Johor developers keen to play integral role

Property developers in Johor want the Government to engage them in the consultation for and drafting of a plan to transform Johor Baru into a vibrant city.


Simon Heng

Real Estate and Housing Developers’ Association (Rehda) chairman of Johor branch, Simon Heng, says the private sector should not be left out in the drawing up of the plan although the initiative was mooted by the Federal and Johor Governments.

“It will be good for all stakeholders if both the public and private sectors could work together to ensure the success of the project,’’ he says in an interview with StarBizWeek.

Heng urges the Johor government to open up state-owned land in the city centre for redevelopment projects via the open tender system instead of awarding the parcels directly to certain parties.

He says it is only logical to engage property developers as they are responsive to the market and know what products sell and what buyers want.

“The former sites of the Lumba Kuda and Bukit Chagar low-cost flats are the best areas to build high-rise condominiums and serviced apartments.

“These properties will attract Malaysian professionals working in Singapore and expatriates based in the republic due to the close proximity,” he adds.

Heng says the number of Singaporeans renting houses in Johor Baru has risen in recent months because of the high rentals in the city-state. Most of these people commute daily from Johor Baru to work on the island.

Prime Minister Datuk Seri Najib Tun Razak had last month announced that the Government would allocate funding to rehabilitate and transform Johor Baru.

Under the 10th Malaysia Plan, some RM1.8bil will be spent within the city centre. T

his include RM200mil to clean up Sungai Segget, one of the dirtiest rivers in the country.

Sungai Segget flows along Jalan Wong Ah Fook in the city centre. Several years ago, RM6mil was spent to cover up a stretch of the river, which has a reputation for being a dumping ground for raw sewage.

The money for the proposed Johor Baru project comes from the Federal Government’s facilitating fund while the Iskandar Regional Development Authority (Irda) will act as a facilitator together with the State Economic Planning Unit (Upen).

According to Irda chief executive officer Ismail Ibrahim, Irda and Upen have until the end of this year to conduct studies to determine how the plan should look like. The findings are to be submitted to the Federal Government.

Undoubtedly, it is vital to rejuvenate Johor Baru city centre, in line with its status as one of the five flagship development zones in Iskandar Malaysia.

“Apart from engaging developers, views from property owners, non-governmental organisations, experts in town planning and chambers of commerce should be taken into account,’’ says Heng.

SP Setia Bhd executive vice-president (property division, northern and southern regions) Datuk Chang Khim Wah agrees with Heng.

He says the redevelopment plan will definitely increase the value of properties in areas near the city. These include those in Taman Pelangi, Taman Abad, Taman Sentosa and Taman Sri Tebrau.

Chang says while Johor Baru should have its own identity, the stakeholders can always look at the success stories of city-centre redevelopment in other parts of the world.

“A vibrant city should be a blend of the old and new, and a city should be a lively place not only during the day but also at night,’’ he says.

Chang says Istanbul is a good example as the city, with historical sites and monuments, blends well with its chic Taksim Square.

He says Johor Baru should have enough attractions to lure crowds back to the city centre even after office hours and during weekends. These can be done by having street performances, building specialty stores and boutique hotels in the old parts of the city, and by reopening the Ungku Puan night outdoor hawker centre.

The centre, which was the biggest alfresco dining area in the city centre, was highly popular with locals and tourists but was closed several years ago; instead, ugly concrete kiosks have been put up there.

KSL Holdings Bhd executive director Ku Hwa Seng suggests the authorities re-zone certain parts of the old housing estates near the city centre as part of the transformation plan.

He says residential properties facing the main roads in these estates could be converted into food and beverage outlets and specialty retail stores like in Bangsar, Kuala Lumpur.

Ku says developers should be allowed to buy these houses, refurbish and upgrade them, and lease these properties to restaurant and store owners.

“Concerted efforts are needed from the relevant parties to ensure the success of the plan. But the most important thing is the political will of the state government,’’ he says.

By The Star

Malacca and Penang: History in abundance

The Malacca government has turned the once old and quiet Jonker Street into the now vibrant and ‘happening’ Jonker Walk.

The saying ‘Old is Gold’ certainly holds true for many things.

Among the things that appreciate over time are family relationships, friendships and the value of some tangible things like real estate.

Many so-called “city folks” in Kuala Lumpur and Petaling Jaya actually do not hail from the city; their hometowns are in other parts of the country.

Home is where the heart is and many of us have set up homes in places where we work, after settling down with our own family, and have children attending schools or colleges in the city.

With passing time and wisdom, we learn to appreciate our loved ones better.

And despite the “rat race” of city life, it is important to stay connected with our loved ones and old friends back in the kampung or in other places.

Likewise in the built environment, we can find many undiscovered gems around, which, in spite of their old physical exterior, are actually hidden treasures with strong history and many untold stories within their walls.

The first thing that comes to mind is the many pre-war houses and buildings that can be found in large numbers in the inner cities of Penang and Malacca.

Despite being old and dilapidated, many have the potential to be restored and given a new lease of life.

Some of the ways to reuse these buildings and “monetise” them include turning them into museums, heritage hotels, alfresco dining and restaurants specialising in local fares.

It is interesting to compare Penang and Malacca as they share many similar traits and history.

Both will benefit by learning from each other new ways to improve and manage their built and unbuilt environment.

Since my other half is a Malaccan, I must admit that I tend to compare my hometown, Penang’s George Town, with Malacca whenever I’m back for holidays or family events.

After all, both have been declared Unesco World Heritage Sites and have many interesting buildings and structures that are reminiscent of their rich history and heritage.

Penang and Malacca are both former Straits Settlement states with a long history of early settlers from various parts of the world converging there for trade.

And both are renowned for their Baba/Nyonya culture and heritage.

Being port states, both also have strong foreign connection and influence.

Penang was a bastion of trade for the English and the East India Company after it was founded by Captain Francis Light in 1786, while Malacca was a confluence of Portuguese, Dutch and English influence.

Those influences can still be clearly seen in the architecture of the buildings today.

It is evident that both Penang and Malacca have their own distinctive assets and attractions that have endeared them to many loyal visitors who throng the cities in droves whenever there is a long stretch of holidays.

This could be one of the reasons for the traffic-choked roads during the holiday season and major festivities.

It is common to find many outstation cars among the long lines of cars on the roads during such times.

To give a boost to their intrinsic value as natural tourist attractions, there is a need to improve the public transport system in the two heritage cities to ensure that the different modes of transport are well integrated and connected to each other.

Being on the radar screen of tourists is one thing, but it is equally important to ensure that visitors have convenient access to a good public transport network.

More should also be done to further boost the alluring old world charms of these cities while at the same time, revitalise the inner cities and keep them alive as living heritage.

To achieve this, the old and new attractions and facilities should co-exist and blend seamlessly with one another to make them relevant and refreshing to the people.

Malacca has made some interesting headway in this regard with many old buildings and “once quiet” historical enclaves being given a new lease of life.

One just needs to hop over to the happening and vibrant Jonker Walk, which comes alive every evening, teeming with traders and visitors.

Penangites can certainly take a leaf from their Malaccan counterparts to liven up George Town’s dilapidated inner city.

Deputy news editor Angie Ng is keeping her fingers crossed that the old and new charms of our cities will be the pride of our present and future generations.

By The Star (by Angie Ng)

Sarawak to host infrastructure conference

SARAWAK hopes to attract both foreign and local investors to its shores by hosting its first Asian infrastructure exhibition and conference in Kuching in March next year.

Sarawak Minister of Infrastructure Development and Communications, Datuk Seri Michael Manyin Anak Jawong, said the infrastructure in Sarawak will be as developed as that in Peninsular Malaysia by 2020.

"We certainly have a lot to catch up but we will get there," he said at the soft launch of the 2011 Asia Infrastructure Exhibition and Conference in Kuala Lumpur yesterday.

Michael Manyin also stressed the importance of established domestic firms in the peninsula to make its way to Sabah and Sarawak.

"There are a lot of investment incentives given by both the federal and state governments. We hope by doing so, Sarawak will be the new Manhattan of Malaysia," Michael Manyin said.

He added that this move is to ensure continuous development and to build roads to link the rural communities together.

The ministry is also targeting big, foreign companies such as London-based mining companies Rio Tinto to invest in the state.

The 2011 Asia Infrastructure, to be held from March 1 to 3 2011, is expected to see some 200 exhibitors from 24 countries participating and to generate RM6.85 million of revenue.

By Business Times

YTL Land: Centrio to be 50pc occupied by year-end

YTL Land & Development Bhd expects 50 per cent occupancy by year-end for its newly-completed Centrio development in the highly popular Pantai Hillpark address.

"We handed over the keys on July 7 and we expect to achieve 50 per cent occupancy by year-end and 100 per cent by the first half of next year," its customer relations manager, Karen Tan, told a media briefing after a tour of the Centrio in Kuala Lumpur yesterday.

Centrio is a low-rise mixed commercial development located at Pantai Hillpark in Bukit Kerinchi.It was launched in December 2006 and completed early this year.

The development comprises 306 units of small office/home office (SOHO), boutique offices, boutique garden offices and retail stores on 1.52 ha in Bukit Kerinchi.
With a gross development value of RM100 million, Centrio is developed by Syarikat Kemajuan Perumahan Negara Sdn Bhd, a wholly-owned subsidiary of YTL Land.

Tan said the value of the property has almost doubled since its debut in 2006.

"The launch price for Centrio was RM280 per sq ft and RM350 per sq ft for the SOHO suites and boutique offices respectively, and in just over three years, they are currently valued at RM600 per sq ft," she said.

The rental rates for the SOHO suites and offices are between RM3 and RM3.50 per sq ft, she said.

By Bernama

Sedco to build RM30m resort in Semporna

The Sabah Economic Development Corporation (SEDCO) proposes to build a RM30 million holiday resort in Semporna, Sabah's east coast.

Chairman Datuk Mohd Ariffin Arif said the project to be undertaken by SEDCO subsidiary, Sabah Urban Development Corporation Sdn Bhd (SUDC), was currently studying the resort's layout plan.

"We want the layout plan for the one-storey resort to be unique and creative, from an aerial view the resort will look like "lepa-lepa" (a type of canoe made by hollowing a tree trunk).

“The new resort will provide the impetus for tourism development in Sabah, particularly the tourism sector in Semporna,” he told reporters after opening a property exhibition hosted by Sabah Urban Development Corporation.

Mohd Ariffin said since SUDC was set up 38 years ago, it had helped the state government implement development projects state-wide, including building shophouses, to help uplift the socio-economic status of Bumiputeras via property ownership at competitive prices.

He said SUDC was also building Darvel Bay Plaza, the biggest shopping mall in Lahad Datu, costing about RM40 million.

Earlier, in his speech, Mohd Ariffin hoped the property exhibition would help SUDC reach out to more buyers and to the people to know SEDCO's roles and contributions through SUDC.

“I hope this exhibition will have a positive impact on property buyers and local economic development," he said.

The state government through SEDCO was determined to ensure that the people tasted development via provision of industrial and commercial areas and housing and tourism projects.

By Bernama

Nagamas plans Yongzhou project

KUALA LUMPUR: Nagamas International Bhd’s wholly-owned unit Nagamas Enterprise (HK) Ltd has signed a memorandum of understanding (MoU) with the government of Yongzhou City to undertake China’s Yongzhou International Multi-Trade Project.

Nagamas said in a filing with Bursa Malaysia the project comprised an airport, along with administrative and management, residential, green belt, commercial, leisure, entertainment and industrial zones.

The project entails planning and investing in a piece of land situated in the surrounding 50km area of Lingling Airport in Yongzhou and Chaisze town.

Nagamas will act as a master planner and be involved in project and property management and become its exclusive marketing agent.

By Bernama

Project to develop Sabah into choice destination in Asia

SABAH Deputy Chief Minister Tan Sri Joseph Pairin Kitingan says Sabah would be developed into an internationally recognised destination of choice in Asia for business and leisure by 2025 under the 18-year Sabah Development Corridor (SDC) Project.



"Tourism, logistics, agriculture and manufacturing sectors will be the main focus of SDC, and shall be guided by the NKEA in line with its key factor endowments," said Pairin when addressing more than 100 delegates from Malaysia and China at the 7th Malaysia-China Joint Business Council Meeting in Jinan, China, yesterday.

He was here with ministers, assistant ministers and officials from the state government and corporate leaders from Sabah to attract Chinese investment in the SDC project.

When elaborating on tourism development under the project, Pairin said, the Sabah government would turn the state as a target of high-yield and long-stay visitors, with premier eco-adventure destinations, as well as a high-end second home destination with luxury holiday villas and lifestyle activities.

"Offshore islands and Kinabalu Gold Coast Enclave will be developed into high end signature resorts, together with new eco-tourism products such as wildlife safari, rainforest interpretation, island hopping and submarine diving," he said.

Lifestyle products like Mt Kinabalu lookout, MICE (meetings, incentives, conventions, exhibitions) facilities, marinas, holiday homes, spas, wellness, healthcare centres, boutique resorts, performing arts, handicraft centres and art galleries will also be built.

He said, development would capitalise on Sabah's largest genera of marine life (cradle of coral life), oldest rainforest and colourful and diverse native population, Agro-tourism in the interior districts and wellness tourism in the highlands.

"Handicrafts and home stay will also be actively promoted to encourage local participation in tourism. To achieve this ends, a handicraft village will be established and new handicraft products such as leather craft will be introduced," he said.

As Kota Kinabalu acts as the main gateway for tourists arriving in Sabah, the waterfront area would be rehabilitated and re-developed into an iconic attraction, added Pairin.

Earlier at a meeting with officials of the Jinan Hi-Tech Industrial Development Zone, Pairin invited Chinese officials to visit Sabah and look for investment opportunities in the state.

He said, investors can focus on four key sectors, namely agriculture, tourism, logistics and manufacturing.

By Bernama

Sibu to get boost from Sunhill project

An upcoming private commercial development project totalling RM60 million in Sibu is expected to spur greater development in the surrounding areas of the airport here.

The project, to be undertaken by Sunhill Development Sdn Bhd, will see the development of a RM35 million nine-storey hotel, a RM5 million two-storey food court and 20 units of shophouses worth RM20 million.

Joseph Ting King Sung, Sarawak Housing and Real Estate Developers' Association (SHEDA) president, said the project is expected to be completed in five years time by Sunhill, a company related to his Joseph Design and Contracts Sdn Bhd.

He also said the properties, to occupy high grounds at the 23rdkm of Tun Abdul Rahman Road, will be free from any flood problem.

Ting was speaking at a press conference to announce SHEDA Home and Property Roadshow Sibu 2010 yesterday.

The three-day roadshow from July 27-29 will be held at Wisma Sanyan in Sibu in conjunction with the upcoming Merdeka Day celebration.

"To date, 60 per cent of the total of 23 booths have been booked, with a 10 per cent discount given to members of SHEDA," Ting said.

"In view of the economic recovery, this should be the best platform for developers from Kuching, Miri and Sibu to introduce their housing packages," he added.

By Bernama

En route to HK listing

Listing of Kosmopolito, a unit of Far East Consortium International, to include five Malaysian hotels, sources say

Hong Kong-based Far East Consortium International Ltd (FEC) plans to include all five Malaysian hotels in a planned listing of its unit on the main board of the Hong Kong Stock Exchange, sources say.

It is understood that the Malaysian hotels have a combined value of about RM600 million. They are Dorsett Regency KL, Grand Dorsett Subang, Grand Dorsett Labuan, Dorsett Johor and Maytower Hotel.

Collectively, they made a pre-tax profit of HK$55.03 million (RM22.74 million) on revenue of HK$237.23 million (RM98.04 million) for the year to March 31 2010, according to FEC's latest annual report.

On June 30, FEC submitted an application to list Kosmopolito Hotels International Ltd on the main board. FEC's deputy chairman and chief excutive officer is Tan Sri David Chiu Tat-cheong.

According to the listing request documents, FEC, which now wholly-owns Kosmopolito, plans to maintain over 50 per cent equity in the company once the spin-off is completed.

Kosmopolito is described as a developer, owner and operator of value to upscale and boutique hotels in Asia with a strong presence in Hong Kong and Malaysia and a primary focus on expansion in China.

It is also involved in hotel investment, operation, management and development. It now owns and operates seven hotels in Hong Kong.

The listing will help FEC raise funds to support organic growth and acquisitions and separate the business of property development from hotel investment, operation and management.

Sources also said the listing is due to take place in the last quarter of 2010.

FEC's chief financial officer Bill Mok declined to speak to Business Times, pending the company's planned listing.

In 2008, it was reported that FEC was planning on a real estate investment trust (REIT) listing that would include the Malaysian properties. However, this did not happen.

The same year, it announced that it was delaying a planned REIT in Hong Kong, comprising seven hotels, to raise HK$4 billion (RM1.65 billion).

As at March 2010, FEC operates a total of seven hotels in Hong Kong, two hotels in China and five hotels in Malaysia with a combined total of over 3,600 rooms. The five Malaysian hotels have a total of 1,407 rooms.

The group also has eight hotels in various stages of development, including five in Hong Kong, two in China and one in Singapore, representing an additional 2,752 rooms that will bring its total number of hotel rooms to 6,356 rooms by 2013.

By Business Times (by Vasantha Ganesan)

Sunway REIT sets new industry benchmark

PETALING JAYA: Sunway REIT, which made its debut on Bursa Malaysia on July 8, has set a new industry benchmark in the local real estate investment trust (REIT) market (M-REIT) by adopting best practices in its business model, market disclosure and corporate governance practices.

Sunway REIT is the largest in the country in terms of asset value at RM3.4bil. It has a total gross floor area of 8.1 million sq ft and a market capitalisation of RM2.4bil, which represents about 28% of the total market capitalisation of M-REIT.

The trust’s eight assets comprise Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.


"There is no limit as to how high the rental can go" says SUNWAY REIT MANAGEMENT SDN BHD CEO DATUK JEFFREY NG

According to Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng, with three hotels in its portfolio, the management company has signed hotel master lease agreements with Sunway City Bhd’s subsidiaries, Sunway Resort Hotel Sdn Bhd and Sunway Hotel Seberang Jaya Sdn Bhd, to mitigate fluctuations in the hotel’s cyclical business.

“The rental-guarantee floor will ensure the minimum rental for Sunway REIT’s 1,190 hotel rooms. Meanwhile, there is no limit as to how high the rental can go when the hotel market turns for the better, which will on the overall benefit the REIT’s income streams,” Ng told StarBiz.

He said Sunway REIT was also the first local REIT to subject its IPO offer to a market price mechanism as well as allowed its asset valuation to be determined by the REIT’s prevailing unit price.

Before the international roadshow for Sunway REIT commenced last month, the REIT manager signed up reputable cornerstone investors including the Government Investment Corp of Singapore, The Employees Provident Fund, Permodalan Nasional Bhd, and Great Eastern Life Assurance (Malaysia) Sdn Bhd, which collectively have confirmed allocation of about 14% stake in the REIT.

It also adopted an over allotment or green-shoe option that came up to 87 million units that will function as a stabilisation mechanism during the one month “stabilising” period until Aug 8.

“We have also proposed for up to 50% of the management fees to be paid in Sunway REIT units and this practice shows that the management company is confident in the REIT’s performance. This should translate to about 10 million units a year,” Ng said.

To attract more global investors, Sunway REIT is working towards being included as an indexed REIT by the Brussels-based European Public Real Estate Association (Epra) and the National Assocation of Real Estate Investment Trusts (Nareit) of the United States.

According to Ng, institutional REIT investors including pension and insurance funds, track these global standard index and use it as a benchmark to guide their investment decisions.


“With RM1.56bil worth of free-float units, big global investors will be attracted to invest in Sunway REIT because of its liquidity. Once accepted as the benchmark indexed REIT for Malaysia, Sunway REIT will be in the global investors’ radar screen,” Ng pointed out.

Based on the institutional offer price of 90 sen a unit, Sunway REIT offers a yield of about 7.5% for institutional investors for the financial year ending June 30, 2011.

Retail investors can look forward to a distribution yield of 7.66%, which is higher than the 6.9% yield disclosed in the prospectus.

The IPO raised RM1.56bil (including the over allotment of 87 million units at RM78mil), of which 44% or RM680mil were subscribed by foreign institutional funds.

Ng said although Sunway REIT had a diversified asset portfolio, some 70% of its asset value and 67% of revenue would be from retail assets, which showed that Sunway REIT was a retail-focused REIT.

The three retail assets have total net lettable area of 2.4 million sq ft and asset value of RM2.4mil, making it the largest retail-focused REIT locally.

“Both the retail and institutional investors are looking at broader and longer-term investment horizon. Being a defensive REIT, unit-holders can look forward to a longer-term growth catalyst as well as low risk and stable yields.

As long as its cashflow remains strong, the dividend payout will be 100% of total net distribution income,” Ng added.

By The Star

QSR buys 1.94 million KPJ REIT units

PETALING JAYA: QSR Brands Bhd has acquired 1.947 million units in KPJ Real Estate Investment Trust (REIT) from the open market on July 20 for about RM2.012mil.

The purchase was funded via internally generated funds.

QSR said in a filing with Bursa yesterday that the acquistion was based on better return on investment of about 7.3% (based on current dividend yield) as against the current fixed deposit interest rate of about 2.5% to 3.0%.

KPJ REIT is managed and administered by Johor Corp Bhd subsidiary, Damansara Assets Sdn Bhd. Johor Corp also owns 50.35% stake in Kulim (M) Bhd, which in turn has a 61% stake in QSR.

By The Star

Axis REIT to raise RM132mil

KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of the world’s first office/industrial Islamic real estate investment trust (REIT), plans to raise RM132mil next month as part of its capital management process, said chief executive officer/executive director Stewart LaBrooy.


Axis REIT Managers Bhd chief executive officer/executive director Stewart LaBrooy at the media briefing yesterday. At the back fr left are chief financial officer Leong Kit May, business development & investor relations senior manager Chan Wai Leo and head of real estate David Aboud.

“The funds raised will be used to expand our property portfolio and to reduce our gearing,” he told reporters here yesterday at a media briefing in conjunction with its unaudited half yearly results announcement.

LaBrooy said ARMB was looking to acquire two new logistics houses and a retail warehouse in Johor, as well as an office building in Cyberjaya, which would cost about RM190mil in total to add to the existing 23 assets it currently owned.

Axis REIT properties include assets in commercial, office and industrial real estate.

“Upon conclusion of the acquisitions, our total assets under management will be RM1.2bil from the current RM900mil,” he said, adding that on average, the group acquired about five assets annually.

He also said ARMB planned to have at least US$500mil worth of assets so that it could attract attention from the international market and that the group was pushing hard to reach that level.

“Our aim is to acquire good assets in good locations such as in Penang, Klang Valley and Johor Baru that can bring value and benefit to the group and also to the unit holders,” he said.

On the group’s financial results, LaBrooy said ARMB was on the right track, with growth seen in revenue and distribution per unit compared to the preceding quarter despite the volatility in global markets.

“This year also saw us comprehensively revalued five of our properties - Axis Shah Alam DC, BWM Centre PTP, Giant Hypermarket, Nestle Office & Warehouse and Quattro West - and this resulted in a positive change in fair value of RM9.07mil,” he said. Axis REIT, which owns mostly industrial properties, posted a 74.51% rise in net profit to RM21.87mil for the second quarter ended June 30, compared with the same quarter a year ago.

LaBrooy attributed the jump in net profit to a combination of revaluation surplus and realised gains from distributed profit and revaluation gains. Revenue for the quarter under review stood at RM21mil, a rise of just over 21% compared with a year ago.

LaBrooy said Axis REIT’s performance in the third quarter would improve due to the satisfactory performance of its existing portfolio and with Quattro West property coming on stream.

By The Star

Axis REIT Managers on buying spree

AXIS REIT Managers Bhd (ARMB) targets to manage some US$500 million (RM1.6 billion) worth of assets and is in the process of buying more properties in the Klang Valley and Johor.

ARMB, manager of the Axis Real Estate Investment Trust, an Islamic office and industrial property trust, now manages 23 properties worth a combined RM952 million, ranging from offices and warehouses to logistic centres and hypermarkets.

By end-2012, it will manage 27 properties worth a combined RM1.2 billion, ARMB chief executive officer Stewart LaBrooy told a media briefing in Kuala Lumpur yesterday.

ARMB is buying a logistics warehouse in Port of Tanjung Pelepas and a Tesco hypermarket in Johor, as well as the Axis Technology Centre in Petaling Jaya, Selangor, and the Axis PDI Centre in Klang, Selangor, totalling RM240 million.
LaBrooy said the deals, except for Tesco, will be completed by October this year. ARMB is still in negotiations to buy the hypermarket.

He added that ARMB is also in the midst of buying the Axis Techpoint 1 in Petaling Jaya, a logistics warehouse in Johor and an office building in Cyberjaya, through third party transactions.

The acquisitions, worth a combined RM190 million, will be completed by early next year, he said.

LaBrooy also said ARMB will place out 68.82 million units next month or about 20 per cent of its current fund size, to raise RM132 million for the acquisitions.

"As you get bigger, the placement gets larger and you can do more. We can accumulate bigger assets and put them in our balance sheet, placing us in the big boys club," he said.

LaBrooy said ARMB will continue to look for valuable assets in prime areas with long term returns.

ARMB's net profit for the quarter to June 30 2010 almost doubled to RM21.9 million due to the higher value of its properties.

"It is always our intention to be in the billion ringgit club. We have reached the first step of development, which is to surpass the RM1 billion mark.

"What is next is to reach RM2 billion. We will work very hard to get to that level. Anything we buy must have a long term strategy," LaBrooy said.

He added that ARMB may dispose of some of its current assets that have fully matured.

By Business Times

KLCCP earnings to get a lift

The average rental rate of office space at Petronas Twin Towers is around RM9 per sq ft while Suria KLCC retail space is fetching average rental rates of around RM23 per sq ft.

Analysts see higher income streams on completion of retail podium, new office block next year

PETALING JAYA: KLCC Property Holdings Bhd (KLCCP) can look forward to higher income streams with the completion of the Lot C retail podium and a new office block next year despite the weaker performance of its hotel property business, analysts said.

Construction of the six-storey retail podium with 160,000 sq ft in net lettable area (NLA) and a 55-storey office block with NLA of 840,000 sq ft is under way.

The new retail podium is due for completion by the end of the year and should start contributing to the company’s earnings in financial year ending March 31, 2011 (FY11).

Suria KLCC has a net lettable space of 1 million sq ft now.

KLCCP’s 55-storey office tower is on track for completion in October 2011.

According to analysts’ estimates, Lot C could bring in RM147mil in rental income and contribute 21% to KLCCP’s FY13 earnings.

A senior analyst with a local brokerage said the KLCCP office building was without doubt the most prime office asset in the country.

“With Petronas as the master lessor for the office building, there is certainty in its rental income whether or not the office space is occupied. But there is also a downside in this arrangement as the company will miss out on the opportunity to review the rental rates should the market improve before the lease expires,” he told StarBiz.

The 15-year lease for Petronas Twin Towers which have a total NLA of 3.2 million sq ft was from August 1, 1997, while the lease for the 528,000 sq ft Menara Maxis was from June 1, 1998.

The lease tenure for the 380,000 sq ft-Menara Exxon Mobil was for 12 years until February 2012.

Hwang DBS Research analyst Yee Mei Hui said in a report yesterday that long term, locked-in rental income from blue-chip tenants would continue to sustain KLCCP’s future earnings.

The average rental rate of office space at Petronas Twin Towers is about RM9 per sq ft while that of Menara Exxon Mobil and Menara Maxis is RM7.50 per sq ft.

Suria KLCC retail space is fetching average rental rates of around RM23 per sq ft.

Yee said for FY10, the retail turnover at Suria KLCC shopping centre had returned to the pre-crisis level of RM2bil, while the number of annual footholds or visitors to the mall was 42 million.

During the period, KLCCP registered a 21% increase in net profit after minority interests of RM648mil while revenue grew 2% to RM881mil.

The improved results wermainly attributable to a 3% hike in office rental income and 8% increase in income from retail space.

She said the higher rental income from KLCCP’s office and retail segments would help mitigate its weaker hotel operations.

Income from Mandarin Oriental fell 13% as a result of a drop in the hotel’s occupancy rate to 55% in FY10 from an occupancy of 65% in FY09.

This was despite the average room rate holding stable at RM636. Yee said rental rates for the new retail space should be comparable with Suria KLCC at around RM35 per sq ft (ex-anchor tenants), adding that its occupancy rate could reach 80% in its first year of operation.

“KLCCP’s net gearing has improved to 27%, equivalent to a net debt of RM1.45bil in FY10 from a high of 130% in FY05. The significantly improved net gearing provides room for more borrowings for future expansion.

“Given the full repayment of Petronas Twin Towers’ private debt securities by 2012, the company’s net gearing ratio is expected to remain at a healthy level despite the loan drawdown for Lot C,” she pointed out.

By The Star

Axis REIT Q2 profit soars as property value jumps

AXIS Real Estate Investment Trust says its second quarter net profit almost doubled due to the higher value of its properties.

Axis REIT is bullish on its performance for the rest of the year.

Its net profit for the quarter to June 30 2010 was RM21.9 million, up from RM12.5 million in the same quarter a year earlier.

Revenue went up 21 per cent to RM21 million due to higher gross rental income.
The higher net profit was largely due to the change in its properties' fair value. The value of its assets rose by some RM9 million in the quarter, compared with RM2 million a year ago.

Excluding this unrealised value, its pre-tax profit increased 15 per cent to RM12.1 million.

Axis REIT plans to pay an income distribution of 4 sen a unit for the second quarter, which is 97 per cent of its realised pre-tax profit.

For the first six months, Axis REIT made a net profit of RM36.1 million, up from RM23 million in the same period last year. Revenue rose 18 per cent to RM40.9 million.

"The (REIT) manager is optimistic that in view of the current satisfactory performance of Axis-REIT's existing investment portfolio and its growth strategy to actively pursue quality acquisitions, it will be able to maintain its current performance for the coming quarter and the rest of the financial year," it said in a statement to Bursa Malaysia yesterday.

Axis REIT has leased out all of the space at Quattro West, its property in Petaling Jaya, Selangor.

It bought the building for RM39.8 million in 2007 and budgeted RM7 million for its makeover.

Axis REIT's properties are now worth RM928 million on its books at the end of June.

Its manager, AXIS REIT Managers Bhd, has targeted to manage RM1 billion worth of assets by the year-end.

It plans to buy five properties valued at about RM180 million in 2010.

In January, it said it was assessing two new warehouses in Port of Tanjung Pelepas in Johor, a factory or a warehouse in Puchong, Selangor, and an office building in Cyberjaya.

By Business Times

1Malaysia Development picks project partners

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB), the agency tasked to develop most of the government land, is identifying partners to draw up a masterplan for its Bandar Malaysia and Kuala Lumpur International Financial District (KLIFD) projects in the city.


Shahrol Halmi ... ‘Those selected should have credible track records, be transparent and bring international experience.’

Among the international architects and designers being considered are Forsters & Partners as well Skidmore, Owings & Merrill LLP (SOM).

“We have been talking to them for the past few months,’’ 1MDB CEO Shahrol Halmi told StarBiz. “Those selected, including project directors and engineers, should have credible track records, be transparent and bring their international experience to enhance our local expectations.’’

The masterplan for both projects will be based on the same approach especially in terms of financial modelling, parcelling and tenders.

Complementing each other will be the Islamic financial hub on 80 acres at the Dataran Imbi area and the mixed development on 460 acres at the Sg Besi old airport.

“We target to unroll the vision and plan for the two projects in a year’s time,’’ he said, adding that momentum of work was essential to keep the young team on their toes while the public would also want to see some progress.

“Construction in phases will probably commence in three to four years,’’ he said. “It is going to be a long journey and we have to get it right, for example, by making sure that we do not flood the market with retail space.’’

Its potential partners, which may also bring in equity, include the Qatar Investment Authority (which has proposed to invest US$5bil in Malaysia) as well as parties from Abu Dhabi and China.

Reports have indicated that the Abu Dhabi Future Energy Co (Masdar), which is a wholly-owned subsidiary of Abu Dhabi’s Mubadala Development Co, may be an interested party while 1MDB is in contact with the CITIC group of China.

Among 1MDB’s board of advisors are Khaldoon Khalifa Al Mubarak, chairman of Abu Dhabi Executive Affairs Authority, CEO & MD of the Mubadala Development Co and Chang Zhenming, vice-chairman and president of the CITIC group.

“We are in a fortunate position where we have interesting projects for foreigners and locals to take part in,’’ he said.

The two developments at Imbi and Sg Besi will be connected via public transportation and feature a balanced approach where the gross development value will make commercial sense as well as ensure future sustainability.

“It should be attractive to investors and tenants while at the same time, offer affordable housing especially to the younger people as in the way that Singapore has provided apartments that are accessible via public transportation.

“Young people should be attracted to live in the city, infuse it with vibrancy and revive it to the next level,’’ he said.

The KLIFD that will promote Islamic finance, will likely comprise a cluster of financial services related groups such as banks, legal firms, IT consultancies and others. The idea is for a hub where there are world-class facilities for working, dining and relaxing in a safe environment.

“We are in discussion with the authorities,’’ said Shahrol. “It needs a concerted approach from eight to nine parties to make it happen. There are energetic and passionate people in the civil service.’’

Among other things, removal of redtape, provision of incentives and tax breaks, salary structures and types of businesses are being looked into, with a view to attracting talent back into the country.

For 1MDB, the plan for Bandar Malaysia represents a new opportunity for a green and energy efficient development. “A big park of 80 acres, in the likes of Hyde Park in London, will differentiate this part of Kuala Lumpur from some neighbouring cities. It will make people feel they can breathe and that they are part of the society that cares about nature,’’ he said.

There may be a place for big events and people’s forums, a university for the leading edge in technology in partnership with world-class firms, a library where there are also shows, book signing and activities for the young and old. “Besides the construction costs, we have to factor in the cost for long-term sustainable maintenance,’’ he said.

By The Star

REIT managers seek cut in withholding tax

MANAGERS of real estate investment trusts (REITs) are hoping for a reduction in withholding tax for REIT investors in next year's budget, to spur the industry growth and make it more competitive.



To keep the industry in line with international practice, REIT managers are also proposing for relaxation on fund-raising exercises.

These issues will be brought up by the Malaysian REIT Managers Association (MRMA) during the pre-budget dialogue.

MRMA pro-tem vice-chairman Lim Yoon Peng said the incentives are needed to grow the local REIT industry, which is still in an infancy stage.

"REITs are a new asset class, which are fairly attractive, defensive, low beta, not volatile, pay regular dividend and tax-efficient.

"But not everybody in the country is familiar with REIT, especially among retail investors," he said in an interview with Business Times in Kuala Lumpur recently.

MRMA, which was formed last year, comprises the managers of 11 Malaysian REITs.

They are AmFirst REIT, AmanahRaya REIT, Atrium REIT, Axis-REIT, Al-Hadharah Boustead REIT, Al-Aqar KPJ REIT, Hektar REIT, UOA REIT, Quill Capita Trust, Tower REIT and Starhill REIT.

The REITs are all listed under the new Securities Commission (SC) Guidelines for the Real Estate Investment Trusts introduced in January 2005.

Lim, who is also chief executive officer of Am ARA REIT Managers Sdn Bhd, the manager of AmFIRST REIT, said the proposed reduction in the withholding tax for REIT investors and relaxation of fund-raising exercises requires amendments to the SC guidelines.

Currently, the SC guidelines state that REITs can only place out new units of up to 20 per cent and it can be done only once in every 12 months.

Lim said REITs need to raise funds more frequently in order to acquire more properties to expand the trust.

He also said that in Singapore, individuals do not pay withholding tax on REIT investments.

Both local and foreign retail investors in Malaysia now have to pay a 10 per cent withholding tax.

Lim said as REITs pay off almost 100 per cent of their income, they are an attractive asset investment class.

He said REITs are not as volatile as equities. They also have low correlation, where, for instance during the recent euro crisis, some shares dropped by 5 to 8 per cent but REIT shares did not fall that low.

"As REITs pay regular and stable income, they are a good investment portfolio for insurance and pension funds.

"Retail investors' awareness on REITs is very low and REIT managers have been organising roadshows to familiarise them with the benefits of investing in REITs," he said.

Lim said generally, promoters and sponsors take up between 40 and 50 per cent of a REIT's initial fund size, and allocate a further 40 per cent to institutional investors. This leaves only a tiny portion for retail investors.

The current market capitalisation of REITs in Malaysia is some RM6 billion and, together with Sunway REIT and CapitaMalls Trust coming onstream by the middle of this month, the total market capitalisation will exceed the RM10 billion mark.

By Business Times

Why REITs should be the choice of investment

KUALA LUMPUR: Real estate investment trusts (REITs) offer many advantages to investors who are keen to invest in the property market.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said what was important now to REIT players was to educate them on the benefits on investing in REITs.

“We need to educate them as most of them are not really aware of the advantages, such as having a higher yield compared with some other investments,” he said yesterday at the Investor Insights into Malaysian REITs in 2010.

As a result of the lack of awareness on REITs, he said, the participation from Malaysians in REITs was still small compared with other countries.

“We have 13 REITs now listed on Bursa Malaysia that cover all types of industries. With a high dividend yield of about 7% annually, low entry cost and support with higher corporate governance, REITs should be the choice of investment,” he said, adding that the size of assets of Malaysian REITs was now about RM16bil.

In REITs, a pool of money from investors is invested in properties such as office buildings or shopping malls and the investment is managed by REIT managers.

LaBrooy said another advantage of investing in REITs was the tax efficiency where investors were taxed only once.

“Apart from that, it is easy to invest in REITs as you can buy it today and sell the unit tomorrow, similar to equity stocks. Plus, REITs are a hedge against inflation,” he said, adding that they were low risks and a passive type of investment.

He said the way REITs did its business was to make sure about 90% to 100% of its retained earnings before tax were given back to investors.

“Last year, despite facing a global economic crisis, Malaysian REITs were still giving back about 70% to 80% of its retain earnings to investors,” he said.

Meanwhile, touching on the outlook of residential and office market in Malaysia, CB Richard Ellis (M) Sdn Bhd executive chairman Christopher Boyd said overall, both markets were still stable.

“For the residential market, we are still in the safe net as in Malaysia, developers are still using the method of sell-first-before-build. If you build first then sell like what is done by some other countries, then you will risk yourself of not getting buyers if suddenly problems arise, such as the economic downturn, ” he said.

By The Star

KLCC Property a 'hold': HwangDBS

HwangDBS has recommended a "hold" stock rating for KLCC Property with a target price of RM3.70.

The securities firm noted that KLCC Property's 2010 earnings (ex-fair value gains) grew by 4 per cent to RM233 million.

Revenue rose 2 per cent, driven by office and retail segments’ +3 per cent and +8 per cent respectively, which helped to mitigate the 13 per cent dip in hotel operations.

While retail turnover at Suria has returned to pre-crisis’ RM2 billion and footfalls remained a high RM42 million, Mandarin Oriental saw lower occupancy rate of 55 per cent (FY09: 65 per cent) albeit stable ARR of RM636.

KLCCP has no intention to cut ARR but rather focus on product differentiation, value add promotions and cost control. Long term locked-in rental income from blue-chip tenants should continue to sustain future earnings.

By Business Times

SunCity eyes foreign investors

Bay Rocks, which c onsists of 77 units of 2 and 2 1/2 storey l uxury bungal ows, signals SunCity’s for ay into the luxury market.

A cooler, calmer sanctuary. This is what Sunway City Bhd (SunCity) will be offering residents of its new condominium development – A’marine – located in Sunway South Quay, Bandar Sunway.

There are elements of comfort, style, and convenience that when put together showcase the height of exclusive lakeside metropolis living.

Sunway South Quay is the company’s new 178-acre residential development that consists of about 4,000 units of condominiums (A’marine and Nautica) and bungalow villas (BayRocks).

SunCity is targeting foreign investors for their latest development.

“We are trying to promote Sunway South Quay to international residents. We have already sold Nautica to a South Korean company, CI Korea,” managing director of property development in Malaysia, Ho Hon Sang tells StarBizWeek.

Nautica was sold for RM171mil, or about RM400 per sq ft. About 70% of A’marine’s 242 units have been sold since its soft launch in May. The units are priced at RM550 per sq ft. A’marine has a gross development value (GDV) of about RM200mil. The project is slated for completion by June 2013.


Ho Han Sang ... ‘As a property de veloper, you always look to better the last project.’

BayRocks, which consists of 77 units of 2 and 2½ storey luxury bungalows, signals the group’s foray into the luxury market. The development has a GDV of about RM367.7mil.

The bungalows are spacious, modern and well furnished. They also come complete with a hydraulic elevator.

Says Ho: “We have kept a low-key profile when marketing BayRocks because it is an expensive product. The price of about RM4mil-RM5mil per unit emphasises that fact. As a result, we have limited the amount of units built. In the first phase, we managed to sell about 95% of the 30 units made available.”

“In line with the Government’s Malaysia My Second Home programme, we are also hoping to attract certain high net worth individuals to come and stay in Malaysia,” he says.

This is not the first time SunCity has done business with foreigners. The development of Bandar Sunway as an integrated city has relied on educational institutions to attract foreign funding in the past.

“Bandar Sunway is an education hub. Taylor’s University College, Monash University and Sunway University College are located in this area. We have about 16,000 students living here, of which 30% are foreigners,” says Ho.

Sunway South Quay is strategically located nearby amenities that includes Sunway Medical Centre, Sunway Pyramid Shopping Mall, Sunway Lagoon Theme Park and an abundance of food and beverage outlets.

Despite what looks to be a rosy future ahead for SunCity, Ho insists that the company will not be resting on their laurels.

“As a property developer, you always look to better the last project. If there is demand for commercial property we will build them, and the same goes for residential property as well,” he says.

By The Star

Penang gears up for more property launches

The Tudor-style houses under the Botanica.CT’s phase one in Balik Pulau, Penang.

HOUSING prices in Penang are expected to rise further over the next 18 months, as local and Kuala Lumpur-based developers plan to launch 2,696 units of residential properties with an estimated gross sales value of over RM2.1bil on the island and the mainland.

Some 1,676 units of these properties, with an estimated of RM1.84bil, are located on the island.

The other 1,020 units of these developments, with an estimated gross sales value of RM300mil, are located on the mainland.

IJM Land Bhd, S.P. Setia Bhd, Asas Dunia Bhd, MTT Properties & Development Sdn Bhd, and Ideal Property Group are among the local and Kuala-Lumpur developers that have drawn up plans for new launches from now till the second quarter of 2011. Real Estate Housing Developers’ Association (Rehda, Penang) chairman Datuk Jerry Chan told StarBizWeek that property prices in Penang were expected to rise between 5% and 10% over the next 18 months.

This was only a very conservative estimate, Chan said after the Star Property Fair 2010 Round-Table Dialogue held at the Star Northern Hub in Bayan Lepas, Penang, on July 9. The dialogue, moderated by The Star’s regional editor (north) Choi Tuck Wo, is a prelude to the Star Property Fair 2010 that will be held from July 23 to 25 at G Hotel and Gurney Plaza.

“The higher pricing reflects the rising land, construction and material costs, and the higher quality, more spacious and better design products from developers,” says Chan.

“Other factors include the influx of money from regional investors and Malaysians abroad, and the positive forecast from the government that the country’s GDP will be over 6% this year,” Chan says.

He says it is time for the state government to brand Penang’s products and services because of the island’s liveability and uniqueness and the fact that its property prices are one-quarter that of Singapore’s.

He calls for a directory to list comprehensively Penang’s hospitality services, products, facilities, and manufacturing services.

He says current efforts to promote Penang such as road shows have not been effective.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat is also in agreement that property prices would rise between 5% to 10% from now till next year.

According to the Valuations & Property Services Department from the finance ministry, the residential property pricing in Penang had soared above that of Kuala Lumpur in 2009 by over 2.5%, Teoh says.

The housing price index of Penang was 145 in 2009, compared with that of Kuala Lumpur and the national average, which was 142 and 130, Teoh says.

“Among the drivers of residential property prices in Penang include foreign investments from China because the Chinese government have started to implement policies to curb property speculation,” Teoh says.

The largest development projects on the island are by IJM Land, which has lined up over RM1bil worth of residential properties to be launched for the second half of 2010 and 2011.

IJM Land Bhd managing director Datuk Soam Heng Choon says these properties include the RM830mil Light Collection projects, comprising 585 units of condominiums, bungalows, and town-houses next to Penang Bridge, the RM113mil The Address in Bayan Baru, comprising 148 units of condominiums cum town-house scheme, and the RM70mil Permatang Sanctuary project, comprising 170 units of semi-detached and bungalow houses, in Bukit Mertajam.

The Light Collection properties, to be launched in October 2010 and in the second and third quarters of 2011, are priced between RM700 to RM800 psf, while the pricing for The Address, to be launched in December 2011, starts from RM625,000 to over RM1mil.

The landed properties in Permatang Sanctuary, to be launched in January 2011, are priced between RM400,000 and RM700,000.

SP Setia is launching condominiums, terraced houses, and bungalows with a gross sales value of about RM425mil in the south-west and north-east districts of the island.

SP Setia (north) general manager S. Rajoo says the RM180mil high-rise project in Setia Pearl Island, Sungai Ara, comprising 300 condominiums would be launched in the second quarter of 2011, while the RM180mil Setia Eco Greens project in Sungai Ara, comprising 167 terraced and semi-detached properties, and the RM65mil Brookes Residence projects in Taman Jesselton, comprising 11 bungalow houses, have been targeted for launch in the first quarter of next year.

Prices for the condominium scheme starts from RM400,000, while the bungalow houses are priced from RM898,880 onwards, and Brookes Residence bungalows from RM5.8mil onwards.

Ideal Property Group will also be launching RM370mil worth of landed residential properties comprising 436 units of terraced, super-linked, and semi-detached houses for its One Residence project in Bayan Lepas, the southwest district of the island.

Ideal Property managing director Datuk Alex Ooi says in September the group would launch 316 units, and in the second quarter 2011, another 120 units.

Prices range between RM650,000 and RM1.4mil, he adds.

MTT Properties & Development Sdn Bhd general manager Jason Tan says the group plans to launch at end of the year in Balik Pulau, 29 units of three-storey hillside villas for its Botanica.CT project, overlooking the Andaman Sea, with a gross sales value of RM100mil. The properties, with a built-up area of 8,000sq ft, will be priced from RM2.5mil onwards.

On the mainland, Asas Dunia plans to launch RM230mil worth of residential properties comprising 500 single storey semi-detached houses, and 350 double-storey terraced, double-storey semi-detached, and light industrial houses in Bukit Mertajam, Simpang Ampat, Nibong Tebal, Sungai Bakap, and Permatang Tinggi from late July till the second quarter of 2011.

Chan, who is also Asas Dunia managing director, says the single-storey semi-detached unit, with built-up and land areas of 1,200sq ft and 2,660sq ft respectively, was priced between RM150,000 and RM290,000.

The double-storey semi-detached unit, with built-up and land areas of 2,557sq ft and 2,724sq ft, is priced from RM358,888 onwards.

“These properties will be launched in phases starting end of July. Their prices are already about 5% higher than the previous launches,” Chan says.

By The Star

Property investments rising in popularity

An iProperty.com consumer trends survey for the first half of this year showed more Malaysians looking to property for investment.

The online survey conducted on the iProperty.com Malaysia website had the participation of 500 respondents and was aimed at getting key insights into Asian property buyers, including motivations for purchasing property and budgets.

In a statement yesterday, the property website said of the 500 respondents, 47 per cent were looking to purchase a home while 31 per cent were investors seeking to expand their financial portfolio with real estate.

The survey showed motivation to invest for rental income dropped in 2010 whereas property investments for capital appreciation was on the rise.

It also said this increased preference to profit from resale could be attributed to rising property prices, as the Malaysian property market continues to improve.

A total of 43 per cent of the respondents were in the market for high-end properties valued between RM400,000 to RM5,000,000. This represents a whopping 16 per cent increase in demand for high-end properties with the RM500,000 to RM1,000,000 segment alone increasing by 10 per cent.

The survey pointed out that rising property prices, better rental returns and high resale profits could be some of the reasons for an increased demand in high-end properties.

"As confidence in the property market grows, we are seeing more home buyers and investors turning to high-end properties as a means to profit from capital appreciation and expand their financial portfolios," said iProperty.com Malaysia Country Manager Ken Tsurumaru.

By Bernama

Creating a real estate investment destination

The Star’s regional editor (north) Choi Tuck Wo met up with Kuala Lumpur-based and Penang developers on what needs to be done further to promote Penang as a real estate investment destination.

The panellists of the roundtable included investPenang executive committee chairman Datuk Lee Kah Choon, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat, Real Estate Housing Developers Association (Rehda, Penang) chairman Datuk Jerry Chan, IJM Land Bhd managing director Datuk Soam Heng Choon, Belleview Group managing director Datuk Sonny Ho, Ivory Properties Group chief operating officer Datuk Ooi Chin Loo, Iskandar & Associates chairman Dr Iskandar Ismail, Nusmetro Group director Thomas Chan, SP Setia (north) general manager S. Rajoo and KPMG partner Ooi Kok Seng.

The following are excerpts of the discussion:

StarBizWeek: What kind of impact will the effort to cool off property speculation in China have on property demand and property prices in Malaysia?

Iskandar: The overseas demand for Malaysian properties is actually overstated. Our foreign direct investment last year grew only by 1%, compared to 9% in Singapore. I have not seen any real evidence that people from Singapore are moving to Malaysia because the property is cheaper.

Soam: There are a lot of high net-worth investors from China to whom we can sell Penang, especially in Inner Mongolia, where there are states with high GDP.

In light of pending subsidies removal, will property prices in Penang reach a point that is beyond the affordability of Penangites? According to a Socio-Economic Research Institute report, property prices on the island is 14 times higher than annual household income.

Soam: Landed properties priced at RM250,000 are still available on the other side. The mainland is not out of reach from the island, just a bit further.

The main thing is still transportation. People do not mind if there is a good public transport system.

Thomas Chan: The removal of subsidies will have minimal impact on property prices.

How can the south-west district of the island be further developed to attract more foreign investments?

Rajoo: We can improve by having more roads and amenities in the south-west district. This corridor is grossly lacking in the infrastructure.

Soam: There is a lot of potential in the south-west district, as the second bridge is coming up and the airport expansion is starting to move.

How can Penang better utilise its heritage properties to attract investments, taking into consideration the 18m height constraint imposed by the local authorities?

Lee: Heritage by itself is a different sort of investment. Generally, my feeling is why do you want to build a property that is more than 18m in the heritage area? There are so many areas that you can build on. All the other houses in the heritage area are one or two stories high and suddenly you have a skyscraper rising from nowhere.

How can developers in Penang improve on their products to meet investors’ expectations?

Sonny Ho: The Japanese are used to staying in small houses. For them, 2,000sq ft is very big. It is not the case for the Europeans and Australians.

Jerry Chan: Rehda has proposed to the state to allow variable unit sizes and layouts within apartments or condo blocks for multi-general use.

What is the feedback from the recent overseas roadshows to promote Penang as an investment destination?

Soam: At a recent luxury property exhibition in China for the rich and famous, the first thing they asked was “Hey, where is Penang?” Most of the people know about KL City Centre, but they are not aware of Penang. We have to give Penang more exposure and branding.

Ho: Malaysia as a whole is a country that is friendly to foreign investors and Penang should do a big marketing and communication job to attract them.

By The Star

Ivory Properties sees right time for listing

Penang-based Ivory Properties Group Bhd, which will soon be listed on the Main Market of Bursa Malaysia, believes the timing is right to go for the listing as the economy, especially the property sector, has picked up following economic stimulus measures by the Government in the past two years.


Datuk Low Eng Hock (left) and AmInvestment Bank Bhd MD T.C. Kok at the group’s prospectus launch early this week.

Chairman/group chief executive officer Datuk Low Eng Hock tells StarBizWeek that Ivory sees strong demand from home owners and investors in land-scarce Penang as well as discerning buyers with an eye for exclusive resort living, high capital appreciation and a prime location.

“We also noticed that in recent months, there have been quite a number of land acquisitions in Penang by big developers,” he says in an email reply. The group has so far undertaken a multitude of projects with a gross development value (GDV) of RM1.51bil.

“The GDV for completed property development projects accounted for about RM675.62mil while the GDV for ongoing property development projects is about RM834.09mil. The projects are scheduled for completion within the next few years,” he says, adding that the listing of Ivory will further enhance the group’s ability to complete property development projects and beef up its financial muscle to undertake bigger projects, both locally and abroad.

Ivory will be the first property development company to be listed on the Main Market this year.

The group launched its prospectus early this week where the balloting of the public issue shares is fixed on July 21 while its listing is scheduled for July 28.

July 19 will be the closing date for application of the public issue.

AmInvestment Bank Bhd has been appointed as the adviser, managing underwriter, underwriter and sole placement agent for the initial public offering (IPO).

Ivory’s IPO entails a public issue of 44.9 million new ordinary shares of 50sen each at an issue price of RM1 per share, comprising of 9.3 million new shares for application by the Malaysian public; 1million new shares by eligible directors, employees and business associates of Ivory and its subsidiaries; 34 million new shares for private placement to selected investors; and 570,000 new shares for Bumiputera investors approved by the Ministry of International Trade and Industry (MITI).

An additional 16.2 million shares at an offer price of RM1 per share will be offered to Bumiputera investors approved by MITI.

Of the gross proceeds, expected to be RM44.9mil, RM10mil will be used to repay bank borrowings, RM31.5mil for working capital and RM3.4mil for estimated share issue expenses.

“I am confident we should do well. Let’s see on July 28,” he says.

On the group’s property business in Penang, Low says being an island, Penang’s property prices will remain stable and this scarcity of land has somewhat shielded the property sector there from adverse effects of an economic slowdown, as had happened before.

“Our properties have appreciated over 40% within a few years and most of our upcoming projects are located in prime locations. We are overwhelmed with enquiries and have accepted registrations from prospective buyers for all the upcoming projects. We are also in the middle of acquiring new landbank in line with our expansion plan after the public listing,” he says, adding that the properties are priced between RM300 per sq ft and RM500 per sq ft.

The Ivory group is a fast emerging developer with a humble beginning. It was established in 1999 to undertake medium to high end property development projects.

It had completed property development projects such as The View Twin Towers (condominiums) in Batu Uban; Tanjung Park (condominium and townhouse) and Seri Taman Tanjung (apartments) in Tanjung Tokong; Plaza Ivory (condominiums, commercial shop lots and retail) and Palace Hill (bungalows and semi-detached houses) in Bukit Gambir; and Penang Times Square’s Phase 1, Birch The Plaza (condominiums and shopping complex) in George Town (Dato’ Keramat).

The group’s ongoing property development projects are the exclusive Moonlight Bay comprising villas and condo-villas in Batu Feringgi with a GDV of about RM189.96mil; Penang Times Square’s Phase 2, Birch Regency comprising condominiums and shopping complex at Jalan Dato’ Keramat with a GDV of approximately RM307.41mil; Zen @ The View comprising bungalows at Batu Uban with a GDV of approximately RM15.32mil; Island Resort’s Phase 2 and Phase 3 comprising condominiums, resort villas and bungalows at Batu Feringgi with GDV of about RM259.03mil and Aston Villa’s Phase 2 and Phase 4 comprising landed residential and shop lot in Bukit Mertajam with a GDV of approximately RM62.36mil.

Future property development projects of Ivory in Penang are Penang Times Square’s Phase 3 and Phase 4 with a GDV of approximately RM624.88mil; Mount Erskine Development comprising The Peak Residences with a GDV of approximately RM221.89mil, Taman Bukit Erskine with a GDV of approximately RM42.30mil, The Latitude with a GDV of approximately RM117.46mil, commercial lots with a GDV of approximately RM34.86mil at Mount Erskine; City Mall with a GDV of approximately RM269.61mil at Jalan Tanjung Tokong; Island Resort’s Phase 4 with a GDV of approximately RM121.15mil; and Aston Villa’s Phase 1 and Phase 3 with a GDV of approximately RM47.66 mil.

Ivory’s project in Tanjung Malim, Perak comprises Ivory Eco Park @ Tanjung Malim with a GDV of approximately RM420mil. On the outlook of the property market this year, Low says he is very optimistic, not only on the Penang market but Malaysia in general.

“With many positive and investor-friendly policies by the Government and healthy growth in our domestic economy, I believe we are on the uptrend. We at Ivory are all gearing up to take up every opportunity in this optimistic property market,” he says.

On plans to venture into the Klang Valley property market, Low says Ivory is studying several parcels of land in the Klang Valley and is looking at joint development with a local partner in the Klang Valley.

Ivory had recorded historical proforma consolidated profit after taxation (PAT) of about RM10mil, RM22.5mil, RM26.5mil, RM26.87 mil and RM17.17mil for its financial years ended Dec 31 (FY) 2005, FY 2006, FY2007, FY2008 and FY2009 respectively.

The company is forecasting a proforma consolidated PAT of approximately RM33.86mil for the financial year ending Dec 31, 2010.

By The Star

Developing townships with the right attributes

The environment theme has become a unique selling proposition for many new property projects as developers hope to leverage on the people’s greater awareness of the environment to boost sales.

It is easy to understand why there is great interest in the environment by both ends of the market. For the buyers, it is not just about the “environmental friendly” way of life but the overall environment of a neighbourhood, including security, safety, facilities and amenities, accessibility and other considerations.

These are important factors that will affect the value of the property in the secondary market when one decides to sell the property.

Many landed residential properties in such neighbourhoods have escalated in prices and even intermediate units are being sold at more than RM800,000 to close to RM1mil a unit.

A check in the classified pages of The Star shows only limited units of landed residences up for sale around the Klang Valley. Most of the “for sale” units are high-rise apartments or condominiums.

As for developers, it pays to plan their townships or projects based on a well balanced and sustainable environment for living, working and playing or recreation.

Instead of maximising the built-up space, developers should strive to achieve the optimum and balanced ratio between the built and “free” or undeveloped space in their projects.

By freeing up land to provide for more pedestrian walkways that link the different neighbourhoods, green lungs and other community facilities including playgrounds, residents will be able to walk more and drive less – thus lowering their carbon footprint.

Besides lowering the cost of living, such facilities will also promote a stronger community camaraderie and kinship among the residents.

These could be the reasons why Desa ParkCity homes are fetching one of the highest price premium in Kuala Lumpur, and possibly the country today.

Since the 473 acre-township took off in 2002, houses in Desa ParkCity have registered a compounded price appreciation of between 50% and 150%, or about 10% to 25% a year, in the secondary market.

From about RM470,000, or about RM235 per sq ft for a terrace house of 2,000 sq ft in 2002, the price has escalated to RM563 per sq ft last month. At a balloting on June 26, all the 137 terraced houses of 3,100 sq ft priced at RM1.75mil were snapped up. More than 800 buyers turned up for the balloting.

Desa ParkCity is a thriving “walkable” township with nine foot walkways connecting all the neighbourhoods.

Its tree-lined streets, a 43-acre central park and well-landscaped neighbourhood parks are among its main attractions.

The success of Desa ParkCity shows that developers should not just exploit the environment catchphrase as a marketing tool, but to go the extra mile to ensure that the townships or projects being built have all the right attributes that promote a holistic, wholesome and secure environment.

Developments with community, park-like environment, walkable streets and top-notch security will be a welcome change from the usual barrack-style layout of most housing estates that are still being built today.

Bad road congestion seems like a “perpetual” occurence in many of our townships. To alleviate the problem, developers should not overbuild and have better traffic planning, including more entrances and exits to make driving within the townships more pleasant.

Likewise, while the Government is making plans to redevelop some of the federal assets and land in Kuala Lumpur and the Klang Valley, the planning authorities should set aside land for the environment cause.

Our cities certainly need more central parks to allow city folk some natural avenues to unwind and relax.

Deputy news editor Angie Ng believes developers that adopt the noble objective of building wholesome environments for the people will be held in high regard for their nobility.

By The Star

CapitaMalls Asia has RM2b to invest in Malaysia

SINGAPORE'S CapitaMalls Asia Ltd (CMA) is looking at investing up to RM2 billion to build and buy malls in Malaysia.

Once the asset starts to generate income, it may then be sold to the CapitaMalls Malaysia Trust (CMMT). CMMT, Malaysia's second largest property trust was listed on Bursa Malaysia yesterday.

CapitaMalls chief executive officer Lim Beng Chee, said that all the money raised from the initial public offering will be reinvested into the Malaysian market.

"We have close to RM800 million from the listing. We have intention to continue investing in Malaysia as we see opportunities in Malaysia.

"So, while CMMT can go on to acquire income producing assets which is yield accretive, there could be projects that are not accretive from day one and need to add value.

"We will be setting up a fund to undertake some development assets to build a pipeline for CMMT to grow over time," Lim said at a press conference following the listing of CMMT.

The development fund, to be ready within a year, will have RM1 billion and can be geared up to RM2 billion.

While the preference is for the fund to build retail properties, Lim said that it may also collaborate with its parent CapitalLand Ltd for funding to build an integrated development which includes a retail component. It can also purchase assets and enhance them.

Similarly, the fund can buy integrated properties provided that at least 65 per cent of the gross floor area, asset value or rental income is the retail portion. If the retail portion is less than 65 per cent, it could opt to do a joint venture with CapitaLand Ltd.

Also, if necessary, the retail portion of an integrated property can be split from the remaining component and offered to CMMT.

Meanwhile, Sharon Lim, chief executive officer of CapitaMalls Malaysia Reit Management said that it has allocated RM40 million and RM60 million for capital expenditure and asset enhancement for 2010 and 2011 respectively.

The CMMT, now has a portfolio of three malls - Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. Together these properties with some 1.88 million sq ft in net lettable area is valued at RM2.13 billion.

CMMT's initial public offering raised RM785.2 million from local and foreign institutional investors. The price for institutional and cornerstone investors was fixed at RM1 per unit and at 98 sen for retail investors.

Retail investors are expected to get a distribution yield of 7.3 per cent in 2010 and 7.6 per cent in 2011.

Yesterday, CMMT's units closed at 98 sen, a 2 sen discount from its reference price of RM1. A total of 11.98 million units were traded.

By Business Times

Lower debut for CMMT

KUALA LUMPUR: Shares of CapitaMalls Malaysia Trust (CMMT), the largest “ pure-play” shopping mall real estate investment trust (REIT) in Malaysia, closed lower yesterday on its trading debut on Bursa Malaysia’s main market at 98 sen, 2 sen lower than its institutional price of RM1 but at par with its retail price.

The stock opened at 98.5 sen, its high for the day, and had a low of 97.5 sen before closing the day with 11.987 million shares changing hands.

CMMT’s initial public offering comprised 786.5 million units, of which 67.5 million were for retail investors and the rest for institutional investors.


Lim Beng Chee and Sharon Lim at the press conference after the listing.

CapitaMall Asia Ltd chief executive officer Lim Beng Chee said he was happy with the opening price as retail investors managed to gain a premium of 0.5 sen.

“Despite the small premium, the most important thing is that the market recognised the value and assets class hidden,” he told reporters yesterday after the listing ceremony.

Lim said CapitaMalls Asia planned to set up a RM1bil fund within a year to build and prepare a pipeline of assets for the Malaysian property trust. “We are looking for maybe another three or four malls to add to our existing assets here in Malaysia,” he said.

CMMT is managed by CapitaMalls Malaysia REIT Management Sdn Bhd, a joint venture between CapitaMalls Asia, which is one of Asia’s largest shopping malls developers, and Malaysian Industrial Development Finance Bhd.

Its portfolio in Malaysia comprises three assets, namely Gurney Plaza in Penang, an interest in Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor.

CapitaMalls Asia is part of CapitaLand Ltd, South-East Asia’s biggest developer, which owns shopping malls in China, India and Singapore.

Meanwhile, CMMT – which is also the country’s second biggest property trust – expects to distribute its yield of 7.3% for the forecast period of 2010 and 7.6% for forecast year 2011 to retail investors based on the unit price of 98 sen.

CapitaMalls Malaysia REIT Management chief executive officer Sharon Lim said the yield distribution was really attractive compared with some other investment yields in the market.

“This is much more attractive than Malaysian bonds, which offer about 4% yield, as well as fixed deposit rates of about 3%,” she told reporters yesterday.

OSK Research Sdn Bhd in its latest report stated that the dividend yield of 7.5% was “well below” the average 8.5% of other Malaysian REITs.

It said CMMT was likely to offer very limited upside to its unit holders, at least in the medium term.

Having said that, it added that the “premium” might be justified given that the trust would be the second largest in Malaysia, and with the largest free float of 58.3%.

Given its defensive nature and longer-term organic growth catalyst it potentially offered, CMMT was likely to appeal to certain classes of investors only, especially those with a defensive investment strategy, it said.

By The Star

UEM-Bina Puri venture wins RM997m LCCT deal

UEM Construction-Bina Puri joint venture will be the main contractor for the construction of the new LCCT at KLIA in Sepang.

UEM Construction Sdn Bhd (UEMC) has won a RM997.23 million contract with Bina Puri Holdings Bhd to build a much-anticipated permanent low-cost carrier terminal (LCCT) at the KL International Airport (KLIA) in Sepang for airport operator Malaysia Airports Holdings Bhd (MAHB).



MAHB told Bursa Malaysia yesterday that it had appointed the UEMC-Bina Puri joint venture (JV), a 60:40 JV that was established in February, as the main contractor for the construction of the new LCCT.

In a separate filing to the stock exchange, Bina Puri group managing director Tan Sri Tee Hock Seng said the company accepted the letter of award yesterday in the name of UEMC-Bina Puri JV to undertake the design, construction and maintenance of the new LCCT's main terminal building, satellite building, sky bridge and piers.

This works package is expected to be completed within 20 months.

The contract is expected to contribute positively to Bina Puri's earnings for the financial year ending December 31 2010.

"With the award, the group's current book order stands at RM2.7 billion. The total value of contracts secured this year is RM1.51 billion," Bina Puri said.

Its share price gained 31 sen to RM1.42 yesterday on news of the award.

Meanwhile, UEM Group managing director and chief executive officer Datuk Izzaddin Idris said in a statement that the group was privileged to have clinched the mega project, helping its construction order book grow to RM3.7 billion.

UEMC is a wholly-owned subsidiary of UEM Group.

"Based on our track record in building the KLIA in Sepang and other infrastructure assets, we strongly believe that we will deliver an LCCT complex that is of global standing," said Izzaddin.

MAHB managing director Tan Sri Bashir Ahmad recently told reporters that the new LCCT that will be ready by March 2012 will be bigger than previously planned.

However, details of the revised cost, size and capacity of the new LCCT have yet to be announced. The project was originally supposed to cost RM2 billion and cater for 30 million passenger per year, with potential capacity for 45 million passengers per year.

Prior to yesterday's main contractor award, MAHB had given out two other contracts for the new LCCT project. The first, worth RM362 million, was given to WCT Bhd last December for site preparation, earthworks and main drainage. In January, a RM291 million contract was awarded to Gadang Bhd to carry out earthworks for the runway and taxiways.

By Business Times