the whole environment.

Making known these practical solutions and guidelines that allow room for value adding and reasonable return on investment will encourage the private sector to partake in the inner city’s rejuvenation and inject a new glow and versatility into George Town.

Currently, some interested parties, including NGOs, are taking a very ad-hoc view of how to go about restoring buildings without looking at the big picture of rejuvenating George Town’s inner city.

Instead of opposing every proposed plans, they should offer value added and constructive ideas that are practical and workable.

It is heartening to note that even Unesco has expressed its empathy for Penang folks and has directed its two representatives, David Logan and Giovanni Boccardi, to appraise the situation on how the 18m height restriction for the four hotel projects approved for George Town’s inner city will affect the stakeholders and the people’s livelihood.

Boccardi, who is Paris-based World Heritage Centre chief of unit for East Asia and the Pacific, and Logan, International Council on Monuments and Sites member, were in Penang from April 26 to 30 to meet representatives of the developers of the hotel projects in the Unesco-listed heritage zone.

Their findings are set to be deliberated at the upcoming Unesco World Heritage Committee meeting in Seville, Spain, from June 22 to 30.

The four developers – Asian Global Business Group, Boustead Group, the Low Yat Group and Eastern & Oriental Group have been granted approvals from the Penang Island Municipal Council to build hotels in the heritage zone before it was placed on the Unesco World Heritage List.

With so much at stake, Unesco’s impending decision will put to rest the anxiety of these developers and hopefully, it will be a well thought out and win-win one for all stakeholders.

Meanwhile, instead of directing the four developers to confine the height of their hotels to 18m or five-storeys, the state government should also wait out for the final Unesco decision on the projects.

After all, commercial projects that are viable will generate huge spin-offs to Penang’s economy and create employment for its people.

·Deputy news editor Angie Ng believes that for George Town to thrive as a vibrant heritage city, it is imperative that quality commercial developments that are within the guidelines of its world heritage status and that add value to the city, be encouraged.

By The Star (by Angie Ng)

Spotlight on IDR draws interest in UEM Land

An aerial view of the Johor Administration Centre in Nusajaya.

EARLIER in the week, UEM Group Bhd took the spotlight when news of a lawsuit to the tune of RM840mil by the Qatar government over a dispute regarding a highway project in Qatar came to light.

It appears that UEM Group received a set of legal documents from the state of Qatar on April 27.

The plaintiff, which is Qatar, claimed that the defendants – Parsons International Ltd, UEM Group and Qatar Insurance Co – failed to fulfil contractual obligations in relation to the construction of the Salwa Road in Doha.

They are being sued for 876.32 million riyal (about RM840.98mil).

Sources said Datuk Izzaddin Idris, the newly-appointed managing director and chief executive offcer of UEM Group (effective July 1), was told of the ongoing issue when he was hired, and as such, was “made aware” of the situation.

Izzaddin will be succeeding Datuk Ahmad Pardas Senin, who is retiring, on July 1.

Industry observers believe that Izzaddin has been tasked to troubleshoot certain issues plaguing the group currently.

UEM Land Bhd’s group chairman Tan Sri Ahmad Tajuddin Ali had told reporters after its annual general meeting, that UEM Group would be able to manage the lawsuit.

Afterall, it was merely the contractor for the project, and the second defendant in the lawsuit.

However, as far as UEM Land is concerned, there is no real impact.

Meanwhile, interest in UEM Land has intensified in recent weeks.

Greater bilateral ties with Singapore, and the possibility of a third bridge from Changi to the eastern part of Johor have all but brought the spotlight back to the Iskandar Development Region (IDR) over the last two months.

Naturally, the key beneficiary would be the largest landowner and master developer of Iskandar Malaysia – UEM Land.

It owns 40% or 9,564 acres of the entire land in IDR.

The appeal behind the UEM Land growth story has always been on its appreciating land prices, favourable domestic policies as well as Khazanah Nasional Bhd’s presence to mitigate execution risk.

As it is, land value in Nusajaya have already risen from an average of RM5 to RM8 per square feet (psf) to RM12psf since Iskandar Malaysia was launched in 2006.

Every 10% increase in current land prices raises UEM Land’s revised net asset value by 11%.

There are huge potential revaluation gains for UEM Land from its low land carrying cost of RM4.40psf.

To date, the IDR has attracted RM42bil of development pledges; with actual cumulative investments reaching RM12.9bil.

It has sold approximately 2,476 acres of undeveloped land parcels in Nusajaya to developers, investors and strategic partners.

This is key for initiating a population base for Nusajaya and accelerating the overall pace of its development.

Some of the prominent development projects include Acerinox’s RM5bil steel manufacturing plant, the Johor Administration Centre and the RM650mil Legoland.

“With the Johor Administration Centre launched in April, the development concept of Nusajaya becomes a reality.

We should see increased business activity and a growth in population moving forward,” says a fund manager.

Certainly, while no major developments are expected to be completed in 2010, but by 2011, the IDR should feature a fully operational Nusajaya, which will boast of the New Castle medical school, a partially operational Puteri Harbour, Danga Bay villas, and the Coastal Highway.

The Khazanah-spearheaded Legoland is expected to be operational only in 2012.

An initial optimism for the IDR was when UEM Land successfully attracted international developers such as Limitless LLC and Damac Holdings to participate as strategic partners in Nusajaya.

Limitless and Damac are two of the bigger investors in Nusajaya, with agreements to develop residential and commercial property at Puteri Harbour, the 688-acre crown jewel of the development.

Both have international reputation and solid financial backing.

Herein lies the catalyst.

For the uninitiated, Dubai-based Damac Holdings, is one of the world’s leading luxury waterfront developers.

It plans to build commercial and residential properties and a private marina with a projected gross development value (GDV) of about RM3.8bil in Puteri Harbour, Nusajaya.

Spanning 44 acres, Damac has commited to invest an initial RM397mil for this project to be undertaken over eight to 10 years.

It will be handled by Damac Properties (M) Sdn Bhd, a subsidiary of Damac Properties LLC, the real estate development unit of Damac.

Meanwhile, UEM Land’s joint venture with Limitless is through its development vehicle Haute Properties Sdn Bhd, where it owns a 40% stake.

It was reported that earlier this year, Limitless has already submitted the layout for the 100-acre residential project in Puteri Harbour .

Haute Properties will develop the 111 acres of the precinct with an initial investment of RM241.8mil.

The development was expected to commence in 2008 and will be completed by 2013 with an estimated GDV in excess of RM1.5bil.

While so far there has been indications of both companies retreating on their agreements, observers close to the company says that no fresh funds have poured in for its Nusajaya development in Iskandar Malaysia.

Afterall, both companies have been grappling with their own problems back home, as the global financial crisis burst the bubble of the Middle Eastern property market.

There have been reports of Damac laying off staff at its headquarters in Tecom, Dubai.

According to Khaleej Times, a Dubai-based newspaper, Damac laid off between 45 and 50 employees in February.

The company axed 200 workers in October last year as the global credit crisis has slowly begun to leave its impact on the property sector.

Earlier in the year, there were reports of employees fired by Damac, that were not paid their full settlement.

According t o an analyst, construction work on Damac’s site has yet to begin.

Damac Properties has some US$30bil worth of projects in the Middle East and North Africa region.

On the other hand, Limitless has nine global projects with a total GDV of US$100bil across UAE, Saudi Arabia, Jordan, Vietnam, Malaysia, Russia and India.

“I heard that Damac may want to scale back on its development in Nusajaya, as they have bigger problems in their other developments elsewhere,” says one analyst who used to track UEM World Bhd.

By The Star (by Tee Lin Say)

LBI Capital to launch RM190m projects

PROPERTY developer LBI Capital Bhd plans to launch three projects in the Klang Valley with a total gross development value (GDV) of RM190 million this year.

Its executive director, Kong Sau Kian, said the projects comprised bungalows in Petaling Jaya at RM60 million, industrial lots in Puchong at RM100 million and service apartments in Subang Jaya at RM30 million.

"We are in the midst of getting the necessary approvals from the authorities," he told reporters after the company's annual general meeting in Shah Alam today.

Kong said LBI Capital would continue looking for other projects to maintain a healthy revenue amid the weak economic environment.

"This is expected to be challenging year as the sharp increase in the cost of building materials last year will continue to affect profit margin," he said, adding that other major component costs such as steel remained high and continued to affect the property business.

However, the favourable low interest rate and incentives offered by the government will help the industry to mitigate the adverse impact of the current downturn, according to him.

LBI Capital posted a lower pre-tax of profit RM1.767 million in its first quarter ended March 31, 2009, compared with RM2.064 million in the same quarter last year. Its revenue declined to RM19.017 million from RM19.613 million previously.

The company is now developing four residential projects, with three of them scheduled to be completed by year-end.

On the company's rubber manufacturing division, Kong said the business remained tough as margins continued to be pressured by the rising cost of raw materials and intense price competition.

The division is contributing about five per cent of the company's revenue, he said.

By Bernama

Magna Prima to launch RM700m projects in 2nd half

PROPERTY developer Magna Prima Bhd will launch three projects worth over RM700 million in the second half of 2009 to boost its income.

Its new chief executive officer Loo Kent Choong said it will launch One Jalil, a gated development in Bukit Jalil featuring 109 units of superlink homes worth RM85 million, in the third quarter.

By December, it will launch Magna Prima City, a RM600 million gated residential project along Jalan Kuching in Kuala Lumpur.

"Magna Prima is well poised given that it has potential landbank in prime areas in the Klang Valley.

"We hope to maintain our 2008 net profit and revenue this year. Sales from our on-going projects have been good," he said after the company's shareholders meeting in Selayang yesterday.

For the year to December 31 2008, Magna Prima posted a net profit of 27.28 million on revenue of RM344 million.

Its on-going projects are Magna Ville in Selayang, U1 Shah Alam and Dataran Otomobil.

An accountant, Loo said he joined Magna Prima as there was tremendous potential for it to grow. Magna Prima was in the limelight recently for various reasons.

Its CEO Lim Ching Choy and group managing director Datuk Steven Lee Kian Seng resigned in May. Lim is now the group managing director of Ho Hup Construction Co Bhd.

In March, Magna Prima announced a deal to buy 1.05ha of prime land in Jalan Ampang, Kuala Lumpur, from the Lai Meng Girls School Association for RM148 million.

The school association has confirmed that it would move to a site in Bukit Jalil, Loo said.

Magna Prima plans to build a 50-storey Class A office building, a 38-storey serviced apartment tower, and a two-level retail podium, worth RM1.3 billion on the existing school site.

It aims to start work in 2012.

By Business Times (by Sharen Kaur)

Gamuda rises on rating upgrades

Gamuda Bhd, Malaysia’s second-biggest builder, rose to a 10-month high after Macquarie Group Ltd and Maybank Investment Bank Bhd upgraded the company’s stock rating, saying it will benefit from the government’s stimulus package.

The stock rose 1.8 per cent to RM2.83, at 12.30pm, headed for the highest close since Aug 15. Gamuda shares have jumped 50 per cent this year.

There is an “urgency on the part of the government to accelerate the rollout of infrastructure projects,” Macquarie said in a report today. Gamuda is a “potential beneficiary.”

Prime Minister Najib Razak has announced two stimulus plans totaling RM67 billion (US$19 billion) to help resuscitate economic growth as the nation nears its first recession in a decade. Gamuda has an outstanding order book of RM8 billion that should support construction earnings, Maybank Investment said in a report.

The company is expected to bid for “major” contracts such as the Sepang budget airport terminal, the Pahang-Selangor water transfer project and the Klang Valley railway-line extension, Maybank said. It will also bid for mid-sized jobs, or contracts valued at less than RM1 billion, to speed up its order book replenishment, Maybank said.

Maybank raised the stock rating on Gamuda to “buy” from “hold” and increased the target price to RM3.35 from RM2.50.

The outlook on Gamuda’s construction business has turned “more positive” and the stock will “re-rate on the back of positive newsflow,” Macquarie said. It upgraded the stock to “outperform” from “neutral” and the target price increased to RM3.35 from RM2.30.

By Bloomberg

Malaysia to relook stamp duty rate

WORKS Minister Datuk Shaziman Mansor said the government needs to relook the stamp duty of 0.5 per cent on service contracts, as it is having a negative impact on the construction sector.

The new stamp duty rate, proposed under Budget 2009, makes a RM10 million construction contract attract an ad valorem duty of RM50,000.

The combined effect of stamping all agreements including sub-contracting and outsourcing at 0.5 per cent of the contract value is exponential and will be passed on to consumers, regardless of whether they are government or private contracts.

Master Builders Association Malaysia president Ng Kee Leen last week urged the government to revert to the previous practice of a RM10 flat fee on construction services agreements that do not require collateral.

"I support the contractors' call to relook into this stamp duty rate change," Shaziman told reporters after officiating at the Construction Industry Integrity Seminar organised by Construction Industry Development Board (CIDB) in Kuala Lumpur yesterday.

Asked if he specifically supported a complete waiver of stamp duty on construction contracts or to revert to the RM10 flat fee, he replied: "I support a revision. The decision lies with the Cabinet."

On the recent collapse of Jaya Supermarket in Petaling Jaya and the roof of Stadium Sultan Mizan Zainal Abidin in Terengganu, the minister said investigations are still ongoing and he hopes to receive the reports soon.

Shaziman said in the mean time, CIDB will continue to weed out contractors who are incompetent and not credible from its register.

"We don't want part-time contractors. We'll strike out the dormant ones," he said.

Currently, there are 63,000 contractors of varying grades registered with CIDB.

By Business Times (by Ooi Tee Ching)