IJM Land confident of good year despite global challenges

SUBANG JAYA: IJM Land Bhd, the property arm of IJM Corp Bhd, is confident of a good 2011 despite a challenging year brought about by the global economic slowdown and European debt crisis.



IJM Land chief executive officer and managing director Datuk Soam Heng Choon said despite a slowdown in some areas such as the Kuala Lumpur City Centre and Mont Kiara, the property market is still resilient in other areas like Penang and Sandakan.

"Property projects, which cost RM500,000 a unit, are still selling strong and the government's mass rapit transit project and the various economic transformation programmes will have strong spillover and multiplier effects in terms of property value and spending," Soam said after the company's annual general meeting.

Soam said the company, which is 67.07 per cent owned by IJM Corp Bhd, will launch projects with a gross development value (GDV) of RM2 billion and RM1 billion within the current financial years ending March 2012 and March 2013 respectively.

IJM Land has a landbank of 1,943.3ha nationwide with a GDV of more than RM19 billion, enough to keep it busy for the next 12 years.

Soam said the company is still open to mergers and acquisitions despite the failed tie-up with Malaysian Resources Corp Bhd.

It will not expand its overseas projects in China and Vietnam for the time being.

The company expects to register slower growth this year as the property market had stretched last year, which saw 375,000 units of various property units launched with a combined GDV of RM109 billion.

By Business Times

Sunway allocates RM400m for overseas expansion

KUALA LUMPUR: Sunway Bhd, a property and construction group, has allocated some RM400 million for overseas expansion mainly in China, Singapore and India.

Chief financial officer, Chong Chang Choong said RM300 million has been set aside for the Tianjin Eco-City project in China while the rest will be for projects in Singapore and India.

The Tianjin Eco-City project has an estimated gross development value (GDV) of RM5 billion and is due to be launched in the middle of 2012. It will also be completed between five and seven years.

Shares of the group, a merger between Sunway City Bhd and Sunway Holdings Bhd, was relisted yesterday with an opening price of RM2.60 versus its reference price of RM2.80.

It closed 11 per cent or 31 sen down to RM2.49.

Chong said the group expects its overseas business to contribute about 30 per cent of total turnover in the next five years.

"Our core strength will still be in Malaysia. Any investment overseas especially in China will be more of an opportunistic point of view," he added.

Meanwhile founder and chairman, Tan Sri Dr Jeffrey Cheah said the group hopes to win jobs under the mass rapid transit (MRT) project. Sunway recently won a contract under the light rail transit (LRT) extension project.

"Just recently, we won the bidding for the LRT extension...As for MRT, we have very good experiences, very good track record. We worked very hard for it," he said.

The group will be one of the largest property-construction players in the region, with total assets of over RM7 billion and a land bank of close to 891 ha with a potential GDV of approximately RM23 billion.

By Business Times

Sunway makes weak debut

KUALA LUMPUR: The shares of newly-merged property and construction group Sunway Bhd were not immune to the weak market sentiment, closing at RM2.49 on their Bursa Malaysia debut yesterday, down 31 sen from the reference price of RM2.80.

An analyst said investors were still reeling from the recent shocks to the global economy.


Cheah striking the gong at the listing ceremony. With him are the group’s executives and directors.

“The stock is still undervalued compared to its peers as its price to earnings ratio and price to book value are still very attractive. There is more upside when the sentiments improve,” he said.

Trading in Sunway shares kicked off at RM2.60, with 123,900 shares changing hands at the opening bell. It hit an intra-day low of RM2.40.

“We are quite happy with the price at the moment given the circumstances. Markets go up and down, but the merger will make us stronger with more synergy and branding (value),” said executive chairman Tan Sri Jeffrey Cheah at the listing ceremony.

The debut marks the completion of the merger between Sunway Holdings Bhd and Sunway City Bhd, which was initiated in November last year. “With our size, we can now bid for more projects with higher values and access more capital markets, backed by enhanced liquidity and stronger credit profile,” he said.

The group expects to derive 30% of its turnover from overseas investments over the next five years. “In line with that objective, we have allocated RM300mil to RM400mil for our overseas expansion,” said chief financial officer Chong Chang Choong.

Currently, its overseas investment contributes 10%-15% of the group's turnover.

Sunway will be looking at opportunities to expand in growth markets such as China, India and Singapore. Chong said about RM300mil would be utilised to develop the 95-acre Tianjin Eco-City in China which is worth RM5bil in gross development value.

“The Tianjin project is very capital intensive as it involves land and development cost, and that is why we need to set aside such a huge quantum of funds for the project. The balance will go into funding our other projects in Singapore and India,” he added.

The enlarged Sunway Bhd, with total assets of RM7bil and a market capitalisation of RM3.6bil, is also set to leverage on its stronger position and continue its participation in local construction projects.

“We have been pre-qualified to tender for the My Rapid Transit project, and we are confident of clinching some of the contracts based on our good track record and experience,” Cheah said.

Recently, the group was awarded the light rail transit Kelana Jaya extension job valued at RM569mil by Syarikat Prasarana Negara Bhd.

By The Star

Sunway eyes 30pc turnover from overseas

Sunway Bhd, an integrated property and construction company, expects its overseas business operation to contribute about 30 per cent of the company's total turnover in the next five years.

Its chief financial officer, Chong Chang Choong said currently, the businesses abroad contributed between 10-15 per cent of group turnover.

To embark on the overseas business operations, Chong said Sunway is investing RM300 million-RM400 million over the next five years.

"From the total investment, some RM300 million will be channeled to our property project in Tianjin, China," he said after Sunway Bhd's listing ceremony today.

Sunway, a merged entity following a merger between Sunway Holdings Bhd and Sunway City Bhd, was listed on the Main Market of Bursa Malaysia Securities Bhd.

Also present at the listing ceremony was the founder cum executive chairman of Sunway, Tan Sri Jeffrey Cheah.

The property development project in Tianjin, named Tianjin Eco City, Chong said, comes with a gross development value of RM5 billion.

The project, which covers about 90-95 acres is expected to be launched in the middle of next year and completed in 5-7 years time, he added.

"Our core business in both the construction and property segments will still be in Malaysia.

"However, we are also looking at overseas expansion, of which China is a very important market for Sunway," Chong said.

He also said after China, Sunway views Singapore as a very vibrant and attractive market.

"We are also allocating some RM100 million for the business expansion plans in Singapore and other countries," he added.

On Sunway's presence in India, he said the amount of investment in the country is relatively small, compared to the others.

"We have done some road projects there. But for the time being, our focus is on China and Singapore," he said.

Sunway debuted on the Main Market of Bursa Malaysia today, with a 20 sen discount against its reference price of RM2.80.

At the opening bell, 123,900 shares were traded.

By Bernama

Sunway falls on debut after property merger

Sunway Bhd fell on its debut on the Kuala Lumpur stock exchange after acquiring and merging two property and construction companies.

The stock slid to RM2.64 at 9:05 a.m. local time, lower than the reference price of RM2.80.

Sunway bought Sunway Holdings Bhd and Sunway City Bhd by offering cash and new shares at RM2.80 each.

The share slump on its debut is due mainly to the “global situation,” executive chairman Jeffrey Cheah told reporters in Kuala Lumpur today.

“We are quite happy with our share price given the circumstances,” he said.

“Markets go up and down. We are not worried too much.”

By Bloomberg

S’pore luxury home prices fall

SINGAPORE: Luxury home prices in Singapore fell during the second quarter as Asia's high-end residental market showed signs of softening amid tighter mortgage lending and rising interest rates, property services firm CB Richard Ellis said.Latest business news from AP-Wire

Singapore luxury home prices declined 1.7% in local currency terms in AprilJune from the preceding quarter, while average rents fell 1.9% as completed units came onto the market, it said in a statement yesterday.

By Reuters

Icon City with GDV of RM3.2bil taking shape at Federal Highway-LDP intersection

New landmark: Chua with a model of Icon City.

PETALING JAYA: The vacant plot of land that used to house Panasonic air-conditioner plant at the intersection of Federal Highway and Damansara Puchong Highway (LDP) will soon get a new landmark with the planned development of the Icon City project.

Built in the 1970s, the plant in SS9, Petaling Jaya, has been left vacant for the past four to five years since Panasonic relocated its factory to an industrial zone in Section 21, Shah Alam.

The 20-acre site was acquired by Mah Sing Group Bhd in 2009 from vendor, Panasonic HA Air-Conditioning (M) Sdn Bhd, for RM89mil or at RM104 per sq ft.

The parcel has a few advantages high visibility with direct frontage to two busy highways the LDP and Federal Highway; good connectivity to multiple highways; and proximity to the KTM stations in Seri Setia, Setia Jaya and Kelana Jaya.

“The plot is sizeable enough for a comprehensive masterplan to optimise the potential of the land for a well-planned and designed integrated commercial development,” Mah Sing Properties Sdn Bhd chief operating officer Andy Chua told StarBiz in an interview.

However, he conceded that one of its main shortcomings was the traffic congestion at the intersection of Federal Highway and LDP.

To improve traffic flow at the junction, Chua said Mah Sing had engaged traffic consultants, who came out with a proposal for a comprehensive traffic dispersal system that would involve about 13 new ramps, two tunnels and road widening work to eliminate the need of traffic lights for cars travelling in and out of the two major highways.

“We are looking at spending RM200mil in infrastructure work with various access points for traffic dispersal,” he said.

On the Icon City development, he said: “It will be the ultimate integrated development in Petaling Jaya, offering an interesting mix of versatile components for a trendy destination for live, work and play under one roof.”

“It will be an architectural marvel within a green and sustainable development and is poised to be among the first in South-East Asia to be certified by Leadership in Energy and Environment Design, USA; Green Building Index, Malaysia; and Green Mark of Singapore,” Chua added.

The project, with a gross development value of RM3.2bil, will be undertaken in two phases over seven to eight years.

The first phase was launched last month and includes 30 units of seven and eight-storey shop offices dubbed the “Jewels”; 46 single and double-storey retail shops, two towers of 411 units of small office-versatile offices (SoVos), two towers of 570 units of serviced residences; and a block of boutique office tower. These properties are expected to be completed in three to four years.

The remaining phase will comprise a hotel, corporate office towers and a retail mall.

There will be three levels of basement parking with 3,800 parking bays in phase 1 and 5,000 bays in the subsequent phase.

Chua said the company also planed to have a green park on top of a four-floor parking podium as open space for recreation.

“The service residences and commercial properties comprising SoHos and SoVos have highly versatile designs to cater to the needs of those in the 30s and 40s age groups. The main focus will be convenience.”

Chua is confident that the properties will be popular due to the affordable pricing and lack of such properties in the vicinity.

“The market catchment is extensive, including matured and affluent neighbours such as Kuala Lumpur, Subang Jaya, USJ, Shah Alam and Damansara,” he said.

Since the launch of Icon City on July 17, close to RM430mil sales have been recorded.

For the current financial year ending Dec 31, Mah Sing has targeted sales of RM2bil, of which Icon City is estimated to contribute RM460mil.

By The Star

Mah Sing gets sales, bookings of RM190.6m

Property developer Mah Sing Bhd has recorded sales and bookings worth RM190.6 million with the launch of a commercial project and previews of two residential projects over the weekend.

In a statement today, Mah Sing Group Managing Director/Chief Executive Officer Tan Sri Leong Hoy Kum said all 78 units of retail lots in Star Avenue@Damansara, Sungai Buloh, valued at RM71.7 million had been snapped up.

The company also recorded a strong take up of close to 75 per cent of the Kinrara Residence luxury bungalows and semi-detached homes in Puchong.

By Bernama

Crescendo plans RM2.5b township

JOHOR BARU: Crescendo Corp Bhd (CCB) is set to launch its new mixed development property project, Bandar Cemerlang township with a gross development value (GDV) of RM2.5bil by the year-end.

Chairman and managing director Gooi Seong Lim said the project would keep the company busy for the next 12 to 15 years.

Once completed, he said the township would have about 15,000 units of mixed residential and commercial properties, of which 90% residential and 10% commercial properties.

The township spans on a 562.51ha site, whereby 349.64ha is located in Mukim Tebrau of the Johor Baru district and 212.86ha in the Kota Tinggi district.

“The completion of the Johor Baru-Kota Tinggi highway in June this year will definitely improve accessibility and connectivity to our project,” Gooi told StarBiz recently. He expects the unique location of the township within Johor Baru and Kota Tinggi districts to be a strong selling point to attract prospective buyers.

“We also see demand for properties in Kota Tinggi is on the upward trend in the recent years due to the district's close proximity to Johor Baru,” he added.

Similarly, he said the company's on-going Nusa Cemerlang Industrial Park (NCIP) in Nusajaya would continue to perform well due to its strategic location to the Second Link crossing.

He said: “We are expecting the relocation of medium-sized enterprises from Singapore to NCIP due to lower land cost, cheaper labour and utility costs as well as better control given the park's close proximity to their base in Singapore.”

So far, 63.97ha of the park's 213.26ha site had been developed, Gooi said adding the company would take about five years to develop the entire industrial park with a GDV of RM1.5bil.

He said Singapore investors currently represented about 44% of industrialists operating at NCIP followed by Malaysians (34%), Germany (6%), the United States (15%) and South Korea (1%).

“We expects NCIP and Bandar Cemerlang to be the main contributors to the company's future earnings in the next few years,'' said Gooi.

For the financial year ended Jan 31, 2011, Crescendo recorded RM39.43mil net profit on RM215.22mil revenue against RM19.35mil and RM160.32mil respectively in the previous financial year.

By The Star

Bandar Sunway - a dream come true, a desire fulfilled

PETALING JAYA: Even as a boy growing up in a small mining town called Pusing in Perak, he was certain of one thing - he wanted to lead.

Tan Sri Jeffrey Cheah, the man behind the development of resort township Bandar Sunway, knew back then he would one day become a leader of some sort.



A business graduate of Melbourne's Victoria University, Cheah started his career as an accountant but soon "became restless" being just an employee.

His wish of becoming a leader began at a derelict tin mine, not far from the busy town of Petaling Jaya, where he dreamed of building something which "I can share with the rest of the world". And the road to that dream was not all a bed of roses.

Recalling his entry into the business world, Cheah said it was not easy as he had approached banks without any track record. However, his determination won the bank over.

Then, the recession came in 1985 and his company lost RM30 million due to its financial leasing business.

A year later, armed with a non-impressive balance sheet, he went to Hong Kong Bank for a loan of RM5 million and a promise that he would pay back every single sen.

"Not once did we ever ask for a haircut and true, we paid all our debts," he said.

But, another economic storm came in 1988, the same year he began his property business. It could not have been any more challenging, he said, but like they say, the rest is history.

Now Bandar Sunway has over 30 million visitations yearly, a thriving RM10.6 billion township and home to over 50,000 people.

Cheah still has plans for the township, hoping to turn it into an education hub or "the Boston of Malaysia" as it banks on five-star ratings of Monash University and Sunway University to grow the number of students to eventually reach 50,000.

"The two trying times were a great lesson for business people like me. I don't believe in regrets but more in the lifelong pursuit of continuous improvements. In business, when you are in a slump, you simply cannot panic ... intelligent failure needs to be embraced."

He noted with pride that in terms of business achievements, building Bandar Sunway and Sunway City Ipoh are his greatest successes.

While his personal success comes from his idea to set up the Jeffrey Cheah Foundation (JCF) - where he had transferred all his shares worth RM700 million previously held under the Sunway Education Fund.

In the JCF, the shares will be held in perpetuity and can never be sold. The foundation will ensure that all assets, funds and operating surpluses are used to perpetuate the cause of bringing quality education to deserving Malaysians.

"I believe the best way to give back to the society is through the gift of education because it has the power to eradicate prejudices, correct biases and move nations."

Cheah said his personal motto of "I aspire to inspire before I expire" has been the key motivator to his passion to succeed and doing business with a heart.

By Business Times

Sunway mulls over India township project

Sunway has been offered a sizeable piece of land in India for a possible township development

Petaling Jaya: The enlarged Sunway Bhd, with total assets of RM7 billion and a market capitalisation of over RM3.5 billion, has been offered a sizeable piece of land in India for a possible township development.

Sunway group founder and chairman Tan Sri Jeffrey Cheah said the development will be in one of India's "major cities".

He, however, declined to disclose more details because no agreement has been finalised.

"But we are looking at the offer seriously," Cheah told Business Times.

Such offers from foreign property players are not uncommon for Sunway, he said, attributing it to his success in developing a piece of derelict mining land into a thriving township, that is Bandar Sunway.

In a recent interview, Cheah said while India is a country with vast opportunities for the Sunway group, moving forward, it will be Singapore and China that it would like to focus on.

"We expect some 30 to 40 per cent from our bottomline to come from China and Singapore by 2015," he said, adding that despite the size of Singapore, Sunway still finds a lot of opportunities in the island.

"Also in Singapore, we learn a lot because they are technologically advanced in many ways."

While in China, the group has signed a collaboration agreement to participate in the development of Tianjin Eco-City with master developer Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd for a RM5 billion gross development value (GDV) project in Tianjin Binhai New Area.

Sunway was chosen to be the only Malaysian developer with other top regional developers, which include among others Singapore's Keppel Land, Taiwan's Farglory Group and Japan's Mitsui Fudosan.

Cheah said in expanding to the region, the group will continue to identify places with high growth in their population and per capita income, and build strong relationships with local partners.

He said the group will definitely leverage on its bigger and stronger merged group to replicate its success here, overseas.

Sunway Bhd, to be listed on Bursa Malaysia tomorrow, will be one of the largest property-construction players with total assets of RM7 billion and a landbank of 880ha with total gross development value (GDV) of RM25 billion and a market capitalisation of over RM3.5 billion.

Within Bandar Sunway itself, Cheah said the group has at least 32ha more to develop, with the remaining GDV more than RM5 billion.

"We want to be a world-class Asian property-construction group and this merger will be our growth catalyst," he said, adding that the group will be on the lookout to acquire other property companies to enhance its shareholders' value.

By Business Times

Hot grabs outside Klang Valley

PETALING JAYA: Major property developers have been snapping up large plots of land worth well over a billion ringgit, even as the global economic scene turned more cloudy. And it is interesting to note that these acquisitions are mainly located outside the country’s largest property market, the Klang Valley.

Mah Sing Group Bhd, Hua Yang Bhd, S P Setia Bhd, Dijaya Corp Bhd, Berjaya Land Bhd and Eksons Corp Bhd are among the noted property developers that have this month announced acquisitions of land for future development projects. According to tabulations of a selection of notable deals by The Edge Financial Daily, five major developers alone have spent some RM1.07 billion to buy 1,502 acres (600.8ha) of land in the past few months (see table on Page 8).

Factors such as scarcity of land in mature markets like Kuala Lumpur and Petaling Jaya, which has led to high asking prices, as well as future economic developments in other regions may have prompted the buying spree. Johor appears to be the new property hot spot now, judging by the rush of developers there.

Analysts said the change of perception towards the southern state was triggered by the rejuvenation of Iskandar Malaysia. They noted that since UEM Land Holdings Bhd’s acquisition of Sunrise Bhd, there has been a more proactive development committee team spearheading the development of Iskandar. Sentiment has also been boosted by warming bilateral ties between Malaysia and Singapore, and maiden investments by Temasek Holdings is seen coming to Iskandar.

In Johor, Mah Sing acquired 83ha (205.7 acres) of prime freehold land in Tanjung Kupang for RM54.7 million in April, or RM6.10 psf, while Hua Yang purchased two prime parcels of land in Johor Bahru measuring 0.8ha for RM10.7 million, or RM117 psf.

Mah Sing’s land is located within the Iskandar Development Region, some 1 km from the Port of Tanjung Pelepas and 23 km to Jurong Industrial Estate in Singapore. It is proposing to develop the land into an integrated industrial and business park named Mah Sing i-Parc, with an estimated gross development value (GDV) of RM610 million.

Last week, Dijaya acquired 92ha of freehold land in Plentong for RM220 million, or RM22.25 psf, in its bid to strengthen its presence in the Iskandar Malaysia development region. The company is building a mixed development named Tropicana Danga Cove with a GDV of RM2.8 billion. Construction of the project will start this year, together with another project called Tropicana Danga Bay, a high-end integrated property development with a GDV of RM3.8 billion.

According to group CEO Tan Sri Danny Tan Chee Sing, Dijaya will be launching more quality properties in the region to ride on its proximity to Singapore. He said Iskandar Malaysia will drive up demand for properties in the region as more investments will be pouring in, especially from neighbouring Singapore. The rising cost of doing business in the island republic has prompted many of its small- and medium-sized enterprises to relocate to Johor due to its proximity to home and lower costs, according to a recent research.

Hua Yang said its Johor Bahru acquisition is in line with its business expansion plan to make the southern region a key revenue contributor to the group. The move is also in line with its vision to become a nationwide community developer providing affordable homes throughout the country.

The land parcels that it recently acquired are located in Jalan Abdul Samad in the Johor Bahru city centre and only 3.5 km from the new Customs, Inspection and Quarantine Complex. The land will be developed into a residential project comprising serviced apartments to cater for professionals working in Johor Bahru and Singapore, with an estimated GDV of RM120 million.

So will the property markets in prime areas such as Kuala Lumpur, Petaling Jaya and Penang island disappear from the property developers’ radar?

Not quite, but with limited large tracts of prime land, developers have been focusing on niche, higher-end projects.

In the heart of downtown Kuala Lumpur, Mah Sing will develop a 1.7ha parcel at the former Tunku Abdul Rahman flats, better known as the Pekeliling Flats, in Jalan Tun Razak, in a joint venture with privately-held Asie Sdn Bhd and Usaha Nusantara Sdn Bhd. The project, tentatively called M Sentral, is estimated to have a GDV of RM9 billion. Mah Sing acquired the land for RM600 psf, and will look to jointly develop the rest of the former Pekeliling Flats land, which measures 58 acres.

Hua Yang also has several projects in the pipeline in Kuala Lumpur, especially those under its RM840 million ‘One South’ integrated development located in Sungei Besi, south to the city centre. The project spreads over 16.7 acres and is currently enjoying high take-up rates, with its Phase 1 comprising retail and office units more than 80% sold.

The group has also acquired 1.55 acres of leasehold commercial land in Desa Pandan, which is located near Jalan Tun Razak and the proposed Kuala Lumpur International Financial District (KLIFD). The land was purchased for RM32 million and the group plans to develop it into affordable serviced apartments with pricing in the range of not more than RM400,000, and a GDV of RM160 million.

With limited prime land left in the urban centres, property developers would have to look much further out to build new townships. And that’s where SP Setia went to Hulu Langat, where it hopes to recreate another “Setia Alam” — its successful transformation of a backwater palm oil estate to a thriving township in less than a decade.

SP Setia acquired 409ha of freehold land in Beranang, Hulu Langat, for RM330.1 million, or RM7.50 psf. The oil palm land will be converted into a mixed residential township with an estimated GDV of RM3.5 billion.

Maybank Investment Bank Research said in a report that the property developer is spearheading a new relatively untapped trend of affordable housing development which will provide steady bread-and-butter sales to the group and support its long-term growth. The research house noted that the land could turn out to be another highly successful “Setia Alam” given SP Setia’s track record and expertise in developing townships.

Up north, Penang continues to draw attention.

Confidence in the state was summed up by Berjaya Group tycoon Tan Sri Vincent Tan. He said he was impressed with the level of cleanliness in Penang; the state has done very well economically over the past few years, having attained the highest level of investments in the country last year with RM12.2 billion.

Berjaya Land Bhd acquired 23ha of land in the famed Penang Turf Club area for RM459 million cash, or RM184 psf for a high-end residential property development.

The group said the project, with an estimated GDV of RM1.52 billion, will be a low-density, exclusive gated housing development comprising bungalows, semi-detached units and low-rise condominiums. The development will take five years to complete.

Not only is the Penang island property market red hot now, the same could also be said about the property market on the mainland, Seberang Prai.

Other than Tambun Indah Land Bhd, which has firmly positioned itself on mainland Penang property market after successfully building several notable townships such as Taman Tambun Indah, Juru Heights, Pearl Garden and Pearl Villas, Hua Yang is also making its foray into the market.

According to the group’s chief executive officer Ho Wen Yan, the group is currently scouting for landbanks on mainland Penang as well as in Kota Kinabalu, Sabah. He said that the group is going to raise RM100 million to fund land bank acquisitions in these two key markets.

“Penang is one of the high growth states in terms of economy and population. It is a target market for us to build affordable housing in the state. In Kota Kinabalu, we will look at building high-rise affordable residential property in the urban centres, whereas if it is outside the urban centre, it would be viable for us to build more landed properties,” he said during a press conference after the company’s annual general meeting last Friday.

However, there are concerns over the various property projects in the more mature markets of Kuala Lumpur and Penang island , giving rise to fears that there will be an oversupply of housing.

Penang, for example, has seen a surge in planned projects over the next ten to 15 years worth RM29.6 billion, according to news reports. At the current level of property purchasing in Penang, which is an all time high, it will take 10 to 11 years for the market to absorb such a large number of projects.

Datuk Jerry Chan Fook Sing, the Real Estate and Housing Developers’ Association (Rehda) Penang chairman, had said property launches should be perfectly timed to suit demand so the many projects would not lead to an oversupply in the island’s property market which will dampen prices/yields.

According to Affin Investment Bank property analyst Isaac Chow, there will always be demand in the medium- and low-cost property markets but the high-end residential property market will see slower demand, as buyers have become more selective and prices will be quite “shaky”, especially for high-rise developments.

“The right property in the right location will see an increase in demand and hence price, whereas the wrong property in the wrong location will see lower demand and the price will decrease,” he told The Edge Financial Daily.

He maintained that property prices in Malaysia are still generally affordable as only about 20% to 25% of a buyer’s monthly disposable income is spent on rent or mortgage payments as opposed to buyers in other countries who would have to spend almost 30% of their monthly disposable income on mortgages.

With the recent turbulence in the global financial markets, amid fears of a recession in the US and Europe, developers are still confident in the property market.

“Development is an industry that cannot slow down. Every 10 to 15 years, we have a downturn but we have to weather it and keep going. For us, it will be business as usual,” Dijaya managing director Datuk Tong Kien Onn told The Edge Financial Daily.

By The EDGE Malaysia (Written by Kamarul Azhar)

Opportunities in Indian property sector

KUALA LUMPUR: Malaysians should invest in India's property sector as prices are expected to increase five or six folds in the next five years, said Deputy Minister in the Prime Minister's Department Datuk S.K. Devamany.

“The prices of properties and land in India are reasonable and can't be manipulated. Malaysians should grab this opportunity,” he said when launching the India Property Investment Fair here on Saturday. The two-day event showcases products of various property firms in India.

Devamany said relations between Malaysia and India had grown stronger with the signing of the Comprehensive Economic Cooperation Agreement (CECA) between the two countries. The CECA envisages liberalisation of trade in goods and services, investments and other areas of economic cooperation.

He added that the sister city agreement between Kuala Lumpur and Chennai, and the Little India in Brickfields had also helped strengthen the relations between the two countries.

The pact presents an ideal platform for the two cities to come together in the fields of art, culture, tourism and economy. “This fair will further strengthen the relations between India and Malaysia,” he added.

By Bernama

Hua Yang set to maintain double-digit growth

The One South serviced residences in Seri Kembangan, Selangor.

PROPERTY developer Hua Yang Bhd is on track to complete another remarkable financial year, says its chief executive officer Ho Wen Yan.

“We are on track to achieve our sales target of RM350mil (13% year-on-year increase) for the current financial year. Based on the first quarter results, we should hit more than RM200mil in revenue,” Ho says in an interview.


Ho: We do not buy land that is deemed to be expensive.

For its recently concluded first quarter ended June 30, the group achieved sales of RM164mil.

For its first quarter, Hua Yang posted a 135% year-on-year jump in net profit to RM11.5mil while revenue rose 66% to RM61.8mil due mainly to better sales performance, steady construction progress recognition and the completed sale of a 215,186 sq ft plot to Tesco Stores (Malaysia) Sdn Bhd for RM3.23mil at the group's Bandar Universiti Seri Iskandar township development in Perak.

Hua Yang, which is known for developing residential properties in the affordable segment, posted a 117% year-on-year increase in net profit to RM25.1mil while revenue rose 82% to RM188.9mil for the financial year ended March 31 (FY2011).

It was a record-breaking full year financial performance, which was attributed to better sales achieved, since Hua Yang's listing on the Main Board of Bursa Malaysia on Nov 29, 2002.

For FY2011, the group's earnings per share stood at 23.29 sen (117% higher compared with the last financial year) while sales achieved grew by 123% year-on-year (from RM139.3mil to RM310.2mil).

Affordable properties

Founded in 1978 by Ho's late father Ho Mok Heng, Hua Yang's first project was eight units of four-storey shophouses in Ipoh, Perak valued at RM2.4mil.

To date, the group has completed over 10,000 residential, commercial and industrial properties with a gross development value (GDV) of RM1.2bil in the Klang Valley, Johor, Perak and Negri Sembilan.

In the last five financial years, the group has enjoyed compounded annual growth rate (CAGR) in profit after tax of 24%, revenue CAGR of 24% and earnings per share CAGR of 20.6%.

The group aims to be a leading developer in the affordable property segment with an annual revenue of RM500mil within the next five to seven years.

Ho says the group's growth will be driven by demand from young Malaysians in a country with a rapidly growing population.

He points out that the 2010 Population and Housing Census report showed Malaysia's population totalled 28.3 million (23.3 million in 2000).

“So on average, half a million Malaysians are added to the population each year. Another factor is urbanisation more than 70% of Malaysians live in urban areas. Demographics will drive our business of providing affordable housing.”

The group's data shows that most of its customers are first-time property buyers who are owner-occupiers aged from 25 to 40 years old.

Ho says there are good margins to be made in the affordable property segment where current prices are generally RM400,000 and below.

“Last year, our net profit margin was about 13% at group level. This year, we are targetting a higher net profit margin of 15% from greater economies of scale.”

According to him, the group has been able to stick to its affordable property tagline over the years, despite rising land and construction costs, due to prudent acquisition, building design and management policies.

“We do not buy land that is deemed to be expensive. Our land cost is below 20% of the entire GDV of the project. Also, we always try to spot the up-and-coming areas (where property will have strong demand).”

Among the toughest challenges ever faced by the group was rapidly rising building material prices in the period before the global financial crisis hit in 2008.

“It was tough. Our margins were squeezed and contract prices for materials changed every day. That was when we decided to re-engineer some of our building designs to be more efficient in terms of cost. The next step we took was to go direct to the suppliers and negotiate bulk purchases for materials such as cement and steel bars. We locked in the prices and paid directly to the suppliers, who then supply to our contractors. So, this takes away risk from the contractors who can feel more secure in carrying out their jobs.”

Ongoing projects

Presently, the group has an undeveloped landbank of 320ha with a potential GDV of RM2.4bil.

The bulk of its remaining landbank is in Perak (62%, 198ha) and Johor (26%, 84ha).

The group's biggest ongoing project is the 314ha Bandar Universiti Seri Iskandar township in Perak.

Bandar Universiti Seri Iskandar, which started in 2001, is slated to have 6,053 residential and commercial units.

About 63% or 198ha of Bandar Universiti Seri Iskandar remains to be developed, with a potential GDV of RM872mil.

Another major township project is the 193ha Taman Pulai Indah, which is located 28km from Johor Baru.

Development for Taman Pulai Indah also started in 2001, and the township will eventually have 4,942 residential and commercial units.

Another 29ha in Taman Pulai Indah remains to be developed, with a potential GDV of RM157mil. Hua Yang is also developing the 11ha Senawang Link, consisting of 85 units of commercial and industrial lots, located along Jalan Tampin, Seremban and adjacent to the Sungai Gadut KTM train station.

The estimated GDV of Senawang Link is RM45mil, and its first phase of 52 units of one-and-a-half storey terrace factories launched in March last year has a take-up of 23%.

Meanwhile, its first major residential project in the Klang Valley was Symphony Heights in Selayang, Selangor.

The first phase was launched in June 2008, and facilities include a swimming pool, squash courts, a community hall, cafeteria, children's playground and a gymnasium.

Symphony Heights consists of three blocks of 946 service apartments on a 1.2ha leasehold plot with a GDV of RM206mil.

Sized from 863 sq ft to 1,246 sq ft, the units were retailed at prices ranging from RM135,200 to RM306,500.

To date, Symphony Heights has a 94% take-up.

One South

One South is Hua Yang's biggest project in the Klang Valley, with a GDV of RM840mil, consisting of shop offices, service apartments, SOHO (small office/home office) units and office towers on a 6.8ha plot in Seri Kembangan, Selangor.

The response to One South has been strong, with a high take-up for the three phases launched within the past one year.

Last month, the group launched 377 units of Gardenz service apartments, sized from 1,020 to 1,220 sq ft and priced from RM380,000 onwards in One South.

According to Ho, one block of Gardenz units have been fully sold while another block has seen high demand.

The Gardenz serviced apartments feature nine units per floor, served by three lifts, and each unit comes with two covered car park bays.

Facilities will include an infinity edge lap pool, wading pool, jacuzzi, sauna/steam room, gymnasium, a jogging track, two squash courts, a basketball court, indoor badminton courts and a snooker room.

One South is served by the Kuala Lumpur-Seremban and Besraya highways, with landmarks in the area including Palace of the Golden Horses, South City Plaza and The Mines Shopping Mall.

The Gardenz serviced apartments, with a GDV of RM160mil, is the third phase to be launched in One South after retail and office units in Phase 1 and 418 units of Parc service apartments in Phase 2.

The retail units and Parc service apartments have been fully sold while the office units have seen a 73% take-up rate.

The retail and office units are sized from 479 to 2,100 sq ft, and were launched at prices starting from RM750 and RM350 per sq ft respectively.

Phase 4, consisting of SOHO units is due to be launched in mid-2012 while phase 5 featuring two blocks of office towers in 2013.

One South is due to be completed by 2018.

Growth strategies

Ho says Hua Yang's double-digit annual growth strategy was planned about five years ago with major forays into the Klang Valley as a key step.

“Previously, our operations were mainly in Perak and Johor which gave us around RM100mil in annual revenue. Our plan is for the Klang Valley to contribute RM200mil to RM300mil or 50% of group revenue in the coming years.”

This year, Hua Yang aims to launch RM525mil worth of properties.

“Including RM190mil of properties that were launched but not sold last year, this means we have RM715mil worth of properties to sell this year,” he says.

Upcoming launches include 294 single and double-storey terrace houses with a GDV of RM63mil in Taman Pulai Indah, Johor in September 2011.

Also in the works are 147 double-storey houses with a GDV of RM33mil in Taman Pulau Hijauan and 31 semi-detached houses in Polo Park in the fourth quarter of this year. Both projects, with a combined GDV of RM63mil, are located in Johor Baru.

The group has also acquired more land in the Klang Valley this year, with the purchase of a 0.63ha plot in Desa Pandan, Kuala Lumpur for RM32mil and a 1.5ha leasehold site for RM13mil in Section 13, Shah Alam.

Both sites are slated for mixed commercial and residential projects, with estimated GDVs of RM160mil and RM175mil for the Desa Pandan and Shah Alam projects respectively.

He says SOHO units sized between 700 and 900 sq ft are planned for the Desa Pandan project while residential apartments sitting on a podium with retail elements are in the pipeline for the Shah Alam development.

The Desa Pandan and Shah Alam projects are due for launching in 2012 and early 2013 respectively.

“Our developments in the Klang Valley are all high rise, with fast turnaround periods. Due to land costs, it is very difficult to acquire land to build townships in the Klang Valley.”

The group is also looking at acquiring land in Sabah and Penang.

“Regarding these new land, we should have something to announce by the end of this financial year.”

A recent note issued by Inter-Pacific Research says that as at June 30, Hua Yang had total borrowings of RM73.4mil and cash of RM6.2mil, translating to net gearing of 29%.

“Our net gearing is low, and this allows us to acquire land when the time is right,” he adds.

At the moment, Hua Yang plans to remain in the affordable property segment.

“Once we achieve an annual revenue of RM500mil, we will reassess our situation and strategies, and decide on further areas of growth.”

On Tuesday, Hua Yang announced that it had acquired two parcels of land, sized at 2.1 acres in total, in Johor Baru for RM10.7mil.The land parcels, adjoined to each other, are along Jalan Abdul Samad in Johor Baru, and located only 3.5km from the Sultan Iskandar Customs, Immigration and Quarantine (CIQ) complex.

The land parcels are slated for a residential development consisting of serviced apartments, catering for young professionals and families working in Johor Baru or Singapore.

with a tentative selling price range of RM150,000 for a studio apartment and up to RM400,000 for a three-bedroom unit, the estimated GDV of the project is RM120mil.

The business successor

By the end of this month, the 37-year-old Ho would have spent a year helming the group after succeeding his uncle Ho Mook Leong as Hua Yang's chief executive officer in August 2010.

However, the British-trained architect says he cannot claim credit for the group's impressive financial performance in recent times.

“At Hua Yang, we work as a team. Since taking over as the chief executive officer, I only made sure we carried out what was planned earlier and meet our targets.”

Wen Yan, who also holds a Masters of Science (construction economics and management) from University College London, says his career in the group was not planned.

Before joining Hua Yang in October 2003 as a project co-ordinator at the group's Johor operations, he had spent about three years working in London.

“I had an independent career in London. However, after my father passed away in 2002, some family decisions were made and I joined the group,” says Wen Yan.

Later, he became general manager in April 2006 and moved to Kuala Lumpur to help grow the group's Klang Valley operations.

The following year, he was promoted to chief operating officer and executive director.

Ho says his experiences as an architect have helped in giving Hua Yang's properties more contemporary designs.

“I think our product designs are quite up-to-date and modern.”

By The Star

Properties that make sound investment

PROPERTIES, by and large, feature significantly in our lives. A large number of us spend the better part of our lives working to pay off a mortgage.

But the need for a place to live in is no longer the main driving force behind our desire to own a property. In fact, many people now invest in properties for a slew of other reasons.

To meet changing expectations from home purchasers and investors, developers and even financiers have to become more innovative. New ideas, concepts and designs are being introduced regularly to attract the potential buyer.

Apart from making their properties more attractive to potential buyers, developers, in collaboration with financiers, are also making it easier to buy a property.

What then, are the factors that induce the average person to make that commitment to part with a large portion of his future earnings just so he can own a piece of property? What makes him think that this is an investment that is worth making?

The first, for both the home purchaser and the investor, is the hope that the value of the property will rise significantly so it can be sold eventually for a tidy profit. This, I believe, is very clearly reflected in the vibrant property market in Malaysia. Browsing the classifieds pages of the daily newspapers, you will have an idea of how much buying and selling there is in the property market.

There is not very much a developer has to do to convince a potential buyer that the value of his property will be much higher on some future date. Buyers of properties in newly launched projects can even re-sell fairly quickly and in the process make a substantial profit.

For instance, a multi-storey apartment block in a mature part of Petaling Jaya was selling at RM280 to RM290 per sq ft when it was launched in 2007. Just three to four years later, the apartments were already in the secondary market for RM420 to RM490 per sq ft.

To hype up the potential gains, some developers even highlight the quantum of returns an investor can expect to make from their properties.

However, the desire for financial gains is not the only requirement developers have to satisfy if they want to attract more buyers.

Developers have to incorporate new and innovative ideas into the concept and design of their projects to promote a desirable lifestyle associated with their properties.

By incorporating such concepts and designs, developers are differentiating their projects from others. For the purchaser, it is an investment that will eventually offer him the reality of an exclusive lifestyle.

This new lifestyle no longer revolves around (just) an expensive apartment in a posh area in the city, with the requisite swimming pool, gym and private lift. For many high-rise projects, such facilities are now standard.

For some, the apartment must be a sanctuary from the hustle and bustle of city life, never mind that it is located in the city centre. Or it must be designed to evoke a lifestyle from another era.

But even as developers manage to meet all the desires of a potential purchaser, some may still hesitate to take out the chequebook. It is, after all, a huge investment and a commitment that will span many years.

To make it easy for potential buyers to make that commitment, there now are many easy payment schemes that give buyers an extended period of time to pay the first 10% or 20% down-payment. All they need to do is to pay an affordable amount to affirm their desire to purchase the property.

However, there is a downside to this arrangement. People can very quickly commit themselves to several pieces of property and soon find that they cannot actually meet all the long-term financial obligations.

That, too, is not the only way financial institutions have made it easier for people to purchase property. Some banks also offer loans with significantly longer repayment schedules, even stretching over two generations.

This concept is based on the understanding that many parents fear that property could be priced beyond the means of their children in the future. To beat the price increase, parents opt to purchase property now for their children's use when they grow up.

Loans are given on terms that enable the parents to begin the monthly instalment payments until such time when the children start to earn an income so they can take over the responsibility until the loan is fully paid up.

However, there is a risk to this arrangement. It is impossible to foresee how well the children will do in their adult life, whether or not they will find a job that will earn them enough money to take over the commitment. In fact, a child may not even want that property, never mind that it had been purchased at a much lower price.

Easy payment schemes and exclusive lifestyles aside, there are many other issues that matter to home purchasers. Security is one of them. A safe neighbourhood is no longer enough.

Gated and guarded communities have sprung up, taking the lead from high-rises where 24-hour security surveillance was first introduced years ago.

The list of such demands from home purchasers and investors will only get longer. And every new addition or innovation will likely come at a cost. The challenge for developers is to meet these demands without adding too much to the cost.

In the end, if the customer is satisfied, it would have been a sound investment, not just for the homebuyer but the developer as well.

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email to md@sdb.com.my.

By The Star (by Teh Lip Kim)

Glomac eyes KLIFD deals with UAE partner

Kuala Lumpur: Glomac Bhd says it may bid for contracts to develop the Kuala Lumpur International Financial District (KLIFD) with its partner, the Al Batha Group.

Glomac and Al Batha, one of the largest private business concerns in the United Arab Emirates, currently have a 51:49 joint venture to develop Glomac Tower in Kuala Lumpur.

Group managing director cum chief executive officer Datuk FD Iskandar FD Mansor said Glomac is also keen to work on Bandar Malaysia, a KLIFD twin development in Sungai Besi, and the 1,335-hectare rubber research institute land in Sungai Buloh.

"We have not submitted any proposals for these projects but would be interested if we are invited," Iskandar said in an interview with Business Times recently.

Meanwhile, Glomac will launch its own projects worth about RM3.8 billion over the next few years, mostly in the Klang Valley.

The company will launch RM1.2 billion worth of projects in its current financial year ending April 30 2012. It has launched half the projects so far.

Iskandar said he is upbeat on the industry outlook, which he anticipates will strengthen with government spending and population increase.

He said the RM52 billion to be spent on the mass rapid system will stimulate the economy.

"The degree of confidence in Malaysia has dropped a little compared with last year but people have money and are spending. The banks are also flush with money.

"Launches in the last two months have been stronger, especially for landed properties. So we are confident of our projects, which mostly are landed residential units in the Klang Valley," he said.

Next month, the company will launch the second phase of its RM450 million Glomac Cyberjaya project.

By early next year it will launch the first phase of its RM400 million project in Bandar Utama, called Glomac Utama, and serviced apartments in Mutiara Damansara, worth RM250 million.

At its ongoing townships in Sungai Buloh and Rawang, Glomac has RM380 million and RM500 million worth of properties to launch respectively, over the next several years.

By Business Times

EPF confirms buying London office block for RM740m

Another investment: D2 Private sold the office block in St James’s Square to the EFP for £150mil.

PETALING JAYA: The Employees' Provident Fund (EPF) has confirmed that it has purchased an office block in St James's Square, London, where one of the tenants has one of London's highest rents.

The EPF told StarBizWeek that it bought 12 St James's Squares for 150mil (about RM740mil) from D2 Private, the leading Dublin-based Irish property investment company. The deal was completed on Aug 11.

This marks the EPF's fourth property investment in London since announcing an allocation of 1bil for British property purchases about a year ago. Including this latest purchase, it has spent 634mil.

The latest purchase is centrally located in one of London's most elegant West End squares. The seller D2 bought the building in 2006 for 60mil and refurbished the classic 81,500 sq ft Georgian building for another 20mil.

Eighteen months after buying it, D2 rented the top two floors to hedge fund Permal Investment Management Services at what was then considered the world's highest rental ever at between 140 and 130 per sq ft.

The West End market has failed to reach rents of that level since. Only earlier this year did they pass 100 per sq ft.

D2 is founded by Deirdre Foley, and David Arnold. Foley was previously a director of the Quinlan Partnership and is D2's managing director while Arnold is a well-known Irish property developer and investor.

The EPF last year handed ING Real Estate Investment Management and RREEF the mandate to invest 500mil each in central London on its behalf.

So far the fund has invested outside the core West End in a bid to find investments that yield more than 5%.

The EPF's three other property assets include commercial building Whitefriars in central London which it bought from Union Investment for 148mil in March. Whitefriars has a annual yield of 5.75%. Property consultancy Savills brokered that deal.

Prior to Whitefriars, the EPF bought One Sheldon Square in Paddington Central for 156mil, and 40 Portman Square near Oxford Street for 180mil. The two properties have yields of 5.75% and 5.55% respectively.

Properties in the city of London was among the first to start recovering from the financial crisis, rising in the second half of 2009 after two years of declines erased 50% of its value from city-centre office values.

The pound sterling's 22% drop since September 2007 had helped make property more attractive to foreign buyers, according to a report by Bloomberg.

Since 2009, when prices of London assets begin its uptrend, spending in London's prime real estate shows no sign of abating, a deep contrast to the overall state of the UK property market which has been soft until today.

In the city, investors are turning to more affordable markets or riskier properties because of the shortage of prime real estate for sale and the high prices it commands.

For the first half of this year, about $12.3 billion has been spent on prime offices, shops and homes in London, the most of any city, Real Capital Analytics's research shows.

Last week's disorder and looting in London has not diminished the appeal of investing in the city, according to Jeremy Helsby, chief executive officer of Savills Plc.

“There's no evidence of an unwillingness to invest in London,” Helsby says after the property broker reported a 52% increase in first-half profit.

“I can't think of any set of circumstances of London not retaining its status as a destination for international capital,” he told Bloomberg.

By The Star

JAKS unit buys land in PJ

JAKS Resources Bhd’s subsidiary JAKS Island Circle is acquiring a land in Petaling Jaya from Star Publications (M) Bhd for RM135 million.

Located next to Jaya One commercial centre, the land has been planned to be turned into a mixed development consisting of residential, commercial, office and recreational areas.

By Business Times

More affordable homes from Hua Yang

KUALA LUMPUR: Builder Hua Yang Bhd, with a niche in affordable housing, currently has about a dozen projects throughout the country with a gross development value (GDV) of RM650 million.

Chief executive officer Ho Wen Yan said for the current year ending March 31 2012, the company will be launching projects with a total GDV of RM525 million.

About a third of the GDV or RM154 million has been fully booked, which is the 418-unit serviced apartment at One South (Phase 2).

"Of the seven projects to be launched in the current year, 70 per cent of the GDV or RM370 will be in Selangor, 24 per cent or RM126 million in Johor and the remaining RM29 million in Perak," he said in an interview with Business Times.

Besides serviced apartments, other components that will be launched within its One South project in Sungai Besi this year include 156 units of offices and two blocks of serviced apartments (Phase 4). Others are landed residential properties in Bandar Universiti Seri Iskandar in Ipoh, and Taman Pulai Jaya, Taman Pulau Hijauan and Polo Park in Johor.

Ho said One South is the company's largest project in Klang Valley, with a GDV of RM840 million. The project, to be developed in five phases on a 6.68ha land, is expected to be completed in 2018.

One South - an integrated development comprising residential, offices and retail - is Hua Yang's flagship project.

"We will not target this project based on consumers' income level but rather on the requirements, such as first-time homebuyers, new families, newly married and young families," he said.

He said Hua Yang has a total of 314.8ha undeveloped landbank in Peninsular Malaysia, with an estimated GDV of RM2.2 billion.

The company plans to acquire more land to replenish its landbank.

"We are talking to landowners throughout the country. The focus is key urban centres and towns with huge working population as our strategy is to go where there is demand for affordable houses," he said.

The company has also acquired a piece of prime land measuring about 0.62ha in the middle of Desa Pandan commercial centre for RM32 million. It plans to develop a mixed serviced apartment and commercial centre with an estimated GDV of RM160 million.

By Business Times

Hua Yang plans to expand into Sabah, Sarawak

MAIN Market-listed Hua Yang Bhd plans to introduce its affordable housing to Sabah and Sarawak.

The company is currently talking to landowners to acquire land near city centres there.

"Sabah and Sarawak are our next market. We've done a lot of study and we believe the population and economic growth there will generate strong demand for our houses," chief executive officer Ho Wen Yan said.

Currently, Hua Yang's property projects are concentrated namely in Klang Valley, Johor and Perak.

The company, which was incorporated some 33 years ago in Ipoh, has no plans for now to go abroad.

Ho said the market is still big in Malaysia and the company wants to grow its market share here.

However, he said Hua Yang may bring its affordable housing model abroad, probably into Asian market in the next three to five years' time.

Merger and acquisition (M&A) is also not the company's way of expanding.

"We want to build a sustainable business over the long term ... We don't want to overborrow and we want to grow organically so that we can handle the growth," he said.

By Business Times

Pact gives new lease of life to Penang Turf Club land

When a media advisory arrived that Berjaya Land Bhd (BLand) was inking a deal with the Penang Turf Club (PNTC) in George Town this week, most reporters were spooked and wondered if the "ghost" of the Penang Global Centre (PGCC) was back to haunt them.

The PGCC was a proposed project to be located at the PTC grounds, carrying a gross development value of RM25 billion and to be built over a span of 15 years by its developer Abad Naluri Sdn Bhd, an associate company of Equine Capital Bhd.

Abad Naluri bought the land for RM488 million from the club in 2002 and had, among others, planned to include two five-star hotels, a performing arts centre, retail complex, monorail transportation and a world-class convention centre.

Following public opposition to the development, which was considered misleading and lacking in transparency with issues such as land rezoning and traffic congestion, along with a host of other concerns, the proposed project was officially declared "dead" after the Penang Island Municipal Council in 2008 rejected it on the basis of the developer's failure to submit the layout plans on time and comply with the council requirements.



On Tuesday, Berjaya Corp Bhd founder and chairman Tan Sri Vincent Tan was in Penang to ink a sale-and-purchase agreement between Berjaya Land Development Sdn Bhd (BLand) and Penang Turf Club (PNTC).

BLand is buying 22.8ha of freehold prime land within PNTC for RM459 million cash, and is proposing to develop a low-density, exclusive, guarded and gated housing development comprising bungalows, semi-detached homes and low-rise condominiums with an abundance of landscape and garden areas to complement the serenity and exclusivity of the surrounding areas.

The company, unlike other property developers which have entered Penang in recent times, is set to meet the requirement of building affordable housing units within the same site, although these homes will be located away from the high-end residential units.

Tan made it clear to reporters when he was asked if there would be any controversy on the project, that he was not expecting any from those living in the neighbourhood of the PNTC.

This he said is because there is no retail component to the proposed development, and the condominium would only include two low-rise blocks.

As concerns about traffic congestion owing to an incremental impact of new residents to the area are likely to surface in due time, it would be prudent for BLand to take proactive measures and devise a traffic dispersal system.

On its part, the PNTC has to contend with decreasing horse-racing revenues, while doling out large sums in quit rent and assessment in recent times.

This is because the present site of the PNTC was originally given by the government for a nominal sum and zoned as an "Open Space". However, this was changed in 2007 to a "Mixed Development" zone, to facilitate the PGCC project.

The club is now saddled with paying revised rates and has been making efforts to increase its revenue base.

In 2009, PNTC said it was planning to embark on a RM30 million development project to build 25 bungalow units on the fringes of the club, which can be rented out to generate income.

Plans for this development is still on the cards, the club's officials said, and it is currently awaiting the necessary approvals to proceed with the project.

While BLand has made it clear that Penang has become much more attractive as an investment destination in recent times and the company is on the lookout for other opportunities, there should be no major issues or opposition arising from its planned development on the PNTC grounds.

At the end of the day, it is simply a property transaction between two parties, with hopefully no "ghosts" lurking in the shadows.

By Business Times

11 named to oversee KLIFD project

PETALING JAYA: The RM26bil Kuala Lumpur International Financial District (KLIFD) will be overseen by 11 local and foreign consultants appointed by 1Malaysia Development Bhd (1MBD) to push forth the development of the project.

1MDB said in a statement yesterday that the consulting companies were appointed based on their experience and track record in their fields such as sustainability, infrastructure, engineering, landscape planning and traffic management.

In March, 1MDB carried out a pre-qualification and request for proposal process through its subsidiary 1MDB Real Estate Sdn Bhd.


Azmar: ‘We also seek people who share our vision.’

Among the selected local companies are traffic management consultant Perunding Trafik Klasik Sdn Bhd, quantity surveyor Perunding NFL Sdn Bhd, landscape architect Akitek Jururancang Malaysian Sdn Bhd and land surveyors Jurukur Perpaduan Sdn Bhd and Jurukur ESA Sdn Bhd.

The infrastructure engineering consultants are EDP Consulting Group Sdn Bhd and Buro Happold Consulting Engineers, a UK and US consultant which also acts as KLIFD's sustainability consultant.

Others include security and risk engineers ARUP Jururunding Sdn Bhd (from Malaysia) and ARUP Group International, a Hong Kong-based company. A consultant from Qatar, KEO International Consultants, was selected as programme management adviser.

The appointments are in addition to the two master planners named recently, Akitek Jururancang Malaysia Sdn Bhd and Machado Silvetti & Associates, selected from an international design competition.

1MDB Real Estate chief operating officer Datuk Azmar Talib said that the appointments were based on global practices and that the committee was “thorough and transparent in the selection process”.

“Given the scale of the development and its impact on national growth, we seek not just capability and capacity but people who also share our vision for a sustainable and holistic KLIFD and our passion to deliver a Greater Kuala Lumpur,” he was quoted.

1MDB owns the 30.35ha on which the KLIFD will be developed. As one of the entry-point projects under the Economic Transformation Programme, the KLIFD aims to attract financial institutions and global companies to complement other financial centres in the region.

The entire financial district is slated to be completed in two decades, with its first phase operational by 2016. Azmar has expressed hopes to integrate the development of the KLIFD with the country's mass rapid transit system which is slated to commence operations in the same year.

Azmar added that the selection of consultants for Bandar Malaysia, a KLIFD twin development in Sungai Besi will also undergo the same rigorous process.

By The Star

Mah Sing jumps on 48pc H1 earnings rise

Mah Sing Group Bhd, a Malaysian developer, rose in Kuala Lumpur trading after OSK Research Sdn Bhd said its first-half earnings beat estimates.

The stock climbed 1.6 per cent to RM2.49 at 9:26 a.m. local time after the company yesterday announced a 48 per cent increase in second-quarter profit to RM43.1 million.

OSK said in a report today that it raised its full-year 2011 earnings forecast by 13.2 per cent.

By Bloomberg

1MDB award jobs to local and foreign companies

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has announced the appointments of several local and foreign companies to develop the Kuala Lumpur International Financial District (KLIFD).

Eleven companies covering various fields including sustainability, infrastructure engineering, landscape planning and traffic management were appointed based on their experience and track record, 1MDB said in a statement yesterday.

1MDB Real Estate Sdn Bhd chief operating officer Datuk Azmar Talib said the selection process has been a thorough and transparent one.

"In addition, we engaged potential vendors in continuous dialogues to ensure seamless synergy with the team," he said.

The successful consultants are EDP Consulting Group Sdn Bhd, and Buro Happold Consulting Engineers (UK & USA) as consulting engineers, Perunding Trafik Klasik Sdn Bhd as traffic management consultant and Perunding NFL Sdn Bhd as quantity surveyor consultant.

The others are Akitek Jururancang Malaysia Sdn Bhd and Grant Associates (UK) as landscape architect consultant, and for the land surveyor part, Jurukur Perpaduan Sdn Bhd and Jurukur ESA Sdn Bhd have been appointed.

Also appointed were ARUP Jururunding Sdn Bhd and ARUP Group International (Hong Kong) as consultants in the security and risks engineering area, Buro Happold Consulting Engineers (US & USA) as sustainability consultant and KEO International Consultants (Qatar) as the programme management advisor.

Azmar added that the selection of consultants for Bandar Malaysia, a KLIFD twin development in Sungai Besi, will undergo the same rigorous process.

KLIFD is currently at the master planning phase and is on track to start construction beginning of next year.

The 30-ha development in the Imbi area fronting Jalan Tun Razak aims to bring together leading financial institutions and top global companies to create a catalytic pool of world-class players.

It will leverage on Malaysia’s existing strength in Islamic finance and play on its strategic location to complement other financial centres within the region.

By Business Times

Oversupply of new launches?

An artist’s impression of the Southbay City development in Batu Maung by Mah Sing Group.

There are concerns that Penang island cannot absorb the high number of projects

The planned development of RM29.6bil worth of properties on Penang island in the next 10 to 15 years has raised concerns over the capacity of the market to absorb them.

The properties are planned for 1,121.56 acres which include reclaimed land and strategic locations on the island.

Eastern & Oriental Bhd is reclaiming 740 acres for the second phase of the Seri Tanjung Pinang project in Tanjung Tokong to develop two islands for mixed development projects, which will have an estimated gross development value (GDV) of RM12bil.

E&O is expected to reclaim the land in 2012 and the group has until 2019 to complete reclamation before the concession expired.

“It should take two years from the start of the land reclamation before the first project launch can be embarked upon.

“Phase two will be a mixed integrated development comprising two islands of approximately 740 acres.


Chan: ‘E&O is expected to fully develop the land for Seri Tanjung Pinang in 10 to 15 years.’

“At three times the size of phase one, phase two is expected to generate RM12bil in gross development value,” E&O deputy managing director Eric Chan said in a report.

Chan said upon completion of the reclamation for Seri Tanjung Pinang Phase Two, it would take at least 10 to 15 more years to fully develop the land.

“Within that time, with Penang continuing on its present growth path, the demand for better residential properties and lifestyle amenities is expected to be generated.

“E&O will be poised to fulfil this demand with the realisation of Seri Tanjung Pinang Phase Two,” Chan said.

Ivory Properties Bhd is reclaiming 35 acres to add to its recent acquisition of the 67.56 acres of Bayan Mutiara land in Bayan Baru for a mixed development scheme, which will have an approximate GDV of RM10bil, according to a recent AmBank report.

IJM Land Bhd is reclaiming 103 acres for the development of an RM5bil mixed development project, which will be completed in 2021.

IJM Land is expected to complete the reclamation of the 103 acre site next year-end.

Mah Sing Group Bhd is developing properties on various prime locations on about 95 acres on the island, with an estimated GDV of RM1.6bil.

From 2012 to 2017, Sunway City Bhd will be launching the Sunway Hill Residence on an 81-acre site in Sungai Ara around 600 units of landed properties and condominiums with RM1bil in GDV.

There are also other smaller projects with combined multi-billion ringgit GDV such as the reclamation of a 100-acre site in front of Queensbay Mall by Boustead Holdings Bhd; new residential projects on the island planned by the other developers from Kuala Lumpur and Penang, and the proposed project by Penang Turf Club (PTC) on 50 acres on the PTC site.

It is estimated that about 70% of the RM29.6bil in new developments will comprise residential properties.

Last year, the purchase of new residential properties on the island was estimated to value around RM1.8bil to RM2bil, which was among the highest in recent years.

If the purchases of new properties on the island were to be maintained at the 2010 level of around RM1.8bil to RM2bil, industry observers said it would take 10 to 11 years to complete the take-up of the properties.


Jerry Chan: ‘A RM21bil GDV is a lot for the market to absorb even if the uptake were to be extended to 15 years.’

Real Estate & Housing Developers' Association (Rehda) Penang chairman Datuk Jerry Chan Fook Sing said even if the uptake was consistently estimated at RM2bil per annum, the 10 to 11 years period would still be a long time.

“This is assuming that the Penang property market can consistently absorb around RM2bil worth of properties per annum.

“A RM21bil GDV is a lot for the market to absorb even if the period of uptake were to be extended to 15 years.

“The planning and the launch of the projects must be timed to suit demand, although the demand of properties would be higher in certain areas of the island.

“But of course if the economy continues to be good and there is consistent or increasing demand, there should be no problem for the new launches to be absorbed in a shorter period of time.

“If Penang can continue to re-invent itself in the economic sphere, then it can draw people from other states to Penang to work.

“This migration could serve as the source of demand for the future property launches and create a higher population as opposed to normal birth rates,” Fook Sing said.


Lim: ‘When the holding power is gone, the speculators will have to release the properties into the market.’

Registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun said there could be downward pressure on property prices on the island due to the oversupply of new launches.

“As it is, the bulk of properties purchased over the past five years were for speculation purposes.

“When the holding power is gone, the speculators will have to release the properties into the market. Add that to the supply of new launches, there will be an oversupply situation.

“Developers must identify where their markets are coming from carefully and release the new launches according to demand,” Lim said.

Lim said for the past five years, the return on investment (ROI) for properties on the island had dropped by 50%, while the value had increased by about 100%.

“This is something that had gone unnoticed.

“The ROI is worsened by the fact that Penang properties generate very low rentals.

“If the ROI keeps decreasing, as property values increases correspondingly, then no one would buy property in Penang for investment purposes.

“The property market in Penang would then become purely speculative in nature,” Lim said.

Lim added that there was also the affordability factor.

“To purchase a high-rise property priced above RM300,000 on the island, the buyer's monthly household income would need to be between RM8,000 and RM10,000.

“The bulk of wage earners in Penang do not fall into this income bracket.

“Where would the demand for future property launches come from?” he said.

Sunway City general manager Tan Hun Beng said the volume of properties planned for launch raised the question whether developers had done enough research and analysis on market demand.

“I think developers should make the necessary studies before making their launch projections: is the present positive response to the property market a good sign or is it an early signal of an approaching storm?” Tan said.

Chartered valuer and property consultant Azmi & Co (Penang) Sdn Bhd managing director Chandra Mohan Krishnan said the RM21bil GDV of residential properties was a lot to absorb over a 10 to 15 years period.

“If there is no demand, there may be downward pressure on property prices. However, the value of landed properties on the island should be able to hold on, as they are becoming scarce,” he said.

IJM Land (north) general manager Toh Chin Leong said it was important for developers to build a balance mix of residential and commercial properties.

“Commercial projects are important to attract the movement of labour to Penang, which will provide demand for housing.

“This is why a large portion of our second phase on 103 acres comprises commercial projects such as hotels, corporate offices, and retail outlets.”

Penang Master Builders and Building Material Dealers Association immediate past president Datuk Finn Choong said the reclamation works would generate demand for workers and jobs for local contractors.

“We can see positive benefits for Penang even before the launch of the new properties.

“The reclamation activities would bring in foreign labour to Penang which would generate economic spill-over effects for the state, as the workers would have to spend money on rentals and food. On paper the number of new projects seems a lot.

“However, if the Penang government can continue inspiring confidence in investors and manages well the expectation of Penangites, the state can draw migration from different income groups into the state that can support the new properties planned,” Choong said.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said Malaysia's population stood at 28.3 million with an average annual growth rate of 2%.

“Being a young population, 67% are between 15 and 64. Nearly everyone will be making decisions about where to live, work, shop and play, with real estate as the major key component for the next 20 years.

“It is important to know a great deal about where they reside, educational backgrounds, family composition, incomes, and whether or not they work.

“Consequently future real estate needs can be anticipated,” Teoh said.

On the infrastructure supporting future development, Penang Chief Minister Lim Guan Eng said international contractors from several countries have indicated that they are interested to build four major road projects in Penang.

Lim said the contractors were from China, Singapore, Hong Kong, Japan and South Korea.

He said the state government would invite those interested to bid for the projects via request for proposals (RFP) by the end of the year.

“The RFP will be out at the end of the year. It will take another six months before the contracts can be awarded to the successful bidders,” Lim said in an interview recently.

The proposed projects are the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu bypass, the 4.6km Lebuhraya Tun Dr Lim Chong Eu-Bandar Baru Air Itam bypass, the 6.5km Penang-Butterworth Tunnel, and a 12km proposed road connecting Tanjung Bungah and Teluk Bahang.

By The Star

No immediate impact seen

High end property: The view from the promenade of the marina enclave at the Straits Quay in Tanjung Tokong in Penang.

Property players have mixed views on effects of US and European crises.

LOCAL real estate valuers, property consultants and the Real Estate Housing & Developers' Association (Rehda) have mixed views over the impact of the economic crises in the United States and Europe on the local property market.

Property consultant PPC International Sdn Bhd managing director Mark Saw says the softening of the equity market due to the economic crisis in the United States and Europe will impact on property prices in Penang.

“Property prices in Penang cannot continue on an upward trend forever. The weakened condition of the equity market will influence the capacity of investors to inject funds into the property market,” he says.

Chartered valuer and property consultant Azmi & Co (Penang) Sdn Bhd managing director Chandra Mohan Krishnan says there will be some minor corrections in local property prices due to the crisis in the United States and its impact on the local equity market.


Tan: ‘If the crisis is resolved within six months, then the impact will be minimal’.

“But I believe that the impact would be short-term. The longer-term impact on local property prices would be political events such as the next general election,” he says.

Sunway City general manager Tan Hun Beng says should the crises in the United States and Europe last for more than six months, there will be an impact on the local property market.

“If the crisis is resolved within six months, then the impact will be minimal,” he says

However, registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun says the weakening of the equity market may prompt buyers to invest in property as a hedge against inflation.

“The conditions are ripe for another round of investment to move into properties.

“But whether the investments actually come into the local property market will depend on the political stability of the country,” Lim says.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat concurs that the softened equity market will generate positive sentiments and interests in the local property market, as it had proven to be a reliable hedge against inflation.

“I don't think the US crisis will have a big impact on property prices here. Property prices in Penang, in particular the landed houses, will perform better than the high-rise properties,” he says.

Rehda Penang chairman Datuk Jerry Chan Fook Sing says the crisis will not likely lead to distress selling in the local property market.

“There was no distress selling in 2008 when the country was impacted by the sub-prime crisis in the United States. We don't think there will be one now either. It all depends on how well the developers can hold on to their projects,” he says.

By The Star

SP Setia buys 409ha plot for RM330m

SP SETIA Bhd, Malaysia's most valuable property company, has bought over 409ha of freehold land in Beranang, Ulu Langat, in Selangor for over RM330.1 million cash or RM7.50 per sq ft from Ban Guan Hin Realty Sdn Bhd.

In a statement yesterday, SP Setia said it intends to develop a mixed residential township development project on the land with an estimated gross deve-lopment value of RM3.5 billion.

"The proposed acquisition offers SP Setia a good opportunity to tap into strong demand for attractively priced homes by first time owners and other home buyers in the Semenyih-Kajang corridor," it said.

It also allows the group to further reinforce and expand its core business by replicating its proven township development model in an emerging growth corridor that is not presently served by its more matured projects in the Klang Valley.

SP Setia said it is currently too preliminary to ascertain the exact product mix, total development cost, expected completion date or expected profits to be derived.

However, its management is confident the proposed development will be well received and is expected to contribute positively to the future earnings and cash flow of SP Setia.

The land deal is expected to be completed during the first half of financial year ending October 2012.

Ban Guan Hin Realty's principal activities involve the working of an estate, as well as producing and selling of rubber and oil palm fresh fruit bunches.

The terrain of the land is generally undulating and is zoned for mixed housing development, and is situated midway between the towns of Semenyih, Bangi Old Town and Beranang.

By Business Times