Analysts optimistic market is turning around

An artist's impression of St Mary serviced apartments by Eastern & Oriental Bhd

HIGH take up rates for some recent property launches could be an early sign that the local property market is bottoming out and is starting to turn around like other regional markets after an 18-month slump, property analysts say.

They pointed to the fact that three project launches over the past month, from suburban mass market to high-end condominium projects, registered superb take-up rates within a week or two of their respective launches (see table). This can be attributed to attractive financial packages by some property developers.

Reflecting the improved market sentiment, residential housing loan approvals recovered 89% to RM6.3bil in April, after touching a low of RM3.3bil in January.

Perhaps the most compelling case was Eastern & Oriental Bhd’s (E&O) much awaited launch – the St Mary serviced apartments in the heart of the Golden Triangle, which recorded a whopping 85% take up rate during its preview launch on June 12.

This type of strong take-up is usually seen for landed properties in prime residential areas and not for high-end condos in KLCC.

While prices started at RM833 per square feet, the bulk of the 169 units offered for its East Tower was sold at above RM1,000 psf.

Property analysts who attended the launch preview say that the studio apartments were snapped up in minutes. “An 85% take up rate is hard to ignore. St Mary’s second tower will be launched six months later, at an estimated 20% higher price,” says a property analyst from Hwang DBS Research.

E&O is not an isolated case.

SP Setia Bhd’s Sky Residence, which is behind the National Heart Institute in Kuala Lumpur, recorded a 100% take up rate for its 220 units of Tower A apartments, selling at an average price of RM680 psf. Tower B has so far recorded a 50% take up rate. These condos too, have yet to be officially launched.

SP Setia’s Setia Walk serviced apartments (RM330 psf) and Setia Vista linked houses (RM600,000) in Shah Alam which were launched early this year have both recorded 70% take up rates.


Island & Peninsular Bhd’s 110 linked houses in Kinrara, Puchong were sold out in three days from its launch date of June 6.

Looking at the data from the Property Market Report 2008 released in May, it was verified that transaction values notched a brisk rate of 14.5% while the number of transactions went up 10%. Less surprising was the decent rise in house prices for most part of the country. Overall house prices appreciated 4.8% in 2008, matching the gain in 2007. Of the big-3 markets, Penang enjoyed the steepest appreciation of 10.4% while the Klang Valley gained 4.5%.

Meanwhile, the first upgrade in the sea of sell calls comes from UBS Research, which says that cheap financing available, low interest rates and a recovering stock market will fuel sentiment and create wealth that can be deployed into property.

“In the property upcycle that is just starting, we forecast residential property transactions in Malaysia to increase 10% to 15% per annum in 2010-2012 to RM59bil by 2012; starting with mass-market housing, then spreading to mid- to up-market landed residential properties and finally to up-market condominiums,” says UBS Research.

It adds that the overhang of completed and unsold properties in key markets of Klang Valley, Johor and Penang have also stabilised.

In value terms, the overhang is 7% of transaction in the Klang Valley, 3% in Penang and 37% in Johor. For the whole of Malaysia, the overhang is 11%.

While many may say that Malaysian property is barely affordable, UBS highlights that the estimated average house price in the Klang Valley was only RM291,477 in 2008.

CIMB head of research Terence Wong has a trading “buy” stance on the property sector for its leverage play on the broader market and bombed-out valuation.

“Although the outlook for the sector remains difficult, the sector held up better than expected in 2008. This increases the odds of a manageable consolidation for the industry in 2009, rather than a steep decline.

“SP Setia remains our preferred play on the sector for its excellent management, size and liquidity. Sector re-rating catalysts include a broad market rebound in the second half and attractive valuations,” he says.

Developers with new products to launch are E&O, SP Setia, DNP Bhd and IJM Land Bhd.

Upturn in Singapore and Hong Kong

In Singapore and Hong Kong, the trend has started convincingly since February.

Singapore released May new home sales on June 15. New units sold were close to the previous peak of more than 1,700 units for a single month in August 2007, at 1,668 units.

This is the fourth consecutive month that monthly new home sales had exceeded 1,000 units with high-end units moving fast. Prices transacted range from S$1,100 to S$1,600.

In Singapore, the queues are forming again. One example is the Vista Residence freehold condominiums by the country’s largest private property developer, Far East Organization. Of the total 282 unit, it has launched 52 and sold 38. The two-bedroom units are going at S$1,070 psf.

On the evening of June 24, buyers started lining up to buy the 68 units offered at Residences @ Killiney by Hoi Hup Realty Pte Ltd. Prices are assumed at US$2,000 psf.

Meanwhile, the Hong Kong real estate market is showing signs of revitalisation as the housing price index (which includes luxury residences) has risen 13.3% so far this year, and sales numbers have steadily increased.

By May 10, the index had reached 64.34, after rising for a five week period.

According to Hong Kong’s Land Registry, April saw an increase of home sales from 8.9% in the previous year to 9.86% this year. This is notably the first gain in the last 11 months – a good indication of better things to come. The value of unit sales rose 14.6%, the first gain since June 2008.

Luxury home prices in Hong Kong are Asia’s second-most expensive, and seeing an increase in prices in that market is certainly a sign that a turnaround is in the works.

With Premier Wen Jiabao’s US$585bil stimulus package, the outlook has certainly improved tremendously from the bleakness of a few months ago.

By The Star (by Tee Lin Say)

Gold Coast Resort developer to invest RM50m in Kenyir project

The STG Group, developer of the Gold Coast Resorts projects, will be investing RM50 million in a lake holiday resort in Kenyir, Terengganu.

This development is the Gold Coast Resorts developer's second project in the East Coast Economic Region (ECER). Its first is the RM10 million Gold Coast Kuantan resort, consisting of 99 apartment suites with views of the South China Sea .

"The Gold Coast Kenyir development will be unique. The project will be made up of a hotel mall with shops, long houses and bungalows built over Lake Kenyir's serene waters," Datuk Dr Alex Tan Siong Seng, chairman of STG Group, said in a statement.

"We are optimistic this project will help draw more tourists to Lake Kenyir to enjoy its natural scenic beauty and water sport," he added.

Lake Kenyir is Asia's largest man-made lake. It contains about 23.6 million cu m of water and covers an area of 369 sq km. Under the ECER's master plan, the lake has been designated for agro-tourism where it will be boosted by aquaculture and tourism.

The Gold Coast Kenyir project will be rolled out in March 2010, kicking off with the construction of 88 bungalows nestled over Lake Kenyir , followed by 188 units of long houses and a hotel mall.

The STG Group is targeting to be listed by 2012.

Other Gold Coast properties include Gold Coast Morib Resort, Nottingham International apartments, located near the Nottingham University in Klang Valley; and Gold Coast Pulau Pangkor.

By Business Times

STG Group plans RM50m resort in Kenyir

KUALA TERENGGANU: The STG Group, which develops the Gold Coast Resorts projects, will invest RM50 million in a lake holiday resort in Kenyir, making it the second project in the East Coast Economic Region (ECER).

The Gold Coast Kenyir project, will be built over 53 acres, and will start in March 2010. The first phase is 88 bungalows built over Lake Kenyir, followed by 188 long houses and a hotel mall.

“The Gold Coast Kenyir development will be unique. The project will be made up of a hotel mall with shops, long houses and bungalows built over Lake Kenyir’s serene waters,” said STG Group chairman Datuk Dr Alex Tan Siong Seng.

“We are optimistic this project will help draw more tourists to Lake Kenyir to enjoy its natural scenic beauty and water sports,” he said.

Lake Kenyir. which is Asia’s largest man-made lake, contains about 23.6 million cubic metres of water and covers 369 sq km. Under the ECER master plan, the lake has been designated for agro-tourism.

“This Lake Kenyir development, like other Gold Coast projects, offers good investment value as well as unrivalled lifestyle and leisure activities,” said Tan.

“Purchasers own a luxury holiday property built over the lake which is run like a hotel and enjoy nature’s scenic beauty. At the same time, they can also choose to have their property managed and rented out on a nightly occupancy basis by a professional company when they are away.

“This rental programme gives owners 8% returns per annum on their investment for up to 15 years, without sacrificing their ability to use the property or any other Gold Coast property for up to 60 days if they chose to.”

While the Gold Coast’s projects are bought off the plan, Dr Tan said owners can expect capital appreciation of 40% after five years from the date of purchase.

“Our buyers are equally split up between domestic and foreign purchasers. Some 80 per cent of them have signed up for the investment plan while the balance will be owner occupied,” he said.

The Kenyir project is the second for the STG Group in the ECER. The first is the RM10 million Gold Coast Kuantan resort, consisting 99 apartment suites.

Other Gold Coast properties include Gold Coast Morib Resort, Nottingham International apartments, located near the Nottingham University in Klang Valley; and Gold Coast Pulau Pangkor.

By The EDGE Malaysia (by Joseph Chin)

PNB not likely to take SP Setia private

PETALING JAYA: There is a possibility for Permodalan Nasional Bhd (PNB) to raise its 32.9% stake in SP Setia Bhd to the takeover trigger threshold of 33%, but industry observers believe the investment institution is unlikely to take the property company private or meddle in its affairs.

SP Setia is regarded as the industry trendsetter under the leadership of Tan Sri Liew Kee Sin

“It will be a very costly exercise for PNB to buy the remaining SP Setia shares that it does not already own. At yesterday’s market closing price of RM4.06 per share, this will cost about RM2.8bil.

“But most importantly is whether PNB can further add value to SP Setia if it is being taken private at current valuations which is expensive. It is currently trading at 19 times of FY2009 earnings estimate,” ECM Libra property analyst Bernard Ching told StarBizWeek.

PNB’s accumulation of SP Setia shares since March last year has kept the shares at a much higher valuation than the industry’s average. The pace of its share buying in the company picked up when the global financial crisis started last June that prompted some of the foreign funds to liquidate their positions.

Ching believes that the recent appointment of two nominee directors of PNB is nothing more than a check and balance to safeguard their significant investment in SP Setia rather than to exert influence over the management of Malaysia’s biggest property developer by market capitalisation.

SP Setia president and chief executive officer Tan Sri Liew Kee Sin owns 12% in the company while the Employees Provident Fund and US-based Capital Group also have 12% each. Other foreign shareholders hold another 14%.

The company’s current chairman, Tan Sri Abdul Rashid Abdul Manaf, had assumed the chairmanship since Jan 15, 1996.

Referring to concerns expressed by the investment community that PNB had taken three property companies – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – private between 2005 and 2007, Ching said the situation was different for those companies.

“These companies do not attract the kind of investors’ following as SP Setia and they were under-valued. Furthermore, PNB only spent about RM1.7bil in total following the mandatory general offers to take them private,” he said.

So, is there a likelihood for PNB after its takeover of SP Setia to merge it with the other three property companies?

“This is very unlikely as it will severely dilute SP Setia’s value. The management style of Liew and the other PNB-appointed chiefs may be very different and a significant amount of time and effort may be required to align these differences,” Ching pointed out.

He said a more likely scenario would be joint development of PNB’s vast land bank under SP Setia’s well-established brandname.

By doing so, PNB can leverage on SP Setia’s vast expertise in turning around large greenfield parcels into townships, while SP Setia can avoid heavy holding cost from new land acquisitions.

HwangDBS Vickers Research senior property analyst Yee Mei Hui said since its transfer to the Main Board in 1996, SP Setia had quickly built up its reputation as a blue-chip property stock and darling of the investment community.

The company’s good dividend payout record at the rate of about 60% of net earnings since 2005, and its capital appreciation over the years have certainly contributed to its stature.

With its track record as one of the top industry performers in terms of sustainable earnings and sales, she said SP Setia was well known for its innovative marketing expertise and product offerings.

Led by its charismatic chief, Liew, 51, SP Setia is highly regarded for being the industry trendsetter in terms of product design, good price premium for its properties and high quality. Its capability in product innovation and designing has won the company many industry awards, both on the local and international stage.

SP Setia’s 4,000 acres of land bank in the Klang Valley, Penang and Johor have all the infrastructures in place and are all paid for. They will last the company at least another 10 to 15 years.

At the end of the day, if PNB’s investment strategy in SP Setia is for long-term value enhancement, then the current Liew-led management will continue to be the faces of SP Setia for many more years to come. PNB could not be reached for comment.

By The Star (by Angie Ng)

Too early to rejoice, say developers and consultants

DEVELOPERS and consultancies are taking a cautious stand on analysts’ optimism that the market is finally turning around.

While they rejoice over the positive signs, they are of the view that “it is too early to tell” if the sector has turned from the worst.

“The issue is sustainability,” two developers and two consultancies say. They prefer to wait for the year-end before they pop the champagne bottle.

Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam says he would like to look further and be more cautious.

“I will not be convinced until I see the third-quarter results. In fact, I would like to look at the next six months. If the stock market hold up until the end of the year, I would say we are at the beginning of a possible bull run and with that, the property market will improve.”

Kumar says Europe is not exactly out of the woods yet and while a dip there may not have such a big effect on Malaysia and Southeast Asia, they do buy quite a bit from China.

“If China’s economy dips further, that will affect us,” says Kumar.

He says analysts are rejoicing because the developers are seeing an upturn due to better sales volume.

“Sales volume have been good because of the close co-operation between the banks and the country’s top 20 developers. The two factors which pushed developers and bankers to work together was the slowdown which started in September 2008 and the buoyant secondary market last year.

“Because of the meltdown, buyers took a back seat. Because developers needed to sell, they sought the cooperation of the banks.

“At the same time, in Selangor, out of 217,000 units of homes that exchanged hands last year, 63% were between individuals. That means, they did not buy from developers. The situation was the same for Penang and Johor,” says Kumar.

Home buyers like the security of being able to touch and feel the property before they buy and developers know that. Because buyers went to the secondary market, developers sought the help of banks to make buying from developers more attractive. The result is the special financing programmes,” says Kumar.

Beginning with SP Setia’s who started the Setia 5/95 Home Loan Package where buyers pay 5% and need not fork out stamp and legal duties, the other developers subsequently followed with 10/90 and other variations.

“Once the toothpaste has come out of the tube, you can’t put it back and so other developers had to follow. The result is better sales volumes, which we are seeing today. This need not necessarily translate into higher ringgit sales because developers are absorbing the cost of interest until vacant possession of the property, stamp duties and legal fees, which they previously used to pass on to their buyers.”

The impact of absorbing this cost will be felt by the developers for the next two to three years, he says.

“These positive signs are limited to major centres like Klang Valley, Penang and Johor, but for the time being, this is good enough. But it does not constitute a property turnaround; it is an upturn for the developers in terms of sales,” he says.

On commercial properties, he says the sub-sector is still relatively quiet and the attractive financing schemes are not for commercial projects. Within the Klang Valley, there have not been many launches.

“At this point in time, there is more demand for housing than commercial space. There is an over supply in the commercial sector and this can be seen in Kota Damansara where literally hundreds of shop-offices have come up and most of them are empty,” he says.

Another source from a major real estate consultancy, who requested anonymity, says he sees no real change in his business.

“The manufacturing sector is still doing badly and this will affect employment. People will be cautious. There is also the issue of oversupply, especially of condominiums.

“In the office space sector, we are seeing developers and landlords gearing up for higher vacancies. Some of them have become more flexible in their pricing. Landed property prices are quite stable but we are seeing lesser transactions, which means prices are still hovering around last year’s levels.

“Buyers are taking a wait-and-see stand. In the condominium market, surprisingly, we have sold RM8mil to RM10mil so far this year. There is a pick-up in enquiries and people are still looking for good deals.”

In the rental market, he says the market is seeing a further softening. The asking and concluded rentals for high-end condominiums are lower than what they were six months ago.

Echoing Kumar, he says the condominium market around the KLCC area is beginning to stabilise between RM800 and RM1,000 per sq ft while the premium ones like Troika may hold its own at around RM2,200 per sq ft.

“We are seeing new levels of lower prices where buyers are prepared to come in,” he says.

On the optimism from certain quarters, he says this is due to developers seeing more transactions in the last few months.

Two developers contacted say it is too early to say anything and sustainability of sales is an issue.

The two senior executives from the companies concurred that the market has been performed pretty well “because we have concentrated on the domestic market and offered attractive packages. Although the market is slowly picking up, it is still too early to say there is a turnaround.”

By The Star (by Thean Lee Cheng)

Time to sharpen saws and make a difference

With signs of the economy and property market bottoming out in the coming months, developers should get back in shape and ready themselves for a more active pace and competition from their peers.

After a long lull that started around September last year, things will start to pick up again if all goes well in the global and local economic fronts. Hit by the widening impact of the global financial meltdown in the past one year or so, many project launches have to be deferred and developers were mostly selling unsold stocks from earlier launched projects.

Getting back into the business should be quite easy for most of the property companies as they have already build up their landbank and some even have project plans and approvals in place and are just waiting for the market to turn around to launch their projects.

While there are developers who have kept themselves active with projects to build and sell, there are also those who have no projects to proceed with and remain in “siesta mood” during the past few months.

It is time to jolt out of this mode and start “sharpening their saws” to make a difference and create more value for property buyers.

There have been much changes during the short spate of economic upheavals and it will be worth starting on the right footing.

Despite the pensive mood of most developers after the poor reception for their projects during those “under performing” months, there is no time to waste by brooding over what could have been if the market had continued to ride on the high gear that peaked before the global crisis sets in.

One consolation for property buyers and developers is the prevailing positive industry environment now; low mortgage rates are supporting property buying and investment activities.

Since May last year, the country has experienced negative real interest rates and this encourages the purchase of property as a hedge against inflation.

Buyers are having a field day with various promotions introduced by developers whereby stamp duty, legal fees and interest during construction period (some even extend by another year after delivery of the property) are borne by developers. These facilities have reduced upfront cost of property ownership.

However, this deal, that can be rated as among the best for property buyers so far, will not last forever as most developers are looking to end the facility in the next few months.

SP Setia Bhd, which was the first developer to come out with its Setia 5/95 Home Loan Package on Jan 19, will be ending it on July 19. The rest of the developers are bound to follow suit shortly after that.

The packages and low entry cost have prompted many buyers to make multiple purchases during the promotion period as they only need to make a downpayment of either 5% or 10% of the property price for each purchase and need not make any further payments until the property’s delivery in the next two to three years.

Whether the buying will continue after the facilities are withdrawn is a big question that have no immediate answer. Only time will tell and it is left to the ingenuity of developers on what value they can bring to their projects to attract buyers.

Buyers will continuously be looking for value buys in the coming days and will shop around for good quality products that offer them a good environment and amenities, safety and security, quality management and maintenance, among a long list of other needs.

Developers should have the right understanding of what the buyers need in the fast changing world today.

The rapidly rising temperature and searing heat we experience as a result of the worsening global warming should encourage developers to look into more breezy and well ventilated designs for their property products, whether they are residences or office buildings and other commercial projects.

At the end of the day, developers that put in the right effort to genuinely plan for the well being and comfort of their buyers will triumph.

● Deputy news editor Angie Ng says to celebrate the end of the long, gruelling crisis days (when they are finally over), it should be a good start for the industry if there are developers who can offer some really cool and refreshing “green” model projects.

By The Star (by Angie Ng)

Mah Sing expects to conclude talks with PNB soon

PROPERTY developer Mah Sing Group Bhd expects to conclude talks with the country's largest fund manager Permodalan Nasional Bhd (PNB) soon to jointly develop the latter's landbank in Kuala Lumpur and Johor.

Mah Sing group managing director Tan Sri Leong Hoy Kum said it has been discussing and exploring the possibility of working with PNB.

"PNB is a valued shareholder and if there is an opportunity, we would like to work with PNB be it to develop land in the Klang Valley, Johor Baru or any other land in its stable," he said after the group's annual general meeting in Kuala Lumpur yesterday.

"Of course, any joint venture would need to match PNB's investment criteria and fit Mah Sing's business model," Leong added.
PNB, which has some 20 per cent stake in Mah Sing, has parcels of land scattered in the city centres, such as those held by its unit Malaysian Industrial Development Fund Bhd, which wholly owns MIDF Property Bhd.

Mah Sing is projecting RM435 million sales this year, helped by its financial package offering that was launched in January.

Its Easy Home Ownership programme has reached RM317 million in sales so far, which represents 70 per cent of its full-year target.

As at March 31 2009, Mah Sing had gross development value and unbilled sales of RM3.8 billion, which will keep it busy for the next five to seven years.

Apart from Malaysia, the group is exploring potential property development projects in China and Vietnam for their lower priced land and high population growth.

By Business Times (by Zurinna Raja Adam)

Mexican entrepreneur wants to turn KidZania into global brand

A model of Kidzania. Xavier Lopez Ancona (inset) says from his planning of a day-care centre, the theme park turns out to be something even more fun and bigger that could attract an even larger crowd

CHILDREN’s role-playing is a universal concept that has existed for thousands of years. Identifying this as a business opportunity, Mexican entrepreneur Xavier Lopez Ancona founded the KidZania theme park in 1999.

The president on KidZania International told StarBizWeek that the idea for KidZania started 12 years ago when his childhood friend approached him to start a business in day-care centre that would offer a variety of activities that could attract children.

Ancona was then a very successful executive in the equity capital group department of the multinational technology and services conglomerate, General Electric. But he tried to help his friend anyway.

During those two years, Ancona spent his after-hours and weekends helping his friend to draw up a business plan for the day-care centre.

“From planning for a day-care centre, it turned out to be something even more fun and bigger that could attract an even larger crowd,” Ancona says.

So, the first KidZania theme park was opened in Mexico City in 1999. It was an instant hit, and Ancona has never turned back. There are currently two KidZania theme parks in Mexico, including one in Mexico City that attracts an average of 800,000 visitors annually. A third is currently under construction. The concept has also been licensed and franchised to operators in Tokyo and Osaka in Japan; Jakarta, Indonesia; and Lisbon, Portugal.

Healthy activities

KidZania is a “nation” just for children. Targeting those between two and 12, it is an educational and entertainment centre that allows children to role-play adult activities in a replica city designed to imitate real-life and a functioning economy.

What’s even more interesting is that this “nation” has an official currency called kidZos. Children can earn kidZos by working in KidZania, and they can use the currency to pay for the goods and services there. They can also save their money and earn interest from their savings in the “banks” in KidZania.

Ancona believes that parents would like the concept of KidZania, as the programmes in the theme park have been designed to instil positive values in children.

The experience in KidZania is aimed at helping children learn faster about the adult world and how a real city works.

The programmes also help children to develop a sense of vocation as they get to try out the various occupations available at KidZania.

KidZania offers more than 60 professional roles, including pilot, doctor, teacher and journalist, for children to play. But given the limited time of five hours per entry, a child can usually play between five and 10 roles a day. Hence, there is a repeat factor for the children to come to the city again to try out other roles.

According to Ancona, the programmes at KidZania are changed regularly so that there is always something new for the children to experience each time they visit the theme park.

It also has a loyalty programme, whereby children can apply for “citizenship” and be KidZanians. As citizens of KidZania, the children will get a “passport” and enjoy various benefits such as income tax incentives.

Ancona believes that the experience in KidZania would also help children learn about the value of money, and how they have to work hard to earn a living, as well as the importance and benefits of savings.

He says children would also be able to pick up social skills through their interaction with other children in the theme park and learn to make their own decisions.

Ancona reveals that the bulk of the people working in KidZania are mainly the supervisors who have to monitor and guide the children.

“It requires special skills to be a supervisor at KidZania, and we take a long time to select the right people for the job,” he says.

Among the values that he looks in people applying to be a supervisor at KidZania are patience, service orientation and passion for children.

Generally, the KidZania theme park is targeted mainly at the local market, with an ideal composition of 70% local residents and 30% outstation or foreigners.

KidZania’s business has remained fairly resilient through the current economic challenges, owing to the fact that it focuses on the local market, Ancona says.

In recession, most people tend to turn to nearby locations for leisure and entertainment, as they cut down on travelling, he explains.

In addition, the entrance fees for KidZania theme parks are quite affordable, though they vary by countries.

However, Ancona acknowledges that the recent outbreak of the A (H1N1) influenza virus had a negative impact on KidZania’s business in Mexico when the theme parks there had to be closed temporarily.

Nevertheless, it is back to business as usual now in Mexico, he says.

Global brand

KidZania brand is growing fast internationally. He, however, did not reveal how much the business is worth today.

This year will also see the opening of KidZania theme parks in Dubai, the United Arab Emirates, and Seoul, South Korea.

Over the next two years, KidZania theme parks will be opened in Cuicuilco, Mexico; Shanghai, China; Bangkok, Thailand; Santiago, Chile; Istanbul, Turkey; and either Delhi or Mumbai in India. Malaysia will also have a KidZania theme park by 2012.

Most of these expansions have been through franchise programmes.

Ancona explains, “We want to partner the local organisations because they understand the local market better than us.”

As for the ticket pricing structures, Ancona reveals that they are usually determined by KidZania’s franchisees.

“We only make proposals based on the socio-economic levels of the local markets of our franchisees, but the decisions are ultimately in the hands of our local partners,” he explained.

Meanwhile, there is also a plan to open KidZania in the US after the next two years.

“The US is the biggest market in the world for any type of entertainment but it is also a very tough market. You only have one chance to do it right,” Ancona explains, adding that he wants to make KidZania a global brand first before setting its foot in the United States.

By The Star (by Cecilia Kok)

Malaysia fits well into KidZania’s expansion

The Malaysian market fits well into the expansion plan of KidZania, says its founder and president Xavier Lopez Ancona.

As long as there are at least 700,000 children in the city, we would deem it a worthy investment, he adds.

What’s more, Kuala Lumpur is an important international tourist destination that attracts more than 20 million foreigners every year.

KidZania Kuala Lumpur is scheduled to be open to the public in early 2012. The brand has been franchised to a joint venture between Khazanah Nasional Bhd and Boustead Holdings Bhd through their newly established Rakan Riang Sdn Bhd, in which the former holds an 80% stake and the latter holds 20%.

The RM50mil project to be located in Mutiara Damansara, Petaling Jaya, marked Khazanah’s second investment in theme parks for the country, after its earlier investment of RM750mil for the development of Legoland in Iskandar Malaysia. It also represented Khazanah’s increasing focus on leisure and tourism sector as it has identified significant development opportunities in the area. The KidZania theme park is expected to be a lucrative investment as it is the first-of-its-kind in the country.

With its strategic location in the high-density township of Mutiara Damansara, the theme park is set to draw in a huge crowd every year. The venture would generate two streams of income – one from the visiting patrons and the other from its marketing sponsors.

Taking the entrance fees of US$12 (RM42) per child for KidZania Jakarta as a guide, the venture could generate at least RM20mil from the ticket sales per year if the target of 500,000 visitors per year is achieved.

The ticketing revenue would be on top of other operating revenues, which would come from fees paid by its marketing partners who have set up their brands in the theme park as well as from food and beverage sales.

Hence, Khazanah is confident of recouping its investment in KidZania Kuala Lumpur in less than five years.

As for Boustead, the joint-venture agreement with Khazanah would not have any material effect on the company’s net assets, gearing and earnings for the financial year ending December 2009, according to its recent announcement to Bursa Malaysia.

ECM Libra in its recent report viewed the recent development as a boon to the Mutiara Damansara township developed by the Boustead group. Its analyst said the upcoming KidZania theme park would increase the property values around the township and draw more visitors to The Curve shopping mall.

The analyst thought KidZania was a clever concept as it provides real-life experience of adulthood for children and an opportunity for other corporations to market their brands. For instance, the KidZania theme park in Jakarta has sponsors the likes of AirAsia, Sony, Hewlett Packard and Sunsilk.

By The Star

S&P lifts KLCI’s year-end target to 1,150

S&P's top property picks are Sunrise, Mah Sing, KSL Holdings and Selangor Properties, and it favours Public Bank, AMMB Holdings and RHB Capital for banks

Standard & Poor's Equity Research has raised its year-end target for the Kuala Lumpur Composite Index to 1,150, saying that a potential economic recovery in the last quarter this year may boost bank's earnings.

Its top picks for banks are Public Bank, AMMB Holdings and RHB Capital.

S&P is putting its next year's KLCI target at 1,300, indicating a 21 per cent potential upside. The benchmark index closed at 1075.77 yesterday.

It expects the US economy to return to a 1 per cent expansion in the final quarter as housing prices and home sales bottom out, and has projected a better economic performance in Malaysia than the official estimates. The various stimulus plans by governments in Asia will work to lift economies in the region, S&P head of Asia equity research Lorraine Tan said.

It expects Malaysia's economy to shrink 3.3 to 3.5 per cent this year, better than the government's projection of a 4-5 per cent contraction.

"Like in most parts of Asia, the worst in Malaysia's GDP (gross domestic production) has probably been seen in the first quarter. The second quarter GDP is probably still down from last year, but there will be some pick-up," Tan said at a media briefing in Kuala Lumpur yesterday.

Still, the second half could be more challenging for Malaysian stocks, since the market has already priced in a fair bit of corporate activity improvement next year.

"At this juncture, there is risk to the 2010 corporate earnings outlook, should rising interest rates, tax rates and a weak US dollar continue to dampen US consumption and slow Asian and Malaysian export recovery," Tan remarked.

S&P has projected Malaysia corporate earnings to grow again next year at 11.7 per cent. This year, it expects companies to report 13.7 per cent earnings contraction.

"We remain positive over the mid-long term on stocks but the short term is subject to further consolidation," she said.

Apart from banks, it also likes property stocks, saying that it expects demand to stay firm because the record low mortgage rates are providing more incentives to buy house than to rent.

Malaysia's real estate prices are also among the cheapest in the region, S&P said. Its top property picks are Sunrise, Mah Sing Group, KSL Holdings and Selangor Properties.

Investors may find opportunity to pick up shares of energy and materials, like steel and cement, when market dips in the near term, S&P said. However, it remains wary of autos, airlines and shipping stocks.

By Business Times (by Chong Pooi Koon)

Dijaya plans RM1.8b property launches

Developer Dijaya Corp Bhd will launch properties worth RM1.8 billion in fiscal 2010 to expand and sustain earnings.

Managing director Datuk Tong Kien Onn told Business Times after the company's shareholders meeting yesterday that it expects its net profit and revenue to improve slightly this year despite a weak market.

Tong said Dijaya achieved RM153 million in sales in the first half of 2009 and is expecting RM100 million more in the second half.

But profit will be hit due to higher land and construction costs. The company is projecting a net profit margin of 15 to 18 per cent this year versus 25 per cent before.
For the year to December 31 2008, Dijaya posted a net profit of RM34.4 million on revenue of RM244.1 million.

In the first quarter of 2010, Dijaya will unveil Tropicana Grande, the last residential development at its award-winning 250ha Tropicana Golf & Country Resort in Petaling Jaya.

It plans to offer 300 units of high-end condominiums for about RM2 million each.

In the second or third quarter, Dijaya will launch three projects that will include Tropicana Avenue in Petaling Jaya, which will feature eight- and 10-storey office blocks including two floors for retail.

In Balakong, Kajang, Dijaya will launch a RM380 million resort development comprising apartments, and two- and three-storey semi-detached and link houses.

In Sungai Long, Cheras, it will launch a RM200 million housing project that will have semi-detached and double-storey link houses, and low-cost apartments.

By the end of 2010, Dijaya will introduce Pool Villas in Tropicana, offering semi-detached houses worth an average of RM2.8 million each, or a combined RM160 million.

Finally, it plans to launch twin-tower offices blocks in Tropicana for more than RM150 million.

Dijaya will sell one block and retain the other to build its investment portfolio for recurring income.

Currently, Dijaya's portfolio includes the 12-storey Tropicana City office tower and newly-opened Tropicana City Mall in Damansara.

By Business Times (by Sharen Kaur)

Oriental: Malacca waterfront project to be ready in 5 years

AUTO and plantation group Oriental Holdings Bhd said its proposed waterfront development in Malacca is due to be completed in about five years.

The company's group managing director Datuk Wong Lum Kong said the company will try to fast-track the integrated project at Malacca's Klebang area with support from the state government.

"Apart from a RM200 million specialist hospital we intend to open there, commercial and residential units," he said after the company's annual shareholders' meeting in Penang.

Wong said reclamation works on the proposed waterfront project have almost been completed and the hospital, a nursing school and service apartments for families of overseas patients are slated for completion within two-and-half years.

Business Times on Monday reported that OHB plans to open the 300-bedded Melaka Straits Medical Centre.

OHB is set to hold a controlling 51 per cent stake in the hospital.

Boon Siew Sdn Bhd, the controlling shareholder of OHB will hold another 20 per cent, followed by Bagan Specialist Centre with 29 per cent.

The reclamation project there is handled by Ultra Green Sdn Bhd, a construction and property development subsidiary of OHB.

Wong said OHB is hoping to fund the project with internal funds and the development value has not been finalised as yet.

"Our plan is to market the project in countries like Singapore and Australia where we have a marketing presence," he added.

By Business Times (by Marina Emmanuel)

MK Land eyes RM3b Indian JV project

(From left): Emkay Group COO Peter Teh, Mustapha Kamal, Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir and Jitendra at the signing of the MoU at Damansara Perdana, Petaling Jaya yesterday. Photo by Chu Juck Seng

PETALING JAYA: MK Land Holdings Bhd is venturing into India, partnering India’s property developer Embassy Group for an integrated township development with a gross development value (GDV) of RM3 billion on a 120ha parcel of land in northern Bangalore.

The joint venture (JV) also sees the participation of MK Land’s sister company, MKN Embassy Development Sdn Bhd, which is under the privately owned Emkay group. The project will be undertaken by a JV company named Milan Gateway Sdn Bhd.

MK Land, via Ritma Mantap Sdn Bhd, and Embassy, via Star Dreams, each holds a 47.5% stake in the JV company, while MKN Embassy owns the remaining 5%.

MK Land chairman and chief executive officer Tan Sri Mustapha Kamal Abu Bakar, who is also the chairman of Emkay, said the project would serve as a stepping stone for the group to expand to other parts of India.

“We are replicating our previous developments (in Malaysia) into that development (in Bangalore). If we implement it successfully in Bangalore, there is tremendous potential in the whole of India. This is just the beginning,” he told reporters after the signing of a memorandum of understanding among the three companies here yesterday.

While the JV partners had yet to decide on the exact investment in the project, Mustapha said it would need to invest at least US$10 million (RM35.3 million) to start a project in India.

He said MK Land would fund its portion of the investment using internal funds. He added that funding was not a problem, as the company had returned to the black with a nine-month net profit of RM13.25 million up to March 31, and had recently redeemed its final tranche of outstanding bonds amounting to RM60 million.

Mustapha said construction on the Bangalore project would start about a year later after obtaining the necessary approvals from the Indian authorities. The expected returns of the project are about 20%.

The project to last more than five years would build 16,000 units of apartments ranging from 650 sq ft to 1,200 sq ft and 560 units of retail shops.

Embassy Group executive chairman Jitendra Mohandas Virwani said the houses would fetch selling prices of RM100,000 to RM150,000, which are considered “affordable homes” in India for the lower middle-income group.

Citing Indicus Analytics Research, he said urban India would need to build at least 10.5 million houses in the next six years to meet rising demand, and that 65% of the demand in India’s top 112 cities is for houses less than 1,000 sq ft.

This is not the first time MK Land/Emkay group collaborates with Embassy. Emkay and Embassy had previously set up MKN Embassy to jointly undertake a RM400 million office building project known as MKN Embassy Techzone in Cyberjaya.

The MK Land/Emkay group had previously ventured into Namibia in 1993. It was involved in construction and housing project in the South African country.

By The EDGE Malaysia (by Gan Yen Kuan)

MK Land in India venture

Developer MK Land Holdings Bhd is partnering two other companies for a RM3 billion residential development project in northern Bangalore, India.

This will be the company's first project in India and its second overseas, after Namibia. The project will be developed on a 120ha land near the new Bangalore International Airport.

It will be undertaken by Milan Gateway Sdn Bhd, a joint venture between MK Land, Embassy Group of India and MKN Embassy Development Sdn Bhd. MKN is a joint-venture company of MK Land and Embassy Group set up to develop IT parks, particularly in Cyberjaya.

"The project will start construction in 2010 and take not more than five years to be developed. It will potentially deliver 16,000 units of affordable homes ranging from 650 sq ft to 1,200 sq ft and approximately 560 units of retail outlets," MK Land chief executive officer Tan Sri Mustapha Kamal Abu Bakar said.

The houses, priced from RM100,000 to RM130,000 per unit, will be targeted at the low middle income group. Bangalore, India's Silicon City, is home to well-known information and communication technology companies, related colleges and research institutions.
"This type of project has a big market potential there," Mustapha told reporters at a memorandum of understanding signing ceremony between the partners in Petaling Jaya yesterday. The event was witnessed by International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir.

Mustapha said the project will be financed through internal funds and disposal of idle landbank.

"We have landbank of more than 2,800ha and we plan to dispose of some to part-finance the project in Bangalore," he said, noting that it needs an initial investment of US$10 million (RM35.4 million) to enter the Indian market.

"We are in the black now and this project will help the company tremendously," Mustapha said, adding that it will continue to seek for more projects in India in the future.

According to the company's announcement to Bursa Malaysia, the proposed design, project management and construction will be undertaken by Malaysian companies.

The Embassy Group is one of India's most reputed developers of information technology and business parks, commercial and residential developments. It has developed a portfolio exceeding 19 million sq ft of landmark commercial and residential spaces across India.

By Business Times (by Azlan Abu Bakar)

IGB leads stocks of developers higher

IGB Corp, Malaysia’s biggest owner of commercial buildings, climbed the most in two months, leading developers higher after HwangDBS Vickers Research Sdn Bhd said they would gain from any investment policy revisions.

IGB added as much as 6.7 per cent to RM1.75, set for its biggest advance since April 30, and traded at RM1.65 at 10:52 am local time. SP Setia Bhd, the country’s biggest property developer, added 1 per cent to RM4.02 , set for its highest close since June 18. The benchmark stock index gained 0.9 per cent to 1,067.14.

The plan by Prime Minister Datuk Seri Najib Tun Razak to announce an easing of investment restrictions next week “could further re-rate the sector, which is already seeing sales bottoming-out with improved consumer sentiment and attractive financing schemes by developers,” Yee Mei Hui, an analyst at HwangDBS wrote in a report today.

Najib, who took office in April, has raised foreign ownership limits in banks and announced a RM67 billion spending plan in an effort to boost the economy that he predicts will shrink as much as 5 per cent this year, the first contraction in a decade.

Policy changes are the “key driver of property market,” said Yee, who has a “fully valued” call on SP Setia and a “hold” on Sunway City Bhd. “Improving perceived investibility of Malaysian properties should help narrow the large price gap with regional markets.”

‘Potential Beneficiaries’

IGB, which owns Megamall and the Gardens shopping centres outside Kuala Lumpur, Sunway City and KLCC Property Holdings Bhd are the “potential beneficiaries should local ownership requirements be eased for retail and trade,” under the revised guidelines, Yee said.

The changes may include allowing foreigners to buy or lease properties for more than 10 years without an approval from the Foreign Investment Committee, he said. The government may also allow foreign investors to waive a requirement for 30 per cent of a locally established company to be owned ethnic Malays, known as Bumiputeras.

The government may also announce a “more competitive” withholding tax for real estate investment trusts, ease regulations on hypermarket ownerships, and take over the role of providing low-cost houses from the developers, Yee said.

Prime commercial property developers such as Malaysian Resources Corp, E&O Property Development Bhd, and UEM Land Bhd would also benefit from the policy revisions, according to the HwangDBS Vickers report.

By Bloomberg

MRCB's property brand launch in Perak on Saturday

MALAYSIAN Resources Corp Bhd (MRCB) will be launching its property brand and unveil the second phase of its pioneer project at Bandar Seri Iskandar in Perak on Saturday.

In a statement, the company said during the brand launch, over 200 units of residential properties comprising bungalows, semi-detached and terrace houses from the second phase development called Puncak Iskandar will be showcased for two days until Sunday.

"It is our hope the new positioning for the company's property development will enhance the value of the brand," MRCB group managing director Shahril Ridza Ridzuan said in the statement.

He said the group is optimistic about the response for Puncak Iskandar, as the demand for quality housing within an integrated enclave offering amenities beyond the conventional is very encouraging.

By Business Times

Asas Dunia developing over 1,000 homes in Seberang Prai

GEORGE TOWN: Asas Dunia Bhd will be developing 1,177 units of landed residential properties with an estimated gross sales value of RM203mil on the mainland in the second half of 2009.

The properties comprise double-storey terraced, double-storey semi-detached and bungalows priced from RM215,000 to RM450,000, and low medium-cost houses with prices ranging from RM42,000 to RM65,000.

Group managing director Datuk Jerry Chan said the key reason for the new developments had to do with the substantial progress made on the construction of the second bridge by UEM.

“Recently I visited the site in Batu Kawan and saw a jetty being constructed to transport components of the bridge. There were also a lot of raw materials being brought in and piling works are being carried out at full steam.

“This indicates that there is commitment to complete the bridge on schedule in 2012, which will unlock the full value of the land in South and Central Seberang Prai,” Chan told reporters after the company AGM.

Chan said another reason for the development was the pick up of the global economy.

“For Asas Dunia, our sales picked up in May and June. In June so far we have sold over 25 units of properties on the mainland worth over RM5mil, which is double the sales in May,” he said.

“The state government has also roped in new investments for this year, which will create demand for housing,” he added.

The 1,177 new properties would be launched for sale once they have reached about 70% completion, Chan said, adding: “They are scheduled for completion in four years.”

The group currently has undeveloped land bank of some 1,308 acres.

By The Star (by David Tan)

Asas Dunia lines up new projects

PENANG-BASED property developer Asas Dunia Bhd (ADB) is looking at implementing eight new projects in mainland Penang over the next four years.

Its managing director Datuk Jerry Chan Fook Sing said 1,177 units of dwellings ranging from affordable housing to high-end homes will be scattered on different sites totalling 48ha.

"We are looking at embarking on the new jobs this year and the proposed properties carry a value of RM203 million," he told reporters after ADB's annual shareholders' meeting in Penang yesterday.

The company currently has ongoing projects worth RM56 million and boasts an unutilised landbank of 571ha.

Chan said ADB's bullishness on embarking on the new projects was spurred by not only the new investments which were being ploughed into Penang, but the tangible progress made in the construction of the Penang Second Bridge.

Penang's second link will connect Batu Maung on the island with Batu Kawan on the mainland.

The project is pivotal to ADB's new developments, which are being planned in areas like Nibong Tebal, Sungai Bakap, Bukit Minyak and Bukit Mertajam.

"The new investments into Penang will see the creation of new jobs and since people follow jobs, they will be looking for housing," Chan said.

He said since industrial land is running scarce on Penang island, the mainland is set to be the centre for future industrial development and ADB intends to leverage on this.

"Following a site visit to Batu Kawan yesterday where UEM Construction Sdn Bhd has a yard, I am pleased to see that the company is going full-steam ahead with the jetty construction for the piling works.

"A lot of construction materials have also been brought to the site and this sends out positive signals that we can expect more growth to be spurred on the mainland," Chan added.

The 24km Penang Second Bridge will link Penang island and Seberang Prai. Upon completion by 2011, the bridge, which will comprise 294 piers and 9,364 sections, is set to be the longest in Southeast Asia.

UEM Construction Sdn Bhd - a subsidiary of UEM Builders Bhd - has named port builder and bridge construction firm China Harbour Engineering Co Ltd as its main contractor for the iconic bridge project.

By Business Times (by Marina Emmanuel)

SP Setia CEO doesn’t see PNB takeover taking place

SHAH ALAM: Although Permodalan Nasional Bhd (PNB) has raised its stake in SP Setia Bhd to 32.9% which can easily trigger a general offer if it decides to further increase its stake to 33% in the coming days, the company’s president and chief executive officer Tan Sri Liew Kee Sin is unperturbed by worries of a potential takeover.

Addressing concerns voiced by the investment community that PNB may further raise its stake in the company and the possibility of the company being taken private, Liew, who owns 12% of the company, said he personally did not think that would happen.

“It does not make sense for the fund to take the company private because that will not serve any purpose in further adding value to its investment. Whatever future plans there may be, they will add value to the SP Setia group,” he told StarBiz.

PNB controls three property developers – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – all privatised between 2005 and 2007.

Liew sees PNB’s majority stake in the company as a boon that will enhance its value as a premier developer.

The investment fund, which has been a shareholder of SP Setia since the 1990s, had from last March started picking up more of the company’s shares in the open market.

He said being an investment fund, PNB would always be on the lookout to create value for its unitholders.

“Its purchase of the company’s shares over the last 16 months to become a majority shareholder underscores the good value it sees in SP Setia. We are very pleased to have a strong and long-term shareholder that looks for long-term value enhancement potential rather than quarter-on-quarter results performance,” Liew added.

He said the company’s goal was to have good, long-term institutional shareholders as their presence was a sign of confidence in the company’s potential and in what it had achieved so far.

Other institutional shareholders of SP Setia include the Employees Provident Fund with 12%, Capital Group of the US also with 12%, and other foreign shareholders which hold another 14% in the company.

On June 18, SP Setia announced the appointment of two nominees of PNB – Tan Sri Wan Mohd Zahid Mohd Noordin and Datuk Noor Farida Mohd Ariffin – as its new non-independent and non-executive directors.

SP Setia’s two executive directors – Khor Chap Jen and Teow Leong Seng – resigned from their positions on the same day.

However, both remain with the company in their existing capacity as executive vice-president in charge of property division (central) and executive vice-president/CEO of international business development respectively.

Analysts concurred that Liew’s hands-on management was a huge asset to SP Setia’s growth to become the largest property company by market capitalisation at RM4bil, based on the closing price of its shares at RM3.98 yesterday.

“The possibility of PNB taking over SP Setia and taking it private is very slim as the move will dilute the company’s value. It is also fair to say that the current management team led by Liew is highly professional and will be hard to replace,” an analyst with a foreign brokerage said.

ECM Libra property analyst Bernard Ching said the company was moving into the next stage of transformation from being a Malaysian-centric property player to a regional player.

“The management led by Liew has an enviable track record in Malaysian property scene. Its long term prospects are underpinned by its drive to penetrate high growth regional markets such as Vietnam and most recently China. While pursuing growth in new markets, management is also cognisant of risks involved and has structured its investment with minimal upfront cost and deferred payment based on development progress.

“Domestically, it is venturing into large scale commercial development such as Setia City. Its long-awaited The Kuala Lumpur Eco City project in Abdullah Hukum is also poised to enhance its value going into the next property cycle.

“This project will easily match Mid Valley’s size and value,” he said.

With projects worth a total gross development value of RM5bil in the pipeline for launch in one to two years, SP Setia will be well positioned for a potential pick-up in the property market.

“Its net gearing ratio at 0.2 times as of April 30, 2009 means its balance sheet is not stretched and has plenty of room to increase its leverage to capitalise on any acquisition opportunities as and when they arise,” Ching added.

Meanwhile, Liew said the company was confident of achieving its sales target of RM1.1bil for financial year ending Oct 31 after having raked in RM803mil in sales between November 2008 and June 15.

His confidence is based on the more positive signs appearing in the global and local economic fronts.

“The share market is improving and there is less negative news about the economy. I think things are looking to be more positive and that the worst times are over,” he added.

Attributing the company’s record sales of RM803mil to the Setia 5/95 Home Loan Package, Liew said the housing facility contributed 90% of the total sales recorded during the period.

By The Star (by Angie Ng)

Asian developers more upbeat

SINGAPORE: Asian property firms are beginning to see light at the end of the tunnel and several are positioning for an upturn even as the world economy struggles to recover from its worst recession in decades.

The mood among US and European executives at this week's Reuters Global Real Estate Summit is glum, but Asian counterparts are more upbeat with some revealing plans for new projects in anticipation of an upturn later this year.

For instance, Chinese commercial property developer SOHO said it has built up a war chest of US$1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months.

Indiabulls, India's third-largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

"The general mood has been cautious, but there is also optimism. Asian companies in general are in much better shape compared to their peers in other regions," said Ayala Land chief financial officer and Asian Public Real Estate Association president Jaime Ysmael.

Spurring the optimism in Asia is a recovery in residential markets, with price cuts drawing buyers in China, Hong Kong and Singapore, where saving rates are high and banks are prepared to lend.

The volume of transactions in these places are close to levels seen during the bull market of 2007 and residential property values have begun to edge upwards as developers such as Singapore's City Developments raise prices.

Asian property values did not rise as much as in the US and parts of Europe this decade. In dollar terms, property in countries such as the Philippines are cheaper than before the onset of the Asian crisis in late 1997.

Interest rate cuts and government stimulus plans are also helping regional property markets recover.

Singapore residential prices were supported by mortgage rates that were below rental yields, a Bank of America Merrill Lynch report said this week.

"At the current mortgage rate of around 2.75 per cent, our net cost of carry model implies that prices can rise by 30 per cent before home buyers enter negative carry," it said. The bank predicts Singapore home prices will rise 20 per cent next year.

Singapore's housing market has been hit hard by the downturn, with home prices plunging nearly 14 per cent in the first quarter of this year, the steepest drop in over 30 years, according to government data.

Separately, Nomura said unemployment was stabilising in Hong Kong and forecasts home prices and rents in the Chinese territory will rise by 22 per cent and 11 per cent, respectively, this year.

A poll of 10 analysts conducted in conjunction with the Reuters Global Real Estate Summit showed China home prices are expected to gain an average of 10 per cent between now and the end of 2010.

The outlook for Asia's office market remained negative but most developers said rents have stabilised after falling sharply in the fourth quarter of 2008 and earlier this year.

Some investors said any pick-up may not be sustainable.

"There is a risk that this is a bear market rally and the situation could reverse when such liquidity leave the cities or country, or there is new shock to the economies," said LaSalle Investment Management's Asia-Pacific head of research and strategy Kenneth Tsang.

By Reuters

Goldis in final talks with anchor tenants for GTower

KUALA LUMPUR: Goldis Bhd is confident of a good response for its soon-to-be-completed GTower and is in the final stages of negotiation with anchor tenants to take up space in the Grade A++ office building.

GOLDIS Berhad chief executive officer Tan Lei Cheng dropped in at the chess league just in time to watch her chess-playing father Dato Tan Chin Nam start off his game.

Executive chairman and chief executive officer Tan Lei Cheng said the anchors comprised companies in the oil and gas and information technology sectors as well as multinationals.

“It will take time but we are confident that GTower will be fully taken up. There are not many new stock in terms of offices in the city centre and most of the existing ones are quite old.

“Currently 40% of the total space has been taken up already,” she said after the group’s AGM yesterday.

GTower, which started construction in July 2006, is expected to be completed and operational in the fourth quarter.

The 30-storey twin tower GTower has over 500,000 sq ft of office space and CEO duplex offices available for lease. The G City Club Hotel, within GTower, is a boutique five-star hotel comprising 180 rooms.

Goldis has private equity investments in the country and China with focus areas in healthcare, property investment and development, information and communication technology, paper manufacturing, water treatment services and organic aquaculture.

Tan said the group recently signed a build, operate and transfer concession agreement and supplemental agreement via wholly-owned subsidiary Crest Spring (Shanghai) Co Ltd of a sewage treatment plant in Zou Cheng Industrial Park, Shandong Province in China.

“We are at the design stage now. It will take 1½ years for the plant to be ready. It fits into our investment strategy and is a long-term cash cow business.

“With our experience we can also look at the sewage treatment business in Malaysia in future,” Tan said.

The group already operates two sewage treatment plants in China.

On new investments, Tan said Goldis had no plans to invest in new businesses at the moment but would focus on growing its subsidiaries via mergers and acquisitions or organically.

Goldis’ private equity investments include Hoe Pharmaceuticals Sdn Bhd, Macro Kiosk Bhd and Protech Yu (Asia) Sdn Bhd.

Goldis recorded a 5% drop in net profit to RM8.2mil for the first quarter ended April 30 versus the previous corresponding period while revenue slipped 7.5% to RM43mil.

All resolutions were passed at the AGM and EGM yesterday.

By The Star (by Elaine Ang)

Glomac net profit up 66%

PETALING JAYA: Property developer Glomac Bhd’s net profit rose 66% to RM7.21mil in the last quarter ended April 30, as revenue rose 39% to RM99.89mil compared with the previous corresponding period.

This brings its full-year (FY09) net income to RM32.3mil, which was slightly lower than RM35.1mil achieved in FY08. Sales grew to RM352mil from RM324mil previously.

In a press release issued yesterday, Glomac attributed its improved performance for the year just ended to strong progress billings from on-going projects, with maiden contribution from new developments.

“Group profits for the year include RM4.4mil fair-value gain for the sale of Wisma Glomac 3,’’ it said, adding that minority interest was higher for the year due to higher contribution from 51%-owned Glomac Tower.

This was the primary reason from the decline in net profit despite higher revenue achieved for the year.

Glomac proposed a final gross dividend payout of 3.5 sen for FY09.

“Prospects in the current year remain healthy, driven by unbilled sales and new commercial launches,’’ group executive chairman Tan Sri FD Mansor said in the statement.

Total unbilled sales reached RM364mil as at end-April.

By The Star

MBSA to relax rules to attract foreign investments

Already open: The first phase of the i-City project has been completed.

The Shah Alam City Council (MBSA) is going easy on its strict rules on entertainment outlets in the city as part of efforts to attract foreign investors to the knowledge-based i-City development project.

With such a policy in place, Shah Alam residents may, within the next few years, see the city’s first cinema with the approval for the facilities having been granted.

The cinema is part of the final phase of the i-City, which comprises a shopping mall and a citywalk which are scheduled to be completed in 2015. The intelligent centre is located at Section 7 of the state capital.

“We are making an exemption for the i-City to encourage international companies and franchisors to invest in the intelligent centre,” Shah Alam mayor Mazalan Md Noor said.

“But they still have to adhere to the existing rules and regulations, especially on the operating hours,” he said.

According to Mazalan, the i-City had been conferred the International Park status by the Selangor government in October last year, allowing it to operate entertainment and lifestyle outlets such as cinemas and theatres, bowling alleys, family theme parks, restaurant and clubs.

He said although the International Park status also allowed restaurants in the i-City to sell liquor, this was not an automatic blanket maxim but subject to approval by the MBSA.

“In principle, we are going easy on the ruling for them, but it does not mean that it is automatic permission. The operators still have to apply for permits and we will look into their cases to make sure that they abide to the guidelines,” he said.

Mazalan said he hoped that the move would serve as a catalyst in boosting the development in the state capital.

“We hope the i-City, with its modern infrastructure and high-tech facilities, will function effectively as the city’s knowledged-based centre,” he said.

“We want the i-City to be an icon for the city and hopefully will be emulated in other areas of the city,” he said.

Shah Alam, with about 90% its population being Muslims, has always been strict on the entertainment outlets, with cinemas, pubs and snooker centres being banned.

But the city is a beautiful place to live, with its many natural parks and a handsome lake too. Traffic chaos is also almost unheard of in this garden city of orchids.

Having a cinema and other modern high-tech facilities in the i-City will complement the other cultural and recreational elements available in Shah Alam.

Residents and visitors can enjoy regular cultural activities at the Laman Budaya and soon watch theatre performances at the Shah Alam Royale Theatre.

“We are also processing applications from karaoke centres, so the residents will soon be able to enjoy that too,” Mazalan said.

Allowing the cinema to operate in the city has received mixed responses and reactions from the Shah Alam residents. Even the city councillors are split on the matter.

While some people agree with relaxing the rules, others feel that the city should maintain its sober identity, with no entertainment outlets.

“All the while we did not have any such outlets and this is what the residents want. Having such facilities would not make Shah Alam any better and might even result in negative influences and impacts, especially among our youths,” said Datin Nor’ini Md Top, a councillor in charge of Section 7.

“So I do feel that we should stick to the the status quo - no cinema,” she said.

Nor’ini said the MBSA should not make an exception to the i-City centre as other similar developments would also demand to be given similar concessions.

She felt that the authority should not bend the rules just to encourage more foreign investors to come and start their business at the i-City.

“Why do we have to sacrifice our own culture and ethics just for the sake of encouraging foreign investors?

“Unless the operator could ensure that they would only conduct constructive and educating activities, I believe we should stand by what the residents want,” Nor’ini said.

Councillor Ang Leng Kiat said the MBSA would have to make sure that the i-City operators provide healthy activities for the people.

Ang said it was only fair to seek the views of the residents on what they wanted.

“We are serving the people and if they want a cinema, then they should have it,” he said.

“But we have to make sure that the cinema operator adhere to our rules and regulations,” Ang said.

Adnan Jamburi said that relaxing the rules would be a boost the development and property value in the city.

He said the move would bring in foreign investors to the city, which was needed especially during the current economic slowdown.

By The Star (Stories by Salina Khalid)

Property market showing signs of recovery, albeit slowly

The Malaysian property market is showing signs of recovery, albeit at a slow pace, attributed to government spending and developers taking a cautious stance during the economic downturn.

"We are recording higher property volume, but lower value. The price is not plunging. It is just that the lower bracket of properties are selling now," said Dr Zailan Mohd Isa, director of the Valuation and Property Services Department under the Ministry of Finance.

According to data provided by the department, there were 23,256 unsold completed residential units in Malaysia as at March 31, 2.1 per cent lower than the same quarter last year.

In addition, there are 15,723 units with approved building plans - launched, but not constructed. Last year, the figure was 18,402 units.

For unsold properties under construction, there are 49,904 units versus 53,619 units last year.

"Due to the economy slowdown, developers have been cautious. Hence, there were less new products in the market. But overall, the performance in the sector remains healthy but most importantly, the government has to secure jobs, facilitate domestic spending and control inflation," he said.

Zailan was speaking at a media conference in Kuala Lumpur yesterday, in relation to the 20th National Real Estate Conference that will be held from August 11-12 at the Kuala Lumpur Convention Centre.

The event is hosted by the Association of Valuers and Property Consultants in Private Practice Malaysia and Institution of Surveyors Malaysia.

The conference will underline issues faced by the real estate sector, covering residential, office, retail, hotel and industrial markets.

Organising chairman Elvin Fernandez said the conference was timely and important to re-calibrate the fundamentals in the Malaysian real estate market. He said there is a self correction mechanism in the market now as the country's 2,000-odd developers are holding on to their launches.

By Business Times (by Sharen Kaur)

Khazanah, Boustead in RM50m KidZania venture

A RM50 million educational theme park from Mexico, KidZania, will open by early 2012 at a new building in Mutiara Damansara in Selangor, just across from the Curve shopping mall.

The award-winning indoor park, which allows children to role-play adult occupations in a replica city with activities designed to mimic real-life and functioning economy, is popular in cities like Tokyo and Jakarta besides its home country.

"It is a commercial investment but it also hits the right note on all fronts. We are excited. This world-class facility will fill the current void of entertainment and education in our tourism sector," Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar said at a press conference in Selangor yesterday.

Once completed, the park will create 400 jobs in the service industry, he added.

The project, an 80:20 joint venture between Khazanah and Boustead Holdings Bhd, is the second theme park investment for Khazanah after the RM750 million Legoland in Iskandar Malaysia.

KidZania Kuala Lumpur is expected to attract 500,000 visitors a year. Boustead, developer of Mutiara Damansara and owner of the Curve, will tear down a building currently occupied by McDonalds to build a seven-storey structure to house KidZania Kuala Lumpur. The theme park will take up about 60,000 sq ft on levels six and seven of the new building, which will be linked to the Curve via a sky bridge.

Xavier Lopez Ancona, founder and chief executive officer of KidZania S.A. de C.V., said Khazanah may recoup its investments in as soon as five years based on the hot response for its parks in Tokyo and Jakarta.

"The typical payback period for theme parks is around seven to nine years," said the Mexican entrepreneur who started the first KidZania in the Santa Fe Shopping Mall in Mexico City in 1999.

Entrance fees in Jakarta are priced around US$12-US$13 (RM42-RM46) for kids, while accompanying adults pay a lower price of about US$9 (RM32), Ancona said.

Other operating revenues also come from food and beverage sales and fees paid by marketing partners who want to put up their brands in the mock-up city.

KidZania also owns and operates another park in Monterrey, Mexico. It is building a third one in the country at Cuicuilco.

Outside Mexico, KidZania operates through franchise in Lisbon, Portugal; Jakarta, Indonesia and in the Japanese cities of Osaka and Tokyo. In Tokyo, tickets are sold out every day since its opening in 2006, with 955,000 visitors last year alone.

New KidZanias are coming up in Dubai, Seoul, Shanghai, Bangkok, Santiago (Chile), Mumbai and Istanbul.

By Business Times (by Chong Pooi Koon)

No major issue in finding new buyer for Iskandar land: Azman

KHAZANAH Nasional Bhd says it sees "no major issue" in finding new investments to replace the Dubai property developer which recently dropped a land purchase deal in Iskandar Malaysia.

Damac Properties (Malaysia) Sdn Bhd, one of Dubai's largest private developers, recently said it would not pursue the plan to buy land in Nusajaya for RM396.5 million.

"It's not a major issue. The Damac plot of land is a good site and there is interest shown for the site.

"We are confident there will be replacement coming in," Khazanah's managing director Tan Sri Azman Mokhtar told reporters in Petaling Jaya yesterday.

By Business Times

Mulpha confident of facing challenges

MULPHA International Bhd is confident of withstanding the challenges arising from the unprecedented global economic turmoil.

Its executive chairman, Lee See Huang, said companies faced problems and hoped for recovery to grow.

"We are confident of the quality of our developments and assets and have a strong balance sheet to ride out of the current economic storm," he told a media briefing after the the company's annual general meeting today.

Mulpha is involved in real estate and property-related and financial services, with operations and investments in Malaysia, Vietnam, Singapore, China, Hong Kong and Australia.

By Bernama

LaSalle ready to invest in Asian real estate

SINGAPORE: LaSalle Investment Management said yesterday it has US$3bil available for investing in Asian real estate and is ready to re-enter the market after nine months on the sidelines, focusing initially on Japan and Australia.

“The process of debt restructuring and market resetting and capital and economic stabilisation seems to be happening fastest in those countries,” chief investment officer for Asia Pacific Ian Mackie told the Reuters Global Real Estate Summit.

“Japan has had a price correction that has been very significant (and) people forget that Japan is still the second biggest economy in the world,” he added.

The US real estate investment firm, which has US$8.7bil in Asian assets, favours “gateway” cities such as Tokyo and Osaka in Japan and Sydney, Melbourne and Brisbane in Australia.

MacKie said LaSalle’s US$3bil war chest, most of it from a fund raised around the middle of last year, would probably translate into acquisitions worth US$6bil as the firm planned to keep debt levels low.

The firm, the investment arm of property services firm Jones Lang LaSalle, used to borrow up to 75% to fund an acquisition in Japan but will likely seek about 50% financing under current market conditions.

Asian property investment sales fell sharply in the second half of last year, hurt by a tightening of credit markets and a collapse in investor confidence following the collapse of Lehman Brothers in September.

For the first three months of 2009, investment sales fell 83% to US$3.1bil from a year ago, according to data compiled by rival property services firm CB Richard Ellis. The worst-hit markets were Japan, Hong Kong and Singapore.

Mackie said LaSalle invested in most types of property but was keenest on warehouses, hotels and offices. Besides Japan and Australia, its other preferred destinations include China and South Korea.

But the firm will probably give Indian real estate a miss as it feels the potential returns do not compensate for the risks.

“We have not seen an attractive investment in India in terms of risk-adjusted returns ... We can get the same returns in Japan and the risks are much, much higher in India,” he said.

LaSalle said that while it saw opportunities in Japan and Australia, it remained cautious about Asian real estate in the near-term and warned that a pick-up in home sales in China, Hong Kong and Singapore could be a “bear rally”.

Kenneth Tsang, the firm’s Asia-Pacific head of research and strategy, said the spike in apartment sales was driven by pent-up demand and low mortgage rates and may not be sustainable.

By Reuters

YTL to subscribe to Starhill REIT units

PETALING JAYA: YTL Corp Bhd will subscribe for up to 75% of the total rights units issued by Starhill Global Real Estate Investment Trust (REIT) under its proposed one-for-one basis.

In a statement to Bursa Malaysia yesterday, the company said it had entered into a sub-writing agreement with DBS Bank Ltd, Merrill Lynch (Singapore) Pte Ltd and Credit Suisse (Singapore) Ltd for the purpose.

Starhill Global REIT, which is listed on the main board of Singapore Exchange Securities Trading Ltd, has proposed to issue 963.72 million new units at issue price of 35 Singapore cents per unit.

As at June 22, YTL Corp has an aggregate deemed interest in 256.1 million units, representing about 26.6% stake in Starhill Global REIT.

By The Star

S'pore Starhill REIT rights issue to raise S$337m

SINGAPORE: Singapore's Starhill Global Real Estate Investment Trust yesterday proposed a rights issue to raise S$337.3 million (S$1 = RM2.43) to reduce debt and get new funds for possible acquisitions.

The property trust, which is controlled by Malaysia's YTL Corp Bhd (4677), will offer shareholders one new unit for every existing share held at S$0.35 per rights unit - a discount of about 45 per cent to the last closing price of S$0.64.

YTL, whose units own about 26.6 per cent of Starhill, will take up its entire allotment of rights shares and will subscribe for up to 75 per cent of the rights unit, the property trust said in a stock market filing.

DBS is the sole financial adviser to the deal and the rights issue will be fully underwritten by DBS, Merrill Lynch and Credit Suisse.

Starhill's assets include stakes in Wisma Atria and Ngee Ann City, two large malls on Singapore's Orchard Road shopping belt.

By Reuters

Oriental in RM200m hospital venture

Auto and plantation group Oriental Holdings Bhd (OHB) plans to open a RM200 million specialist hospital in Malacca in 2012 to strengthen its healthcare division.

Called the Melaka Straits Medical Centre, OHB will hold a controlling 51 per cent stake in the hospital that will be located in the new reclaimed coastal tourist township of Klebang in Malacca.

Boon Siew Sdn Bhd, the controlling shareholder of OHB, will hold another 20 per cent, followed by Bagan Specialist Centre with 29 per cent.

Boon Siew also holds the majority stake in Bagan Specialist Centre which is located in Seberang Prai, Penang.

"This 300-bed hospital will offer multi-diciplinary specialist healthcare services with niche specialisation in heart, lung and cancer treatment," OHB director Datuk Dr Tan Chong Siang told Business Times.

Dr Tan said Malacca was chosen because land was available. The reclamation project there is handled by Ultra Green Sdn Bhd, a construction and property development subsidiary of OHB.

The hospital is expected to create 500 new jobs. Construction is due to start in November this year.

"We choose to expand at this time of challenging economic situation because we see the synergistic opportunity presented in a field we have been involved in for the past 22 years," said Dr Tan, who is also the medical superintendent of Bagan Specialist Centre.

"It is a concept well received by the public from our track record, we believe we are ready now for expansion," he added.

According to Dr Tan, the existing hospital, Bagan Specialist Centre in Seberang Prai in Penang, operates on the basis of good quality at minimum cost, minimum discomfort and optimum speed. It plans to do the same for the new hospital.

In the year ended December 31 2007, Bagan Specialist Centre made a net profit of RM6.83 million on revenue of RM39.23 million.

As for OHB, its net profit eased 3 per cent to RM314 million in 2008 while revenue was up 14 per cent to RM5.1 billion.

By Business Times (by Vasantha Ganesan)

Khazanah: KidZania to be opened by 2012

KHAZANAH Nasional Bhd and its partner, Boustead Holdings Bhd, expect the indoor educational theme park, KidZania Kuala Lumpur, to be opened by 2012.

Khazanah managing director, Tan Sri Azman Mokhtar, said the RM50 million theme park would occupy about 60,000 sq ft at the new building in Mutiara Damansara.

"About 500,000 visitors are expected per annum," he told reporters after the signing of licensing agreement between Rakan Riang Sdn Bhd and KidZania SA de CV today.

Rakan Riang is a joint-venture company between Khazanah and Boustead.

Azman said the theme park was expected to create 400 jobs.

He said the company would announce the entrance fees soon.

Founder/chief executive officer of KidZania SA de CV, Xavier Lopex Ancona, said it cost between US$12 and US$13 to visit KidZania in Jakarta.

KidZania is a family entertainment centre where children play adult roles in a child-sized replica of an actual city with streets, buildings, shops as well as vehicles moving along its streets.

The first KidZania was opened in 1999 in the Santa Fe Shopping Mall of Mexico City. The others are in Japan, Indonesia and Portugal.

By Bernama

Malaysian builders set for 'fat years'

Malaysian construction stocks including Gamuda Bhd, IJM Corp and WCT Bhd are set to benefit from several “fat years” as the government accelerates a slew of development projects, Maybank Investment Bank Bhd said.

Prime Minister Datuk Seri Najib Razak is yet to award RM12 billion (US$3.4 billion) of contracts from two stimulus packages, Wong Chew Hann, a Kuala Lumpur-based analyst at Maybank, said in a report today. The first-quarter economic slump of 6.2 per cent underlines the need for faster project implementation, Wong said.

“The momentum of awards for construction jobs should quicken,” Wong said in the report, reiterating an “overweight” rating on the industry. “Tenders and awards ought to lift the valuations of construction stocks.”

The rollout of all outstanding contracts has the potential to trigger Malaysia’s first building boom since the Petronas Twin Towers and the Kuala Lumpur International Airport projects before the 1997-1998 regional financial crisis, Maybank said. Steelmakers, property developers and construction stocks are already among the year’s top climbers on the nation’s main index.

IJM, helping to build a tunnel for an interstate Malaysian water project, has almost doubled in 2009 and is the second-best performer on the Kuala Lumpur Composite Index. Gamuda, jointly building a railway in the north of Malaysia, has surged 33 per cent. WCT has jumped 27 per cent.

The government may hand out infrastructure projects valued at between RM8 billion and RM10 billion this year, followed by a similar total in 2010, Bank of America-Merrill Lynch said today after meeting executives at IJM and Gamuda.

More Spending

“The government will continue to spend, spend and spend,” Melvyn Boey, a Singapore-based analyst at Bank of America- Merrill Lynch, said in a report. Contracts awarded in the next 12 months to 18 months will have a “big multiplier effect” on the economy, Boey said.

According to Maybank, the funds from Najib’s two stimulus packages will coincide with the acceleration of spending under a five-year government industrial plan, devised before the current crisis, which stretches through 2010. Najib has an additional RM103 billion, almost half the entire allocation, to spend before the end of next year, Maybank said.

The biggest projects due by the middle of 2010 are the remaining components of a water-transfer project in central Malaysia, already partly awarded to IJM, that are probably worth a combined RM6.2 billion, Maybank said.

The government will also award a RM2 billion contract to build a low-cost terminal at Kuala Lumpur’s airport, and order an extension to a railway network in the Klang Valley surrounding the Malaysian capital, a job that might be worth as much as RM10 billion, the bank said.

Najib, who came to office in April and inherited the government’s smallest majority in more than 50 years, probably has only a 12-month window to implement the biggest projects in order to strengthen the economy before the next general election, due by 2013, Maybank said.

By Bloomberg

Muhibbah MD sees better year for infrastructure construction

SHAH ALAM: Muhibbah Engineering (M) Bhd sees better performance from its infrastructure construction business this year due to cheaper materials after the division posted losses last year.

Nevertheless, the current general business environment remains slow and a pick-up in the construction industry is not seen for another six months, said managing director Mac Ngan Boon.

Mac said the group’s infrastructure construction business was expected to perform better this year as raw material prices overall had decreased by 10% to 15%.

“Last year was a difficult period as we had to endure high prices for raw materials and scarcity of equipment for our heavy engineering works.

“Going forward, we see a trend reversal and that (will have a) positive impact on our ongoing jobs,” he told reporters after Muhibbah’s annual general meeting yesterday.

The company’s infrastructure construction division registered a pre-tax loss of RM21.5mil in its previous financial year ended Dec 31 mainly due to increased costs in oil, construction materials, transportation as well as other operating costs.

This had a negative impact on the company’s net profit, which fell to RM21.8mil from RM70.2mil in FY07, although revenue rose to RM2.1bil from RM1.4bil.

Mac said although the construction business was currently slow, “our present strength lies in the orderbook that should last another two years during which we can replenish our orders.”

“The secured projects also give us the choice to select projects that would be highly beneficial for the company and not just aggressively fight to get jobs,” he said, adding that the company had bid for jobs worth RM3bil for both local and overseas projects.

“But the market environment is more competitive today,” Mac acknowledged when asked on the success rate of the jobs tendered for.

Muhibbah’s order book for construction projects stands at RM2.6bil currently with 55% local projects and the rest goreign.

On its crane business, Mac believes that demand will be more robust in the latter part of the year.

By The Star