Oversea Enterprise To Sell Shop Offices For RM5.65 Million

KUALA LUMPUR -- Oversea Enterprise Bhd's wholly-owned subsidiary, Restaurant Oversea (Imbi) Sdn Bhd, has proposed to dispose off four units of two-storey shop offices located in Kuchai Business Park here for RM5.65 million.

The sale and purchase agreement was entered into with Yayasan Dazhi Monday, Oversea Enterprise said in a filing to Bursa Malaysia.

It said the properties were acquired on Feb 21, 2006 and its disposal would result in a loss of RM3,000 to Restaurant Oversea.

"The proceeds arising from the disposal is intended to be used for the working capital of Restaurant Oversea and is expected to be utilized within a period of 24 months from the date of the sale and purchase agreement," it said.

As for the rationale for the disposal, it said: "The location of these properties were found to be unsuitable for the intended business activities of Oversea and its subsidiaries and the current rental income derived from these properties was low.

"The disposal would generate additional cash reserves for Restaurant Oversea's working capital purposes."

By Bernama

Naim to develop RM300m mixed project in Kuching

SARAWAK-based Naim Holdings Bhd (Naim), a property developer and construction group, will develop prime land in Batu Lintang, Kuching, into the state's biggest comprehensive mixed development project, costing more than RM300 million.

Managing director Datuk Hasmi Hasnan said the proposed development would be sprawled over 13.597ha and be completed over 20 years.

The project will comprise a four-storey shopping mall with basement car park, office tower block, hotel tower, a 36-storey office tower with basement and elevated carpark, showroom, 18-storey condominium block and a 27-storey high-rise apartment.

"We will incorporate a water theme park, a roof garden and incorporate plenty of greeneries so as to come out with a development that is eviromental friendly and one that the local populace can enjoy and benefit from," he said.
The project will be developed on a joint venture basis between Naim, Sarawak Mosque Welfare Trust Board and Tabung Baitulmal Sarawak.

The three parties signed a memorandum of understanding to facilitate the venture witnessed by Chief Minister Tan Sri Abdul Taib Mahmud.

Hasmi said Sarawak Mosque and Tabung Baitulmal will each have a 15 per cent equity in the project venture while Naim would hold the remaining 70 per cent.

"We estimate employment for more than 2,000 people in the project," he said, without disclosing, when the construction will begin.

By Bernama

Can the MRT address the long-term transport problem?

MUCH will be said and written about the mass rapid transit (MRT) in the next several months with construction expected to begin in July this year. Some will be for it, others will be against it.

At RM36.6bil, the public transport system will be one of the country's largest infrastructure projects. But this figure is for the civil works only. The prices of the trains and land acquisition have yet to be factored in. So the figure will certainly swell.


Why not have more cars fitted to the two-car system?

The building of this new MRT line as opposed to the current monorail and light rail transit must be seen from the perspective of what we know today as our public transport system.

When the monorail and LRT were built in the mid-1990s, Klang Valley has a population of about 3 million. Today, we have a population of 6.6 million. By 2020, it is estimated to be 8 million.

While we were building our monorail and LRT in the mid-1990s, Singapore was extending their MRT system with the first portion of the line ready for service in the late 1980s. Despite a population of just over 3 million in 1990, they opted for the MRT in the 1980s, and not the LRT, monorail or whatever. Today, Singapore's MRT is serving a population of more than 5 million people and that network is constantly being extended.

Over in the Klang Valley, we were building two systems, the monorail and the LRT line. At that time, questions arose why we needed two systems and fragmentise public transport further. Why not have just one system? This question was never answered. The two systems lack integration. To use the monorail, one has to get off and get out of the LRT station, and walk some distance to get on the monorail line, for example between Dang Wangi and Bukit Nenas station.

The people who designed, planned and built the LRT and monorail also did not factor in park-and-ride facilities. They just built a station where they can, put in a line and expect everyone to walk there in the sun and rain.

The result is that today, there are cars parked under the electric lines which electrify the LRT and there is a charge to this. So, in addition to spending about RM5 on a return ticket, there is the RM5 parking charge.

If one has to fork out RM10 to use the LRT or the monorail and yet at the same time, having to bear with the inconvenience, they may as well spend a bit more to have the convenience of driving to the city. That explains our low ridership. For every one ticket we sell, Singapore sells nine, London 16 and Tokyo 48.

All of us know there is a cost to infrastructure. Whether it is road network, bandwidth or public transportation system, it is a sunk cost. As with most public infrastructure projects, there is no profit to be made from it.

So the thing for the Government to do is to consider it as an investment for future years, for future generations. London's underground is about 150 years old. It was the first underground railway system in the world. Today, it serves the Greater London population of more than 7 million, which is about equivalent to Klang Valley's population. Greater London did not have a population of nearly 8 million some 150 years ago, yet they opted to build the underground. Closer home, Singapore did not have a population of 5 million 25 years ago.

When and if we build this MRT, it will not be for the next 30 or 40 years. It is for posterity. In that sense, it need not be wasteful.

But there is a need to be focused here. Do we want to sell more made in Malaysia cars to Malaysians or do we want to improve public transport? It is not possible to have both.

One may ask, why not have more cars fitted to the present two-car LRT system? The LRT started with a two-car system. It can be fitted to a maximum of four cars. The LRT platform is designed to fit only four. The LRT has a carrying capacity of about 30,000 per hour per direction for a two-car system. So there is a cap to capacity. The MRT has 50% more carrying capacity and the car is 50% wider.

What is wasteful is spending money on piecemeal solutions the LRT and monorail, for example to solve a eternal question that hovers around population growth and the need for public transport.

What is wasteful is having two MRT stations just 400m apart from each other.

What is wasteful is building the MRT, while ignoring and not improving the bus, taxi and Komuter system.

Assistant news editor Thean Lee Cheng thinks there is a need to think very long term when investing in infrastructure projects.

By The Star

Bina Puri unit buys land in KK for RM4.5m

KUALA LUMPUR: Bina Puri Holdings Bhd said its wholly owned subsidiary, Bina Puri Properties Sdn Bhd has acquired a parcel of land in Kota Kinabalu, Sabah of about 1.95 acres for RM4.5mil.

Group managing director Tan Sri Tee Hock Seng said in a statement yesterday that the land would be developed into a serviced residence, with an estimated gross development value of about RM60mil.

The land will be used for the development of one block of service apartments consisting 100 units with sizes ranging from 1,500 sq ft to 4,500 sq ft.

The land will be developed into a serviced residence, with an estimated gross development value of about RM60mil.

By The Star

Equine unit to develop land

EQUINE Capital Bhd’s wholly-owned subsidiary, Equine Park Country Resort Sdn Bhd, has signed a joint development agreement with Revenue Concept Sdn Bhd to develop a 3.6ha in Subang Jaya, Selangor, into a RM1 billion mixed commercial and residential development.

The project will be carried out in phases over seven years, Equine said in a filing to Bursa Malaysia yesterday.

By Business Times

Tesco plans 3 more stores in Penang, Kedah

TESCO Stores (Malaysia) Sdn Bhd is expanding its business in the northern region by opening three more outlets in Penang and Kedah within this year.



Tesco Malaysia chief operating officer Tim Golding said the company wanted to bring its Tesco offers to more customers and the new outlets will be opened at Seri Tanjung Pinang in George Town, Penang, and in Kulim and Alor Star, Kedah.

He said the new outlet at Seri Tanjung Pinang is expected to open in June.

The company has invested RM20 million on setting up the leased outlet, making it a long-term tenant at the development, which has been said to be the largest seafront project in Penang's history.

"Tesco Malaysia also has further developments in Alor Star and Kulim, where two more of our outlets will be opening this year. Both projects cost about RM50 million each," he said at the official launch of Tesco Bukit Mertajam at Jalan Rozhan yesterday.

Tesco Bukit Mertajam, which measures 9,000 sq m, opened for business on September 23 last year and is Tesco Malaysia's 36th outlet in the country and Penang's fourth.

Apart from more than 60,000 product lines in fresh food, groceries, apparel, electrical appliances, furniture and health and beauty items, the outlet also features over 50 shop units and 30 pushcart stalls.

Golding said the new Alor Star outlet will be located in the Stargate township, a 124ha mixed development in Tandop.

Tesco Kulim began constructions in September last year in Taman Lembah Impian. The two-storey hypermarket is expected to be completed in the second quarter of this year.

Golding said Malaysia was a fantastic market for Tesco, which plans to open seven to eight new outlets annually. The company is presently in planning stages for the new outlets nationwide.

He added that Tesco Malaysia also boasts a 100 per cent local employment rate, with Malaysians filling various positions in the company across the country.

Tesco Malaysia government relations and legal affairs director Azlam Shah Alias said for 2011, the company would invest an estimated RM500 million.

It was reported earlier this month that Tesco Malaysia has plans to invest RM280 million and open four more hypermarkets over 12 months starting from March, bringing the total number of stores it has nationwide to 40.

Tesco Malaysia started operations here in 2002 with its first store in Puchong, Selangor, and has invested over RM3 billion since. Last year, it recorded RM3.6 billion in revenue.

By Business Times

GSB to sell land, hotel for RM22mil

KUALA LUMPUR: GSB Group Bhd's unit, Serta Usaha Sdn Bhd (SUSB), has entered into a conditional sale and purchase agreement with Leopad Holdings Sdn Bhd to sell its property, comprising land and a 13-storey hotel, for RM22mil cash.

The property is situated in Jalan Kapar, off Jalan Syed Putra, in Kuala Lumpur.

GSB, in a filing to Bursa Malaysia yesterday, said the proposed sale is expected to be completed within eight months from the date of the agreement.

By The Star

CapitaMalls confident of meeting payout target

KUALA LUMPUR:CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM), the manager of CapitaMalls Malaysia Trust (CMMT), is confident of achieving its target of 7.45 sen distribution per unit (DPU) amid the positive microeconomic outlook for Malaysia this year.

CMMT, a shopping mall real estate investment trust (REIT), recorded a total annualised DPU of 7.26 sen for last year, exceeding its forecast of 7.16 sen as stated in its listing prospectus.

CMRM chief executive officer Sharon Lim said the company’s strong operating performance demonstrated its ability to proactively manage its assets and create value for unitholders.

“Ours malls maintained close to full occupancy (98.3 per cent), while shopper traffic grew to 16.2 per cent (13.1 million) in the fourth quarter ended December last year compared to the year before (11.3 million).

“We also expect to complete our proposed acquisition of Gurney Plaza extension by this year,” she told reporters during a briefing on the company’s fourth quarter results here yesterday. Sharon said CapitaMalls Asia’s recent acquisition of Queensbay Mall in Penang would form the seed asset for its planned RM1bil Malaysia retail property fund, which would provide a pipeline of assets for CMMT to acquire.

“CMMT will continue to actively pursue acquisition opportunities on its own, to increase its asset size and strengthen its position as Malaysia’s largest ‘pure-play’ shopping mall REIT,” she said.

For the fourth quarter of 2010, CMMT achieved a distributable income of RM24.8mil which was 3.1% higher than its forecast of RM24.1mil while DPU was recorded at 1.84 sen, 3.4 per cent higher than its forecast of 1.78 sen.

CMRM chairman Kee Teck Koon said: “With our quality portfolio of three strategically located shopping malls in the higher growth urban centres of Penang, Kuala Lumpur and Selangor, CMMT is well positioned to capitalise on the expansion in Malaysia’s retail sector.”

By Bernama

Demand for new houses to surge, says Knight Frank MD

There will be a surge in demand for new houses in Malaysia as Asian property investors look for properties, and expatriates come here for projects under the Economic Transformation Programme (ETP).

"The expatriates will be here for the duration of the projects such as the Mass Rapid Transit (MRT), among others. They would need a place to stay," said Eric YH Ooi, managing director of Knight Frank.

Ooi said, Asian investors are returning as Malaysia still offers the best value for properties, as compared to Singapore and Hong Kong where the property price is about five times more expensive.

Malaysia is the prime investment location in Asia because of its stable property market and relative affordability.

Many investors are coming to the market, rich with cash, and with an appetite for luxury properties in Kuala Lumpur, Ooi said on the sidelines of a property market outlook summit in Kuala Lumpur recently.

The investors from Singapore, Hong Kong, Indonesia, Taiwan, South Korea and Japan are buying condominiums, apartments and bungalows in the KLCC, Bangsar, Mont' Kiara and Kenny Hills areas.

Ooi said Malaysia's positive economic outlook and improvement in the rental market is driving them here.

During 2008/2009, rental of the properties fell by 20 per cent to 40 per cent in some locations in Kuala Lumpur, because of the financial meltdown and more supply in the market.

"It has improved and rentals are hovering between RM3.50 per sq ft and RM7.00 psf now," Ooi said.

Ooi expects more than 15 per cent of the sale of luxury properties this year to come from foreigners.

But this is low compared to 2008, where some 40 per cent of the sales were contributed by foreigners.

"We expect it to return to levels of 30 per cent," he said.

By Business Times

Naim to develop Batu Lintang land

Sarawak-based Naim Holdings Berhad (Naim), a property developer and construction group, will develop prime land in Batu Lintang, Kuching, into the state’s biggest comprehensive mixed development project, costing more than RM300 million.

Managing Director Datuk Hasmi Hasnan said the proposed development would be sprawled over 13.597 hectares and be completed over 20 years.

By Bernama

iProperty.com starts free property website

iProperty.com Malaysia, today announced the launch its free property website, www.home-guru.com.my.

The website would provide an additional distribution channel for all agents subscribing to iProperty.com.

Some 5,200 real estate agents in Malaysia will now be able to advertise their properties to an even larger audience of property hunters and investors, it said in a statement today.

By Bernama

Genting S’pore eyes building

SINGAPORE: Casino operator Genting Singapore says its subsidiary Resorts World Properties is in negotiations with Singapore Technologies to buy an office block.

The Singapore Business Times reported that Resorts World is expected to pay about S$1,500 per square foot on the current net lettable area of 98,906 square feet.

This would come to about S$150mil (US$117mil).

By Reuters

Property transactions may hit RM100bil

KUALA LUMPUR: A total of 342,179 property transactions worth RM96.77bil were recorded between January and November last year, which means the full year's transactions could reach the RM100bil mark, said Knight Frank Malaysia managing director Eric Ooi.

Ooi was commenting on figures provided by the Valuation & Property Services Department director general Datuk Abdullah Thalith Md Thani at the Property Market Outlook for 2011 yesterday.

“This is the first time transactions value has reached this figure,” said Ooi at the event organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia.


Eric Ooi ... ‘This is the first time transactions value has reached this figure

In light of this, and considering Malaysians penchant for property investments, Ooi said it was unlikely that property values would fall. It may not rise as much as it did last year, but the uptrend is there.

Ooi, together with Henry Butcher chief operating officer Tang Chee Meng, said property value rose between 30% and 40% last year.

“This is the first time property went up so much,” Tang said, adding that he had never seen such record growth for the property market in 30 years.

“The condominium market saw a price rise of between 60% and 100% between 2003 and 2008. This pales in comparison to the rise in value of landed units which rose as high as 40% in just one year. If one were to average out the rise in condominium prices, it is about 20% a year,” Tang said.

Earlier, in his overview of the Malaysian economy and the Malaysian property market, director general of Valuation & Property Services Department Abdullah Thalith said it was very significant that the transaction volume between the 11-month period increased 12.2% year-on-year, but the value of transactions increased at a higher rate of 35% from RM71.67bil to RM96.77bil.

“The recovery of the Malaysian economy has reinvigorated the overall property market,” he said.

In terms of lending in the broad property sector, the purchase of residential property took up the lion share of bank loan, at 58.8% compared with the purchase of non-residential property, at 22.1%. Construction took up 9.6%.

“Credit expansion for the broad property sector in the banking system increased from RM342.09bil as at the end of September 2009 to RM391.25bil as at end-September 2010,” he said.

“This means the residential property sub-sector remained the main mover of the property market,” he said. In this residential market, transactions in Kuala Lumpur recorded a growth of 8.2%, Selangor 7.2%, Johor 3.6% and Penang (island) 9.7%.

Terraced houses continued to dominate the market, especially in Selangor with 27,165 transactions, Johor with 12,555 transactions and Penang 4,358 transactions.

The city of Kuala Lumpur recorded more condominiums changing hands, 10,333 units versus terraced housing at 3,756 units.

By The Star

Property deals this year to breach RM100b

However, the growth of Malaysia property sector may be in single digit or below 20 per cent because there will be more people buying low- to medium-end properties

PROPERTY transactions will surpass RM100 billion this year but the sector will not enjoy 35 per cent growth as it did last year, said a government official.

Growth may be in single digit or below 20 per cent because there will be more people buying low- to medium-end properties resulting from government initiatives under the 2011 Budget.

Datuk Abdullah Thalith Md Thani, director-general of the Valuation and Property Services Department in the Ministry of Finance, said the volume of properties transacted will, however, grow by double digits to more than 350,000.

Between January and November 2010, there were a total of 342,179 properties transacted, worth RM96.78 billion.

Abdullah Thalith thinks there will be more than RM100 million in sales recorded in December, breaching RM100 billion for the whole year.

The RM100 billion mark, a record high for Malaysian properties, would be 35 per cent more than 2009.

In 1998, the value of properties transacted was about RM60 billion, with 5 to 10 per cent growth per annum.

Abdullah Thalith told reporters yesterday in Kuala Lumpur at the 2011 property market outlook summit that the positive economic outlook and the Economic Transformation Programme will drive growth this year.

He said the prime movers will be the redevelopment of the Sungai Besi land, Batu Cantonment army base, Rubber Research Institute land in Sungai Buloh, Matrade project by Naza Group, the 100-storey tower by Permodalan Nasional Bhd and the Mass Rapid Transit project.

"If all these projects can start this year, it will uplift the market. We expect more people to buy low to medium-end properties. We also expect movements in the luxury segment, commercial and industrial," he said.

By Business Times

TILB focuses on mainland Penang projects

KUALA LUMPUR: Newly-listed Tambun Indah Land Bhd (TILB) expects to complete the first of its seven ongoing property projects on mainland Penang in the first quarter of this year.

The company will complete the second phase of its RM79mil Juru Heights bungalow project by March, according to managing director Teh Kiak Seng.

“We have seven projects ongoing this year with a GDV (gross development value) of RM530mil. They include medium-cost apartments and mid-range housing developments,” he said after the listing ceremony of TILB on the Main Market of Bursa Malaysia yesterday.

Going forward, Teh said TILB would continue to develop projects on mainland Penang (as opposed to the island) as properties there were more affordable.


Teh Kiak Seng (second from left) and Tambun Indah Land directors monitoring the company’s share price on Tuesday.

“We are getting more purchasers coming to the mainland because they can't afford prices on the island,” he said, adding that it would be more viable for TILB to tap the mainland property market.

“The Penang state population is about 1.6 million. The island has 700,000 people. There are more people staying on the mainland and it is also attracting a lot of FDI (foreign direct investments),” Teh said.

He cited, as an example, Japan-based printed circuit board maker Ibiden Co Ltd, which has invested in a RM1bil plant at Penang Science Park. He also mentioned Nasdaq-listed Rubicon Technology Inc, a leading global light-emitting diode (LED) manufacturer, as well as US-based Honeywell Aerospace, a leading provider of avionics and electronics, which have also invested substantially in the mainland.

“Connectivity (in Penang) is also being improved with the construction of the second Penang bridge,” Teh said, adding that the Federal Government had big plans to develop Butterworth.

“Expansion at Butterworth Port has just been completed. The main railway station is also in Butterworth. All of this will create opportunities such as new jobs and attract more people, who will need to buy houses to be closer to the job market.”

Teh also said the Penang mainland property market was more active and had better growth prospects.

“During the recession in 2009, the Penang island property market grew by 0.3%, but mainland Penang grew by 9.3%,” he said.

“Also, from 2002 to 2010, the island housing market grew by 4%, but mainland grew by 5.4%.”

According to Teh, TILB has a land bank of close to 300 acres, all located on the mainland.

“We have an option of another hundred acres. We move very fast, we buy land and develop. We don't buy land to keep as it's too costly. This has been our business model since the beginning.”

TILB was negotiating with land owners in Penang to acquire land for projects in 2012 and “actively seeking” land in the Klang Valley, he said, adding: “We've seen some land in the Klang Valley but we haven't bought any. We're still looking but the project must be viable.”

On another note, Teh said the company had set a dividend payout policy of 40% to 60% of its annual net profit.

TILB recorded a net profit of RM25.37mil for its financial year 2010.

The company opened at 80 sen and closed at 80.5 sen, a 10.5 sen premium over its issue price of 70 sen. A total of 41.5 million shares were traded, making it the second most active counter of the day.

By The Star

Bolton eyeing 44ha site in Penang

PROPERTY developer Bolton Bhd is looking to expand its landbank in Penang with a potential acquisition in Teluk Kumbar this year.

Bolton executive chairman Datuk Azman Yahya yesterday said it was hopeful to conclude the proposed acquisition of the 44ha site within two to three months.

The land on the south-western end of Penang island is estimated to cost Bolton RM150 million, Azman added.

"Our maiden project in Penang - Surin, has been encouraging and we are now looking at expanding our landbank on the island via acquisitions and joint ventures," he told reporters after a topping out ceremony for the Surin Tower B project located in Tanjung Bungah.
Surin is a two-block 28-storey luxury condominium project which is built on a freehold parcel of elevated land and carries a development value of RM199 million.

Of the project's 390 units, about 77 per cent had already been sold out and about 30 per cent to 35 per cent of the buyers were foreign, Azman said.

The units, which were sold at prices ranging from RM345,998 to RM1.2 million, offer amenities such as an infinity pool, rooftop garden, two covered carpark bays per unit, three tier security, a barbeque area and sky decks.

On the planned purchase of the Teluk Kumbar land, Azman said Bolton was looking at building landed property units, along with apartments in a gated community.

"Our target investors for this proposed project would be locals," he added, saying that Bolton remains on the lookout to buy land in Tanjung Bungah.

"We remain convinced of Penang's vibrancy and growth prospects and we are actively looking for development opportunities.

"The residential market remains buoyant and this is a segment which we want to focus on," Azman said.

In the Klang Valley, he said the company will soon unveil a block of luxury serviced residences at Jalan Bukit Ceylon, an exclusive gated community in Ukay Perdana, and the 51 Gurney development.

The latter project is touted as Malaysia's first and only super luxurious condominium which comes complete with spacious driveway on every floor and a car park within every unit.

By Business Times

Bina Puri wins RM62.8m Thai project

Bina Puri Holdings Bhd''s associate, Bina Puri (Thailand) Ltd (BPTL), has secured a 626 million baht (approximately RM62.76 million) project to undertake structural and architectural works for phase one of Phahonyothin Park condominium in Bangkok, Thailand.

"Thailand remains one of our key markets overseas. To date, we have secured projects exceeding RM1.5 billion in Thailand," said Group Managing Director Tan Sri Tee Hock Seng in a statement today.

He said the awarding of the project proved the company's project and management capabilities in delivering results and its continued acceptance in this region.

"We will continue to strengthen our reputation in Thailand and are confident of clinching more projects there," he added.

The project is a joint venture between BPTL and Dimara (Thailand) Ltd and is expected to be completed in 15 months.

The company said the project would contribute positively to group earnings for the financial year ending Dec 31, 2011.

Inclusive of this project, Bina Puri's outstanding orderbook stands at RM2.5 billion, which will sustain the company's earnings for the next two years.

By Bernama

AmResearch maintains buy on SP Setia

KUALA LUMPUR: AmResearch maintains its BUY rating on SP Setia and raises its fair value from RM6.80 per share to RM7.10 per share based on an unchanged 5% discount to its revised fully diluted (FD) net asset value (NAV) of RM7.46.

“We lifted our FD NAV from RM7.15 to RM7.46 to account for the estimated accretion to assets value from its landbanking deal with the Ministry of Health (MOH). SP Setia has been given the right to develop 40 acres of prime land in Bangsar in return for a new health and research complex on a 55-acre site in Bandar Setia Alam,” said AmResearch

Based on AmResearch's conservative estimated plot ratio of 5 times (x) and an efficiency factor of 70%, the net saleable area is about 6.1msf. Assuming an average selling price of RM1,000psf, the gross development value is about RM6.1bil.

Compared to status quo, AmResearch said this land swap is accretive because the Bangsar site has high development potential and ready end-user demand. And, the relocation of the new research complex would accelerate the maturity of Setia City, the commercial precinct in Setia Alam.

“But the deal fell short of consensus expectations. SP Setia would only have a 50% stake. The joint venture company would also have to distribute 20% of its profits to the MOH,” “SP Setia also spooked the market by announcing a surprise placement of up to 15% (153mil) of its paid-up capital to raise funds for its existing projects and future' expansion,” said AmResearch.

AmResearch said the market would need to digest the immediate dilution risk from the proposed placement and the back-ended accretion to assets value from the land swap. After the sell down yesterday, this trade-off is already being priced-in.

Hence, the risk reward profile is turning more favourable starting from a lower entry point because the fundamental story is intact, we believe. For a start, it is poised to deliver at least RM3bil in sales this year, given maiden contributions from the prolific KL Eco City.

Given a recapitalised balance sheet (post the proposed share placement), SP Setia must again demonstrate its uncanny ability to grow acquisitions.

The litmus test though is how prolific and significant its next land deal is going to drive NAV growth, considering its share capital would have expanded by 15% post the share placement.

By The Star

Axis-REIT records RM16m profit in Q4

AXIS REIT Managers Bhd has reaped RM16.16 million profit in its fourth quarter ended December 2010 and plans to distribute 5.25 sen a unit to investors.

"Last year, we saw the highest gain in fair value of investment properties for a single year since the listing of the trust," said chief executive officer Stewart Labrooy. He said the company revalued 14 of its stable properties.

"It has led to an increase in the net asset value of the trust to close at RM2.009 a unit compared with RM1.842, a year ago," he told reporters at a briefing in Kuala Lumpur yesterday.

In the fourth quarter of 2010, Axis-REIT bought three more properties, namely Tesco Hypermarket, Axis PDI Centre and Axis Technology Centre. It also concluded the purchase of two IDS warehouses in Seberang Prai, Penang.

Following these acquisitions, Axis-REIT now owns 26 properties. Its net asset value rose to RM1.18 billion in 2010 from RM884.96 million in 2009.

Two days ago, Axis-REIT said it will sell an industrial complex in Port Klang for RM14.5 million by June 2011.

"We need to maintain growth by culling smaller assets where the returns have stagnated. We will bring in assets that have capital gain potentials," said Labrooy.

"We'll gain RM764,000 from the sale of industrial complex in Port Klang and this will be chanelled back to unitholders," he added.

On outlook for 2011, he said Axis-REIT is looking to buy five more warehouses in Johor and the Klang Valley and two more office blocks in Cyberjaya. So far, the company has set aside RM365 million for these acquisitions.

By Business Times

Jetson Development buys land in Penang

KUMPULAN Jetson Bhd’s 51 per cent-owned subsidiary, Jetson Development Sdn Bhd, is buying three plots of first grade freehold land in Penang from Malaysia Building Society Bhd for RM14 million.

The company said the purchase fits into its strategy to implement boutique developments in Penang, which will appeal to the niche local and foreign property buyers, who demand luxury and secluded prestigious address.

By Business Times

Sycal Ventures unit signs property JV

Sycal Ventures Bhd's wholly-owned unit, Sycal Properties Sdn Bhd, has signed a joint venture agreement with Global Net Communication Sdn Bhd.

In a filing to Bursa Malaysia today, Sycal said the companies aimed to jointly develop three plots of land in Kuala Lumpur into a high-end residential villas with estimated gross development value of RM70 million.

It said the development would contribute positively to the construction order book of Sycal Group.

By Bernama

SP Setia to develop govt complex

PETALING JAYA: SP Setia Bhd's 50% owned associate Sentosa Jitra Sdn Bhd has received the Government's approval-in-principle to negotiate over terms to develop a new integrated health and research complex for the Health Ministry in Setia Alam, Selangor.

In a filing with Bursa Malaysia yesterday, SP Setia said the approval-in-principle was subject to terms and conditions to be agreed between Sentosa, the Public Private Partnership Unit (UKAS) in the Prime Minister's Department and the Health Ministry.

The proposed complex, to be known as the 1National Institute of Health (1NIH) Complex, is expected to be developed on 55.33 acres owned by SP Setia's wholly-owned unit, Bandar Setia Alam Sdn Bhd, in Setia Alam.

The complex will house the various national health institutes and relevant supporting offices and research centres under the ministry's purview which are currently situated on 40.22 acres along Jalan Bangsar and other parts of Kuala Lumpur.

In exchange, SP Setia will get the 40.22-acre Government land which it will redevelop into an integrated mixed residential and commercial project.

It will provide the Health Ministry and the Government with a 20% share of the net profits from the redevelopment.

“The land swap nature of the deal means that the ministry and the Government will not have to fund any part of the cost for the construction of the new 1NIH Complex,” the company said.

SP Setia was responding to a report over the weekend that it would build the complex at a cost of RM600mil to RM700mil.

The statement to Bursa did not mention the estimated cost of the complex or the estimated value of the proposed development in Bangsar.

In a separate statement, SP Setia announced a proposed placement of new shares of 75 sen in the company, representing up to 15% of its paid-up capital and a proposed 1-for-2 bonus issue.

The proposed placement would enable the company to raise funds to finance some existing projects, for future expansion plans as well as for general working capital requirements.

By The Star

SP Setia plans project, in talks with govt on KL site

SP Setia Bhd plans to undertake a mixed residential and commercial project in Bangsar, Kuala Lumpur, giving the government a 20 per cent share of its net profit from it.

The 16.3ha of prime land along Jalan Bangsar, where it proposes to undertake the project, is owned by the government.

SP Setia is currently in talks with the government to be given that land in exchange for building an integrated health and research complex for the Ministry of Health (MoH) on 22.4ha of land it owns in Setia Alam, Shah Alam.

It told the stock exchange yesterday that its unit, Sentosa Jitra Sdn Bhd (SJSB), has the government's in-principle approval for the land swap proposal.

The proposal was mooted by SJSB to the government along the lines of the public-private partnership concept.
The land in Bangsar currently houses five National Institute of Health agencies under the MoH's purview, which will be relocated to Setia Alam.

SP Setia said SJSB had finalised its design and costing for the new complex, to be known as the 1National Institute of Health (1NIH), and is now ready to commence negotiations with the MoH and the Public-Private Partnership Unit in the Prime Minister's Department.

The proposed new 1NIH will serve as a hub and centre of excellence for health research, training and consultation at both the local and global level.

"The land swap nature of the deal means that the MoH/government will not have to fund any part of the cost for the construction of the new 1NIH complex."

This, it said, will be paid for by the difference between the current market values of the Bangsar and the land in Setia Alam.

SP Setia told the stock exchange in a separate filing later that it plans to place out up to 15 per cent of its issued and paid-up capital. The issue price will be determined by way of book-building.

By Business Times

Property transactions to top RM100b in 2011

Property transactions are expected to exceed RM100 billion in worth this year from RM96.77 billion in the first 11 months of last year, said Director General of Valuation and Property Services Department, Datuk Abdullah Thalith Md Thani.

He also said the recovery of the economy has reinvigorated the overall property market with the residential property sub-sector remaining the main mover of the property market.

The value of transactions in the residential sector between January and November last year rose 7.6 per cent to RM222.29 billion taking up 60.2 per cent share of the volume of property transactions, he said during a press conference here today on the upcoming 4th Malaysian Property Summit 2011.

The transactions of commercial properties rose 21.3 per cent while that of industrial properties went up 25.6 per cent, agriculture 17.9 per cent and development land 24 per cent.

In the residential property sub-market, the major states recorded positive growth with the city of Pulau Pinang recording the highest rate of 9.7 per cent followed by Kuala Lumpur at 8.2 per cent and the state of Selangor with 7.2 per cent growth.

By Bernama

S P Setia back in the limelight

KUALA LUMPUR: S P Setia Bhd has bounced back strongly after taking a backseat in recent months when mega-property mergers took the spotlight. The property developer has confirmed securing 40 acres of prime land along Jalan Bangsar.

It also announced a fund-raising exercise via a proposed placement of 15% of new shares to be done via book-building that could easily raise RM1.14 billion. The fund raising comes in tandem with a one-for-two bonus issue.

In an announcement confirming a report in The Edge, S P Setia said it had received an approval-in-principle from the Prime Minister’s Department to talk over terms for the proposed development of a new integrated health and research complex for the Ministry of Health (MOH) in Setia Alam.

In return, S P Setia’s 50% subsidiary Sentosa Jitra Sdn Bhd gets a piece of prime land along Jalan Bangsar where the present facilities belonging to the health ministry are located.

“The company said that it had received a letter on Sept 24, 2010 by Unit Kerjasama Awam Swasta (UKAS) of the approval-in-principle granted by the Federal government for Sentosa Jitra to enter into negotiations with UKAS and the MOH over terms for the proposed development of a new integrated health and research complex on a 55.33-acre land in Setia Alam by way of land swap for the government land located along Jalan Bangsar,” the company stated.

In the last two months, S P Setia’s position as the industry leader among property developers was jolted following the mergers between UEM Land and Sunrise Bhd, and the proposed tie-up between Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd. The MRCB-IJM Land deal did not take off but the UEM Land-Sunrise merger had created a large property company overtaking S P Setia as an industry leader.

However, S P Setia’s president and CEO Tan Sri Liew Kee Sin last month had told analysts and reporters that the developer would bounce back and was looking at aggressively expanding its landbank in the Klang Valley.

This, he appeared to have delivered as the piece of land along Jalan Bangsar is one of the few sizeable parcels remaining in that location.

The proceeds from S P Setia’s fund-raising exercise are partly for the MOH development in Setia Alam that is expected to cost RM600 million to RM700 million. The funds are also to finance its existing projects, general working capital requirements, future expansion plans as well as to defray related expenses.

“The funds to be raised are timely especially for the MOH deal and will help expedite the development of Setia City to complement the presence of the 1NIH Complex,” Liew said in a statement yesterday.

S P Setia’s other development projects are also expected to benefit from the corporate exercise, including its KL Eco City (KLEC) project opposite Mid Valley, and the Fulton Lane project in Melbourne, Australia. The KLEC is a joint venture with City Hall.

S P Setia has plans to redevelop the land in Bangsar into an integrated mixed residential and commercial project where the MOH will have a 20% share of the net profits from the redevelopment under the proposal.

“We are tremendously excited about the project given the site’s excellent location which provides a rare opportunity for the group to further showcase our skills in developing luxury residential and integrated commercial products within the affluent Bangsar and Federal Hill areas,” Liew added.

Analysts are positive on this development. According to CIMB Research, the 40 acres could be worth RM523 million to RM871 million, based on the price of RM300 to RM500 psf for residential bungalow land in Bangsar.

“If the land has a plot ratio of four times or higher with commercial title, it could be worth several times more,” the research house said.

CIMB said that assuming a plot ratio of four to five times and an average selling price of RM1,200 psf, the gross development value of the Bangsar land would amount to RM8 billion to RM10 billion.

Additionally, CIMB expects margins for the project to be higher than KLEC’s as infrastructure requirements are likely to be considerably lower than the RM400 million expected to be spent on KLEC.

CIMB also assumes that S P Setia has a 50% to 60% stake in the project, which is similar to its effective 60% stake in KLEC, the surplus value from the land at a net cost of RM700 million for the 1NIH Complex alone would be around RM550 million or 48 sen per share, boosting the revised net asset value (RNAV) to RM6.21.

The research house kept its target price at RM7.45 but noted that there was a possibility of raising it to around RM8 based on the surplus value of the Bangsar land.

“There could be further upside to the RNAV as the shift of several thousands of ministry staff to Bandar Setia Alam would make S P Setia’s flagship township and the RM5 billion 158-acre Setia City commercial centre even more attractive,” it said.

Potential re-rating catalysts include positive news on the Bangsar land, continued robust sales, newsflow on other landbank and strong earnings growth. S P Setia remains the property sector bellwether and CIMB’s top pick for the sector.

The counter closed unchanged at RM6.70, with its market capitalisation at RM6.81 billion. S P Setia’s share price has risen some 50% since late September, thanks to the impending launch of KLEC.

By The EDGE Malaysia

China property prices climb in December

SHANGHAI: Property prices in China’s major cities posted a fourth straight month-on-month rise in December and sales picked up pace, data showed yesterday, despite efforts to cool the market.

Prices in 70 major cities were up 0.3 per cent last month from November and were 6.4 per cent higher than a year ago.

The month-on- month gain in November was 0.3 per cent.

The annualised surge peaked in April, when prices soared 12.8 per cent, but growth has slowed since then.

By AFP

Sunrise shares to be delisted on Jan 21

SUNRISE Bhd’s shares will be removed from the Main Market of Bursa Malaysia with effect from 9am on January 21.

Sunrise, which develops high-rise residences and commercial properties locally and abroad, has been taken over by UEM Land Holdings Bhd.

By Business Times

Axis-REIT to sell Port Klang complex

AXIS Real Estate Investment Trust (REIT) hopes to complete the sale of an industrial complex in Port Klang for RM14.5 million by the end of June this year.

Axis will make a net gain (after real property gains tax) of RM764,000 from the sale to freight services firm Freight Management Sdn Bhd.

It told Bursa Malaysia yesterday that the amount would be distributed to its unitholders this year at 20 sen a unit and also be used to reduce its gearing.

It was the right time to dispose of the property as it offered limited upside for future rental growth, Axis added.

By Business Times

M’sia-S’pore deal leads to property openings

The station site at Tanjong Pagar has the greatest redevelopment potential

PETALING JAYA: The recent historic agreement between Malaysia and Singapore to settle the long-standing railway land issue which runs through Singapore to Malaysia will open up property development opportunities in Singapore and Iskandar Malaysia not envisaged before, a property consultant said.

According to DTZ Research in its latest report, the warmer bilateral relations, and smoother and cheaper transport system arising from the agreement will give a boost across all property sectors in Iskandar Malaysia.

“With a proposed mass rapid transit (MRT) line linking Johor Baru city centre to Nusajaya, there will be a tendency for a shift in value towards Nusajaya as more newer physical developments take place and the cost of using the Second Link becomes more competitive,” the report added.

For Singapore, judicious land allocation has always been an integral part of real estate planning and development given its limited land size. The reversion of the railway land will thus enable the authorities to amalgamate the track land with adjacent sites and bring about more optimal use of the land.


Brian Koh says the railway agreement has unfolded a new chapter for Malaysia and Singapore.

DTZ Malaysia executive director Brian Koh said the railway agreement had unfolded a new chapter for Malaysia and Singapore and both countries can co-build a new growth story that resembles the Hong Kong-Shenzhen Metropolis model.

However, unlike Hong Kong and Shenzhen which are both under one country, a lot more co-operation and government involvement is needed between Singapore and Malaysia to overcome two distinct economic and legal systems and build trust and co-operation, while pursuing their respective national and economic objectives.

“The degree of success of Iskandar Malaysia will be partially determined by political co-operation with neighbouring Singapore as well as by economic factors,” Koh said.

More skilled and semi-skilled migrants from other parts of Malaysia may be attracted to reside in Iskandar Malaysia to take advantage of the employment opportunities in Singapore through daily commute without having to pay for the high residential cost of living across the causeway.

“Demand for homes from foreign buyers, particularly Singaporeans, is envisaged to improve due to the higher confidence level in Iskandar Malaysia from the warming bilateral ties,” he added.

In the office sector, there is potential for a shift of low-end commercial service activities, namely back office processes, from Singapore into the Johor Baru central business district to take advantage of cost arbitration, given the widespread use of the English language and the general availability of mid-level executives in Johor.

The retail and hotel sectors will also benefit from the higher tourist flow into Johor, while more industrial and logistics investments can also be expected from Singapore.

DTZ head of South-East Asia Research Chua Chor Hoon said that among the returned railway land in Singapore, the railway station site at Tanjong Pagar had the greatest redevelopment potential given its size and the government's plans for this district.

While the rest of the returned land are unlikely to be developed anytime soon, one area that is likely to see some earlier new developments will be at Bukit Panjang where a MRT station would be ready in 2015, providing some impetus to develop the vacant land around it.

The once sleepy Tanjong Pagar area is perking up with newly completed and pipeline offices, hotels and apartments. Higher rents and prices are being achieved and more investors are becoming interested in the area.

“The Spottiswoode area just north of the railway station may be totally rejuvenated as the old existing residential developments are prime candidates for redevelopment,” Chua said.

By The Star

SP Setia wins Penang convention centre deal

SP Setia Bhd, the country's largest developer by sales has won a RM300 million project to build and operate the Penang International Convention and Exhibition Centre (sPICE), Bloomberg reported, citing an email statement from the Penang Chief Minister Lim Guan Eng.

Last Thursday, Business Times reported that the property developer was the front runner and on the verge of winning the job.

Securing the project should bode well for SP Setia, which posted sales of RM1.74 billion and a net profit of RM251.81 million in the year ended October 31 2010.

The project aims to create a "Penang People's Park" that includes the country's first subterranean sPICE, a 2.83 hectares public park on the rooftop, a refurbished and upgraded Penang International Sports Arena (Pisa), a refurbished and upgraded Aquatic Centre and a four-star hotel with retail outlets and a spacious parking lot.

The project will be developed through a public-private partnership agreement between the Penang Municipal Council (MPPP) and developer SP Setia Bhd's unit Eco Meridean Sdn Bhd.
On September 3 2010, SP Setia had bought 2 ordinary shares of RM1.00 each in Eco Meridian Sdn Bhd, resulting in the private company becoming a wholly owned unit of SP Setia.

Financing for the Penang project will see MPPP injecting some RM50 million, through a combination of land and cash, while Eco Meridean will finance the rest.

The proposed sPICE, which initially came with a RM50 million priceline, has been mired in controversy ever since Lim proposed it.

One of the concerns raised was that the project would incur huge expenditure, which could result in the council becoming insolvent.

Lim, however, claimed the council could save some RM25 million from the refurbishment, repairs and upgrading work on Pisa and the Aquatic Centre and that Eco Meridean will pay RM13.5 million for land to build a four-star hotel to complement sPICE.

This means that the net sum of MPPP's investment in the project would be RM11.5 million.

Work on the project is expected to start within three to six months' time and will be completed in three years.

By Business Times

SP Setia: New MoH complex design ready

KUALA LUMPUR: SP SETIA BHD has finalised the design and costing for the proposed development of a new integrated health and research complex for the Ministry of Health (MoH) in Setia Alam, Selangor.

The company said on Monday, Jan 17 that its associate Sentosa Jitra Sdn Bhd (SJSB) had finalised its design and costing for the new complex based on the MoH’s brief of requirements.

It added SJSB is now ready to commence negotiations with the Public Private Partnership Unit in the Prime Minister’s Department (Unit Kerjasama Awam Swasta) and the MoH “based on the proposal submitted to the government”.

SP Setia said a UKAS had issued a letter on Sept 24, 2010 informing it about the approval-in-principle granted by the government to SJSB to enter into negotiations with UKAS and the MoH over terms for the proposed complex to be located on approximately 55.33 acres of land at Setia Alam via a land swap for the government land measuring 40.22 acres along Jalan Bangsar, Kuala Lumpur (“Proposal”).

It said the government’s approval-in-principle to SJSB’s proposal, subject to terms and conditions to be agreed. It added SJSB has finalided its design and costing for the new complex.

SP Setia said the proposal would enables the MoH to reap the value of matured government land to obtain a fully integrated and modern new 1NIH Complex capable of housing all the relevant national health and research institutes and support functions in a single location within the vibrant, fast-growing and highly accessible township of Setia Alam.

“The MoH/government will also have the opportunity to participate in the redevelopment of the MOH Land through its share of 20% of the net profits from the development,” it said.

In terms of benefits, SP Setia said SJSB had started the master plan to redevelop the MoH Land.

“Its superb location provides a rare opportunity for S P Setia to further showcase its skills in developing luxury residential and integrated commercial products within the affluent Bangsar and Federal Hill areas,” it said.

By The EDGE Malaysia

MRT may cost over RM36.6bil

PETALING JAYA: The cost of building the mass rapid transit (MRT) transport system, which is scheduled to begin construction in six months, may swell beyond the projected RM36.6bil as developers and residents have begun lobbying on the proposed locations and types of stations.

Business leaders want the MRT stations to be located close to the centre of commercial activity, in some cases where they have projects or plan to build one, but residents living near or adjacent to the proposed lines have voiced objection against the MRT tracks being built above ground and want the lines and stations to be underground so as to avoid congestion and noise pollution issues.

At the heart of the matter is the alignment of the MRT line, particularly where it should go, where it should stop, and lobbying have begun to have more than 9.5km of the first phase of the 60km Sg Buloh-Kajang line constructed underground.

The entire MRT line is estimated to run a total of 150km at a cost of RM36.6bil. Other lines will be added later. All these lines, together with the existing Star, LRT and Komuter rail will form part of the country's Urban Transport master plan.

At the session with business communities, developers who own shopping malls and commercial developments were lobbying for the line and station to be located at, or as close to their commercial properties as possible.

“We are willing to adopt' a station,” said a source from Uptown's See Hoy Chan Sdn Bhd over the telephone. The company is a different entity from See Hoy Chan Holdings Group which built Bandar Utama and the highly-popular 1 Utama mall. The owners of both companies are cousins.

Uptown's See Hoy Chan is planning to develop the second phase of what is already a densely populated commercial area in Damansara Utama popularly known as Damansara Uptown.

The company plans to build several blocks of offices and serviced apartments on 12 acres. That site is currently being used as a car park.

Damansara Uptown has a working population of about 30,000. Once the 12-acre commercial project is completed, the number will swell by 20,000 to 50,000.

Over in Kuala Lumpur, the Low Yat group is lobbying for the line to be located close to its commercial properties in downtown shopping area Bukit Bintang, in the heart of the Golden Triangle of Kuala Lumpur.

But not all business communities share a common stance. Some fear commuters would use existing parking space at commercial and shopping complexes for using the MRT instead of going shopping.

See Hoy Chan Holdings would like to get in touch with resident associations in the PJ North area to lobby for the line to go underground from Kota Damansara to Bandar Utama station.

“The station can be located below Central Park in Bandar Utama if the line is constructed underground. That location can be turned into a transport hub to serve the vicinity,” said See Hoy Chan Holdings director Datuk Teo Chiang Kok.

“Most of the lines and stations in countries with MRT are located underground. The communities in Kota Damansara, along Persiaran Surian, Bandar Utama and neighbouring residential areas are already there. To build elevated lines over what is already a densely populated area would bring about negative impact on the entire area,” he said.

At the same dialogue, Sunway Damansara resident association representative Ngian Siew Siong appealed to Land Public Transport Commission (LPTC) to have the line go underground in the Kota Damansara area. LPTC is planning for a station to be located at Dataran Sunway, a highly congested area during peak hours. Ngian is also Sunway City Bhd managing director (property development).

Contrary to LPTC's views that the MRT system will boost property values, Ngian said that “the visual impact and the noise level over Persiaran Surian and the vicinity will affect property value there.”

“The MRT line is massive and noisy.”

“The various communities are already in existent. Where will the park and ride facilities be located? Do not look at just the alignment, consider having the line underground and having integrated connectivity,” Ngian said. Under the proposed Sg Buloh-Kajang line, 20% of the 9.5km will be underground.

LPTC CEO Mohd Nur Ismal Kamal said the cost would be five to 10 times higher on a per km basis if the line were to go underground, depending on geological conditions.

See Hoy Chan's Teo Chiang Kok said the area comprised laterite and building an underground line will only cost three to four times more.

Earlier, explaining the Government's rationale to build the system, LPTC general manager Amiruddin Maaris said the MRT would have 50% more carrying capacity than the LRT line and will also be 50% wider. One car train carrying capacity is equivalent to three buses, or that of 177 cars.

“It will ease congestion,” he said.

The MRT system is expected to create 130,000 jobs and bring about a huge multiplier effect from its construction and operation. But the vision to bring out the flavour of KL metropolis, which to many, remains dormant because of the lack of public transport and connectivity, Amiruddin said.

Although tendering is expected to begin in April, the alignment can still be tweaked to accommodate the views of the public.

“This is just the proposed line. We will have other sessions to hear the public's views,” said Mohd Nur.

Said a public transport specialist: “Let us learn from the mistakes of the Light Rail Transit and the Star line.”

By The Star

Axis-REIT sells Port Klang building

Axis Reit Managers Bhd (ARMB) and Axis Real Estate Investment Trust (Axis-Reit) has proposed to dispose Axis North Port LC1 for RM14.5 million to Freight Management (M) Sdn Bhd.

Located in Port Klang, Axis North Port LC1 is an industrial complex comprising a single-storey detached warehouse with a double-storey office annexe, a double-storey amenities building and other ancillary buildings.

ARMB confirmed that OSK Trustees Bhd, the trustee for Axis-Reit, has entered into a sale and purchase agreement for the disposal of Axis North Port LC1.

The proposal is in line with meeting the objective of Axis-Reit, it said in a statement.

By Business Times

Axis REIT to grow 19.6pc in 2011: ECM

ECM Libra expects a 19.6 per cent earnings growth in Axis Real Estate Investment Trust (REIT) Financial Year 11 (FY11) due to contributions from four recently acquired properties.

Axis REIT has completed acquisition of PTP D8 in Johor, Axis Technology Centre in Petaling Jaya, Axis PDI centre in Kuala Langat, Selangor and Tesco Johor as well as its proposal to acquire an office building in Cyberjaya for RM51.3 million which will be completed in the first quarter of this year.

In its research note on Axis REIT, ECM Libra said it expects more acquisitions going forward.

"We understand that the management is working on the acquisition of an office warehouse in Petaling Jaya, a logistics warehouse in Johor and a warehouse/logistics and manufacturing facility in Shah Alam/Klang," ECM Libra said..

ECM Libra is recommending a "BUY" on Axis Real Estate Investment Trust (REIT) with a target price of RM2.90.

"Despite its defensive quality, Axis’ average annual total return of 23 per cent since its listing in 2005 outperforms the equity market as represented by the total return of the benchmark FBMKLCI over the corresponding period," the research house said.

ECM Libra said another plus point is its distribution visibility as Axis commits to distribute 99 per cent of its earnings on quarterly basis.

Axis has the most enviable acquisition track record among M-REITs as it has grown its asset under management (AUM) from five properties with AUM of RM260.4 million to 27 properties with AUM of RM1.4 billion now.

By Bernama

ECM to review 'hold' call on SP Setia

SP Setia Bhd, a Malaysian property developer, had its “hold” stock rating and price estimate under review at ECM Libra Capital Sdn Bhd following a newspaper report of a potential land purchase in Kuala Lumpur.

The Edge weekly newspaper reported on January 15 that SP Setia probably won a bid to purchase a prime land in Bangsar after the company agreed to build a government health institute in Shah Alam, outside of Kuala Lumpur, citing an undisclosed news report in September.

ECM will review the rating and share price estimate of RM5.20 pending the announcement of the said land deal, it said in its research note today.

By Bloomberg

Big change in landscape ahead for Klang Valley

The Klang Valley property landscape is set for a massive change with major government land being open for re-development and a number of new infrastructure initiatives.

They include the mass rapid transit (MRT) system, Greater Kuala Lumpur development plan, the re-development of the Rubber Research Institute (RRI) land in Sungei Buloh and the Sungei Besi airport.

These projects are certainly high-profile and potentially significant as catalysts for change in the interest of a more organised living, working and recreational environment.

The proposed development projects present immense opportunities to both the people and industry players to participate in their planning. As such, their views should be given due attention and incorporated if they proved to be relevant.

They are important to ensure the sustainability and growth of the country's infrastructure development for years to come.

It is not every day that an opportunity for re-development of such massive scale arises; so, it should not be treated as a profit-making venture but a chance to overhaul poorly-planned cities.

The 3,300-acre RRI project has the potential to become a showcase for a well-planned sustainable township that will last for decades.

Besides its potential gross development value of RM10bil, there are many intangible values which should be considered including a safer neighbourhood as well as more accessible, economical and convenient public transport system.

More development projects could also result in more proposed mergers and acquisitions (M&As).

But these M&As have generated both excitement and concerns in the market.

For industry players, those looking to merge their companies may be driven by the need to strengthen their capital base and technical capability.

They believe that by becoming larger developers, they will get to enjoy economies of scale and become more efficient. It will also provide a stronger financial position, healthier balance sheet, larger landbank and management expertise.

Merged entities will also mean larger market capitalisation and liquidity. Their higher profile may also attract interest from investors.

While there may be merits to support the M&As, there are also shortcomings that may de-rail such plans.

The M&A process will become problematic if the enlarged team cannot work as a team as there are bound to be differences in corporate culture, vision, work ethics and practices.

A contentious issue will always be about the controlling stake of the new company. Therefore, it is crucial for the companies to get it right from the very beginning from controlling stake to the right management team.

It will be ideal if the two companies which are going to merge addressed issues concerning their differences and assimilate best practices.

For the public, the formation of bigger entities may mean that there are fewer smaller developers and less competition in the industry.

This scenario is not healthy as the absence of competition means that players need not produce their best product offerings to survive in the market.

Nonetheless, a bigger entity does not necessarily equate a stronger, and more successful company as many mega financial institutions in the West had crumbled during the global financial crisis. More importantly, companies, whether big or small, should conduct their business in an ethical manner.

They should not be guided by the motto of “making profits at all cost” and therefore sacrificing their values and responsibilities to the community at large.

Conglomerates have been known to fall from grace when greed takes over sound ethical values.

I believe companies that grow through the organic process may have smaller capacities but they have built for themselves a strong foundation to face market challenges and uncertainties.

In the property sector, there is certainly a big role for the smaller players who are focused on their strength and in doing what they do best.

The bottomline is to ensure that they deliver good values, quality and wholesome projects to their customers.

Deputy news editor Angie Ng still has faith in the laissez-faire system and believes merits and fair competition is a more sustainable option.

By The Star (by Angie Ng)

Synergy Property eyes Asia-Pacific prospects

SYNERGY Property Development Services Pte Ltd, a leading project management company based out of Bangalore, India, is eyeing growth opportunities in Asia-Pacific, especially Malaysia.


Sankey Prasad ... ‘Our association with Blackstone provides us the expertise of looking at projects that are attractive from an investment perspective.’

Chairman and managing director Sankey Prasad says Malaysia is one of the few countries in the region that remained resilient during the global financial crisis.

“Malaysia showed a lot of stability during the global recession. If you compare with many other markets, this country showed a lot of character and did not suffer any electric shocks of the crisis,” he tells StarBizweek in an interview.

“That's a sign of a good and stable market,” Sankey says, adding that Malaysia's resilience throughout the crisis has allowed the country to remain competitive.

“I think Malaysia has learnt a lot from its mistakes.”

Sankey started Synergy in early 2003 with just 40 people, and the company has since employed more than 600 people, with a resource pool comprising architects, engineers and project management personnel.

Synergy has offices in India (Delhi, Mumbai, Pune, Hyderabad, Trivandrum and Bangalore), Dubai and Malaysia.

On the local front, the company operates in Kelana Jaya, employing a team of 25 people.

The company offers complete project management consultancy, delivering support and design services through all phases of the development process of a real estate project. It also provides turn-key solutions.

In 2008, Blackstone Real Estate Partners, an affiliate of the Blackstone Group (a leading investment and advisory firm), acquired a 35% stake in Synergy.

“Our association with Blackstone provides us the expertise of looking at projects that are also attractive from an investment perspective,” says Sankey.

“We adopt a holistic approach that provides a single point of contact in every stage of the project, starting from inception to project close-out. This approach is practical in giving a detailed outline of the working procedures,” he adds.

Synergy also offers a management information system which is essentially a web portal that allows its customers real-time updates on projects that are being carried out.

“The portal can be accessed anywhere and at any time. Using the Internet, our clients can become aware of any issues,” Sankey says, adding that MIS is developed to create more transparency for its customers.

The company has delivered over 60 million sq ft of projects consisting developments within the retail, information technology, hotels and hospital sectors.

Its clients include Tata, IBM, Goldman Sachs and Deutsche Bank.

Having done projects for clients globally, Sankey says Synergy is constantly looking for opportunities, especially within the Asia-Pacific region to help boost its business.

“In the pipeline, we're looking at large projects. We've got associates and clients that are looking for opportunities in Asia.”

Synergy made its foray into Malaysia in 2007, when it became the project manager for MKN Embassy Techzone, a freehold information and communications technology (ICT) business park in Cyberjaya.

The project is developed by MKN Embassy Development Sdn Bhd, a joint venture between EMKAY Group of Malaysia and Embassy Group of India.

Synergy deals with the pre-construction phase of the project, keeping tabs on the development cost and ensures that it is on schedule.

On a personal note, Sankey says Cyberjaya, despite its potential, has not grown to become “what it should have been.”

“Cyberjaya has the right infrastructure and the dream ingredients but in the past four years that I have travelled to Malaysia, it has not grown as aggressively as it has been portrayed.

Perhaps there needs to be more aggressive marketing on Cyberjaya,” he says.

Sankey also says Synergy has recently been appointed project manager for the development of luxury villas at Bandar Enstek, Nilai, in Negri Sembilan.

The villas are part of a larger project being developed by a consortium that includes Enstek developer TH Properties Sdn Bhd, Ascenteus Holdings Sdn Bhd and Indian developer, Davanam Constructions.

Sankey says ground breaking for the project is expected within six months.

Synergy has also secured the right to become project consultants for the development of two international schools one each in Kuala Lumpur and Johor Baru.

“We will reveal more when the time is right,” he says.

Given Malaysia's growth opportunities, Sankey says Synergy is looking to secure “big” projects.

“We want to take on more niche projects as we also price ourselves that way. We don't do any run-of-the mill jobs.”

Asked about the challenges in Malaysia, Sankey says getting construction materials is a common issue.

“Because our jobs are pretty niche, most of the materials that we require are difficult to obtain locally and require importing.”

On the global front, Sankey says Synergy is cautious about its expansion plans, but adds that the company is looking to offer its services in Mauritius, Indonesia and the Philippines.

“We don't want to go berserk and go everywhere. We need to evaluate the market first and get the right project before we think about expanding into a new market.”

By The Star

Facility for London property purchases

MALAYAN Banking Bhd (Maybank) is anticipating a take up of RM60 million within the next six months for its latest mortgage facility "Overseas Mortgage Loan Scheme" being offered for those purchasing properties in London.

"This is in view of attractive property valuation in London and overseas buying interest to peak before April 2011 when the new 5 per cent sales tax is imposed for properties above STG1 million (RM4.84 million)," Maybank deputy president and head of community financial services Lim Hong Tat said in a statement yesterday.

The key features of the mortgage scheme include repayment in ringgit, high margin of financing of up to 85 per cent, flexible repayment and long tenure of up to 30-years or 70-years of age, whichever is earlier.

The facility will be offered in the form of term loan, overdraft or a combination of term loan and overdraft, he added.
The ringgit mortgage facility will finance completed or under-construction residential and commercial properties in London Zone 1 to Zone 3, covering prime locations such as the City of London, Westminster, Knightsbridge, Kensington and Chelsea.

Maybank's mortgage facility makes it the first Malaysian bank to offer Malaysians a local mortgage loan facility in ringgit for purchase of property in London.

By Bernama

Sime plans 15 property launches by June

KUALA LUMPUR: The Sime Darby group is preparing for at least 15 property launches for the six months ending June when the group's financial year comes to an end.

Sime Darby Property Bhd head of marketing development Henri Young said these 15 launches would cover different locations. Young was speaking to reporters at the launch of the Certificate of Real Estate Investment Finance programme in Malaysia, which will be sponsored by the Sime Darby group for the first time.

The eight-month course was first launched in 2007, and Malaysia is the fifth market to offer the programme.

The programme is promoted by the Asia Pacific Real Estate Association, which is partnering with the Malaysia Property Inc and Sime Darby Property, to offer the programme.

Young said the property market had been very buoyant the last year with units being sold the first two months after launch.

“Demand is very strong for landed units. We are now seeing a demand for service apartments and condominiums in the suburban areas. Buyers are looking for more value and they see room for capital appreciation in future years. The KLCC and Mont'Kiara areas have reached their peak and the rental market is struggling.”

In the next two months, the company will be launching The Glades in Putra Heights, Subang Jaya, a 53-acre development with bungalows, semi-detached, link and condominium units.

This will take place in May where as the Denai Alam in Shah Alam development will be offering Mulberry Grove linked houses while the Bandar Bukit Raja project will also offer linked houses.

In USJ Heights, it will offer zero-lot bungalows, where the compound is either small or limited.

In Melawati, the company launched super-linked terraces in Casa Rimba priced at RM1.5mil and retail and condominium units at its Quartza development in Desa Melawati.

By The Star

Sime to launch 15 property projects

SIME Darby, through Sime Darby Property Bhd, will be launching 15 projects across 10 townships in the first half of this year.

Its head of marketing development, Henri Young said, the townships include Putra Height and USJ Heights in Subang Jaya, Denai Alam (Shah Alam) and Bandar Bukit Raja (Klang).

"There is still strong demand for landed and residential properties in Malaysia," he said before the launch of the Certified Real Estate Investment Finance programme in Kuala Lumpur yesterday.

He highlighted that the company's previous projects in Denai Alam, Bandar Bukit Raja and the USJ Heights townships was sold out within two months.

By Bernama

Good outlook despite soft rental market for property

KUALA LUMPUR: The overall property sector is expected to enjoy an uptrend this year, buoyed by the various economic transformation programmes announced by the Government and expansion in the manufacturing and services sectors, a property real estate consultancy said.

Rahim & Co Chartered Surveyors Sdn Bhd, one of the largest property consultancy firms, said at a press conference that the outlook was good despite a soft market in the rental of high-end condominiums. Executive chairman Datuk Abdul Rahim Rahman said average prices in the secondary high-end condominium market fell by 29% between the second quarter of 2008 and the second quarter of 2009 but this sub-segment of the residential market had been on the uptrend since the third quarter of 2010, increasing by 13%. Prices of new launches range between RM750 and RM2,500 per sq ft (psf).

“The leasing market has not fully recovered. Rental rate has remained low at about RM4.30 psf compared with its high in 2008 at RM4.90 psf. With the various projects to be implemented under the ETP to make city living more vibrant, we expect the market to be on the uptrend by 2012,” said Abdul Rahim.

In locations like Shah Alam, landed units by the more reputable developers are snapped up within six months. “People are buying because for RM2mil or so, they can buy the same type of houses which cost RM6.5mil to RM7mil in the city. That is why the launches outside KL are doing well, coupled with the fact that there is no landed launches within KL itself because of the scarcity of land. In locations like Bangsar and Sri Hartamas, only condominiums are launched,” he said.

In view of this, Shah Alam, Rawang, Selayang and Sg Buloh have become the hot spots today. The effects of the 2008 financial crisis also put pressure on the rental rate in the office sector, which enjoyed a peak of between RM6.50 and RM8 psf in 2007/2008.

He said there were limited transactions in 2010 but capital values rose to an average of RM775 psf after a sharp decline of 19% in 2008/09. Net yield is estimated to be between 6% and 7%.

Abdul Rahim cautioned that in the next five years, an estimated 14.5 million sq ft of new office space would be completed, of which about 27% would be located in the suburbs.

He added that with selling prices of between RM500 and RM1,000 psf, some companies in the city centre were relocating to new office buildings in the suburbs due to lower rental rates, opportunity to own their own space, and convenience which helps recruitment and retention of staff.

“With the recovery in the economy expected to continue in the second half of 2011 and the effects of the ETP being felt, the office market may stabilise in the short term but will continue to be challenging in the long term,” he said.

In the retail property market, Abdul Rahim was upbeat about this sector, noting that retail sales were forecast to increase from RM137bil in 2010 to RM227bil in 2014.

For this year, 13 new malls are expected to be opened offering a total of 4.5 million sq ft of retail space, including two malls that are being refurbished and rebranded, Intermark (previously City Square) and Viva Mall (previously UE3 Mall).

By The Star

Sluggish outlook for property investment trusts

Prospects for real estate investment trusts (REITs) are sluggish as there are fewer Grade A office buildings for sale in Greater Kuala Lumpur.

As such, Rahim & Co managing director Robert Ang reckons there will be fewer REIT launches this year.

"REITs look at investments of above RM100 million. However, there is no good stock in the market. If there are quality assets, most developers will hang on to them as an investment, and probably float their own REITS," Ang said.

"What you have in the market now are assets for sale by trust funds who are cashing out," he said after a briefing on the Malaysian property market outlook in 2011 in Kuala Lumpur yesterday.

Ang said developers may take up property investment as a side income because of scarce land for new projects.

Nevertheless, he expects more launches this year compared with 2010, with prices for landed residential properties increasing by 5 per cent to 10 per cent in choice locations.

But he cautioned that ordinary investors are staying out of the market.

"Fundamentals are not strong for foreign investors to come here. There is oversupply of condominiums in Kuala Lumpur. The vacancy rate is 30 per cent and rentals are softening. I do not foresee a major price increase for the next one to two years," he said.

Ang said developers are still launching condominiums in Kuala Lumpur despite an oversupply situation and sales have been brisk as prices are 20 per cent less from the peak.

Meanwhile, Rahim & Co founder and executive chairman Datuk Abdul Rahim Rahman said the Malaysian property market will do better this year, led by projects under the Economic Transformation Programme.

Abdul Rahim expects more demand for residential, commercial, industrial and retail properties.

He said projects like the Sg Buloh land and Sg Besi airport redevelopment, the Matrade project by Naza Group, the Kuala Lumpur International Financial District and the 100-storey tower by Permodalan Nasional Bhd will contribute to growth in the property sector over the next few years.

"There would not be a nationwide phenomenon of property bubble," he said.

By Business Times

Ringgit loans for British properties

PETALING JAYA: Malayan Banking Bhd (Maybank) expects its Overseas Mortgage Loan Scheme, the bank's first ringgit-denominated mortgage facility for property purchase in Britain, to boost its home financing division.

With the new product, the division is expected to grow more than 13% in its current financial year ending June 30, 2011.

The mortgage was designed for high net worth customers interested in buying properties in Britain due to the favourable currency exchange rate, said Maybank community financial services deputy president and head Lim Hong Tat in a statement yesterday.

London offered attractive advantages for property purchase to non-residents, he said, adding that the bank had worked with international real estate agencies to assist customers on British regulations.

The ringgit mortgage facility will finance completed or residential and commercial properties under-construction in London covering prime locations such as the city of London, Westminster, Knightsbridge, Kensington and Chelsea.

Key features of the loan scheme include repayment in ringgit, high margin of financing of up to 85%, flexible repayment and long tenure of up to 30 years or 70 years of age whichever is earlier.

“This milestone mortgage scheme brings tremendous savings to customers as the unique proposition of this loan is Malaysians being able to borrow in ringgit for the purchase of property in London.

“Borrowing in ringgit will protect customers from currency fluctuations on their monthly loan repayments and savings as the pound sterling is anticipated to rise against the ringgit this year,” said Lim.

A banking analyst said the facility provided investors with protection against currency fluctuations.

Asked if other banks would offer similar facilities, the analyst said: “The banking industry is constantly coming up with ways to boost their margins and remain competitive.”

According to Maybank, Malaysians purchasing properties in London have to obtain financing from Britain-based banks and pay the monthly installments in pound, thus exposing them to exchange fluctuations.

Financing from Britain-based banks for Malaysians is only available for “buy-to-let purposes” the property must be purchased for investment purposes and not for own occupation.

Lim said the facility was offered in the form of term loan, overdraft or a combination of term loan and overdraft.

“We anticipate a take-up of RM60mil within the next six months. This is in view of the attractive property valuation in London and overseas buying interest which will be before April when the new 5% sales tax is imposed for properties above 1mil.

“The current strong ringgit against the pound is also another factor that will encourage Malaysians to buy before the anticipated rise in the second half of the year,” he said.

Lim said the people can enquire about this new facility at any Maybank branch in Malaysia or in London.

By The Star

UCSI plans RM1.13b expansion drive

DIVERSIFIED firm UCSI Group plans to spend up to RM1.13 billion to expand its business and education-based operations over five years, its chairman Datuk Peter Ng said.

The group, which operates the UCSI University, is in the midst of developing three five-star hotels in Kuching, Kuala Lumpur and Bandar Springhill in Port Dickson, Negri Sembilan.

Ng said in Bandar Springhill, UCSI is planning to build a university medical centre on 13.9ha with investments of RM500 million, besides a RM200 million resort hotel and convention centre.

Bandar Springhill is also where UCSI University's main campus will be located.

"Initially, the medical centre will hold 400 beds and will expand to 1,000 beds," he said, noting that it will feature state-of-the-art technology and a hostel for nursing students.

The resort hotel and convention centre, meanwhile, are being built on a 5.6ha site comprising a 17-storey hotel with 319 rooms.

Ng said the hotel will feature nine restaurants and eateries with indoor and outdoor seating, a sandy beach, a full-service spa, a roof garden, four meeting rooms, conference and seminar rooms, function hall and grand ballroom.

A 14-storey residential block for students with 390 rooms will be built next to the hotel.

"These projects are expected to be completed by May 2012," Ng said after unveiling the expansion plans at UCSI University's 25th anniversary celebration in Kuala Lumpur yesterday.

Also present was UCSI University chancellor Tan Sri Abdul Rahman Arshad.

Ng said UCSI University is committed to strengthening Malaysia's position as an international tourist destination.

"To ensure the success of the university medical centre, we have to be involved in health tourism," he said.

He said at present, Malaysia's health tourism was still low, with revenue of RM350 million recorded in 2010.

Ng said this was due to lack of hospitals involved in the niche market.

Apart from the two projects, UCSI is also setting up an international school in Bandar Springhill costing RM50 million whereby the project is due for completion by year-end.

Others include UCSI CityIsland Hotel in Kuching worth RM180 million, a RM200 million UCSI tower and hotel in Cheras and an office building in Cyberjaya.

"We are funding all of the projects via internal funds, disposable of fixed assets and borrowings," Ng said.

The government recently appointed UCSI University to lead a national initiative to help the country achieve its goal of becoming a high-income nation by 2020.

The university will chair the hospitality and tourism discipline cluster (Entry Point Project 10), one of the 131 projects under the Economic Transformation Programme.

By Business Times

Perak may have its own LCCT, says MB

The Perak state government is considering setting up its own low-cost carrier terminal (LCCT) in the northern part of the state.

"We have had a few discussions with AirAsia Bhd on the matter and we have proposed several locations in Perak, and they have stated their preference for one particular location," Menteri Besar Datuk Seri Zambry Abd Kadir told reporters in Sepang yesterday.

The site is expected to be in the vicinity of Parit Buntar and Taiping, which is in the area of the Northern Corridor Economic Region. Zambry was accompanying Sultan of Perak Sultan Azlan Shah and Perak Regent Raja Dr Nazrin Shah on a three-hour official visit of the LCCT and AirAsia Academy in Sepang yesterday.

Zambry explained that the state government was waiting for the right time to bring it up to the federal government to decide on the suitability and viability of the project.

He ruled out the possibility of turning the existing Sultan Azlan Shah airport in Ipoh into an LCCT because of congestion issues.

Currently, only Malaysia Airlines' low-cost arm Firefly services the Ipoh airport. At one time, however, MAS was flying in its Boeing 737 there.

"We have always, always said that we need a low-cost airport or terminal in the north (of Peninsular Malaysia). The airport has to know if there are airlines that will come ... we have said we can come. Now it's up to the airport (operators) to decide if that makes sense," AirAsia chief executive officer Datuk Seri Tony Fernandes said when asked to comment on the possible terminal in Perak.

By Business Times