REIT vs direct real estate investment

Investing in real estate can be tricky.

For a start, those who intend to make a quick buck by “flipping” property within a few months will find that it is risky, especially in a property market less buoyant than in Hong Kong or Singapore.

The alternative is hard work, that is, managing residential properties (and absorbing all the hidden costs that come along with it) as long term investments, receiving rent and selling them off for a capital gain or profit.

Another factor that may deter investors from real estate is the difficulty in raising enough capital to purchase a particular property.

So, should you consider putting your money in a real estate investment trust (REIT) instead?

Granted, a REIT does not comprise residential property, but if it is profit you are interested in, it may be an option.

REITs originated in the United States in the 1960s, but it wasn’t until 2005 that Axis REIT became the first property trust to be listed on Bursa Malaysia.

In Malaysia, there are now 14 REITs to choose from on the Main Market, offering investors a choice to own stakes in commercial, industrial, plantation and office real estate.

Aside from being more liquid than investing in real estate, one of the reasons why REITs are more appealing than investing in actual real estate is because of its high yield.

Gross dividend yield in the FTSE Bursa Malaysia index is about 2.9%, while the average yield for a REIT in Malaysia is about 8%.

REITs yield higher returns because commercial real estate generates a huge amount of cash flow from rentals.

If one invests in real estate though, it may be hard to charge the most preferred rental rate, even if the property had been purchased for a hefty price, simply due to market forces.

As for REIT prices on the stock market, they generally tend to be “low risk” because their prices are sustained by the yield factor, hence the volatility element is reduced.

Even so, REITs are not immune to economic difficulties.

REITs such as AmFirst, Hektar, UOA and Axis hit their lowest point in the middle of the financial crisis in 2008 but have since recovered to their pre-crisis prices, if not better.

Part of their recovery, says an analyst, is due to good management, good investor relations and a proven track record when it comes to acquisitions.

Still, one critic of REITs says it is probably more worthwhile to purchase stocks of established companies if they want to play safe.

Advocates of the property trust point to the fact that REITs are a different investment class altogether, choosing to view them as an investment that bridges the gap between a fixed deposit and the stock market.

One drawback of REITs is their inability to benefit from capital gain, unlike real estate.

But with REITs, returns may be secured with less risk which make them a nice way to take advantage of the big booms in the real estate market.

Investors can do without taking on the risk of mortgage payments, unscrupulous tenants and rising tax rates.

However, less risk obviously comes with less reward.

Good capital appreciation is still the main factor driving demand for landed residential properties.

Since 2008, there has been an annual compounded growth rate of 10% for capital appreciation in residential hotspots such as Petaling Jaya, Taman Tun Dr. Ismail and Mont Kiara.

A home can go up in value ten-fold given the right market conditions, which would give one a hefty sum of money right into his or her pocket - this won’t happen with any REIT.

Ultimately, for someone who wants to have more control of their assets and is willing to improve their value, investing in residential real estate can be a good choice.

For someone looking for passive real estate investment, with the added benefits of portfolio diversification and liquidity, a REIT is a good option to consider.

Think of them as allowing investors to be exposed to the real estate market without having to fork out as much capital.

Alternatively, REITs could be purchased as part of a balanced portfolio, until one has enough capital to enter the real estate market.

By The Star

GuocoLand unit ups stake in Tower REIT

PETALING JAYA: GuocoLand Malaysia Bhd’s wholly-owned HLP Equities Sdn Bhd has acquired 4.55 million units, or 1.62%, in Tower REIT for RM5.1mil including transaction costs via a direct transaction.

The acquisition raised GuocoLand’s interest in Tower REIT to 21.66% from 20.04% previously, it told Bursa Malaysia yesterday.

Tower REIT is a real estate investment trust that owns three office buildings – Menara HLA, Menara ING and HP Towers.

By The Star

Bolton to unveil RM650m 'The Wharf'

Property developer Bolton Bhd will unveil a new commercial development in Puchong, known as "The Wharf", later this month, said its executive director Chan Wing Kwong.

The development, with a gross development value of RM650 million, is a mixed offering of boutique shop offices, service apartments and a retail shopping mall.

The Wharf would highlight green features that would capture the imagination of an ever-demanding market, he told reporters after the company's annual general meeting today.

Other projects in the pipeline include a 33-storey development, known as "Sixceylon" at Bukit Ceylon, Kuala Lumpur, comprising 215 units of luxury condominiums with a gross development value of about RM180.0 million.

Meanwhile, "51 Gurney" is a unique offering comprises 71 units of super luxury condominium with a gross development value of about RM150.0 million.

Asked on expansion plans, he said the company would continue building its strength in the Malaysian property market while consider venturing overseas in the next one to two years.
"We will look within the region," he added.

For the financial year ended March 31, 2010, the company registered a pre-tax profit of RM50.7 million, up 33 per cent, compared with 38.113 million chalked up in the same period last year.

However, revenue declined to RM257.473 million from RM292.044 million previously.

By Bernama

Bolton to start RM500m projects in 2010

Bolton Bhd, a Malaysian property developer, will start property projects this year that may generate RM500 million in sales, chairman Azman Yahya told reporters in Shah Alam, near Kuala Lumpur today.

The projects are mostly in the capital, including high-end condominiums in Bukit Tunku residential area and Jalan Bukit Ceylon, Azman said.

By Bloomberg

CDL weighs options on prime KL land

PETALING JAYA: City Develop-ments Ltd of Singapore (CDL) is considering the available options, including whether to sell the 32,000 sq ft land in Jalan Bukit Bintang in Kuala Lumpur that is owned by a wholly-owned unit of its 54% subsidiary, Millennium & Copthorne Hotels plc.

In a statement yesterday, CDL said the group had from time to time received indications of interest from third parties keen on the land. CDL will make further announcements as appropriate if and when any agreement has been entered into for the sale of the subject site,” it said.

CDL’s Malaysian unit, City Developments Sdn Bhd, had earlier planned to build a 42-storey high-end serviced apartment project, Millennium Residence, comprising 135 one-, two- and three-bedroom units on the site.

It was initially planned for launch in the first half of 2008 but the project has been delayed several times due to the soft market for high-end condominiums around the KLCC area. The parcel is located between the Grand Millennium Hotel and the Pavilion Kuala Lumpur shopping centre.

CDL, which is owned by Singapore tycoon Kwek Leng Beng, owns the Grand Millennium Hotel.

A local daily had on Wednesday reported that the selling price for the land was being negotiated for more than RM3,000 per sq ft (psf).

An analyst in a local brokerage said “if materialised, this will re-write the previous record set by Sunrise for Wisma Angkasa Raya (RM2,588psf) and recent transactions of RM2,000-RM2,200psf for landbank around the KLCC area.”

Commenting on the possible sale of the land, a real estate consultant said land around KLCC was getting scarce and although the market was still quite soft, companies with deep pockets were still on the lookout for strategic land.

“The successful bidder may have to hold the land for a while until the market gets better if it intends to build a residential project there,” he told StarBiz.

By The Star

KL Plaza to re-open as farenheit88

KUALA LUMPUR: The 27-year-old KL Plaza will be opening for business on Sunday after a refurbishment of more than RM100mil.

It will be officially launched next month, mall manager Kuala Lumpur Pavilion Sdn Bhd said.

Its chief executive officer for retail Joyce Yap yesterday unveiled two of the anchor tenants for the former KL Plaza, which has been renamed fahrenheit88, at a press conference.

These are Japan’s top casual wear brand UNIQLO and Malaysia’s Signature IT.

Both of them will be taking up 23,000 sq ft and 75,300 sq ft of space respectively in the mall, which has a net lettable area of about 300,000 sq ft, about a quarter the size of Pavilion KL.

Yap, who will be managing both malls, said there would be more homegrown brands in fahrenheit88.

“Unlike other shopping malls where the average outlet is about 2,000 sq ft, about 50% of the stores in this new mall will be between 200 and 500 sq ft. Many of them will be small and medium-sized businesses,” she said.

Yap, who is also managing Kuala Lumpur Pavilion, said fahrenheit88 would have a different appeal.

Its main target will be those aged between 18 and 35.

UNIQLO is making its debut in Kuala Lumpur after entering into a joint venture with DNP Clothing Sdn Bhd, a subsidiary of Wing Tai Asia, with a capital of RM18.8mil.

UNIQLO owns 55% while DNP the remaining 45%. The brand entered the Singapore market 18 months ago.

DNP operates more than 50 retails outlets in Malaysia carrying various brands such as Dorothy Perkins, Miss Selfridge, Top Man and Top Shop.

UNIQLO managing director Satoshi Onoguchi said there were plans to open more stores in all major cities around the world.

The expansion into Singapore in April last year marked its entry into South-East Asia.

There are currently over 900 stores worldwide.

Fahreheit88 is owned by Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd.

The principal of this fund is Qatar Investment Authority (QIA). QIA also owns 49% of the Pavilion KL shopping mall nearby.

Fahrenheit88, formerly known as KL Plaza, was acquired by Makna Mujur for RM470mil in 2007. KL Plaza was previously owned by the Berjaya group.

By AP

Ivory to buy land in Penang for RM25m

IVORY Properties Group Bhd will buy a plot of land measuring 0.5ha in Bandar Batu Ferringhi, Penang, for RM25 million.

Ivory told Bursa Malaysia yesterday that it had entered into a conditional sale and purchase agreement with Lim Soon Hin and Lim Soon Vin for the purpose.

It plans to build 96 units of condominium with an estimated GDV of RM159 million on the land.

By Business Times

Hektar REIT: Buy, fair value price RM1.23

AMRESEARCH Sdn Bhd has maintained a "buy" call on Hektar REIT Bhd's due to its future earnings potential which are in line with expectations despite a weak occupancy.

In its research note, AmResearch said Hektar has attractive yield and defensive assets under its portfolio with a fair value of RM1.23 a unit under review pending a meeting with the management.

Hektar reported a net income of RM9 million for second quarter 2010, taking its first half earnings in 2010 to RM19 million.

Net income grew by 7 per cent on the back of 4 per cent increase in rental income. This is mostly driven by stronger occupancy in Mahkota Parade following its asset enhancement exercise.
Similarly, Wetex Parade showed stronger occupancy to 92 per cent, from 90 per cent as at end of last year.

However, Subang Parade's tenancy dropped to 95 per cent (from 100 per cent) as some of its tenants moved out, most notably Toys R US.

While this is a slight setback to the portfolio, AmResearch said this gives an opportunity for Hektar to redesign its mall concept at certain floors, thus enhancing its mall.

At current price, the REIT is trading at par to its net asset value of RM1.28 per unit and its current yield of 9 per cent remains attractive comparing against 10-year government bonds (4.2 per cent) and fixed deposit of 2.8 per cent.

By Business Times

Distressed property sales to increase

LONDON: More distressed property sales are expected in the next 12 months as changes to international regulations will likely raise the capital cost of holding commercial property on banks' balance sheets, an industry body said.

Growth in distressed property listings eased in the second quarter of this year, but are expected to worsen in the third, the UK Royal Institution of Chartered Surveyors (RICS) said yesterday, based on the results of a survey of its members.

RICS defines distressed properties as those with foreclosure orders or which are advertised for sale by their mortgagee, and which tend to fetch lower prices than their market value.

Three European countries - Portugal, Spain and Germany - were worse off in the second quarter, reporting distress in their market had risen at a faster pace.

By Reuters

Singapore's Kwek in talks to sell KL land

The parcel of land in Jalan Bukit Bintang could fetch more than RM3,000 per sq ft, possibly a record price for a land deal in Malaysia's history.

Singapore's property tycoon Kwek Leng Beng is in talks to sell a parcel of land in Jalan Bukit Bintang, Kuala Lumpur, which could possibly fetch a record price for a land deal in this country's history.

It is understood that the selling price for the land, owned by Kwek's City Developments Ltd (CDL), is being negotiated for more than RM3,000 per sq ft.

To date, the most expensive land deal reported has been Sunrise Bhd's acquisition of Wisma Angkasa Raya in Jalan Ampang, Kuala Lumpur, for RM2,588 per sq ft. In May this year, FFM Bhd and Kuok Brothers Sdn Bhd sold a piece of land in Jalan Perak, Kuala Lumpur, for RM2,200 per sq ft.

CDL's land in Jalan Bukit Bintang is about 32,000 sq ft. At RM3,000 per sq ft, the deal could fetch RM96 million.

The land sits between the Grand Millennium Kuala Lumpur hotel and the Pavilion Kuala Lumpur shopping centre. CDL, which is part of Singapore's Hong Leong Group, also owns the Grand Millennium hotel.

Contenders for the land are believed to be the owner of Pavilion Kuala Lumpur and the YTL group, both of which have sizeable assets along Jalan Bukit Bintang.

Sources told Business Times that the RM500 million Millennium Residences project originally planned for the site and launched in 2007 had been aborted and that the land was being negotiated for sale.

A quick check at the site revealed that the project signage and hoarding had been removed. Some work on the 42-storey high-end condominium with an additional 15-storey crown started in 2008, but has since stalled.

In late March, a spokesperson for Singapore's Hong Leong said that the Millennium Residences would be launched later this year.

However, replying to a follow-up question from Business Times last week, the spokesperson said: "There are no details on the Millennium Residences available at this point."

When asked if the project had been scrapped and the land was being negotiated for sale, the spokesperson said: "We have no comment at this stage."

Pavilion Kuala Lumpur is wholly owned by Urusharta Cemerlang Sdn Bhd, which in turn is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority (QIA).

Pavilion Kuala Lumpur will be managing the new Fahrenheit 88 shopping centre, previously known as KL Plaza. It belongs to Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd, of which the principal is the QIA.

YTL owns the Starhill Gallery and Lot 10 shopping centres and the JW Marriott hotel in the vicinity.

By Business Times

CapitaMalls may seek venture in Vietnam

CapitaMalls Asia Ltd, the retail property unit of Southeast Asia’s biggest developer, may seek shopping-center ventures in Vietnam after expanding in markets including China and India.

Singapore-based CapitaMalls may collaborate with its parent company CapitaLand Ltd to explore "interesting opportunities" in Vietnam, Chief Executive Officer Lim Beng Chee said.

CapitaLand, which is building homes in the nation, said this year it expects properties in Vietnam to make up 10 per cent of its assets in three to five years from about 1.5 per cent now.

“If they come across something interesting that we could look at for a shopping mall, we can tap on their expertise to go into the market,” Lim said in an interview in Singapore late yesterday.

CapitaMalls is seeking retail projects in Vietnam as the economy expanded 6.4 per cent in the three months through June, compared with 5.8 per cent in the first quarter. The company also plans to invest S$800 million (US$592 million) to S$1 billion in the second half in Singapore, Malaysia and China, it said yesterday.

The retail property operator will also open three more malls in China by the end of the year in addition to the four properties it recently acquired, Lim said.

"There is definitely a positive outlook on retail in the region," said Ong Choon Fah, head of research at DTZ Debenham Tie Leung in Singapore, a real-estate consulting group. Lifestyle changes in the region "will support retail, but it’s very competitive. There will be some that do exceedingly well, and there will be some that fall to the wayside."

CapitaMalls said yesterday its second-quarter profit fell 24 per cent to S$113.1 million as it booked a smaller gain from the increase in value of its properties. Without the one-time changes, earnings would have increased six times, it said.

In Singapore, CapitaMalls plans to eventually offer its ION mall development along the Orchard Road shopping belt to CapitaMall Trust, the island state’s biggest real-estate investment trust, which it manages. The sale will only be considered when the property is "stabilized," Lim said.

By Bloomberg

Sime aims to double revenue from healthcare

Sime Darby Bhd, the country's largest conglomerate, wants to double its healthcare revenue in three years, looking for land outside the Klang Valley as well as Sabah and Sarawak to build its hospital portfolio.

The healthcare division currently contributes less than 5 per cent to group revenue.

Last year, Sime Darby posted a net profit of RM2.3 billion on a revenue of RM31.01 billion.

Sime Darby Property Bhd managing director Tunku Datuk Badlishah Tunku Annuar said the group may buy land to build its own hospitals or co-develop with others.

Tunku Badlishah said it may also consider buying existing hospitals and refurbishing the properties.
"It can be costly to set up a hospital. Returns on investment can take a while. The best thing is to form smart partnerships like what we did with Perdana ParkCity (Sdn Bhd)," he said.

Perdana ParkCity, a unit of the timber-based Samling group, is building a RM143 million hospital on a design, build and lease concept in the Desa ParkCity township in Bukit Menjalara, Kuala Lumpur.

The 300-bed hospital, called Sime Darby Medical Desa Park City, will operate by first quarter of 2013.

Sime Darby Healthcare has an agreement with Perdana ParkCity to lease the hospital for 15 years.

"We are bullish on the hospital, which is dedicated to women and children's healthcare. It will have good catchment," he said after the ground breaking ceremony at the project site yesterday.

It was officiated by City Hall director general Datuk Salleh Yusup. Also present were Sime Darby Medical Centre Subang Jaya chairman Tengku Datuk Ahmad Shah Sultan Salahuddin Abdul Aziz Shah, Perdana ParckCity chairman Yaw Chee Siew and chief executive officer Lee Liam Chye.

The hospital will comprise a three-storey podium block featuring full service outpatient clinics, advanced diagnostics services, six operating theatres, a 20-bed critical care unit, and a six-storey ward.

It will be the fourth full-fledged hospital operated by Sime Darby Group.

It now owns and operates the 393-bed Sime Darby Medical Centre (previously known as the Subang Jaya Medical Centre) in Subang Jaya and the Sime Darby Specialist Centre Megah in Petaling Jaya.

The group recently acquired a 220-bed Sime Darby Medical Centre Ara Damansara, which is under refurbishment and will open by 2011.

By Business Times

Dijaya, IWSB in Danga Bay venture

Property developers Dijaya Corp Bhd and Iskandar Water Front Sdn Bhd (IWSB) will jointly develop two parcels of prime waterfront land at Danga Bay, Johor Baru, into a mixed development project that carries a gross value of RM3.8 billion over the next 12 years.

Goldhill Quest Sdn Bhd - a 60:40 joint-venture between Nagasari Cerdas Sdn Bhd (a wholly-owned subsidiary of Dijaya Corp) and Global Corporate Development Bhd, which is wholly-owned by IWSB - yesterday sealed the deal to purchase the land for the project from Danga Bay Sdn Bhd for RM308 million or RM190 per sq ft.

Johor Menteri Besar Datuk Abdul Ghani Othman witnessed the signing of the sale and purchase agreements for the two parcels of land totalling 14.8ha in Johor Baru.

It is one of the biggest private land deals since the inception of Iskandar Malaysia in 2006, where it is located.

Dijaya was represented at the signing ceremony by its chairman Datuk Rohana Mahmood and managing director Datuk Tong Kien Onn, and IWSB by its chairman Johar Salim Yahya and chief executive officer Datuk Lim Kang Hoo.

Also present was Dijaya group chief executive officer Tan Sri Danny Tan Chee Sing.

Dijaya is planning an integrated development in Danga Bay, featuring prestigious commercial, residential and leisure properties.

The group is known for its flagship Tropicana Golf and Country Resort development in Petaling Jaya.

Abdul Ghani said the initiation of the project is a milestone in the development of Iskandar Malaysia as it represents the first major interest among local investors in the development corridor.

"It's an interesting investment trend as we at Iskandar Malaysia had started with those from the Middle East and Europe and countries such as South Korea.

"Now there seems to be a flurry of investment enquiries among the local companies. We are now looking at a potentially good mix of foreign and local investments in Iskandar Malaysia."

Abdul Ghani attributed the growing interest among local investors towards the development corridor to the level of commitment by the government and agencies tasked with making it a success, as well as the practicality of the area as the best choice of investment in the region.

By Business Times

Dijaya banking on Iskandar’s attraction

Tan Sri Danny Tan Chee Seng (left) and Iskandar Waterfront Sdn Bhd chairman Johar Salim Yahaya at the signing of agreements between their companies yesterday

JOHOR BARU: Dijaya Corp Bhd is banking on the long-term sustainable development of Iskandar Malaysia as the main attraction for its Danga Bay project here.

Group chief executive officer Tan Sri Danny Tan Chee Sing said apart from the project’s location on the prime waterfront land, Johor’s close proximity to Singapore would also be another selling point.

“The time is right for us to come to Iskandar in view of the good progress in the economic growth corridor since its launch,” he said at a press conference at the signing of the sales and purchase agreements for two parcels of land, totalling about 14.97ha in Danga Bay, for RM308mil.

The land is being acquired by Goldhill Quest Sdn Bhd – a 60:40 joint-venture between Nagasari Cerdas Sdn Bhd (a wholly-owned subsidiary of Dijaya Corp) and Global Corporate Development Sdn Bhd, which is 100% owned by Iskandar Waterfront Sdn Bhd.

Tan said Goldhill Quest would develop the project, which has a total gross development value of RM3.8bil, over the next 12 years.

Components of the integrated waterfront development project would include a stand-alone retail mall, four- and five-star hotel towers and serviced apartments blocks, he said.

“The project is likely to be known as Tropicana @ Danga Bay, after our flagship Tropicana Golf & Country Resort in Petaling Jaya,” Tan said.

Meanwhile, Johor Mentri Besar Datuk Abdul Ghani Othman said demand for high-end properties in Iskandar was on the upward trend and Singaporeans would be the major buyers for these properties.

He also said Khazanah Nasional Bhd and Temasek Holdings Ltd’s proposed joint-venture iconic wellness township project in Danga Bay augured well for Iskandar.

By The Star

KYM, Vale agree to extend deadline for property sale

PETALING JAYA: KYM Holdings Bhd has mutually agreed with Harta Makmur Sdn Bhd and Vale Malaysia Manufacturing Sdn Bhd to extend the cut-off date for a sale and purchase agreement (SPA) involving 13 parcels of leasehold properties to Aug 31.

In a filing with Bursa Malaysia yesterday, KYM said the parties had signed a conditional SPA on March 31 pursuant to Vale exercising its option to purchase the properties, totalling 305.94ha, from KYM’s 54%-owned unit Harta Makmur for RM93.76mil cash.

Harta Makmur last year sold 485.6ha of leasehold land in Teluk Rubiah to Vale for RM195.7mil.year.

In a separate statement, KYM said its wholly-owned unit KYM Built Sdn Bhd had on July 29 accepted a contract from Vale Malaysia for the refurbishment of a building for the use as a site office and upgrading of the main entrance at Teluk Rubiah, Perak for RM300,265.

“The contract is expected to commence next week and will be completed within a month.

“None of the directors or major shareholders or persons connected to the directors or major shareholders of KYM has any direct or indirect interest in the award of contract,” it said.

By The Star

HK property prices set to rise another 15pc

HONG KONG: Hong Kong home prices will rise another 15 per cent in the next 12 months as limited supply forces buyers to pay more for property that’s already expensive, CLSA Ltd’s Nicole Wong said.

Prices will increase because the city’s promising job market and growing wealth will help drive demand for real estate while supply doesn’t increase much, Wong, the regional head of property research for CLSA, said at a media briefing yesterday .

“Is Hong Kong real estate too expensive? Definitely,” Wong said.

By Bloomberg

UEM Land expects brisk Symphony Hills sales

UEM Land Holdings Bhd, the real estate investment and property development arm of UEM Group Bhd, believes its first phase of landed properties launched in Cyberjaya will be snapped up within weeks as homebuyers see value in the properties.



"When one sells, one must sell value," said managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim in Cyberjaya last Saturday.

Its new development, dubbed Symphony Hills, was unveiled to special invited guests on Saturday.

Wan Abdullah said the response has been "very good" so far as there were interested buyers keen to book the properties prior to the official launch.

Based on its opening weekend alone, it has sold more than 40 units valued at about RM60 million.
He said these landed properties are sold for about RM320 per sq ft, which is competitive against its other landed property developers within the vicinity.

However, he believes Symphony Hills offers greater value to its peers because it is based on the "Connected Intelligent Community" platform. It will also have a clubhouse.

"It's like buying a condominium, only that it is a landed property. So, at about RM320 per sq ft, homebuyers should be able to see the value and potential of it," he said.

The company's residential property development project in Cyberjaya will comprise of 450 units of terrace and semi-detached houses, as well as over 500 units of low-rise apartments.

For the first phase, it will only unveil 122 units of landed properties.

Symphony Hills is also the company's maiden project in Cyberjaya.

There will be four designs of houses under the first phase, namely Beethoven, Mozart, Schumann and Schubert.

The Mozart and Schubert units are terrace houses, while the Schumann units are townhouses, and Beethoven units are semi-detached houses which the company calls it as twin villas.

Mozart and Schubert terrace houses come in various sizes, ranging from 3137 sq ft to 3703 sq ft.

The Schumann townhouse comes in studio and duplex units, while the Beethoven twin villas comes in two types: the three-storey Twin Villa with a total built-up area of 5,661 sq ft and the two-storey version (4,620 sq ft).

Wan Abdullah said more and more people are considering living in Cyberjaya these days, as it is now "more convenient" for people to travel to Cyberjaya.

By Business Times

Dijaya plans RM3.8b Danga Bay project

Property developer Dijaya Corporation Bhd has bought two parcels of prime land totalling 37 acres in Danga Bay, Iskandar Malaysia, for RM308 million.

The land is being acquired by Goldhill Quest Sdn Bhd, a joint venture between Nagasari Cerdas Sdn Bhd (a wholly-owned subsidiary of Dijaya Corp) and Global Corporate Development Sdn Bhd, owned by Iskandar Waterfront Sdn Bhd.

Johor Menteri Besar Datuk Abdul Ghani Othman, who witnessed the signing of the sales and purchase and joint venture agreements, said the expected gross development value of the land is RM3.8 billion, spanning 12 years.

"The RM3.8 billion investment of Dijaya Corp in Danga Bay is yet another milestone in our continuing efforts to promote and position Iskandar Malaysia as a premier economic zone," he said in Johir Bahru today.

According to him, the sizeable investment by Dijaya and Iskandar Waterfront will have a massive impact on the local economy.

"Local supliers, contractors, professionals and even the man-in-the-street stand to benefit from the investment, which in turn will spur the Johor economy significantly," he said.

Abdul Ghani said more good news were expected as several other prospective investors were now eyeing major property developments in Iskandar Malaysia and Danga Bay.

"In the case of Danga Bay specifically, I'm told several interested parties are now literally knocking on Danga Bay's door, wanting a slice of the action here. This speaks volume about investor confidence and the prospect for world-class developments coming up here," he said.

Abdul Ghani said that investor confidence on Iskandar Malaysia was on the rise.

As at July 2010, the total cumulative investment for Iskandar Malaysia is RM62.32 billion, of which RM25.44 bilion or 40 per cent has been actualised, he said.

Dijaya Corp's group chief executive Tan Sri Danny Tan said the development in Danga Bay will include prestigious commercial, residential and leisure projects.

"This will include office and commercial properties, hotel, shopping complex, condominiums and a full range of world-class waterfront lifestyle projects," he said.

By Bernama

Property market to stay vibrant

Malaysia's property market is due to stay vibrant in 2010 due to low borrowing costs, easier foreign ownership rules and a new home purchase scheme by the nation's biggest pension fund.

Last year, there was a 0.7 per cent drop in the total number of property transactions but the number of unsold properties fell by 13 per cent for residential units.

"This shows that the property market in Malaysia is more resilient and stable, especially in demand locations such as in the Klang Valley," said Housing and Local Government Minister Datuk Wira Chor Chee Heung.

He spoke at the opening of a three-day property fair organised by iProperty.com in Kuala Lumpur yesterday.

The total number of property transactions dropped 0.7 per cent to 337,859 in 2009 from 340,240 in 2008. The bulk of it came from the housing market, making up 63 per cent of the total deals and 52 per cent in terms of value.

"The total number of launches reduced only slightly from 48,830 units to 45,909 units in 2009, possibly due to some cautiousness among some developers. Selangor and Johor remains the leading states with 8,430 units and 7,099 units respectively," he said.

Speaking to reporters later, Chor lauded the Employees Provident Fund's (EPF) latest move, which would boost the local housing industry.

From August 1, EPF will launch a flexible withdrawal scheme for higher-end houses.

The scheme is open to contributors who have not made withdrawals under the existing scheme to buy a house or reduce their housing loans.

According to the EPF, the main difference of the new scheme is that it is designed to give qualifying members, who initially were not eligible for a higher loan, a better chance to boost their loan eligibility.

By Business Times

Empire mall sets RM350m revenue goal

MAMMOTH Empire Holdings Sdn Bhd expects to rake in RM350 million revenue a year from its newly opened Empire Shopping Gallery (ESG) in Subang Jaya, Selangor.

The five-storey lifestyle and contemporary mall features 180 retail stores, with anchor tenants like Tangs, Fitness First Platinum and Jaya Grocer.

ESG is part of the freehold Empire Subang commercial development, which includes the 10-storey, 210-unit Empire SoHo (small office/home office); 12-storey Empire Tower; and 13-storey, 199-room Empire Suites Hotel, a boutique hotel.

The RM450 million development is located next to the KTM station.



Datuk Sean Ng, managing director of Mammoth Empire, said that 90 per cent of the mall has been leased at between RM10 and RM25 a sq ft.

"We expect to lease the balance 10 per cent within the next two to three months. We are selective on the tenant mix as we want to maintain a certain quality," Ng told reporters after the official mall opening yesterday.

Mammoth Empire group executive director Danny J.Y. Cheah said it was looking to build its hotel business.



The Empire Suites Hotel is the first property to be managed and operated by the group.

The group is also developing Empire Damansara in Damansara Perdana, Petaling Jaya, which will feature residential units, SoHo, retail shops, offices and a hotel.

According to Cheah, Mammoth Empire is planning to launch an integrated development and a medium- to high-end gated residential project in Damansara Perdana by the year-end.

The integrated development will comprise SoHo, an office and residential tower, and a third hotel for the group.

Cheah said the master plan and value of the two projects are still being finalised.

"We believe there is a good growth story in Damansara Perdana for hotel, commercial and retail (developments). Early this year, we launched Empire Damansara and it was fully sold in two months," he said.

Cheah added that the group was talking to international operators to manage its hotels in Damansara Perdana.

By Business Times

Redeveloping Kampung Kerinchi

David Khor says Bangsar South City is changing the landscape of the area.

The rapid development of Bangsar South City in Kampung Kerinchi by UOA Group is now changing the landscape of the area that used to be a slum with squatters.

UOA Holdings Sdn Bhd general manager David Khor says the group is braving itself with the challenges and is optimistic of successfully developing the project within a few years.

“We are trying to lift the image of Kampung Kerinchi and along the way, contribute back to the people here by providing new amenities, jobs and upgrading the access roads,” Khor tells StarBizWeek in an interview recently.

The group, he says, is lucky in the sense that when it bought the land in 2005, the squatters had already been assisted by the Kuala Lumpur City Hall (DBKL) to be relocated to the nearby flats.

“Our task that time was to help DBKL to revive the delayed flats and complete them within three months and we did,” he says.

Spanning 60 acres with gross development value of RM4.5bil, the development of Bangsar South is set to be fully completed in the next five to seven years.

“The plan is to have an equal 50:50 ratio of commercial and residential component. About 20% of the development is already completed,” he says.

The development is called Bangsar South City because it shares the same postcode with Bangsar even though the location is in Kampung Kerinchi, says Khor.

Khor says the group is now working together with Kampung Kerinchi residents, with the help from non-governmental organisations, to aid single mothers in need of assistance and provide tuition classes for children as part of its corporate social responsibility.

“We want to uplift the image of Kampung Kerinchi to become the place of choice to live,” he says.

In fact, Khor says this is why the name of Jalan Kerinchi is still used as the address of Bangsar South City.

Before starting the development, Khor admitted that when the project was fully completed, traffic problems might arise as more people come to live and work.

“The result showed that the access roads are still sustainable to handle traffic. However, we do have plans to build new access roads when the time comes,” he says.

Touching on the outlook of property market last year and this year and its impact to the development, Khor says, despite the property market been affected by the economic crisis, the progress of Bangsar South City development has not been impacted at all and there are no delays.

“We believe this year, the outlook will be more positive and promising. Our sales are doing well based on the responds we received for our residential and commercial properties,” he says.

UOA is building grade A offices, retail avenues, boutique condominiums, service suites and a clubhouse. Two blocks of condominium called Acacia and Begonia which are now completed and enjoying 80% sales and in two months, the group will launch the service suites.

On the commercial side, its boutique offices have attracted some of the prominent local and international companies.

“The selling and rental rates for our residential and commercial properties are still competitive as compared to our neighbour, Bangsar, where the price for residential is around RM450 to RM500 per sq ft while the rental rate for our commercial side is around RM5.50 psf,” he says.

Khor says most of the buyers for the residences are local, with many of them being UOA followers over the past 20 years.

In January, Bangsar South City was awarded the MSC Malaysia Cybercentre status by the Government.

The group is now able to attract more MSC-status companies and by 2013, they expect to host some 200 information and communications technology (ICT) companies.

“Our focus is to become an important node in the local telehealth segment in collaboration with key figures in the health ICT industry,” Khor says.

The group has established a 24/7 Cybercentre management office and a one stop centre on its journey to help create, nurture and grow a vigorous ICT in tandem with the MSC Malaysia agenda.

Bangsar South City’s close proximity to Universiti Malaya also ensures availability of qualified graduates to man the demand of Bangsar South’s ICT tenants.

Elaborating further, Khor says the group has set up The Advanced Informatics and Management Centre (AIMaC), aiming to pioneer and become a regional hub for growing eHealth industry, spurring concurrent local development and attracting/fostering local talents.

“At the same time, we are supporting the green technology initiated by the Government by building more environmental friendly buildings that use less energy and planting more trees for a greener landscape,” he says.

For the future plans for the group, Khor says they are looking to buy strategic lands with focus location in the Klang Valley to add up to their existing 100 acres of land banks.

By The Star

Upbeat Crescendo lines up industrial property launches

CRESCENDO Corp Bhd, a property developer based in Johor, plans to launch RM230 million of industrial properties over the next 18 months as improved economy and growing ties with Singapore help boost demand for its industrial properties.

The company is also optimistic on its growth prospects over the next few years.

"We believe this year will be better than last year," said managing director Gooi Seong Lim after Crescendo's annual general meeting in Petaling Jaya, Selangor, yesterday.

The company, whose net profit grew for two consecutive years previously, saw its net profit declining 43 per cent for the year ended January 31 2010.

Its industrial properties, under the Nusa Cemerlang Industrial Park (NCIP) project, were launched about two years ago. To date, it has launched 157 units of industrial properties with a gross development value of RM460 million.

"So far, the response for our properties has been overwhelming. We have sold all the industrial properties that we built," Gooi said.

The NCIP is still at the early stages of development.

"So far, less than 100 acres of the 520 acres have been developed. We are still at Phase 1 of the development. I'm not sure when the NCIP will be fully developed as it is based on demand. But our past experience tells us it will likely take about 10 years for it to be fully developed," he said.

The company is also planning to launch its Bandar Cemerlang township by the end of next year.

Gooi said the decision to launch Bandar Cemerlang, a 1,390-acre mixed-development township, was mainly driven by two factors.

One is the availability of key infrastructure such as an interchange that connects the township as well as the expansion of a highway there from two lanes to four. They are expected to be ready in the second half of 2011.

The other factor relates to the supply issue, which Crescendo expects to taper off sometimes next year.

Gooi said the company will remain focused on developing properties in Johor in the near term.

"We have a landbank of more than 3,000 acres that should keep us busy for sometime," he said.

By Business Times

Building homes for different budgets

The rising cost of living, especially for city dwellers, mean they now have lower disposable income and may need to watch their spending even more closely.

Most Malaysians are trying their best to make ends meet. It is not uncommon these days to find folks juggling multiple jobs to feed their family.

But despite the trying times, more houses and other consumer products are being sold. Strong domestic consumption is a good thing as it can contribute towards a more resilient economy.

Prices of homes have escalated in the past one to 1½ years, and many people who have yet to buy their dream home are now in a quandary as they have to cough up at least 15% to 20% more due to the rise in house prices.

Serious home buyers say it is becoming increasingly difficult to buy landed property in a relatively decent location that is priced between RM300,000 and RM500,000 – which is what the average buyer can afford.

Buyers are somewhat bewildered that property prices have “gone through the roof” within such a relatively short time after the world’s worst financial crisis.

Comments like the following are common, “Unless it is in a really secluded area, nothing is less than RM500,000 these days, even for a double-storey terrace house of just about 20 ft by 70 ft.” Even projects in the suburban and “further away” areas have shot up in prices.

Good landed residential products, especially in mature neighbourhoods with readily available amenities and facilities, are hard to come by these days.

Instead of building more high-rise residences that are already facing an over supply situation, developers should tweak their products wherever possible and offer more landed housing projects.

This will be a good time for developers with sizeable land bank to move forward their project launches. Having the right product type is important as there are various needs to cater to.

Instead of just offering houses that are of one standard size, developers should consider offering a wider range of built-up space to meet the different affordability levels of buyers.

Inflationary pressure could be one of the reasons for the rise in property prices. Of course, market forces play an important role and the latest price hike shows that demand far surpasses supply.

The appetite for house purchases can be attributed to growing confidence among buyers and investors that property is a tangible investment instrument that has proven to be more reliable than other forms of investments.

The relatively sluggish equity market and low bank savings interest rates have also made property investment one of the more viable investment alternatives for Malaysians.

While there are rich Malaysians who will not even bat their eyes over a RM1mil or higher price tag for a typical intermediate terrace house, more than half of the Malaysian population are not “in that league” yet.

They have to turn to bank loans to finance their purchases and have to be prudent about their financial commitments.

After all, buying a property is a big ticket item, more so with the appreciated prices.

While it may sound good to belong to an exclusive residential community, such as a gated and guarded project in a sought after address, buyers have to be prudent and ensure they do not over commit themselves.

The norm is to keep the maximum monthly loan repayment to about a third of one’s take home pay.

Deputy news editor Angie Ng hopes developers will offer more “tailor made” housing products instead of the typical barrack-style houses that are being offered today.

By The Star (by Angie Ng)

K-Euro banks on income from Talam projects

KUMPULAN Europlus Bhd (K-Euro) is banking on residential construction jobs from its associate Talam Corp Bhd for income while waiting for its two major projects - the Canal City and the West Coast Expressway (WEC) - to take off.

The debt-laden firm hopes that its 26.51 per cent unit Talam, would be able to complete its stalled housing projects this year to be able to start selling houses in 2011.

"This financial year we won't lose money," said the company's president and chief executive officer Tan Sri Chan Ah Chye.

He said Talam has another 3,000 units of the total 13,000 units of stalled houses to finish by the end of this year.

Talam which is undergoing a restructuring exercise plans to launch properties as much as RM1 billion by the second half of next year.

"If there are no activities we are going to run at a loss again. So we are going to have activities," Chan told pressmen after the company's annual general meeting in Kuala Lumpur yesterday.

Last year, K-Euro posted a net loss of RM33.1 million. In the first quarter ended April 30 2010, its net loss was RM3.4 million.

Both the RM10 billion Canal City project and the RM3.5 billion West Coast Expressway has been snagged with delays.

K-Euro is hoping to pen a supplementary agreement with the Selangor State Government soon to commence the Canal City project located near Kota Kemuning and Putra Heights in Selangor.

K-Euro is still in negotiations with the the federal government to extend the WEC concession agreement and for changes to be made to the terms and conditions to ensure the project is fundable.

By Business Times

Ibraco to acquire land in Kuching

IBRACO Bhd, a property group, has signed a conditional deal to buy 2.63ha of land in Kuching, Sarawak, from Datuk Wee Song Ching for RM16 million in shares.

Wee, who now holds 4 per cent of Ibraco, will end up with 17.32 per cent of the group after completing the deal.

Ibraco plans to build a shopping mall on the land for RM28 million and construction will start in August this year and finish in July 2011.

It has a letter of intent from GCH (Malaysia) Sdn Bhd, operator of Giant Hypermarket, to become an anchor tenant for up to 30 years.

By Business Times

Fortunes diverge for UK house prices and economy

LONDON: After marching to the same tune for the past decade, Britain’s property market and its economy are going separate ways, and further house price falls look likely into 2011 even if the recovery broadens.

In the three months to June, Britain’s economy grew by 1.1%, its biggest quarterly bounce in four years.

Yet UK house prices, which had become a major economic driver in the boom years, fell in every single month of that quarter according to the Halifax index.

Whilst the economy is expected to continue growing, albeit modestly, the outlook for house prices is grim.

Bank of England data on Thursday showed mortgage approvals slipped in June while lending recorded one of its weakest outturns in the series’ history.

Historically, house prices and GDP growth have had a tight correlation because factors such as credit availability, wage growth and consumer confidence have tended to pull in the same direction.

During the credit boom of the Noughties, that correlation was intensified by home owners borrowing and spending against the rising value of their homes.

But things got out of whack in the spring of 2009 when recession prompted the Bank of England to unleash a wave of monetary stimulus and slash interest rates to 0.5%.

The consequence was that mortgage affordability for those already on the property ladder rose to its highest in a generation, allowing prices to rise even though price/earnings ratios - the traditional valuation yardstick - were at uncomfortably high levels.

While property prices and economic growth are likely to synchronise over the longer term, the divergence could persist over the next few years, particularly if interest rates rise.

“My biggest worry for house prices is in the medium term, when the Bank of England raises interest rates,” said Ray Boulger at mortgage broker John Charcol. “The more people get used to low interest rates, the more of a shock it will be.”

House prices in Britain began their rebound in the spring of 2009, when the country was mired in recession, and rose to within 10% of their late 2007 peak earlier this year.

It is likely, however, that low interest rates have just have postponed an inevitable fall to more affordable levels.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said the ending of the emergency stimulus measures posed a big risk for the property market.

“The stronger the economy, the more likely it is that interest rates will rise and that transitional arrangements after the ending of liquidity support measures won’t be put in place,” he said.

British banks need to refinance almost 800 billion pounds of short term funds by the end of 2012.

This will sap their willingness to lend to homebuyers, particularly when prices are falling and capital buffers need to be rebuilt.

At just over 166,000 pounds, the average price of a home is nearly seven times the average annual UK salary, well above the long term average multiple of 3.7.

Record low interest rates have pushed the cost of servicing mortgage payments to its lowest in 35 years, according to the Council of Mortgage Lenders, but that is little comfort for first-time buyers unable to raise the chunky deposit lenders now require.

Economists, almost all of whom were wrongfooted by the pace of the rebound last year, are growing increasingly bold in forecasting house price falls.

Howard Archer at IHS Global Insight reckons prices will fall 3% to 5% in the second half of this year, with a further drop of 5% to 10% in 2011.

By Reuters

UEM Land to launch Symphony Hills Phase 1

UEM Land Holdings Bhd is launching phase one of Symphony Hills, a RM1 billion five-year residential project in Cyberjaya, and is confident demand will be strong.

In fact, it expects to sell all 122 superlink houses, townhouses and town villas that will be launched this weekend. Prices range from RM1 million to as much as RM2.3 million per unit.

Managing director Datuk Wan Abdullah Wan Ibrahim is optimistic of strong sales judging from the demand shown by both locals and expatriates in the Klang Valley, especially in Cyberjaya.

"We feel Symphony Hills is hitting the market at the right time. There is Maju Expressway improving connectivity between Cyberjaya and Kuala Lumpur.

"Cyberjaya has announced several new international firms coming on board. These include Fortune 500 companies, which will spur demand for new housing. Cyberjaya is going to fly," he said.

Symphony Hills will feature 450 houses. The project will showcase the connected intelligent community (CIC) concept of state-of-the-art technology and high-speed fibre optic infrastructure.

UEM Land is partnering Mesiniaga Bhd and Cisco Malaysia to develop Symphony Hills, which is the first residential development for the company outside of Nusajaya in Johor.

Each house at the 98ha Symphony Hills will have strata landed status, allowing residents to maintain certain aspects of the project from landscaping to security.

The project, which will be certified green, will also have a floating clubhouse incorporating green technology for rainwater harvesting.

"Although the prices are steep, our margins are very mediocre. We won't get 30 per cent to 40 per cent margin, but the satisfaction will come from being the first developer here to offer such a community.

"A lot of budget is being planned on the ICT (information and communications technology) component. We believe in value. We will make decent margins in the next few phases once we have delivered the first batch of houses," he said.

UEM Land wants to buy more land in Cyberjaya, Kuala Lumpur, Penang and Kota Kinabalu to expand.

By Business Times

UEM Land cashing in on Cyberjaya revival

Datuk Wan Abdullah Wan Ibrahim strikes a pose in front of a showhouse at Symphony Hills, UEM Land’s maiden project in Cyberjaya.

CYBERJAYA: UEM Land Holdings Bhd, which will launch its maiden property project in the Klang Valley this weekend, expects “mediocre margins” from the 122 landed strata homes offered under the first phase of its high-end residential development, known as Symphony Hills, in Cyberjaya.

Managing director and chief executive Datuk Wan Abdullah Wan Ibrahim said he was confident buyers would be willing to pay more for future launches at the site once the main components of the development were completed.

“I managed to convince the board of directors that our margins will improve to a ‘decent’ level in upcoming launches after they (buyers) can see what we have delivered,” he told a media preview at the site yesterday.

A number of UEM Land’s projects in Johor have won international acclaim and the company is setting a high target for Symphony Hills.

Going forward, UEM Land will continue to expand its presence outside Johor.

“We have a little war chest that we will use to acquire good landbank in several hotspots,’’ said Wan Abdullah. He identified these so-called hotspots as the Klang Valley, Selangor, Penang and Kota Kinabalu in Sabah.

He said the group would only consider expanding overseas after 2012.

Symphony Hills is located on a 98-acre site near Multimedia University. UEM Land plans to build 2,865 residential and commercial units with a gross development value of RM1bil over the next five to eight years.

Only 410 landed homes are planned for this project, billed as the country’s first “connected intelligent community” development.

“Symphony Hills was conceptualised under a strategic and intelligent masterplan that reinforces aspects of planning, design and technology.

The concept combines the elements of comfort, convenience, community and security,’’ Wan Abdullah said.

The first of the “intelligent” houses will sell for RM1mil to RM2.3mil each, or RM300 to more than RM400 per sq ft, depending on design, size and location.

Wan Abdullah said a “floating pavillion” clubhouse within the development would be ready by the time the first batch of homeowners received their keys.

To ensure the project would live up to its wired and connected billings, UEM Land has roped in network system provider Cisco and Mesiniaga Bhd as partners.

UEM Land is the master developer of Nusajaya, Iskandar Malaysia in Johor, where it has 9,564 acres under various stage of development. The company is also a 25% shareholder in Setia Haruman Sdn Bhd, the master developer of Cyberjaya.

Wan Abdullah credited the Maju Expressway, which significantly cut travel time between Cyberjaya and Kuala Lumpur city centre, as the key to Cyberjaya’s recent revival.

“I believe we are hitting the market at the right time,” he said.

By The Star

Property industry still 'very active' despite FDI slowdown

The local property sector has not been affected much by the slowing foreign direct investment (FDI) last year and can cope with the pressure, Housing and Local Government Minister Datuk Wira Chor Chee Heung said.



"All I can say is that the development of the housing industry in the country is very active. Although there is a reduction in FDI, we can still withstand (the pressure)," Chor told reporters on the sidelines of the 13th National Housing and Property Summit in Petaling Jaya, Selangor, yesterday.

He was asked to comment on the United Nations Conference on Trade and Development report which said that FDI in Malaysia had plunged more than 80 per cent last year.

Chor said that units offered at property launches in the Klang Valley, in particular, were quick to be taken up by buyers.

"This is probably because Malaysians have high saving rates that enable them to buy these properties.

"Added to this, the prices of properties in the country are still relatively low compared to neighbouring countries."

Chor said foreign investors were still keen to participate in the property industry here as they were optimistic of opportunities to make profits.

He said there were no worries at the moment that rising prices could lead to a property bubble, adding that the government had no plans to control prices.

"There is no property bubble in the country as demand and supply is matched properly. There is no fear of a property bubble here.

"We have not reached the stage yet and the mechanisms are right in place. It is still manageable," he said.

Chor, who is also MCA vicepresident, criticised the DAP for publicly calling for the removal of the 5 per cent discount for Bumiputeras to buy luxury homes.

"The MCA had discussed the idea of slashing Bumiputera discounts for luxury homes even before it was raised by DAP's PJ (Petaling Jaya) Utara MP (member of Parliament), Tony Pua, last week.

"But we did not bring it up in public until a proper study and consultation is made. Unlike them, we just don't simply say anything that crosses our mind."

Chor was responding to Pua's suggestion to the Selangor state government to remove Bumiputera discounts for luxury homes and commercial properties in the state to boost competitiveness and restore investor confidence.

"We have to look at the statistics and discuss the matter thoroughly, including getting feedback from the Bumiputeras themselves," he said.

Chor, however, said the MCA felt that it would be better if the rich Bumiputeras did not take the 5 per cent discount, but channelled that instead to help the poor Bumiputeras.

By Business Times

Penang set to see RM2b projects

SOME RM2.1 billion worth of residential properties in Penang are being lined up for development from this year to next, Chief Minister Lim Guan Eng said.

He said that Penang and Kuala Lumpur-based developers were planning a total of 2,696 residential properties, with estimated gross sales of more than RM2.1 billion, on the island and mainland.

"Of this, a total of 1,676 units with estimated gross sales value of RM1.84 billion are located out of the island," Lim said at a luncheon address on the sidelines of the 13th National Housing and Property Summit in Petaling Jaya, Selangor, yesterday.

Apart from this, the state government will also put out to tender some of the prime land in Penang, he added.

Among the sites is a piece of land between the Penang Bridge and Queensbay shopping complex.

"This land is being offered on a freehold basis with the reserve minimum price of RM200 per sq ft. This is considered cheap.

"However, potential bidders will be required to build a hospital, office lots, and reclaim some land. Still, this is a worthwhile bargain," Lim said.

According to Lim, interest was already being shown by overseas investors, including those from Singapore and Hong Kong.

By Business Times

Talam gearing for property launches

Talam Corp Bhd, once the country's largest builder of low- and low-medium-cost houses, plans to launch properties worth as much as RM1 billion once its restructuring exercise is completed.

The property launches will be staggered over a period of two to three years.

The company expects to launch some projects by the second half of next year.

The group has sold off RM676 million worth of properties to settle its debts, of which RM393 million is due to Menteri Besar Selangor Inc and RM266.3 million to lenders.

When its restructuring is completed, the group's current liabilities will be reduced to RM190 million from RM887 million a year ago.
"Once this exercise has been approved by shareholders and regulatory body, we will use the remaining landbank to launch higher-range products," executive director Chua Kim Lan told reporters after the group's annual general meeting in Kuala Lumpur yesterday.

After selling off some 1,942.5ha to settle its debts, the group still has 809.4ha in Selangor and plans to develop bungalows, semi-detached houses and industrial factories.

"One of the many things we learnt from this episode was, when we launch low-medium-cost houses, we get low returns. In addition to that, during the peak of the property market in the 1990s, we had a huge landbank of 7,284.3ha and the group's liability then was around RM4 billion to RM5 billion," chairman Tsen Keng Yam said.

"We do not need so much landbank, should only buy when you have money and when you need it," he added.

For this year, Talam is committed to finishing off its incomplete projects, including housing developments in Kinrara Section 3, Jalil Heights, in Petaling, Saujana Puchong and Ukay Perdana.

The projects have progress balance billings of about RM100 million.

By Business Times

White knights sought for idle housing projects

The government is seeking "white knights" to revive 56 abandoned housing projects while coming down hard on directors of companies and property developers out to make a fast buck from the industry.

Housing and Local Government Minister Datuk Wira Chor Chee Heung said its officers had managed to bring down the number of abandoned projects to 56 from 151 last year.

"In the process of reviving these abandoned projects, we have identified 40 developers who are willing to help revive those projects.

"Now, there are 56 projects that need to be revived, but we have yet to get the needed assistance from the willing developers," Chor told reporters at the 13th National Housing and Property Summit in Petaling Jaya, Selangor, yesterday.

He said that some developers were not really interested in helping to revive the abandoned projects as they were not money-making ventures. On the contrary, they had to fork out more money to revive them.

Taking this into account, the government is willing to top up the RM200 million fund allocated previously to revive such projects, he said.

At the same time, the ministry will be stricter in vetting applications by developers for housing developments.

"We try to weed out unscrupulous or unqualified developers who tend to make a fast buck.

"Their actions are not wanted here. The buyers tend to be the victims as they have taken loans to pay for the houses in advance. If the projects are abandoned, they will suffer," Chor said.

Although he did not have the statistics on errant developers, Chor said the ministry had blacklisted some, including company directors.These directors are not allowed to set up new companies.

On calls for the government to implement the "build first, then sell" policy, Chor said that the country had yet to reach the stage to implement it, but encouraged able developers to do so.

"When we build first, and up to a certain level, then sell, then, of course, developers will have to set aside a lot of capital outlay.

"Currently, a lot of developers in this country can only continue development under the current system of acquiring funding from end-financiers.

"I suppose we are not able to emulate advanced nations such as Singapore where they build first and sell later.

"We have not reached that stage yet, but we encourage those who can afford to do that," he said.

On the 10th Malaysia Plan (2011-2015), Chor said that some 78,000 units of affordable housing had been targeted to be built.

"We are targeting to build 78,000 units although survey shows that there are currently some 95,000 families throughout the nation who have yet to own houses.

He added that there was a lot of demand for such houses in Selangor, Penang, Pahang and Kedah.

By Business Times

Mutiara's unit in RM38 m property disposal

KUALA LUMPUR: MUTIARA GOODYEAR DEVELOPMENT Bhd announced that its wholly owned subsidiary, Potensi Naga Sdn Bhd (PNSB), has entered into a sale and purchase agreement (SPA) with Prosper Palm Oil Mill Sdn Bhd (PPOM) to dispose a property for RM38 million cash.

The company said on Friday, July 30 that the property involved a 13-storey office building together with 230 car park bays in Kelana Centre Point, Petaling Jaya.

The group said the property was acquired by PNSB on May 15, 1999 for a consideration of RM31.9 million, adding that it was a leasehold property with the lease expiring on Jan 23, 2094.

"The property is currently leased to a mixed group of tenants for office use and has a tenancy rate of 77%," said Mutiara, adding that the approximate age of the property is 11 years.

It noted the fair book value of the property based on PNSB’s latest audited financial statements for the year ended April 30, 2009 was RM32 million.

Mutiara said the the disposal represented an opportunity for the Mutiara Group to unlock the value of assets that did not contribute towards its core business of property development.

It added that the disposal would also free the group from future holding and maintenance costs of the property.

The proceeds from the disposal would provide future cashflow for the group’s working capital purposes, reduce its borrowings and/or contribute towards expansion of its core business.

By The Edge Malaysia

Empire Mall eyes full occupancy in 3 months

The Empire Shopping Gallery (ESG), Subang Jaya's new landmark, expects its retail space to be fully taken up in three months' time.

Mammoth Empire Holdings Sdn Bhd managing director Datuk Sean Ng said most of the company's projects had different concepts to prevent the customers from getting bored.

"To meet the demands of the customers, we have been selective in the tenants we want.

"We also actually have to look at the geographical and demographic factors in certain locations to implement the right concept," he told reporters after the opening of the lifestyle-focused and upscale mall in Subang Jaya today.

The mall is part of the freehold Empire Subang commercial development which also comprises Empire Soho (small office/home office), Empire Tower and a boutique hotel.

Empire Soho consists of 210 units while the Empire Tower is a 12-storey office block.

Empire Hotel offers stylish getaway options for business and leisure travelers.

Mammoth Empire Holdings Sdn Bhd also have two other projects at Damansara Perdana that will be launched by year-end.

By Bernama

Outlook for KL office market remains soft

PETALING JAYA: The Kuala Lumpur office market is expected to remain soft for at least the next six months, with average rental rates facing downward pressure, including for some prime office buildings, property consultants said.

DTZ Nawawi Tie Leung executive director Brian Koh said with the large incoming supply of new office space, especially in the next two years, office occupancy and rental would come under pressure until at least 2012.

“It will take sometime for the market to recover. We expect monthly average rentals in the prime office areas to ease from RM6 per sq ft now to around RM5.80 in the coming months,” he told StarBiz.

DTZ Nawawi Tie Leung, in its latest DTZ Property Times Kuala Lumpur report, said the local office market had increasingly become a tenants’ market as supply would continue to surpass demand.

“This is due to a significant increase in incoming supply later this year and over the next few years. That will allow tenants to negotiate for cheaper rates upon renewal and when signing for new leases,” it added.

By the second half of the year, another 2.06 million sq ft of new office space is scheduled to come onstream.

Between 2010 and 2014, about 14.9 million sq ft of space is in the pipeline, with about seven million sq ft scheduled for completion in 2012.

“With the significant supply of new office space coming on-stream, competition is expected to intensify further among new office buildings to secure tenants, and office rents are expected to see further downward pressure,” the report said.

It added that the outlook for the sector remained cautious, “until a more convincing and firmer economic performance is achieved”.

Although the overall occupancy rate of office buildings in Kuala Lumpur rose from 87.2% in the first quarter of this year (Q1’10) to 87.9% in Q2’10 due to a lack of new supply, the average monthly rental of office space fell from RM6.02 per sq ft (psf) in Q1’10 to RM6.00 in Q2’10.

YY Property Solutions, in association with Cushman & Wakefield, in its latest Kuala Lumpur Office Marketbeat report, said although there were more active enquiries in Q2’10 compared with the previous quarters, “the pace of demand for office space has yet to match the improved economic environment.”

“It is still largely a tenants’ market with landlords offering better terms to tenants under growing competition from existing and newly completed office buildings,” it added.

Lauding Bank Negara’s issuance of five new commercial banking licenses as “giving a boost to the office market”, it said demand for office space was essentially driven by employment generation in the services sector.

The report pointed out that the capital value of real estate in the investment market was expected to remain stable this year.

CB Richard Ellis Sdn Bhd executive director Paul Khong concurs that the market is very much a tenants’ market and rental rates are very competitive.

“Landlords need to fight harder to attract tenants and various financial incentives are now thrown in to package a deal,” he said.

However, Khong is more optimistic in his outlook of the office market and believes rentals will be stable “with some nominal increases for the rest of 2010 while occupancy rates will continue to improve slightly further.”

“Over the next six months, we expect to see further activities in the office market and more relocation of tenants to newer buildings,” he added. Khong noted that the market held on rather well in the first half of the year with areas like KL Sentral, Jalan Bangsar, Mid Valley, Damansara Heights, Petaling Jaya and Mutiara Damansara, recording a higher occupancy rate.

Monthly rentals for Grade A office space in KL’s city centre are within the range of RM6.50 to RM7 psf inclusive of service charges, at RM7.50 to RM8 psf in KLSentral, and RM5 to RM5.50 psf in Bangsar and Damansara Heights. Average office rental in Petaling Jaya is around RM4.50 psf.

By The Star (by Angie Ng)

Malaysia housing development still active

Housing development in Malaysia is still active due to the rapid growth of urbanisation and is expected to increase from 67 per cent this year to 75 per cent by 2020.

Housing and Local Government Minister Datuk Wira Chor Chee Heung said the property sector is doing well based on positive sales by property developers.

"In my own personal opinion, the industry is doing well as Malaysians have a high savings rate and are still able to purchase houses," he told reporters after officiating the 13th National Housing and Property Summit in Kuala Lumpur today.

The summit was organised by the Asian Strategy and Leadership Institute.

Chor said the growing demand for property was also in line with the rising population while prices of properties in Malaysia are still low compared to other regions.

"Hence, the attractive prices have attracted foreign investors as they believe there is still an upside in terms of returns. The number of houses is projected to increase to 8.37 million units by 2020 from 5.15 million in 2000," he added.

On whether rising property prices is healthy for the industry, Chor said the current pricing is still manageable and there was no overheating in the sector.

"The government is monitoring the (prices) every now and then. We are not reaching the stage where there is going to be overheating," he explained.

He also said Malaysia is not ready for the build and sell concept as the it has not achieved a specific level of development and is unable to emulate the advanced nations.

However, he added, the Ministry of Housing and Local Government does encourage big developers to start the concept.

"There are many developers at the top of the scale who are able to adopt the build and sell scheme, which of course, will not give rise to abandoned housing projects," he highlighted.

According to Chor, the Housing and Local Government Ministry is in the process of reviving the remaining abandoned housing schemes and will try to weed out the unscrupulous developers.

He said the government had successfully reduced abandoned housing projects to 56 this year from the 151 in 2009.

By Bernama

Ivory hopes to expand to KL soon

KUALA LUMPUR: Penang-based Ivory Properties Group Bhd, which made a strong debut on the Main Market of Bursa Malaysia yesterday, hopes to expand its operations to Kuala Lumpur in the near future, said its chairman and group chief executive officer Datuk Low Eng Hock.


Datuk Low Eng Hock (right), deputy chairman Datuk Seri Nazir Ariff (second from right) and other directors checking out the company’s debut prices yesterday.

“Our company’s strength lies in enhancing land value and maximising its return. We have been doing this in Penang for the past 10 years, and hopefully with the success of this listing we may secure deals with landowners in Kuala Lumpur soon,” said Low.

The company posted a 15 sen premium over its offer price of RM1. Afternoon trade resulted in a high of RM1.35 before it closed 15 sen higher at RM1.30, with 51 million stocks changing hands. Ivory is the first property developer to be listed on the Main Market this year.

Low said Ivory Properties was looking to secure joint ventures with other property developers.

“We have been in joint venture deals with companies from Kuala Lumpur to develop property in Penang for the past 10 years. We are currently in talks with several companies to develop more townships as well as commercial condominiums,” added Low.

At present, the company has completed property development projects with a total gross development value (GDV) of about RM675.63mil. It has ongoing projects with a GDV of about RM834.08mil scheduled for completion within the next few years. The company also has future projects worth RM1.9bil.

Project director Murly Manokharan said the property market outlook was good at present.

“In recent months, the property market has looked good not just in Penang but in the whole of Malaysia. We have recently participated in The Star Property Fair and sales results were better compared to the past two years. I would say the (property) market is on an uptrend,” said Manokharan.

By The Star

MRCB to raise RM400m for KL Sentral Park

MRCB Sentral Properties Sdn Bhd, a unit of Malaysian Resources Corp Bhd (MRCB), will raise RM400 million of debt to finance the development of its latest project called KL Sentral Park.

The commercial paper/medium term notes (CP/MTN) programme is arranged by Affin Investment Bank Bhd.

"The financing, which is being guaranteed by Danajamin Nasional Bhd, is for a period of seven years," said MRCB chief executive officer Mohamed Razeek Hussain.

KL Sentral Park comprises five blocks of office buildings, high-end retail shops, business centres and green spaces with a net lettable area of 518,000sq ft. So far, 18 per cent of the project has been completed.
Speaking to reporters after the signing ceremony between MRCB, Affin Investment and Danajamin in Kuala Lumpur yesterday, Mohamed Razeek said construction started in the fourth of quarter of 2009.

"The project is scheduled to be completed next year," he said.

MRCB had executed a 15-year lease agreement with SME Corp and recently obtained a commitment to lease for 15 years by SBM (Malaysia) Sdn Bhd.

"Collectively, this translates to occupancy reaching 60 per cent of KL Sentral Park's net lettable area," he said.

Also present were Affin Investment managing director Maimoonah Mohamed Hussain, Danajamin chief executive officer Ahmad Zulqarnain Onn, Malaysian Trustees Bhd director Ng Hon Soon and MRCB senior vice-president of property Wong Dor Loke.

Meanwhile, Maimoonah said the domestic bond market has been dull since the subprime crisis started.

"Therefore, the guarantee provided by Danajamin to MRCB is instrumental to re-ignite interest by providing quality issuance to the market," she said.

Maimoonah said the CP/MTN programme is accorded the highest rating of MARC1 and "AAA" with the guarantee wrap from Danajamin.

This provides the most competitive pricing which lowers the company's interest costs further.

The financing for MRCB is Affin's second for the group in the last two years, the first being the RM499 million syndicated loan.

By Business Times

Viva Home to be KL's new retail landmark

The four-storey Viva Home retail mall at Jalan Loke Yew, Kuala Lumpur, is set to change Cheras' landscape and spur new developments as well as improve the experience of shopping for your home.

Viva Home is the first of its kind retail mall in Malaysia. It is a one-stop centre for home products like furniture, furnishing, home decoration and home improvement services.

The 660,000-sq-ft mall, developed by Viva Mall Sdn Bhd, a unit of Kha Seng Corp Group, is opening by the end of this year.

Besides shops catering to every inch of the home, the mall will also offer lifestyle and entertainment elements, housing anchor tenants like MBO Cinemas with nine screens and ICT Gadgets, an information and communication technology section selling computers, accessories, handheld devices and telecommunications equipment.

There will be a range of food and beverage outlets, banks, a hypermarket and an exhibition hall, showcasing the latest home and home-related products and services.

Viva Home will have lot sizes ranging from 300 sq ft to 2,000 sq ft, while anchors will have space of up to 15,000 sq ft.

All the lots are for lease, and Viva Home is currently undergoing its leasing campaign.

"As a developer, we tend to look at long-term investment ... so we will retain the lots for recurring income and manage the retail mix," Viva Mall chief executive officer Yee Ia Howe said in an interview with Business Times.

The lots will be leased from RM4 per sq ft, depending on size and location, which is the current market price, Yee said.

Viva Home is part of a RM280 million two-phase redevelopment of Plaza Uncang Emas (UE3), which Kha Seng bought last year for some RM100 million.

The old mall at UE3 is being refurbished and renamed Viva Home. The phase two of the development will boast a 260-room business-class hotel, which will sit atop the mall.

Yee said work on the hotel will start by the end of this year.

"We believe in this project. We did a lot of research on how it will work. We are improving the access to Jalan Loke Yew and Jalan Cheras and building a pedestrian bridge from the Taman Miharja light rail transit station into the mall," he said.

Yee added that there will be clear merchandising zoning to ensure identifiable retail zones and concepts to make shopping easier and comfortable.

Viva Home will also have 2,000 parking bays.

By Business Times

KYM to build up property division

INDUSTRIAL packager KYM Holdings Bhd, which owns a small property division, plans to bolster the business in a bigger way to create a new significant revenue stream.

KYM executive director Datuk Lim Kheng Yew said the company owns some 28ha of land in Teluk Rubiah, Perak, and it plans to build properties there.

"Property will be a new revenue stream for us to augment our income. We are working on that but haven't signed on anything at the moment," Lim said after its annual general meeting in Kuala Lumpur yesterday.

Lim declined to elaborate when asked if KYM plans to become a full-fledged property developer and said "We will announce our plans in the foreseeable future."
KYM made a windfall when it sold 163.6ha of its land to Brazil's Vale, an iron ore group, for RM101.9 million in June 2009. It has an option to sell another 302.4ha for RM93.8 million and this was completed in February 2010.

As a result, KYM was able to cut its debt to RM50 million from RM180 million.

KYM has also bought an additional 16ha of land in Jelapang, Perak, from Idaman Bina Makmur Sdn Bhd for RM12 million.

The company hopes to participate in Vale's downstream activities in Teluk Rubiah. This could include building properties or being a distributor for Vale.

KYM now makes and sells paper and polypropylene-based packaging products like fertiliser bags and carton packs.

By Business Times

Kha Seng does its part to transform shopping scene

The Kha Seng Group, a niche retail property developer, has taken over Plaza Uncang Emas (UE3) at Jalan Loke Yew, Kuala Lumpur, and is turning it into a prime spot for retailers and consumers.

UE3 is undergoing a massive redevelopment. The RM280 million plan includes turning the existing mall into a niche home retail mall, dubbed Viva Home, and building a multi-storey business hotel above it.

Taking over such buildings is not new to Kha Seng. In 2004, it bought Central Market, located near the Klang bus station, from Melewar Group and turned it into a vibrant culture and arts centre.

Kha Seng paid RM38 million for the building's remaining 60-year lease in an open tender by Pengurusan Danaharta Nasional Bhd.

The decision to take on the project lies in founder Bernard Bong's passion for retail. His main focus is in taking over a building and finding loopholes to meet the demand and supply of end-retail consumers.

"Central Market and Viva Home are strong concepts that can benefit from proper planning and surveying to uncover what the market really wants," he said.

"It is our commitment to develop innovative, retail properties in the Klang Valley. We find there is a demand for them. We have more projects in the pipeline," Bong said in a recent interview with Business Times.

Kha Seng is currently developing the RM1 billion Kenanga Wholesale City (KWC) in Kuala Lumpur at Jalan Kenanga, off Loke Yew, which will open by mid-2011.

The 22-level KWC, with 500,000 sq ft of net lettable space, is set to be the flagship for the Malaysian fashion wholesale industry.

The Jalan Kenanga area is the existing hub for Malaysian fashion wholesalers. Some RM1 billion revenue is generated per year and this is expected to increase by threefold after KWC opens, Bong said.

The Kha Seng Group started as a garment manufacturer and wholesaler in the 1980s. It diversified into property development and investment some 15 years ago to ride on the growing retail market.

By Business Times

MRCB will consider setting up REIT, says CEO

Mohamed Razeek Hussain exchanging documents with Maimoonah Mohamed Hussain. With them are MRCB senior vice-president and head of property Wong Dor Loke (left) and Danajamin Nasional Bhd CEO Ahmad Zulqarnain Onn.

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) will consider injecting some of its properties into a real estate investment trust (REIT) as part of the company’s growth strategy, said chief executive officer Mohamed Razeek Hussain.

“REIT has never been (far) away from our minds. It is a strategy that we might employ in the future, perhaps in the mid to long term.

“We are strengthening our balance sheet to enhance recurring income. When it is substantial and the time is right, we will consider,” he said after an agreement signing between MRCB and Affin Investment Bank Bhd yesterday.

Razeek was responding to a research report earlier this month that MRCB was gearing up for a REIT.

“For us, mid term would mean (within) three years and long term (is anything) beyond that,” he said.

Meanwhile, MRCB plans to raise RM400mil via a guaranteed commercial paper/medium-term note (CP/MTN) programme.

This is to finance its mixed commercial development, KL Sentral Park, which is valued at RM600mil.

MRCB Sentral Properties Sdn Bhd, a wholly-owned unit of MRCB, has appointed Affin Investment to act as principal adviser and lead arranger for the programme, which will be guaranteed by Danajamin Nasional Bhd.

The financial arrangement would come with an option of both floating and fixed interest rates, said Affin Investment managing director Maimoonah Mohamed Hussain.

“The MTN allows fixed-rate funding wherein MRCB can lock in the current low rates of interest, given the environment where interest rates are trending upwards.

“The CP, on the other hand, allows MRCB to issue short-term notes on a floating rate basis.”

Razeek said the first tranche, worth some RM50mil, would be issued “as soon as possible”. “For future tranches, it’s up to us to draw down whenever we want,” he said.

KL Sentral Park, which is about 18% completed, is scheduled for completion next year.

The project will comprise five blocks of office buildings, retail shops, business centres and green spaces with a net lettable are of about 518,000 sq ft.

By The Star

UEM Land expects average margins from Cyberjaya property launch

CYBERJAYA: UEM Land Holdings Bhd, which will launch its maiden property project in the Klang Valley this weekend, expects “mediocre margins” from the 122 units on landed strata homes offered under the first phase of its high-end residential development known as Symphony Hills in Cyberjaya.

Managing director and chief executive Datuk Wan Abdullah Wan Ibrahim said he is confident buyers would be willing to pay more for future launches at the site, once the main components of the development were completed.

“I have managed to convince the board of directors that our margins will improve to a decent level in upcoming launches after they can see what we have delivered,” he told a media preview at the site today.

A number of UEM Land’s project in Johor had already won international acclaims, and the company is setting a high target for Symphony Hills in Cyberjaya.

By The Star