Developers, builders fall on property tax

IJM Land Bhd led Malaysian real estate stocks lower and builders fell after Prime Minister Datuk Seri Najib Razak imposed a capital gains tax on property and the government cut development spending.

IJM Land, Malaysia’s fifth-biggest developer, slid 2 per cent to RM2.44 at 10.28 am local time, outpacing the FTSE Bursa Malaysia KLCI Index’s 0.4 per cent decline. IGB Corp lost 3.3 per cent to RM2.07.

The property tax is a “negative surprise” and will “dampen the velocity of transactions,” HWANGDBS Vickers Research said in a report today.

The government aims to bolster revenue and cut spending to help trim a budget deficit to 5.6 per cent of gross domestic product next year from a 22-year high of 7.4 per cent in 2009.
Malaysia plans a 5 per cent capital gains tax on property from January to help broaden the base of revenue collection, Najib said on October 23. Development expenditure will be reduced by 4.4 per cent to RM51.2 billion next year.

Gamuda Bhd, Malaysia’s second-biggest construction company, lost 1.2 per cent to RM3.30, set for the biggest decline since October 9. IJM Corp dropped 1.2 per cent to RM4.87.

“Although we believe the property market has bottomed, we view this measure came too soon,” Citigroup Inc said in a report today, referring to the property tax. It’s a “negative for the sector as it would curb buying interest.”

Sunway City Bhd and Sunrise Bhd had their stock ratings cut to “hold” from “buy” today by HWANGDBS, which also lowered the target prices of SP Setia Bhd, DNP Holdings Bhd and Eastern & Oriental Bhd.

Shares of Sunway were unchanged, while Sunrise fell 2.9 per cent to RM2.32. SP Setia lost 1.3 per cent to RM3.83, headed for the lowest level since July 13. DNP sank 2.7 per cent to RM1.47 and Eastern & Oriental declined 4.1 per cent to RM1.18.

“The government needs to ensure that the Malaysian tax system is equitable and able to generate revenue for development purposes,” Najib said in his budget speech. Property tax exemptions for families will remain, he said.

Malaysia scrapped a three-decade old capital gains tax on property in April 2007 in a bid to help clear a backlog of unsold homes and attract overseas funds.

Previously, the capital gains tax on property was 30 per cent within the first two years, falling to 5 per cent by the fifth year. For foreigners, the old tax started at 30 per cent for the first five years, dropping to 5 per cent in the sixth and subsequent years.

Neighboring Singapore said in August it wouldn’t proceed with an earlier plan to impose a tax on some property transactions after receiving negative public feedback. It had planned to tax individuals who sold more than one property within a four-year period to deter speculation.

By Bloomberg

Naza TTDI set to bag RM14b job

The property arm of the Naza Group is set to bag the job to build Malaysia's largest international conference and exhibition centre for heavy industries

NAZA TTDI, the property arm of the Naza Group, is set to clinch a RM14 billion property development project on a 24.2ha parcel of land near the Malaysia External Trade Development Corp (Matrade) headquarters in Kuala Lumpur.

Sources said the flagship project will be the construction of Malaysia's largest international conference and exhibition centre.

It will specifically cater to heavy industries like shipping, machinery, trains as well as high technology industries such as aerospace.

"The expo centre is part of the government's vison to elevate Malaysia as a regional hub at par with South Korea, China and Japan as well as bolster innovation among Malaysians," said a source.
The project will also include residential units such as condominiums as well as commercial buildings and may take at least five years to complete.

It is understood that the project will be signed between the government and the Naza Group as early as the end of this month (October 2009).

"The expo centre will offer something different because traditionally people always go to the Putra World Trade Centre, Kuala Lumpur Convention Centre and Matrade headquarters for small- and medium-scale events, furniture fairs, export-import fairs or auto shows.

"This massive expo centre will offer something never done before, which are heavy industries such as ships and airplane components and even aerospace," said the source.

Sources said the Naza Group is currently seeking financial partners and is willing to do the project on a joint-venture basis.

It has approached banks like CIMB Group Holdings Bhd, the AmBank Group as well as government-owned funds like the Employees Provident Fund and Permodalan Nasional Bhd.

Neither Naza TTDI managing director SM Faliq SM Nasimuddin nor other Naza officials responded to questions sent by Business Times.

The Naza Group, traditionally known for its automotive operations, also aims to gain equal prominence in its property business as it targets to become among Malaysia's top three developers in five years.

The group is sitting on 180.59ha of land in the Klang Valley with a potential RM7.6 billion gross development value (GDV).

Naza TTDI raked in a net profit of RM86 million on revenue of RM239 million last year.

It has secured orders of RM1.8 billion from projects like the Platinum Park near the Kuala Lumpur City Centre, of which RM1.5 billion has yet to be billed.

By Business Times (by Zaidi Isham Ismail)

SP Setia in US$16.2m Vietnam JV

KUALA LUMPUR: SP Setia Berhad Group's subsidiary, Setia Lai Thieu Ltd is teaming up with Vietnam's Investment and Industrial Development Corp (Becamex IDC Corp) to undertake a mixed-use project in Vietnam valued at US$16.26 million.

The project would be carried out in Lai Thieu, Binh Doung province. The site is 16km north of Ho Chi Minh City and an hour's drive from Tan Son Nhat International Airport.

The development will encompass shophouses, terraced houses, semi-detached houses, commercial centres, club house and apartments which will be for lease and for sale.

"The project is expected to take six years to complete and has a gross development value (GDV) of US$250 million," said SP Setia.

The site is 2.5km from Phase 1 of the Vietnam Singapore Industrial Park with 230 international manufacturers from 22 countries with investments of more than US$1.4 billion. The working population is more than 40,000.

The project will be SP Setia's third project in Vietnam after EcoLakes at My Phuoc Industrial Park, 40 km north of Ho Chi Minh City and EcoXanh at Saigon Hi-Tech Park in District 9 of Ho Chi Minh City.

SP Setia made its maiden foray into Vietnam in mid-2007 when it teamed up with Vietnam’s state-owned conglomerate, Becamex to develop EcoLakes, a 558 acre eco sanctuary, conceptualised after SP Setia’s award-winning Setia Eco Park in Shah Alam.

The success of EcoLakes has reinforced SP Setia's confidence in the Vietnamese property market - in particular that of the Binh Duong Province.

By The EDGE Malaysia

Tax plan spurs new property listings: Website

The government's move to re-introduce Real Property Gains Tax (RPGT) from Jan 1 next year seems to have spurred some borderline sellers to put up their properties on the market, according to Thinkproperty.my.

The move has also encouraged others to reduce their prices to make sure they sell before the end of this year, the property website said in a statement today.

Thinkproperty.my said it saw an unusually high number of new property listings over the weekend as well as an unusually high number of listings where the price had been reduced from an earlier stated price.

Its chief executive officer Asim Qureshi said the re-introduction of the tax will play in important role in stamping out speculative investments in property.
"Speculations in property markets have caused the boom and bust cycles we have seen in many other real estate markets across the world and avoiding that kind of instability would be a positive," Qureshi said.

"However, while we have seen a surge in confidence in the property market in recent months, I cannot help but feel the re-introduction of the tax has been a year or two too soon," he said.

Qureshi said that having a tax exemption if the property was held for a certain number of years would have been better as the tax would have been more targeted at property speculators.

"One concern I do have is the message that this move will send out to foreign investors. Malaysia is increasingly being seen as an international property hotspot, and the re-introduction of the tax will somewhat undermine that view," he said.

"There is a big difference between 100 per cent tax-free property gains, which jurisdictions like the United Kingdom, the United Arab Emirates, Singapore and Hong Kong offer and a low rate of tax of five per cent."

On a positive note, Qureshi said the rate of tax was only five per cent of the gains, adding that the government has done the right thing by re-introducing the tax gently so as not to significantly disrupt the market.

"In terms of opportunity, I believe it will be a good time to buy in the secondary market from now until year-end, which is where the tax will have its most direct impact," he said.

"A lot of property owners will want to sell their properties before the deadline which means more supply, yet in the backdrop we have increasing confidence in the Malaysian property market and the country's strong economic fundamentals."

Thinkproperty.my, launched in October 2007, is owned by Think Media Sdn Bhd. The website has over 20,000 members and a rapidly growing database of over 70,000 quality property listings.

By Bernama

Malaysia clarifies Real Property Gains Tax

SECOND Finance Minister Datuk Seri Ahmad Husni Hanadzlah clarified that the Real Property Gains Tax, effective January 1 next year, is fixed at 5 per cent, irrespective of the property disposal year.

"The Real Property Gains Tax for the first year is 5 per cent and is the same for the second, third, fourth and fifth year," he reportedly said on Saturday.

In a statement released from Putrajaya yesterday, Ahmad Husni reiterated that in the 2010 Budget, the fixed 5 per cent tax to be imposed on the gains from the sale of property is irrespective of the holding period and the category of the owner.

This rate of 5 per cent will be implemented through the Real Property Gains Tax (Exemption) Order 2009. This Order will be gazetted as soon as possible and is effective January 1, 2010.
Therefore, the current rate of RPGT, which is higher than 5 per cent as in Schedule 5 of the Real Property Gains Tax 1976, will no longer be applicable.

The Second Finance Minster said there are three circumstances where the property owner is exempted from the 5 per cent gains tax.

The first is where the level of exemption is increased from RM5,000 to RM10,000 or 10 per cent of the chargeable gains.

The second, is when the property sale are gifts between parent and child, husband and wife, grandparent and grandchild. And finally, when the disposal of a residential property is a once in a lifetime transaction.

By Business Times

Exemption order on property tax out soon

The Finance Ministry is expected to come up with an exemption order on the Real Property Gains Tax (RPGT) this week to clear the confusion surrounding the RPGT proposal.

Under the 2010 Budget, the government proposed a fixed tax rate of five per cent imposed on gains from the disposal of real property effective Jan 1 next year.

However, based on the Finance Bill, disposal within two years of acquisition will be taxed 30 per cent, 20 per cent in the third year and 15 per cent in the fourth year while disposal within five years and beyond will still be subjected to five per cent.

"As far as the Act is concerned, the rate is still there, which is five per cent to 30 per cent. Exemption order has yet to be gazetted but it is coming out very soon, maybe around this week," Finance Ministry's Under Secretary, Tax Analysis Division, Siti Halimah Ismail, said today.
She was speaking to reporters after the 2010 Post Budget Dialogue, jointly organised by the Malaysian Economic Association and University of Malaya's Faculty of Economics and Administration, and supported by Standard Chartered Bank Malaysia Bhd.

Gains from the disposal of property are subject to tax under the Real Property Gains Tax Act 1976 to curb speculative activities in the propoerty sector. However, the RPGT was exempted in 2007 to help the property sector.

Siti Halimah said the government is expected to collect some RM500 million from the real property gains tax in 2010 but lost RM240 million in individual income tax due to the reduced one per cent from 27 per cent to 26 per cent.

On the sources of tax revenue, she said that Malaysia's tax base was narrow.

"Being a narrow base, the revenue is not sustainable actually. For example, the import duty, because our commitment to free trade agreements, we have no choice but to reduce the rate," she added.

Come Jan 1, 2010, an estimated 98 per cent of the goods that come from Asean countries will be at zero import duty.

Siti Halimah said Malaysia's tax revenue was dependent on petroleum income, which contributed over 40 per cent to the total federal government revenue.

"Therefore, we have to find new sources of revenue for the government and we have a lot of new sources of growth, namely biotechnology, green technology, information and communications technology, and financial services," she said.

On the Goods and Services Tax (GST) which is expected to increase the government''s revenue collection, Siti Halimah said: "That is the reason why the government would like to push for the GST."

The government was in the final stage of its GST study, she said.
On the restructured fuel subsidy scheme, Siti Halimah hoped that the scheme would help to reduce the subsidy burden on the government.

"We hope to save government expenditure and the scheme is focused on only the targeted group," she said.

By Bernama

New York's biggest ever US$5.5b real estate poised to flop

NEW YORK: It was the most expensive real estate deal in U.S. history. Now it's poised to become one of the biggest flops.

At the height of the real estate bubble in 2006, an investment group led by New York City real estate firm Tishman Speyer Properties and BlackRock Realty Advisors paid US$5.4 billion for a pair of gigantic Manhattan apartment complexes known as Stuyvesant Town and Peter Cooper Village.

The price seemed outrageous to many, but the company believed it had a winning strategy: It would aggressively convert thousands of rent-regulated apartments occupied by middle-class families into luxury units that would fetch top dollar.

Three years later, to the glee of many New York renters, the tactic has been a bust.

Tenants fought back, conversions happened much slower than expected and a state court ruled Thursday that about $200 million in the company's new rent increases were improper.

Real estate analysts say the ownership group is now just two to three months away from a likely default on the $3 billion mortgage it used, along with a $1.4 billion secondary loan, to buy the property.

Foreclosure looms as a strong possibility.

Even before the state Court of Appeals ruling on a lawsuit filed by the apartment complex tenants, ratings firms had estimated that the value of the 80-acre (32-hectare) property, home to 25,000 people, had fallen to as little as $2 billion - far less than the outstanding loan balance.

Given the math involved, "I wouldn't be surprised if they just want to walk on it," said Steve Kiritz, a senior vice president at the credit ratings agency Realpoint LLC

"The whole master plan with this project had been for Tishman to come in and ramp up the number of units that were paying market rent," he said. New York state's rent regulation laws place restrictions on how much landlords can charge renters for many apartments.

Regular folks - especially those who have had home financing problems of their own - might laugh at the folly until they realize that some of their own money might be tied up in the deal.

Some of the biggest equity investors in the deal are public pension funds that manage retirement system benefits for millions of government employees.

Florida's State Board of Administration had put $250 million into the project. It has already written off the entire investment as a loss.

California's two largest government pension funds, the California Public Employees' Retirement System and the California State Teachers Retirement System, invested a combined $600 million.

CalSTRS has also already written off its $100 million stake.

Tishman, by comparison, stands to lose much less.

Its share was $112 million, less than 2 percent of the purchase price.

A spokesman for the company declined to comment Friday on the project's future.

Tishman Speyer's co-chief executive, Rob Speyer, told The New York Times in a recent interview that win or lose on the court case, "the asset is going to require a restructuring."

"Once the court case is resolved," he said, "we'll speak to our debt holders as well as our fellow equity investors."

Teams of lawyers will likely spend the next few months fighting over who gets control of the complex and which lenders are entitled to get some money back, said Dan Fasulo, a managing director of Real Capital Analytics.

How much they recover, and who is wiped out, may come down to how much appraisers decide the buildings are really worth, based on more realistic rent projections.

"I had a number, put together last week, that I thought was fair. I don't think that number is fair anymore," Fasulo said.

"No one could give you an honest appraisal right now."

Stuyvesant Town isn't the only such project to run into trouble after plans to increase rents went poorly.

An investment group that purchased Riverton Houses, a big development in Harlem built around the same time as Stuyvesant Town, ran into financial problems after its bid to convert hundreds of rent-regulated units to market rates went slower than expected.

One analyst estimated the value of the complex in September at $108 million, about half the value of the $225 million mortgage on the property, which is currently in default.

Any debt restructuring process at Stuyvesant Town is likely to be complicated.

The mortgages that financed the deal were chopped up, repacked and sold as Commercial Mortgage Backed Securities to a variety of investors.

Fasulo said the complexity of the arrangement and the size of the property itself mean that a traditional liquidation still might not happen.

A sale, he said, "would be very disadvantageous at this time," given the state of the real estate market.

"There would be tremendous demand," he said, but at such a depressed price that the lenders might be better off holding on to the troubled property.

By AP

Existing home sales surge

WASHINGTON: Sales of existing US homes surged a record 9.4 per cent in September as Americans rushed to take advantage of a tax credit for first-time buyers before it expires next month.

Purchases rose to a 5.57 million annual rate, more than forecast and the highest in more than two years, the National Association of Realtors said on Friday in Washington. The median price fell at the slowest pace in a year as the number of houses on the market shrank.

While sales may cool unless Congress decides to extend the US$8,000 (US$1 = RM3.38) credit due to expire November 30, lower prices and mortgage rates have also made houses more affordable and may cushion any decline. Smaller price decreases show the market is stabilising as demand improves, easing the strain on consumer finances that deepened the worst recession since the 1930s.

"The excess supply of unsold homes has declined a lot and this reduces the downward pressure on home prices," said Harm Bandholz, an economist at UniCredit Global Research in New York.
"An improvement in house prices is an important condition for a rise in housing wealth and therefore higher willingness of households to start spending again."

By Bloomberg

Major US real estate lender files for bankruptcy protection

In its bankruptcy filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion.

CHICAGO: Capmark Financial Group, one of the largest U.S. commercial real estate lenders, has filed for bankruptcy protection amid mounting bad debt, becoming the latest casualty in the still turbulent U.S. real estate market.

Capmark has been hurt by rising losses on mortgage loans, and has had to foreclose on properties such as the Equitable Building in Atlanta because borrowers were not able to make loan payments.

In its bankruptcy filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion.

It seeks to reorganize under court protection, reducing its debt while continuing to operate its businesses.

Many U.S. banks and real estate investment trusts have been hurt by increasing losses on commercial real estate loans.

With millions of jobs lost and office space remaining empty during the recession, developers have been forced to default on loans.

Analysts predict that commercial real estate defaults will rise rapidly.

"We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies," said Capmark President and CEO Jay Levine, in a statement.

"By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses."

Last month, Pennsylvania-based Capmark posted a $1.6 billion quarterly loss, as it set aside $345.8 million to cover loan losses during the quarter ended June 30.

The company had been in talks with lenders and bondholders to restructure its debt so that it could stay in business.

Capmark in September agreed to an option to sell its North American servicing and mortgage businesses to Berkadia III LLC - a joint venture of Warren Buffett's Berkshire Hathaway Inc. and Leucadia National Corp.

Now that Capmark has been forced to file for bankruptcy protection, it will receive $415 million in cash and a $75 million note in the deal, minus any losses on a portfolio of mortgages.

Had the transaction been completed outside of bankruptcy court, Capmark would have received $375 million in cash at the closing.

Berkadia would have held $40 million to cover indemnity claims and pay the $75 million note.

Capmark was created in 2006 after a private equity group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners bought the commercial real estate business of lender GMAC LLC for $1.5 billion in cash.

According to the bankruptcy filing, the group owns 75.4 percent of the company.

GMAC owns 21.3 percent, with most of the remaining shares owned by employees and directors.

Messages left for KKR, Goldman Sachs and Five Mile were not immediately returned on Sunday.

In a statement, Capmark said its Capmark Bank subsidiary is not part of the bankruptcy filing.

The bank, which recently received $600 million in new equity from Capmark Financial, will continue to serve its customers.

As of Friday, Capmark and its units involved in the filing had more than $500 million of cash and cash equivalents available to fund operations.

Capmark said it believes it has enough liquidity at this time to allow it to pay vendors for goods and services and to pay salaries and continue benefits to its employees, and has filed motions with the court to allow it to do so.

"The Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders," said Mohsin Meghji, the company's chief restructuring officer, in a statement.

Capmark's filing marks the latest in a string of commercial real estate-linked bankruptcies.

General Growth, the second largest shopping mall owner in the U.S., in April filed for bankruptcy protection in the largest U.S. real estate bankruptcy case in history with $27 billion in debt.

Extended Stay Hotels LLC in June also filed for bankruptcy protection, citing massive debt stemming from its 2007 acquisition by the Lightstone Group at the peak of the hotel market and a sharp drop in business travel due to the recession.

By AP

Better days ahead for condo market

Artist’s impression of 11 Mont’Kiara. The project will be completed in 2011.

The mere mention of Mont’Kiara easily strikes a chord among many Klang Valley folks and property investors as it is a vibrant neighbourhood and is one of the favourite property hotspots in the country.

There are currently close to 10,000 completed condominiums in Mont’Kiara, its neighbouring areas in Sri Hartamas and the newer Dutamas area. Another 6,000 units are expected to come on stream in the next couple of years.

Although transactions almost halted early this year following the global financial crisis, sentiment is gradually recovering since the middle of this year, with more transactions concluded in the secondary market.

Overall, the market had fared quite well although average prices of high-end condominiums in Mont’Kiara have dropped by 10% to 15%. Thanks to the buyers’ tenacity and the more flexible repayment terms offered by financial institutions, there was no fire sale reported so far.

Knight Frank Research, in its latest Real Estate Highlights, says although the market for high-end condominiums is still soft, prices seem to have bottomed out especially for suburban condominiums.

The market is starting to show some signs of recovery as more buying activities are seen in the second half of the year.

However, the report points out that despite the renewed interest, the downside of the sector lies in the incoming supply of new condominiums which will be completed in the second half this year and in 2010.

According to Zerin Properties chief executive officer Previndran Singhe, the asking prices for the older residences range from RM400 to RM650 per sq ft, while the newer projects have price tags from RM450 to RM750 per sq ft.

Rental rates are holding out quite well with the older developments enjoying yields of between 7% and 10% last year.

Previndran says the higher entry cost for the newer projects will push yields down to around 6% this year.

“Prior to this bout of global crisis, most properties in Mont’Kiara have seen substantial increases in prices, averaging gains of at least 50% for most of the completed developments. Moving ahead, we expect prices of apartments to hold,” he adds.

Although there is a short term over-supply issue, Previndran says the situation is expected to reverse as the attractiveness of Mont’Kiara picks up again among investors given its superb amenities, international schools and business activities.

The number of hits in the company’s website, www.montkiara-living.com, has picked up from about 3,500 a month early this year to about 8,000 to 9,000 hits a month now. On the ongoing projects, he says projects under construction are still on schedule and some, including MK10, Gateway and Ceriaan Kiara, are almost completed. The launch of some of the planned developments including MK28 and 163 Kiara have been pushed to next year.

“Some of the projects are highly anticipated as there are investors and owner occupiers still looking for newer properties to invest in Mont’Kiara. The bigger units are always in demand by owner occupiers while lower range units are popular among investors,” explains Previndran.

Echoing his positive sentiments, Sunrise Bhd senior manager for branding and community development Anne Tong says the company is seeing a strong return of buying interest for its projects in recent months, notably for 11 Mont’Kiara and the Mont’Kiara Residence bungalows.

“In a space of seven months since March, we have chalked up property sales of RM309mil from just these two projects, of which RM239.3mil have been sales and purchased agreement (SPA)-signed. We also booked in SPA-signed sales of RM31.5mil from the balance of other existing projects such as Mont’Kiara Meridin and Solaris Dutamas,” she adds.

Tong says the company’s projects have average occupancy rate of 80% to 90% for the older projects and 50% to 60% for the newly completed ones.

“This means that more and more people are calling Mont’Kiara home. We are positioning Mont’Kiara as the preferred place to stay in Kuala Lumpur, and differentiating the Sunrise Mont’Kiara community further within the area,” she adds.

Sunrise has widened its product range to suit all market segments – from small units of under 1,000 sq ft for singles and couples, to larger units of 3,500 sq ft for bigger or extended families.

Previndran says Mont’Kiara will continue to be an obvious property hotspot as it has gained the critical mass to continue to prosper.

“Adding to that is the limited supply of land that puts a natural limit on future supply,” he points out.

On some of the “vogue” products that should be considered by developers, he cites projects with more green elements, well designed layouts, strong management, good finishes and security. They should have varying sizes from 600 sq ft to 2000 sq ft.

“As for commercial products, products that will do well include proper service apartments and hotels, and smaller office suites with corporate designs,” he adds.

By The Star

Making right buy can result in big gain

MALAYSIAN property has withstood the test of time quite well and the many economic downturns over the years have failed to weaken its position as an attractive and reliable investment instrument.

Whether it is used as a roof over our head or for capital appreciation and rental income, many Malaysians have benefited from buying property in one way or another.

Astute property investors who have bought the right property, whether residential or commercial, at the right time have reaped attractive capital appreciation or rental yields from their investment.

In fact, there is quite a number of successful investors who have gone on to become multi-millionaires by merely leveraging on property investment.

Those who have made it as successful property investors have sworn by its efficacy as the first step towards achieving one’s financial freedom. The list of the “Who’s Who” and gurus of property investment include Renesial Leong, dubbed the Queen of Properties; Dr Peter Yee; and personal finance trainer Azizi Ali.

The latest global financial crisis has shown that local property, especially landed units, are resilient and have withstood the onslaught of the “value eroding” impact of the economic downturn.

Although prices of high-rise residences in Mont’Kiara have dropped between 10% and 15% while those in the KLCC areas have eroded by up to 20% in the sub-sale market, landed residences have held out quite well.

So, is this the best time to invest in property and start building up one’s portfolio of real estate assets to join the club of property investors?

For those with the financial resources and surplus cash, investing in property is certainly a much better option than stashing one’s cash in a savings or fixed deposit account going by the low interest rates.

Even those who don’t have much ready cash to invest or have low tolerance for risk can afford to build up a comfortable nest of property assets by leveraging on the low cost of funds prevailing today.

Given its reputation as a good hedge against inflation and the possibility of higher inflation setting in when the economic recovery picks up steam down the road, there is a stronger possibility for property prices to strengthen than to depreciate going forward.

Before prices start to climb again, it will be a good time to lock in at the current prices.

It must be noted that the current environment for property buying is very positive given that the entry cost is still at an all time low.

If developers continue to offer their housing packages and allow buyers to sign up for a property with just a 5% to 10% down payment, the low entry cost will continue to make it easy for property ownership.

Coupled with the other perks including the low mortgage rates of 3.2% to 3.5% a year offered by financial institutions, zero mortgage instalment until the property is completed, and free legal fees and stamp duty for sale and purchase agreement and loan documentation, it must be one of the best time to shop around for a house if you have not already done so.

The exemption from real property gains tax (RPGT) for profits made from property sales will also be one of the inducements for more buying and selling activities. (Under Budget 2010, the Government has proposed to reimpose the RPGT next January.)

There’s also the potential wealth creation effect to consider when prices start to appreciate again.

Based on a 13-year property cycle, renowned mapmaker and property researcher, Ho Chin Soon predicts the local property market will peak around 2011 if the economic recovery continues unabated.

He says the last property boom which took place before the Asian financial crisis in late 1997 saw a 70% jump and a 14% compounded growth rate in property prices over a four year period.

Property investment looks like a wise choice. After all, unlike some other intangible investment instruments, property is a tangible asset and its value will not just evaporate overnight unless a major natural disaster struck.

To ensure they make the right purchase, the onus is on property buyers to do the necessary homework of checking out the background of the developer and the project’s feasibility before signing on the dotted lines.

While believing in the tenacity of the local market, deputy news editor Angie Ng cautions against an over-speculative market as unchecked spiralling property prices are prerequisites for potential bubbles.

By The Star (by Angie Ng)

New EPF scheme for home purchase

The government will launch a scheme in January allowing Employees Provident Fund (EPF) contributors to use current and future savings in Account 2 to boost house ownership.

The scheme, announced under the 2010 Budget, will help contributors secure higher financing to buy higher-value or more houses. However, it is limited to the purchase of one house at a time.

"While it is a good idea conceptually as it aligns with the goal of 'every Malaysian will own a home', it remains unclear how the future savings in Account 2 will be calculated," PricewaterhouseCoopers Taxation Services Sdn Bhd executive director Ng Say Guat told Business Times.

She said uncertainties such as unemployment, default in future contributions and amount of future salary could impact the future savings.

Meanwhile, property sellers will be disappointed that the Real Property Gains Tax Act 1976 (RPGTA) has been reintroduced, after it was waived two years ago.
Under the 2010 Budget, disposal of real property will be taxed 5 per cent from January 1 next year.

The tax is collected through a withholding mechanism under which the buyer keeps 2 per cent of the purchase value and pays to the Inland Revenue Board.

Individuals will be given an exemption up to RM10,000 or 10 per cent of the gains, whichever is higher.

However existing exemptions under the RPGTA are retained for gifts between parent and child, husband and wife, grandparent and grandchild.

The exemption also applies for the sale of one residential property for a citizen or permanent resident of Malaysia.

"The re-imposition (of RPGTA) is counterproductive to the efforts to stimulate the property market in these trying times," Real Estate and Housing Developers' Association Malaysia president Datuk Ng Seing Liong said.

By Business Times (by Jeeva Arulampalam)

Property gains tax makes comeback

The Government has proposed to reimpose real property gains tax (RPGT) for gains arising from property disposal.

Based on the Finance Bill, disposal within two years of acquisition will be taxed 30%; in the third year, it will be 20%; in the fourth year 15%, while disposal within five years and beyond will still be subject to 5% tax.

The latest measure, which will come into effect in January next year, has been described as “a knock-out punch” by Deloitte Malaysia country tax leader, Ronnie Lim.

“It was merely four short sentences in the 2010 Budget speech. However, that short reference to RPGT carried a knock-out punch,” Lim said in a statement yesterday.

He pointed out that from the speech itself, many would have thought that a low rate of tax of 5% would apply to most gains arising from disposals of real property.

“Be prepared for a shock – this is not the case and the highest rate of RPGT will be 30%,” he said.

Most rates of RPGT from January 2010 will be restored to those prevailing immediately before its suspension in April 2007.

Lim said one notable difference was that the exemption from tax for disposals after the fifth year of acquisition has been removed.

“Even where a property was purchased over 20 years ago, a gain on disposal from 2010 will attract 5% RPGT (without any indexation of acquisition price to reflect current purchasing power of the ringgit),” he said, adding that a flurry of property transactions could be expected soon.

Concurring with Lim, OCBC Bank Bhd director and chief executive officer Jeffrey Chew described the measure as a counter-productive move in efforts to encourage property investments among local and foreign investors, particularly to attract real estate investment trust investors.

“Furthermore, this would make Malaysia’s property market less attractive compared to other neighbouring countries in the region despite our property prices being among the lowest in the region,” Chew said.

However, Khong & Jaafar Sdn Bhd managing director Elvin Fernandez gave the thumbs up to the RPGT, saying “it shows that Malaysia, like other Asian countries, is not for unfettered speculation.”

“The RPGT is an anti-speculative tool, not a revenue earner for Government coffers,” he added.

To promote home ownership and enhance the people’s quality of life, the Government has also proposed a scheme to allow Employees Provident Fund (EPF) contributors to utilise their current and future savings in Account 2 for home purchase.

Meanwhile, to encourage green technology in the property sector, building owners obtaining Green Building Index (GBI) Certificates from Oct 24 until Dec 31 will be given income tax exemption equivalent to the additional capital expenditure in obtaining such certificates.

Those purchasing buildings with GBI certificates from developers will be given stamp duty exemption on instruments of transfer of ownership.

The exemption amount is equivalent to the additional cost incurred in obtaining the GBI certificates. This exemption is given to buyers who execute the sale and purchase agreement from Oct 24 until Dec 31, 2014.

And to promote rehabilitation of abandoned housing projects, the Government will consider extending appropriate financial assistance to rehabilitate low and medium-cost houses based on the existing project list.

An allocation of RM200mil will be provided under the housing and local government ministry.

Under the Government’s initiative to provide housing facilities for the low and middle-income groups, the National Housing Department will provide 74,000 low-cost houses to be rented in 2010.

By The Star

MBAM: Budget 2010 continues to support industry

KUALA LUMPUR: The Master Builders Association Malaysia (MBAM) said Budget 2010 has continued to support the construction industry through the promotion of public-private partnership initiatives.

President Ng Kee Leen said the construction sector expected a 3.5% growth this year, which would mean the third successive year of positive growth.

“Furthermore, the construction sector is envisaged to expand 3.2% in 2010 and the sector is expected to benefit from economic recovery and ongoing construction activities under the second stimulus package,” he said in a statement.

He said MBAM was appreciative that the Government would focus on the development of the five growth corridors with emphasis on provision of infrastructure and public amenities.

“The industry wishes the Government will ensure the speedy and efficient implementation of the projects,” he said, adding that the MBAM was also supportive of Government’s efforts to support the Green Building Index.

“It was announced that RM1.5bil will be provided as loans to promote green technology and this will also help spur the initiative. The setting up of the National Green Technology Centre will also give further currency and credibility to the Government’s effort to promote Green Building Initiatives,” he said.

Meanwhile, UDA Holdings Bhd, which received a RM30mil contract by the Government to build 300 units of Kedai Desa in rural areas nationwide, said it would strive do an efficient job and deliver the project on time.

“... It shows the Government’s sensitivity to help the people in rural areas on providing business opportunities for them to improve their income. This is the concept of One Malaysia,” said managing director Datuk Jaafar Abu Hassan.

Ho Hup Construction group managing director Lim Ching Choy said the provision of RM4.7bil for road and bridge projects under the budget would boost the construction industry and the company was looking forward to participate in the projects.

“It is a very good initiative by the Government to enhance infrastructure as the impact will not just benefit the construction industry but also other businesses involved directly with the construction sector,” he told StarBizWeek.

Malaysian Resources Corp Bhd group managing director Shahril Ridza Ridzuan told StarBizWeek that the company was looking forward to take part in any project initiated by the Government under the construction budget.“(Our focus) will be on infrastructure and transport infrastructure projects,” he said.

By The Star

RM9bil set aside for construction sector

The construction industry has been given a shot in the arm with a RM9bil allocation next year to finance various infrastructure projects.

Of this, RM4.7bil will be allocated for road and bridge projects and RM2.6bil for water supply and sewerage services.

A provision of RM899mil has been made for rail facilities, RM820mil for ports and sea services and RM276mil for airport projects.

An allocation of RM2.3bil has been made to upgrade infrastructure in rural areas, including RM857mil to construct 510km of rural roads and 316km of village roads.

Among the roads to be constructed are in Kapit, Lawas and Simunjan in Sarawak, as well as Kinabatangan, Kota Belud and Keningau in Sabah.

An allocation of RM530mil will be made for water supply to 16,000 houses, RM825mil for electricity supply to 30,000 homes, and RM88mil to implement 5,356 social amenity projects such as rural clinics, community halls and public recreational areas.

Under its plans to develop Putrajaya and Cyberjaya into more lively and vibrant townships, efforts will be intensified to increase business, commercial and recreational activities there.

Among the projects to be implemented in Putrajaya are the construction of a hypermarket, international school, art gallery, museum, vehicle repair complex and recreational centre.

For Cyberjaya, the projects include affordable houses, hypermarket, business complex, parking lots, recreational centre, schools, and a more efficient public transport system.

The Government also plans to develop wakaf properties throughout the country for charitable purposes.

Initially, an allocation of RM20mil will be provided.

Under this initiative, Yayasan Waqaf Malaysia (YWM) will implement programmes that will focus on economic development, particularly small-scale high-impact projects, as well as education, social and welfare of Muslims.

The main focus of YWM is to eradicate hardcore poverty as well as enhance the socio-economic status of Muslims.

Projects planned include the construction of wakaf rakyat shops at selected mosques and small business bazaars for the public, including the asnaf.

By The Star

RM9b for infrastructure development

The government has allocated RM9 billion to finance infrastructure projects.

More than half of the money, or RM4.7 billion, will go to roads and bridges construction and RM2.6 billion to upgrade water supply and sewerage services.

Another RM899 million is for railway facilities construction, RM820 million for seaports and RM276 million to upgrade airports.

Master Builders Association of Malaysia hopes the government will speed up the project implementation.
"This year, the construction sector is expected to grow 3.5 per cent," said its president Ng Kee Leen.

With the setting up of the National Green Technology Centre, the association looks forward to new guidelines and specifications in the design of sustainable homes, office blocks and structures.

Green buildings can be built via modular system, using renewable building materials, incorporating lighting and air-conditioning systems that are energy efficient and fitted with dual flush toilets.

By Business Times

Mydin to open hypermarts in key towns

Mydin Mohamed Holdings Bhd plans to open hypermarkets in all the key towns in Malaysia like Kuantan, Johor Baru and Seberang Prai in the long run.

Its managing director, Datuk Ameer Ali Mydin, said the company would open two hypermarkets in Meru Raya and Manjoi in Perak by 2011.

"The areas have been identified and the proposals are now in ''planning approval'' stage," he told reporters after the opening of the 46th ''My Mydin'' mini market which is based on eco-retail concept in Kota Seriemas near Nilai today.

He said currently, the company has three hypermarkets in Subang Jaya, Melaka and Kuala Terengganu.
Ameer said the RM70 million wholesale hypermarket in Kubang Krian, Kelantan would start operations in January 2010 and would hire 450 staff.

He said the company would also build 30 more ''My Mydin'' mini markets in the Klang Valley next year.

"The company will franchise the mini markets once it has built at least 50 branches. This is to ensure more entrepreneurs get to run the mini markets," he said.

Ameer said the Kota Serimas mini market was different from its other branches.

"It is built with attractive landscaping to give shoppers the peace of mind and comfort.

"It has also a surau, a reception area, children's playground, free parking, and kioks selling all types of products," he said.

He said the company aimed to make the Kota Serimas mini market a ''one-stop centre'' for the locals to buy provisions and allow them to interact and organise various activities.

By Bernama

CIMB-Mapletree buys Patimas Computers HQ

CIMB-MAPLETREE Management Sdn Bhd (CMM) has bought Patimas Computers Bhd’s headquarters in Bukit Jalil, Selangor, for RM60 million.

Patimas will continue to lease and utilise the building as its headquarters over a period of 12 years, with an option for an extension.

The property, located within Technology Park Malaysia, comprises a two-storey purposed-built Grade A office building with a gross area of 138,000 sq ft.

This purchase is the fourth commercial property to be acquired by CMREF 1 Sdn Bhd – a Malaysian-focused private closed-end real estate fund that is managed by CMM, a joint-venture between CIMB Group and Mapletree Investments Pte Ltd of Singapore.

By Business Times

L&G expects 8trium to break even by year-end

An Artist's Impression of 8rium.

KUALA LUMPUR: Land & General Bhd (L&G) expects its latest project, 8trium, a mixed commercial development in Bandar Sri Damansara, to break even by year-end.

Managing director Low Gay Teck said currently, about 90% of the company’s unbilled sales were from 8trium and he believed the development could be about 90% sold by the middle of next year.

8trium comprises a two-storey 100,000 sq ft retail podium and 260 office suites in two business suite towers. L&G will maintain the retail podium once it completed.

“Thirty per cent of the units in Tower 1 that was launched recently have been snapped up and about 90% of the units in Tower 2 have been sold.

“The response to 8trium illustrates that we have successfully introduced the right product that suits our buyers’ needs,” he said yesterday at the 8trium groundbreaking ceremony and customer appreciation event.

Low said currently, L&G had about 45 acres of undeveloped land in Bandar Sri Damansara where it planned to develop residential and condominium projects once the proposal had been approved by the relevant authorities.

“We plan to acquire more land in the Klang Valley to develop mixed projects (commercial and residential) and these will be financed by the company’s internal funds and bank loans,” he said.

By The Star

L&G upbeat on sales of units in 8trium towers

Property developer Land & General Bhd (L&G) expects 90 per cent of units in its two commercial towers in Bandar Sri Damansara, Selangor, to be snapped up by June next year.

Dubbed "8trium", the commercial development comprises a two-storey 100,000 sq ft retail podium and 260 units of office suites contained in two blocks.

The development has a gross development value of RM160 million and makes up 90 per cent of L&G's unbilled sales.

"Tower 2, which was officially launched this July, is over 90 per cent sold. Meanwhile, 30 per cent of Tower 1, which was launched 10 days ago, has been taken up," L&G managing director Low Gay Teck told reporters after the 8trium groundbreaking ceremony yesterday.

The project is slated for completion by the first quarter of 2012.
The developer is also looking to develop another 16.18ha in Bandar Sri Damansara.

"We have submitted the necessary documents for the approval of the relevant authorities for a residential development there," said Low.

L&G is also in talks with landowners to pursue land deals in the Klang Valley, for either residential or commercial developments.

"We don't have a target landbank size, but what we look for is valuable land. Our business direction is to consider areas that are sought after," he said.

The land purchase will be financed via bank borrowings and cash reserve.

L&G also has undeveloped land in Sungai Petani and Johor.

By Business Times (by Jeeva Arulampalam)

Atis to raise stake in Mutiara to 30.28%

KUALA LUMPUR: Atis Corporation Bhd is raising its stake in property developer Mutiara Goodyear Development Bhd to 30.28% with the proposed acquisition of an additional 9.26% at 97 sen per share for a total of RM20.74 million cash, in a related-party transaction.

Atis said yesterday it had entered into an agreement with Laman Arif Sdn Bhd and Lim Beng Guan to acquire their 9.26% stake comprising 21.38 million shares in Mutiara.

“The proposed acquisition is in tandem with our corporate vision, as we view the investment in Mutiara as strategic to our core business.

“Atis would be able to synergise the business of both companies, and enable us to tap into Mutiara’s business presence, network and expertise to derive business opportunities of providing electrical and engineering products required by future development projects,” said Atis.

Lim is a non-independent non-executive director and shareholder of Atis. The transaction is deemend a related-party transaction as Lim is also the executive director of Mutiara and a major shareholder by virtue of his direct interest in the company and indirect interest via Laman Ariff.

Prior to the disposal, Lim owns 6.28 million Mutiara shares or 2.72% and Laman Arif 15.1 million shares or 6.54%.

Cumulatively, the two vendors’ total cost of investment in the 21.38 million Mutiara shares from October 2007 to October 2008 was about RM21.27 million or 99.46 sen per Mutiara share.

Mutiara yesterday closed two sen lower at 83 sen, with 263,000 shares done.

Recently, Atis proposed to acquire an 8.66% stake comprising 20 million shares in Mutiara from WEIDA (M) BHD, also at 97 sen per share for a total of RM19.4 million, bringing its stake in the property developer to 21.02%.

Weida, which holds a 17% stake or 39.09 million shares in Mutiara, had then said it would also seek a general mandate from its shareholders to sell its remaining holding of 19.09 million Mutiara shares (8.27% stake), either via the open market or placements for no lower than 97 sen per share.

The latest acquisition would push up Atis’ net asset per share to RM1.60 from RM1.45, and increase its net borrowings to RM74.65 million from RM34.5 million, while its net gearing ratio would rise to 0.29 times from 0.15 times based on its consolidated results as of March 31, 2009.

Mutiara Group develops residential and commercial properties in Klang Valley and Penang and has strategic landbank in these two areas.

By The EDGE Malaysia (by Tony C H Goh)

Hunza plans rights issue

HUNZA Properties Bhd plans to raise at least RM43 million from a rights issue to finance ongoing projects, investments or fund working capital.

The property developer has proposed to issue up to 45.21 million new shares on the basis of one new share for every 10 existing shares, it said in a statement to Bursa Malaysia.

It has also offered one free warrant, with a maturity of five years, for every one rights share. It has yet to fix the issue price but it will not be lower than RM1.

By Business Times

Zambia welcomes Malaysian builders

MALAYSIAN companies have been invited to capitalise on investment opportunities in Zambia's construction industry worth a potential US$1.77 billion.

Zambia's National Council for Construction executive director Dr Sylvester Mashamba said the African country welcomed all businessmen from Malaysia to invest in the industry, either by themselves or in joint ventures with local companies or government agencies.

"We have a lot of things to offer to Malaysian businessmen, especially those in road construction, through government funds worth US$1.6 billion for the period from 2004 to 2013," he said at a half-day seminar on "Business Opportunities in Construction and Education in Zambia" in Kuala Lumpur today.

In addition to roads, Mashamba said, other areas that Malaysian companies could participate included sports infrastructure, water and sewage disposal infrastructure, multi-facility economic zones in Lusaka and Chambeshi, housing and hydroelectric power stations.
The construction sector has been the biggest growth industry in Zambia in the past 10 years with its annual growth rate averaging 17 per cent, he said.

Bilateral trade between Malaysia and Zambia in 2008 totalled US$17.5 million with exports valued at US$4.7 million and imports at US$12.8 million.

By Bernama

Budget incentives for property sector

This is the last in a series of articles by PricewaterhouseCoopers which appear on Mondays and Wednesdays leading up to Budget 2010

Abolishment of the real property gains tax, reduction in stamp duty for properties in a certain price range, and the construction and property sector gaining most from the stimulus packages announced – these are clear indications of the Government’s focus on this sector to help accelerate economic growth.

The positive multiplier effect from an improved performance in the construction and property sector is tremendous, with the stakeholder chain including the manufacture and supply of building materials; the service industry of contractors, architects, engineers, etc; the developers and even the financial institutions.

This industry is not just about residential and commercial development but also the tourism and industrial economy. It is a holistic economic driver.

Take the tourism industry for example. When tourist arrivals are up, there will also be a boost to hotel and retail consumer demand. With tourism being one of the Government’s top priority growth sectors, there has been a focus on encouraging the development of affordable three-star hotels to attract mass tourists.

However, with the country shifting towards a modern developed economy, we must turn our attention to attracting investments into upmarket, boutique and innovative hotel property development to bring the industry to the next level; tourist arrivals must increase together with the increase in value spending.

Hotel owners should be given additional incentives to bring the investment yield return earlier. It may be worthy to relook at the existing investment tax allowance incentive as well as the availability of duty exemption for materials in hotel property development.

Closely linked to the tourism industry is the availability of retail attractions to complement hotels of similar class, with retail development popularly linked to commercial office space development to provide the consistent retail traffic. Commercial space also remains the top three property interest of Malaysian and foreign investors.

Currently, there are no incentives for the retail sector. Consideration should be given to developing incentives holistically and linking it with initiatives to drive tourism, thus providing further push to the sector. Perhaps tax incentives such as income exemption based on retail investment turnover value or spending on green technology can be given to retail outlets or “green” commercial buildings.

When it comes to landed or high-rise residential properties, crisis or not, there seems to be no lack of demand, with some of these properties being snapped up on launch.

This show of investor confidence bodes well for the real estate sector which has attracted much foreign investment and known to offer a reasonable investment yield.

Hence, we must continue to attract foreign investment into the high-end property development market and leverage our “preferred location” status in this part of the world.

Here, the attraction for foreign investors would not be tax incentives but rather, high quality development with full facilities and in a prime location – the formula to high investment yield. Hence, the Government should continue to deliver on its policies to facilitate a speedy investment process for foreigners.

A final analysis on the property sector is for the Government to consider how it can support the wish of most Malaysians to own their own home. Malaysia has a large middle-income population who strive to own a home and it is this dream which can keep the demand for residential property healthy.

With pockets of initiatives sporadically introduced such as the reduction in interest rates, subsidies given to developers for low-cost housing and even financial institutions’ willingness to reschedule loan repayments, we must ask if more can be done.

Relative to our salary standards, it is becoming more difficult for the middle-income group/family to sustain a home, let alone own one. Suggestions previously put forward such as first home subsidy and deduction for interest expense on loans for home purchases should be reviewed.

Some other thoughts are tax rebates for a certain period of the loan term depending on the value of property purchased, different stamp duty rates for different property prices, unprecedented tax breaks for developers undertaking certain types of projects or development type.

The challenge will be in ensuring that the savings given to developers is passed on.

The property sector plays a crucial role in sustaining and spurring economic growth. There is a compelling need to review and introduce policies that are holistic and integrated, with incentives provided to each player in the property chain and across the portfolio of properties.

● Ng Say Guat is executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd.

By The Star (by Ng Say Guat)

TA Global aims to beef up hotel portfolio

TA Global wants to build at least two hotels in Kuala Lumpur and make acquisitions in overseas markets from London to Canada

TA GLOBAL Bhd, set to become Malaysia's fifth biggest listed property group, plans to double the number of hotels it owns in five years, adding to a portfolio that includes the Radisson Plaza in Sydney and the Westin Melbourne.

It wants to build at least two hotels in Kuala Lumpur and make acquisitions in overseas markets from London to Canada, said Datin Alicia Tiah, managing director and co-founder of parent company TA Enterprise Bhd.

"Definitely, we want more. We want to develop our own chain. I want to buy hotels in gateway cities like London," she said in an interview in Kuala Lumpur.

"But some are not cheap; some too big, some too small. It takes time to get the right fit. I want people to show me what they have."
TA Enterprise, shares of which have more than doubled this year, folded all its property assets into TA Global, which will be listed on Bursa Malaysia on November 23 to tap a resurgent stock market.

The FTSE Bursa Malaysia KLCI Index has gained 46 per cent so far this year. TA Enterprise closed 0.7 per cent down at RM1.46 yesterday. Shares earlier gained as much as 1.4 per cent.

TA Global, which currently owns four hotels, is being spun off into a separate listing to realise its value and help it expand. The group spent about RM756 million from December last year to August to buy the Westin Melbourne hotel, the Swissotel Merchant Court hotel in Singapore and the Coast Whistler Hotel in Canada, taking advantage of depressed prices during the global recession.

The acquisitions will triple hotel revenue at TA Global next year, Tiah said, without giving the current figure.

"A lot of hotels were going for below their replacement costs," she said. "We managed to get great assets at a time when things were so gloomy."

TA Global will have a market value of RM2.4 billion when it is listed and will be ranked the fifth largest property group, HwangDBS Vickers Research Sdn Bhd said in a September 29 report.

"The timing is quite good to list," Tiah said. "We have accumulated great assets."

TA Global, which has total assets valued at RM2.4 billion, has lined up more than RM6 billion of property development projects from now till 2012, said Tiah.

The company also owns the 24-story Terasen Centre, an office building in Vancouver, Canada, and Menara TA One, a 34-storey office in Kuala Lumpur.

By listing the property unit, TA Enterprise will be "unlocking the hidden value" of its property assets, ECM Libra Capital Sdn Bhd said in a report yesterday.

TA Global will raise RM230 million from the share sale. It also owns offices in Kuala Lumpur and Canada. TA Enterprise will retain a 57 per cent stake after the listing, said Tiah.

"We have a good stream of income: good time, bad time, it will be there," she said, referring to the hotels.

"I love hospitality, you can up the rates", as opposed to office buildings where rates are fixed by contracts, she added.

By Bloomberg

L&G to build condo, residential units

Land and General Bhd (L&G), developer of the 1,200-acre Bandar Sri Damansara, aims to develop the remaining 45 acres of the township next year, its managing director Low Gay Teik said today.

He said the company hoped to get the authorities' approval by end of this year and planned to develop a new condominium and residential units.

Asked on its other landbanks in Johor and Sg.Petani, he said L&G had no plans to develop the land there for now.

"We believe it's not the time to develop yet. We will wait for the right time before developing the land," he told reporters at the company's ground-breaking ceremony for its 8trium mixed property development project in Petaling Jaya today.
L&G is consistently looking at acquiring new land and also at joint venture possibilities, Low said.

"Currently, we are in talks with several parties to acquire new landbanks for new mixed-commercial and residential development in the Klang Valley," he added.

On the 8trium project, he said the project is due for completion by 2012.

With a gross development value (GDV) of RM160 million, 8trium is a mixed commercial development project combining a two-storey retail podium and 260 units of office suites contained in two suite towers.

Since the launch in July, 90 per cent of the Tower 2 has been sold, while the Tower 1, launched 10 days ago has recorded almost 30 per cent sales.

"I believe, based on the current response, we should achieve 90 per cent sales for both towers by middle of next year," he added.
The project is expected to contribute positively to its financial year ending March 31, 2010.

By Bernama

European commercial property deals rise

LONDON: Investment in European commercial properties rose 34 per cent in the third quarter as more deals were completed in the UK and Germany, CB Richard Ellis Group Inc. said.

Investors bought ?17.3 billion euros (?1 = RM5.03) of shops, offices and warehouses in the third quarter, 44 per cent less than in the year-earlier period, according to a report released yesterday by the Los Angeles-based adviser.

European commercial property sales have fallen for more than two years after credit dried up and companies slashed spending on
offices. About ?295 billion of commercial real estate changed hands in 2006, with more than e80 billion spent in the fourth quarter alone, according to data compiled by Cushman and Wakefield.

“Many investors believe the European market is approaching the bottom of the cycle,” said Michael Haddock, head of capital markets research for the Europe, the Middle East and Africa at CB Richard Ellis.

By Bloomberg

Lifestyle mall will enhance Iskandar Malaysia's appeal

A New lifestyle mall in Iskandar Malaysia is expected to become the largest in the southern region, with the potential to attract RM338 million in annual spending.

With a gross retail space of one million sq ft, the mall, situated at the western development zone of Medini North, will benefit from high accessibility to Johor Baru via the coastal highway, which is slated for completion in 2012.

The mall is 15 minutes away from the Second Link to Singapore, and will be connected to public transport services, including the planned Light Rail Service.

It is next to the Legoland Malaysia theme park and it will start operations at the same time as the theme park.
Iskandar Investment Bhd (IIB), which is overseeing the project, said the new lifestyle mall would turn Medini North into a hive of activity.

"Medini North will come alive in 2012, showcasing to the world Iskandar Malaysia's strong and compelling value proposition," said Arlida Ariff, president and chief executive officer of IIB.

"Iskandar Investment is proud to have solid relationships with our current investors and will continue seeking trusted partners from across the globe to establish Iskandar Malaysia as the ultimate destination for global citizens to live, play and work," she said in a statement.

IIB had showcased the lifestyle mall to potential partners and retailers during the International Council of Shopping Centers Asia Expo in Singapore from October 14-16.

"This first shopping mall in Medini North, will seamlessly connect to the Legoland Malaysia theme park, hotels and commercial developments which will fulfill Iskandar Investment's vision to develop Medini as the definitive lifestyle and leisure zone in Iskandar Malaysia," said Rosenah Hassan, chief executive officer of Iskandar Harta Holdings, a wholly-owned subsidiary of IIB, which is undertaking the lifestyle developments within Medini North.

The design of the mall will incorporate natural open-air landscapes, making it ideal not only for shopping but contemporary art exhibitions, live performances and international festivals.

By Business Times (by Ahmad Fairuz Othman)

Property sector bouncing back

PETALING JAYA: The property sector has seen a strong comeback in the third quarter with renewed buying interest for residential property indicating that the economic downturn is “bottoming”.

Datuk Seri Kong Cho Ha... 'The country’s property and construction sectors had experienced revisions to their ratings outlook.

Housing and Local Government Minister Datuk Seri Kong Cho Ha said the country’s property and construction sectors, which were more severely impacted than other sectors of the economy, had experienced revisions to their ratings outlook.

“Our local property market, especially in the Klang Valley, has shown a recovery over the past few months.”

He said this to reporters after opening the National Property and Housing Summit 2009 here yesterday.

Kong said sales on the upmarket ones in particular had been “very encouraging”.


“That is a good sign of recovery of our economy, and the people are investing again,” he added.

Kong credited the recovery to the implementation of the Government’s stimulus packages.

Currently, there are 148 abandoned projects in the country, some dating back 20 years.Kong said the ministry had successfully revived 12 of these.

Commenting on the upcoming Budget 2010, Kong said the country, like others, had faced an economic crisis in the last two years.

“So, the Government has to be very prudent and plan very carefully,” he said.

By The Star

TA Global to double number of hotels

TA Global Bhd, set to become Malaysia’s fifth biggest listed property group, plans to double the number of hotels it owns in five years, adding to a portfolio that includes the Radisson Plaza in Sydney and the Westin Melbourne.

It wants to build at least two hotels in Kuala Lumpur and make acquisitions in overseas markets from London to Canada, said Alicia Tiah, managing director and co-founder of its parent company, the Malaysian brokerage TA Enterprise Bhd.

“Definitely we want more. We want to develop our own chain. I want to buy hotels in gateway cities like London,” she said in an interview in Kuala Lumpur. “But some are not cheap, some too big, some too small, it takes time to get the right fit. I want people to show me what they have.”

TA Enterprise, whose shares have more than doubled this year, folded all its property assets into TA Global which will be listed on the Kuala Lumpur stock exchange on November 23 to tap a resurgent stock market. The FTSE Bursa Malaysia KLCI Index has gained 44 per cent so far this year.
TA Global, which now owns four hotels, is being spun off into a separate listing to realise its value and help it expand. The group spent about RM756 million (US$225 million) from December to August to buy the Westin Melbourne hotel, the Swissotel Merchant Court hotel in Singapore and the Coast Whistler Hotel in Canada, taking advantage of depressed prices during the global recession.

The acquisitions will triple hotel revenue at TA Global next year, Tiah said, without giving the current figure.

“A lot of hotels were going for below their replacement costs,” she said. “We managed to get great assets at a time when things were so gloomy.”

Good Timing

TA Global will have a market value of RM2.4 billion when it’s listed and will be ranked the fifth largest property group, HWANGDBS Vickers Research Sdn Bhd said in a September 29 report.

“The timing is quite good to list,” Tiah said. “We have accumulated great assets.”

TA Global, which has total assets valued at RM2.4 billion, has lined up more than RM6 billion of property development projects from now till 2012, said Tiah.

The company also owns the 24-story Terasen Centre, an office building in Vancouver, Canada, and Menara TA One, a 34-story office in Kuala Lumpur.

By listing the property unit, TA Enterprise will be “unlocking the hidden value” of its property assets, ECM Libra Capital Sdn Bhd said in a report yesterday.

TA Global will raise RM230 million from the share sale. It also owns offices in Kuala Lumpur and Canada. TA Enterprise will retain a 57 per cent stake after the listing, said Tiah.

“We have a good stream of income, good time, bad time, it will be there,” she said, referring to the hotels. “I love hospitality, you can up the rates,” as opposed to office buildings where rates are fixed by contracts, she said.

By Bloomberg

Penang Turf Club to build bungalows for rental income

The Penang Turf Club plans to build 25 bungalows on its grounds as it seeks to develop rental income to fund operations.

The RM30 million development, will be sited on two separate parcels of prime freehold land totalling 2.25ha, on the fringes of the horse track in Batu Gantung.

The club stands on a plot of land totalling 104ha. It will use internal funds for the development.

"We are projecting a RM1.94 million net annual income from the rental of the new homes," PTC president Datuk Ong Eng Khuan told reporters after an extraordinary general meeting held at the club's premises yesterday.

While the estimated development cost has been tagged at RM30 million, Ong said the projected annual return from rental as a percentage of the development cost stood at 6.43 per cent.

The history of the Penang Turf Club dates back to 1864. Apart from the Singapore Turf Club, this is the oldest club of its kind in Peninsula Malaysia.

The earliest horse racing turf in Penang was on a field along Macalister Road on the island.

Members voted for the project, which will comprise detached and semi-detached homes, which are slated for completion by the end of 2012.

"Since the lots are within an area zoned as 'established housing' and 'low density residential', the height of the proposed houses should not be more than 2 or 3 storeys," said Ong, adding that this is to ensure that the proposed development will be consistent and compatible with existing houses in the surrounding areas.

The club is located next door to the upmarket Jesselton neighbourhood, which serves as one of George Town's more prestigious addresses.

"The maximum density allowable for the area is 6 units per acre," said Ong, "and the development will not interfere with the running of the club."

By Business Times (by Marina Emmanuel)

UK's Weston Homes sees Asia as new growth region

WESTON Homes plc, a UK property developer specialising in the development of high quality residential developments, is targeting Asia including Malaysia as a new growth region to develop properties, says its chief.

Weston Homes operates throughout the South-East of England and London.

Its chairman and chief executive officer Bob Weston said the company plans to develop properties outside the UK.

"Asia, including Malaysia, is an important market to us. We would be delighted to discuss any potential joint venture arrangements with Malaysian developers," he told Business Times in an interview.
Weston Homes was recently in Kuala Lumpur to promote its RM825 million Bridges Wharf project.

The project is one of London's most prestigious River Thames residential development.

It offers a collection of 265 one- and two-bedroom units, with built-ups ranging from 450 sq ft to 2,100 sq ft, including one penthouse built within three glass-fronted, 12-storey apartment towers.

Within one of the apartment towers is a five-star 70 room French boutique hotel called the Von Essen Hotel.

Bridges Wharf features 8,000 sq ft of commercial space and more than 14,500 sq ft of retail space for restaurants and boutique shops.

"We are making our debut into the Malaysian investor market as the (British) pound remains weak. There is also more Malaysian interest shown in the UK and this would be an opportune time for them to own properties in London before prices move (up). We are offering great value for money now," Weston said.

Weston Homes has sold close to 200 apartment units since Bridges Wharf started two years ago. It hopes to sell the remaining lots to Malaysian home buyers.

The company's joint marketing agent for Malaysia is VPC Alliance (KL) Sdn Bhd.

VPC managing director James Wong said it recorded moderate success during the sales exhibition on Bridges Wharf in Kuala Lumpur in October.

"Some deposits were made, but they are strong leads for follow-ups. Many prospective buyers are going to London to view the development before committing," Wong said.

By Business Times (by Sharen Kaur)

Scientex to buy Johline Realty for RM65.3m

SCIENTEX Bhd, a manufacturer and property developer, plans to buy Johline Realty Sdn Bhd for RM65.3 million to tap the growth triangle of Johor Baru.

It told Bursa Malaysia yesterday that the acquisition by its unit Scientex Quatari Sdn Bhd is in line with its expansion plan of current operations from Pasir Gudang and Kulai to Iskandar Malaysia.

The deal, which will be funded with internal funds and borrowings, is due to be completed in three months.

By Business Times

CC&T, China firm in property tie-up

CC&T Ventures Sdn Bhd, a local property company, has signed a pact with a leading construction and development company in China to jointly develop properties in China and Malaysia.

The signing of a strategic collaboration agreement with state-owned Beijing Uni-Construction Co was held in Beijing recently, witnessed by the Malaysian Ambassador to China, Datuk Syed Norulzaman Syed Kamarulzaman.

By Business Times

Mulpha to unveil innovative high-end housing designs

An artist’s impression of the Bangsar Enclave

PETALING JAYA: Malaysian developers have their fair share of successes overseas and one of the most successful players in Australia is Mulpha International Bhd.

Renowned for its A$2bil Sanctuary Cove development on Australia’s Gold Coast, Mulpha is today one of the largest Malaysian developers Down Under with an estimated asset portfolio of A$1bil.

Its wholly-owned subsidiary, Mulpha Australia Ltd, has developed and managed a wide range of property and lifestyle assets, including hotels, a hotel school, integrated residential and commercial developments, car parks, and a winery and vineyard operation.

Its assets include the Hyatt Regency Sanctuary Cove in Queensland, Hilton Melbourne Airport, InterContinental Sydney, The Hotel School Sydney, Norwest Business Park, 99 Macquire Street and Cathedral Street Car Park in Sydney, Bimbadgen Estate in New South Wales’ Hunter Valley, and the award-winning Hayman Great Barrier Reef.

For the six months ended June 30, Mulpha Australia contributed 66.5% to the group’s revenue of RM357.9mil while its Malaysian business’ share was 7.5%. The balance of the revenue came from operations in China, Hong Kong, Singapore and Vietnam. Mulpha is now looking to build a stronger presence in the Klang Valley property market. General manager for property division Ronn Yong said that despite its successes in Australia, the company had not lost sight of its local roots and business interest.

With its vast knowledge in building lifestyle homes, Mulpha is looking to introduce more innovative housing designs in Malaysia.

“We are working towards expanding our presence in the Klang Valley and have lined up a few prime residential projects in Kuala Lumpur’s well sought-after addresses. By leveraging on our expertise as a niche lifestyle developer, we hope to contribute towards changing the local property landscape.

“Malaysians are becoming more lifestyle-conscious and we are confident there is a big market for our range of high-end residences,” Yong told StarBiz.

Mulpha, via property arm Mulpha Land Bhd, is planning a few exclusive project launches in the next one to two years.

Major projects under Mulpha Land include Bangsar Enclave and Raintree Residence in Kuala Lumpur, Taman Desa Aman in Kedah and Bukit Punchor in Nibong Tebal.

The most exclusive project will be Bangsar Enclave, to be unveiled early next year. The gated and guarded luxurious bungalow enclave, located at Jalan Medang Tanduk, will have a gross development value (GDV) of RM75mil.

Located on 1.54 acres, there are only seven three-storey bungalows sharing a common communal linear garden, a courtyard and deck.

Each of the contemporary, minimalist-designed unit, with built-up of 7,525-9,540 sq ft, will have its own private swimming pool, koi pond and lush garden. They are available at an average price of RM10mil.

Yong said another upcoming project would be an eight-bungalow enclave in Jalan Langgak Tunku in Bukit Tunku. The residences will have land area of 15,000 sq ft and built-up of between 8,000 and 15,000 sq ft. The lifestyle homes with indicative price of RM15mil each will be launched by early 2011.

Mulpha is also undertaking the refurbishment of the Raintree Residence opposite the Raintree Club in Jalan Ampang.

The luxurious low-rise residential building, with eight apartments and four penthouses, was purchased by Mulpha in 2002. Presently seven of the units are leased out at a monthly rental of RM4 per sq ft or about RM8,000 a unit.

Yong said if the right buyer came along with the right offer for the building en bloc, “we may consider selling the property.” Otherwise, the residences will be kept for long-term leases.

The group is also an active builder in Johor with its Leisure Farm Resort on 1,765 acres going full swing now.

According to Yong, Leisure Farm is one of the first award-winning double-gated residential resort developments in Iskandar Malaysia with a 36-hole golf course and country club, a recreational club, canal park and organic orchard. It has attracted a lot of foreign interest, especially Singaporeans.

Offerings at the RM2.6bil development include spa villas and chalet hotels along a canal.

“We are in the process of planning resort lifestyle spa hotels in Leisure Farm to support our future retirement villages there. Phase one will include the expansion of the Bale Equestrian Club that will commence in the second quarter of next year while the phase two Spa & Village Hotel will start in 2011. Phase 3, comprising a cluster retirement village, will follow after that,” Yong said.

Also in the pipeline are 332 semi-detached units and bungalows fronting the canal and mangrove reserve in Precinct 7, with a GDV of RM500mil.

Mulpha is planning to build an office building, Menara Mulpha, along Jalan Sultan Ismail in Kuala Lumpur. Construction of the 29-storey Grade A office tower with a gross floor area of 360,000 sq ft will kick off in the second quarter of next year for completion in 2013.

With a GDV of RM450mil, it will be designed by New York architect Kohn Pederson Fox.

By The Star (by Angie Ng)

Australia attractive spot for property investment

AUSTRALIA'S housing shortage provides good opportunity for those seeking to diversify their property investment portfolio overseas.

Frasers Property Australia Pty Ltd managing director and chief executive offficer Dr Stanley S.H. Quek said the high immigration trend in Australia makes the country an attractive spot for property investment. Last year, 430,000 people migrated to Australia.

"The lifestyle, stable economy and political situation make it an interesting country for people to live in. Many students who used to study in Australia also go back to work and settle down there," he told Business Times in an interview.

According to an ANZ Australian Property Outlook report, house prices and rents in Australia will continue to skyrocket on the back of a record shortage of supply.
"By 2010, we project a record housing shortage of nearly 200,000 homes," it said.

Sydney has a population of 4.3 million and is set to grow by 25 per cent to 5.35 million people by 2026.

The city has the highest dwelling of housing undersupply among other capitals, with an estimated lag of two years worth of building.

Over the weekend, Frasers Property Australia, in collaboration with Jalin Realty, had organised "The Sydney Collection" seminar, a preview of its residential properties in Sydney.

It featured three types of apartment buildings and low-rise houses, with prices between A$435,000 and A$2.9 million (RM1.5 million and RM8.9 million) per unit.

The properties include Lumiere Residence, encompassing 456 units of apartments, and a residential property called Trio.

By Business Times (by Zurinna Raja Adam)

'Improve housing approval process'

The government should give incentives for first-time house buyers, review its policy on low-cost housing and improve the approval process, says YTL Land & Development Bhd.

These are some of the property developer's suggestions for the upcoming Budget 2010, which will be presented on Friday.

Currently, there are no incentives for first-time buyers although the industry has lobbied for it since last year.

Fiabci, an international real estate federation, has asked the government for grants of up to RM10,000.

YTL Land executive director Datuk Yeoh Seok Kian also held the view that the government should examine what he termed as unhealthy competition in the high-end residential market.
State firms like the Selangor State Development Corp (PKNS) are building houses priced at more than RM800,000 each.

He argued that PKNS should stick to providing social housing instead of competing with the private sector.

"This will certainly improve the overall well-being of deserving Malaysians faced with financial difficulties. A lot more can be provided for at the end of the day and the responsibility should not only fall on private developers," Yeoh told Business Times.

Under current policy, 30 per cent of a developer's residential project must be low-cost housing.

Yeoh also hopes that the government will improve the approval process for new development projects.

"This is one of the challenges we continue to face. While the government has acknowledged this as an issue with the set-up of the One-Stop Centre (OSC) in 2007, there should be better follow-through to ensure all parties are working towards the same intent," he said.

Yeoh said delays caused by unnecessary red tape and bureaucracy could be reduced with better enforcement and regulation.

"Ongoing reviews of policies can play a major role in helping the property sector stay robust and competitive," he added.

By Business Times (by Sharen Kaur)

The importance of green building effect

Environmental issues and climate change have marched into the mainstream of popular, political and business thinking over the last year worldwide.

As individuals, corporations and governments alike take more cencerted action to help "Mother Earth", governments are often seen as the catalyst in spearheading this initiative by way of legislation. In the UK, for example, the introduction of the Climate Change Act 2008 has mapped out the direction of the government's policy.

But what types of legislation are effective in initiating change, particularly among companies?

PricewaterhouseCoopers in the UK conducted a survey of top UK and international companies to understand businesses' views of the government's use of tax and regulation to manage the environmental impact of business. Some of the more salient observations from the "Saving the planet - can tax and regulation help?" survey were:

* Regulation is seen as being the government's most effective tool to change business behaviour;

* Taxes that tackle specific market failures, such as climate change levy, are viewed as effective in shifting corporate behaviour, while taxes that were either not originally designed to tackle environmental issues, such as fuel duty, or are less explicitly linked to polluting behaviour, such as air passenger duty, are seen as being far less effective in changing corporate behaviour;

* Businesses believe that tax incentives could be an important tool in encouraging a change in their behaviour and want to see the government offer more and better designed incentives.

WHAT CAN GOVERNMENTS DO?

The survey findings clearly indicate that while governments must drive the initiative, they must also bear in mind the preference by businesses for "carrot" incentives over "stick" penalties in changing corporate behaviour. It is important that the incentive framework is not onerous or complex, lest it fails to motivate changes in behaviour. Moreover, the framework must be sufficiently potent to generate a multiplier impact on the change behaviour of the larger community.

One area of focus is the building industry. Buildings alone account for nearly one-third of the energy used globally and, if appropriately incentivised, could create the impact we seek on environmental change behaviours.

GREEN BUILDINGS

In Malaysia, our corporates are embracing green initiatives more keenly and an upshot of this is the proliferation of green buildings. The recent establishment of the Green Building Index (GBI) is a key milestone. Incentives such as higher plot ratio and better land premium rates to promote the development of green buildings are currently being explored.

These are well and good, but if we are to look at the tax incentives for green buildings, we would find that they are scarce and not "potent" enough. Currently, the tax incentives are mainly geared towards spending on energy-efficient assets by way of investment tax allowance.

It should also be noted that green building initiatives do not stop at just the installation of energy-efficient assets. It encompasses the way the building is designed and constructed, site planning, innovation and resources used. The building must be sustainable and can provide energy savings, water savings, a healthier indoor environment, better connectivity to public transport and the adoption of recycling as well as the greenery of the project.

While it is true that, generally, adopting green thinking and technology would be costly and may not be attractive for building owners, especially if the return on investment is too long, injecting the right "carrots" to the right sectors should drive the green initiatives, notwithstanding the high investment or cost of moving towards green technology.

A GREEN THOUGHT?

The government's endorsement of green buildings in a more holistic manner will positively impact the developers, property owners, consumers and suppliers to think and act green.

Granting greener tax incentives which are pegged to the type of building certifications such as the GBI or the likes will impact the entire building supply chain: from building owners and suppliers right up to consumers. Given the size of the property industry, incentives such as investment tax allowance or even industrial building allowances for green-certified buildings will be impactful.

We don't need to look far for examples. Across the causeway, the Singapore government uses both the "stick" approach of requiring green certification for buildings and the "carrot" approach of incentives such as grants to building owners and accelerated tax depreciation for energy-efficient equipment. Australia also provides incentives such as interest-free "Green Loans", grants and rebates to encourage greener living.

In Malaysia, using incentives as a tool to stimulate a change in behaviour will probably be preferred over the "stick" regulations. The introduction of regulations will likely give rise to a host of compliance issues before the community is ready or makes a conscious effort to go green. As a start, the government may want to invest with businesses to change behaviour in protecting Mother Earth.

As the politican and environmentalist Peter Garrett said: "Climate change is such a huge issue that it requires strong, concerted, consistent and enduring action by governments."

Peter Wee is an executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd.

By Business Times (by Peter Wee)