UEM Land-Sunrise merger unravelled

It's a well-dressed deal, this planned takeover by government-linked UEM Land Holdings Bhd of builder Sunrise Bhd. Accompanied by a cavalcade of rosy numbers and promises that the merged entity will become one of the "leading real estate company by market value, land bank and total assets", not just in Malaysia but the region, the psychology behind the deal is hard to fault.

The truth, however, as analysts and thick-walleted bankers would tell you, rests in the numbers and, of course, execution. And as far as that's concerned, for now, the views appear as varied and divergent as the corporate cultures of UEM Land and Sunrise.

Since the veil was lifted off the quickly-conceived deal a week ago, for many, its obvious financial and strategic merits far outweigh its niggling points. But there are some who quibble over the "low valuation" accorded to Sunrise, while others deem the exercise as benefiting one more than the other.

This must be frustrating indeed for the deal's protagonists. Sunrise's chief steward Datuk Tong Kooi Ong, who is the single largest shareholder and executive chairman, says: "People are always hung up over who gets a better deal. I'm not. If we all try to get a better deal at the expense of the other, then surely we can't get a deal done.

"A deal materialises when both parties believe they are better off. And this one clearly is. The synergies are extremely clear," he says in an interview with StarBizWeek.


The deal in a nutshell

UEM Land has launched a RM1.4bil conditional takeover offer for Sunrise at RM2.80 a piece. Sunrise shareholders have two options – to accept 1.33 UEM Land shares at an issue price of RM2.10/share for every Sunrise share surrendered or to accept 2.8 unlisted redeemable convertible preference share (RCPS) in UEM Land at an issue price of RM1 for every Sunrise share.

Those who opt for the second route, can convert their RCPS any time within two years from the issue date at RM2.30 each.

Shareholders can also choose to redeem RCPS at RM1 upon maturity. Any outstanding RCPS not converted or redeemed will be converted into UEM Land shares automatically.

There's a third option for shareholders if you count dumping their shares and walking away from the deal. OSK Research throws in a fourth – to hold out and wait for a sweeter offer, which it readily admits is risky.

The voluntary general offer is conditional upon UEM Land receiving more than 50% acceptance, which is deemed almost a done deal as three key shareholders – Tong, Datuk Allan Lim and Tan Sri Danny Tan Chee Sing – who collectively own 40.3% interest in Sunrise (25% is held by Tong) have given an irrevocable undertaking to accept the offer.

Assuming a 100% acceptance for the share swap, UEM Group's current stake of 77.1% in UEM Land will be diluted to 65% while Tong and friends will collectively hold 6% in the merged entity and other shareholders of Sunrise will have a collective stake of 9% in UEM Land.

On the other hand, a 100% RCPS alternative with full conversion under the cash conversion method will see UEM Group's stake in UEM Land diluted to 56% while Tong and his friends will collectively hold 11% equity stake in the merged entity and other Sunrise shareholders will have a collective stake of 17%.

The quibble

Could the offer have been better? Maybe.

And more so, if you agree with OSK Research that the Malaysian property scene is "at the cusp of a strong positive re-rating". By most valuation benchmarks – be it price to earnings (P/E), price to net tangible asset (P/NTA) and price to real net asset value (P/RNAV) – it would appear as if the offer falls short.

At RM2.80 a piece and with the just-announced 20 sen net interim dividend tossed in, OSK Research says Sunrise is valued at 1.3 times FY11 price/NTA but at a mere 0.58 times price/RNAV (RNAV of RM5.15),

The offer, says ECM Libra Research, only values Sunrise at 7.3x P/E based on CY11 earnings, which is lower than its peers. "Its closest peer Mah Sing, which has similar market capitalisation and also a perceived lack of landbank, is currently trading at 10.4x P/E based on CY11 earnings," it says.

Sunrise's pre-announcement traded price of RM2.52 is some 23% off its 52-week high of RM3.26 while UEM's last traded price of RM2.26 is merely 10% off its 52-week high of RM2.52.

To put it simply, to accept the offer, Sunrise shareholders ought to be convinced that the merger would unlock more value in their holdings over and above what the company can achieve on a stand alone basis.

Ultimately, the best barometer on the market's take to the offer still rests in the price performance of both counters post-announcement. The deal has received a resounding nod; both counters have leaped since the announcement. Sunrise's shares have climbed 25% from its pre-suspension price of RM2.52 to RM3.16 on Thursday while those of UEM Land has risen by 9% from RM2.26 to RM2.47.

But one market wag says the trend is "rather atypical". "Normally, the buyer's counter will fall while the seller's will go up. But in this instance, both have gone up. Because it's a share swap, if the buyer goes up, the target's price will also rise," he says.

That's a good start, if any and one that UEM Group Bhd group managing director/CEO Datuk Izzaddin Idris can't help but point out: "For a start, the fact that the market has spoken with the appreciation in the respective share prices, is a good sign."

Naturally, Tong can't resist either: "The value proposition for UEM Land is the strength of the people and the brand in Sunrise. It only makes sense if UEM Land can retain and harness this value for the new enlarged UEM Land ... the financial market agrees given the way both companies' shares have appreciated since the deal was announced."

Merger of unequals?

One's a large scale developer with massive tracts of land with an "I got your back" stamp from the Government, given its ultimate controlling shareholder is state investment arm Khazanah Nasional Bhd, while the other, an entrepreneur-driven nimble outfit with a penchant for high-end high rise buildings. Yet, small, Sunrise is anything but.

"Let me correct a general misperception. Sunrise was, but is hardly, a boutique developer today. It is one of Malaysia's largest property developers with sales of RM800mil and pre-tax profit of over RM150mil a year. There are only a handful of other developers in Malaysia with better financials," says Tong.

Melding two diverse corporate cultures could prove to be a tough act.

The different cultures are perhaps best embodied by the top executive cadre of the two entities; Tong is the casually-clad innovative-oriented and creative risk-seeker who used to be a banker and also owns media company The Edge Communications Sdn Bhd apart from having businesses abroad. UEM Land CEO Wan Abdullah Wan Ibrahim is an industry lifer who has spent over a decade of his career in several GLCs while Izzaddin, boss of UEM Group, which controls UEM Land, is a "GLC-lifer" who has spent his career in a smorgasbord of businesses from banking, utility, construction to property. One's a true-blue entrepreneur, while the other two, true blue professional managers.

It's easy to forget but UEM Group is actually more of a "reverse GLC" as it was privately-owned long before it was brought to the fold of state-owned Khazanah.

"UEM has a private sector DNA but it has government backing. In that sense, you can say that both organisations are not as vastly different as perceived. Still there is a state-owned mentality that's quite prevalent in the organisation," says an observer.

But some contend that it is this unique difference which could make the teaming up work.

"The unique thing about property companies is that the cultures may not even have to merge. By nature, a property company is focused on a project by project basis. For example, in UEM Land, the Putera Harbour team (a high end luxury waterfront project) is different from the team that is undertaking the rest of Nusajaya. On the development side, there are always separate teams handling the various projects. That means, one can leverage off the central expertise but each development can run separately," says an industry observer.

Still, quite visibly it's an issue foremost in everyone's mind.

"The major challenge will be people. We will need to address their concerns, to encourage and motivate them," says Tong.

Izzaddin alludes to that when he says: "Ultimately with any business or operational combination, the challenge is to successfully implement the plan to immediately extract the synergies. Call it execution risk. In this case, with the common ground and universal values that both organisations profess coupled with the professionalism and mutual respect we have for each other, I am fairly confident that it will be the case of 1+1 is more than 2. The issue for my team and I is how much more than 2!"

Tension among partners?

Could there be another reason, though not over-riding, for the recent deal? According to industry insiders, there is some long-standing friction between two other major shareholders of Sunrise – Danny Tan and Allan Lim, who respectively own 8.5% and 7.2%. Tan and Lim are brothers-in-law, having married two sisters.

Lim, the executive deputy chairman of Sunrise, according to insiders has keen interest in property development and has contributed substantially to the group's achievements. On the other hand, Tan is regarded as a passive investor in Sunrise as he is the controlling shareholder of another property company Dijaya Corp Bhd.

Still, an industry source says "the issues" between the two parties do not at all affect Sunrise.

For UEM Land, it hooked up with Sunrise after trawling for potential suitors for some time.

"We explored a host of potential candidates. After a careful study ... where we mapped the various candidates' profiles against a selection criteria based on our own strategic requirements, we felt that Sunrise was the most suitable candidate.

We were fortunate that Sunrise shares the same view and more importantly it was a willing seller," says Wan Abdullah.

Paving the way for an exit?

There is a strong sense of foreboding in the marketplace, that Tong, through this deal, is paving the way for his exit from the property developer. That may be a possible risk which, at this juncture, none of the deal's proponents would care to admit as he has been instrumental in the company's commendable growth in recent years.

In fact, Credit Suisse in a recent report pointedly refers to it: "The risks to potential benefits lies in the retention of Sunrise's key staff and the role Sunrise chairman Datuk Tong will play in UEM Land following the acquisition."

OSK Research echoes this sentiment: "Should he (Tong) no longer play a proactive role in driving Sunrise post-merger, there is little doubt that the company's current shareholders may get jittery."

But Tong is quick to brush off such nagging suspicions. "I am a shareholder of Sunrise like other shareholders. This deal creates value for all of us. I am not sure what you mean by "exit". I am not selling out. I am accepting the offer," he says just as pointedly.

"It is not possible to know how long I will stay invested, whether in Sunrise or in the new enlarged UEM Land. Many things can happen to my life. But my intention is to continue (being) invested, to help grow the business and the people and create value for shareholders and customers," he elaborates.

In line with this, Tong will be made chairman of both the development committees of UEM Land and Sunrise, and is expected to be the "platform" to take Nusajaya (UEM Land's flagship project) to the next level. "This appointment is a strong signal from UEM Land (that they want my experience, knowledge and assistance)," says Tong.

Tong's RCPS option

Tong plans to convert his shares in Sunrise to the RCPS of UEM Land. "Taking the RCPS shows my longer term commitment to the enlarged entity. The market would be worried if I take shares on the basis that I will sell out," he says, adding that this acquisition was clearly not just for the physical assets of Sunrise but also "the intangibles, the brand, the people".

"The structure of the RCPS has a good gearing effect on the performance of UEM Land. Although the conversion is at a premium (RM2.30 versus RM2.10), the RCPS holders can opt for cash option redemption as well ... In other words, if UEM Land does well (which I am confident it will), then the RCPS has a very good "option value".

"What options you choose depends on your assessment of the future success of the enlarged entity. The more positive you are of the future UEM Land, the higher is the value of the RCPS. As someone who will be partly responsible for the future UEM Land, I should show by example and commitment and my confidence. Therefore, I must accept the RCPS. It would be wrong otherwise," he adds.

But as far as minority shareholders are concerned, there may be little reason to opt for the RCPS – it is not tradeable, offers zero yield and is convertible at a higher price. "The shares are more liquid. There's no motivation to take up the RCPS. The only one who may be incentivised to do it is someone like Tong as it allows him to buy more shares in future and tap the upside potential of the group, which he will be helping to contribute to anyway over the next two years (tenure of the RCPS)," says an observer.

The pull factor

UEM Land's most prized asset is in Nusajaya, located west of Johor Baru and part of Iskandar Malaysia, a masive southern development corridor project. UEM Land has some 8,300 acres left in Nusajaya, of which about 2,700 acres are currently being developed.

To date, the company has introduced various projects in Nusajaya with a combined gross development value (GDV) of RM13bil. "UEM Land has brought in various development partners to accelerate the development namely Gamuda Bhd, United Malayan Land Bhd, Malaysian Biotechnology Corp Sdn Bhd (BiotechCorp), Encorp Bhd and most recently Bandar Raya Developments Bhd with a total committed land investments of RM744mil.

Sunrise, and more specifically, Tong's role in this precious piece is hard to miss.

"This deal will allow UEM Land to leverage on Sunrise's strong brand equity, pioneering knowledge in developing "lifestyle experience", capable management team and proven track-record in managing development of quality, high-rise residential, serviced residences and commercial properties.

"Sunrise will be able to immediately fill one of the numerous key components of the entire Nusajaya development," says Izzaddin, In short "to pull in the crowd and buyers".

The BIG picture

The deal's merits are hard to knock. UEM Land will be able to feel the sugar rush in its earnings as soon as it consolidates the financial results of the Sunrise group, which has RM3.2bil in GDV for new projects till the end of next year with RM1.2bil in unbilled sales, boasting an admirably high gross margins of 30%.

For Sunrise, it is just as compelling; it can finally diversify from flagship Mont'Kiara, where some say competition is heating up and gain an entry into Iskandar Malaysia, which is in sync with its growth strategy to have "multiple products in multiple locations." It also helps solve its "small landbank" disadvantage (Sunrise has 164 acres versus UEM Land's 11,400 acres).

But be warned – big may be vogue for booming sectors hungry for consolidation but it doesn't always end up better. The corporate landscape around the globe is proof of that.

Closer to home, the mega plantation merger that resulted in the rebirth of a larger Sime Darby Group three years ago is far from flaw-free. If anything, it has taught us that the sweetness in the combined numbers and commercial rhetoric at the inception of such mergers can very soon turn sour if executed poorly.

For we all know, UEM Group, which has to a great extent managed to shed its past stigma, can ill afford another big blunder.

By The Star

What's in it for UEM Land?

P. Gunasegaram says UEM Land's offer for Sunrise raises questions as to how it can benefit from the deal.

NO matter how you look at it, it's a rather interesting deal and a very intriguing one too. It's not everyday that a group of entrepreneurs gives up control of their prized asset to a government-linked company (GLC) and yet remain in the group, accepting a minority stake.

We are of course talking about UEM Land's takeover of developer Sunrise Bhd (see our cover story this week), controlled by businessman Datuk Tong Kooi Ong and friends.

The offer is RM2.80 cash a Sunrise share, valuing the deal at RM1.39bil and includes UEM Land shares, or redeemable convertible preference shares alternatives instead of cash.

Analysts have largely hailed the deal and the rise in price of both shares has been cited as evidence for market acceptance for the deal. That may not be strictly correct as Sunrise's rise is purely due to the takeover offer.

UEM's share price before the announcement was RM2.26, Sunrise's was RM2.52 with dividends of 20 sen per share.

That puts the effective offer price at RM3.00 a share after taking out the 20 sen dividends. So definitely, there was upside to Sunrise as the offer was effectively about a 20% premium to market.

Also days before the suspension, Sunrise's share price was hovering around RM2.20, which indicates the deal was not such a close-kept secret after all. Using this price, the offer was a good 36% above the market price, a handsome premium indeed.

So it does not come as such a surprise that Tong accepted the deal. Faced with a dwindling land bank and marginalisation of his role as a property developer, he made the best decision for himself.

He not only got access to a whole lot of land bank but exited Sunrise at a very generous price effectively at a substantial premium to market.

He lost control of Sunrise but got the opportunity to play a major role in UEM Land, which if he plays well, will earn him lots from his minority stake in UEM Land.

Things are not that clear-cut for UEM Land though. Were they paying too much for Sunrise? Can't they have just bought professional expertise on a project-by-project basis instead of spending RM1.39bil to buy basically expertise and brand? Did they need the other assets that Sunrise had?

But still the UEM Land deal has to rate better than the one another GLC made with Sunrise earlier this year (see A Question of Business: Does Sime Darby need Sunrise? Feb 6).

Then Sime Darby entered into a 50:50 joint venture with Sunrise to undertake a RM1bil commercial development in Bukit Jelutong, Selangor.

The land belonging to Sime Darby was to be injected at a mere RM125 per sq ft into the joint venture when residential land in the area was already selling at more than that.

Now that Sunrise is going to be wholly owned by a GLC, that deal may seem a bit more palatable, although not to Sime Darby minority shareholders who still lose out.

Back to UEM Land, the deal is certainly better than what Sime Darby had cut with Sunrise because any benefit that accrues to Sunrise will accrue to UEM Land as well.

That reduces the question mainly to whether UEM Land is paying too much for Sunrise and whether it needed to pay for all the other assets that Sunrise had when what it was looking for was merely expertise.

History has repeatedly shown that it is possible to buy expertise in the form of professional project consultants, property experts, architects and others. Evaluation was key.

This was amply shown by the development of the Petronas twin towers. Tycoon T. Ananda Krishnan, who got the project started, had no major property expertise to speak of.

But he got the project going and off the drawing boards and it remains a landmark development. There are countless others before him who have done the same thing.

Why can't our GLCs do the same? But one thing is clear. Tong, despite Sunrise's dwindling land bank, is very much on the property scene using other companies' land banks.

No matter how he got there, that's a nice place to be. Question is, how much the two GLCs – first Sime Darby and now UEM – benefit from the tie-up with him.

·Managing editor P. Gunasegaram knows that land is more valuable than buildings and people more than both.

By The Star (by P. Gunasegaram)

Sunrise on stage 3 of growth

HAVING built up a strong brand name in the Mont'Kiara high-end condominiums market, Sunrise Bhd is embarking on the third stage of its growth to diversify its property development activities geographically.

It has since ventured to other areas including the Kuala Lumpur City Centre, Bukit Jelutong, Kajang and Seremban as well as overseas to Canada.

"The company is duplicating its success in Mont'Kiara into other localities locally and overseas. The aim is for Sunrise to create multi-products in multi-locations," Sunrise executive chairman Datuk Tong Kooi Ong says.

According to Tong, planning has been ongoing for the last couple of years and it has successfully launched phase 1 of Quintet in Richmond, Canada in September.

It is also working on the Bukit Jelutong joint venture project and several other parcels of land owned by Sunrise in various locations in the Klang Valley.

The 50:50 joint venture with Sime Darby Property Bhd for the RM1bil development on 21 acres in Bukit Jelutong will consist of retail, shop offices, office suites and serviced apartments. The project is slated for launch sometime next year.

Tong says Sunrise is also venturing into hospitality – a new business that will add to its brand value.

"The primary objective is in the operation of serviced residences. This new unit also aims to assist our existing home-owners in generating yield and occupancy for their properties through medium to long-term leasing," he adds.

Currently Sunrise has 14 residential projects (including 11 Mont'Kiara) with over 5,400 units and three commercial projects.

The company has managed to grow its sales and profits by over four-fold in six years, while profits for the entire industry remained constant during the same period, he says.

"We have built pre-tax return on equity (ROE) from 11% to over 21% during the same six-year period. This ROE is more than twice the industry's norms."

In its current financial year ending June 30, 2011 Sunrise plans to launch four projects with a total gross development value of about RM3.2bil. As at June 30 this year, it has unbilled sales amounting to RM861mil.

The company's strong pipeline of new projects that include Menara Solaris in downtown Kuala Lumpur, Quintet, Canada (phase 2), Mk20 in Mont'Kiara, Bukit Jelutong joint venture development in Shah Alam and the Kajang project, will be a boon to its financial prospects.

Since coming on the company's board in 2003, Tong has been leveraging on Sunrise's prowess in the luxurious condominium market by moving into the commercial property sector.

Up until 2002, referred to as stage 1 of the company's growth, Sunrise was very much a single-product company, developing mainly residential condominiums in Mont'Kiara. It has since moved on to stage 2, where it ventured into multiple products (commercial and residential), mostly within Mont'Kiara to target a bigger market segment.

Its products cater to the different market segments, complement the existing projects and enhance the strategic appeal of the entire community.

The Solaris range of commercial properties in the Mont'Kiara/Dutamas area aims to add value, generate retail activities, and enhance mobility and convenience within the thriving Mont'Kiara neighbourhood.

In the last eight years, it has also developed mid-sized condominiums (Mont'Kiara Meridin and Mont'Kiara Banyan) and large spacious condominiums (10 and 11 Mont'Kiara) to cater to the diifferent market segments.

Tong's vision for Sunrise is to build dream homes and create value for all stakeholders; customers, staff, shareholders and the community. He believes the company's success is not solely measured by its profitability but also by the contribution it makes to the community and how others will become better off.

Tong's strategy to achieve the vision of value creation is depicted in the Quintet Development Strategy that focuses on the five key elements of location, product quality, services, environment and lifestyle.

"Sunrise will stay committed to its business proposition of value creation and more importantly, it will also focus on delivering its brand promise to the stakeholders by continuously improving its product and service quality and managing costs more efficiently through economies of scale and innovation," he explains.

Going forward, Sunrise's brand premium will be an immense asset to the company's expansion into other new markets, both locally and abroad.

By The Star

Sunrise-Sime partnership progressing well: Tong

PETALING JAYA: Doubts over the status of a joint venture between Sunrise Bhd and Sime Darby Property Bhd to undertake an integrated commercial property project in Bukit Jelutong were dispelled after Sunrise executive chairman Datuk Tong Kooi Ong said the partnership was progressing well.

In an e-mail interview with StarBizWeek on the status of the joint venture, Tong said the joint development committee met regularly and the project planning was very advanced.

"We are working with an international architect and making decisions with Sime Darby on the product offerings and mix. Hopefully, we can bring this project to the market by the end of next year," added Tong.

The 50:50 joint venture was inked in January to develop 21 acres in Bukit Jelutong.

Sime Darby Bhd, the parent of Sime Darby Property, had in August said the conglomerate was taking a re-look at some of its property joint ventures and, where possible, would be seeking to unwind out of ventures that did not create maximum value for itself.

Besides the joint venture with Sunrise, Sime Darby Property also has 60:40 joint ventures with the Brunsfield Group to develop property projects such as Subang Avenue, Oasis Damansara and the redevelopment of Oyster Cove, an exclusive waterfront resort on Australia's Gold Coast.

in a separate e-mail response, Sime Darby acting president and group chief executive Datuk Mohd Bakke Salleh said the group's new management and the board were reviewing all joint-venture agreements to ensure that the interests of Sime Darby were safeguarded.

"Currently, there is no conclusion to end any joint venture. We regularly perform reviews of our businesses and joint ventures to ensure that they are still in line with our objectives. We are extracting the most value out of our partnerships," he added.

According to Bakke, the Bukit Jelutong venture would comprise retail space, shop offices, office suites and serviced apartments with gross built-up area of approximately 2.7 million sq ft.

It will be developed over five phases with the first phase scheduled for launch in July next year.

"The project with a gross development value of RM1bil is expected to be completed in seven years from the launch of phase one."

Phase one will comprise retail space and offices; phases two and three will be retail, offices and serviced apartments; while the fourth and fifth phases will be retail and offices.

By The Star

More restrictions to ease property bubble?

The rising prices of houses is still one of the hot topics among average Malaysians as the threat of higher inflation is growing by the day.

The fact that Bank Negara had early this month imposed a lower loan-to-value ratio (LVR) for those taking up their third and subsequent mortgage loan shows the central bank also considers the situation quite worrying. Effective from Nov 3, house buyers who have already signed up for two mortgages and are applying for their third loan will only be eligible to get financing of up to 70% of the value of their house.

Although it is largely seen as a timely pre-emptive measure to avert unhealthy speculative activities, some quarters voiced their reservation that the measure is too mild and are asking for "stiffer" measures to rein in rising prices.

Their argument is that people who can afford the higher downpayment for their property purchases will not be affected by the lower LVR although the measure may be effective on those who need financing assistance.

The LVR should be further reduced for those applying for subsequent loans. Those applying for their fourth loan should only be granted up to 60% and fifth loan up to 50%, and so forth.

Since the LVR is now used as the basis to decide on the quantum of mortgage loan that house buyers can sign up for, some properties with "unrealistic" price tags are finding it hard to get financing unless their values are adjusted accordingly. Hopefully, this situation will make developers uphold their responsibility properly and price their project according to the fair value of the property.

Just because there is strong demand for landed houses these days, developers should not take advantage of the situation by pricing their property a few notches higher and burden buyers unnecessarily.

Like some parts of the Klang Valley, the situation is also quite apparent in Penang where basic intermediate terraced houses are being priced close to or beyond RM1mil each. With house prices shooting off the roof, banks should also play a more responsible role and should not over-push their housing loans. The "war" between banks is still evident with some banks trying to outdo their competitors by offering "aggressive" interest rates of up to 2.5% below base lending rate.

In fact, banks are still aggressively pushing their credit facilities to consumers.

Although the market situation may still seem to be under control, it is important for all stakeholders to be vigilant and take note of any fast changing signs of overheating.

Like one observer says: "Bank Negara's LVR curb is not just about the restriction per se, but more importantly it is about the SIGNAL that Bank Negara has send out, and that is, the central bank is keeping a wary eye on things and more measures could be introduced if the market does become frothy."

Hence, the psychological impact of such a move is more important in that it will remind developers, potential borrowers, and bankers to be more judicious with their actions, and that is good for the market in the long run.

Otherwise, the central bank may have to impose further tightening measures if the market heats up further.

In fact, various Asian governments are already looking to impose capital controls to curb growing risk of asset bubbles in the region, signalling that the red flag has been raised on the havoc that can be wreaked by the inflow of hot foreign money into the region.

The measures underscore concerns over the US Federal Reserve's second quantitative easing (QE2) – the printing of money to buy US$600bil long-term government bonds – amid an ‘'extended period'' of super-low interest rates to support its weak economy.

The side-effect of depressing the US dollar and keeping borrowing costs near zero will cause speculative capital inflow to Asia as investors seek higher yields in emerging markets.

Hence, the environment is highly conducive for asset prices to spiral further leading to asset bubbles. Besides the high liquidity in the system, the low interest rates and inflow of foreign funds are bound to send asset prices soaring if left unchecked. And when these hot money pulls out, it will result in financial destability and a meltdown in the assets market.

Even without the threat posed by these hot-money, governments in Singapore, China and Hong Kong have already imposed a number of restrictions to dampen the rise in property prices and curtail speculative activities in the property sector.

So it won't come as a surprise if Malaysia also have to resort to more restrictions to ensure the financial and property markets continue to be sustainable.

Deputy news editor Angie Ng hopes industry players are aware that the average Malaysian is still not a high income earner and that they will dedicate some of their projects for well planned affordable housing projects as part of their corporate responsibility.

By The Star (by Angie Ng)

Bandar Raya plans RM652m project

PETALING JAYA: Bandar Raya Development Bhd has formed a joint venture with Country Heights Land Sdn Bhd (CHLSB) to undertake a development at a 47.6-acre site in Seri Kembangan, Selangor.

The joint venture firm, Earth Pavilion Sdn Bhd, will be 75% owned by Bandar Raya and the rest held by CHLSB.

An integral part of the JV is the acqusition of 66 parcels of leasehold land in Seri Kembangan from Bluwater Developments Bhd for RM160mil cash.

“The proposed development of the Bluwater land comprises 310 semi-detached homes and 13 bungalows,” Bandar Raya told Bursa Malaysia yesterday.

The gross development value of the project is estimated at RM652mil, while total project cost was RM481mil. The projected gross development profit is RM170mil, giving it a margin of 26.1%. The project is scheduled to start in the last quarter of 2011, to be completed within five years.

By The Star

CapitaMalls to buy Gurney Plaza block

PETALING JAYA: The manager of Capitamalls Malaysia Trust, CapitaMalls Malaysia REIT Management Sdn Bhd, proposed to acquire a retail extension block of Gurney Plaza and parking lots at the complex in Penang for RM215mil.

A filing with Bursa Malaysia showed that CapitaMalls Malaysia REIT had entered into a conditional sale and purchase agreement with Gurney Plaza Sdn Bhd for the acquisition of a nine-storey retail extension block adjoining Gurney Plaza with a net lettable area of about 139,964 sq ft as at Sept 30, comprising four levels of retail space and car parking bays. The deal also includes another 129 parking bays at Gurney Plaza itself.

“The proposed acquisition is in line with the manager’s investment strategy to provide unitholders with long-term and sustainable distribution of income and potential capital growth,” it said, adding that the building has a forecast property yield of about 7.1% for 2011.

As at Nov 1, Capitamalls Malaysia Trust is the largest “pure-play” shopping mall real estate investment trust by property asset value in Malaysia and the proposed acquisition will further strengthen its position. Following the completion of the proposed acquisition, its property asset value is expected to increase from about RM2.13bil as at Sep 30 to about RM2.36bil.

By The Star

Properties worth A$850m sold at Sanctuary Cove

SANCTUARY Cove is one of Australia’s most successful resort-styled residential projects which Mulpha Australia acquired in 2002 for about A$208mil (RM640mil).

Located on the northern end of the Gold Coast and a 40-minute drive from Brisbane, the more than 2,000-resident estate boasts two golf courses, four harbours, 15 restaurants and harbourside cafes. It still has homes and land for sale ranging from just under A$500,000 (RM1.5mil) up to A$8mil (RM25mil).

Mulpha had acquired Sanctuary Cove from its previous Japanese owners who had collapsed into receivership in the early 1990s. The Japanese were intent on making it a big success and are said to have pumped in some A$1bil (RM3.1bil) into infrastructure at Sanctuary Cove.

However, due to overcapitalisation, the Japanese had faced financial troubles and had to sell it. When Mulpha bought Sanctuary Cove, only under a third of it was developed, with only 600 houses built on the site.

Since then, Mulpha has sold about A$850mil (RM2.6bil) worth of properties at Sanctuary Cove, says Alison Quinn, Sanctuary Cove executive general manager. She says that in the first half of this year alone, more than A$60mil (RM186mil) of property sales were achieved.

Since acquiring it, Mulpha has also invested as much as A$250mil (RM773mil) into the infrastructure of Santuary Cove, focusing on its golfing facilities, creating a retail precinct and expanding its marina.

Sanctuary Cove has a total capacity of 1,922 lots, with more than 800 individual titles yet to be developed including waterfront blocks, golf course and hillside land.

In January this year, as a move to provide more variety into its offerings, Sanctuary Cove released the first homes as part of a joint venture with Australia’s Sunland Group.

The joint venture will involve 117 new luxury homes and duplexes with golf and lake views.

Sunland is the developer of Q1, a tall skyscraper located in Surfers Paradise, on the Gold Coast. It is the world’s tallest residential tower, and the tallest building in Australia.

Last year, more than A$100mil (RM310mil) worth of properties were sold on Sanctuary Cove. It had been reported that this was made up of at least 50 properties, including a large waterfront block that went for A$7.2mil (RM22.2mil) to a Hong Kong-based businessman.

Sanctuary Cove is one of the few property projects in Australia with the Foreign Investment Review Board (FIRB) exemption status, meaning that foreigners can buy and sell properties there without restrictions.

Quinn believes that the company is well-placed to hit the A$100mil mark of sales again this year.

She says a recent A$20mil (RM62mil) investment on Sanctuary Cove’s golfing facilities, including the construction of an A$13mil (RM40.2mil) golf clubhouse followed by an overhaul and redesign of its golf course, has enhanced the community’s appeal.

“We are in the midst of very exciting times at Sanctuary Cove,” Quinn says.

“As a result of this strategic investment, Mulpha now has one of the largest and most diverse property portfolios in the country, and a level of infrastructure and lifestyle facilities that is unrivalled by any other residential community.”

By The Star

Analysts say UK property market sluggish

PETALING JAYA: The property market in the UK is currently very sluggish and prices are low, according to analysts responding to the move by the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (KWAP) to acquire their first property there.

According to a report by Reuters yesterday, the country's two pension funds had acquired an office building as part of plans to invest up to £1bil in the British property market.

They acquired the office building in London for £156.7mil, translating into a yield of 5.75% and a capital value of £802 per sq ft, said Reuters quoting Jones Lang LaSalle Inc which advised on the deal.

An analyst from a bank-backed research house said Europe's economy was quite bad right now and, apart from Malaysia, other investors were also flocking to the UK to acquire properties. "And when Europe economy revives, the UK is likely to pick up first as it is one of the top cities in Europe," she said.

Another local analyst also shared similar views quoting figures from Bank of England's latest mortgage figure that net lending in the UK, which stripped out redemptions and repayments, was just £112mil in September, down from £1.62bil in August.

It was also reported that lending figures there were unlikely to pick up in the coming months.

as banks restricted the best deals only to borrowers with substantial deposits.

"But, what I say is the yield of 5.75% is quite high," he said.

Previously, EPF said in a respond to query by StarBiz, it had made the decision as it viewed the UK property market as "stable and highly liquid" and one of the world's largest property markets backed by strong laws protecting the landlords.

By The Star

Alan Tong named ‘Property Man of the Year'

FIABCI Malaysia Property Man of the Year 2010 Datuk Alan Tong after receiving his award from the King

KUALA LUMPUR: Bukit Kiara Properties Sdn Bhd group chairman Datuk Alan Tong Kok Mau was named "Property Man of the Year'' at the International Real Estate Federation (FIABCI) Malaysia Property Awards 2010 yesterday.

Tong received the prestigious award from the Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin, who graced the event at a hotel here in a glittering ceremony attended by local and foreign guests.

Bukit Kiara Properties' projects include luxury bungalows at Aman Kiara and Hijauan Kiara, a luxury condominium. Both developments are located in Mont'Kiara.

Tong attributed his win to perseverance and determination.

"We always need to listen to the interest of the purchasers in our daily operation. This will help a lot for the success of the business," he said.

The award, dubbed the "property Oscars'' by industry players, also acknowledged nine property projects.

The winners for the Malaysia Property Award 2010 included Sunway City Sdn Bhd's Sunway City Ipoh in Ipoh (master plan category), Coronation Spring Sdn Bhd's Springtide Residences in Tanjung Bungah, Penang (residential development - high rise) and SP Setia Bhd Group's Precint 3, Setia Eco Park in Shah Alam, Selangor (residential development - low rise).



By The Star

Sunway City launches A'Marine at Sunway South Quay

Luxurious: A'marine

Sunway City Berhad (SunCity) continues its successful track record with the public viewing of A’marine, a luxury lakeside condominium in Sunway South Quay, located within the Sunway Integrated Resort City (SIRC).

Themed ‘A Night of Carnival Excitement’, SunCity successfully sold close to 80% of its units. To date. A’marine has a gross development value of RM200 million and comprises 242 units. Sizes of units will range from 1,306sq ft to 2,836sq ft.

The guests were truly entertained by a string of performances by street magicians and an eye-catching fire eating act that lit up the whole atmosphere during the evening. Children were also delighted by several clowns that gave out free souvenirs throughout the night. Additionally, all guests were treated to a sumptuous assortment of local delicacies.

Sunway City Berhad Property Development, Malaysia, managing director Ho Hon Sang said, “We are pleased with the response to date and A’marine allows homebuyers to experience a lakeside metropolis lifestyle in Sunway South Quay. It is a masterpiece that was conceived through an architectural competition which attracted numerous renowned international and local architectural firms. It is a unique development concept where a 28-acre lake takes centre stage.”

Sunway South Quay's development strategy is Blue, The New Green where the lake takes centre stage. Residents will enjoy a "paradise" secluded from the hustle and bustle of the city but with plenty of world-class amenities at their doorsteps. Surrounding the lake is an impressive 1.5km promenade for recreational purposes where residents can walk, jog and relax comfortably. As a result, residents will have the unique opportunity to spend quality time with their family beside the lake.

There will also be a 77-foot luxury yacht called the South Quay Princess, anchored by the side of the lake. The luxurious yacht, which was specially transported to the site, can be rented by the residents of SSQ to host parties or business meetings.

Sunway South Quay will be a lifestyle paradise of its own with alfresco dining, designer cafes, international restaurants, lakeside boutiques as well as retail and shopping lots in future.

Ho added that the appeal of A’marine is strengthened further as it is located within the SIRC, which is a hub of award-winning and world-class shopping, leisure, entertainment, education, recreational and commercial facilities. All these components make SIRC one of the most comprehensive integrated developments in the country.

The success factors for this good response for Sunway South Quay are due to several key factors. All the world-class and award-winning amenities are already completed, namely education, which is Sunway University College, Monash University Sunway campus and Sunway International School; healthcare with Sunway Medical Centre; shopping with Sunway Pyramid Shopping Mall; leisure with Sunway Lagoon and hospitality with the 5-star Sunway Resort Hotel & Spa, which constitutes of the 4-star Pyramid Tower & Resort Suites (service apartments) and the exclusive Villas chalets.

Sunway South Quay enjoys good connectivity as residents of SSQ will enjoy free bus shuttle service to all the locations mentioned within the SRIC. Proposed future access includes an elevated highway linkage from the Shah Alam Expressway (Kesas) and New Pantai Expressway (NPE).

For further enquiries, kindly contact us at 03-56381000 or 03-56399000.

By The Star

SP Setia beats sales target

PETALING JAYA: Leading property developer SP Setia Bhd has exceeded its sales target for the financial year ending Nov 30, 2010 (FY2010), achieving RM2.1bil in the first 11 months.

President and chief executive officer Tan Sri Liew Kee Sin said the property market had remained strong for most of the year.

“Many property developers,including SP Setia had recorded good sales,” he told StarBiz. Liew said the Government’s pump-priming activities and the anticipated Economic Transformation Programme augured well for the propertysector.

“We are definitely looking at doing better in the coming year as we plan to launch our Kuala Lumpur Eco City (KLEC) project in Abdullah Hukum,” he said.

Liew said the company had been actively marketing KLEC and the response had been very encouraging.

“We have received strong registered interest for our strata offices, en-bloc offices and serviced apartments,” he noted

On SP Setia’s properties showcased at the Star Property Fair, Liew said the company would be mainly showcasing its properties in the Klang Valley, which are Setia Sky Residences, Setia Eco Park, Setia Alam and SetiaWalk.

On the company’s marketing and promotional exercise, Liew said marketing and promotional activities had always been on-going.

“Brand building is important to us and we are constantly on our feet where this is concerned. Currently, our Invest in Setiahomes scheme is continuing until year-end,” he said.

He said the Setiahomes scheme involved a 5% down payment and up to 95% loan margin, depending on the banks.

Moreover, legal fees and stamp duty on sale and purchase agreement and loan documents would be absorbed by SP Setia.

“The interest during construction period up to vacant possession would also be absorbed by us,” he said.

AmResearch in a report on Oct 22, had maintain a “buy” rating on SP Setia and had raised its fair value from RM4.84 per share to RM6.50 per share pegged to a 5% discount to its upward revised net asset value (NAV) of RM6.82 per share.

The report had lifted SP Setia’s NAV from RM4.61 per share to RM6.82 per share to reflect more aggressive pricing and demand assumptions for KL Eco City, as it turns bullish on this massive RM6bil development following a company visit.

It said: “We have raised our earnings estimates 17% to RM233mil for FY10F, 14% to RM265mil for FY11F, and 15% to RM313mil for FY12F.

This put SP Setia three-year earnings per share compounded annual growth rate at 23% (compared with 1% for FY08-FY10), it said.

“In our opinion, the market may have underappreciated the deeply embedded value of Eco City, given the current bearish consensus view on condominium and office space due to oversupply concerns,” said in the report.

The report also said KL Eco City would be a testament to SP Setia’s slick execution and uncanny ability to strike deals.

“Given SP Setia’s design niche, first mover advantages and market reach, Eco City may usher in a new era for SP Setia propelling its annual pre-sales to a record high of RM3bil starting from FY11F (FY10F: RM2bil),” it noted.

A local analyst said SP Setia had a net gearing of only 0.29 times and can comfortably raise gearing to 0.5 times or a maximum of 0.75 times.

“The current low gearing of SP Setia allows the property developer to borrow up to RM1bil for landbanking purposes,” he said.

The analyst said it was very likely that SP Setia would be participating in land privatisations by the Government.

He said SP Setia was trading at a 25% discount to the fully diluted net asset value of RM6.80 – which is unjustified given its solid track record and also one of the most liquid property stocks in the market.

By The Star

Are mega projects necessary?

Despite some misgivings from certain quarters, many would view the government's launching of mega projects as an attestation of its commitment towards transforming the economy.

LAST month, the government fired the first salvo by launching seven mega projects under the Economic Transformation Programme (ETP). These projects are part of the 131 entry point projects identified under the government's ambitious roadmap to be carried out over the next 10 years.

Despite some misgivings from certain quarters, many would view the government's launching of mega projects as an attestation of its commitment towards transforming the economy.

Malaysia's economic performance will be affected by many factors including its economic and monetary policies as well as external and domestic demands.

In the past, most Asian countries prospered by adopting explicit industrial policies that focus on building its manufacturing prowess.

Apparently, the contours of the new industrial policy seem quite different today. There are four key policy parameters that the government needs to consider when designing new economic strategies - establishing sound industrial policies that cater to global demands; enhancing its human resource and capital development; adopting aggressive economic policies to strengthen its economic performance; and improvising the nation's physical and social infrastructure.

The goal of the government's economic strategies is simple - create jobs and increase its per capita income by accelerating the economy.

The Asian experience tells us that no country can accelerate its economic growth unless it is willing to invest in major infrastructure projects.

The major allocation to better roads, power supply, transportation and physical infrastructure is part of the government's grand strategy designed to stimulate the economy and restore both the private and public sector's confidence.

The multiplying effect will lead to more jobs being created as a result of the huge investments.

Indeed, investment spending in construction projects have a strong correlation to the rate of economic growth and future prospects.

Economists will agree that demand for construction projects reflects a healthy economy while declining growth implies an economy that is declining.

The construction of tall skyscrapers across many major cities such as South Korea's world tallest twin towers due for completion by 2014, Shanghai with its 121-floor skyscraper, and Mumbai with the 125-storey India Tower and 117-floor World One is a testimony of the importance of the construction sector as a measurement of a vibrant economy.

Since construction is often financed by borrowings that comprise short-term bank credit and long-term bond markets, the aggressive transactions within the capital market will rejuvenate market activities and ultimately lead to opportunities for reforms in the financial system, including improvement of corporate governance, reinforcement of regulatory and supervisory arrangements.

There will also be several visible effects on the economy. The government's active participation in the physical development of the nation directly implies the government's commitment towards improving the country's standard of living. The investments will also stabilise the investment climate while signifying a message of economic vibrancy to foreign investors.

The government has also not lost sight on other factors that contribute to economic growth. Economic growth can only occur when a country has sufficient human capital.

In today's industrial era, accumulation of a nation's wealth is no longer created by machines but human labour, thus the need for the economy to be knowledge-driven.

The knowledge to complement the government's economic agenda combined with the depth of technology embedded in the nation's human capital will decide on the success or failure of the economy. To instil a knowledge-driven economy is no mean feat because it involves major reforms that pervade at every facade of the economy - its social, educational and economic policies.

The ultimate mission is to create a "learning economy" where new technologies are applied and innovation remains the primary goal.

No efforts should be spared to ensure that the country's vision to foster life long learning is rigorously enforced at every level of our society.

The construction sector is seen as the first "battleground" for the government to instil its knowledge-driven economy agenda because of the massive manpower that will be utilised during the projects.

Already more than RM100 billion has been allocated for construction development that comes hand-in-hand with an additional RM1.5 billion on researches and development.

The government has also directly fostered competition among local construction firms by increasing the size of the construction sector while bringing pressure for organisations to innovate because technologies are needed in the wake of fierce competition among local companies.

Firms that aspire to win government-initiated projects will be forced to acquire and utilise advance technological know-how to compete locally, which in turn will mould local firms to be more internationally competitive in addition to generating higher returns and greater growth potential.

Competition will also breed innovation while technological knowledge will spread quickly across many firms to innovate.

In economic terms, the focus on construction development is seen as an attempt by the government to avoid "market mismatch" when supplies cannot fulfil the demand, as the economy becomes more vibrant.

In anticipation of future needs, the onus will be on the government to provide better quality residences to cater to the growing population of city dwellers that is expected to exceed more than 10 million over the next 10 years. There will be more demands for new commercial and retail properties, including better amenities, comprehensive civic facilities and an efficient transportation system.

There is a clear consensus that Malaysia needs an explicit industrial strategy to pursue its economic agenda and the government has identified 12 new key economic areas that need encouragement including the construction sector. The development of the city's physical infrastructure through investments in mega projects has been identified as the first thrust, a process that will revitalise the construction sector, spur the growth of SMEs, offer massive employment opportunities, increase net capital stock, improve labour efficiency and enhance the robustness of the capital market. Are these not enough reasons to justify the need for mega projects?

The writer is an associate professor with the Graduate School of Business, Universiti Sains Malaysia.

By Business Times

UEM Land: No plan to raise bid for Sunrise

UEM Land offered RM2.80 per share in an all-share deal but Sunrise shares rose 28 per cent to close at RM3.22 yesterday.

UEM Land Holdings Bhd has no plans to raise its bid for Sunrise Bhd after the latter's share price jumped above the offer price yesterday.

It offered RM2.80 per share in an all-share deal but Sunrise shares rose 28 per cent to close at RM3.22 yesterday.

Although major shareholders with a 40.34 per cent stake have agreed to the offer, UEM Land still needs another 9.7 per cent for the deal to happen.

"We believe the current market price of Sunrise is only reflecting the proposed dividend announced, the proposed offer structure and the pricing of our offer to acquire Sunrise at RM2.80 per share," UEM Land said in response to Business Times' questions.
Sunrise shareholders are offered 1.33 UEM Land shares for every share they hold, priced at RM2.10 each.

"As such, any increase in UEM Land share price, will result in a proportionate increase in Sunrise share price as to reflect the proposed structure and pricing," it added.

Shares of UEM Land rose 10.2 per cent to close at RM2.49 yesterday.

Most analysts think the offer, which values Sunrise at RM1.4 billion, is low.

AmResearch Sdn Bhd said the offer means UEM Land is getting Sunrise at a 28 per cent discount to its estimated net asset value (NAV) of RM3.89 a share.

OSK Research said there is a 31 per cent discount to its 2011 target price of RM4.33, based on the offer price and after adding the recently-announced net interim dividend of 20 sen.

But ECM Libra reckons that not everything can be based on numbers in this deal, as the fact that major shareholders are accepting could mean a lack of growth prospect for Sunrise.

Datuk Tong Kooi Ong, a major shareholder of Sunrise, is staying in a senior management role in the enlarged group.

"As such, the question to ask is whether the existing major shareholders of Sunrise expect positive value creation from this exercise," ECM Libra said in a report.

Analysts also think that the deal may spark more takeovers in the sector.

There is speculation of a deal between IJM Land Bhd and Bandar Raya Development Bhd (BRDB).

BRDB, famed for crafting thriving communities like Bangsar, has land surrounding its CapSquare development and along the Federal Highway.

MIDF Research senior analyst Syed Muhammed Kifni thinks that Sime Darby Property Bhd and Mah Sing Group Bhd would be a good fit.

By Business Times

UEM Land takeover bid draws mixed views

PETALING JAYA: Analysts have mixed views on UEM Land Holdings Bhd’s RM1.4bil takeover offer for Sunrise Bhd, with some of them saying that UEM Land will emerge “the bigger winner”.

Having already secured 40.34% of the voting shares, if its bid succeeds, UEM Land will become one of the largest property developers in the country, with land and projects in Iskandar Malaysia, the Klang Valley and abroad.



Last week, UEM Land proposed a conditional takeover to acquire all the equity shares in Sunrise at RM2.80 per share via a share swap of 1.33 UEM Land shares at RM2.10 for each Sunrise share or a share swap of 2.8 redeemable convertible preference shares (RCPS) at RM1 for each Sunrise share.

In terms of land, the enlarged group would have expanded its acreage from 4,164 acres, of which 98% are in Iskandar Malaysia, to 4,741 acres with 86% in Iskandar, 9% in Mersing and 5% in the Klang Valley. This acreage will exceed that of SP Setia Bhd, which has 3,453 acres.

The enlarged entity will also have a combined gross development value (GDV) of RM27.6bil. On its own, UEM Land has a GDV of RM20bil, about the same as IJM Land Bhd, which has over 5,000 acres.

Three out of five analysts said the takeover was “attractive” for Sunrise shareholders. Their views also differed on which was a better option for shareholders.

OSK Research said while the share-for-share swap offered most reward potential, it was not without risk as the the entities had very different culture with one being a government-linked company under Khazanah Holdings Bhd and the other a pure breed private sector animal. Merging their operations would be herculean.

Accepting the RCPS had limited downside risk as the RCPS could be redeemed at face value by UEM Land two years later.

“However, as the RCPS will not be listed, there will be no early exit for the investor and he must take into account the potential opportunity cost involved,” OSK said.

Another option was to cash out on or after the Nov 18 ex-date of the recently-announced 20 sen interim dividend and invest in other property stocks as OSK believed the Malaysian property sector was on the verge of positive re-rating over the next 12 months and investors may find more attractive options elsewhere.

ECM Libra Research said an analyst briefing on Nov 4 suggested that the main reason for Sunrise executive chairman Datuk Tong Kooi Ong to sell his stake was the landbank constraint of Sunrise.

At another analyst briefing several months earlier, Tong indicated that he was taking Sunrise onto a new strategy with multiple products and multiple locations.

While its joint venture with Sime Darby group in Bukit Jelutong, Shah Alam and its projects in the Kuala Lumpur city may be part of this strategy, ECM Libra said with this turn of events, the “potential for (the) enlarged entity to reap synergistic benefit of large landbank (UEM Land’s) and the development exeprtise and strong branding Sunrise” was there.

Tong will take up a board seat in UEM Land and remain as Sunrise chairman. He will also chair the development committee in the enlarged group. ECM Libra said despite the unattractive takeover offer, valuation wise, not everything could be quantified in this particular corporate exercise.

“The question we have to ask is whether the sale of stakes by major shareholders especially Tong, who is instrumental in the success of Sunrise, signifies the lack of growth prospect going forward and thereby (led to) their exit,” said ECM.

However, that Tong would continue to play a crucial management role in the enlarged group begged another question – would the existing major shareholders of Sunrise expect positive value creation from this exercise, that is, the consideration shares in UEM Land to be worth a lot more in two years despite its current stretched valuation, the research house asked.

Meanwhile, shares in Sunrise and UEM Land jumped when trading on Bursa Malaysia resumed yesterday following a two-day suspension last week to announce UEM Land’s takeover plan.

UEM Land gained 23 sen to its all-time high of RM2.49. The counter has risen more than 102% year-to-date.

Sunrise gained 27.78%, or 70 sen, to RM3.22, its highest since Jan 29, 2008 when it hit RM2.80. It was the second most traded stock on Bursa with 44.7 million shares exchanging hands. Year-to-date, Sunrise has gained more than 56%. Its closing price yesterday was much higher than the offer price of RM2.80 by UEM Land.

An analyst believed UEM Land would easily secure 50% acceptances level but doubted if the company would revise the offer price so soon.

He said investors could be buying into Sunrise yesterday due to the dividend which was announced last week.

Apart from the net dividend, analysts were unsure on the reason behind the rise in Sunrise’s share price. Investors could easily buy into UEM Land if they wanted to buy Sunrise as a proxy to the former.

Based on yesterday’s closing of RM3.22, 1,000 Sunrise shares cost RM3,220 and 1,000 UEM Land shares, RM2,490. Under the direct share swap, the 1,330 UEM Land shares received for 1,000 Sunrise shares would be worth RM2.42 each. In contrast, purchasing the 1,330 UEM Land shares directly would cost RM3,311.70, or RM2.49 each.

Another analyst said there was no guarantee that UEM Land would make a better offer in a subsequent round, if any.

By The Star

1Shamelin mall to have more than 1,000 stores

The much anticipated 1Shamelin mall in Cheras is scheduled to be completed by the second quarter of 2011 with a host of amenities set to bring in shoppers.

A sneak preview of the nine-storey mall located at Taman Shamelin Perkasa was held recently for the media at Westin Hotel in Kuala Lumpur.

The new mall boasts a gross build up of one million square feet with over 1,000 stores with 1,500 carparks for some 500,000 residents who lived nearby.

For entertainment shoppers can choose from Tanjong Golden Village Cinemas (TGV), One Pioneers Badminton Academy, Amp Square Karaoke to CYC Mega Leisure.

According to the mall’s senior complex manager Wong Chee Keong, fashionistas will enjoy themselves at the street bazaar located at the Lower Ground, Ground and Upper Ground floors.

“We have young entreprenuers who are arbiters of style and fashion who will start their own business. We hope they take up this opportunity and share their successes with us,” he said.

There are also themed zones such as Trendy & Fashion, Cyber & Lifestyle, Integrated, Eateries & Snack, Beauty & Pamper, Health Care & Academic as well as Sports & Entertainment.

Shoppers can also enjoy the gastronomic delights that will be available 24 hours by alfresco eateries surrounding the mall.

“Usually, shopping centres adopt two stages and stage two involves expansion with increased lettable area adjacent to existing spaces. In our case, we have two stages that will be developed at the same time,”Wong said.

The phase two is right above phase one and will have three extra floors dedicated to the entertainment and sports hub.

The third floor will house a supermarket and household stores, the fourth floor will have the badminton academy, health care, sports and lifestyle retail stores while the fifth floor is dedicated to TGV with eight screens.

For badminton enthusiasts, the badminton academy with 14 courts led by Malaysia’s top badminton players Wong Choong Hann, Lee Wan Wah, Chew Choon Eng and Chan Chong Ming will be a must try.

For now more than 50% of the retail outlets have been taken up.

By The Star

Mah Sing: Local property market sustainable

KUALA LUMPUR: Mah Sing Group Bhd is confident the local property market is sustainable as the current buying activities are backed by economic fundamentals and genuine purchasers.

“Despite Bank Negara’s measure to cap the loan-to-value ratio at 70% for third and subsequent house purchase, the prevailing low interest rate, healthy employment market and the fact that property investments have proven to be a reliable asset class will continue to sustain and drive the sector,” group managing director and chief executive Tan Sri Leong Hoy Kum said.

The Government’s Economic Transformation Programme to pave the way for the country to become a high-income nation will also boost demand for properties in economic hot spots that include the Greater Kuala Lumpur, Penang and Johor.

Leong said careful market studies to match supply with demand was necessary to make sure that the products offered meet market needs in terms of concept and design.

“It is important to invest in research and development to continuously create a healthy, sustainable and eco-friendly lifestyle. Other attributes include good locations, unique concepts and on-time delivery of quality products,” he told StarBiz.

Leong said gated and guarded landed properties seemed to be the most sought after, both for new launches and the secondary market.

“Besides a good location, buyers today place more importance on security, concept, design and lifestyle.

“The current price trend for link homes in good locations are approximately RM700,000 onwards for double-storey link homes and RM1mil onwards forthree-storey link homes,” he added.

Leong said Mah Sing was confident of chalking up sales of more than RM1.5bil this year after having turned in RM1.02bil for the first seven months this year from projects in the Klang Valley, Penang and Johor.

As at June 30, the company had unbilled sales of RM1.17bil, nearly twice the revenue recognised in 2009.

“Our landed properties generally attract local buyers, and our serviced residences have a higher quantum of foreign buyers due to ease of maintenance,” Leong said.

As part of the company’s marketing strategies, Mah Sing takes part in property exhibitions locally and overseas as they are good brand-building campaigns.

“We look forward to the upcoming Star Property Fair on Nov 19-21 at the Kuala Lumpur Convention Centre, and will be showcasing some of our latest projects at the fair,” he added.

The company currently has 15 ongoing projects while 10 projects are at various stages of planning. Its existing projects include One Legenda and Hijauan Residence in Cheras, Garden Residence in Cyberjaya, Perdana Residence 2 in Selayang, Icon Residence Mont’ Kiara, Aman Perdana in Meru-Shah Alam, Southgate, StarParc Point, iParc@Bukit Jelutong and iParc 2@Shah Alam in Kuala Lumpur and Klang Valley, Legenda@Southbay and Residence@Southbay in Penang island as well as Sri Pulai Perdana 2, Sierra Perdana and Austin Perdana in Johor Baru.

Those in the drawing board include M Suites @ Jalan Ampang, Kinrara Residence and Kinrara joint venture project, Garden Plaza in Cyberjaya, Star Avenue@D’Sara in Sungai Buloh, Icon City in Petaling Jaya, iParc3@Bukit Jelutong, and Bayu Sekamat in Hulu Langat in Kuala Lumpur and Klang Valley as well as Southbay Plaza and Icon Residence in Penang island.

Mah Sing is previewing its second project in Cyberjaya, namely Garden Plaza comprising Garden Suites (residential) and Garden Retail which are lifestyle retail shops.

The project-awareness exercise has attracted more than 2,000 registrants for the Garden Suites. Comprising fully-furnished small to medium-sized units that will be furnished and in move-in condition, the units are targeted at both users as well as investors looking to tap the vibrant student population in Cyberjaya which is currently in excess of 17,000.

The indicative price for the smallest unit of 500 sq ft starts from RM236,800 and there are flexible sizes to meet various requirements.

Leong said the company’s medium to medium-high end properties, including M-Suites@Jalan Ampang, received overwhelming response during its preview. M-Suites offers freehold apartments from 502 sq ft to 1,630 sq ft which are designed specifically to provide easy ownership and ensure long-term rental demand – criteria which appeal to both investors and residents alike when investing in the city.

The residential landed projects in Cyberjaya, Selayang and Bandar Kinrara had also attracted positive response. Garden Residence in Cyberjaya comprises two- and three-storey superlink and semi-detached as well asthree-storey bungalows. The gated and guarded project has been very successful, with sales hitting RM419mil as at July this year. Meanwhile, Perdana Residence 2, a gated and guarded project in Selayang, achieved more than 98% in take-up rate since its launch in March.

Kinrara Residence, a mixed residential development comprising super links, semi-detached units and executive bungalows priced from RM708,800, has also garnered positive response.

The gated and guarded development offers a communal lifestyle living with a clubhouse equipped with facilities such as swimming pool, wading pool, changing rooms, gymnasium and a community centre.

By The Star

Property: No specific theme this year

We don’t want developers over-emphasising on certain areas only, says FIABCI M’sia president

PETALING JAYA: After several years, the International Real Estate Federation (FIABCI) has decided that it is not going to have a specific theme for its Malaysia Property Award (MPA) this year.


Yeow Thit Sang

“There won’t be a theme for this year’s property awards because we don’t want to see developers over-emphasising on certain areas only,” said FIABCI Malaysia president Yeow Thit Sang (pic).

He said FIABCI Malaysia wanted to award developers that “excelled at everything.”

“In previous years, whenever there we had themes, many developers neglected certain aspects of their projects and we don’t want to see that happening.”

Yeow said FIABCI Malaysia also aimed to create more recognition for small, unheard of developers not just locally but also internationally. “There are many developers in Sabah and Sarawak, for instance, that nobody has heard of but are of world-class standards.

“By participating in the MPA, and going on to represent the country on the global stage at the International Prix d’Excellence, helps build their reputation and credibility,” he said.

FIABCI Malaysia is also more than just an organiser or annual property awards. According to Yeow, it was often a “voicebox” for property players to engage with the Government.

“We also address issues concerning the property industry. We meet with the Government regularly to express our views on how to improve the sector.”

Yeow said during the global financial crisis that occurred in September 2008, FIABCI Malaysia’s views were consulted by the Government on matters relating to the stimulus package.

On the awards, Yeow said all of this year’s entrees deserved top marks for their projects and their efforts. “The standard of the local property sector has increased tremendously,” he said, adding that there were over 50 entrees for this year’s MPA.

Yeow said over the years, FIABCI Malaysia had been encouraging local developers to reduce its impact on the environment as much as possible.

“Environmental awareness is a global issue. Local developers that consider the wellbeing of the environment into consideration will go a long way,” he said.

FIABCI Malaysia will be organising the 2010 MPA on Nov 11 in Kuala Lumpur with Malayan Banking Bhd as the official sponsor.

The categories to be contested are: Property Man of The Year, Master Plan, Hotel Development, Office Development, Public Sector, Residential Development (low rise and high rise), Resort Development, Retail Development and Special Award for National Contribution.

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

By The Star

Developer offers greener living experience in Putra Nilai

NILAI: GD Development Sdn Bhd is undertaking a mixed development, Green Beverly Hills in Putra Nilai, that could potentially generate a total of RM5.3bil in gross development value (GDV) when completed in eight years.


Datuk Yeat Sew Chuong

Its joint chairman Datuk Yeat Sew Chuong said the project, which comprises residential properties and commercial properties as well as a hotel, would be developed in seven phases.

“The first phase comprises the development of 334 condominium units and 61 bungalows.

“Our condominium project is over 75% taken up even before the official launch today and we plan to launch our bungalows in two months,” he told StarBizWeek yesterday at the launch of Green Beverly Hills.

The condominiums were priced from RM380 to RM580 per sq ft and piling work started last month, he said, adding that the first phase development would generate a total GDV of RM315mil.

“Green Beverly Hills is located on 350 acres freehold land in Putra Nilai, which is the new name for Bandar Baru Nilai, a distinct and well-planned integrated township with modern infrastructure and amenities,” he said.

He added that Green Beverly Hills offered a greener living experience.

Located 15 minutes from Putrajaya and the KL International Airport, and 30 minutes to Kuala Lumpur city centre, Putra Nilai is already known for its up and coming biotech hub, regional education hub and trading/commercial hub.

Yeat, who is also chief executive officer of Bursa Malaysia-listed INS Bioscience Bhd, said GD Development was a joint venture between him and Tan Sri Gan Kong Seng, chairman of Nilai Resources Group Bhd in their personal capacity. The project did not involve INS, said Yeat.

Gan is also joint chairman for GD Development.

“This is my personal investment and I will responsible for the property development while Gan is the land owner,” Yeat said.

By The Star

UEM Land bid gets 40% votes

KUALA LUMPUR: UEM Land Holdings Bhd’s proposed takeover of Sunrise Bhd for RM1.39bil, or RM2.80 per share, has received an acceptance level of 40.3% from three major shareholders of Sunrise.

UEM Land managing director/chief executive officer Datuk Wan Abdullah Wan Ibrahim said the group had received irrevocable undertakings to accept its offer from Datuk Tong Kooi Ong, Tan Sri Tan Chee Sing and Datuk Lim Kim Huat

According to filings with Bursa Malaysia, Casa Unggul Sdn Bhd (a company controlled by Tong) owns 24.41% stake in Sunrise. Other shareholders include Phoenixflex Sdn Bhd (8.46%), Lim (7.24%), Tong (0.22%) and Tan (0.01%)

“We do not intend to maintain the listing status of Sunrise if the public shareholding spread of Sunrise is not met pursuant to the offer,” Wan Abdullah said at a briefing to announce the takeover offer on Thursday.

He said the proposed takeover was conditional upon UEM Land receiving valid acceptances of more than 50%.

“If we don’t get that (50%), we will take a walk (from the deal),” he said.

UEM Land will take the necessary procedures to withdraw Sunrise’s listing status if it secures more than 75% acceptance.

However, Wan Abdullah was confident the deal was “primed for success” given that the group had already received 40% acceptance level.

He said there were synergies between the two companies as UEM Land was a township developer while Sunrise was a niche high-end developer.

Sunrise has a market capitalisation of some RM1.24bil (as at Nov 2) while UEM Land is currently the country’s largest property company with over RM8.23bil in market capitalisation.The combined market capitalisation of Sunrise and UEM Land will be close to RM10bil.

UEM Land will be offering Sunrise shareholders two options under its proposed takeover offer.

Under the first option on share swaps, Sunrise shareholders will receive 1.33 UEM Land shares priced at RM2.10 apiece for every Sunrise share held.

The redeemable convertible preference shares (RCPS) option will see UEM Land issuing Sunrise shareholders RCPS at RM1 each based on 2.8 consideration RCPS per Sunrise share.

The RCPS, with a tenure of two years, will not be entitled to dividends and will not be listed.

The RCPS are convertible into UEM Land shares at RM2.30 per share anytime during their tenure and are redeemable at 100% of their issue price only at maturity.

Assuming that a shareholder holds 1,000 Sunrise shares and opts for option one, he would receive 1,333 UEM Land shares. If he were to opt for option two, he would receive 2,800 RCPS.

While some analysts said UEM Land’s offer was a positive proposition, other analysts were less optimistic.

An analyst said the merger may be a catalyst for further appreciation in UEM Land’s share price.

Another analyst said given that both companies had very different operating environments, it would take some efforts to merge their operations.

“I guess anything is possible at the moment. It makes business sense to merge as UEM Land develops townships while Sunrise builds high-end properties,” an analyst said, adding that they may have to resolve some cultural differences between the two.

ECM Libra head of research Bernard Ching said at first look, the takeover offer price of RM2.80 significantly fell short of its revised net asset value (RNAV) estimate of RM3.46 for Sunrise.

“But taking into account the net interim dividend of 20 sen, the total return to Sunrise shareholders is actually RM3, just 13% short of our RNAV,” he said.

On paper, shareholders who prefer to cash out could opt for the RCPS but would have to wait two years before redemption.

“However, we believe shareholders are better off selling Sunrise shares on or after the ex-date of interim dividend on Nov 18 if they wish to cash out. This is because of the opportunity cost over two years since the RCPS will not be listed,” Ching said.

Despite this, Ching believed the RCPS offered a “more attractive entry into UEM Land” as it was essentially a synthetic call option on UEM Land shares which would allow Sunrise shareholders to benefit from the upside of UEM Land shares but with limited downside risk.

Post-takeover, assuming 100% acceptances under the share swap option, Tong, Tan and Lim would end up with 6% in UEM Land and other Sunrise shareholders 9%. UEM Group Bhd will have a 65% stake in UEM Land and the balance 20% by other UEM Land shareholders.

On the other hand, if the RCPS option gets 100% acceptances, upon the RCPS’ full conversion, Tong, Tan and Lim would hold a 11% stake in UEM Land, other Sunrise shareholders 17%, UEM Group 56% and other UEM Land shareholders 16%.

The RM2.80 offer price represents a premium of 11% to Sunrise’s last trading price of RM2.52.

However, the offer price represents a premium of 30.4% to the 1-month volume weighted average price of Sunrise shares to Nov 2, after taking into consideration the interim dividend of 20 sen announced on Wednesday.

UEM Group Bhd group managing director/chief executive officer Datuk Izzaddin Idris said the offer, if successful, would result in the creation of an enlarged property developer with significant size, complementary expertise, capabilities and an asset base of about RM5bil.

On the rationale, UEM Land said the group’s vast land bank in Nusajaya was expected to be the engine for growth and sustainable income over the mid- to long-term.

However, as the Nusajaya projects were still under various stages of development, UEM Land’s current/historical profitability was not reflective of the value potential of such land holdings.

The proposed exercise is expected to provide immediate enhancement to UEM Land’s earnings as it would be able to consolidate the financial results of Sunrise and leverage on its strong existing pipeline developments.

“By leveraging on Sunrise’s robust financial strength and prospects, UEM Land is expected to be better positioned to accelerate its own business expansion and to secure new development projects,” UEM Land said in a statement.

Wan Abdullah said the group faced geographical risk as most of its landbank was in Johor and thus needed to diversify its landbank.

He said the acquisition would allow UEM Land to participate in Sunrise’s developments in the Klang Valley including Mont

Kiara/Dutamas, around the KL City Centre and its upcoming projects in Kajang and Shah Alam.

Meanwhile, Tong said he was excited at the prospects of Sunrise being part of the enlarged UEM group.

“Together, the new entity will have the size, means, capabilities and management experience and foresight to offer more comprehensive and diversified product range not just in Malaysia but regional as well,” he said.

Upon completion of the offer, Tong, who is executive chairman of Sunrise, will be appointed director at UEM Land. He will also chair both companies’ development committees together with Izzaddin and Wan Abdullah

Izzaddin and Wan Abdullah would be appointed to the Sunrise board with the latter assuming the position of managing director.

Asked if the merger was his way out, Tong said it was “hardly an indication” that he was getting out as he would remain on the Sunrise board as chairman.

“Realistically, for me to try to make Sunrise as huge and be a regional and global player the likes of CapitaLand may be impossible, or may take the rest of my life,” Tong said.

By The Star

BRDB in tie-up to expand presence in Nusajaya

KUALA LUMPUR: Bandar Raya Developments Bhd (BRDB), which recently signed supplemental agreements with UEM Land Bhd, the master developer of Nusajaya, to buy a 60% stake in a special-purpose vehicle used for the development of Residential North in Puteri Harbour, is planning to expand its presence in the township.

The project, on a 111-acre freehold parcel, would be launched in the third quarter of next year and would be completed in six phases over seven years. The expected gross development value (GDV) for the project is RM2.3bil.

BRDB chief executive officer Datuk Jagan Sabapathy said the partnership with UEM Land was just the first step in a strategy to grow the company’s presence in Nusajaya, the flagship township of the special economic zone of Iskandar Malaysia in Johor.

The signing of the agreements was a follow-up to the July announcement by BRDB of the acquisition of the stake in Haute Property Sdn Bhd, the special-purpose vehicle set up for the Residential North project, from Dubai World, the emirate of Dubai’s flagship investment arm.

BRDB paid RM75mil for the stake and would be advancing a further RM70mil to Haute Property for the developmental rights to the project after Dubai World pulled out as a result of the global financial crisis.

“We’re still looking at a couple more tie-ups within Nusajaya, we’re taking a longer-term view of the region and its prospects,” Jagan told StarBizWeek.

He added that besides Nusajaya, the company still had about 300 acres undeveloped in the 1,400-acre freehold Bandar Baru Permas Jaya, also in Johor, where it recently launched the 35-acre Straits Residences, a strata-titled landed project.

Jagan said among projects in the pipeline for the Klang Valley was a 25.25-acre freehold plot slated for commercial development in Subang Jaya next to the Federal Highway, which the company acquired for RM125.86mil in early 2008.

“The plans have been submitted to the relevant authorities and we’re also contemplating acquiring a neighbouring plot of land to build a railway stop for the project,” he said.

Besides Subang Jaya, he said other projects in the pipeline included the first phase of the Hartamas II condominiums located north of Mont Kiara which, according to earlier reports, could have a GDV of RM300mil next year.

As for its overseas ventures, Jagan said the company, in partnership with Defense Housing Authority of Lahore, had completed the first residential phase in the 400-acre Defense Raya together with the golf course.

“We’ve also launched smaller residential units but we feel that the situation in Pakistan has to settle down first,” he said, referring to the country’s volatile political situation.

By The Star (by Fintan Ng)

NEO Bankside property within potential landmarks

Last year, property agency Savills Rahim & Co introduced the first phase of NEO Bankside, a British property located in prime central London, to Malaysians.

The first block, known as Pavilion A, had prices starting at £1,000 per sq ft for a one-bedroom apartment of slightly more than 500sq ft.

It did seem pretty steep when most of the British properties being marketed in Malaysia were priced at about £200,000 for a one-bedder. Nonetheless, of the 80 units that comprised block A and B, Malaysians bought 10 units of NEO Bankside.



About two weeks ago, the agency marketed the third block. Prices have upped about 10% to 15% from last year. Located south of the River Thames, NEO Bankside is located in South Bank, in an area that runs along the southern edge of the Thames from Westminster Bridge to London Bridge.

Jointly developed by Native Land Ltd and Grosvenor, the 200-unit project is located in what is known as the cultural hub of London.

Gray was in Kuala Lumpur recently to touch base with buyers from the previous phase and to unveil the third of the four-block project.

Native Land development executive Nicholas Gray says notable features in the vicinity include art museum Tate Modem, Blackfriars Bridge and Station which spans the river, a new mall One New Change which is due to open in 2012, a second Hilton hotel with 280 rooms and the Borough Market, known to be London’s oldest market.

The area of South Bank has undergone tremendous change over the last 10 to 15 years. Similar with what’s taking place in several parts of London, NEO Bankside is part of the huge regeneration process that is under way there.

Like other parts of the capital undergoing regeneration – where old derelict buildings are torn down and new buildings take their place – South Bank has over the years boasted some of the finer names in architecture.

The catalyst for the area is Tate Modem, formerly a derelict power station. Today, the art museum receives millions of visitors every year.


The other catalyst is the Millennium by Sir Norman Foster. (Foster designed the Troika, a project by BRDB Bhd in the KLCC area).

A new mall One New Change, about 10 minutes walk from NEO Bankside, will be another landmark in South Bank. The most ecclesiastical of NEO’s neighbour will be St Paul’s Cathedral across the river.

South Bank and its surroundings on both sides of the Thames have brought together some of the most famous architects. Among them Sir Christopher Wren (St Paul’s), Tate Modem (Giles Gilbert Scott and Jacques Herzog) and Richard Rogers for NEO. Rogers is also the architect for One Hyde Park, one of the most upmarket real estate in London at £6,000 psf.

Gray says the main qualities of NEO Bankside are its quality, both in terms of design and construction, its location in the city by the river and the landmarks around it, on both sides of the Thames.

Says Gray: “There is a lot of development by the river. Some of them will become landmarks in years to come.”

Native Land is specifically a prime central London developer, which is different from a house builder.

In Malaysia, when one buys into a project, most of the time, if not all the time, it is a project undertaken by a developer. In England, the situation is slightly different. There, developers and house builders also undertake projects.

Both Native Land and Grosvenor are developers. Native Land was formed seven years ago by the former senior management of Taylor Woodrow Capital Developments and it is today a residential and mixed-use developer.

Grosvenor’s expertise is in prime London residential market and it has total assets worth £12.6bil.

NEO Bankside is located in what property consultancy Knight Frank says is a maturing market. In its review of South Bank, its head of residential research Liam Bailey says South Bank has succeeded in creating its own identity and cemented its reputation as London’s cultural hub, a sentiment reflected in its contemporary architecture and physical landscape.

He says residential demand on South Bank is currently identifiable from two key sources – overseas purchasers and cash-rich domestic buyers.

“The weaker pound alone has created a compelling buying opportunity for international purchasers,” the report says.

A significant driver for investment comes from educational requirements.

South Bank is within a 30-minute tube ride of seven universities including The London School of Economics, Central St Martins and Goldsmith’s.

Most of the Malaysians who have bought British properties do so because they have children studying there. Other international buyers invest for the same reason. Over the past decade, the number of international students studying in Britain has risen by 175%.

The strongest growth comes from China, India and Pakistan. The number of Chinese students rose 11.7 times from 4,017 in 1998/99 to 47,035 in 2008/09.

In many cases, investors look to buy to cover the period of their child’s stay at university, and the properties are then retained as a long-term investment, the Knight Frank report says.

Diversification is the other reason for their investment. Many view the current global financial crisis as a once-in-a-lifetime event and the fall in the Sterling presents itself as a buying opportunity.

With fears of price bubbles in China, Hong Kong, Singapore and even in Malaysia, governments in these countries have already taken steps to cool the prices.

“Their success, or otherwise, will have repercussions for the central London market. Initial feedback from our Asian teams suggests that there is a strong potential for the negative impact of lower housing wealth in Asia to be at least partially offset by a desire for investors to target safe haven locations such as London,” the report says.

By The Star