Penang land duel

SP Setia and Ivory Properties Group have responded to Penang state government's tender to develop the Bayan Mutiara land.

George Town: Two property players are in the race for the multi-billion ringgit development of some 40.47ha at Bayan Mutiara on Penang island.

Business Times has learnt that SP Setia Bhd and Ivory Properties Group Bhd are the companies that have responded to Penang state government's tender to develop the Bayan Mutiara land. The tender is part of the state government's efforts to raise funds.

Sources said of the two companies, Ivory Properties had submitted the higher bid, for which the reserve price was reportedly set at RM200 per sq foot.

The state government had asked for a request for proposal (RFP) via the Penang Development Corp to develop an initial 24.8ha, which is located south of the Penang Bridge and overlooking Pulau Jerejak.

The RFP comes with the potential to develop an additional 14ha via a future reclamation after the development of the initial 24.8 ha.

Although the deadline for the RFP of the project was set for December 31 2010, it is learnt that the RFP had been recalled and interested parties were asked to re-submit their bids.

SP Setia is currently the only developer without any development projects along Penang's southern corridor where its rivals are present.

This includes Mah Sing Group Bhd, which is planning a mixed-development property project at Batu Maung. Ivory Properties is present via "The View Twin Towers" development in Batu Uban, while IJM Land Bhd had already embarked on its landmark waterfront development of "The Light" close to the Penang Bridge.

In January this year, the Penang state government announced that SP Setia - via subsidiary Eco Meridean Sdn Bhd - had won a RM300 million project to build and operate the Penang International Convention and Exhibition Centre in Relau on the island.

The project was reportedly meant to create a "Penang People's Park" that includes the country's first subterranean Penang International Convention and Exhibition Centre (sPICE), a 2.8ha 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.

It is not known if SP Setia and the state authorities have inked any agreement to firm up this deal.

By Business Times

'Overweight' on property sector stays: OSK

KUALA LUMPUR: OSK Research Sdn Bhd has maintained its 'overweight' call on the property sector.

In a note today, OSK said the biggest gainers from the current upcycle were the mid- to high-end developers, particularly those with focus on developing landed properties and also had significant exposure in high-growth areas.

"As such, our top buys for the sector are UEM Land Bhd and SP Setia Bhd for mid- to large-capitalised property companies while Plenitude Bhd (is our top pick for small-cap firms," it said.

OSK said developers with exposure in high growth areas such as Kuala Lumpur, Penang and Iskandar Malaysia would benefit the most not only from the current but also future property upcycle.

"Out of the three high-growth areas, Iskandar presents the most upside for developers, both in terms of supply as well as price appreciation.

"With the development of Iskandar progressing as planned and reaching its tipping point by 2012, we believe there is significant untapped potential for the property market there," it said.

By Bernama

N2N buys office tower in Bangsar South

N2N Connect Bhd says it has entered into a sale and purchase agreement on June 3 to buy an 11-storey office building known as Block 6, The Horizon (Phase 1), Bangsar South from Bangga Istimewa Sdn Bhd for RM36 million cash.

N2N plans to borrow RM27 million, or 75 per cent, of the purchase price to pay for the building.

The remaining RM9 million, or 25 per cent, will be derived from internal funds.

N2N intends to occupy four storeys of the property for its own use and rent out the remaining floor space to third-party tenants.

It estimated the rental income to be generated at about RM1.76 million per annum based on current office rental rates of RM5 per sq ft per month.

By Business Times

Privatisation of AP Land, OSK Property

With an upward movement of interest rates in tandem with the creeping price inflation amidst the softening global economy, majority owners of listed companies such as AP Land and OSK Property have announced plans to take them private.

Minority shareholders should consider their positions with regard to each of these individual offers.

As regards AP Land, on Jan 11 this year Low Chuan Holdings, the family-owned company that started AP Land half a century ago, offered 45 sen a share for all of AP Land's assets and liabilities, with the market surmising that this move is a likely precursor to the company being taken private.

That means the Low family has offered RM305mil to take over the business of a company famous for building some of Kuala Lumpur's main landmarks like the Empire Tower and City Square shopping centre, in Kuala Lumpur. The group's major shareholder, Low Chuan Holdings Sdn Bhd, which has a 37% stake, is owned by Low Gee Tat@Gene Low, Low Gee Teong, Low Gee Soon, SemSiong Industries SB, Selangor Holdings SB and Low Chuan Securities SB.

The issue is that the offer is 45 sen, an 8% premium compared to its closing price of 41.5 sen before the announcement whereas the net tangible asset (NTA) per share is RM1.

Generally, it is not uncommon to see a privatisation offer that is priced below net asset value in Malaysian listed companies, and is particularly prevalent among property developers.

Many reasons could be attributed to this such as the fact that the value of the assets, mostly backed by landbank, has not been unlocked; undemanding valuation and location of the land bank; and the (perceived) management quality.

Additionally, AP Land has not enjoyed a stable history of profits, since it has lost money in seven of the last ten years. Nor has it paid any dividends in this period.

However, it does have some non-property related businesses in the shape of its oil palm plantation venture in East Kalimantan, Indonesia, which has seen a total of 4,982 hectares of land planted with 3,000 hectares coming into maturity in the first quarter of 2012.

An additional point to note is that only a simple majority (or 50%+one share) of non-interested shareholders' approval is required for the proposed privatisation, since the offer came before the amendments to the listing requirements (which raises the threshold for shareholder approval to 75%, where a listed company is disposing all, or substantially all, of its assets, resulting in it being no longer suitable for continued listing on Bursa Malaysia).

Despite AP Land's lack of visibility and poor valuation, it has a 50-year track record in building.

Plus, it also operates a golf course and college and has current and ongoing projects such as the myHabitat residences in Kuala Lumpur, Bandar Tasik Puteri township in Rawang, Penang Island Bay Resort, commercial development in Changshu City in China as well as a residential project in Hokkaido, Japan.

These projects do have value, and minorities need to bear these factors in mind in their assessment of Low Chuan Holdings' offer.

As regards OSK Property Holdings Bhd, on May 27, its executive director and substantial shareholder Ong Leong Huat, together with Land Management Sdn Bhd, which comprises other members of the (founding) Ong family, offered to buy all the remaining shares and warrants that they do not already own in OSK Property Bhd, for 87 sen per share and 6 sen per warrant.

The joint offerors have been acquiring the shares at the offer price in the past one week. The additional shares acquired has triggered the mandatory general offer instead of conditional general offer at 87 sen.

In our view, the proposal can be seen as a move by the joint offerors to acquire a meaningful stake (i.e. 51%) at a reasonable price, to control the company, since the joint offerors had stated that it was their intention to maintain OSK Property's listed status.

However, the price offers no premium over the counter's last closing price of 87 sen, and is about half the value of OSK Property's NTA of RM1.71 per share. Which means that OSK Property shareholders who do not feel the price is sufficiently compelling may choose to retain the shares until the elapsement of the offer.

Ultimately, there is nothing to prevent the founding families from taking their companies off the public markets.

Our main consideration, as always, remains the minority shareholders who had helped the family finance the growth of the company.

To offer them a reasonable exit as this will certainly bode well for the founding families should any of them decide to again tap the public markets in future.

Rita Benoy Bushon is the CEO of Minority Shareholder Watchdog Group (MSWG).

By The Star (Comment by Rita Benoy Bushon)

UOA arm acquires land for RM50m

UOA Development Bhd, through its wholly-owned unit, Magna Tiara Development Sdn Bhd, has acquired two parcels of freehold land in Sri Petaling for RM50 million from Sim Nam Housing Development
Co Sdn Bhd.

In a filing to Bursa Malaysia today, UOA said it proposed to develop the 1.94-hectare land into high-rise residential and the development was expected to commence in the fourth quarter of 2011.

"The land is strategically located approximately 15 km from Kuala Lumpur City Centre, within the mature suburbs of Sri Petaling, which is a densely-populated and highly-accessible residential area," it said.

In a separate statement, the group said its wholly-owned unit, Paramount Properties Sdn Bhd, has won the 2011 Green Building Index Provisional Gold Rating award.

The award was awarded for its four office towers located at The Horizon, Phase 2, it said.

Its chief operating officer, David Khor, said the award marked the beginning of the group's venture into Malaysia's green economy, particularly through its flagship development, Bangsar South City.

By Bernama

Gromutual unit buys land in JB for RM44m

KUALA LUMPUR: GROMUTUAL BHD has acquired two pieces of freehold land in Johor Bahru for RM44 million as part of its plans to replenish its land bank in strategic locations for future development.

In a filing on Tuesday, June 7, Gromutual said its wholly owned subsidiary Rainbow Entity Sdn Bhd had acquired the two lands measuring 9,079.88 sq meters and 5.37ha respectively from Ladang SPK Sdn Bhd.

It said the purchase would be financed via internally generated funds and bank borrowings.

“The development on the said land is expected to contribute to the medium to long term future earnings of the Gromutual group,” it said.

By The EDGE Malaysia

1Utama boost for See Hoy Chan

Petaling Jaya: Property developer See Hoy Chan Holdings (SHC) expects to reap the benefits of the RM160 million makeover of its 1Utama Shopping Centre in Bandar Utama by next year.

The upgrade, which comes some 16 years since the building was first constructed, will see SHC - the developer and owner - enjoy a 35 per cent jump in revenue in 2012 as it begins to manage both the new and old wings.

1Utama's old wing was managed by Aeon Co (M) Bhd, which operates the Jusco stores for 15 years until August 2010.

SHC director Datuk Teo Chiang Kok said both SHC and the tenants will pump in an equal amount of investment to spruce up the building and the outlets, an exercise which is expected to be completed by November this year.

"SHC will be spending RM80 million and our tenants will be spending another RM80 million," Teo told Business Times in an interview at the mall.

The construction cost of the old wing, built 16 years ago, was RM89 million, excluding the land cost.

This makeover will see the two-million sq ft 1Utama old wing increasing its rentable area to 780,000 sq ft. The three-million sq ft new wing has a 1.2 million in nett lettable area.

The mall will have the TGV Cinemas relocated one floor up, with an additional five more cinemas to make 12 cinemas in total.

Apart from the facade and interior, 1Utama has just completed connecting the mall to its newly opened 1 First Avenue office tower. The ramp at the entrance, which leads to the third floor parking, will be removed, as it is obstructive.

The office car parks in 1 First Avenue will be freed up on weekends so that the entire mall will be able to accommodate over 10,000 cars.

Jusco, an anchor tenant, will occupy 320,000 sq ft and is expected to open at its new location within the mall by August this year.

Subsequently, two major Japanese retailers will take over the space where Jusco's supermarket and Jusco's deli are now located. These two new tenants are set to start business before the end of the year.

On the performance of the mall, Teo said: "Traffic count to the shopping centre has been increasing year-on-year. In 2010, it rose 13 per cent over 2009".

While the old wing is experiencing a drop in shopper traffic, traffic to the new wing has risen. Teo views this as a positive sign, as previously, there were patrons who either visited the new wing or old wing only.

When asked if the mall may be extended further given the availability of land where it now sits, Teo said that 1Utama has already reached an optimal size for a suburban mall.

"Walking from one end to the other in itself is 1km," he said.

By Business Times

See Hoy Chan looks beyond Malaysia's shores

PETALING JAYA: See Hoy Chan Holdings, the developer of Bandar Utama township, is planning to venture abroad to widen its revenue base.

Director Datuk Teo Chiang Kok said going abroad is a natural progression for the group, especially since conditions for developers in Malaysia are getting tougher.

Teo, in a recent interview with Business Times said countries under its radar include Indonesia, Vietnam, India and secondary cities in China.

"It could be an entire township or just an office building ... we are still exploring. It is a natural progression to look beyond our borders," Teo said.

According to him, the property development environment in Malaysia makes it difficult to obtain sizeable landbank.

Its Bandar Utama land, for example, covers 405ha.

Teo added that the requirement for allocating low cost housing, cross subsidies for utility companies, Bumiputera quotas and discounts add to the cost of housing and reduces yield.

"We will go where opportunities are better and where things can be developed more efficiently. In India and China, return on investment is faster and better," he said.

SHC is also interested in participating in the 1Malaysia Mall projects proposed under the Economic Transformation Plan, that aims to take Malaysian retailers and mall operators abroad.

Besides houses, the Bandar Utama development also houses commercial properties, which includes the 1Utama Shopping Centre, Plaza IBM, KPMG Tower, the five-star One World Hotel and the 1 First Avenue office.

The next development on the cards is for a four-star 450-room hotel and a convention centre with some 18,000 sq m space.

"We will submit the proposal for approval by year-end and it should be ready within three years," Teo said.

The convention centre will be built in such a way that it will be connected to the new hotel as well as to two more office towers, each 30-storey high.

Beyond that, the plan for Bandar Utama includes the establishment of a hospital for which a 3ha site has been set aside. And next to the hospital are plans for the setting up of a retirement village.

Meanwhile, Teo, who had previously not been keen on floating its shares on the stock exchange, is now open to the possibility of listing a real estate investment trust (REIT).

"We have been approached to look at REITS. (The setting up of) REIT looks interesting, but in terms of timing, we are not there yet ... we need our commercial properties to mature a little more and reach critical mass," he said.

He added that the properties could take another three to five years to mature and the company needs a few more buildings, within or outside Bandar Utama.

By Business Times

UOA Development posts RM130m net profit in 1Q

KUALA LUMPUR: UOA Development Bhd, which will be listed on Wednesday, June 8, posted net profit of RM130 million in the first quarter ended March 31, 2011.

It said on Monday, June 6 that its revenue was RM145.7 million and profit before tax of RM155.7 million. The current period profit after tax was arrived at after expensing RM21.9 million for administrative and general expenses and RM22.1 million for tax expense.

“Total expenditure for the quarter under review of RM21.9 million comprises marketing expenses of RM10.2 million, property maintenance expenses of RM1.7 million, finance costs of RM0.7 million and administrative and operating expenses of RM9.3 million,” it said.

UOA Development said the group’s profit and revenue were mainly derived from progressive recognition from on-going development projects which include The Horizon Phase II, Kepong Business Park and Binjai 8, and sales of inventories.

“During the quarter, the Group also recognised fair value gains amounting to RM92.3 million due to the completion of Blocks 3 and 4 of The Horizon Phase II which are held as investment properties,” it said.

UOA Development also said the group planned to launch two other projects -- the Ceylon Hotel Suites located within the Kuala Lumpur Golden Triangle and Kiara IV in Segambut.

It said together, the two development projects would have an estimated gross development value of about RM400 million.

By The EDGE Malaysia

N2N Connect buys officer tower in Bangsar South for RM36m

KUALA LUMPUR: N2N CONNECT BHD is acquiring an 11-storey office building in Bangsar South for RM36 million cash to be partly used as its office space, and to be let out to third party tenants.

In a filing Monday, June 6, N2N said it had entered into sale and purchase agreement with Bangga Istimewa Sdn Bhd to acquire the building known as Block 6 (Type G) as the The Horizon, Phase 1 in Bangsar South.

N2N said it planned to occupy four storeys of the property for its own use and rent out the remaining floor space to third party tenants.

“Based on conservative management estimates of current office rental rates in the vicinity of the property of RM5 per sq ft per month, it is estimated that the rental income to be generated is approximately RM1.76 million per annum, assuming the leasing out of the entire seven storeys of the property to third party tenants,” it said.

N2N said it would finance 75% or RM27 million of the purchase price via borrowings, while the remaining RM9 million would be through funded internally.

The company said the The Horizon, Phase 1, was a commercial development comprising 14 blocks of 11-storey stratified office buildings erected on a three-level basement car park.

The entire blocks of The Horizon, Phase 1, are MSC-compliant and completely broadband enabled, it said.

“The Horizon, Phase 1, forms part of the ongoing integrated township development known as Bangsar South.

“When fully-developed, Bangsar South will consist of Grade-A offices, retail avenues, boutique condominiums, service suites, a clubhouse and a boulevard,” it said.

N2N said that acquisition would provide it savings on its current rental expenses; a hedge against future increase in rental expenses; potential capital gains arising from the expected appreciation in value of the property; and secure sufficient office space to cater for the future expansion of N2N to be housed all under the same roof as the property is designated as a MSC Malaysia Cybercentre.

“It is a conducive environment to promote growth of N2N as a MSC Malaysia status company,” it said.

By The EDGE Malaysia

Noor Arfa keen to set foot in property sector

KUALA LUMPUR: Noor Arfa Holdings Sdn Bhd, a pioneer in the batik industry in Malaysia, is planning to venture into property development and hotel management in the near future.



Its founder, Wan Mohamed Ariffin Wan Long, said that the move is necessary as its core business - manufacturing batik and selling handicrafts - has seen a sharp fall in recent years due to the shortfall in tourist arrivals.

"We are looking for a suitable investor or developers to join us to build a three-star hotel and several chalets around the area at our main showroom in Chendering, Kuala Terengganu," he told Business Times in an interview recently.

Wan Mohamed said the company has over two acres of empty land, which would be ideal for such development. However, it is having a tough time finding the right developer to partake in the project.

"We plan to jointly develop the area with the developer, and the breakdown on how we plan to do this will be finalised once we find the right developer to work on this project," he said, adding that a RM20 million investment would suffice for a start.

Although there are many three- and four-star hotels around the area where Wan Mohamed plans to build his own hotel, he is confident that it would be a hit because of the tourism activities that his place has to offer.

"My place is right next to a river bank (which leads to the South China Sea), there is a nice restaurant here where tourists can do all sort of activities like weaving songket, chanting batik and also shopping for handicrafts (at the showroom). The other hotels don't have that sort of facilities," he said.

Wan Mohamed said his son had approached the Tune Group for a joint venture only to be turned down by the latter as they only set up hotels next to airports.

Wan Mohamed, who started Noor Arfa along with his wife Noor Hijerah Hanafiah in the 1980s, said a lot has changed since the yesteryears as today, not many Malaysians put on the importance of donning the batik. This, he said, is slowly eating into his profits.

"These days, even the civil servants are not following the Thursday rule of wearing batik to work like they once used to," he lamented.

He said the lack of tourism activities or big events like "Visit Year" in Terengganu and the country is also affecting the sales of his batik goods.

"Even the East Coast Economic Region has failed to bring in any sort of development or tourism activities in this area," he said.

Wan Mohamed has two showrooms located in Kuala Terengganu and Malacca, and few other stand-alone shops in Kuala Lumpur.

"Now, many travel agents fly the tourists to the islands and completely bypass Kuala Terengganu. This was not the practice before," he said, adding that Singaporean tourists used to be the biggest spenders back in the good old days.

Asked whether his company plans to be listed on the local bourse, he said that there are many things that need to be ironed out internally before such a plan could take place.

"We did plan to go for listing in year 2000 but at that time, our sales were clocking in at RM16 million a year. Last year, we only made RM10 million in sales and the year before that (2009), it was around RM12 million. I am afraid that this year will be even worse that last year's performance," he said.

By Business Times

Complex to be completed in 2012

Mohd Ali showing the construction of the complex in Malacca during a visit recently.

MALACCA: Construction of the state’s recently revived Customs Immigration and Quarantine (CIQ) complex is expected to be fully completed by March next year.

Chief Minister Datuk Seri Mohd Ali Rustam said the government had strived hard to ensure the project was restored after the initial construction hit a snag due to technical hitches on the part of its previous contractor.

“We have commissioned a second contractor and up to now 38% of the project is completed and if all goes well, we could anticipate the RM73mil complex to be operational by mid-2012,” he said at a site tour recently.

Once completed, Mohd Ali added the complex could accommodate 15,000 visitors arriving from neighbouring countries on a monthly basis.

“This will certainly be a boost for Malacca in terms of the tourists arrivals,” he said.

The CIQ will complement the Batu Berendam International airport as a major gateway to the state and also to expedite the entry process for foreign tourists.

Mohd Ali said once the CIQ was completed, the state could also attract tourist boats from Singapore and Batam to enter the local waterway.

He added that frequency of the current ferry services from Bengkalis and Dumai in Indonesia could also be doubled with the new facility.

The increase, could turn the Malacca port as an optional hub for ferry services from neighbouring countries.

On another matter, Mohd Ali said the government hoped to introduce a tram car to ferry city folks to several selected destinations.

He said the tram service would help alleviate traffic congestions at the city-center while the monorail service was also expected to resume soon and would serve several populated areas here.

By The Star

Bertam Alliance: Property development outlook 'exciting'

PETALING JAYA: Bertam Alliance Bhd is confident of growth this year helped by a favourable outlook from the local property development industry.

Its managing director Tan Ai Tong however did not provide a forecast on the firms's growth numbers for this year.

Last year, the firm's net profit stood at RM15.2 million against RM4.2 million in 2009. Its revenue increased to RM60.2 million last year. from RM39.7 million in 2009

"The outlook for the local property development industry is exciting considering the favourable demographics (65 per cent of the population under 35 years old) and high population growth rate, particularly in the Klang Valley. With the new economic initiatives being driven by the government, both the GDP growth and the property development industry are expected to remain strong.

"We are confident that our 2010 results are sustainable, with the new strategies being adopted," he told reporters after the company's annual general meeting here, yesterday.

Tan said the group is planning a development soon in Cheras which is within walking distance to a proposed MRT station site.

He said the company is also collaborating with a prominent developer, which he refused to name, in the southern region to develop a 270 acre land in Muar, Johor into a mixed development.

"This project will contribute positively to the group's earnings over the next 6 years," he said.

By Business Times

Bigger homes may not be happier homes

The phrase “old is gold” certainly holds true for many things such as family relations and friendships, but it does not seem to apply to consumer items, especially trendy ones. Barely months old gadgets are being replaced by new and trendier ones these days.

This underscores the strong consumerism movement and how it is promoting buying frenzy among the young and old alike.

The list of “must haves” is growing longer and it is not surprising that many of the items are actually status symbols.

One of the most easily replaceable items include mobile phones and other tacky communication devices. The big rush for Apple's new iPad 2 is a good example of how much headway these tacky gadgets are having a hold on the people.

Even though it has been more than a month since its release, there is still a long waiting list for this latest tablet computer. Just try to place a booking for one with an authorised distributor in Kuala Lumpur and you'll know what I mean.

When the economy is doing better, there is a tendency for people to splurge a bit more on themselves and their loved ones.

The property market is certainly one of the biggest beneficiaries of this stronger consumer confidence. Many developers are turning in one of their best sales ever.

From just a handful previously, there are now more developers who have surpassed the RM1bil annual sales mark.

The housing market is riding on this wave and there is a rush for a variety of property, especially well located landed housing projects.

Beelines are once again making their appearance at project launches, and more people are snapping up property either for their own occupancy or for investment purposes. There are also those who are buying to upgrade to bigger houses or move to better neighbourhoods.

It is undeniable that one's residential address has become a status symbol and many can't wait to move to more prestigious neighbourhoods.

Although it is uplifting to have a more prestigious address or move into a better community, one should also think about the consequences of uprooting one's family when moving to a new area.

It will mean new schools, new friends and neighbours, and grown up children, especially teenagers, often don't take to such changes easily. Having built up their bond with their schoolmates, teachers and neighbours over the years, they will need time to adjust to their new environment.

Another issue that needs to be considered thoroughly pertains to how much space the family really needs and how much loan one should commit to.

A bigger house may sound like something to look forward to but it can be a dampener to family bonding, unless efforts are expended to ensure the family find time to gather together in some common areas, like the study and computer rooms, and of course the dining room.

When there are too many floors (more than two storeys), sections and rooms in the house, it may mean the family members may not “bump” into each other often enough, and communication may suffer.

With many families having both parents working and their grown up children driving themselves around, the communication gap may grow wider.

Buying a new property may also mean more borrowings from the financiers unless the buyer has the means to make higher cash downpayment.

Banks have become very innovative these days and a number of them are promoting housing packages where the repayment can be stretched up to the next generation.

The question is whether it is wise to commit to such high loans to the extent of involving one's children in the loan repayment.

I believe one should not over commit in their borrowings, and it is advisable to be prudent and leverage up to one's own ability to repay.

Instead of buying, it can even make better economic sense to rent a house. This way, one gets to enjoy the choice of address, and do not have to fork out any downpayment, or be bothered with the high maintenance and renovation costs to upkeep a property.

Deputy news editor Angie Ng subscribes to the maxim that while everything is in a state of flux and change, sound values should be upheld at all times.

By The Star (by Angie Ng)

Housing dream come true?

PROPERTY players are eagerly waiting for clear guidelines from the Government on how the recently launched My First Home (MFH) scheme is supposed to work. Social housing generally does not provide good returns, developers and consultants point out, and without concrete details, it is even harder to expect the private sector to be actively involved. As always, land is a central issue.

First announced last October in Budget 2011 and officially launched in March by Prime Minister Datuk Seri Najib Tun Razak, the scheme is aimed at helping young professionals between 18 and 35 to own a home priced between RM100,000 and RM220,000. At the launch, Najib expressed his hope that the private sector would view participation in the scheme as a corporate social responsibility (CSR) activity, and not as a venture to profit from.


Ghazali: ‘There are still a lot of existing affordable homes in locations such as Nilai, Rawang and Sepang.’

In other words, the developers are expected to shoulder the costs of MFH projects as part of being dutiful corporate citizens. Nevertheless, it has been reported that the Government was considering providing land at very low cost or for free, even in the Klang Valley, in joint ventures with the private sector. If this indeed happens, says Real Estate and Housing Developers' Association (Rehda) president Datuk Seri Michael Yam, it will help developers to lower costs.

Still, there is this next question on the minds of developers: If the land comes free or cheaper, where will it be? If the sites are far from the city centre or in areas that lack public amenities, will there be enough buyers? As it is, many low-cost housing projects built by the private sector are in areas such as Nilai, Rawang and Sepang, which cannot boast of high demand. If the scheme's objective is to meet demand for homes, allocating land in such locations would be self-defeating.

Lightening the developers' load

Yam says land generally constitutes a fifth of the total gross development cost of stratified properties. “For most parts of the Klang Valley and Penang, the likehood is that housing units below RM220,000 would be stratified apartments with relatively small built-up areas, despite land being free,” he adds.

Elsewhere in Malaysia, it may still be possible to deliver landed properties with smaller built-up areas in less prime areas, if access to completed roads and infrastructure is available, and certain conditions and cross-subsidy requirements are waived.

He points out that the expenditure in developing a property project covers land, manpower, construction materials, consultancy fees, utility contribution, bank interest, cross subsidy for low-cost homes and discounts to meet national aspirations. “If all the stakeholders can review their cost, provide subsidised materials and reduce utility contributions, the final delivery cost can be lowered,” he says. He also suggests that the Government consider providing upfront infrastructure and utilities to further reduce the burden on developers.

Hua Yang Bhd chief executive officer Ho Wen Yan believes that it is possible for developers to offer better homes if the Government supplies the land.

He argues: “With cheaper land cost, better homes with larger living area and better amenities can be provided. With good transportation infrastructure such as integrated highways, the MRT (Mass Rapid Transit), KTM Komuter and other forms of public transport, it is possible to live further away and work in the city. This is a proven model in developed cities all over the world.”

At present, says Ho, urban density in Kuala Lumpur is increasing rapidly. To reduce social and economic pressures, there is a need to look at alternatives beyond the city centre.

He points out that while property developers may not be looking to earn sizeable margins from the MFH scheme, some profit is still needed to make participation viable for them. “Balancing all the factors of cost, land allocation and earnings will be critical towards the long-term sustainability of the scheme. Financial incentives such as tax breaks, rebates and other forms of support will be welcomed by the private sector,” he says.

What buyers want

While the developers focus on costs, the buyers are primarily concerned about three things location, location, location. This has been a perennial point of contention with social housing, be it low-cost or affordable housing. Or any form of housing, for that matter. Because land within or close to the city is expensive, developers tend to build social housing in less-than-prime areas, which explains the poor demand.

Normlly, low-cost housing costs about RM42,000 a unit with a build-up of 650sq ft. Affordable housing, such as those that come under the MFH, is priced between RM100,000 and RM220,000 a unit. Size for units under the scheme has not been determined so far.

With land cost escalating, property consultancy Rahim & Co executive chairman Datuk Abdul Rahim Rahman reckons that developers should be allowed to build premium units in tandem with MFH homes so as to give them a chance to make a profit.

“If the Government provides a 100-acre plot for the scheme for free, or at very low cost, conditions should be imposed whereby the private developer must allocate fixed portions of the project for low-cost and affordable housing. Perhaps 30% of the project can be low-cost housing and 20% for affordable housing. The remainder can generate profits for the developer,” he says.

Generally, Rahim adds, location, demand and transportation are issues that the Government needs to consider. “Old apartments sized at less than 1,000 sq ft can be found for less than RM220,000 in the Gombak area. However, for double-storey houses in Gombak and Cheras, the prices are upwards of RM350,000 and RM450,000 respectively. If they stay in Rawang or Klang, and work in Kuala Lumpur, the cost of daily transport to work is prohibitive.”

Boustead Holdings Bhd director (property) Datuk Ghazali Mohd Ali says if an MFH project is located in the Klang Valley, the developer should be allowed to build affordable homes in place of low-cost units. For similar projects outside the Klang Valley, he says, developers can opt to build low-cost homes instead, as buyer income tend to be lower in such locations and demand may not be as strong given that there is abundant land in these areas.

Ghazali says the MFH affordable homes need to be built in locations where demand is strong as they are meant for young working professionals. “There are still a lot of existing affordable homes in locations such as Nilai, Rawang and Sepang. So it would defeat the purpose of the scheme to build more of such homes in these areas. The Klang Valley remains the top draw for young adults looking for job opportunities. It will continue to be the location of choice for young adult home buyers, unless there is an efficient transportation system serving Nilai, Rawang and Sepang,” he adds.

“Poor response to these units will mean higher holding and opportunity costs for developers.”

The provision of social housing is not something new to developers. Developers of projects of a certain size are required to carve out a portion of their land for low-cost housing. There is also Syarikat Perumahan Negara Bhd (SPNB), a unit of the Minister of Finance Inc, which was set up in 1997 to provide affordable housing.

But for whatever reasons, public response to affordable homes built by SPNB has not been encouraging. Recent reports highlighted the lack of response to 11,400 low and medium-cost housing units completed by the company.

SPNB chairman Datuk Idris Haron says this could be due to the lack of publicity about the homes. With the launch of this MFH scheme, SPNB will act as a one-stop centre for applications and access to financing for homes. National mortgage company Cagamas Bhd will guarantee 10% of the financing for the home purchases. A total of 25 banks have agreed to give out home purchase loans under the scheme.

So far, about 4,516 housing units with retail prices that are categorised under the MFH scheme, have been completed in 12 projects by SPNB. Another 8,991 units in 16 projects are under construction. As of April 30, 772 people had applied for loans under the scheme, while 143 applications have been approved, amounting to RM21.3mil in loans, with an average value of RM149,365 per loan.

By The Star

Fine-tuning necessary for housing scheme

BESIDES the possibility of the Government providing land for free or at low cost, another issue surrounding the My First Home (MFH) scheme is the general consensus that it is unrealistic to have the same limit on monthly income and property price across the country. To date, it has been announced that houses under the scheme are priced from RM100,000 to RM220,000 per unit, and to qualify, buyers must have a monthly salary of not more than RM3,000.

Developers are of the view that the higher land values in the Klang Valley and major cities should be reflected in the MFH scheme.


Leong: ‘The scheme should reflect the higher land values.’

“The scheme should reflect the higher land values, living costs and incomes in the Klang Valley and major cities to ensure there is no mismatch between demand and supply,” says Mah Sing Group Bhd group chief executive and managing director Tan Sri Leong Hoy Kum.

Leong and other developers say a price limit of RM350,000 is more realistic in Greater KL and Penang, and the monthly income limit should be raised to RM5,000.

Real Estate and Housing Developers' Association (Rehda) president Datuk Seri Michael Yam says the present threshold household income for the purchase of low-cost houses is RM2,500, which is just RM500 less than the RM3,000 income limit for MFH buyers.

The minimum property value of RM100,000 should be set aside so that those who are not entitled to the RM42,000 low-cost homes be given a chance to own a property, says Yam.


Chang calls for home buyers to be given preferential interest rate.

Loan financing is another issue linked to the MFH scheme. National House Buyers Association (HBA) secretary-general Chang Kim Loong says buyers with a monthly income of RM3,000 may have problems with mortgage payments, despite the 100% financing provided under the scheme.

Chang explains that based on the previous BLR (base lending rate) of 6.3% and a “market rate” of BLR less 1.8%, the effective interest charged to a house buyer is about 4.5% per annum. Generally, banks practise a rule of thumb whereby any single loan repayment should not exceed one-third of the borrower's gross pay.

“For a RM220,000 housing loan with a tenure of 30 years and 100% financing, a buyer with a monthly salary of RM3,000 would be paying monthly repayment of RM1,115, which is 37% of his gross monthly salary. These borrowers would not have much savings and could default on their loan obligations in the event of personal emergency expenses. Also, it would be impossible for these house buyers to take up additional loans to buy cars.”

Chang calls for home buyers under the scheme to be given a preferential interest rate of 3% fixed throughout the loan tenure. He also says the Government must make it compulsory for MFH projects to be based on the 10:90 BTS (build-then-sell) concept to give maximum protection to home buyers and to shield the Government from potential liabilities as such projects are easier to revive in the event they are not completed.

Under the BTS concept, a buyer only pays 10% of the price on signing the sale and purchase agreement, with the balance to be settled only after completion of the house.

Yam of Rehda concurs with Chang and calls on banks to allocate a block of loans at preferential interest rates with longer loan tenures and with the provision of having joint multiple borrowers.

By The Star

SP Setia plans RM2.8bil projects

PUTRAJAYA: Property developer SP Setia Bhd will redevelop the Sri Johor, Sri Pulau Pinang and Sri Melaka low-cost apartments and the Taman Ikan Emas low cost homes in Bandar Tun Razak, Cheras at a total development value of RM2.8bil.

SP Setia's deputy president and chief operating officer Datuk Voon Tin Yow said the first phase of the project would take off next month.

He said this at a press conference yesterday after a meeting the Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin on the proposal to rebuild the housing area.

Raja Nong Chik said the first phase of the project would involve the development of affordable, quality homes totalling 1,255 units. They would be completed in three years.

He said SP Setia would also undertake an apartment housing project in the area for young executives with each unit to cost not more than RM300,000 and with a built-up area of at least 800 sq ft.

The decision to build quality, affordable homes in the area was made in view of the housing area which has been rundown. The area will be modernised with well appointed homes as well as public facilities and improved landscaping.

Under the second phase, Raja Nong Chik said the housing developer would also develop a commercial and residential centre which will take 14-15 years on the 53.4ha.

By Bernama

Beating traffic congestion

Driving in Kuala Lumpur during rush hour, when people are going to office or going home, one cannot help noticing that the number of cars heading in one direction is matched by the number of cars heading in the opposite direction. People seem to live at one end of the city and work at the other end. The amount of petrol consumed and the number of hours wasted must be phenomenal. How does this come about? Is there a solution?

Improvement of public transportation could reduce the number of cars on the road but the new cars registered every year seem to cancel out the reduction. Restriction of cars from certain parts of the city by imposing a fee for entry during peak hours has been considered and abandoned. These solutions do not seem to work in Kuala Lumpur. Taking taxis is not a pleasant experience because taxis are often old and dirty and the drivers seem to be a grumpy and choosy lot. They avoid certain destinations at certain times of the day, which are usually the very destinations that you need to get to in a hurry.

Actually somebody, whom I will call CK, has found an interesting solution to the problem. CK was a manager in a large foreign manufacturing company and the division under him was famous for the loyalty of its staff. The staff turnover rate in his division was the lowest in the company. There was no need to keep retraining new staff and there were hardly any disruption due to staff quitting.

What was his secret? It was not something you will find in any management book. When he recruited, he selected only people who lived in other towns, not in KL. When they came to KL to work, they would be in a totally new environment and would have to look for accommodation. Naturally they would look for accommodation close to their place of employment, preferably within walking distance. In time, they would get married and buy a house in the same area. Then their children would go to school in the same area. They would be less likely to change jobs and move away.

If your enterprise is located in Cheras and you hire somebody from Kepong, at the opposite end of town, you will create an unhappy commuter who has reason to quit upon getting the first alternative offer.

I saw a somewhat similar principle applied in Singapore when I visited the Marina Bay Sands project while it was still under development. This was a megaproject employing thousands of foreign workers, who would have caused great social disruption in Singapore had they been obliged to find accommodation all over the city. The employers were obliged to house all the workers in quarters nearby so they could walk to work. Food was provided in large comfortable canteens within the project areas. I was told this was the norm in all big projects in Singapore. In this way there is minimal human congestion caused by megaprojects.

Another innovative way to reduce traffic congestion has been tried out in Santiago, Chile and Beijing, China. This was to allow cars with odd-numbered plates and those with even-numbered plates to drive on alternate days. In theory, this should halve the number of cars on the road. But in Santiago, everybody began to keep two cars, one with odd-numbered plate and the other with even-numbered plate. The car population doubled and congestion got worse. The same idea was applied in Beijing during the period of the Olympic Games, and it worked better. The time period was too short for people to consider getting two cars.

In Bangkok, they have motorbike taxis and it has become a common sight for executives in coats and ties to ride pillion in order to get to their meetings on time.

In the Philippines in the 1970s, they gave up getting to meetings on time. The first time I attended a seminar in Los Banos, which is an hour's drive from Manila, I turned up early and thought I had made a mistake about the date and time. Then a few locals turned up. Slowly, the hall filled up. Students came first, then junior academics and junior civil servants, then professors and senior civil servants. Finally, the minister who was to perform the opening ceremony arrived, two hours late. He started his speech with a joking apology, blaming the traffic in Manila for the delay. However, the participants seemed to have timed their arrival very accurately according to their social rank. It looked like a well-practiced pecking-order display, in which everybody knew when to arrive except the foreign participants.

That display, involving about 200 people, would have wasted 600 man-hours. If every minister and provincial governor repeated this every working day, the effect on national productivity would have been calamitous. This was during the early days of Asean, when President Fidel Marcos ruled by decree and the Philippines prided itself as the most advanced country in Southeast Asia. Makati district in Manila had the most modern shopping malls in the region. The streets were filled with big American limousines.

Unknown to us, the country was already beginning its decline to the bottom. The proliferation of time-wasting habits may have been a major cause.

Botanist and researcher Francis Ng is the former deputy director-general of the Forest Research Institute of Malaysia. He is now the botanical consultant to Bandar Utama City Centre Sdn Bhd and the Sarawak Biodiversity Centre.

By The Star (by Francis Ng)

N. Korea launches city facelift to mark anniversary

North Korea said Friday it had launched a construction project to change the showcase capital "beyond recognition" in the run-up to the centenary of its founder's birth next year.

The massive construction will centre on the Mansudae area of Pyongyang where the giant statue of late president Kim Il-Sung stands, the official Korean Central News Agency said.It will include a "monumental edifice", high-rise apartment blocks, public buildings and cultural and leisure facilities including a round people's theatre facing the existing Mansudae Assembly Hall where parliament meets.A restaurant will also be built to face Pyongyang's famous Okryu Restaurant, along with a park.

The new construction will match existing monumental edifices dedicated to the memory of the founder and his Juche (self-reliance) ideology, the agency said."This will change the appearance of the capital city beyond recognition," it added.

The North in 2009 announced plans to build 100,000 new high-rise apartments in three districts of the capital to mark the 2012 anniversary.The latest project has been announced despite chronic food shortages in the impoverished communist state.

UN agencies say six million people, a quarter of the population, urgently need aid.The North has vowed to become a "great, powerful and prosperous nation" by next year, the 100th anniversary of the birth of its founder who died in 1994.The country fosters an all-pervasive personality cult built around the late Kim and his son and current leader Kim Jong-Il.Kim Jong-Il is now grooming his own son Jong-Un as heir apparent.

By AFP

Greenhill bullish on Setia City Mall revenue

SHAH ALAM: Greenhill Resources Sdn Bhd, a unit of the country's largest developer SP Setia Bhd, is bullish that its latest project, Setia City Mall, will generate big revenue.

Part of the optimism is based on the high take-up rate for the mall's retail space.



The estimated RM450 million Setia City Mall is due to open its doors for business in May next year.

Those that have confirmed tenancy include big names like Padini Concept Store, Golden Screen Cinemas, Urbanfresh, Harvey Norman, Fitness First, Courts and Wangsa Bowl.

Greenhill development director Robert Spinks said out of the 250 retailers expected 160 have confirmed their slots in Setia City Mall.

The mall consists of 740,000 sq ft of lettable space spread over four levels of zoned shopping space. Its biggest tenant will be Parkson, which is taking a total of 120,000 sq ft.

Setia City Mall is jointly developed with Asian Retail Investment Fund, a fund managed by the investment arm of global property developer Lend Lease.

"We are confident the opening of Setia City Mall will help boost Greenhill's revenue," Spinks said at a media briefing yesterday.

He did not reveal any sales forecast.

Spinks said construction work on the mall was started in 2009.

"Gross development cost for the Setia City Mall is about RM450 million," he said, adding that the project would be a good and profitable venture for those involved.

Rental varies from RM5,000 to RM30,000, depending on size and lots.

Spinks said Setia City Mall would offer much more than the typical retail destination.

"It will provide a fun and affordable family experience - encompassing shopping, dining and entertainment," he said.

Meanwhile, SP Setia executive vice-president Khor Chap Jen said there will be a convention centre and a 250-room hotel located opposite the northern entrance of the mall.

"The construction of the convention centre, which is large enough to host a 200-table banquet, will commence next month," he said.

The company also plans to launch three blocks of SoHo (small office home office) apartments next to the hotel by the end of this year.

By Business Times

Mah Sing rewards loyal customers

KUALA LUMPUR: Mah Sing Group Bhd yesterday introduced a loyalty rewards programme called "M Club" designed to keep its custo-mers returning to the developer and buy more properties in Johor Baru, Penang and Klang Valley.



The enhanced loyalty programme offers its 10,000 members the chance to enjoy privileges and discounts of up to 30 lifestyle brands.

"We hope in the future our customers will view their M Club as indispensable as their identification card. In fact, in the pipeline is a new-generation Mah Sing Community website complemented by Facebook and Twitter accounts and a community-centric blog," Mah Sing chairman and independent non-executive director Tan Sri Yaacob Mat Zain said in his speech.

He added that M Club members or better known as the Mah Sing community, will appreciate select bene-fits being brought direct to their doorsteps with the simple act of flashing either their classic, gold or platinum M Club card at the merchants, with services ranging from home and living, beauty and health to wellness and personal development.

Among the 30 lifestyle merchant partners are KL Lifestyle Art Space, IHeal Medical Centre, Lightcraft and Times Bookstores.

By Business Times

Encorp Strand bags another property award

KUALA LUMPUR: Encorp Strand, the flagship development of Encorp Bhd, has added another feather to its cap when it clinched the Highly Commended Award (Mixed-Used Development category for Malaysia) of the Asia Pacific Property Awards 2011.

Encorp executive chairman and group chief executive officer Senator Datuk Seri Effendi Norwawi said the award represents the hard work and commitment that have gone into the group's flagship development.

"Encorp Strand is a testament of our relentless pursuit of innovation and providing unbeatable quality, standard, value and services to all our customers, and the award certainly confirms this project's stature," he said in a statement.

Effendi received the award on behalf of the company at the high-profile presentation ceremony at Longemont Hotel in Shanghai, China, on Tuesday.

Encorp Strand was previously a winner of the inaugural The Edge-PEPS Value Creation Award 2010, an accolade for properties with the greatest value creation in terms of capital appreciation as well as sustaining value.

Encorp Strand comprises the fully completed and sold Business Suites, the iconic Red Carpet Boulevard, Garden Offices, The Mall and Residences. Collectively, these components offer a complete living, working, shopping, dining and entertainment experience.

Effendi said Encorp Strand is essentially a product of the group's commitment to innovation and quality for its customers.

"This is the Encorp experience, an experience that is anything but ordinary," he said.

Encorp Strand is easily accessible from Kuala Lumpur City Centre and the rest of Klang Valley via the DUKE highway, Damansara-Puchong Highway, the New Klang Valley Expressway, Middle Ring Road II and Penchala Link of the Sprint Expressway. It is about a 20-minute drive from the city centre.

By Business Times

New project in Iskandar Malaysia set to boost sales

Done deal: Frankie (second right) exchanging the documents with Fujimora (second left) while Tan (right), Takahiro (left) and Ahmad Zahri (thrid right) and Pee look on.

JOHOR BARU: Iskandar Malaysia is set to attract more foreign property buyers who want to make the city as their second home or to invest in properties.

Johor Baru’s proximity to Singapore is one of the strong selling points and many of them are also attracted to the prices of the residential properties which are relatively cheaper compared to theirs home countries.

“Iskandar Malaysia is progressing well since its launch with many infrastructure projects and major developments taking shape within the next one to two years,’’ said Seri Alam Properties Sdn Bhd general manager Frankie Tan Kiat How.

He said this after the signing of Memorandum of Understanding (MoU) between the company and Global Asia Assets (M) Sdn Bhd (GAAM) at the Wealth of Iskandar Malaysia Conference.

Seri Alam Properties was represented by Tan and assistant general manager (Finance) Tan Siew Peng while GAAM by its chief executive officer Fujimora Masanori and general manager Sakanoue Takahiro.

The ceremony was witnessed by Johor committee chairman for Local Government and Housing Datuk Ahmad Zahri Jamil and UMLand Bhd chief executive officer Pee Tong Lim.

The company will develop 110 bungalows, each with a swimming pool with a land area of 4,500 sq ft each and a club house under the Japanese Holiday Homes in Bandar Seri Alam township in Pasir Gudang for Japanese buyers on a 8.09ha site overlooking a lake.

“We believe the project will be a good platform to attract more foreigners to come and buy properties in Iskandar Malaysia,’’ said Tan.

The collaboration, he added, would increase the number of Japanese community within the township which already has from the existing Japanese International School there.

By The Star

S’pore plans more HDB flats

SINGAPORE: Aspiring home owners can expect to see more build-to-order (BTO) Housing Development Board (HDB) projects launched in mature estates next year, promised National Development Minister Khaw Boon Wan on Monday.


Khaw ... ‘I have asked HDB to look into more mature estates as possibilities.’

Announcing this latest policy shift in another blog post, he said: “I have asked HDB to look into more mature estates as possibilities.

“It is too late to prepare suitable sites for this year, but we should be able to put up some for next year's BTO.”

He said that his ministry had been “rather reluctant” to launch BTO in mature estates as it was worried that such popular launches would attract high subscription rates, “further alarming the market”.

“While this is a valid concern, I believe Singaporeans will understand that mature estates will always attract very high subscription,” he said.

“We should not be daunted by such a prospect, but should instead try to meet the aspirations of many young couples wanting to set up nests near their parents. Our response should be to put up more sites in mature estates, even as we ramp up BTO launches elsewhere.”

Khaw added that it would be inevitable that some of these new sites would be near existing residential blocks, and he hoped residents would bear with the construction while works were under way.

The blog, titled Making a Calculated Move, was his third since last Thursday. Like the other two as well as his recent comments it showed the determination of the new National Development Minister to address areas in housing which are causing unhappiness to various segments of Singaporeans.

Last Friday, he spoke of speeding up the construction of new flats and raising the number of BTO units from 22,000 to 25,000 this year. At a forum with youth on Sunday, he said that more rental flats must be built for lower-income families.

Under the BTO system launched in 2002, the HDB builds flats in response to demand for them.

In his latest post, Khaw noted that the current BTO launch for 4,000 new units in four towns was under way. So far, there have been about 8,000 applications, and this was within the ministry's expectation.

Not surprisingly, he said, projects in the mature estate of Tampines are the most popular, with many applying for four and five-room flats.

He acknowledged that new flats in mature estates are more attractive since many couples living there would like to continue to live close to their parents.

This is a move which the government supports, and so it has doubled the chances of such couples under the Married Child Priority Scheme.

The current BTO launch in Tampines was also the first one there in recent years, he noted.

He said that young couples eagerly looking for new homes should calculate their chances.

“My advice to them is to opt for non-mature estates,” he said.

“You improve considerably your chance of securing one in the new towns, instead of competing with many others for the popular projects in the mature estates,” he said, adding “good luck friends, and congratulations on your recent or upcoming wedding”.

For years, the Ministry of National Development's (MND) position has been to focus on launching new flats in non-mature estates such as Punggol and Sengkang.

Last year, former national development minister Mah Bow Tan said that land in mature estates was limited and the mainstay of BTO supply would still be in outlying estates.

Launches in mature estates have proven to be wildly popular.

In 2009, 1,718 BTO flats in Queenstown SkyVille@Dawson and SkyTerrace@Dawson received over 10,000 subscriptions, or 12 buyers for some units in the estate.

In 2007, 400 flats in Telok Blangah Towers were oversubscribed nearly 20 times, with 7,970 applications.

Mature estates usually have more established infrastructure such as recreational and educational facilities and well-connected transport links.

In such areas, land for building new flats is limited and flats built are generally snapped up quickly.

Dennis Wee Group director Chris Koh said that these projects were also likely to be smaller in size, given the limited land.

He added that flats could be built at the perimeter of mature estates.

Colin Tan, research and consultancy director at real estate firm Chesterton Suntec International, said HDB could overcome such size limitations by building taller blocks and increasing the population density.

Khaw's latest announcement gives hope to buyers like human resources executive Teo Yingying, 25, who has applied for a BTO flat with her boyfriend five times with no success. She is hoping for a BTO launch in Tanjong Pagar where she now lives with her parents.

“I want to be near my parents. If we ever have children, my parents can help me take care of them when we're working,” she said.

MND said that it was studying suitable sites and more information would be released later this year.

By Asia News Network/ST

Survey: England, Wales house prices fall sharply in May

LONDON: House prices in England and Wales dropped at their fastest annual pace in over 1 years in May as demand fell for the first time since January, a survey showed.

Property research company Hometrack said prices were 3.7% lower in May compared with a year ago, the biggest decline since October 2009. On the month, prices nudged 0.1% lower after April's unchanged reading.

Hometrack blamed the decline on flagging consumer morale, public holidays and people taking Easter breaks that ran on into May.

“The late Easter break and May bank holidays reduced the volume of traffic through agents' offices,” said Hometrack research director Richard Donnell. “But of greater significance is the growing evidence of weakening consumer confidence.”

Economists expect high inflation, weak wage growth, tax rises and public spending cuts to weigh on consumer spending and house prices this year, despite record low interest rates.

One survey released on May 27 suggested consumer morale may not be as bad as many feared.

The GfK NOP measure showed its biggest rise in almost 20 years in May, although analysts said it might have received a temporary boost from unusually fine weather, the royal wedding and a run of public holidays.

The Hometrack survey showed that the number of new buyers registered with estate agents fell by 0.5% in May, the first decline since January.

The number of sales agreed rose by 1.6% in May, lower than the 8% jump seen in April and March's 12.6% rise.

London continued to buck the national trend, with prices up by 0.2% on the month.

Hometrack said it expected lower demand to keep pressure on national house prices over the rest of the year.

“With concern over household finances and the wider economic outlook, demand for housing is likely to continue to post further modest declines over the summer,” Donnell said.

By Reuters

Mixed views on two offers

PETALING JAYA: Reactions of analysts are mixed about whether minority shareholders of Asia Pacific Land Bhd (AP Land) and OSK Property Holdings Bhd should accept takeover offers for the property developers.

Some opine that shareholders should ask for a higher price for the takeovers, considering that both offer prices are at significant discounts to the book values of the two companies.

On Friday, OSK Property’s major shareholders offered to buy up the remaining of the company they do not own for RM120mil or 87 sen per share.

The stock closed at 79.5 sen just a day before the offer was made. This means that the offer price by OSK Property’s major shareholders was at a mere 9% premium over the last traded market price.

Against OSK Property’s latest net assets per share of RM1.74, the offer price is a 50% discount.

For the financial year ended Dec 31, 2010 (FY10), the company posted revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.

As at the end of FY10, OSK Property’s cash and cash equivalents stood at RM53.2mil.

The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.

Interestingly, the offerors did not provide any rationale for making the offer to take over OSK Property.

Considering the offerors for OSK Property – led by Ong Leong Huat – is making a general offer for the shares of the former, they would need to secure up to 90% acceptances before they can take the company private. This would mean that shareholders have ample room to reject the offer on the table if it is not up to expectations, explained an analyst.

In the case of AP Land, the offer was at 45 sen per share, which is a 9.8% premium over AP Land’s last traded price of 41 sen before the announcement was made, but only 7.7% over yesterday’s closing price of 41 sen.

AP Land’s net asset value per share has stayed above RM1 since 2005.

Under the new takeover rules, offerors will need at least 75% of non-interested shareholders to accept an offer before it can go through.

“This puts more power into the hands of minority shareholders, who can insist of a higher price for the assets of their company,” said one analyst.

On the other hand, the takeover offers do provide an exit opportunity for minority shareholders in companies whose share prices have not performed.

Analysts said that in general, the rationale for these exercises was that both companies had failed to attract market attention and therefore the value of their shares did not reflect the companies’ underlying strengths.

AP Land’s offeror is its parent company, the Low Yat group, which stated the following as the rationale for its exercise: “The liquidity of the trading of AP Land shares has been relatively low, with a trading volume of approximately 349,429 AP Land shares per day during the past one year.

“Therefore, it may not be easy for the shareholders of AP Land to be able to realise their investments in AP Land on the open market.

“The proposals will accord an opportunity for all AP Land shareholders to realise their investment in the company in the short to medium term at a reasonable premium above the historical market prices of AP Land shares ...”

AP Land’s major property projects include Bandar Tasek Puteri in Rawang and a residential development comprising luxury apartments in the Niseko region of Hokkaido, Japan.

Properties under OSK Property’s stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.

By The Star

Analysts have mixed views on Genting’s land purchase in Florida

PETALING JAYA: Genting Malaysia Bhd's land acquisition in Miami, Florida for US$236mil received mixed reactions from analysts while the move is seen as the way to diversify its earnings base and spur growth going forward.

ECMLibra Investment Research viewed the move positively given the choice location of the waterfront property, adding that Florida attracted up to 82.3 million visitors in 2010, of which 87% were local visitors.

“The announcement has made no mention of casino operations but we view that the announcement will be in due course as licences would be required from the Miami-Dade County,” it said in a report yesterday.

Reported in the South Florida Business Journal, Resort World Miami (RWM) president Mike Speller said Genting Malaysia would fund the US$2bil development cost of the project without stating the funding details.


Kok Thay ... ‘Downtown Miami has experienced dramatic residential and commercial growth in recent years.’

CIMB Research is neutral on Genting Malaysia's acquisition and the research house thinks that the deal positions Genting Malaysia to capitalise on the potential liberalisation of “resort-style” gaming in Florida.

It pointed out that there was a question mark over whether the Florida state government would liberalise such gaming in the state.

“This purchase, however, is sizeable, indicating the group's confidence in the success of the mixed development project, in our opinion,” it said.

CIMB left its earnings projections unchanged, pending more details on the acquisition.

“Assuming bank borrowings of US$200mil (85% of total price), we estimate that its net cash will fall by about 33% to RM1.5bil. The total price accounts for less than 1% of the group's shareholders' equity,” it said.

HwangDBS Vickers Research said: “While it is still early to assess earnings impact for RWM, we do not expect any meaningful contribution over the next two to three years. Genting Malaysia's foray into the United States, if successful, will help diversify earnings base and spur growth.”

Genting Malaysia announced last Friday that its subsidiary Bayfront 2011 Property LLC had purchased 13.9 acres in Miami for US$236mil, with plans to build a mixed-use development.

The land includes the building currently housing The Miami Herald Media Company and an adjacent parking lot.

It said in a press release that it was working towards developing a comprehensive master plan for RWM, as the development would be called, which would include hotel, convention, entertainment, restaurant, retail, residential and commercial facilities.

The project aims to capitalise on Miami's standing as one of the world's leading tourism hubs.

Its chairman and chief executive Tan Sri Lim Kok Thay said: “Downtown Miami has experienced dramatic residential and commercial growth in recent years, and we believe the addition of a large-scale mixed-use and entertainment complex will be a welcomed addition, further elevating the area's status as a global destination.”

The acquisition is an integral step for Genting Malaysia as it seeks to expand internationally in the leisure, hospitality and entertainment industry.

The envisioned RWM represents Genting Malaysia's second venture into the United States, after Resorts World New York at the historic Aqueduct Racetrack in the city of New York.

By The Star

When developing a luxury resort is a hobby

KUALA LUMPUR: Cardiologist Dr N.S. Dhaliwal has ventured into a hobby which most people would call a business.

Sixty-five-year-old Dr Dhaliwal has decided to turn his passion for building houses into a project.

Together with two other partners, Michiel Leo Philip and Roger Mauclair Deslorieux, the team is building a luxury development with a gross development value of RM200 million in Kudat, Sabah. It is called the The Nyior Luxury Villas Borneo Beach Resort.

The project, which is expected to be launched in the third quarter of this year, will have 43 villas and 57 serviced suites. It will include a club house.

The project is being developed by Borneo Eco-Green Resorts Sdn Bhd, in which Dr Dhaliwal has a 40 per cent equity interest, Leo Philip 30 per cent and Deslorieux 30 per cent.

Built on a 10.13ha fronting the Marudu Bay, the two-, three- and four-bedroom villas will have a built-up of between 2,500 sq ft and 5,000 sq ft. However, each lot in itself is double the size of the built-up.

"They will be sold from RM2.5 million to RM5 million," Dr Dhaliwal, who is the managing director of the property, said.

It has already hired a marketing firm in the UK to handle the sale of the property.

The company is targeting to sell the property to specific markets like the UK, Russia, the Middle East and other high-profile buyers.

The Nyior, he said, is not to be confused with an earlier project called Kudat Riviera, launched by another developer. This project is said to have been abandoned.

The Nyior resort is said to be private and exclusive, and those who land at the Kota Kinabalu airport will then be transported via a 20-minute helicopter ride.

"We were looking for a place for us ... and realised this was quite big and decided to develop a resort instead," Dr Dhaliwal said.

The sea-front resort, he said, would give access to diving, particularly wreck-diving where shipwreck is explored.

The entire project could take three years to complete.

By Business Times

M’sians in S’pore can help promote housing scheme

SINGAPORE: Malaysians residing in Singapore can assume a vital role in promoting the “Malaysia My Second Home Programme” (MM2H) among Singaporeans, says Tourism Malaysia director in Singapore Zalizam Zakaria.

He said Singaporeans were among the top ten purchasers of properties in Malaysia under MM2H followed by Japanese, British, Americans, Chinese nationals, Iranians, Pakistanis, Bangladeshis, Indian nationals, Australians and South Koreans.

The programme is promoted by Malaysia to allow foreigners, who fulfill certain criteria, to stay in Malaysia for as long as possible on a 10-year multiple-entry social visit pass which is renewable.

Open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age, applicants are allowed to bring their spouses and unmarried children below the age of 18 as dependants.

The Malaysian High Commission in Singapore, in collaboration with Tourism Malaysia briefed Malaysians living in the city-state at its monthly “Malaysians Get Together” on the advantages of owning a house in Malaysia.

According to Zalizam, Malaysians should do a “sales pitch” among their Singapore friends by highlighting that the Government would continuously seek to improve the programme.

Quoting International Living.com, Zalizam said Malaysia ranked the 16th most preferred top retirement haven in the “Annual Global Retirement Index” in 2009.

Apart from a relatively low cost of living, he said it was worthwhile to note that those who qualified would be able to bring their immediate family members along, own freehold property in Malaysia, import worldly goods and even purchase a brand new car, tax free.

“They can also enjoy all the multiple benefits that Malaysia offers to its citizens,” he said, explaining further that Malaysia had an efficient and affordable healthcare system.

By Bernama

Strong interest to jointly develop 50 acres near KLIA2

PETALING JAYA: Twenty companies have collected request for proposal (RFP) documents to partner Malaysia Airports Holdings Bhd (MAHB) to develop 50 acres near KLIA2 in Sepang.

Due to the large number and requests from the companies interested to be developers, MAHB has extended the closing date of the RFP to July 4 from June 1.

MAHB posted the RFP notice on its website on March 31 and documents were available for collection from April 4 onwards. The airport operator had also briefed interested parties on its requirements in April.

The RFP is for the privatisation of the 50-acre commercial development that would comprise premium factory outlets centre, a food and beverage centre and an auto city. Since it covers a big area, several parties may be selected.


Bashir ... ‘The 50 acres form the first phase of the entire development.’

“The 50 acres form the first phase of the entire development. We will provide the land (and partner parties that will develop the land). We have completed levelling the land recently,'' MAHB managing director Tan Sri Bashir Ahmad told StarBiz in an interview.

The 50 acres is part of the 6,750-acre landbank that is earmarked for development around KLIA and this development dubbed KLIA Aeropolis falls under the wholesale and retail initiative under the NKEA. It would transform KLIA into a diversified airport city, providing significant opportunities including employment, leisure and tourism.

KLIA2 is 1.5km from the KL International Airport (KLIA) main terminal building. KLIA2 is the new low cost carrier terminal (LCCT) that is under construction and it would be able to cater up to 30 million passengers.

MAHB is asking the Government for an extension on the lease of the land identified for development from the current 25 years to 60 years.

After the RFPs are in, the evaluation process will begin and the key would be to select the right partner and bring in appropriate brands and retailers.

“(A lot of it is about) selling the right product and getting the model right from the onset. It is not (merely) about opening shops but the right shops, the right products and location,'' he said.

The targeted completion date of the 50-acre development is in 2013.

The commercial development has been identified as the key driver to help the airport operator boost revenue in the long term while it maintains competitive aviation charges for airlines and passengers.

In its 2010 annual report, MAHB quoted Datamonitor Retail as saying that the global airport retail market was expected to grow by 60% in 2015 and be worth US$44.1bil. In 2010, a 8.4% global growth rate for airport retailers was fuelled by the Asia Pacific, Middle East and African regions. MAHB is positioning itself to take advantage of the opportunity and thus the greater focus on its commercial business.

“We will get rental income and royalties from this land venture,'' Bashir said, but did not elaborate as the RFPs are not in yet.

Over the past year, MAHB has increased retail space in both the LCCT and KLIA substantially. There is equal contribution from both commercial and aeronautical businesses to revenues but the plan is to drive commercial revenue contribution to reach 60% by 2014.

MAHB hopes to also more than double revenues to RM3.2bil by the same time and expects its earnings before interest, tax and amortisation (EBITDA) to hit RM1bil by then.

For the financial year ended Dec 31, 2010, MAHB recorded RM1.8bil in revenues, RM378mil in net profit and EBIDTA stood at RM706mil. The company is scheduled to announce its first quarter results tomorrow. The full year estimates for 2011 by an analyst are that revenues should increase to RM1.9bil and net profit to RM472mil while EBIDTA should reach RM783mil.

There will be other phases in the development of KLIA Aeropolis which would include a commercial business district which houses office parks, retail/commercial centres, an auto mall, exposition/convention centre, medical centre, training centre complex and service apartments. There are also plans to build golf courses, a boutique hotel and a theme park as well as agro-tourism tracts of land.

Last year, all 39 airports operated and managed by MAHB nationwide handled a total of 57.8 million passengers and Bashir said he would not be surprised if they manage 60 million this year.

By The Star

Quality of housing stock already makes KL a global city

The Binjai Residency in Kuala Lumpur.

In a recent report from the UK, it was stated that the quality of a city's housing stock plays an important role in boosting its attraction and making it more competitive in global terms. Malaysia has slipped in global competitiveness according to both The Institute of Management Development and World Economic Forum but does this mean the quality of housing stock is still not of global standards?

It is arguable that London is one of the top global cities and it has recently been reported that the housing stock in London continues to sell well and at prices equal to, or even above, pre-recession levels. This may be testament to the quality of homes in central London they are so desirable because of the quality of design, finishing and of course location in a vibrant city.

Kuala Lumpur is not a global city yet but there are examples of high quality housing stock that should be contributing to its global competitiveness. For example, The Troika is designed by British firm Foster & Partners in cooperation with local firm GDP and such a building in London, New York and Paris would be five or six times more expensive to buy or rent. Probably the most expensive apartment transaction in the country was at a price of RM2,657 per sq ft for a penthouse unit at Binjai On The Park and the next closest in value would be The Troika.

The buyer is a corporate figure who has been on Forbes magazine's list of wealthiest people. On June 22, 2010, he bought the triplex penthouse, measuring 14,300 sq ft, on the 42nd floor of Binjai's Tower B. The price tag of RM38mil meant the penthouse was sold for almost RM2,660 per sq ft. At the time, the marketing and sales manager was quoted in The Star as saying “The buyer bought the penthouse to stay. He fell in love with the 360-degree unobstructed view of the KLCC skyline right at his doorstep” similar to views offered by the likes of London's One Hyde Park. “Binjai On The Park was just like one of his other homes around the globe,” said Terri Har, marketing and sales manager of Layar Intan Sdn Bhd, the developer.

The “Global Cities Review” published by Savills in the UK compares prices of residential units bought by CEO level executives in London, New York, Moscow and Hong Kong, and KL pricing is still 50% more affordable than in New York which was the only city not to show any price gains over the last five years. Indeed, the value of a CEO's home in New York last year was still down 7% on 2005 prices.

London's wealthy residents, whether they own or rent, are likely to live in a house and it is “landed property” in Malaysia that is still the most sought after and valuable in the country. The so-called “bungalow in the sky” concept for some KLCC apartments has sold well and make wonderful accommodation for owner occupiers but investors have found it difficult to let at rents that would give acceptable returns.

Only 40% of 5mil plus purchases in London were made by British buyers in 2010 and this is exactly what Malaysia needs more foreign buyers of residential accommodation and more foreign tenants from multinational corporations. The quality of the housing stock is present and getting better all the time and we look forward to more liberalisation of the business sector and the attraction of more foreign investment to boost the luxury housing market and improve the country's competitiveness.

London is the world's largest financial centre alongside New York and there are more overseas banks in London than any other international city. Obviously the attempt to base an Islamic “mega bank” in Kuala Lumpur is welcome and may make Kuala Lumpur the global centre for Islamic finance. Life in London is very busy with Heathrow being the world's busiest airport and London having more than 300 languages spoken. Malaysia has embraced multiculturalism and so this is not likely to hinder progress towards being a global city.

Just like London, the hunting grounds for wealthy families to live in large houses in KL are well established residential areas characterised by wide roads and plenty of parks or trees Areas in London for houses like Belgravia, Holland Park, Regent's Park, Chelsea and Mayfair are the equivalent of our Bukit Tunku, Ampang Hilir, Bangsar and Damansara Heights. Well-planned new townships like Desa Park City may well become the equivalent of Chiswick in West London one day and will undoubtedly help Kuala Lumpur become a global city!

Senator Datuk Abdul Rahim Rahman is the executive chairman of Rahim & Co group of companies

By The Star

Glenmarie plans RM1b projects over next 5 years

SHAH ALAM: DRB-HICOM Bhd's property subsidiary, Glenmarie Properties Sdn Bhd (GPSB), aims to launch projects with a total gross development value (GDV) of about RM1 billion over the next five years.



"We're going to launch about 3,500 units of commercial/residential developments over 3,300 acres of land. That's the projection for the next five years," said Siti Mariam Mohd Desa, group director for property, asset and construction.

GPSB, formerly known as HICOM Properties Sdn Bhd, is known for its riverside and gated resort-style development here in Glenmarie, near the Subang airport.

It still has a balance of 200 acres in Glenmarie that can be developed, she said.

Siti Mariam spoke to reporters here yesterday after GPSB and Bank Muamalat Malaysia Bhd, another DRB-HICOM subsidiary, formalised an agreement to develop a home-financing package.

The package, available at selected Bank Muamalat branches in the Klang Valley, is designed for potential buyers of two of GPSB's developments, namely Glenmarie Gardens and Laman Glenmarie.

Glenmarie Gardens consists of 70 units of bungalows that will be launched in three phases. The first phase is fully sold, while the second phase is expected to be launched next week and the final phase, in 2012.

Laman Glenmarie comprises 385 units of two-storey link houses covering 70 acres of land at Section U1A here.

"Competitive financing rates, convenience of online repayment and a longer financing tenure of up to 70 years of age, or maximum financing duration of 40 years, are some of the package's attractive selling points," Bank Muamalat's chief executive officer Datuk Mohd Redza Abdul Wahid said.

He said buyers could be eligible for funding of up to 95 per cent of the home value.

Bank Muamalat has a financing portfolio of over RM8 billion, of which half is in consumer loans.

Mortgages make up "at least 50 per cent to 60 per cent" of its consumer loans, he said.

Mohd Redza said the bank's consumer loans are expected to grow by up to a fifth this year.

By Business Times