Mixed reaction to possible increase in property downpayment

PETALING JAYA: The possible move to raise downpayment from 10% to 20% for the third and subsequent house purchases drew mixed reaction from housing professionals and a research house.


Datuk Michael Yam ... ‘The property market is still lukewarm.’

Real Estate and Housing Developers’ Association (Rehda) president Datuk Michael Yam said the capping of loans to 80% for the third and subsequent purchase would probably not discourage the wealthy from speculating because they could afford the 20% deposit.

“Investors would pull back on purchases after the third unit because of the higher deposit requirement. The impact of this is probably 10%-20% of the upmarket segment. Overall, the effect of the cap is minimal as the presence of speculators is small,” he said.

Prime Minister Datuk Seri Najib Tun Razak said on Tuesday that Bank Negara might impose a limit on financing for subsequent purchases after the second property while first time buyers can borrow up to 90%.

The property market has come under speculative pressure the past 12 months with double-digit rise in prices in some locations. Despite concerns that a bubble may be forming, Yam said “the property market is still lukewarm.” The number of launches by developers has also increased compared with last year, with developers offering 10/90 schemes or variants of it.

Yam, who is also managing director of property consultancy Impetus Partnership, said investors may purchase that third property, but nothing additional due to the deposit. “Those who buy for the next generation would buy it sooner if they see a capital upside as well.” Yam said the 20/80 move would have little impact on the secondary market.

“There are usually lower margins for secondary housing,” he said. He said the move needed to be further studied and evaluated in order not to dampen the activities of serious investors.

“At the moment, the property market is still lukewarm due to lower rental yields and capital appreciation compared to neighbouring countries. Placing such a restriction may take Malaysian property off the radar of foreign investors. As it is, the Government has already re-implemented real property gains tax (RPGT) and raised interest rates. Further restrictions may not bode well for Malaysian property.”

He said loan capping and other measures introduced in Singapore had not really slowed the property transactions in Singapore. This proved that it was ultimately market forces that decided what was best, he added.

Managing director of The Metro Kajang Group, Datuk Eddy Chen, said the move would have little effect on landed units. “It is fine to have a pool of properties for rental income. I don’t think there are many people who are buying to flip (to resell when the project is completed). There is always the 5% RPGT as a deterrent,” he said.

He said the 20/80 move would not affect landed units. The company launched 260 double-storey terrace and semi-detached houses last week in Semenyih, Selangor.

Mah Sing’s group managing director cum group chief executive Tan Sri Leong Hoy Kum said the proposal should not affect market sentiment.

“Property has long been viewed as a preferred vehicle to hedge against long-term inflationary pressure,” Leong said.

“The banks have in place stringent processes as well as check and balance in their loan approval process. These should be good enough to ensure the quality of loans in the market and market forces should be allowed to prevail.”

A source from a housing developer has a different view.He said that nine out of 10 buyers opt for the 10/90 scheme whether they were buying to stay or investing.

“If there is a 20% downpayment requirement for non-first time buyers, at least 30% of sales will be affected,” he said.

Should this move be implemented, he said Malaysia would be joining the ranks of Hong Kong and Singapore to curb property speculation.

Hong Kong requires buyers to have a downpayment of between 50% to 60%.

Singapore requires 70% to 80%.

Property consultancy Rahim & Co said government intervention was only warranted if there was overwhelming evidence of excessive speculative activity.

“Otherwise these actions may backfire and hinder recovery in one of the most important economic components. Interest rates have already been increased – it may be too early to slap more deterrents to investment at this fragile stage of the economy’s recovery,” a Rahim & Co statement said.

“It should be best left to the banks to decide on their own desired level of exposure, although it might be prudent for Bank Negara to direct the banks to cut back on their margin of lending to parties that are clearly speculators, no matter how good their credit.”

The statement said 10/90 was a happy medium.

Research house HwangDBS said the 20/80 move was “less onerous than expected as there was initial concern that the loan-to-value ratio at 80% cap may be imposed across the board.”

“Impact to the property sector should be insignificant as we believe there are not many buyers with more than two houses. Banks have been generally stringent on mortgage applicants with multiple properties and high monthly commitment, the report said.

“We are positive on the Malaysian property sector and expect demand to continue to be supported by positive macro factors like young population, urbanisation, shrinking household size, rising income, inflation hedging and infrastructure improvements,” HwangDBS said.

By The Star

More funds invest in offshore properties

PETALING JAYA: More Malaysian institutional funds, including Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF), are looking to raise their exposure in offshore property investments such as in Australia and the UK.

Last month PNB acquired its first property in Australia with the purchase of Santos Place in Brisbane for A$287mil (RM838.19mil). The 36-storey Premium A grade office tower with 34,338 sq m is said to be the largest six-star environmentally rated building in Australia.


Christopher Boyd ... ‘They are entering markets that offer higher income assets.’

Following on the heels of PNB’s foreign venture, the EPF had at the end of August announced that it would be investing £1bil (RM4.88bil) in European property markets, focusing on the UK.

The fund had said that the investments would be for the long term with expected annual yields of 6% to 7%.

Industry observers said another potential candidate for offshore property investment was Kumpulan Wang Persaraan (KWAP).

According to the fund in its recently upgraded portal, the objective of its property investment initiatives is to invest in strategic properties for steady income with growth potential on rents and capital values in order to achieve commendable returns that contribute well to KWAP’s overall goals.

“Prospective investments in property can be domestic or foreign based with a preference for locations in central business district and urban areas. Acquisition of the strategic assets can be via direct acquisition or partnership.

“The risk exposure of property investments should not exceed 30% of KWAP’s Strategic Asset Allocation. Moreover, the property portfolio itself shall be well diversified based on locations, types, sectors and sizes,” KWAP said in the website.

PNB’s acquisition of Santos Place is said to be the largest commercial property transaction in Queensland since the global financial crisis. It was brokered by CB Richard Ellis and Jones Lang La Salle.

According to CB Richard Ellis Malaysia executive chairman Christopher Boyd, who was one of the agents for the PNB deal, Malaysian funds are venturing offshore to diversify their risks and to go to markets where returns and capital values are higher.

“They are entering markets that offer higher income assets as they have a commitment to pay out dividend yields of 5% to 7% per annum,” he told StarBiz.

Santos Place is fully tenanted and more than 40% of the office space is leased to Australian oil and gas exploration and production group, Santos Ltd. Petronas is also one of the tenants.

“The vendor, Nielson Properties, has given a guarantee of an annual yield of just under 8% for the building. The yield is quite attractive considering that Malaysian properties are offering yields of only 6% to 6.5% a year,” Boyd said.

He added that the performance of office buildings in general “is a proxy for the country’s economy and how it fares is as good as the tenants that occupy them.”

“This is a good time for the funds to snap up good quality property for long-term investment. Investing in offshore property market is a cyclical play and it is important to get the timing right when the market is on the verge of an upturn,” Boyd added.

Most of the traditional buyers of investment property in Australia are institutional funds such as mutual and pension funds and REITs, but they are quite cash strapped now and are not active in the market.

He said the domestic buyers were expected to only start getting back to the market within the next 12 months and the valuation of the property assets was still quite attractive.

“Given that there is still room for capital appreciation for good quality investment property Down Under, it is a good time to leverage on the market. The quality of the tenants there is also highly rated and they usually sign up for long-term tenures of 10 to 15 years. The rental rates will be reviewed every three to five years,” he added.

Besides office buildings, investors Down Under are also keen on good retail centres as well as industrial and logistics buildings.

CB Richard Ellis executive director Paul Khong said there were also strong interests from Malaysian developers in Australian development projects especially in Sydney and Melbourne.

“They are looking at redevelopment of commercial and residential sites and also joint venture opportunities. Some have already set up shop there.”

Khong said Malaysians generally ranked very high on the investment list for Australia and UK properties as a majority of individual investors would have one of their children studying there or would be going abroad to pursue their studies soon.

“This is a natural push for our local investments to head this way. The investors will be looking at yields of 6% to 8.5% (initial yield) depending on property type, size of investment, location and country. Many projects have seen good or even double-digit capital appreciation over the last five years,” Khong added.

By The Star

Announcement on loan-to-value ratio for properties very soon

KUALA LUMPUR: BANK Negara is expected to make an announcement on the loan-to-value ratio for mortgages very soon, according to a source.

“Genuine home buyers need not worry as it will most likely be implemented on buyers making their third and subsequent house purchases, and be confined to specific locations and prices.

“These are only pre-emptive measures as currently there is no property bubble,” said the source, adding that genuine house ownership would still be encouraged.

By The Star

Three-day property seminar begin tomorrow

The National House Buyers Association is having three seminars from tomorrow to Saturday at the Mid Valley Exhibition Centre in Kuala Lumpur.

The sessions are ideal for house buyers, property investors, developers, financiers, architects, engineers, surveyors, valuers, contractors, real estate agents, lawyers, accountants, stakeholders, insurance professionals and interested parties.

The topic for the first seminar tomorrow is Pemudah Focus Group on Registering Property.

There will be presentations by the Inland Revenue Board stamp duty division director Teoh Ai Suan, Valuation and Property Services Department director Huan Cheng Kee and Federal Territories Land and Mines Office director Hasim Ismail.

On Saturday, the focus will be on Tribunal for Consumer or Housing — Claims, Jurisdiction and Award Enforcement.

The session will explain in layman’s terms the workings of the respective tribunals, common cases and enforcement and prosecution of non-compliance of tribunal awards.

The speakers will be Consumer Claims Tribunal chairman Pretam Singh, Homebuyers Claims Tribunal chairman Bhupinder Singh and National Housing Department deputy enforcement director Gunasegaran Naidu.

On Sunday, the issues that will be explored include Built-Then-Sell and Sell-Then-Build concepts, legal requirements on JMB and MC, strata titles, flaws in the Building and Common Property Act and absence of regulations, and more.

In conjunction with the 53rd National Day celebration, the session will also feature a short speech by former Perak police chief Datuk Seri Yuen Yuet Leng on Merdeka: My Experience and Yesteryears.

Participation fee for each session is RM80 or RM200 for all three sessions. An extra RM20 will be charged for registration after Sept 20.

A book titled Buying Property from Developers (What you need to know and do) by Robert Tan will be given free to participants who opt for the three-seminar package.

For details, call 012-3345 676 or email klchang@hba.org.my.

By The Star

SP Setia 3Q net profit jumps 104% to RM87.25m

KUALA LUMPUR: SP SETIA BHD posted a strong set of results, with earnings at RM87.25 million for the third quarter ended July 31, 2010 versus RM42.68 million a year ago.

It said on Thursday, Sept 23 revenue increased 13.5% to RM414.90 million from RM365.57 million. Earnings per share were 8.58 sen versus 4.2 sen.

SP Setia also said the group has achieved sales of RM1.95 billion as at Aug 31, achieving its full year FY2010 sales target of RM2 billion, two months ahead of its financial year ending Oct 31.

“The 10-months sales value has already exceeded the group’s highest ever sales value over one financial year of RM1.65 billion recorded in FY2009 by 18%,” it said.

SP Setia said sales had remained strong since the start of the year, with RM590 million achieved in the third quarter and cumulative nine-months sales of RM1.8 billion.

Projects that contributed to these numbers include Setia Alam and Setia Eco-Park at Shah Alam, SetiaWalk at Pusat Bandar Puchong, Setia Sky Residences at Jalan Tun Razak, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru, Setia Pearl Island and Setia Vista in Penang.

SP Setia president and CEO Tan Sri Liew Kee Sin said the group’s proactive moves in 2009, aimed at capturing market share in the luxury high rise and integrated commercial sector, whilst further consolidating its lead in the landed residential segment, had borne much fruit.

By The EDGE Malaysia

Al-Aqar to buy Aussie properties for RM135m

KUALA LUMPUR: Al-Aqar KPJ Reit will acquire properties from Jeta Gardens Waterford Trust in Australia for RM134.91mil as part of plans to diversify its income sources and tenant base.

The acquisition would be satisfied with RM67.45mil in cash and the rest via the issuance of new units in Al-Aqar, said the real estate investment trust company in a filing with Bursa Malaysia yesterday.

The properties consist of an integrated gated premium residential estate for older people including an aged care complex with care facilities, 23 units of independent living villas and 32 units of independent living apartments as well as portions of undeveloped land.

By Bernama

Eksons plans new property project in Klang Valley

TIMBER outfit Eksons Corp Bhd is planning its next property project in the Klang Valley to drive up earnings, its director Tang Seng Fatt said.

Currently, contribution from property projects to the group is less than 5 per cent and it expects this to hit 20 per cent next year, Tang said.

The potential growth is attributed to its on going joint venture project, The Atmosphere, a RM850 million mixed commercial development in Seri Kembangan, Selangor.

"The project is being developed in phases, so we will have RM40 million to RM50 million coming in every year," Tang told Business Times at a media briefing on the project in Kuala Lumpur yesterday.
For the year ended March 31 2010, Eksons posted a net profit of RM28 million on revenue of RM279.1 million.

The Atmosphere is the first commercial development in South Klang Valley to be certified with the coveted BCA Green Mark Certification (provisional).

The 21ha leasehold project is being developed in three phases and it is expected to be completed within 5 to 8 years.

Eksons' stake in the project, launched in August last year is 60 per cent. Tempo Properties Sdn Bhd holds 40 per cent.

"We will continue to work with Tempo as joint venture partners and project managers. We are looking for land in the Klang Valley and will ink a deal soon," Tang said.

Tempo, though not part of Eksons, is deemed a related party to the group, given certain common shareholdings between both companies.



Tempo chief executive officer Khoo Boo Hian said it is eyeing land in Ampang and Mont Kiara.

He also said the company expects a return on investment of up to 25 per cent over the next three to four years from The Atmosphere.

Upcoming properties at The Atmosphere include retail and small office/home office (SOHO) units. They are due for launch by early next year.

By end-2011 or early 2012, works on a five-star hotel, serviced apartments, office suites and an entertainment hub will commence.

Khoo said the joint venture will invest an additional RM2 million or more in green technology to value-add the development.

By Business Times

Malaysia to monitor property speculation

The government will not introduce measures to make it difficult for first and second time house buyers but will monitor signs of speculative buyings in the property market.

Prime Minister Datuk Seri Najib Razak said after discussing with Bank Negara Malaysia, the government found no reason why it should limit end-financing across the board for residential properties.

Speaking to reporters at Bank Negara yesterday, Najib said the central bank may impose a limit on financing for subsequent purchases after the second property.

"For the bona fide buyers, there will be no review of the limit. So, they can borrow up to 90 per cent," he added.

Reports surfaced recently that Bank Negara was talking to banks about possible measures to check excessive speculation on property prices.

One of the measures brought to the table include capping end-financing to just 80 per cent of the value of property from 90 per cent that is given out by banks now.

Analysts have said they were watching property prices closely for signs of bubble building up in the sector amid talks of excessive speculative buyings.

Developers, however, dismissed the bubble threat, with many saying banks themselves were closely monitoring the situation, including the creditworthiness of borrowers before app-roving loans.

By Business Times

Glomac Q1 net profit rises to RM15.5m

GLOMAC Bhd’s first quarter net profit jumped 86.5 per cent to RM15.5 million for the period ended July 31 2010, backed by strong sales of its development projects.

The company told Bursa Malaysia yesterday that profit contributions mainly came from on-going developments namely Glomac Tower, Glomac Damansara and Glomac Cyberjaya.

Stronger sales in Bandar Saujana Utama projects had also contributed to the increase in the group’s profit.

Group revenue surged 114 per cent to RM126.3 million, it added.

By Business Times

Glomac still a ‘buy’: ECM Libra

ECM Libra Investment Research has maintained its ''buy'' recommendation on property developer, Glomac Bhd.

In a research note here today, ECM Libra said the call was premised on Glomac's three-year earnings compound annual growth rate of 19.4 per cent.

ECM Libra said it has raised Glomc's estimates for financial years 2011 and 2012 by 24 per cent and 19 per cent respectively after imputting higher margins.

"Our earning upgrade has led us to revised the target price from RM1.87 to RM1.93," it said.

It said Glomac's results for first quarter of 2011 (Q1FY11) financial year were above house and market expectations as the net profit of RM15.6 million already made up 33 per cent and 35 per cent of house and consensus full-year estimates respectively.

"Its Q1FY11 revenue of RM126.3 was 114.1 per cent higher year-on-year as the Glomac Tower project is now full swing and we expect this to continue given the slew of commercial projects in the pipeline," it said.

ECM Libra said Glomac achieved decent property sales of RM80 million in Q1FY11. Unbilled sales of RM585 million would provide earnings visibility over the next two-three years.

By Bernama

Al-'Aqar KPJ REIT to acquire Aussie property for RM134.9m

KUALA LUMPUR: The Al-'Aqar KPJ REIT has proposed to acquire properties in Queensland, Australia from Jeta Garden Waterford Gardens Trust for RM134.91 million.

Damansara REIT Managers Sdn Bhd, which is the manager of Al-`Aqar, said on Wednesday, Sept 22 the properties covered 14.753 hectares including a complex, villas and apartments.

The properties consisted of an integrated gated residential estate for older people which includes an aged care complex with care facilities known as Jeta Gardens Aged Care Facility, 23 villas and 32 apartments known as Jeta Gardens Retirement Village, and an undeveloped portion of the land.

Jeta Gardens Aged Care Facility includes 108 aged care bed places with all ancillary improvements, dining areas, kitchen, bathrooms, nurses stations, lounge area.

The undeveloped portion of the land is proposed to be developed to extend the Jeta Garden Retirement Village to include an additional 43 villas as well as to extend the Jeta Garden Aged Care Facility to include an additional 42 places.

Damansara REIT Managers said the properties are sited on several pieces of land with a fully integrated road system, landscaping and lake gardens.

The total purchase consideration of RM134.91 million would be satisfied by RM67,454,750 in cash and the remaining RM67.45 million via the issuance of new units in Al-`Aqar.

By The EDGE Malaysia

Pulai Springs upbeat on record net profit

Pulai Springs Bhd expects to achieve a record net profit in the current financial year ending December 31 2010 and is even more positive about its outlook in 2011, its top official says.

Executive director Nick Mah Siew Chean, who emerged as the new major shareholder in the company three years ago, said things are looking brighter after a difficult run in 2008 and 2009.

Excluding an extraordinary gain from the sale of the Novotel in Kuala Lumpur, the hospitality-cum-property developer would have posted a net loss in the financial year ended December 31 2009.

"The years 2008 and 2009 were tough for us. We expect to return to the black this year. Operationally we are positive," Mah told Business Times in an interview.
In the first half ended June 30 2010, the resort operator posted a net profit of RM221,000 and revenue of RM25.15 million.

"We expect to achieve the best year in terms of bottom line this year, since the takeover from the previous owners in 2007," Mah said.

The expected better performance this year and next will be attributed by sales of the remaining 85 units of Cinta Ayu All Suites. A total of 300 units were built within Pulai Springs Resort.

The company has made some RM80 million from the sale of the units and expects the remaining units will be sold by end-2011 and fetch RM50 million in sales.

Pulai Springs also plans to launch some niche developments within the resort. It has 3.2ha of land available for development. It is now conducting a feasibility study to decide on the type of property units it should build. The units are likely to be launched at end-2011.

In 2007, Mah took over Pulai Springs from one of its founders, Datuk Chua Jui Leng, and emerged as a major shareholder.

Meanwhile, Mah dismissed talks in the market that the company was up for sale. "We are here for the long term," he said, adding that the units within the resort were the ones that are available for sale.

On foreign ventures, Mah said Pulai Springs will look for opportunities for both hotel operations and property development in China. These projects can be via acquisition of existing assets or be built from scratch.

"We understand the China market and are confident about China," he said, when asked if Pulai Springs is looking at other countries within the region.

This is because his family business already operates a 18-room hotel in Kunming, China.

Although a joint-venture agreement to jointly bid for a development project in Kunming was withdrawn in July following unsuccessful negotiations, Mah said the company will continue to pursue for other projects in the republic.

By Business Times

Suria Bistari expects RM80m GDV for Johor Baru project

SURIA Bistari Development Sdn Bhd, a wholly-owned subsidiary of IJM Land Bhd, expects to record RM80 million in gross development value (GDV) for its two blocks of SuriaMas suites project in Larkin, Johor Baru.

General manager (Southern region) Tham Huen Cheong on Saturday launched the 16-storey SuriaMas Block C comprising 152 units.

Tham said 70 per cent of the units, pegged from RM220,000 to RM320,000 had been snapped up even before the launch.

Tham said he expects the take-up rate to hit 90 per cent by year-end and the GDV for Block C is expected to be RM35 million.

The company is set to launch the 13-storey Block D which will have 119 units by the end of the year, with GDV targetted at RM40 million.

The launch of Block D will mark the last of its four blocks of SuriaMas suites in Larkin.

Block A and Block B, comprising a total of 600 units, were fully sold out since last year.

"Johor Baru's economy is always linked to Singapore. A majority of the flat dwellers are locals working in Singapore. Security is one of the reasons why buyers are snapping up the apartments," Tham said.

Meanwhile, the company is set to launch the third phase of its cluster homes in Taman Nusa Duta soon.

The third phase consists of 128 units of two-storey cluster homes priced from RM518 and above.

Since its inaugural launch in July, the company has chalked up over RM65 million in sales turnover for its homes in Taman Nusa Duta

"With the new coastal highway here coming up and the cheaper toll rates at the 2nd Link since August, we expect a surge in sales of properties in the area.

"Taman Nusa Duta and the neighbouring areas are also poised to be like a duplication of Taman Molek with the sprouting of banks and other amenities in the vicinity," he said.

By Business Times

Tempo Properties targets up to 25pc ROI

Tempo Properties Sdn Bhd, the developer of "The Atmosphere", a mixed commercial development project, is targeting a return on investment (ROI) of up to 25 per cent over the next three to four years.

Chief Executive Officer Khoo Boo Hian said the gross development value (GDV) of the second and third phases of the project in Sri Kembangan is estimated at about RM850 million.

The entire project will be complete by 2012. It is also the first commercial development project in the South Klang Valley to be awarded the coveted BCA Green Mark Certification (provisional).

The certification recognises the best practices in environmentally-friendly buildings design and performance.

The first phase of the project has been sold to Giant Hypermarket for RM24 million.

"We are now constructing the second phase and expect to launch its phase 2E in early 2011," he told a media briefing in Kuala Lumpur today.

He said 90 per cent of phase two (excluding 2E), was sold out, while the construction of phase three would start next year.

"We are planning to build service apartments, a five-star hotel, retail and commercial centres under the third phase.

"Although 90 per cent of the development has been sold, we have decided to spend an additional RM2 million on green features, to be enjoyed by business owners," said Khoo.

He also disclosed that Tempo is eying properties in the Ampang and Mont Kiara areas for residential development.

He also stated that Tempo's future developments would continue to incorporate green elements into the design.

By Bernama

Mah a controlling shareholder of Pulai Springs since 2007

Not many are aware that Nick Mah Siew Chean has been the controlling shareholder of hospitality and property developer Pulai Springs Bhd since 2007.

Mah emerged as the shareholder of the company with a 32.9 per cent stake when he acquired 32 million shares then held by Datuk Chua Jui Leng.

Mah took over the reign of Pulai Springs at the age of 30. His move into the company came after the sale of Novotel Hydro Hotel in Kuala Lumpur, and the suitor then was Pulai Springs Bhd.

In an interview with Business Times, Mah said following the sale of Novotel, he was so taken aback by the beauty and splendour of Pulai Springs Resort that he negotiated and subsequently bought the company from Chua.
"We decided to take over the company as we were attracted by the potential it had," he said.

Mah's experience in the hospitality business can be traced back to his father, Mah King Hock, a lawyer by profession, who decided to venture into property development. From property development, there was a natural transition into the hotel business.

"My father went into this business 15 years ago when my sister started studying hospitality in Australia," the junior Mah said, adding that the hotel was somewhat a training ground for them.

His father bought an 86-room historic Hotel in Blue Mountains Australia called Hydro Majestic Blue Mountain. This became a venue where the Mah siblings started their journey in the hospitality industry.

The hotel has since been sold.

Today, the family owns two hotels in Australia - the Airport Sydney International Inn and Metro Hotel Sydney. Both hotels are ranked three-star and have about 120-odd rooms.

In 2005, the family bought the Novotel Hydro Majestic in Kuala Lumpur, which now belongs to The Nomad Group Bhd.

A year later, it bought the Ferringhi Beach Hotel in Penang and renamed it Hydro Hotel Penang.

The family also owns a 180-room hotel in Kunming called the Hydro Hotel Kunming, which is being managed by Mah's brother.

Together with the listed company's hotel business, the Mah family operates over 1,000 rooms.

Although Mah sits on the board of the family business, he is solely involved in the operation of the listed entity.

By Business Times

Glomac reports higher Q1 profit

Glomac Bhd reported a pre-tax profit of RM29.465 million for the first quarter ended July 31, 2010, up 79 per cent from RM16.474 million in the same period last year.

The profit was achieved over a 114 per cent rise in its revenue of RM126.31 million from RM58.986 million previously.

In a statement released today, its Group Executive Chairman, Tan Sri F.D. Mansor said the strong results reflected the smooth progress in its key property development projects, namely Glomac Tower, Glomac Damansara, Glomac Cyberjaya and Bandar Saujana Utama township.

He said construction work for the RM577 million Glomac Tower, a Grade ‘A’ commercial office tower in the vicinity of the Kuala Lumpur City Centre, was on track for completion next year.

Glomac Damansara, the group’s freehold mixed development project, has started well with its initial launch of shop offices fully taken up and the successful sale of a 25-storey office tower to Lembaga Tabung Haji for RM171 million.

New launches from Glomac Damansara this year include two blocks of serviced apartments and a retail mall with an estimated gross development value of RM450 million.

The statement said Glomac also recently purchased 2.8 hectares of freehold land adjacent to Glomac Cyberjaya for RM27.4 million.

"Prospects for the group remain robust. We expect earnings growth to be sustained in this financial year, underpinned by our strong unbilled sales of RM585 million (as at 31 July 2010), which remains at a historical high," Mansor added.

By Bernama

AQRS to launch RM153mil Melawati Heights project

KUALA LUMPUR: Property developer, AQRS The Building Co Sdn Bhd, will launch its residential project, Contours Twin Courtyard Show Villa, at Melawati Heights in Hulu Kelang, Selangor next Friday.

The project, with a gross development value of RM153mil, is located on 3.2 ha.

The Contours, comprising 41 units, come in four designs. Its sizes range from 4,165 sq ft to 7,738 sq ft. The units are priced between RM3.2mil and RM4.8mil.

Its senior general manager, Thang Ah Hong, said the company has received a lot of positive response from buyers although the project has not been opened to the public yet.

To date, some 40% of the 41 units available were sold, she said.

“We are confident of selling all the units soon. This is a unique development and totally different from the existing residential projects,” she told a media briefing at the preview of the show unit here yesterday.

She said the freehold project, which was expected to be completed by end-2012, would have a clubhouse equipped with gymnasium, children water splash park, convenience store, multi-purpose hall, management office and a playground apart from landscaped jogging tracks.

“The project will also be equipped with quality fittings like the Owens Corning roof shingles, Kohler sanitary fittings, SimonsVoss digital locking system, private home lift, home alarm system, solar water heater and stainless steel piping,” she said.

She said AQRS would offer the developer interest bearing scheme on 10:90 basis, whereby interest would be absorbed by the developer during the construction period until notice of vacant possession.

“The package also includes free legal fees and disbursements on sale and purchase agreement and loan documents, free one-year maintenance, free air-conditioning units for all bedrooms (except for maid’s room) and kitchen cabinets too,” she said.

AQRS, founded in 2001, is the property development arm of Motibina Group of Companies whose core business is in the building, civil construction and development industries.

Contours is the company’s third development project.

Its first and second projects were the development of commercial and residential units in Kota Damansara.

By Bernama

UK launching more projects for M'sian and Asian home-buyers

KUALA LUMPUR: Over the weekend of Sept 4 and 5, Malaysian home-buyers parted with £785,000 (RM3.7mil) for a one-bedroom 530 sq ft apartment and about £2mil (RM9.6mil) for a 1,500 sq ft three-room apartment in prime London.

The yet-to-build project in Kensington High Street, considered a prime London location opposite the Hilton chain, was also exhibited in Hong Kong and Singapore. The average price for the project is £1,400 per sq ft.

This project by Berkeley Homes is one of the most expensive to be brought into Kuala Lumpur. They are working with Malaysian agent Henry Butcher. Berkeley is London’s largest volume house builders.

In the next several months, other house builders like Land Securities Group Plc and Native Land will also be making their way into Kuala Lumpur. They will be working with Rahim & Co.


An earlier property offering, The Sugar House apartments, by Berkeley Homes. The yet-to-build Kensington High Street project by Berkeley Homes is one of the most expensive brought into Kuala Lumpur. They are working with Malaysian agent Henry Butcher. Berkeley is London’s largest volume house builders.

Land Securities will be offering Wellington House, which is located 500m from Buckingham Palace. The average price per sq ft for this project is £1,300.

A 650 sq ft one-bedroom unit is £650,000. Next month, Native Land will be offering the third block of Neo Bankside which averages about £1,300 per sq ft.

Two earlier blocks were sold for about £1,150 per sq ft last year.

In what may be a sign of the shifting balance of wealth in the global economy, British house builders are increasingly making their offerings available to Asia even before launching them in Britain.

Although house-builders have been aggressively selling in the Middle East, China and India, Singapore and Hong Kong, the last two years have seen them explore the new markets of Malaysia, Thailand and Vietnam.

House-builders used to skip Kuala Lumpur because “there wasn’t a market to serve”, said Berkeley group managing director Paul Vallone. This has changed over the last two years. There has been a fairly consistent stream of exhibitions from house-builders here.

Vallone said they were beginning to see a new market in Kuala Lumpur, chiefly because of the weak pound.

The British pound is trading about RM4.80 to a pound compared to its peak of about RM7 a few years ago.

Berkeley is one of London’s largest volume house builders that cater to the mass market.

Of the 2,000 houses it sold last year at an average price of £263,000, more than 30% were sold to China and India compared with a historic average of 10%.

Said Vallone: “London property is generally supported by international money. Generally, about half of prime central London properties goes to buyers from the Middle East, China, India, South East Asia and Europe.

“There has always been a market in Hong Kong and Singapore prior to this. We tried selling in Kuala Lumpur a number of years ago but the market was not ready then.”

Most of Malaysians who bought properties are buying to stay.

“We are seeing a buying-to-stay market, not a buying-to-let market,” he said.

Because of the price of the units in the Kensington project, Vallone said this was the most successful exhibition by the group in terms of gross development value.

“This particular exhibition actually did better in Malaysia than in Singapore,” he said.

Berkeley Homes would be building the project with joint-venture partner Prudential.

Vallone said builders are beginning to look for international buyers because there is a lack of financing for British buyers who normally go for 90% financing when buying off the plan.

“Banks are not lending to this group at the moment,” he said.

In a report in Financial Times (Aug 30, 2010), Berkeley Group CEO Rob Perrins said the demand from Asian buyers, who want to invest offshore, or who want a place for their children to live in while undergoing tertiary education, has no match for the domestic British market.

Telford Homes, the east London focused-group, said the appetite from foreign buyers had allowed it to launch developments that would not have been possible to sell to domestic buyers.

This year, the group sold 70 out of 118 apartments in its Matchmakers Wharf development, which flanks the Olympic Park to buyers in Hong Kong, Singapore and Malaysia.

Property consultant Elvin from Khong & Jaafar Sdn Bhd suggests caution.

“Unless Malaysians are buying for their own stay or for their children, I will not advise it.

“House prices are expected to come down further because the entire country is on a major austerity drive.

“The economy is being reshaped. There is a major readjustment in the United Kingdom and the United States. So if you rush in now, during this cyclical period, you may be in for trouble.

“However, you can go and buy commercial properties like office space where there may be an annual yield of 7.5%. There are some good properties in London. Maybe this is the time to buy. But for the residential sector, be cautious,” Elvin said.

In an August residential sector report, UK-based Jones Lang La Salle said Britain faced a “choppy” recovery. For every four would-be purchasers, agents were listing 10 new properties for sale.

The current supply and demand dynamics are a reversal of fortunes for the British housing market lacking sufficient stock for the majority of the past 18 months.

With supply increasing, and decreasing demand for houses, house prices were slowing down, the report said.

The property consultancy expects prices to remain weak throughout the remainder of this year, with the market stabilising in the latter part of 2011.

By The Star

‘Provide incentives for developers to go green’

MORE education and tax incentives are needed if the Government wants to convince all developers in the country to go green with their buildings.

International Real Estate Federation (FIABCI) Malaysia Penang branch chairman Daisy Ooi said the current tax incentives by the government were insufficient to encourage the developers and other industry players.

“More can be done to encourage everyone to construct or reside in property which comply with the Green Building Index (GBI), including having a hire purchase system for the installation of solar panels and LEDs (light emitting diode). Such items are presently expensive,” she said.

Ooi made the comment after a talk entitled ‘Green Building-Benefits and Tax incentives’ organised by FIABCI-Malaysia Penang branch on Saturday.

The talk featured architect Chan Seong Aun, the co-chairman of Malaysia Institute of Architects sustainable committee.

The committee was instrumental in coming out with the GBI for the property industry.

The index was launched in 2009, and is now adopted by many authorities to rate buildings in the country on its energy efficiency and greenery sustainable effort.

Chan said: “Laws and regulations are important to control energy efficiency in buildings.

“More laws can be amended to overcome the energy inefficiency of most buildings.”

By The Star

Builder AQRS to launch RM153m project

Property developer AQRS The Building Co Sdn Bhd will launch its residential project, Contours Twin Courtyard Show Villa, at Melawati Heights in Hulu Kelang, Selangor, next Friday.

The project, with a gross development value of RM153 million is located on 3.2 hectares.

The Contours, comprising 41 units, come in four designs. Its sizes range from 4,165 sq ft to 7,738 sq ft.

The units are priced between RM3.2 million and RM4.8 million.

Its senior general manager, Thang Ah Hong, said the company has received a lot of positive response from buyers although the project has not been opened to the public yet.

To date, some 40 per cent of the 41 units available were sold, she said.

"We are confident of selling all the units soon. This is a unique development and totally different from the existing residential projects," she told a media briefing at the preview of the show unit in Kuala Lumpur today.

She said the freehold project, which was expected to be completed by end-2012, would have a clubhouse equipped with gymnasium, children water splash park, convenience store, multi-purpose hall, management office and a playground apart from landscaped jogging tracks.

"The project will also be equipped with quality fittings like the Owens Corning roof shingles, Kohler sanitary fittings, SimonsVoss digital locking system, private home lift, home alarm system, solar water heater and stainless steel piping," she said.

She said AQRS would offer the developer interest bearing scheme on 10:90 basis, whereby interest would be absorbed by the developer during the construction period until notice of vacant possession.

"The package also includes free legal fees and disbursements on sale and purchase agreement and loan documents, free one-year maintenance, free air-conditioning units for all bedrooms (except for maid’s room) and kitchen cabinets too," she said.

AQRS, founded in 2001, is the property development arm of Motibina Group of Companies whose core business is in the building, civil construction and development industries.

Contours is the company’s third development project. Its first and second projects were the development of commercial and residential units in Kota Damansara.

By Bernama

Lake Fields takes YTL to new heights

YTL Land & Development Bhd, the property arm of YTL Corp Bhd, says its priced development in Sg Besi, Kuala Lumpur, called Lake Fields has taken the company to new heights, as it has set a new price standard for properties in the area.

"Lake Fields has demonstrated Sg Besi's potential as Kuala Lumpur's next property hotspot," YTL Land executive director Datuk Yeoh Seok Kian told Business Times.



Lake Fields, a joint-venture by YTL Land via Syarikat Pembinaan Yeoh Tiong Lay and the Employees Provident Fund, spans 74ha and the centrepiece is a 6ha lake.

The first phase, known as Meadows & Glades, launched in 2005, were snapped up overnight.
The three-storey homes were priced from RM380,000 per unit and they are now worth around RM665,000.

YTL Land recently had a preview for the second phase known as Dale, which sold out in four days.

The RM300 million Dale project comprises 343 units of three-storey semi-detached homes and the prices range from RM638,800 to RM1.33 million.

More than half of the units were snapped up on the first day of preview on August 25 by existing buyers of YTL Land's other projects such as Sentul East, Sentul West, Lake Edge and Pantai Hillpark.

Dale saw over 4,000 registrants and the preview was held on a first-come, first-served basis.

The key point for Dale is the double-volume living area with floor-to-ceiling windows. It has five bedrooms including one with an en suite bathroom on the ground floor for the elderly.

YTL Land will launch phase three soon, known as the Groove, worth over RM300 million. The price of the homes here will be higher than Dale.

The three-storey homes feature a built-up of more than 4,000 sq ft and comes with a private lap pool and rooftop garden.

Yeoh said following the completion of Lake Fields, YTL Land will focus on its ongoing Sentul West and Sentul East projects in Kuala Lumpur, its flagship development.

By Business Times

Cooling down the market

Buyers who already own at least one property should have to dig into their own pockets for a higher downpayment for their subsequent purchase.

The issue of whether an asset bubble is forming has become a hot topic in a number of countries in Asia these days.

Hong Kong, China and Singapore have sounded the alarm on skyrocketing property prices and are worried that a bubble could be building up and will lead to a market collapse if the north-bound prices are left unchecked.

When an asset bubble happens, prices for a broad spectrum of properties would have escalated beyond the affordability of many common folks. The price increases are not due to fundamental demand but are being artificially pushed up by speculators.

This is what is happening in the “hot” property markets in the region today, and their governments are scrambling to cool the market down with tightening measures such as stricter mortgage loan policies and higher deposits for purchasers.

While some parts of the world, notably the western countries, are still facing the likelihood of a double dip in their economies, Asia has made a notable recovery in the past one year.

The low interest rate environment, high liquidity and an under performing equity market are fuelling a growing appetite for property investment among Asians who are renowned for their high savings.

The danger is that when interest rates start to rise and affordability is affected, demand may start to shrink. The bubble will then burst and result in falling asset prices and a market collapse.

The same issue has been raised about the state of the local property market. Will the run-up in the prices of houses in some parts of the Klang Valley, Penang, and Johor, be a prelude for prices to jump in the other broader property sectors and other parts of the country?

Although the current price spike is still quite contained within the higher end landed residential sector in sought after areas, some concerned parties have voiced concerns that it may spell trouble for the local market if the situation persist and a contagion effect takes place.

Those who are pressing the panic button are pointing their fingers at the speculators for the huge price increases through “property flipping” activities. By buying and selling within a short time, the main aim of these speculators is to push prices up and pocket the profits.

They worry that the bubble will burst when it becomes too big and unsustainable.

The bursting of the bubble will send prices tumbling and property values will be washed down the drains, causing much unnecessary losses.

Those who say there is no immediate danger believes the price increases of housing in the country are not across the board but are contained in only the “hot” areas.

To them, some degree of speculation is actually quite healthy and will not harm the market.

Although there is no confirmed figure on the exact percentage of speculative buying in the local market, the prevailing low interest rates and easy financing schemes are indirectly churning out more speculators in the market.

Unlike genuine investors who usually keep their properties to be leased out for long-term rental income, speculators are those who flip (buy and sell) their properties within a short time for quick profits.

It is common knowledge that there is a growing number of people (with extra cash for investment) who are pooling their resources to buy up multiple housing units (both apartments and landed) for profit-making purposes. They are hoping that their “investment ventures” will yield substantial profits for them in the current market run up.

Excessive speculation is unhealthy as it will unnecessarily burden genuine property buyers who find themselves being priced out of the market.

It will be a good time for the respective state housing authorities to churn out more public housing projects to meet the needs of the lower income population.

National House Buyers Association honorary secretary-general Chang Kim Loong laments that with the steep prices, only the rich, especially foreigners, can afford to buy. He urged the Government to introduce some kind of a price-control mechanism for houses – a threshold to help curb speculation.

He also suggests a lower mortgage loan limit (below 90%) for subsequent purchasers.

It is undeniable that some first time house buyers may still need the financing assistance to make it affordable for them to own a property.

To ensure the new measures do not unnecessarily burden genuine buyers, especially first timers, some flexibility like allowing a loan limit of up to 95% should be extended to these buyers who meet the banks’ credit assessment criteria.

Buyers who already own at least one property should have to dig into their own pockets for a higher downpayment for their subsequent purchase.

The easy financing schemes offered by developers and their panel of bankers should be phased out for upper medium to high-end houses.

Those who are taking advantage of the facility to speculate in multiple properties should not be granted “the free hand” to manipulate the market for their own gains.

Deputy news editor Angie Ng believes all stakeholders – from house buyers to developers and the regulatory authorities has a role to play to upkeep the sanctity of the market.

By The Star

Reasons for this perceived bubble

While much of the Western world today continues to suffer the effects of the global financial crisis of 2008/09, Asia has moved on. It is probably in this process of moving on that there is much concern about the property prices today, as seen in several readers writing in calling for curbs to speculation.

RAM Holdings Bhd group chief economist Dr Yeah Kim Leng says prices began to rise during the second half of last year but surge the first half of this year, particularly for landed units.

Although the 1998 Asian Financial Crisis took its toll on the Malaysian property sector, the sector was not affected by the 2008/09 global crisis.

“Our main concern today is the escalation in property prices. We do not see an economy-wide bubble. It is location specific. If the situation persists, it will have a spillover effect on the broader market segment. The effect is more noticeable in Penang, although certain locations in Kuala Lumpur are also affected. The double-digit growth may be sustainable for a year or two, but if it continues, there is the high likelihood that we will experience a bubble,” says Yeah.

Yeah’s views are echoed by property consultancy Khong & Jaafar Sdn Bhd managing director Elvin Fernandez.

“For a number of years after the Asian Financial Crisis, house prices hovered at about four times our annual household income. In some countries, it is three times. When prices increase six to seven times the household income, that is known as a bubble. In the last six months or so, there are a few locations where prices have started to run up. It is still not alarming as it has not yet affected the entire market.”

Both Yeah and Fernandez also concur that there are two key factors which are supporting this sharp run-up on prices – low interest and easy credit financing.

Prior to this sharp run-up on prices, the middle income group could afford a certain type of housing, in a certain location. Of late, the group discovers that this has gone beyond their reach.

At the same time, the number of people in the high-income bracket has also increased and their strong purchasing power has enabled them to snap up properties as an investment asset.

“Both these factors were present last year because of the counter measures taken by the Government to stimulate domestic demand.

“This has resulted in a boost in demand and the rush to buy in anticipation that prices will go up.

“Fundamentally, one may think it is not affordable but the expectation of higher prices stays with speculators. And the market becomes frothy,” says Yeah.

When prices go beyond fundamentals – an overshot in prices – rental yield is affected. If this situation is confided to selected schemes, the negative impact is limited. It is the high income bracket that will be affected.

A reasonable rental return is 3% to 5% nett depending on the type of house. But with various new areas coming up, yield has gone to 2% or below.

“These are dangerous levels from the household income perspective and also from the rental perspective,” says Fernandez.

Added to that is speculation, with some people buying five to 10 houses in one go, says Fernandez. The 5/95 schemes and other variants of it, where you pay RM2,000 to RM3,000 and need not pay anything until the property is completed, is an invitation to speculate.

Speculation, says Yeah, is another of RAM’s other concern as this is likely to affect non-performing loans (NPLs).

“At this point in time, the latest figures show that NPLs have not increased. That is one of the arguments that there is no bubble. What banks need to do is to ensure that lending is not generating speculation,” says Yeah.

The total exposure of banks to the property sector is about 40% in terms of mortgages and lending for construction loans.

By The Star

A leaf from history

The world we live in has become very interconnected. Within an economy, what happens in one sector affects another. There is much correlation, for example, between the property and the banking sector.

But the fusion does not occur at just sectoral levels. It has gone global. During the euphoric bull run of the 1990s, Malaysia enjoyed tremendous growth for a good part of that decade with gross domestic product (GDP) hitting 10% in 1996. Much of Asia was caught up in an era of contagious exuberance.

During those pre-Asian Financial Crisis years, property prices grew, supported by stock market gains in Asia. The fall of the baht in late-1997 heralded the Asian Financial Crisis. It was a financial and banking crisis which affected the housing sector, says RAM Holdings Bhd group chief economist Dr Yeah Kim Leng .

When housing becomes out of reach, or when incomes do not keep pace with the price rise, and prices continue to climb, there will come a time when demand will shrink. An oversupply occurs. If this oversupply persists and prices become unsustainable, the property market collapses.

“Anything can trigger a collapse. An economic slowdown, for example. The trigger need not necessarily be property-related. The bursting of the bubble occurs when the housing market collapses. Prices fall and demand dries up. The next thing is, we enter a property recession, which we experienced in 1998,” says Yeah.

In that year of negative growth, property transactions also went into negative mode. The market bounced back quickly however. With the return of confidence, 1999 saw a surge in transactions both in terms of volume and value. Analysts call this a pent-up demand.

From double-digit negative territory, property transactions entered positive territory with double-digit growth. But the effects of the Asian Financial Crisis remained for subsequent years.

In 2004, the Kuala Lumpur City Centre (KLCC) and the Petronas Twin Towers became an address. Since then, high-end condominiums in the KLCC area have experienced phenomenal growth in prices of 60% to 100% between 2003 and 2008.

Henry Butcher Marketing Sdn Bhd chief executive officer Tang Chee Meng attributes the strong growth of prices in KLCC condominiums to the influx of foreign investors to the market after the Government announced the exemption of real property gains tax in April 2007.

Says Tang: “The state of the property market is very much dependent on the state of the country’s economy.”

“This can be seen in the strong correlation between GDP growth and the volume and value of property transactions during this 15-year period. The volume and value of residential transactions drop whenever the country experiences negative economic growth or a deceleration in growth. Each property cycle lasts between six and 10 years,” explains Tang.

However, this year has seen a negative in terms of both volume and value of transactions due to a lag time (see tables). The first quarter of 2010 will be transactions of quarter 3 and 4 of 2009, he says.

While analysts may attribute the escalation in property prices to demographics and the growing desire for lifestyle housing, Tang considers inflationary pressure as a major factor.

“The significant rise in building material costs in recent years has led to property developers raising prices. In some instances, softer market conditions result in the developers absorbing the costs instead of being faced with unsold stocks,” he says.

But inflation is not the only factor. The rise in incomes of the middle class has resulted in purchasers demanding better designed and higher quality homes. Social ills like rising crime creates a demand for security.

“So developers came out with gated and guarded communities and larger houses. Even the humble link houses have morphed into prestigious supersized homes selling for well above the RM1mil mark. The strong take-up rates of these types of homes have led to developers pricing their products at ever higher prices,” says Tang.

Based on NAPIC’s house price index, it can be seen that landed properties have enjoyed higher rates of capital appreciation compared to condominiums/apartments .

The supply of landed residential properties in Kuala Lumpur and, to a certain extent, in Selangor is quite limited due to high land costs which result in developers going for higher density development. As Malaysians generally prefer landed property if they can afford it, this has led to prices of landed residences being chased upwards especially in the current low interest environment, says Tang.

By The Star

RM2 firm creates land deal history

Urusharta Cemerlang (KL) pays RM210 million, or RM7,209.80 per sq ft, to a company controlled by Singapore's property tycoon Kwek Leng Beng for a vacant land in Jalan Bukit Bintang, Kuala Lumpur

A RM2 company is the buyer of the country's most expensive piece of land.

On Wednesday, Millennium & Copthorne Hotels plc (M&C), a company controlled by Singapore's property tycoon Kwek Leng Beng, sold 29,127 sq ft of vacant land in Jalan Bukit Bintang, Kuala Lumpur, to Urusharta Cemerlang (KL) Sdn Bhd for RM210 million, or RM7,209.80 per sq ft.

The previous record in a reported land sale was RM2,588 per sq ft for Wisma Angkasa Raya in Jalan Ampang in 2008.

A search at the Companies Commission of Malaysia revealed that Urusharta Cemerlang (KL) is owned by Tan Sri Zainol Mahmood and Shazni Sulaiman. The two have been its directors since 2006.

Zainol is the chairman of Urusharta Cemerlang Sdn Bhd and Pavilion Kuala Lumpur Sdn Bhd. Urusharta Cemerlang owns the Pavilion Kuala Lumpur shopping mall, which is also located in the Bukit Bintang area.

Urusharta Cemerlang is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority(QIA).

Not much is known about Shazni.

In the financial year ended December 31 2009, Urusharta Cemerlang (KL), which is described as a dormant company, had current liabilities of RM5,010 and posted a net loss of RM1,305.

Real estate agents are describing the latest deal as "dizzying heights" and reckon that it could take many more years to surpass the figure.

But observers are wondering how and who will finance the acquisition given that the buyer is a RM2 company.

They also questioned whether QIA will later participate in the deal and what will be built on the land - an extended retail mall or luxury residences.

A mall would make sense given the land's proximity to Pavilion. However, at such a price, there is no doubt it could take more than the usual eight to 10 years to see a return on investment should a shopping complex be built.

It might recoup the investment faster if it built and sold high-end residences. After all, the land had been initially slated for the RM500 million Millennium Residences project.

In a statement issued in Kuala Lumpur on Wednesday, M&C said a 10 per cent deposit had been paid to its wholly-owned unit, CDL Hotels (Malaysia) Sdn Bhd, which owns the land.

The deal confirms a Business Times report early last month that a land deal was being negotiated by CDL Hotels which could fetch a record price of over RM3,000 per sq ft.

The latest deal is nearly three times the price paid per acre in several private sales of nearby land, and the highest ever in the country's history.

"This transaction has obviously set a new benchmark in the local property market. I view the transaction as a special transaction as it is a special purchaser - an adjoining property owner who probably places more value on the asset than others," said a real estate agent, who declined to be named.

It is understood that the YTL group, which owns the nearby Starhill Gallery, Lot 10 Shopping Centre and JW Marriott Hotel, had also been eyeing the land.

The deal is expected to be completed no later than the second quarter of 2012.

M&C's carrying value of the land was RM42.8 million. Based on this, the sale is expected to result in a pre-tax profit of RM164.1 million after taking into account transaction costs.

By Business Times

Mines 2 eyes up to RM15m annual rentals

Mines 2 Sdn Bhd expects to rake in up to RM15 million in rentals a year from the Mines 2, an office building and shopping mall.

Its chairman/founder, Tan Sri Lee Kim Yew, said Mines 2, which was expected to open in Oct 15, was the first fully light-emitting diode (LED) commercial building in the country.

Lee said Mines 2 was expected to attract 10-12 per cent more visitors from the Mines Shopping Fair (owned by CapitaLand) which has one million visitors a month.

"We expect Mines 2 to record an occupancy rate of 90 per cent by June next year," he told reporters after signing an agreement with Frontken Corp Bhd to enhance cooperation on green initiatives today.

The RM150 million 11-storey mall houses 400 shops and kiosks to encourage small and medium businesses as well as office spaces.

Lee said the company invested RM5 million for the LED installation to help save energy, promote sustainability, reduce environmental impact and improve the quality of the light.

The LED, installed by GreenFront, a division of Frontken, was designed to create a new green initiative to validate cost savings and its technology capabilities to deliver the economic, environmental and application benefits.

"With Frontken's LED technology, Mines2 is expected to reduce the utility expenses by up to 40 per cent from the lighting and air-conditioning loads.

"This will in turn help minimise the environmental impact by reducing carbon discharge," Lee said.

Lee, who is also the deputy chairman of Country Heights Holdings Bhd, said the group also planned to install LED lighting in projects that were built in the past 10-20 years ago as well as for future developments.

Among Country Heights's projects are Palace of the Golden Horses, Mines Wellness Hotel, which is the city's only beach resort, Mines Waterfront Business Park and Mines Exhibition and Convention Centre, he said.

Meanwhile, Frontken's executive chairman/managing director, Willie Wong, said the company would also install one of the biggest LED screens in Malaysia to run promotional messages for Mines 2 and also social awareness video campaigns.

The screen is expected to complete by the end-October, he said.

"We have created some innovative green products and would like to invite other shopping malls to join us in creating and developing energy-efficient malls," Wong said.

By Bernama

Mydin to expand reach with 14 more outlets

MYDIN Mohamed Holdings Bhd, the owner and operator of the Mydin chain of wholesale stores and hypermarkets, plans to make its presence felt in more areas in the country by opening another 14 outlets nationwide.

The group will invest about RM1.6 billion to open the new outlets in the next three years.

Mydin managing director Datuk Ameer Ali Mydin said the hypermarket has bought 14 plots of land valued at RM165 million in various strategic locations in the country.

"Our aim in the next three years is not only to open new hypermarkets, but also mini supermarkets in major towns such as Kuching, Kota Kinabalu, Sungai Petani, Bukit Mertajam, Kota Bharu, Kuantan, Johor Bahru, Kuala Terengganu, Seremban and Kajang," he told reporters at the Mydin Hari Raya open house and the countdown to Malaysia Day at the Mydin Mall in Malacca on Wednesday.

"Soon, we will open Mydin stores in Manjoi and Meru Raya in Perak. It would be our 56th and 57th stores," he said.

The countdown to Malaysia Day was officiated by Malacca Chief Minister Datuk Seri Mohd Ali Rustam. Also present was the state's Transportation, Information and Consumer Affairs committee chairman Datuk R. Perumal.

On the operations of the Mydin stores in Malacca, Ameer Ali said its three stores there are the second biggest contributors to the group, after those in the Klang Valley.

By Business Times

Bukit Bintang land parcel sold at record price

PETALING JAYA: A parcel of land in Kuala Lumpur’s shopping district of Bukit Bintang has been acquired by Urusharta Cemerlang (KL) Sdn Bhd at a record price of RM210mil from CDL Hotels (M) Sdn Bhd, a unit of London-based Millenium & Copthorne Hotels plc.

At 29,127 sq ft, the land parcel located between Grand Millenium KL hotel and the Pavilion KL mall would be acquired for approximately RM7,209.80 per sq ft, surpassing estimates in earlier reports that the sale could fetch more than RM3,000 per sq ft or around RM96mil.

This would also dwarf previous transactions for real estate in the city centre, where Sunrise Bhd had bought the 24-storey Wisma Angkasa Raya along Jalan Ampang for nearly RM180mil or RM2,588 per sq ft in 2008.

Millenium & Copthorne is a company controlled by Singaporean billionaire Kwek Leng Beng via a 53% stake in Singapore-listed property and hotel group City Developments Ltd.


Kwek Leng Beng controls Millenium & Copthorne via a 53% stake in Singapore-listed City Developments Ltd

Kwek is also cousin to Tan Sri Quek Leng Chan, who helms the Malaysian operations of the Hong Leong group, while the former helms the Singaporean operations.

The sale to Urusharta Cemerlang, which owns and operates the Pavilion KL mall, ended several weeks of speculation on who would acquire the parcel of land.

The YTL group, owner and operator of the nearby Starhill Gallery and Lot 10 malls as well as the JW Marriott Hotel, was said to be interested in acquiring the parcel.

Urusharta Cemerlang is 51% owned by Urusharta Cemerlang Development Sdn Bhd, with the remainder of the stake owned by the Qatar Investment Authority (QIA).

The QIA, which is the principal of Pavilion International Development Fund Ltd, owns the Fahrenheit 88 mall via Makna Mujur Sdn Bhd. The mall will be operated by Urusharta Cemerlang.

The land was slated for a RM500mil serviced apartment project comprising a 42-storey block to be known as the Millenium Residences.

The project was launched in 2008 but has since stalled following the recession and the slower demand for high-end residences in the city centre.

By The Star

Makna Mujur anticipates new Fahrenheit 88 mall to do well

MAKNA Mujur Sdn Bhd, the owner of Fahrenheit 88, expects the newly-opened shopping mall in Jalan Bukit Bintang, Kuala Lumpur, to generate RM250 million in annual sales.

Its director Datuk Lee Tuck Fook said the opening of Fahrenheit 88 will help boost the company's revenue.

"This would be a profitable venture for us," Lee said, but declined to disclose figures. Makna Mujur is a subsidiary of Pavilion International Development Fund Ltd.

Lee was speaking to reporters after the soft launch of the mall yesterday.

He said Fahrenheit 88 has about 200 shops and is expected to be fully operational by November 23.

"Today about 65 per cent of the shops are operational," he said.

The mall has secured 95 per cent tenancy rate, of which 80 per cent constitute local brands and the remaining 20 per cent international.

Fahrenheit 88 consists of 300,000 sq ft of lettable space spread over five levels of zoned shopping space. Its anchor tenants include Japan's biggest clothes retailer Uniqlo and Signature IT, which comprises shop lots, island kiosks and counter kiosks selling all information technology-related products.

Fahrenheit 88 is managed and leased by Kuala Lumpur Pavilion Sdn Bhd, which manages Pavilion KL.

Earlier in his speech, Lee said Fahrenheit 88 aims to inject added excitement to the Bukit Bintang shopping district.

"This will be the latest shop spot in Bukit Bintang for the young urban shoppers, who are sophisticated, educated and cultured," he said.

Meanwhile, Kuala Lumpur Pavilion retail chief executive officer Joyce Yap said the company is bullish about the growth of the local retail industry.

By Business Times

Buyers returning to property mart: IJM

Property developer, IJM Land Bhd (IJM Land), believes the recent launch of 116 units of double-storey terrace houses called "Serena" will be a hit among housebuyers who want modern-concept houses at attractive prices, says sales and marketing manager Susan Teh.

Moreover, she said, this was the right time to buy houses as the financing cost was at the lowest. "Of late, we can see a renewed buyers' interest to buy houses. They have started to return to the property market," she said.

The Serena is among new housing projects being developed by IJM Land at S2 Heights in Seremban 2. The houses, measuring 2,269 square feet a unit, are being built on a 607-hectare site.

Susan said 30 per cent of the houses have been booked since the project launch. The houses, costing RM326,800 a unit, are slated for completion at end-2011.

By Bernama

Ivory Properties plans condo, shopping complex of RM368m GDV in Penang

KUALA LUMPUR: Ivory Properties Group Bhd plans to build residential condominiums and commercial complex with a with an estimated gross development value (GDV) of RM368 million on a proposed site in Tanjong Tokong, Penang island

Ivory said on Wednesday, Sept 15 this project followed its proposal to acquire an additional 847,059 shares representing 94.12% of Tanjong Tokong Garden Development Sdn Bhd (TTGD) for RM37.64 million.

Ivory said it currently owns 52,941 shares or about 5.88% in TTGD. The 94.12% stake would be acquired from the shareholders of TTGD.

TTG, it said, was the registered and beneficial owner of all several pieces of land in Bandar Tanjong Tokong. The land was about 600 ft from the main road and opposite Island Plaza shopping complex.

“The land offers a high potential development in light of its strategic location with roads and other infrastructure in place,” it said.

Ivory said it intended to develop the land under a proposed project named “City Mall” consisting of approximately 175 units residential condominiums and commercial shopping complex with an estimated GDV of RM368 million and estimated gross development cost of RM173 million.

“The expected profit before tax to be derived from the development is RM154 million,” it said.

Ivory added that it had submitted plans to the relevant authority to develop the land and application for planning permission has been approved by the relevant authority.

The proposed development is expected to start in 2011 and complete in 2014.

By The EDGE Malaysia

Bina Puri order book swells to RM2.57b with RM95.9m Kuching project

KUALA LUMPUR: BINA PURI HOLDINGS BHD’s order book swelled to RM2.57 billion to date after it secured a contract to build the proposed 13-storey Plaza Merdeka commercial complex/hotel along Pearl Street, Kuching for RM95.69 million.

It said on Wednesday, Sept 15 that its unit Bina Puri Construction Sdn Bhd had accepted a letter of award from Rakyat Elite Sdn Bhd for the project.

Bina Puri said the project was expected to be completed within 19 months.

“With the award, the group’s current book order stands at RM2.57 billion as at to date. The group had managed to secure new projects worth RM1.62 billion in 2010,” it said.

Bina Puri said the contract was expected to contribute positively to its earnings for the financial year ending Dec 31, 2010.

By The EDGE Malaysia

Daiman inks MoU for China project

KUALA LUMPUR: Property developer Daiman Development Bhd has signed a memorandum of understanding (MoU) with the People’s Government of Chaozhou Municipality in China to acquire and develop a piece of land in Chaoan County, Guangdong Province.

Under the MoU signed on Sept 10, Daiman accepts the investment opportunity offered by the Chaoan County to develop the land, measuring about 121.4ha at Dong Shan Hu in Shaxi Town.

Based on the MoU, the Chaoan County undertakes to supply full information and assistance for Daiman to complete its feasibility and due diligence studies.

During the due diligence period, the right to acquire and develop the land was exclusive to Daiman, the company said in a filing with Bursa Malaysia.

By Bernama

Rising demand for Prai property

Completed terrace houses in the Pearl Garden project by Tambun Indah Development in Simpang Ampat

GEORGE TOWN: Residential property prices in the prime locations of Seberang Prai have seen their most pronounced rise in years with prices having advanced by between 10% and 20% for the past six months.

The prime residential locations in Seberang Prai are in Alma in central Seberang Prai, Simpang Ampat and Bukit Tambun in southern Seberang Prai, and Butterworth town.

Henry Butcher Malaysia (Seberang Prai) senior manager Fook Tone Huat told StarBiz that a double-storey terrace house in Alma, Bukit Mertajam was now priced at around RM280,000, compared with RM240,000 about a year ago, an increase of about 17%.

A similar type of house in Simpang Ampat and Bukit Tambun in South Seberang Prai is now selling for about RM260,000, compared with RM220,000 a year ago.

In Butterworth town, a double-storey terrace house is priced around RM320,000, compared with about RM260,000 a year ago.

For condominiums in prime locations such as the Pinang Laguna Water Park condo project in Seberang Jaya, Fook said the prices had increased by about 10% from last year to about RM200,000.

For example, the recent launches of Pinang Laguna Water Park Condo units in July by Island LandCap Properties were priced from RM208,888, up about 10% from RM188,888 last August when the project was first introduced.

The Pinang Laguna Water Park Condo project, comprising 350 condominiums with built-up areas of 935sq ft and 1,010sq ft, is over 90% sold.

“In last three years, condominiums are becoming increasingly popular in Jalan Raja Uda and Jalan Telaga Air in Butterworth town.

“The original selling price, which started off from about RM160,000 for a unit with over 1,000 sq ft in built-up area, has risen over 30% over the past three years to around RM210,000 and RM230,000 today,” he said.

For the second half of 2010, three condominium projects, the Dahlia Park, Tanjung Heights in Butterworth town, and Palma Laguna Water Park Condo in Seberang Jaya, are already being planned for launching.

Although the price of residential properties had risen, Seberang Prai is still far from being a speculative market.

Fook said this could be seen in the low volume of sub-sales transaction of residential properties in the secondary market.

“Since January 2010, our company’s sub-sale transactions are just over 50 units.

“The appreciation for sub-sales properties is about 5% yearly,” Fook said, adding that Henry Butcher Seberang Prai’s main focus was on sales transaction of light industrial properties.

Fook said the speculative element in the Seberang Prai residential property market was not strong, as there was a strong supply of new houses.

From Asas Dunia Bhd alone, a major developer in the mainland, in the first half of 2010, the group had already launched 231 units of landed residential properties with an approximate gross sales value (GSV) of RM82mil, compared with the 169 units with an approximate GSV of RM44mil launched by the group for the whole of 2009.

Tambun Indah Development Sdn Bhd general manager Teh Theng Theng said the sub-sales for its Juru Heights project in central Seberang Prai in the past three years were only about 10% of the 482 units of landed residential properties in the scheme.

The demand for workers from multi-national corporations such as Ibiden Electronics Malaysia Sdn Bhd, First Solar, and Osram is also stimulating the demand for affordable residential properties on the mainland.

Ibiden, for example, has announced that it would hire some 900 workers for its first plant that is scheduled to start operations in the second quarter 2011.

Osram Opto Semiconductors and First Solar had earlier this year announced their plans to hire 1,000 workers for each of their respective plants in Bayan Lepas and in Kulim Hi-Tech Park (KHTP).

Meanwhile, Real Estate Housing Developer Association (Penang, REHDA) chairman Datuk Jerry Chan said the rise in Seberang Prai property prices had to do with the increase in land and construction costs.

“In hot locations such as Butterworth and Bukit Mertajam towns, where land is limited, the price of land with vacant possession is now about RM50 per sq ft and RM40 per sq ft respectively.

“In Alma, the price of land with vacant possession is about RM30 per sq ft, while in Bukit Tambun it is around RM18 per sq ft.

“Inclusive of land and construction costs, the cost to build a double-storey house on the mainland is about RM200,000, compared with about RM160,000 a year ago,” Chan said.

Chan said the scheduled completion of the second Penang bridge in 2013 was another important factor in pushing up property prices. “Now that is over 24% completed, people are now confident that it would be completed on time,” he said.

DNP Land Sdn Bhd general manager KC Tan said one of the reasons why property prices in Bukit Mertajam was appreciating had to do with the effort to improve the road infrastructure.

“For example, the roads near Bukit Mertajam town are now gradually being widened to accommodate the construction of a flyover that will reduce traffic congestion.

“The opening of Tesco hypermarket in Alma before the year ends also explains why the area is now booming as a prime residential zone,” he said.

By The Star

Emkay wants Cyberjaya land to build office towers

PRIVATELY-HELD property developer Emkay Group is on the lookout for land in Cyberjaya, Selangor, to build office towers.

Its senior general manager Mazrita Mazlan said that office space was in demand and easier to sell, giving good returns to the group as foreign multinational corporations liked to buy floor by floor en bloc.

"Office space is what the market wants right now as the government does not have enough buildings to house their ministries and agencies such as the Department of Environment and the Public Service department. Also, Cyberjaya is near Putrajaya with easy and fast connectivity," Mazrita told Business Times.

"Furthermore, office space which is usually sold en bloc is hassle-free because documentation process is under one company, making it faster to process at local government agencies compared to shop-houses," she added.

Mazrita said the group recently bought 1.4ha in Cyberjaya for RM7 million, on which it plans to build another two to three office blocks or special purpose buildings.

"We have sufficient experience to build office towers, such as our completed RM100 million Bangunan Mustapha Kamal in Cyberjaya and the RM350 million Menara Mustapha Kamal in Damansara Perdana, Petaling Jaya.

"But we plan to build office towers cautiously and will first undertake feasibility studies to see the project's viability," she said.

Mazrita added that some international firms, especially information technology (IT), find it cumbersome to buy land and build their own offices.

"They would rather tender out construction of the buildings and then rent or sell them to investors."

The Emkay group is owned and controlled by property tycoon Tan Sri Mustapha Kamal Abu Bakar, who is also the executive chairman and dominant stakeholder of associate company MK Land Holdings Bhd.

He holds 48.7 per cent of MK Land via privately-held MKN Holdings Sdn Bhd, which in turn is one of 15 companies owned by Mustapha grouped under the Emkay stable.

Emkay associate company Setia Haruman Sdn Bhd is also the master developer of Cyberjaya.

Mazrita believes that Cyberjaya is the place to be as it is home to 20,000 students, out of which half are foreigners.

It is also a workplace for 19,000 workers spread across 50 MSC Malaysia-compliant buildings spanning 5.8 million sq ft.

"Property price in Cyberjaya is competitive at RM350 per sq ft compared with other competitors at RM450 per sq ft, and rental yield here is 7 per cent per year," said Mazrita.

By Business Times

Property launches worth RM571m planned in H2

GEORGE TOWN: The second half of this year will see the commencement of property launches in Seberang Prai for 1,981 landed and high-rise property units with an estimated gross sales value (GSV) of RM571mil.

Asas Dunia Bhd, Tambun Indah Development Sdn Bhd, and Island LandCap Properties Group are among the developers launching the projects.

Of the 1,981 units, some 664 are high-rise properties developed by Tambun Indah Development Sdn Bhd and Island LandCap Properties.

The highlight of the high-rise projects is the 38-storey RM100mil Palma Laguna Water Park Condo, touted as the tallest building in the mainland, by Island LandCap Properties.

“The 382 condominiums, measuring 1040 sq ft and 1,100sq ft in built-up areas, are priced between RM228,000 and RM265,000, depending on whether the units are facing the sea or the facilities.

“There are four penthouses, with built-up areas of 1,600sq ft and 1,970sq ft, priced between RM400,000 and RM490,000.

“We have already sold 20% of the units during a preview recently,” said Island LandCap executive chairman Oon Weng Boon. The official launch of the project is on October 23.

Also scheduled for launching in the fourth quarter are Tambun Indah’s RM40mil Dahlia Park and the RM41mil Tanjung Heights high-rise condominium project, comprising 282 units.

“The Dahlia Park in Butterworth town comprises 134 condominiums with built-up areas ranging between 1,395sq ft and 1,689sq ft, priced from RM209,800 onwards.

“The Tanjung Heights project in Butterworth town comprises 148 condominiums of 1,300sq ft units, priced at around RM200,000,” Tambun Indah general manager Teh Theng Theng said.

“The recent launches of Carissa Park werepriced at RM182,000, compared with RM160,000 when the project was introduced early this year,” she said.

Teh added that the group’s Carissa Park condominium project, comprising 144 units in Butterworth town, had sold about 70% of its units since the launch early this year.

Tambun Indah is also launching, in the fourth quarter, 467 units of landed residential properties in Simpang Ampat, South Seberang Prai, and in Alma, central Seberang Prai, with an approximate GSV of RM160mil.

“Some 335 units are for the group’s Pearl Villa gated project in Simpang Ampat.

“The terrace and semi-detached properties are priced respectively from RM270,000 and RM398,000 onwards.

“The Impian Residence, comprising 132 terrace and semi-detached units, is in Alma.

“The selling price starts from RM260,000 for terrace units and RM350,000 for semi-detached types,” she said.

Asas Dunia will launch soon 850 units of landed properties planned for central and southern Seberang Prai.

The 850 units of landed properties have an estimated GSV of RM230mil.

They comprise 500 single-storey semi-detached houses, and 350 double-storey terrace, double-storey semi-detached, and light industrial units.

Group managing director Datuk Jerry Chan said the single-storey semi-detached unit, with built-up and land areas of 1,200 sq 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.

By The Star

Pulau Bruit development set to be major tourist destination

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak has announced plans to develop Pulau Bruit in Sarawak into a major tourist destination.

The island covers an area of 530 sq km. Pulau Bruit is the second largest island in Malaysia after Pulau Langkawi.

The development of the island will also benefit the nearby Kampung Penipah and Kampung Tekajong along Sungai Rajang.

On April 28, Deputy Prime Minister Tan Sri Muhyiddin Yassin said a RM28mil infrastructure project to transform the island into an agropolitan centre.

Pulau Bruit was prioritised for development by the state for its strategic location in the Sarawak Corridor of Renewable Energy.

The government will look into areas of urgency such as the construction of roads connecting the villagers of the island to the district of Sibu where it will enable them to transport their produce to sell at a lower delivery cost.

Kampung Penipah also requires a clinic of its own as patients currently have to travel for 40 minutes by longboat to the Tekajong Health Clinic and this can only be done during high tide.

By The Star

SP Setia to grow foothold in landed assets

SP Setia's acquisition of 103.64 hectares of land in Johor and its development prospects may further strengthen the property developer's foothold to capitalise on the boom in the mid-to-high-end landed properties in the country, says OSK Research.

The company bought the freehold development land, adjacent to its Setia Indah township in Iskandar Malaysia, for RM169.3 million or RM15 per square feet, recently.

It said the proximity of the land to other mature developments offers important advantages, especially potential demand among upgraders in the area, wanting to move up to larger, newer and better-designed houses.

The proposed development that would replenish the company's landbank is expected to have a gross development value of RM1.5 billion.

"The land development is envisaged to commence by end-2011 or early financial year 2012, with a development period of eight years.

"The land is expected to be developed into another township with a mix of residential and commercial properties," OSK said in a research note today.

It said earnings contribution, at the earliest, is expected to start from late 2011 (or early financial year 2012) and onwards.

However, as the launching and development details are still sketchy, it is not imputing this into its earnings forecast for now, it said.

By Bernama