Can real property gains tax be minimised?

It may be possible by transferring properties to a company, but there are many pitfalls to consider

At the recently concluded budget seminar of our firm, a major focus of the 650 attendees was the proposed real property gains tax (RPGT) of 5% to be imposed on disposals of property after Jan 1.

Resigned to the inevitability of the tax and the futility of objections, the ingenious ones posed the question to us on the possibility of tax minimisation by transferring their current properties to a company before Jan 1.

The plan calls for properties which were acquired many years ago at a cheap price (say RM1mil) to be transferred to a company controlled by them at the prevailing market price (say RM3mil).

The transfer will be effected before Jan 1, thus attracting no RPGT on the disposal.

In the future when the property is disposed off by the company, the company will only be taxed on the capital gain over and above the new cost of RM3mil.

If the disposal price by the company is RM4mil, the company will only pay tax on the capital gain of RM1mil (RM4mil less RM3mil) at the rate of 5%, thus resulting in RPGT of RM50,000.

A very ingenious idea indeed. The comparison of taxes payable shows a tax saving of RM100,000 calculated as seen in the table.

Before anyone embarks on such a potentially lucrative move, one has to bear in mind many of the pitfalls, some of which are discussed below.

Date of disposal

For the purpose of this discussion, the term “chargeable assets” is used to refer to properties and other assets that can be caught under RPGT.

Chargeable assets include shares in real property companies which are companies that predominantly hold assets in the form of properties or shares in other real property companies. Only chargeable assets disposed on Jan 1 or after will be assessed to RPGT. Those disposed of from April 1, 2007 to Dec 31, 2009 will not. A day is literally night and day for tax purposes!

But the term “disposal date” has a technical definition and it is not the date when the sales price is paid over as we usually consider a sale to be. In sales circles, as they say, a sale is not a sale until the money is collected!

However, for RPGT purposes, a sale is a sale on the day a written agreement is entered into.

Hence, the date that a sale and purchase agreement is entered into for the sale of a property is usually the date of disposal for RPGT purposes. But what if there is no written agreement?

The law provides that the date of disposal is the earlier of two dates – the date that the sales price is fully received or the date that the ownership is transferred. Disposals of this nature may have disposal dates being deferred to a later date, which may fall in the 5% taxable period!

Likewise, disposal dates may be deferred even much later if the sale is dependent on securing approvals from the “Government or an authority, or committee appointed by the Government” – for example, the state government, the Securities Commission (SC) or Foreign Investment Committee.

For these “conditional contracts” which are covered by Para 16 of Schedule 2 of the RPGT Act, the disposal date is when the last of the approvals is obtained.

If a sale and purchase agreement is signed in December 2009 that is subject to SC approval which is obtained in February 2010, the disposal will be treated as having taken place in 2010 and thus subject to the 5% RPGT!

Stamp duty on the transfer

Stamp duty is imposed on the documents for the transfer of title; for example, the memorandum of transfer for transfer of property.

The rates applicable are fairly steep for properties which range from 1% to 3% with the highest rate of 3% being applicable for transfer prices which exceed RM500,000.

Transfers of shares attract duty at the rate of RM3 for every RM1,000 of the transfer price or 0.3%.

However, to avoid stamp duty, one may wish to transfer the property without the transfer of title; for example, the owner holds the property in trust for the company.

What if no transfer of title is effected as in these circumstances? Will the issue of tax avoidance then arise? Perhaps.

Anti-tax avoidance in the RPGT Act

Section 25 of the RPGT Act contains the general anti-avoidance provisions which allow the tax authorities to disregard transactions, vary transactions or impose taxes that should have been imposed.

The law specifies that this right is available if the transactions had the effect of “altering the incidence of tax”, “relieving a person from tax liability” or “evading or avoiding any liability which would otherwise have been imposed”.

Besides these general anti-tax avoidance measures which are also found in the Income Tax Act to discourage income tax avoidance, Section 25 of the RPGT Act also provides for persons who provide loans to related parties; for example, Mr A providing loans to Company A which is owned by him.

The law provides that if Company A sells a property and the property was financed by a loan provided by Mr A, the disposal may be regarded as a disposal by Mr A and not by Company A.

However, the cost of acquisition to Mr A is the market value of the property when Company A acquired the property from Mr A. If Company A had acquired the property from Mr A at the true market value, this anti-tax avoidance provision of the RPGT Act should not pose any problem.

Previous rules by Ministry of Finance (MOF)

A few years ago, the Government had granted a similar tax free period from June 1, 2003 to May 31, 2004.

During that period, the MOF had issued some guidelines to curb the avoidance of RPGT by mandating that any disposal of property must be evidenced by a sales and purchase agreement which must be duly signed and stamped within the exemption period.

Sale of property to a company in exchange for shares

Care should be taken if the property owner transfers a property to a company controlled by him in exchange for shares, or at least 75% in the form of shares. If the transfer is done this way, the shares may be considered to be chargeable assets.

In the future when these shares are sold, the gains will be subject to the RPGT of 5%. The cost of shares for RPGT purposes is not the par value of the shares but the price paid by the property owner for the property plus incidental expenses incurred by him on the acquisition; for example, legal fees.

As such, if Mr B transfers a piece of property acquired for RM1mil to his company (Company B) at market price of RM3mil in exchange for 3 million RM1 shares, and the shares are subsequently sold for RM4mil, the gains on disposal are calculated at RM3mil which is RM4mil sales price less the acquisition price to Mr B of RM1mil.

Indirectly therefore, Mr B is taxed on his full capital gains and not merely on the gains made by Company B owned by him.

RPGT or income tax?

Another aspect which has deep implications is whether the disposer had held the property as stock-in-trade or as a long term investment.

If held as stock-in-trade, the gains on disposal will attract income tax whereas if held as a long term investment, the gains will attract RPGT.

Some property investments which are disposed as part of a quick sale, or as a single isolated transaction in circumstances which give it a cloak of “adventure in the nature of trade”, could be caught under income tax.

Due to space constraints, we are unable to elaborate on this issue. If these disposals are caught under income tax, what then is the advantage of disposing the properties before Jan 1 if the disposer has to pay income tax at 25% on the gains upfront?

The obstacles can be quite challenging as seen above and careful navigation of the tax law is necessary. But I am sure good tax advisers will find a way out of the conundrum!

Poon Yew Hoe is a partner of Horwath.

By The Star (by Poon Yew Hoe)

Report: Mortgages first hit if lending rates rise

PETALING JAYA: Average lending rates are on an uptick with banks possibly positioning themselves for a gradual increase in the rates for their long-term loans.

The monthly statistical bulletin released by Bank Negara for September showed that average lending rate (ALR) was 4.91% compared with 4.9% in August and 4.96% in July. The average base lending rate (BLR) remained unchanged at 5.51% as at Oct 15.

According to UOB Kay Hian Research’s latest update, one of the first loan segments to be impacted would be mortgages. The report said that financing for the purchase of residential properties, which comprise 27% of total loans in the banking system, would likely slow down due to the re-introduction of real property gains tax as part of the measures under Budget 2010.

Mortgage growth would also take a temporary adjustment due to a rise in effective lending rates as banks lowered their mortgage spreads, the research house added.

“Our market survey shows that mortgage spread has been reduced from the previous BLR minus 2%-2.3% to BLR minus 1.6%-1.9%,” the report said.

The rate increase was expected to mitigate the slower loans volume growth, the research house added.

“In this scenario, Public Bank would benefit the most from its strong loans growth supported by its strong branding and lower cost of funding,” the report said.

An analyst with another brokerage said he had heard reports of the rise in effective rates recently but declined to comment further. Banks, when contacted, declined comment on this matter.

Banking data for September continued to show strong credit demand from the household sector, leading to total loans growth of 7.2%.

Loan applications in the household sector amounted to RM23.2bil in September, compared with monthly average of RM22.8bil in the preceding eight months to August.

UOB Kay Hian Research noted that robust approvals in the six months to Sept 30 would sustain strong loans growth in the fourth quarter of this year and the first quarter of 2010.

“However, potential slower property sales and credit card demand due to the new budget measures would likely lead to slower loans growth in the second half of 2010,” the report said.

The research house, however, maintains its “overweight” call for the banks as slower growth would be mitigated by the increase in effective lending rate.

By The Star (by Laalitha Hunt)

'Maybank mortgage lending rises 7 pc'

Abdul Wahid Omar, chief executive of Malayan Banking Bhd, comments on mortgage lending as Malaysia seeks to recover from its first recession in a decade.

Malayan Banking, or Maybank, is the country’s biggest lender. It recently raised its average mortgage rate 2.0 percentage points below the bank’s base lending rate.

On mortgage sales: “If we look at our own mortgage performance last year, we had a decline in our housing loans. In this current financial year, with all the aggressive marketing which we have already taken, we have seen a seven percent growth in our mortgages.”

On mortgage lending rates: “Currently, Malaysia has one of the lowest rates in and around the region. We can’t speak for other banks, but from our own perspective there was a time when we were looking at base minus 2.2 percentage points. We adjust based on competition. If we are able to get sufficient number of mortgages at a slightly higher pricing, obviously that’s something which we look at.”

On other lending rates: “We increased mortgage rates slightly, but we are bringing down our SME and corporate loan rates, for example. So you have to look at it from that perspective. As we are able to get more and more loans and as we reach an optimal level, so we will adjust our pricing accordingly.”

By Bloomberg

Penang's RM300m mall to open in 3Q2010

GEORGE TOWN: 1st Avenue, Penang's latest RM300 million shopping mall modelled after Singapore's Raffles City, Marina Square and Suntech City, is set to open its doors in the third quarter of 2010.

The city centre retail mall, located in the heart of George Town on Magazine Road is jointly developed by three property and retail heavyweight groups Asian Retail Mall II Ltd (ARML II), Belleview Group and Lion Group.

ARML II is the Asian real estate arm for Pramerica, which is the real estate investment management subsidiary of Prudential Financial Inc.

Asiamalls Management (SEA) Pte Ltd employer's representative and CEO Michael Leong said that the mall would house 280 shops on 400,000 sq ft of retail space with seven levels of zoned shopping.

Leong said the upmarket mall was modelled to target mainly the young and chic shoppers.

"Eighty percent to 90% of the shops will be the popular brandnames.

"We want to raise the standard of retail malls in Penang via 1st Avenue as tenants would also include Singapore retailers and the mall has also been carefully modelled after other successful malls in Singapore," he added.

The official launch of 1st Avenue and signing of its anchor tenant, Parkson Departmental Store, was witnessed by Penang Chief Minister Lim Guan Eng.

Also present were 1st Avenue Mall Sdn Bhd director Datuk Sonny Ho, Pramerica CEO Victoria Shigehira Sharpe and Parkson Corp Sdn Bhd COO Toh Peng Khoon.

Parkson is taking up 92,000 sq ft of retail space across four levels and the location will be Parkson's 36th.

Sharpe said that the collective expertise of Pramerica, Lion Group and Belleview Group will bring a new wave of shopping experience to Penang.

"Malaysia's sound economic fundamentals and strong growth capacity is evident from the Asian Public Real Estate's Association's recent REIT report, which states that Malaysia's market capitalisation of US$1.4 billion (RM4.9 billion) is behind markets like Japan, which leads, followed by Singapore, Hong Kong, Taiwan and Thailand.

"We are encouraged by these statistics, which point to a robust growth potential," she added.

As of June 30, Pramerica Asia managed US$6.4 billion of gross assets throughout Asia via ARMF-managed shopping malls in Singapore, namely Tiong Bahru Plaza, Century Square, Hougang Mall, White Sands, Liang Court and Tampines 1.

By The EDGE Malaysia (by Regina William)

CapitaMalls, Longfor IPOs to test demand for Asia property

HONG KONG: CapitaLand Ltd, Southeast Asia’s largest developer, and China’s Longfor Properties Co may raise a combined US$3 billion (RM10.3 billion) in share sales that will test demand for Asian property stocks.

CapitaLand wants to raise up to S$2.8 billion (RM6.8 billion) from the listing of its CapitaMalls Asia Ltd unit in what could be Singapore’s largest initial public offering (IPO) since 1993. Chongqing-based Longfor, the biggest developer in China’s most populous municipality, may get as much as HK$7.1 billion (RM3.2 billion) in a Hong Kong sale.

The amount sought would almost double the US$3.2 billion raised by 10 real estate-related initial public offerings (IPOs) in Asia-Pacific so far this year. The two companies will be competing for investor funds against five Chinese developers that started marketing Hong Kong offerings last month.

“People have been waiting a long time to tap the markets for cash,” said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd in Hong Kong. “With the markets trading around year-to-date highs, they are keen to lock in the money in case the bubble bursts.”

The 168-member Bloomberg Asia Pacific Real Estate Index has jumped 59% this year, double the benchmark MSCI Asia Pacific Index’s 29% rise.

CapitaMalls and Longfor are taking advantage of a rebound in Asian economic growth, led by a four trillion yuan (RM2.1 trillion) stimulus package in China, the world’s third-largest economy. Singapore raised its 2009 economic forecast last month after gross domestic product expanded for a second consecutive quarter in the three months through September.

CapitaLand is offering about 1.165 billion shares in CapitaMalls at S$1.98 to S$2.39 apiece, according to emails sent to investors by sale arrangers Credit Suisse Group AG and Deutsche Bank AG.

The share sale will allow CapitaMall Asia to undertake expansion plans, including the acquisition of land for new developments and the purchase of completed malls, it said last month when it announced the IPO.

The listing of CapitaMalls Asia will give investors access to a company that manages 86 retail properties across Asia, including China. The company’s net asset value is estimated at about S$5.3 billion as of Sept 30, according to a prospectus filed with Singapore’s central bank yesterday.

If it’s priced at the top end of the range, the share sale may be the largest IPO in the city-state since Singapore Telecommunications Ltd’s initial offering in 1993, which raised more than S$4 billion, a record for the island.

CapitaLand’s CapitaLand Retail unit reported a six-fold gain in profit last month as revenue from its China and Malaysia malls increased.

Longfor, backed by Temasek Holdings Pte and Ping An Insurance (Group) Co, plans to sell one billion new shares, or a 20% stake, at HK$6.06 to HK$7.10 each, said the document emailed to fund managers yesterday. The sale values the company at HK$35.5 billion, or 14 times 2010 earnings, as estimated by banks involved in the sale.

Longfor is pushing ahead with the IPO after a flurry of similar share sales by Chinese developers were shelved or downsized as the stock market declined and more property companies offered shares.

“In terms of fundamentals, Longfor is quite privileged, given its landbank covers major cities in northern and western China,” said Wang Ren, a Hong Kong-based analyst at CCB International Co, by telephone yesterday. “They are in a strong market position, they’re quite niche as they focus on the luxury segment. There are too many choices now, so investors have to be very selective. Some of the IPOs are very low-quality.”

Longfor was the largest developer in terms of the gross floor area of residential projects sold in the three years to 2008 in southwestern Chongqing, according to a draft share sale prospectus. Since then it has expanded to other Chinese cities, including Chengdu, Xian, Beijing and Shanghai.

Five institutions, including the Government of Singapore Investment Corp and Temasek, the city-state’s two state-owned investment companies, will buy a combined US$197.5 million worth of Longfor’s IPO shares as “cornerstone investors”, said the share sale document.

Companies use cornerstone investors, who are guaranteed shares in an IPO by agreeing not to sell their investments for a few months, to attract other buyers to their offerings.

Yuzhou Properties Co, a Xiamen, southern China-based property developer, declined as much as 10% on its debut in Hong Kong yesterday. The benchmark Hang Seng Index fell 2%.

Excellence Real Estate Group Ltd, the largest developer in Shenzhen’s central business district, last month delayed a Hong Kong IPO that could have raised as much as US$1 billion, according to a company statement.

Mingfa Group (International) Co, a developer in the southern Chinese provinces of Fujian and Jiangsu, last week decided to restart its IPO at a later date and cut the top end of an offering range by 24%, it said in a statement.

Citigroup Inc, Morgan Stanley and UBS AG are managing the Longfor sale, which is scheduled to be priced Nov 12. The stock will start trading Nov 19.

By Bloomberg (by Bei Hu & Shiyin Chen)

Developers to launch more projects

From left: Datin Linda Ngiam, Housing and Local Goverment Minister Datuk Seri Kong Cho Ha, Star Publications (M) Bhd group chief editor Datuk Seri Wong Chun Wai and executive deputy chairman Datuk Clement Hii at the official launch of Star Property Fair KL at Menara Star on Sept 29.

PETALING JAYA: Developers in the Klang Valley are planning to launch more projects in the coming months as the local property market continues its recovery.

To provide industry players a platform to showcase their latest developments, The Star Media Group will be organising the first Star Property Fair in Kuala Lumpur from Nov 27 to 29.

Themed “Stylish Living”, The Star Property Fair Kuala Lumpur will be held at the KL Convention Centre halls 4 and 5.

According to Star Publications (M) Bhd group managing director and chief executive officer Datin Linda Ngiam, the economic downturn has affected the property market and there is a need for an integrated platform for property developers and prospective purchasers to meet.

“The Star Property Fair is an integrated platform because it will be an on ground event fully supported by our print, radio, magazine and online media, especially StarProperty portal.

“Through the property fair, we hope to complement the Government’s efforts in stimulating the economy especially in the property market and hasten the process of recovery. Businesses such as financial and lifestyle will subsequently benefit also,” Ngiam said.

The Star has so far organised eight annual property fairs in Penang and response from both exhibitors and visitors has been very encouraging, making it the leading property fair in Penang.

“With our established network and the strategic platform created over the years, we want to leverage on our position as a leading media group to set a new benchmark for property exhibitions in the country,” she added.

Ngiam said many affluent Malaysians were looking to invest in properties that would not only give them good long-term value but also reflect on their lifestyles.

The upcoming fair will enable visitors to view the latest offerings by renowned local developers for a broad range of property from medium to medium high-range residences, luxurious bungalows to exclusive condominiums, and commercial projects.

Visitors will also have the opportunity to obtain advice on financing options from participating financial institutions as well as government agencies that will be on hand to offer information on Employees’ Provident Fund withdrawals and on other matters.

There will also be talks and forums conducted by industry experts on various topics, including property investment, feng shui and home inspirations.

Other attractions include auctions by CIMB Property Mart and a contest for all visitors to the fair with prizes worth over RM20,000 to be won.

The property fair is open to the public from 11am to 8pm (Friday to Sunday) and admission is free.

For enquiries on the property fair, contact Kenny Thong or Ian Qua at 03-79671692 or 79671388 ext 1165.

By The Star (by Angie Ng)

Mulpha’s countryside homes show the way to holistic living

PETALING JAYA: When the International Real Estate Federation (Fiabci) organises its annual Malaysia Property Award (MPA), it usually coins a tagline to convey the theme for the year.

Last year’s awards emphasised environmental consciousness while this year’s focus is on Intrinsic Value in Holistic Living.

If these themes are meant to be an indication of the ideal Malaysian property development, or the direction that local developers should be heading, than Mulpha International Bhd’s Pinggiran Bayou Village Homes is certainly ahead of its time.

The winner in the best residential development (low rise) category at the 2007 MPA, the luxury resort homes are redolent of environmental splendour and holistic ambiance.

Being a countryside development, holistic living meant its residents could interact with nature as much as possible, said Mulpha general manager (property division) Ronn Yong.

“Holistic living is about the surrounding experience. A lot of developers ignore the well-being of the nature around their development. When they finish constructing, they wash their hands and just walk off,” he told StarBiz.

Pinggiran Bayou Village Homes is an exclusive enclave of 122 two-storey homes that are part of the company’s 1,765-acre Leisure Farm Resort located in Gelang Patah, Johor and next to the Second Link Expressway to Singapore.

The homes have wide frontages with double volume living and dining rooms, enhanced with internal courtyards, skylights or roof decks and screened outdoor gardens. The low density of 10 to 12 units per acre also lines a waterway and fronts an expansive Canal Park.

“We wanted our residents to be able to enjoy the sights, sounds, fragrances and feel the wonders of living with nature,” Yong said.

Epitomising a “green” architecture concept, the philosophy behind the development is aimed at protecting, preserving, recycling and conserving as much of the natural resources and surroundings as possible.

Prior to construction, the company took great pains to ensure the impact on the surrounding ecosystem was minimal, Yong said.

“We photo-document our sites prior to construction, which means that we record and study the wildlife within the area, like the birds. This is so that we would know if any wildlife was affected upon the project completion. We also expand progressively so that the impact on the surrounding nature is minimal and not too drastic,” he said.

About 70% of the homes have been taken up. Residents are a mix of locals, Singaporeans and other expatriates. The homes are priced from RM500,000. Only the bumiputra units are left, but Mulpha is in no rush to sell off these units, according to Yong.

“We often rent out these units during the weekends. During festive seasons like Hari Raya, all the available units are fully booked. They’re quite popular because people enjoy the peace and tranquility there,” he said.

The Pinggiran Bayou homes went on to win the 2008 International Prix d’Excellence Award for best residential category – and a string of other accolades.

Yong said winning a Fiabci award helped create more recognition for not just the Pinggiran homes, but also the entire Leisure Farm development, which has a gross development value of over RM2bil.

“When we won the fiabci awards, not many developers knew about Leisure Farm. Winning gave us a certain level of prestige because developers started going ‘what’s this development in Johor?’

“It (winning) has also helped build the confidence levels of our architects, consultants, contractors and others who helped develop the project,” he said.

The MPA has been heralded as the “Oscars” of the local property industry.

Fiabci Malaysia will be organising the 2009 MPA on Nov 16 in Kuala Lumpur, with Malayan Banking Bhd as the official sponsor. The categories that will be contested are: Property CEO of the Year, Master Plan, Residential Development (low rise and high rise), Retail Development, Office Development and Purpose-Built Project.

Winners of the MPA in their relevant categories will represent Malaysia the following year at the International Prix d’Excellence, an annual competition that honours the world’s best property projects.

By The Star (by Eugene Mahalingam)

KL has to wait a while more for its Four Seasons

KUALA LUMPUR will have to wait a little bit longer for its first Four Seasons hotel as the developer for the RM2.5 billion project may get a new partner.

"There is an internal restructuring to the shareholding structure of Venus Assets Sdn Bhd," a source said.

A search with the Companies Commission of Malay sia reveals that Venus Assets is owned by Venus Pacific Sdn Bhd.

Venus Pacific is 30 per cent owned by ISY Equity Sdn Bhd, a company controlled by Tan Sri Syed Yusof Syed Nasir and the Sultan of Selangor while 70 per cent is held by Attesa Investment Ltd, a firm controlled by Ipoh-born tycoon Ong Beng Seng and partner.
There would also be minor changes to the 65-storey building that comprises a hotel, apartments and a retail area, the source added.

Venus Assets bought the prime 1.05ha site, which sits right next to the Petronas Twin Towers, for RM90 million in 2003 from the estate of the late Khoo Teck Puat, the former major shareholder of Standard Chartered plc.

The source said that the Four Seasons Place project will take off but the timing has not been confirmed.

The project was first announced in 2005, but piling work only began in 2007.

Said to be the tallest Four Seasons in the world, the project has already been plagued with several delays, ranging from changes in building plans from an initial two tower project to a single tower.

There were also changes in design, positioning, composition and roping in of partners for the venture.

In an interview with Business Times in March this year, Syed Yusof said contractors will be hired in the third quarter of 2009.

However, it is understood that this has yet to happen.

In the same interview, he also said the completed Four Seasons Place will have 150,000 sq ft of retail space, 150 hotel rooms and 100 serviced apartments. There will also be another 140 units of apartments that will be sold.

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

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

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

By Business Times (by Vasantha Ganesan)

Ireka studying growth options, not ruling out REIT

IREKA Corp Bhd’s growth driver may come from either a real estate investment trust (REIT) or expansion of its development management services to other property markets.

Until it finalises its options, the construction group is now on an asset-light operations mode, keeping its balance sheet lean, its executive director Lai Voon Hon told Business Times recently.

Incorporated in 1967 by Lai Siew Wah, Lai’s father, Ireka’s core businesses are construction, property development, hospitality & leisure and information technology.

It is not looking for new business opportunities for now but does not discount the possibility of launching a REIT when the time is right.

Its current asset-light business model was adopted when Ireka was restructured to cut its gearing after the 1997 financial crisis.

It shed its weight among others by listing in London Aseana Properties Ltd where it holds a 23 per cent stake.
It also sold The Westin Kuala Lumpur to an international investment firm and its entire property portfolio to Aseana to focus on construction.

The de-gearing move was also to diversify risks, Lai said.
Under the asset-light model, Ireka, through its wholly-owned unit Ireka Development Management (IDM) Sdn Bhd, is responsible for implementing the real estate investment strategy for Aseana.

IDM’s role as a development manager includes engaging, managing and coordinating third parties in relation to the development or management of properties and leading the negotiation for the acquisition, disposal or financing of real estate assets.

On plans to go international, Lai said Ireka will remain focused on Malaysia and Vietnam, where it is exploring infrastructure-related projects.
According to Lai, there is still a lack of high quality housing, offices, shopping malls, hospitals and hotels in Vietnam.

Lai said he believes Vietnam will remain a high growth market post the global financial crisis.

“All the positive economic fundamentals, which had attracted foreign investors to Vietnam in the past, remain intact and will be the foundation for future growth once the global economy recover,” he said.

Lai, however, did not rule out the possibility of looking into other Asian countries in the future.

By Business Times (by Sharen Kaur)

Construction arm to stay as top revenue contributor

IREKA Corp Bhd's construction arm, Ireka Engineering & Construction (IEC) Sdn Bhd, will remain the biggest contributor to its net profit and revenue going forward, executive director Lai Voon Hon said.

Ireka, set up in 1967, is involved in construction, property development, hospitality & leisure, and information technology.

IEC has three projects in hand, namely SENI Mont' Kiara and one Mont' Kiara in Kuala Lumpur and Sandakan Harbour Square with outstanding works of RM650 million.

It may get more jobs next year as Ireka has been pre-qualified to bid for more than RM2.5 billion worth of infrastructure and building construction projects.
Ireka started as Syarikat Lai Siew Wah, a sole proprietor which undertakes general earthworks such as site clearing and road work construction for other local contractors.

The group, founded by Lai's father, Lai Siew Wah, expanded its fleet of plants and machinery and began to take on large-scale construction works in the 1970s.

Throughout the 1990s it had constructed some notable projects like the Kuala Lumpur International Airport runway, sections of the Kuala Lumpur Middle-Ring Road II and North-South Expressway, Putrajaya government administrative offices and The Westin Kuala Lumpur.

The elder Lai is a self-made man who learnt through the school of hard knocks.

At the age of 10, he was laden with responsibilities far too big for his age. There was no formal schooling and he had to contribute to the family's income due to the passing of his father.

He became a machine repair apprentice and at 14, wanted to own a tractor. With the money earned, he bought a machine and leased it out, gradually moving into sub-contracting work.

Siew Wah, now 69, is known in Kuala Lumpur as 'lai wong' (earth king).

His son, a professional architect, joined Ireka in 1994 as the group general manager and was appointed to the board in 1996.

By Business Times

Sunrise 1Q net profit up 24% to RM37.3m

KUALA LUMPUR: SUNRISE BHD's net profit rose 24% to RM37.3 million from RM30.2 million a year ago as earnings were sustained by progress billings for its ongoing developments.

The company said today that pre-tax profit rose 17% to RM50.2 million from RM42.8 million while revenue was RM190.3 million compared with RM198.2 million a year ago. Earnings per share were 7.52 sen versus 6.37 sen a year earlier.

"The company's earnings continue to be sustained by progress billings for our ongoing developments, namely 10 Mont'Kiara, 11 Mont'Kiara and Solaris Dutamas, as well as sales of 11 Mont'Kiara and the completed Mont'Kiara Residence bungalows. The y-o-y growth in profitability was also driven by lower operating costs," it said.

Sunrise said the strong sales momentum continued into the quarter, with the company chalking up RM147 million in sale-and-purchase-agreement-signed sales.

As for sentiment for property, the company said it was boosted by the global economic recovery, low interest rates and the global stock market rally.

Providing an update on its projects, Sunrise said construction of ongoing projects was progressing well. Solaris Dutamas and 10 Mont'Kiara are due for completion in the current financial year and 11 Mont'Kiara in 2011.

It said Solaris Dutamas, its first integrated commercial-residential development, would transform the Dutamas area into an engaging and lively hub.

Sunrise added the development, targeted for completion in stages up to mid-2010, would house an exciting differentiated retail offering which will open in end-2010.

"Going forward, the company has substantial unbilled sales of RM870 million as at Sept 30, which will sustain earnings in the current and following financial year," it added.

Sunrise plans to launch several new residential and commercial projects in the near future in order to sustain longer-term profits.

Its first and final dividend of three sen per share for financial year 2009 was approved by shareholders at the AGM on Oct 29 and would be paid on Dec 10.

At the AGM, shareholders voted favourably on the company's "Say on Pay" proposal. Sunrise said the proposal, a first for corporate Malaysia, underscored its commitment to corporate governance and shareholder accountability.

By The EDGE Malaysia (by Joseph Chin)

Berjaya hotels to get RM130m facelift

BERJAYA Hotels & Resorts, the leisure arm of Berjaya Land Bhd, will spend close to RM130 million to refurbish its six hotels in the country, says its chief.

The company operates the Berjaya Langkawi Resort, the Berjaya Tioman Resort, the Berjaya Redang Resort, the Berjaya Georgetown Hotel in Penang, Colmar Tropicale in Bukit Tinggi, Pahang and the Berjaya Times Square Hotel in Kuala Lumpur.

Chief executive officer Joseph Won said despite the current economic downturn, the properties have generally maintained its revenue per available room.

The four-star properties recorded an average occupancy rate of 66 per cent for the financial year ended April 30 2009.
Won said he is expecting more visitors to Langkawi, Redang and Tioman next year, as the economy improves and the company embarks on promoting its properties aggressively.

"Malaysia is a beautiful country and it has a lot to offer but it needs to be more focused in promoting local tourism in a more controlled and organised fashion.

"Malaysia needs a roadmap so that all players, including the government, will have something more firm to look at and follow," Won said.

Won said Berjaya Hotels is spending RM30 million to refurbish the 502 rooms at Berjaya Langkawi.

It will spend another RM25 million in the second or third quarter of 2010 to improve the public areas at the resort.

"We have been refurbishing the rooms since August. We want to improve the appeal of our resort so it could compete more effectively," Won told Business Times in an interview.

Berjaya Hotels will also spend RM70 million to upgrade its 670-room Berjaya Times Square Hotel, the company's best-performing city hotel, beginning first quarter of 2011.

At the same time, the company will conduct minor renovation at the Berjaya Redang Resort.

It will spend some RM7 million to refurbish the two food outlets, after spending RM35 million to upgrade its 220 rooms last year.

"We are proud of Berjaya Redang. The average room rate during the peak period is RM550 and due to high level of demand for rooms during this season, we are looking to raise the rates next year," Won said.

By Business Times (by Sharen Kaur)

CapitaMalls Asia IPO seeks as much as S$2.78 billion

SINGAPORE: CapitaLand Ltd, Southeast Asia’s largest developer, is seeking S$2.8 billion (RM6.8 billion) from the listing of its CapitaMalls Asia Ltd unit as it seeks to grow its retail mall business across the region.

Some 1.2 billion shares were being offered at S$1.98 to S$2.39 apiece, according to emails sent to investors by sale arrangers Credit Suisse Group AG and Deutsche Bank AG. The share sale will be the biggest in Singapore this year, according to data tracked by Bloomberg.

The listing of CapitaMalls Asia will give investors access to a company that manages 86 retail Properties across Asia, including China. The company’s net asset value is estimated at about S$5.3 billion as of Sept 30, according to a prospectus filed with Singapore’s central bank today.

“The market is expected to be quiet, so this IPO will provide a boost,” says Najeeb Jarhom, an analyst at AmFraser Securities Pte. “Investors have seen CapitaLand’s success in spinning off its property trusts, and fund managers wanting exposure to the China consumption story will be interested.”

CapitaLand has gained 13% since it announced plans to list the unit on Oct 5. The Singapore benchmark Straits Times Index has added 1.5% in the period.

By Bloomberg (by Philip Lagerkranser & Shiyin Chen)

Dubai Holding property unit head under probe

DUBAI: Dubai Holding's chief executive officer (CEO) has taken the helm of its property unit, the company said yesterday, after the division's chairman was ordered by a Dubai watchdog to face questioning over suspected wrongdoings.

Yesterday, an official at Dubai's financial audit department confirmed a report in state-owned newspaper Emarat Alyoum last Thursday that it questioned Hashim al-Dabal, chairman of Dubai Properties, over what it called financial irregularities.

Dubai Holding declined to comment when asked about the allegations. Its CEO Ahmad bin Byat, who was named acting chairman of the property unit, could not be reached for comment.

Dubai Holding reorganised its business into four groups in August: property, business parks, hospitality and investments, in a bid to deal with the economic crisis.

By Reuters

Signs of green shoots

An artist’s impression of The Light Waterfront Penang’s residential precinct. More developers are lining up new greenfield projects for launch from the later part of this year

The housing property market which also succumbed to the dampening impact of the global financial crisis may be showing some “green shoots” of recovery, especially in the medium-range landed housing sector.

However, the high-end condominium market around the Kuala Lumpur City Centre vicinity is still fragile.

Since the middle of this year, the take-up rate for landed housing units has improved and developers are seeing a return of buying interest for good projects in well sought after locations. Even the high-rise residential market is showing some glimmer of hope.

The Malaysian Institute of Economic Research’s Residential Property Index (MIER RPI) hit 91.5 points in the second quarter of this year, which is a strong rebound from the all-time low of 69.3 points in the fourth quarter of 2008.

As a sign of their improved confidence, more developers are lining up new greenfield projects for launch from the later part of this year.

This is a much improved situation from late last year when things practically came to a halt and the sale registers at developers’ offices stopped ringing.

Just when developers are about to look forward to brighter days ahead, the proposed reimposition of the real property gains tax (RPGT), albeit at a flat 5% rate irrespective of holding period and category of owners, is seen as a dampener of the “overall feel good” sentiment.

Although some are not overly concern that the RPGT will slow down sales substantially, especially among first time buyers and owner occupiers, some say it will impact the investor market.

Overall, with the prevailing low interest rates and improving economy, the environment is still relatively positive.

IJM Land Bhd managing director Datuk Soam Heng Choon says with the current benign interest rates and the pent up demand due to lack of new launches in the last nine months, the sentiment should remain positive.

“Most of our projected launches are on track and we will be putting more projects into the market. By our financial year ending March 2010, we would have launched about RM1.3bil worth of products nationwide,” Soam adds.

Among IJM Land’s latest launches are the Nusa Duta project in Johor Baru in July and The Light Waterfront Penang in August. A new commercial project in Melaka will be launched next month.

On challenges ahead, he says land prices are still on the rise and the cost of doing business remains high.

“Industry players should take the lull period to improve their product delivery and refocus on quality products to lift the industry’s image in the years ahead,” Soam points out.

Tan Sri Liew Kee Sin says developers are still careful with planning their launches.

According to SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin, the country’s economy is showing strong signs of recovery. Coupled with prevailing low interest rates and ample liquidity, the outlook looks more promising.

Although sales is picking up, he says developers are still careful with planning their launches and only time will tell if the recovery is sustainable.

Liew adds that product innovation which caters to the people’s changing lifestyle and needs will continue to fuel demand, adding that the company will continue with its launches in its townships in Johor, the Klang Valley and Penang.

Tan Sri Leong Hoy Kum ... ‘The market is gaining momentum for an up cycle in the second half of 2010.’

Mah Sing Group Bhd group chief executive Tan Sri Leong Hoy Kum says: “The market is gaining momentum for an up cycle in the second half of 2010.

This would be true for mid- to high-end landed residential projects as well as commercial projects in prime locations.”

The company is lining up some new project launches next year, including Garden Residence in Cyberjaya by the first quarter of 2010. The project has received more than 600 registrants so far for the superlink homes and semi detached houses.

Mah Sing is also planning to launch the iParc project in Bukit Jelutong comprising semi-detached factories with flexible layouts for corporate warehousing.

Leong says as property demand in the country is largely driven by fundamentals, there has been no price bubble so far and hence, any downside for property prices is limited.

“We have not seen any fire sales, and good properties that are developed by reputable developers in prime locations still see strong take up.”

As of the middle of July, Mah Sing achieved RM543mil in sales, exceeding the full year target of RM453mil.

Its unbilled sales stood at RM812mil, approximately 1.6 times the revenue recognised from the property division last year.

Hunza Properties Bhd executive chairman Datuk Khor Teng Tong says prevailing low interest rates, a growing population, relatively low unemployment, and no significant overbuilding are strong factors to fuel growth in the market.

Industry players should also be well versed with the industry cycles, trends and changing needs of the society.

Concurring with him, Gamuda Land Sdn Bhd managing director Chow Chee Wah says innovative master plans with strong concept, good systematic implementation and execution will result in quality delivery system.

“Projects by developers with strong track record, good capital appreciation and rental yields will continue to do well even during difficult economic times,” he says.

Chow says to ensure more sustainable growth, it is necessary to maintain the current financing rates. “To provide a further lift to the property market, it is important to liberalise the bumiputra quota issue and state consent on purchase of leasehold property.

“Streamlining the process to cut down red tapes for speedier approvals in the two areas will be great help to the property industry,” he says.

By The Star (by Angie Ng)

Pressure building up in KLCC

Will the 5% real property gains tax be a deterrent?

AS the property investor goes through his checklist on why he should invest in Malaysia, that 5% real property gains tax (RPGT), to be effective Jan 1 next year, will be a bit of a blemish.

Although it is just 5%, it raises a hypothetical question. Will this 5% be raised sometime down the road?

The Government gave an exemption in April 2007 to stimulate the market when it was already quite hot. It boosted the market and coupled with the iconic location of KLCC that was then emerging at that time on the world property market scene, foreigners and locals bought into that location. The Kuala Lumpur property scene was seen as lagging in terms of prices to the regional markets. It still is.

A lawyer who declined to be named said the RPGT, with its graduating scale of 0%, if a property is sold after five years, to 30% if sold in the first two years, was never abolished.

Her remark two years ago: the Government can always bring it back, in different forms. That time has come.

With the pressure building up in the high-end condominium market in the Kuala Lumpur City Centre (KLCC) and its vicinity as more projects are completed, that re-instatement could not have come at a more inopportune time.

There is an existing supply of about 5,700 units and a further 5,800 units are expected to come onstream in the next two to three years. (See the table on KLCC projects).

The pressure is coming from two counts – prices and rental. Its effect will be felt by both owners and developers who have not sold all their units in that iconic and surrounding vicinity.

Savills Rahim & Co MD Robert Ang says the market is on the downtrend and it is clear that there will be an oversupply as the year comes to an end and 2010 rounds the corner.

“My KLCC condominium sales are not registering a boom. It is at a standstill,” he says. The situation is expected to lumber along like this for the next six months to one year.

Even at RM950 per sq ft, compared to a high of RM1,200 to RM1,500 per sq ft, it is a challenge to sell in today’s market.

An expatriate owner called to sell her condominium for between RM1,200 and RM1,400 per sq ft.

“I told her I cannot perform a miracle. She bought into that project at between RM600 and RM700 per sq ft,” he says.

As more units enter the market, and the Jan 1 deadline rounds the corner, buyers will try to bargain down further.

“This will move Malaysia a step back in terms of overall attractiveness in the regional investment market,” says Regroup Associates executive director Paul Khong.

This is another layer of tax the investor has to consider when they invest and/or decide to liquidate. Any purchaser irrespective of whether local or foreign will have to weigh this accordingly in their investment consideration.

Owners who are in the selling mode will try to beat the deadline, while buyers will try to squeeze in a further discount because of the Jan 1 deadline.

It is too early to see the impact of that 5% tax but it is a psychological barrier, particularly for those who entered that market in 2006/07 when it was at its peak.

Some of them will not be making money and they are already upset. With this flip-flop policy, they may just take their money and go elsewhere to get a better return. For those who bought in the early days at RM500 to RM600 per sq ft, that 5% is just a dent. Which is why when it comes to investing in properties, it is always a question of timing and location. About 20% to 40% of owners are foreigners.

If the project is marketed locally, the foreigner content is only about 10% to 15% and if an international roadshow is done, the percentage doubles, Khong says.

At the moment the foreigners are largely Asian investors.

“After the third quarter of 2008, buyers have been largely locals but that number is shrinking as well,” says Khong.

Generally, buyers bought into that market for rental and capital appreciation due to the uniqueness of that location and the Petronas Twin Towers.

It is liken to Hyde Park of London and Central Park, New York. Ironically, there isn’t a Petronas Twin Towers or a central park in Singapore, yet prices are chugging along over there, which takes us to the rental dynamics here, or lack of it.

Khong & Jaafar Sdn Bhd managing director Elvin Fernandez says those who bought into KLCC and its vicinity will want a net yield of between 5% and 6%.

There have been arguments that people who buy into that location do not care about rental yield. He does not buy that. People with money have alternative uses for their funds.

If a buyer bought a 2,400 sq ft unit at RM1,500 per sq ft (RM3.6mil) and rents it out at RM5 psf (which is between RM4.50 and RM5 today), he would get RM12,000 monthly rental, or RM144,000 a year. He has to less the outgoing expenses of about 75 sen psf for the quit rent, assessement and service charges, which comes up to RM21,600 a year. So he makes RM122,400 a year (3.4% net). If it were a landed property, he may be quite happy but not for a condominium.

Value in that location have been running up ahead of supportable rental, which is why as soon as the crisis came, the market shook.

If he wants to get a rental return of 5.8%, he will have to rent at RM8.50 per sq ft. That is impossible in today’s market, Fernandez says.

Malaysians will not want to pay that sort of rental, which means owners are looking at the expatriate community. But the foreigners who arrive on Malaysian shores do not command that sort of monthly rental expenses from their employers.

In Singapore, an expatriate may get a monthly rental allowance of S$30,000. That is why prices can go up so high.

Henry Butcher’s COO Tang Chee Meng says Malaysia is not attracting enough of that level of expatriates whose rental allowance average RM15,000 to RM20,000 a month, and even less of those who command between RM30,000 and RM40,000 a month.

“They send these people to Singapore and Hong Kong, the big financial centres of Asia,” says Tang.

Rental yield aside, the second weakness in that market is the sizes of the units, which are generally more than 2,000 sq ft. In Singapore today, developers are cutting it small. Agents contacted say there is interest in the smaller units. With companies around the world cutting cost and sending less manpower abroad, the larger units will be difficult to fill, and to sell. For developers who have unsold stocks, they may try to promote their projects abroad.

No story on the KLCC property outlook may be complete without a mention on Binjai On The Park, which sets the benchmark in that location.

Even in that high-end location, they are the average priced units and the super class condominium. Binjai On Park belongs to the super class.

Early this year, it was going for RM2,400 per sq ft. At its peak, prices went as high as RM3,500 per sq ft. As it nears completion, it is unlikely Malaysia’s premier company Petronas will allow that project to be shrouded in darkness, as with many of today’s projects in that iconic location when night falls. Watch that space.

By The Star (by Thean Lee Cheng)

TA Global lines up RM7b projects over next 2 years

TA Global Bhd, which will rank as the country's fifth biggest listed property group in terms of market value, has lined up around RM7 billion worth of property development projects locally, to be launched over the next two years.

Director Datin Alicia Tiah said three projects will be launched in the second half of next year. They are Dutamas in Mont' Kiara, U-Thant 28 in Ampang and Seri Suria, a mix development in Sri Damansara.

By 2011, the group plans to launch Nova Square at the junction of Jalan Bukit Bintang and Jalan Imbi, and two 50-storey residences near the Petronas Twin Towers, in Kuala Lumpur.

Nova Square features an office tower, a serviced apartment block, a five-star hotel carrying the Aava brand, and a podium for boutique shops.

Tiah said the development order has been approved for Nova Square and it will be submitting its building plans soon.
"We will take a year to lay the foundation. Construction would take another three years. We are confident of selling the property due to its location. We will, however, retain the hotel, a few apartments and the podium for recurring income," she added.

Tiah said she expects TA Global to maintain its profits in the current financial year ending January 31 2010 and in 2011. But revenue may dip due to fewer launches.

"We expect higher margins from our overseas investment properties, thanks to foreign exchange gain. Locally, we sold many high margin products and the profits would be recognised over the next few quarters," she said.

Last year, TA Global made a net profit of RM92.9 million on a revenue of RM441 million.

"If things go well and we get faster approvals for our projects, TA Global may surpass the RM93 million in fiscal 2011," she said at the launch of TA Global's prospectus in Kuala Lumpur yesterday.

TA Global is due to list on the Main Market of Bursa Malaysia on November 23.

Its parent, TA Enterprise Bhd (TAE) is looking to raise RM230 million from the listing.

Tiah, who is TAE co-founder and managing director, said it will use the proceeds to pare down debt and for working capital to expand its financial services.

TAE folded all its property assets into TA Global to "unlock the hidden value".

The initial public offering entails 460 million ordinary shares of RM0.50 each at an offer price of RM0.50 apiece.

It will offer 360 million shares for private placement to selected Bumiputera institutions and investors, and 90 million shares to Bumiputera citizens, companies, societies, cooperatives and institutions by way of balloting.

Some 10 million shares will be issued to eligible directors and employees of the company.

TAE will retain a 57 per cent stake in TA Global after the listing, while TA Global executive chairman Datuk Tony Tiah Thee Kian will hold 8.1 per cent.

In addition, TA Global, which has total assets valued at RM2.4 billion, will raise RM135 million via a rights issue.

Proceeds from the rights issue will be used to renovate its Aava Whistler Hotel in Canada, acquire more assets and undertake new developments.

By Business Times (by Sharen Kaur)

TA Global eyes more assets

KUALA LUMPUR: TA Global Bhd, slated for a listing on the Bursa Malaysia main market on Nov 23, is keen to acquire more properties locally and internationally.

Director Datin Alicia Tiah said TA Global already had properties in Australia and Canada.

The company’s existing portfolio includes two five-star hotels in Australia and a four-star hotel in Vancouver, Canada.

“We’re always looking for opportunities. Buying a hotel is not as easy and a lot of homework needs to be done. We want to buy properties that have the right location, price as well as offer good yields,” Alicia said after the launching of the company’s prospectus yesterday.

She said the company was not under pressure to buy anything at the moment but would consider it if something came along.

To a question, Alicia said she hoped TA Global would have some “good news from Canada to disclose soon”.

Going forward, Alicia expects revenue from its hospitality division to triple in the financial year ending Jan 31 (FY10).

Alicia said hypothetically, revenues from hospitality should increase judging by the number of hotels it had now from one previously.

On pro-forma basis, TA Global posted a net profit of RM92.8mil on revenue of RM440.7mil in FY09. For the three months ended April 30, its net profit fell to RM15.7mil from RM19.8mil previously. Revenue was also lower at RM49.2mil.

“I’m sorry. We’re not allowed to give forecast but we’ve been profitable over the last three years,” Alicia said when asked on the company’s financial performance. However, she expects the company to “maintain” its financial performance in FY10 and FY11.

Executive chairman Datuk Tiah Thee Kian said the company’s properties were all iconic assets. “They are not only located in prime areas but also yield a steady income for TA Global.”

On the local front, TA Global owns land in prime areas in the Klang Valley. Its head office, Menara TA One, is scheduled for refurbishment and when completed, is expected to see higher yield.

With the listing, TA Global is expected to be one of the largest listed property companies in the country.

The exercise includes a rights issue of 269.9 million new shares to its single-largest shareholder TA Enterprise Bhd (TAE) at an issue price of 50 sen, raising RM135mil, which will accrue to TA Global.

TAE will offer for sale up to 460 million TA Global shares at an indicative offer price of 50 sen each. Of the total, 90 million shares are allocated for bumiputra individuals and organisations. Another 360 million shares are for approved bumiputra investors and 10 million shares for eligible directors, employees and business associates of the TA group. The listing exercise is expected to raise RM230mil.

By The Star

Reimposition of real property gains tax appears untimely

The proposed reimposition of the real property gains tax (RPGT) come Jan 1 has ruffled feathers among property investors and industry players with calls made for its review before being implemented.

Depending on whether you own just “the roof over your head” or have a nest of property assets, the concern from various quarters largely centres on the fact that a flat rate of 5% will be imposed on all gains from disposal of real property irrespective of the holding period and category of owner.

To ensure the tax will be equitable and acceptable to all, there is a need for further fine-tuning before its implementation. Prior to the exemption of the RPGT in April 2007, tax on gains from property disposal was on a progressive basis from 30% to 0% depending on the holding period of the property.

If one buys a property and disposes it for profit within two years of purchase, the profit will attract 30% tax; within the third year will be 20%; fourth year 15%; and fifth year 5%. A sale in the sixth year and thereafter will not be taxed.

Long-term property investors and owners who have held on to their properties for many years or decades are particularly spooked by the proposed 5% tax rate.

Firstly, their contention is that they should not be the target group of the RPGT when the intention of the tax is to reign in speculation in the property market in the first place.

After all, they are not speculators and have dutifully held on to their property which in a way has contributed to the market’s growth over the years.

They don’t see the logic of having to pay tax for the “gains” they will make if they decide to sell their property one day, especially when there is no explanation on how the “gains” will be calculated.

It will be unfair to just base the calculation on the sale price minus purchase price when the value of the ringgit has not been duly adjusted. The time value of money should be considered and there should be an equitable formula used to calculate the actual value of the “gains” if the tax is to be imposed.

We have to bear in mind that the value of the ringgit when the property was first purchased in the past was many times higher than the value today.

There should also be a cut-off time for the holding period after the fifth year as imposing a flat tax rate of 5% irrespective of number of years of acquisition is punitive to owners who may have bought their properties many years ago.

What if after holding the property over a period of time, the owner decides to move into a better property or to relocate to another place?

Some also voice concern that extending the tax on long-term property owners will be like imposing a capital gains tax on them when there is no tax on gains made from equity trading.

Another concern is the timing of the implementation. Reinstating the tax at this juncture when the local property market is just recovering from the global financial crisis may be untimely.

Although sales have picked up since the middle of the year, this was mainly due to the many housing packages and easy financing facilities offered by developers and financial institutions.

It will be a better gauge to see if sales will continue to hold once those packages expire around year-end.

Perhaps the soonest time to reinstate the RPGT will be the middle of 2010 when there is more certainty on whether the economic recovery is sustainable or that it will head for another dip or a “W” recovery.

And instead of the proposed flat 5% that will also penalise long-term owners, it will be a better alternative to impose a higher tax rate on those who make high profit from disposing of their property within the first two to three years of purchase.

That will be more effective in preventing overheating and bubbles from forming and ensure a more balanced long-term growth.

Deputy news editor Angie Ng believes companies making huge profit margins, especially providers of consumer services including telcos and banks, should contribute towards a corporate responsibility fund for more social-oriented projects for the people.

By The Star (by Angie Ng)

Iskandar Investment, UK college in landmark deal

ISKANDAR Investment Bhd (IIB), the catalytic developer of Iskandar Malaysia in Johor, is expected to reveal numerous investments in the south economic region over the next few months.

"We continue to have growing interest from potential investors worldwide, who see potential in Iskandar Malaysia," said Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.

IIB, a unit controlled by the state-owned Khazanah, is on track to surpass the US$13 billion (RM43.94 billion) foreign direct investment target for its first phase of development.

Yesterday, Education@Iskandar Sdn Bhd, a subsidiary of IIB, signed a landmark agreement to develop Marlborough College Malaysia, as part of a long-term plan to establish EduCity - located within Iskandar Malaysia - as a world-class education hub.
The signing was witnessed by Deputy Prime Minister Tan Sri Muhyiddin Yassin, who is also Education Minister.

"Malaysia is an emerging contender to attract international students and the agreement between Iskandar Investment and Marlborough College is testament that we are moving in the right direction to become a global education hub in Asia," Muhyiddin said.

There are some 16,000 international students studying in private and international schools in Malaysia.

Marlborough College Malaysia is the first international venture for the leading British independent, co-educational boarding school for pupils aged between 13 and 18.

Expected to open in September 2012, Marlborough College Malaysia will provide first class education to local and international students across Asia.

Its 36.42ha campus here will see initial intake of 350 students in June 2012, with enrolment projected to increase gradually to up to 1,300 students in 2020.

Marlborough College Malaysia will boost economic growth in Iskandar Malaysia with the creation of over 340 job openings for academic and non-academic staff, with additional employment and business opportunities in the future.

The entry of one of UK's leading independent co-educational boarding schools follows investments from other education groups such as Newcastle University Medical Malaysia, which is due to open its campus in 2011.

IIB also recently inked an agreement with De Ruyter Maritime Institute and Willem Barentsz Maritime Institute to set up a Dutch Maritime University at EduCity.

Other institutions IIB is looking to bring in include skilled training institutions, international schools, research and development facilities and regional training centres.

By Business Times (by Rupinder Singh)

New agreements in pipeline at Iskandar

PUTRAJAYA: Iskandar Investment Bhd (IIB) hopes to announce numerous agreements on investments in Iskandar Malaysia over the next few months as there is growing interest in the economic zone from potential investors globally.

IIB is an investment holding company working in close partnership with the Iskandar Regional Development Authority to attract investments to Iskandar Malaysia.

“This is testament that Malaysia is seriously competing in the global marketplace and meeting with ongoing success despite the prevailing economic situation,” said chairman Tan Sri Azman Mokthar, who is also managing director of Khazanah Nasional Bhd, the government’s investment arm.

Speaking at an agreement signing between Education Iskandar Sdn Bhd, Marlborough Overseas Ltd and M East Sdn Bhd here yesterday, Azman said to increase Iskandar ’s profile as a “thriving, international urban centre”, efforts were being put in place to increase the overall accessibility of the special economic region.

This would be done via the building of new infrastructure such as highways and so on, he added.

Yesterday’s agreement will see the establishment of Marlborough College Malaysia in Iskandar, the country’s first economic growth corridor which was launched in 2006.

Education Iskandar is a subsidiary of IIB while M East is a special purpose vehicle set up to develop this project.

The setting up of the institution is also the first international expansion of the co-educational British boarding school.

Marlborough College Malaysia, to be opened by September 2012, is expected to create over 340 job opportunities for academic and non-academic staff with additional employment and business opportunities in the future.

The school will cater to students between the ages of five and 18.

“Education is a key pillar of growth for the region and our long-term objective is to create a world class education hub here in Iskandar Malaysia,” Azman said.

“Other institutions IIB is looking to bring in include skilled training institutions, international schools, research and development facilities and regional training centres.”

He declined to reveal the value of investment of the college, saying that “announcements would be made in due course”.

By The Star (by Yvonne Tan)

Sunrise to build 460 condo units in Mont’ Kiara

KUALA LUMPUR: Sunrise Bhd plans to launch three new developments in the Klang Valley in the next few months, starting with the MK28 project comprising 460 condominiums in Mont’ Kiara in December, said executive chairman Tong Kooi Ong.

Tong Kooi Ong ... ‘MK28 will take about three years

Next in line will be the construction of two office towers at Jalan Sultan Ismail near the Renaissance Hotel here in January. Tong declined to elaborate on the third project.

“MK28 will take about three years with units ranging from 2000 to 3000 sq ft and we have just finished the groundwork for the project,” he said yesterday after the company AGM.

Tong said the commercial project at Jalan Sultan Ismail would take about four years.

“The office towers, which will be over 30 stories high, will cater for the niche market and the net saleable area will be about 550,000 sq ft,” he said.

The company had also ventured into Canada to develop residential and retail properties, he added, without elaborating.

“We hope to launch the project (in Canada) by the middle of next year but this is subject to approval by the authorities. We are also looking at other countries in Asia for our overseas ventures but nothing has been firmed up,” Tong said.

On the Government’s proposal to reimpose the 5% real property gains tax (RPGT) from Jan 1, Tong said it was not a bad idea as this would help curb speculative buying in the property industry.

“The industry will like to see sustainable long-term growth and not a market bubble. We think the RPGT will prevent bubbles from building up in the property industry and we too believe that the RPGT will not affect our business,” he said.

The company’s total unbilled sales stood at about RM860mil which will be realised over the next two years, Tong said.

“We are also trying to achieve zero gearing in the future,” he said, adding that the company’s current debt level was about RM500mil.

For its 2009 financial year ending June 30, Sunrise recorded RM804mil in sales and a net profit of RM156mil.

In FY2008, Sunrise chalked up RM686mil in sales and a profit of RM160mil.

By The Star

Sunrise plans projects worth RM1.5b in KL

SUNRISE Bhd plans to launch two new property projects worth some RM1.5 billion in Kuala Lumpur over the next four months.

Executive chairman Tong Kooi Ong said Sunrise will launch 28 Mont' Kiara, a 41-storey tower featuring 460 units of condominiums, each ranging from 3,000 sq ft to 4,000 sq ft, this December.

Early next year, it will launch Solaris KL, two 30-storey towers with 550,000 sq ft of office space on Jalan Sultan Ismail.

Sunrise has done the foundation for 28 Mont' Kiara and hopes to start construction in December, completing it in three years.
He said work on Solaris KL will start early 2010 and the project will be ready in four years.

"We believe the market will do well next year. We are confident of sales because of the location and features of the properties," he said after a shareholders' meeting in Kuala Lumpur yesterday.

Sunrise has applied to obtain the Green Mark certification for Solaris KL, which is issued by the Singapore government and awarded to buildings that are environmentally friendly.

Its 11 Mont' Kiara is the first local residential project to receive the Green Mark. Solaris on the Park, a mixed development in Mont' Kiara, which is yet to be launched, has also won the Green Mark.

Tong is optimistic Sunrise will do well with unbilled sales of RM860 million, which will underpin its earnings for the next two years to 2011.

Most of the unbilled sales or sales that have yet to be booked into its accounts were from higher margin products in Mont' Kiara.

Last year, Sunrise made a net profit of RM156.2 million on revenue of RM803.9 million.

Among the projects Sunrise will launch in 2010 are Solaris on the Park, and a RM1 billion residential project in Richmond, Canada.

Sunrise will launch a mixed development project on 0.6ha of prime land opposite the Petronas Twin Towers where Wisma Angkasa Raya now sits in 2011.

"We have done a market study in terms of the various composition of properties, whether it would be a hotel, a condominium or an office block, with retail space. We have decided what we want. We are at the stage of appointing architects now," Tong said.

The 24-storey Wisma Angkasa Raya, which is around 30 years old, is Kuala Lumpur's first high-rise office building. Sunrise paid RM179 million for land and property last year.

By Business Times (by Sharen Kaur)

TA Global launches prospectus

The listing of TA Global Bhd on the main market of Bursa Malaysia on Nov 23, will position it as one of the largest listed property companies in Malaysia.

TA Global launched its prospectus today for an Initial Public Offering (IPO) of 460 million shares at an issue price of 50 sen per share.

The executive chairman of TA Global, Datuk Tiah Thee Kian said with the listing, the TA Group would be divided into two main business entities, namely the financial division under TA Enterprise Bhd and the property division under TA Global.

"The property division will include hotel operations, property management, property investment and property development," Tiah said.

He said TA Global which have three new Klang Valley projects with a gross development value of RM6 billion over a period of seven to 10 years and is now looking towards expansion in Australia and Canada.

By Bernama

MRCB's Shahril set for EPF job

Shahril Ridza Ridzuan, currently group managing director of property group Malaysian Resources Corp Bhd, is poised to join the Employees Provident Fund (EPF) as its new chief investment officer (CIO).

That position is now vacant after the EPF moved Johari Muid, its previous CIO, to be in charge of the pension fund's strategic planning unit early this year.

"Shahril will probably join at the end of this year or early next year," said a source, who asked not to be named because he was not authorised to speak to the media.

Shahril declined to comment when contacted.

Currently, EPF chief executive officer Tan Sri Azlan Zainol is in charge of investments while the pension fund scouts for a new CIO.
Shahril will help manage some RM354 billion at the EPF, one of the world's biggest pension funds. Last year, the fund paid out its lowest dividend in six years after the stock market fell 40 per cent as investors braced for a global recession.

Things are looking up again for the EPF this year as the stock market has fully recovered the losses of 2008. The benchmark index is up 42 per cent so far this year.

Shahril will join the EPF at a time when the fund is facing lower returns from its government bond investments, which make up about two-thirds of its portfolio. The Malaysian economy is also still weak and this could hamper dividend payouts.

The economy is officially forecast to shrink 3 per cent this year and to grow 2-3 per cent next year.

MRCB is the developer of Kuala Lumpur Sentral, a massive property project that comprises mainly office buildings, and the group is 30.97 per cent held by the EPF.

Shahril's property background could be valuable for the EPF. The fund has expressed interest to buy a large piece of prime land in Sungai Buloh, Selangor, from the government to boost its property portfolio. It also wants to buy more commercial properties in Kuala Lumpur.

By Business Times

Mah Sing clarifies

Property developer Mah Sing Group Bhd has clarified that it is buying two plots of land worth a combined RM130.65 million in Selangor, and not as reported in yesterday’s article entitled “Mah Sing buys land worth RM927m”.

The group said proceeds from the proposed private placement of up to 63 million new shares will be used for working capital.

By Business Times

SP Setia sees higher sales from abroad

Tan Sri Liew Kee Sin (second from left) exchanging documents with Hangzhou Ju Shen Construction Engineering chairman Hu Bai Fu, witnessed by Datuk Seri Kong Cho Ha (centre). With them are Setia Land (China) Ltd chairman Datuk Beh Hang Kong (left) and Hangzhou Ju Shen business development advisor Xu Yong.

SHAH ALAM: SP Setia Bhd, which has secured its first property project in Hangzhou, China, with a gross development value (GDV) of RM2bil, aims to derive 30% of its revenue and net profit from overseas projects by 2014.

Currently, overseas projects contribute less than 5% to the company’s revenue.

President and chief executive officer Tan Sri Liew Kee Sin said the China project, which comprises residential and commercial buildings including a hotel, would be developed in four phases over five years.

“The first phase, with a GDV of RM500mil, will commence early next year and should take about 2½ years to complete,” he said yesterday.

Liew said this after a joint-venture contract signing ceremony between SP Setia and Hangzhou Ju Shen Construction Engineering Ltd, its local partner in China.

Under the contract, a joint-venture company – Setia Fusheng Property Development Co Ltd – would be formed to undertake the project on 24 acres, with SP Setia having a 55% stake.

Liew said the partnership was akin to a perfect marriage, as both companies shared the same aspirations and values in terms of property development.

“SP Setia will provide the expertise and funds, while our China partner will inject the land,” he said, adding that this could fast track SP Setia’s expansion into the republic.

Liew said SP Setia chose Hangzhou for its first flagship project because the place had many strong points, including a population of nine million, an international airport close by and was fast growing into a commercial hub.

“This is our second venture abroad after Vietnam and SP Setia expects property projects in China to contribute significantly to its bottomline in the future,” he said.

Housing and Local Government Minister Datuk Seri Kong Cho Ha, who witnessed the ceremony, said first-time home buyers (foreign or local) were exempted from tax on capital gain if their properties were proven to be their principal home of residence under the Income Tax Law.

By The Star

SP Setia to develop RM2b mixed project in China

SP SETIA Bhd, the country's biggest property developer, will develop a RM2 billion mixed development project in XiaoShan, Hangzhou City in China, scheduled to begin in the first quarter of 2010.

This will be SP Setia's maiden project in China, in a joint venture (JV) with Chinese landowner, Hangzhou Ju Shen Construction Engineering Ltd (HJSCEL).

SP Setia, through its subsidiary Setia (Hangzhou) Development Co Ltd, holds a 55 per cent stake in the JV, while HJSCEL has a 45 per cent stake.

Work on the 10ha project will be completed in four phases over five years.
It features 11 residential towers, five office blocks, serviced apartments, a four-star hotel, a 300,000 sq ft retail mall and signature shops, said SP Setia president and chief executive officer Tan Sri Liew Kee Sin.

"We are awaiting for approvals from the Chinese authorities. We hope to get them by early 2010 and start Phase 1 of the project immediately," he said after the signing of the JV agreement with HJSCEL in Shah Alam, Selangor, yesterday.

The event was witnessed by Housing and Local Government Minister Datuk Kong Cho Ha.

"Phase 1 includes commercial properties and service apartments worth RM500 million," Liew said.

"We are not looking at borrowings as it is a self-funded project. We are developing the properties on a sell-and-build concept," he added.

However, it will retain the mall to control its tenant mix.

The service apartments will be pegged at RM400-RM500 per sq ft, while the commercial properties will go for RM500 per sq ft onwards.

"Our first income from this project will come in two years. The project will contribute positively to the future earnings and cash flow of SP Setia. It will also tell the world that we are ready to be an international property player," Liew said.

Liew said SP Setia is in talks with other landowners in China to form JVs, with priority to develop in Hangzhou.

He added that the company has a five-year plan to get 30 per cent of its net profit and revenue from overseas projects by 2014, from 2-3 per cent currently.

"We will focus on Vietnam and China for the next few years."

By Business Times (by Sharen Kaur)

Mutiara Goodyear plans to launch RM1.5b properties

Mutiara Goodyear Development Bhd, a mid-sized property developer, plans to launch RM1.5 billion worth of residential and commercial properties in the Klang Valley and Penang over the next year.

The properties will be divided into seven launches, starting from next month until the end of 2010.

"We are ready to launch the properties, but as to when, we will have to assess the market," its executive chairman Hamidon Abdullah told reporters after the company's annual general meeting and extraordinary general meeting in Kuala Lumpur yesterday.

"The approval and finances are in place," Hamidon said.
"The launches will start from next month onwards and will keep us busy until the end of next year," he added.

Its chief executive officer Kee Cheng Teik said the projects are being spread out so that the company can manage them well.

"In fact, we were ready to be put up (the properties) in the market last year, but had to delay them (due to the economic slowdown)," he said.

In its annual report 2009, Mutiara Goodyear said it plans to build 142 units of high-end bungalows and 46 units of superlink homes in Taman Melawati, Ampang.

It is also developing Mutiara Kajang project in Kajang, Selangor that features 392 units of bungalows, link houses, superlink homes and semi-detached homes.

Additionally, Mutiara Goodyear has teamed up with Tambun Indah Sdn Bhd to embark on a 101.48ha residential development project in Seberang Prai, Penang.

Meanwhile, the company is looking to acquire more land to add to its existing 356ha of landbank in the Klang Valley and Penang.

For the financial year ended April 13 2009, Mutiara Goodyear posted a net profit of RM17.39 million on revenue of RM91.3 million.

By Business Times (by Kamarul Yunus)

Mutiara Goodyear lauds RPGT

KUALA LUMPUR: Mutiara Goodyear Development Bhd believes the Government’s proposal to reimpose the 5% real property gains tax (RPGT) from Jan 1 next year will give certainty and market clarity to the property industry.

Chief executive officer Kee Cheng Teik said these values were important especially for potential foreign investors.

“It (the RPGT) was temporary waived but is now going to be tabled and this will give a clear picture to potential investors. Plus, the 5% figure is not really big,” he told a press conference after the company AGM yesterday.

He also said the RPGT was not going to give much impact to the company as its buyers were mostly resident-owners rather than investors.

It was reported that under Budget 2010, the RPGT would be imposed on gains from the disposal of real property irrespective of the holding period and category of owner.

Prior to the exemption of the RPGT in April 2007, tax on gains from property sales was on a progressive basis from 0% to 30%, depending on the holding period of the property.

On the performance of the company, Kee said Mutiara would launch RM1.5bil worth of properties starting next month until the end of next year.

“The launches will be mixed developments that are mostly residential. Five projects will be in the Klang Valley and two in Penang.

However, the launching dates will depend on the timing factor and market conditions,” he said.

Kee said the company had an undeveloped land bank of about 890 acres with future gross development value of about RM4.2bil.

Executive chairman Hamidon Abdullah said it was important for the company to come up with products that really suited the demand and needs of buyers at this time of uncertainty.

The property market sentiment had started picking up again since June, he said, adding: “We hope this positive sign will continue and we at Mutiara will continue to come up with quality and affordable products that will give value for money to our buyers.”

By The Star

YTL to develop project in George Town heritage area

The heritage enclave of George Town in Penang may see a waterfront development soon.

It is learnt that YTL Corp Bhd will embark on a project, through joint-venture company PDC Heritage Hotel Sdn Bhd, to build luxurious condominiums and an eatery on a 1.4ha seafront site adjacent to the 124-year-old Eastern and Oriental (E&O) Hotel along Lebuh Farqhuar.

PDC Heritage was set up about a decade ago, with YTL Corp holding 51 per cent stake and Penang Development Corp (PDC) the remaining 49 per cent.

It is not known if PDC has since divested its interest in the joint-venture company.
According to sources, the project will feature six blocks of high-end condominiums.

A double-storey building housing food and beverage outlets will also be built on the site where two dilapidated heritage structures are currently standing.

However, the development value of the proposed project is not known.

Local authorities gave PDC Heritage approval in June this year to convert its prime seafront land from leasehold to freehold status.

The land, bordered by the E&O Hotel and St Xavier's Institution, was originally state-owned and had nine pre-war buildings.

In 1996, the land on which sat government staff quarters, the former Public Works Department district engineering office, watchman's quarters and a garage, was alienated to PDC.

In 1998, PDC came under fire from heritage activitists when it demolished the 80-year-old buildings without local council approval to make way for a five-star hotel, which was to be developed by PDC Heritage Hotel.

YTL Corp group managing director Tan Sri Francis Yeoh could not be reached for comment.

By Business Times (by Marina Emmanuel)

WCT to jointly develop 1Medini

PUTRAJAYA: WCT Bhd and Iskandar Investment Bhd (IIB) will jointly develop and own a residential project in Iskandar Malaysia, the 1Medini, with a gross development value of RM600mil.

1Medini comprises 1,332 condominiums and 68,800-sq-ft commercial space in the 2,300-acre Medini, a mixed urban development alongside Legoland Malaysia, Educity and the Iskandar financial district.

WCT chairman Datuk Capt Ahmad Sufian said a joint-venture company, One Medini Sdn Bhd, had been set up to undertake the development, which was 70% owned by WCT Land Sdn Bhd and 30% by Medini Land Sdn Bhd.

WCT Land and Medini Land are wholly-owned subsidiaries of WCT and IIB respectively.

“We were also awarded a RM766mil contract for infrastructure works for the whole of Medini in July,” he said after a strategic partnership signing ceremony between WCT Land and Medini Land for the 1Medini development.

The event was witnessed by Johor Mentri Besar Datuk Abdul Ghani Othman.

IIB chief executive Arlida Ariff said phase one of 1Medini was scheduled to be handed over to buyers in early 2011 and its full completion was expected in 2015.

She said that so far, the response had been quite good with interested buyers from the Middle East, Indonesia, Singapore as well as locally.

Ahmad Sufian said the Medini projects were expected to contribute positively to WCT’s earnings from the next financial year ending Dec 31, 2010 and should last for three to four years.

By The Star

Iskandar Investment, WCT in joint venture

WCT Bhd and Iskandar Investment Bhd will jointly develop and co-own the 4.4-hectare 1Medini residential project in Medini Iskandar, Johor with a gross development value (GDV) of RM600 million.

The project will be developed by One Medini Sdn Bhd, a 70:30 per cent joint venture between WCT’s subsidiary, WCT Land Sdn Bhd and Medini Land Sdn Bhd, a subsidiary of Iskandar Investment.

Scheduled to be fully completed by 2015, the 1,332 units of condominiums in 1Medini would include a 68,800 sq ft commercial area for local retail businesses.

Priced at RM350 per sq ft, the first phase of the condominium is expected to be launched in early 2012.

By Bernama

Mah Sing Q3 net profit up 42% on current projects

PETALING JAYA: Mah Sing Group Bhd posted a net profit of RM23.5mil in the third quarter ended Sept 30, a 42% improvement from the previous corresponding period.

The higher profit was contributed by its current residential and commercial projects.

However, its revenue for the quarter dropped 17.5% to RM135.14mil.

In a filing with Bursa Malaysia, Mah Sing said its plastics division also contributed to the earnings apart from property development, adding that the latter contributed more than 90% to its operating profit.

“The group’s quick turnaround business model has generated healthy profit and cashflow with about RM120.4mil cash as at Sept 30,” it said.

Mah Sing managing director-cum-group chief executive Tan Sri Leong Hoy Kum said: “We believe the property market is gaining momentum for a likely up-cycle in the second half of 2010, and have planned ahead to meet the coming demand with several land acquisitions.”

The company yesterday acquired two pieces of prime land in Selayang and Petaling Jaya that could yield an estimated total gross development value of RM1.05bil.

Its wholly-owned subsidiary, Nova Century Sdn Bhd, acquired about 26 acres of freehold development land in Selayang for RM41.65mil cash.

Meanwhile, its other wholly-owned unit, Sierra Peninsular Development Sdn Bhd, acquired about 19.6 acres in Petaling Jaya for RM89mil.

Mah Sing has also announced that it proposed to undertake a share private placement and bonus issue that could potentially raise gross proceeds of RM103mil.

The private placement involves 63 million new 50 sen shares, representing about 10% of its issued and paid-up capital.

The one-for-five proposed bonus issue involves up to 151,286,435 new shares.

The private placement and bonus issue are targeted for completion by year-end and the first quarter next year respectively.

By The Star

Mah Sing buys land worth RM927m

Refer Updated here: Mah Sing clarifies

Property developer Mah Sing Group Bhd is buying two plots of land worth a combined RM927 million in Selangor, it told Bursa Malaysia yesterday.

It plans to develop the two plots, a 10.53ha land in Selayang and a 7.938ha land in Petaling Jaya, for residential and commercial purposes respectively.

Mah Sing also proposed a private placement of up to 63 million new shares, about 10 per cent of its paid-up share capital.

The placement will be done in several tranches and the issue price will be at a discount of not more than 10 per cent based on the five-day weighted average market price of the share or the par value of 50 sen each share.

Proceeds will be used to strengthen its financial position and reduce borrowings.

The company also proposed a bonus issue of up to 151.3 million new shares on the basis of one bonus share for every five shares held.

By Business Times

Mah Sing stock jumps on profit gain

Mah Sing Group Bhd, Malaysia’s fifth-biggest property developer, rose the most in almost three months after the company said third-quarter profit jumped 42 per cent and it announced land acquisitions and a bonus issue.

The shares climbed 3.4 per cent to RM1.84 ringgit at 9:56 a.m. local time, headed for their steepest gain since Aug 6. The stock is set be the best performer on the FTSE Bursa Malaysia Top 100 Index, which fell 0.8 per cent.

Fourth-quarter earnings “should be stronger due to the recognition of robust sales,” Terence Wong, an analyst at CIMB Investment Bank Bhd., said in a report today. The bonus issue was “another piece of good news” that “could help improve liquidity of the stock.”

Mah Sing is benefiting from an economic recovery spurred by the government’s RM67 billion (US$19 billion) of stimulus initiatives.
The company yesterday acquired 46 acres of land with plans to develop RM1.05 billion of homes and offices.

Profit climbed to RM23.5 million in the third quarter from RM16.5 million a year earlier, boosted by higher sales, it said. Mah Sing said it plans a one-for-five bonus share issue.

The company also proposed a private placement to raise RM103 million for working capital, it said in a statement yesterday.

It’s “perfect timing to build its land bank and war chest,” Kenanga Investment Bank Bhd said in a report today. Kenanga raised its target price on Mah Sing to RM2.36 from RM2.33 and maintained its “buy” rating.

Mah Sing has been “on a roll” in terms of buying land this year, having spent RM289 million on 180 acres, CIMB’s Wong said. The land has a combined gross development value of RM1.9 billion, he said.

By Bloomberg

Mah Sing sees RM23.1m off-market trade

Mah Sing Group Bhd, Malaysia’s fifth-biggest property developer, had 12.5 million shares worth RM23.1 million changing hands in an off-market trade.

The shares traded off-market at RM1.85 each, according to stock exchange data.

By Bloomberg