SP Setia at 6-month high

PETALING JAYA: SP Setia Bhd rose six sen, or 1.5%, to close at RM3.94, its highest level in almost six months and one sen short of the revised offer price jointly proposed by its president and chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB).

Meanwhile, analysts have hailed the revised takeover offer as a “win-win” deal for all parties as it would enable Liew to stay at the helm of the property developer with full control over the next three years.

“This is close to our best-case scenario where there is incentive for top management to stay on and take SP Setia to greater heights. It is a win-win situation for all parties and a share price catalyst,” CIMB Research analyst Terence Wong said in a note to clients.

Liew’s commitment to stay on in SP Setia has been viewed positively by analysts.

SP Setia had on Friday notified Bursa Malaysia about the revised offer, which raised the offer price by five sen each for the shares and warrants to RM3.95 and 96 sen, respectively.

Liew, PNB and SP Setia would also enter into a management agreement for Liew to remain in his current position for three years following the close of the revised offer.

Among others, Liew would continue to oversee and manage the operations of SP Setia within the ordinary course of its business and enter into contracts or arrangements for and on behalf of the company.

As a joint offeror, Liew is not allowed to sell his 8.6% direct shareholding of 158.2 million shares, or 8.6% stake, in SP Setia, but he would be given a put option to sell the shares to PNB in tranches over three years at an exercise price of RM3.95.

Under the terms of the put option, Liew can choose to sell his stake to PNB at RM3.95 or in the open market at the then prevailing market price, which thus acts as an incentive for him to continue to grow the value of the company.

However, Liew's wife, who has a 2.3% stake in SP Setia, will be accepting the revised offer.

PNB and its related parties currently hold 38.6% of SP Setia while Liew has a direct and indirect stake of 10.9%, which adds up to a combined 49.5% interest.

“We view positively Tan Sri's (Liew) commitment to stay on and retain his direct stake without getting any premium even though he will only be allowed to exercise the put option gradually over three years.

“This signals his commitment and confidence that he can take SP Setia to the next level and add value to the company and share price,” CIMB Research said.

Kenanga Research said in a report that the slightly higher offer price is a show of good faith to minority shareholders, adding that SP Setia would have more bargaining chips to bid for government land with the backing of a shareholder like PNB.

As PNB intends to retain the company's listing status, RHB Research Institute noted that post-takeover, the joint offerrors might have to pare down their stakes via a placement exercise to maintain the stock's mandatory 25% free float.

Kenanga Research said investors with a 12-month view should accept the revised offer as there might be cheaper entry points when the stock succumbed to an expected downtrend in the property sector. However, it said longer-term shareholders might want to stay invested as liquidity could tighten up in the future, preventing substantial accumulation.

By The Star

Developers advised to look into location, cost and design to make sale

JOHOR BARU: Property developers in Johor must be prepared to face tougher times this year and next if the eurozone debt crisis prolongs and the United States continues to experience economic slowdown.

Johor Real Estate and Housing Developers Association (Rehda) branch chairman Simon Heng expected 2012 property outlook to be not as good as 2011.

"Hopefully, our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang," he told StarBiz.

Heng said the sign was already there with developers chalking lower sales in the Malaysia Property Expo (Mapex) held in November last year.

Developers who took part in the four-day event raked in about RM256mil in sales over a month-period lower from RM384mil in Mapex in May 2011 and RM331mil in November 2010.

Heng pointed out that the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.

He said the last five to six years were considered good for most Johor property developers as they were able to keep the number of unsold properties to a minimal.

Heng said local developers had learnt their lesson well from the 1997-1998 Asian financial crisis as they were caught unaware resulting in many abandoned projects and unsold properties.

He advised developers not to be overly ambitious and more realistic when launching a project this year and their focus should be more on products that could sell in view of the unfavourable property market.

"Go for affordable residential properties as demand for them is good especially in the Johor Baru district as there are many potential first time house owners out there," said Heng.

He said first time house buyers normally went for houses priced within their budget and with no-frills designs as what was important was to have a roof over their heads.

Heng said areas like Gelang Patah, Kempas, Kulaijaya, Mount Austin, Nusajaya, Senai and Tebrau would be the property hot spots and many projects were expected to be launched this year and 2013.

"For instance, land in Tebrau has been sold for RM4 per sq ft on average the last few years but now the asking price is RM20 per sq ft or even higher," he said.

Heng said the completion of the New Coastal Highway, Eastern Dispersal Link Expressway and Southern Link this year would improve accessibility and connectivity within Iskandar Malaysia.

Leisure Farm Corp Sdn Bhd senior project manager Siew Fook Wah said that he always believed there would be a silver lining despite uncertainties in the property market.

He said the ruling introduced by Singapore last December to foreigners buying private residential properties in the republic was likely to benefit property developers in Iskandar Malaysia.

Foreigners have to pay an additional 10% stamp duty when buying a private home there; effectively raising the purchase price by 10%.

The move is seen to cool the private residential prices in the island state which are on the uptrend despite a slowing economy.

Siew said Johor's close proximity with the republic was an added advantage and prices of private properties here were lower than those in Singapore and to some extend in places like Kuala Lumpur and Penang.

"Iskandar Malaysia will continue to drive the growth of the property market in Johor in many years to come with demand for high-end properties likely to remain good," he said.

Siew said that with Iskandar Malaysia progressing well since its inception on Nov 4, 2006, these buyers (foreigners and Singaporeans) were most probably looking at Johor Baru.

A subsidiary of Mulpha International Bhd, Leisure Farm is developing the RM2.1bil Leisure Farm Resort on 714.27ha in Gelang Patah. The residential and gated resort development project offers 11 architectural design themes.

The villas are built on lots of 3,000 to 18,000 sq ft and priced from RM2mil and above. The scheme is now home to international communities from 35 countries.

SP Setia Bhd executive vice-president (property division) Datuk Chang Khim Wah said the company was still upbeat on the Johor property market as demand for properties had gone up steadily in the last few years.

"Take up rate for our properties in South Johor has been good over the years as we don't only cater for locals but also Singaporeans," he said.

Chang concurred with Siew that Iskandar Malaysia was one of the strong factors that would help to mitigate the slow growth in the Johor's property market this year and next if there was one.

He said Singapore would play a significant role in the development of Iskandar Malaysia as when people talked about Iskandar Malaysia, they would look at the bigger picture and include Singapore as well.

He said compared with other economic-growth corridors in the country, Iskandar Malaysia had the competitive edge due to its close proximity with Singapore.

"Investors, especially foreigners, will be attracted to invest in Iskandar Malaysia as they have the best of both worlds Johor and Singapore," said Chang.

By The Star

SP Setia jumps on improved PNB offer

SP Setia Bhd, Malaysia's biggest listed property developer by sales, advanced to its highest level in almost six months after Permodalan Nasional Bhd raised its buyout offer.

The stock gained 1.6 per cent to RM3.94 ringgit at 11:35 a.m. local time in Kuala Lumpur trading, bound for its highest close since Aug. 2.

Three brokerages raised their price estimates today, including HwangDBS Vickers Research Sdn. which forecast in a report that SP Setia could rise to as much as RM4.50.

Permodalan Nasional, the country's largest state asset manager better known as PNB, boosted its offer by 5 sen per share to RM3.95 for the remaining stock it doesn't already own and brought in SP Setia's Chief Executive Officer Liew Kee Sin as a bidding partner, according to an exchange filing on Jan. 20. Liew will stay on to run the developer as part of a deal struck almost four months after PNB's initial bid.

“This proposal is a win-win solution for PNB, the management and shareholders," Loong Kok Wen, an analyst at RHB Capital Bhd., wrote in a report today. The revised offer is "fair," she said, advising investors to accept.

The new bid values SP Setia at RM7.3 billion (US$2.4 billion). Liew, who currently owns 10.9 per cent of SP Setia, will keep his post for three years after the buyout is completed, according to the statement.

Investors are "better off holding on given management continuity for three years," HwangDBS Vickers said in its report. "Strong execution track record and solid balance sheet should help SP Setia weather challenging outlook."

Hong Leong Investment Bank Bhd. and RHB Capital Bhd. increased their share estimates to match the new offer price, according to separate reports today.

The developer reported net income of RM82.5 million for its fiscal fourth quarter ended October, 9.7 per cent growth from a year earlier. That brought its full-year profit to RM328 million, its highest annual income since 1994, according to data compiled by Bloomberg.

The benchmark FTSE Bursa Malaysia KLCI Index fell 0.1 per cent today. The stock market resumed trading after a two-day break for the Lunar New Year holidays.

By Bernama

CapitaMalls Malaysia REIT chalks up higher profit

KUALA LUMPUR: CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM) posted a higher pre-tax profit of RM179.814 million for the financial year ended December 31 2011 compared with RM109.396 million previously.

In a statement, the company said the better performance was attributable to revenue growth at the mall level and savings in financing costs.

CMRM's acquisitions last year of Gurney Plaza Extension and East Coast Mall contributed to earnings, it said.

The manager of CapitaMalls Malaysia Trust's (CMMT) said revenue rose to RM230.887 million from RM94.636 million in the same period a year earlier.

It said CMMT achieved a distribution per unit (DPU) of 7.87 sen during the year, 8.4 per cent higher than the annualised DPU of 7.26 sen previously.

CMMT recorded net property income (NPI) of RM162.4 million, 1.6 per cent higher than the forecast NPI of RM159.8 million.

The total distributable income was RM118.3 million, eight per cent higher than the forecast distributable income of RM109.5 million for the year, CMRM said.

By Bernama

L&G set to shine again

Low with a model of Damansara Foresta.

Last week, Land & General Bhd (L&G) soft-launched its condominium project, Damansara Foresta, in Bandar Sri Damansara, Petaling Jaya. That launch was significant in many ways.

L&G is an old brand that became a casualty of the 1997/98 Asian financial crisis. Bandar Sri Damansara is its old turf, having made a name for itself when it built the township with some 14,000 households decades ago.

The company fell victim to the crisis because it had a cashflow problem and became insolvent. It also had massive debts. It was also involved in a variety of businesses and owned properties in different parts of the world that it was not able to fully concentrate on.

Like other companies that fell during that period, L&G’s fall from grace revealed its many weaknesses, which had earlier went unnoticed.

The whole unfortunate affair culminated with the resignation of its captain, Tan Sri Wan Azmi Wan Hamzah, in 2002 from the debt-laden property group.

In 2007, Hong Kong-based property tycoon Tan Sri David Chiu became a substantial shareholder of L&G with an 8.35% stake through Mayland Parkview Sdn Bhd. That stake has grown to 16.94% today. His entry sparked speculation of a possible asset injection or takeover exercise. It pushed the stock up from 20 sen to over 80 sen in six months.

But there was no asset injection. Instead, the new management under managing director Low Gay Teck spent the last several years quietly cleaning house and strengthening the foundations of the company.

When L&G, under Low, launched commercial project 8trium in Bandar Sri Damansara, buyers were sceptical about the company. Does it has the financial muscle to pull it off? Today, that project is more than 95% sold and in about three months, it will be completed.

When it launched its Damansara Foresta condominium project (with gross development value of RM700mil), this skepticism was not evident anymore.

Low is a property man. He was with Mayland with Chiu for many years and has helped build up Mayland’s name in the Plaza Damas area in Sri Hartamas. But while Mayland concentrates on studio units of about 500 sq ft, L&G prefers the 1,400 to 1,600 sq ft range as can be seen in the recent launch.

While property development will remain its core business, contributing about 70% to the group’s revenue, L&G also inherited the education business in the form of private school Sri Bistari.

The last several years has seen student enrolment double to about 1,100. Low has never been in the education business but he seems willing to take what the company has inherited and to make the most of it. Today, revenue from its education business amounted to about RM5.7mil (19% of total revenue of RM28.7mil) for the six-month period ended Sept 30, 2011, according to filings with Bursa Malaysia.

Total contribution from the property division amounted to RM17mil (66% of total revenue) and looking ahead, property will be the company’s main business for the next decade or so.

L&G also has a bit of oil palm plantation (about 1,010ha) which it inherited from the previous management in the Lembah Beringin area, its previous township development during its heyday. There are plans to fully make use of that piece of land with new plantings.

The company has other sources of revenue of about RM7mil but at press time, it is uncertain whether this RM7mil is a contribution from the plantation business.

The recent launch of Damansara Foresta is interesting because that project is only one part of that 40 over acres in Sri Damansara. The entire gross development value of the 40-odd acres will be about RM2bil. As mentioned earlier, L&G made its name in Bandar Sri Damansara and it looks like it will continue to rebuild its name and branding in that location.

With that land size, the project will take several years to complete and the profit margins should be good as it owns the land, having bought it decades ago. Its recent launch was priced between RM500 and RM600 per sq ft.

L&G also has two other pieces of land, including about 25 acres in the Bandar Sri Damansara clubhouse area, but it will have to solve the membership issue of that clubhouse first.

Last year, it bought about 200 acres in Seremban and has to date submitted its development plans to the local authorities there. The Seremban land will be used for a mixed residential project with terraced, semi-detached and cluster homes priced at about RM300,000 for the terraced houses.

Although it plans to have predominantly landed housing for the Seremban land, L&G will very probably focus on condominium projects for its overall property business in order to slowly get back on its feet. It also has a joint-venture development with the Mayland group at Jalan Ampang known as Elements@Ampang with a GDV of RM700mil.

The company’s total borrowings amounted to RM68.58mil, while its cash and cash equivalents totalled about RM140mil as at Sept 30, 2011. It took a bridging loan of about RM90mil for Damansara Foresta, which is about 50% sold to date.

As mentioned earlier, when the new management came in in 2007, speculation drove L&G’s share price up to about 80 sen a share. Today, it is between 30 and 40 sen. Its shareholding seems rather fragmented, with Wan Azmi having a 2.13% stake.

Now that Low and his team have cleaned up the company, things are moving again.

By The Star

Legoland Malaysia expects a million visitors in first year

JOHOR BARU: Legoland Malaysia is projecting its nearly-completed theme park to attract a million visitors during its first year of operation.

Its general manager Siegfried Boerst said the theme park will be officially opened in the second quarter of this year.

"We are looking at more than one million visitors for the first 12 months of operation, and we hope it increases all the time," he told reporters after the unveiling of Legoland Malaysia's dragon mascot made entirely of Lego bricks called "Ollie The Dragon" at Thistle Hotel here on Friday.

The model took 50-man hours to build from approximately 10,000 Lego bricks.

Boerst said construction of the RM700 million theme park is progressing well despite the rainy season affecting Johor, adding he is confident it will be completed on time.

Legoland Malaysia, he said, is planning public relations activities in Malaysia and several other East Asian countries including Singapore and Indonesia leading up to the theme park's official opening, adding it is also developing Johor as a tourist destination.

On the annual pass ticket sales, he said Legoland Malaysia is happy with the response, with its counters selling more than 300 passes daily, with Malaysians making up 80 per cent of the buyers, although the operator is hoping to attract more Singaporean buyers.

"We have registered several thousand annual pass sales, and we intend to keep it open for a few more weeks," he said.

The annual passes, sold at a discounted price of RM195 (adult) and RM150 (children), are valid right into the end of 2013.

Tickets are available online through the AirAsia RedTix and Legoland Malaysia websites.

Legoland Malaysia, the world's sixth Legoland and Asia's first, is located in Iskandar Malaysia and will feature more than 40 interactive rides, shows and attractions when it opens.

Other Legoland theme parks across the world are in Denmark, the UK, Germany and Florida and California in the US.

By Bernama

Sara-Timur expands

New borders: Artist’s impression of Mersing Laguna – a multi-billion ringgit integrated resort development on three reclaimed islands – in Johor.

KUCHING-based construction and property development company Sara-Timur Sdn Bhd is building its presence in Peninsular Malaysia with a number of projects in the pipeline.

The company has an order book of RM2bil worth of construction projects and RM1.8bil of development projects.

Sara-Timur has two development projects in the peninsular KB Sentral at Bandar Baru Tunjong in Kota Bahru, Kelantan; and Mersing Laguna in Johor. It is also undertaking construction projects at KL Sentral and Utama Lodge Condo in OUG, Kuala Lumpur; and Teliti Data Centre in Nilai, Negeri Sembilan.

Sara-Timur managing director John Loi says with the company's successful venture to Peninsular Malaysia, it has established a platform to grow into a better known industry player.

“There are more opportunities here in Peninsular Malaysia for us and we intend to build up the company's presence here,” he tells StarBizWeek.

KB Sentral project in Kota Bahru which is to kick off around the middle of this year for completion in five years, will have a gross development value of RM1.2bil.

The project is a joint-venture urban development between Perbadanan Menteri Besar Kelantan, Tunjong Development Corporation Sdn Bhd and Sara-Timur Urban Development Sdn Bhd.

The 42 acres of new lifestyle project in Kota Bahru is part of the 2,000 acres of new urban redevelopment project of Bandar Baru Tunjong by the Kelantan state government.

Located about 6km from the Kota Bharu town, the new business hub is to meet the growing needs of the local populace.

Loi says the development is based on the Intelligent City concept of cosmopolitan community living where occupants will get to enjoy high-speed broadband connectivity.

Meanwhile, Mersing Laguna is a multi-billion ringgit integrated resort development on three reclaimed islands totalling over 2,000 acres set in the South China Sea off the town of Mersing in Johor.

The islands are designed as an oasis dotted by premier residential, commercial and tourism-related developments encased in an eco-friendly environment.

The developer of Mersing Laguna, Radiant Starfish Development Bhd, has awarded one of the construction packages, parcel 12 to Radiant Sara-Timur International Sdn Bhd.

Loi says the award is based on a turnkey design and build contract valued at RM360mil for the construction of an integrated resort development comprising a 5-star 216-room hotel, 70 service apartments, and 73 villas.

Radiant Sara-Timur has also been awarded another turnkey design and build package for an estimated sum of RM370mil by the same developer that involves the redevelopment of the existing Mersing township. Also known as the “Mersing Urban Renewal Development Project”, Loi says the company will apply its experience in the urban renewal project of the Sandakan Harbor Front project to help revitalise Mersing.

“The urban renewal program that includes the building of new business class hotels, recreational parks, cultural centres, medical centres, and commercial and business areas, will cater to the growing population by meeting their aspirations and needs. There will also be provision for the recovery of the foreshore around Mersing, allowing for the development of landscaped boulevards and recreational amenities for the local population,” he explains.

Sara-Timur also has two projects in Kota Kinabalu Jade Residence and the Jesselton Point Hotel comprising 140 rooms, 118 hotel suites and 25 business suites.

Projects it has completed to-date include the Sandakan Harbour Square, Sutera Harbour Hotel and Resort, Sarawak State Stadium, and Taman Tiong Ung Siew in Sibu.

Loi: ‘Sara-Timur has the resources to deliver sustainable solutions in both single-use and mixed-use developments and urban redevelopments.’

Loi says Sara-Timur will increase its hotel assets from one in Sandakan currently to other assets in Mersing, Kota Bahru and Kota Kinabalu.

Despite the challenging external front, he says the outlook for the local construction and property sectors looks quite stable.

“In the past three years, the company's turnover has doubled to RM350mil for the financial year (FY) ending May 31. We are confident the performance will get better going forward.”

Loi says the company hopes its revenue from property development will increase to 50% in the next three years from less than 15% in financial year 2011.

Sara-Timur has recently set up its corporate headquarters at Solaris Dutamas in Kuala Lumpur, and is looking to increase its paid-up capital to RM18mil from RM10mil now.

He says the company's forte lies in urban renewal projects to give a new lease of life to old dilapidated townships around the country.

“Sara-Timur has the resources to deliver sustainable solutions in both single-use and mixed-use developments and urban redevelopments. Its capabilities include building and civil engineering contracts comprising project management, turnkey design and construction, and project partnering.

“We choose to support new development and urban redevelopment because of the incredible impact they make on the lives of the families and the communities.

“New developments also provide attractive investment opportunities. They form the main elements of a new strategy by our local governments to see to the implementation of both new development and urban redevelopment plans through the attraction of private capital,” Loi points out.

To finance the company's expansion, Loi does not discount the possibility of Sara-Timur making an initial public offering on the Main Market of Bursa Malaysia.

“We are looking at the option and hopefully our listing plans will materialise by this year,” he says.

By The Star

SP Setia must take possession of Pisa first

The timing of property developer SP Setia Bhd's new launches for its 2012 fiscal year in Penang appears to hinge on whether the company is given vacant possession of the Penang International Sports Arena (Pisa) by the first quarter of this year to build the RM300 million Subterranean Penang International Convention and Exhibition (sPICE) Centre.

Business Times has learnt that the property giant's application for planning approval to proceed with its upmarket Setia V Residences project along Gurney Drive cannot be deliberated as yet by the Penang Island Municipal Council, until the time SP Setia takes over Pisa officially.

Three other projects in the pipeline for its fiscal year ending October 31 2012 are located in the Relau and Sungai Ara areas.

The company on January 3 took over as operator of the building and it has already ploughed in RM1 million to spruce it up, sources say.

"The problem now lies in the fact that SP Setia is unable to avail itself yet of the increased density privilege it was accorded as part of the sPICE deal," one source said.

SP Setia was granted the right to build an additional 1,500 residential units over and above the density limit of its existing and future projects in Penang over a 30-year period when it inked an agreement with the Penang authorities last year to build the convention centre.

The project includes 2.8ha public park and an upgraded and refurbished Pisa.

The move for SP Setia to be granted additional density was viewed positively by analysts who noted that it would enhance the gross development value of some of the company's proposed high-rise projects.

Based on the existing density limit, it is learnt, Setia V Residences can only build about 50 units on the 0.8ha site, which has a dual frontage of the sea-fronting Gurney Drive and Jalan Kelawai in Pulau Tikus.

Analysts had also hailed the fact that with the additional density, SP Setia would now have a competitive edge over other developers in bidding for land in Penang, since it would be in a position to pay higher land costs, given the company's ability to build beyond the "normal" allowed density.

SP Setia officials could not be reached for comment.

Under the agreement signed in August last year between Penang island Municipal Council and SP Setia's subsidiary, Eco Meridian, the proposed sPICE Centre will feature a basement car park and a green park on the roof top. The project, which is expected to be completed by 2014, includes a 2.8ha public park, refurbishing, repairing and upgrading Pisa and the Aquatic Centre as well as construction of a new hotel, retail outlets and a car park.

By Business Times

PNB, Liew raise offer for SP Setia to RM3.95 a share

KUALA LUMPUR: Permodalan Nasional Bhd (PNB)’s takeover bid for property developer SP Setia Bhd’s shares has takena new turn, and closure.

The country’s largest fund manager has revised upwards its offer price to RM3.95 for every SP Setia share, up from RM3.90 previously.

Equally interesting, SP Setia founder Tan Sri Liew Kee Sin will now be joining the governmentlinked asset manager in making the revised offer.

In a statement yesterday, SP Setia said PNB and Liew will also now pay 96 sen per SP Setia warrant they do not already own, instead of the earlier 91 sen offered by PNB alone.

“The joint offer enables a closure to be arrived at finally on uncertainties over takeover matters.

More importantly, it will provide a fresh launching pad for SP Setia to continue pursuing its quest to create greater value to
all stakeholders,”Liew said in the statement.

As a joint offeror, SP Setia said Liew will not be accepting
the revised offer. Instead, he will hold on to his direct eight per cent stake amounting to 158.2 million shares.

It also noted that PNB had given Liew an option to sell his stake progessively in tranches after three years at RM3.95 a share.

Liew said he is “highly appreciative” of PNB’s put option offer as it will enable him to focus on doing his best to grow the underlying value of the company.

“After many months’ work, I am happy that we have managed to come up with what I believe is a win-win solution for everyone, especially our customers, employees and all shareholders of SP
Setia,” he added.

SP Setia said a management agreement would also be signed between the company, PNB and Liew for the latter to remain as group president and chief executive officer for three years, after the close of the revised offer.

By Business Times

PNB and Liew in Joint offer for SP Setia

KUALA LUMPUR: Tan Sri Liew Kee Sin and the country's largest asset manager, Permodalan Nasional Bhd (PNB), are making a joint revised offer for SP Setia Bhd in a bid to safeguard the interests of all shareholders and maintain management continuity in the company.

This new turn of events followed the move by PNB to raise its stake in property developer SP Setia via a conditional offer made last September to gain control of the company.

The new offer price has been revised to RM3.95 per share from RM3.90 while the offer for the warrants has been revised to 96 sen per warrant from 91 sen.

According to sources, the joint offer was arrived at following meetings between Liew, who is president and chief executive officer of SP Setia, and PNB president-cum-group chief executive Tan Sri Hamad Kama Piah Che Othman.

SP Setia board of directors said in an announcement to the stock exchange that they received the notice of revised offer from Maybank Investment Bank Bhd issued on behalf of PNB and Liew. The company had earlier asked for the trading of its shares to be suspended, with the last traded price at RM3.88.

As part of the offer, Liew, PNB and SP Setia would enter into a management agreement for Liew to remain at the helm for a period of three years following the close of the revised offer.

He would continue to oversee and manage the operations of SP Setia within the ordinary course of the company's business, appoint and remunerate managers and employees as well as enter into contracts or arrangements for and on behalf of the company.

Liew told StarBizWeek that the key point of the joint offer was the strong marriage that would arise, with SP Setia able to lean on the support of cash-rich PNB for expansion and growth while PNB would have invested in a trusted brand with a regional presence.

“It's a win-win situation and there'll be no change in management,” Liew said, adding that PNB had remained supportive of the company's ventures abroad, including SP Setia's failed bid for the Battersea power station in Great Britain, even during the period of the first offer.

He said the previous offer caused a bit of confusion as the company's management was in the dark as to PNB's intentions. “But the management agreement shows that PNB recognises that without a strong team, SP Setia's future will not be so bright,” Liew pointed out.

He said the revised offer was also to “appease ruffled feathers out there” while his role as a party acting in concert was to overcome the Securities Commission's objections as well as the rules on takeovers and mergers.

Liew, who has an 8% direct stake in the company, would not accept the revised offer but would be given a put option in the three years following the close of the takeover offer. This would give him the right to sell his stake to PNB in tranches at the same price of RM3.95 per share.

He said the revised offer and the conditions attached to it, including retaining the current management team, showed PNB's genuine interest and sincerity as an investor.

Hamad had taken the step of reassuring the company and stakeholders in a joint statement with Liew last October that the latter would continue to lead SP Setia and manage its day-to-day operations.

“On our part, we'll now have to prove ourselves worthy as they've been supportive of all the key thrusts of the company, be it in eco-homes, township development, luxury condominiums, high-rise residentials and integrated commercial projects,” Liew said.

By The Star

KrisAssets plans REIT exercise

PETALING JAYA: KrisAssets Holdings Bhd is likely to inject its two retail assets in Mid Valley City the Mid Valley Megamall and The Gardens shopping mall into a retail real estate and investment trust (REIT) this year.

An industry source said the company had already engaged a merchant bank to look into the REIT exercise.

“The two assets have an estimated total asset value of close to RM4bil which makes KrisAssets a strong candidate to sponsor a REIT to unlock the value of its assets for its shareholders,” an analyst with a local brokerage told StarBizWeek.

The Mid Valley Megamall, which opened in 1999, has a net lettable area of 1.7 million sq ft on 5 floors that are occupied by about 400 stores. It also has a convention centre and two hotels Cititel and Boulevard. Its retail space is 100% occupied and commands average rental rates of RM10.50 to RM10.60 per sq ft.

The Gardens at Mid Valley City, which opened in September 2007, is the second phase of Mid Valley City. The Gardens contains a high-end shopping mall with branded labels. Its 830,000 sq ft of retail space is about 97% occupied with average rental rates of RM9.40.

The analyst said KrisAssets would be able to take advantage of the low prevailing tax structure accorded to REITs.

The REIT would be exempted from corporate tax if it distributes at least 90% of its total annual income to unit holders.

He said retail REITs had proven to be popular among the investing public but good retail assets had become a scarce commodity now.

Financing for such REITs was still available and the onus was on the sponsor companies to plan for more holistic retail projects that could cater to the changing needs of city folks, he added.

Another bank-backed analyst said the strong market response to the recent listing of Pavilion REIT, which has been oversubscribed by about 28 times, as well as the yield compression on select well-managed REITs including CapitaMall Trust, could have triggered KrisAssets' plan to expedite its REIT plan.

“Furthermore, in an environment where bank interest rates are expected to remain flat at best, we expect sustained buying interests on the REITs. This means that the company's parent, IGB Corp, which owns 75% of KrisAssets, would be able to extract generous valuations for its assets by divesting them to the REIT,” he added.

He said the REIT would be able to raise enough funds for IGB to undertake a mixed development project in London. IGB is said to be bidding for the project in west London, believed to be its first development project there.

In a recent report, RHB Research said it was positive on retail REITs although on average, they offered slightly lower yields compared with other sub-segment REITs.

“A strategic combination of asset acquisitions, asset-enhancement initiatives and creative events to drive shopper footfalls is crucial to deliver sustainable distribution per unit (DPU) growth.

“Retail REITs offer the highest earnings per unit (EPU) and DPU growth within our coverage. The office segment continues to experience massive oversupply, while industrial production is generally more sensitive to GDP growth.

“Apart from buying for the REIT's yield, investors should also ride on the rising valuations of scarced quality retail properties,” the report noted.

DTZ Research noted that retail REITs were subject to macro-economic risk and any downturn in the economy would have an impact on their performance.

“Notwithstanding the cautious consumer spending, the outlook for the retail sector remains positive with sales growth forecast to move upwards to 6.5% in 2012 from 6.0% for 2011,” it added.

By The Star

Scanwolf unit undertakes property project in bidor

KUALA LUMPUR: Scanwolf Corp Bhd's subsidiary, Scanwolf Development Sdn Bhd, signed a joint-venture agreement with SQ Land Sdn Bhd yesterday to undertake the proposed development of 128 plots of mixed development land into five units of shop houses and 123 units of terrace houses in Bidor, Perak.

Scanwolf told Bursa Malaysia yesterday the joint venture allowed the company to venture into the property development business with minimum capital investment.

By Bernama

China’s housing slowdown to cut big hole in GDP growth

China’S cooling property market could shave more than 2 percentage points off 2012 growth, forcing Beijing to decide just how badly it wants to keep the economy expanding at more than 8% a year.

Even if the world’s second-biggest economy avoids a housing crash, slower property investment is almost certain to constrain growth. That assumption was built into economists’ predictions that the economy will slow in 2012, but data released this week suggests housing may take an even bigger chunk out of growth.

China’s investment in real estate development rose 28% to 6.17 trillion yuan (US$977.67bil) in 2011 a full US$200bil more than the United States put into residential real estate at the peak of its housing bubble in 2005.

Unlike the United States, China does not have an oversupply of housing. In fact, the government has pledged to build 7 million units of public housing in 2012 after an estimated 10 million in 2011.

But in order for property investment to add to GDP growth, it has to keep getting even larger each year, and with real estate prices falling and developers scrounging for credit, China will be hard pressed to outdo 2011’s strong showing.

“If they build the same amount (in 2012) that they did last year, which is still a phenomenal rate of construction, then it would take GDP down to 6.6%,” said Patrick Chovanec, an economist who teaches at Tsinghua University’s School of Economics and Management in Beijing.

That would be a dramatic slowdown from 2011’s 9.2% growth, and it doesn’t even include potential indirect impacts that typically come with a housing slowdown, such as falling demand for building materials or a rise in banks’ bad debts.

Worthy projections

China’s latest economic plan targets GDP growth of 7%, but economists widely consider 8% as the minimum needed to generate sufficient job growth and support social stability top priorities for the Communist Party.

The Chinese phrase “bao ba”, or protect 8, is a commonly used line, illustrating Beijing’s unwritten imperative to keep annual growth above that threshold.

“It’s something that’s almost ingrained within the (Communist) party,” said Alistair Thornton, an economist with IHS Global Insight in Beijing.

Thornton thinks 2012 growth will dip to the 7.5% to 8% range, largely because of the housing slowdown. But he said it could easily drift down to 7% if China chooses not to prop up the property market.

UBS economist Tao Wang predicted property investment growth would halve in 2012, less dire than Chovanec’s prediction for a flat reading. That leaves GDP right around the 8% mark.

“We continue to hold the view that property investment will slow sharply but will not collapse in 2012,” she said.

Data released on Wednesday showed Chinese house prices have fallen for three consecutive months as of December, and property developers are bracing for a brutal 2012. A Reuters poll released on Jan 10 found economists expected property prices to fall 10% to 20% this year.

Chinese officials have spent the past 18 months cracking down on property speculation to try to keep the market from overheating, and it appears to be in no hurry to change course now. A housing bubble and bust would inflict far more economic damage than a policy-induced slowdown.

In Beijing, which enjoyed one of the country’s biggest price gains in 2010 but is now feeling the pinch of the government’s tightening measures, property developers were still hoping that policymakers will loosen their grip.

“It totally depends on whether the government will relax policies or not,” said a young sales agent surnamed Cui, when asked about the likely direction of property prices.

It would take something more severe than weak property sales to alter the policy course.

Beijing seems willing to accept that some developers will go out of business, but rising unemployment or a steep drop in growth would probably prompt Beijing to lift some of the real estate purchase restrictions put in place since 2010.

“While the central government does not generally sympathise with developers, rapidly decelerating real estate investment growth is a major concern,” analysts at Macquarie wrote in a Jan 17 note to clients.

Holding the line

There is little doubt that China has the policy tools available to keep growth above 8%, but it is not clear that policymakers are willing to live with the consequences. Real estate investment accounted for 13% of China’s GDP in 2011, according to government data released on Tuesday, bigger than the 10% estimate that some economists had assumed. That means a slowdown will weigh more heavily on growth, and the remaining 87% of the economy will have to pull even harder to take up the slack.

Net exports subtracted from GDP growth in 2011 and will probably do so again this year, so that leaves consumption and government spending as the two main economic drivers.

China could offer incentives to spur demand for big-ticket items such as cars or appliances, which it did with good success during the 2009 downturn.

But that strategy must be used sparingly. Incentive schemes tend to pull forward demand, essentially borrowing sales from later periods.

“You just can’t force people to spend more money,” Global Insight’s Thornton said.

As for government spending, China went on stimulus binge to combat the global recession in 2009, but local government debt soared to US$1.7 trillion and problem loans are growing. China’s audit office said in December it had identified US$84bil worth of irregularities with local government debt.

“They could pump a lot of money into this economy and keep the investment boom going,” Tsinghua’s Chovanec said. “All of those things have a cost and the cost might be pretty steep.”

By Reuters

Malaysia housing market to pick up steam in first half

The local housing market is expected to gather steam in the first half of this year, after cautious consumers shunned buying at the end of last year due to global economic uncertainties.

Datuk Seri Michael K.C. Yam, president of the Real Estate and Housing Developers' Association Malaysia (Rehda), said people are more confident on the Malaysian economy now despite uncertainties in developed countries.

Yam said the Economic Transformation Programme, the Government Transformation Programme and projects like the mass rapid transit and River of Life have garnered confidence in the market.

"They will have spin offs, creating jobs and business opportunities," Yam said yesterday, at the Rehda property market update for the first half of the year.

A Rehda survey found that 79 per cent of the 148 developers who responded were optimistic of the first six months of this year compared with 81 per cent in the second half of 2011.

Some 63 per cent said they will launch new projects in the first six months of this year, against 58 per cent in the preceding six months.

Seventy-four per cent of the respondents said they will increase their selling prices by five per cent to 20 per cent this year.

"This is due to the high costs of building materials and labour, which continues to be major challenges for the industry. Land cost is also increasing and we have no choice but to pass it on to customers as our margins are eroding," Yam said.

The survey showed that 38 per cent of respondents are facing challenges with building materials, particularly the pricing of bricks, cement and steel bars, and it is having an impact on their cash flow.

Meanwhile, the first Malaysia Property Exposition (Mapex) for 2012, organised by Rehda, will be held from March 2 to 4 at the Mid Valley Exhibition Centre here.

Rehda immediate past president Datuk Ng Seing Liong said Mapex is expected to generate property sales of up to RM100 million, slightly more than last year. Some 60 developers, including a small portion of foreign players, will showcase over 200 housing developments.

By Business Times

Rehda: Property prices will continue uptrend in H1

KUALA LUMPUR: A majority of developers expect property prices to continue climbing in the first half of the year in tandem with rising costs.

In a recent survey of members by the Real Estate and Housing Developers' Association Malaysia (Rehda), about 74% of respondents surveyed generally felt that prices would be on an upward trend, largely influenced by an increase in the cost of development.

Rehda president Datuk Seri Michael Yam said about 36% of the respondents said property prices might increase 10% to 20%, 31% expected prices to increase less than 10%, and 7% expected prices to increase more than 20%.

“The main reason cited was the escalation in land, building materials and labour costs. For example, steel bar price had climbed to RM2,589 per tonne in 2011 from RM2,285 in 2010, while cement had gone up to RM16.33 per bag in 2011 from RM15.64 in 2010,” he told a briefing yesterday on the Rehda Property Industry Survey for the second half of last year.

Two other main factors were the larger deposits required in obtaining housing development licences and the higher market demand.

The deposit for a housing development licence is now 3% of the estimated project cost instead of RM200,000 previously. The survey covered 148 companies or 15% of Rehda's 979 members, and they were selected from all the states in Peninsular Malaysia.

Yam said 63% of the respondents indicated that they planned to launch projects in the first half of this year. In comparison, 45% had launches in the second half of 2011.

“The top property types to be launched in the first half of this year are two-storey terrace houses, apartments and condominiums as well as service apartments,” he added.

The survey also reported that better sales were expected in the first half of this year compared with the preceding six months. About 67% of the respondents with planned launches in the period under review anticipated to sell 41% of their properties and above. Yam pointed out that this was despite the drop in confidence largely influenced by external factors. “Some of the external factors are the eurozone sovereign debt crisis, fragile US economy and volatility in commodity prices.

“Nevertheless, the Malaysian market is still buoyed by its relatively strong economy, low non-performing loans for the property sector and the Government Transformation Programme and the Economic Transformation Programme (GTP/ETP),” he said.

On challenges for the industry, Yam said the unsold designated bumiputera lots had been the main reason for unsold units recorded in the last four surveys, which were conducted every six months.

“The way forward in solving this is to have a policy for automatic release of designated bumiputera lots. This will enable such ideal units to be put in the open market instead of them remaining unproductive.”

“Additionally, more than half of the respondents believed that the real property gains tax would have an impact on the overall property market.

“Other than that, 48% of respondents reported that they faced financing issues but mainly in the end-financing for buyers due to buyers' creditworthiness as well as due to banks being more stringent in their lending policies,” he said.

Rehda Federal Territory branch chairman NK Tong said the 45% of respondents that reported launches in second half of 2011 represented a slight drop from the 58% in the first half of 2011.

“The average size per project launch has also declined to 145 units from 160 units for the period under review,” he said.

“Sales were encouraging for the period as more than half of respondents who had launches sold more than 40% of their launched units,” he said, adding that the majority of the units launched were landed properties, but Kuala Lumpur and Penang were more focused on strata-title properties.

Rehda announced that the first Malaysia Property Exposition for 2012 would be held from March 2 to 4 and would feature some foreign developers.

By The Star

New township offers synergy of family, work, business and leisure

Brand new: The Zest Serviced Apartment @ Kinrara 9 is completed ahead of schedule.

The Trinity Group team shifted into high gear as 2011 drew to a close — and delivered a full schedule ahead for the much-awaited launch of The Zest Serviced Apartment @ Kinrara 9. Dreamed up to be the next prime address in Bandar Kinrara 9 offering an integrated location for family, work, business, leisure, and entertainment — The Zest @ Kinrara 9 became an anticipated reality at the official Key Handover Ceremony recently.

The company is right ahead of target with the completion of an integrated development that consisted of 20 units of shop offices, 24 units of retail outlets and 720 units of serviced apartments in the Bandar Kinrara 9 township development — with infusions of modern and contemporary architectural design.

“The launch of The Zest @ Kinrara 9 marks our foray as a serious contender and comprehensive player offering a gamut of services in the real estate industry,” said Trinity Group managing director Datuk Neoh Soo Keat.

Moving in: Lok Jean Hui (left) is among the 720 homeowners receiving his key from Neoh (right) while Chor looks on.

Trinity Group’s long-standing commitment towards “building communities and enriching lives” is strongly reflected in its developer journey as it grew from strength to strength with each project. Its credo echoes the Malaysian government’s dedication towards ensuring quality and affordable housing to meet the needs of Malaysia’s growing population by matching demand and supply as well as providing efficient public utilities and services as well as a clean and livable environment.

Neoh added that Trinity Group wishes to redefine property development by bringing landmark projects that incorporate the best design, quality, technology and timely delivery. “As a forward thinking and customer-driven developer, we will ensure that all our new products offerings will set new benchmarks in terms of quality and value creation for our customers while remaining true to our aim of pursuing business activities in an ecologically-friendly manner.”

Housing and Local Government Minister Datuk Seri Chor Chee Heung was the guest-of-honour at the key handover ceremony. He said it was imperative for the Government and private sector to work together in order to create a competitive and sustainable housing industry.

“The partnership will benefit the homeowners as well as housing developers. I am pleased to see Trinity Group taking a leader role in raising the industry bar for private developers and employing the six thrusts in the National Housing Policy (NHP) as its guiding principle to achieving conducive and liveable environments and shared community infrastructure and foundation,” he added.

Being a resident or business owner in one of the units at The Zest Point means all-year access to amenities.

Trinity Group does not take community enhancement lightly; its service-focused vision spanning beyond property development is attested by its series of community projects such as a RM7mil access ramp, a RM3mil access road for The Z, and Malaysia’s first air-conditioned bus stop.

The ramp, linking the opposite side of the road and The Zest @ Kinrara 9 with the Bukit Jalil Expressway to lessen traffic congestion and commuting time, was launched by Chor.

Community development, to Trinity Group, is an on-going pursue. “We do not ­— and will not stop here. In the near future, we will undertake more development and community projects that are aimed to improve and enrich people’s lives”, said Neoh.

By The Star

L&G seeks more landbank

Low showing off the model of Damansara Foresta, a high-rise condominium project in Bandar Sri Damansara.

KUALA LUMPUR: Land & General Bhd (L&G) is looking to expand its landbank in prime locations, said managing director Low Gay Teck.

“We are looking to acquire more land in prime locations in the Klang Valley, Johor and Selangor. We are also trying to venture north to Penang as the property prices at these places are good,” he said at a briefing on its high-rise condominium project, Damansara Foresta in Bandar Sri Damansara.

However, he did not reveal the size of its current landbank. He noted that sourcing for ideal land was not an easy task and was a challenge for the company.

Low said it was currently busy developing Damansara Foresta and Elements@Ampang (a luxury condominium project in Ampang). Both projects have a gross development value (GDV) of RM700mil each.

“We are also planning for a mixed residential development on 220 acres of land in Seremban.

“Based on our initial estimate, the project has a GDV of about RM550mil,” he said, adding that L&G had kick-started all relevant pre-development for the Seremban project, but actual work might only commence at the end of this year.

Low said the question of a property bubble was “relative”.

“It happened because of all the hype from certain projects when the prices have gone too high. We're not selling very speculative property projects,” he said.

Commenting on its project, Damansara Foresta, Low said it was a freehold residential property located next to the Bukit Lanjan forest reserve.

“The overall project site consists of 42 acres, whereby only 21 acres will be developed for residential developments, leaving the remaining as natural forest,” he said.

Low said L&G would be taking registration for the third block of its Damansara Foresta project in February.

“We have sold part of the phase 1.

“We are now opening registration for Block C. Block A is 99% sold while Block B is 95% sold.”

Phase 1 consists of four blocks ranging from 227 to 237 units for each block.

Each unit ranges from 1,400 sq ft to 1,600 sq ft to a luxurious penthouse of above 3,000 sq ft.

The selling price for phase 1 ranges from RM500 to RM600 per sq ft with a maintenance fee of 25 sen per sq ft.

Low said the property was designed with lots of natural activities such as jungle trekking, resting pavilions, hammock garden, camping sites and others to make use of the forest area incorporated in the development.

“We have put up all the necessary precautions, including slope protection measures at Damansara Foresta,” he said when asked as the property was located on a highland, some 180 metres above sea level.

Damansara Foresta is expected to be completed by end-2015.

By The Star

Naza TTDI bullish on KL property

The company will launch Platinum Park residences, residential component in Taman Tun Dr Ismail and one residential component in KL Metropolis.

KUALA LUMPUR: Naza TTDI Sdn Bhd, which is optimistic about the property market in Kuala Lumpur, will continue to launch new projects and residential components in its existing projects.

The property development arm of the Naza Group is also launching three high-end residential projects.

Deputy executive chairman and group managing director SM Faliq SM Nasimuddin said the company is still optimistic about the property market in Kuala Lumpur.

"So far, I think we are still going aggressive into 2012, we still continue launching our remaining phases in our current township projects and also our ongoing projects," he told a news conference after the awards ceremony for "Bertam Master Plan & Creative Ideas Competition" last night.

SM Faliq said the company will launch Platinum Park residences, residential component in Taman Tun Dr Ismail and one residential component in KL Metropolis.

The combined gross development value for these projects is about RM1.5 billion.

Earlier, Naza TTDI and Persatuan Arkitek Malaysia (PAM) awarded six participants of the jointly-organised competition.

The competition required participants to submit creative ideas and designs for the masterplan of Naza TTDI's upcoming 333.6ha township in Bertam, Penang.

SM Faliq said the Bertam project is the company's first township development outside the Klang Valley.

"The success of our Bertam township development will serve as a platform for us to foray into development in other parts of the country," he said.

SM Faliq said the competition, which is its third such collaboration with PAM, aims to provide a platform for the architectural fraternity to showcase their expertise.

He added that Naza TTDI is committed to supporting and giving due recognition to local architect firms for their creative and innovative designs.

Naza TTDI had previously collaborated with PAM for respective masterplan competitions for the former's land in Puchong and Shah Alam in 2010.

Among the judging criteria for the competition include innovativeness, environmental-friendly features, the ability to achieve the Green Building Index rating, economical and resource efficiency, world-class qualities and consideration of traffic circulation while conforming to local planning standards and guidelines.

Also present at the awards ceremony were PAM president Ar Saifuddin Ahmad and chief executive officer Ar Paul Lai Chu.

By Business Times

Naza TTDI expanding to Penang

KUALA LUMPUR: Naza TTDI Sdn Bhd will commence works on its first out-of-Klang Valley project in Bertam, Penang next year.

While the mixed development is still in its design stage, it will be Naza TTDI's long-term project geared towards the middle to high-end market.

Faliq: ‘This year is our trophy year.’

Deputy executive chairman and group managing director SM Faliq SM Nasimuddin said the gross development value had not been determined but gave a rough estimate of houses priced from RM600,000.

The 834-acre Bertam township will be mainly residential with commercial and education developments.

“Penang island is not getting any cheaper so people who want to stay there would have to look for alternatives,” Faliq said after the Bertam Master Plan & Creative Ideas Competition awards ceremony.

He said that Naza TTDI had plans to go south to the Iskandar Malaysia region as well as beyond the country.

While the property arm of Naza has been developing projects single-handedly, it is open collaborations and partnerships.

“There are local and foreign parties that have approached us but nothing is solid yet, we are still in talks,” Faliq said.

“This year is our trophy year. We are still aggressive and optimistic about the property market,” he added, “We are looking to launch three high-end projects this year.”

Faliq was referring to the Platinum Park, KL Metropolis and Taman Tun Dr Ismail residential projects in Kuala Lumpur. The combined GDV for these projects is RM1.5bil.

Naza TTDI has a total of 1,200 acres of landbank now, 800 acres of which are under planning.

The Bertam Master Plan competition was jointly-organised by Persatuan Arkitek Malaysia and Naza TTDI, where participants submitted ideas and designs for the master plan of the township.

Winners of the competition were architects Lim Siew Bok, David Teh Teik Lim and Almaz Salma Abdul Rahim who received RM100,000, RM75,000 and RM50,000 respectively.

By The Star

IOI targets project at Singaporeans

KULAIJAYA: IOI Corp Bhd does not see any effect from the additional 10% stamp duty ruling imposed by the Singapore government on foreigners buying private property on its new project there.

IOI Properties Bhd senior general manager Simon Heng said the company was targeting Singaporean buyers instead of foreigners for its Clementi condominium project.

He said its strategic location within the mature housing estate of Clementi and close proximity with the National University Hospital and Clementi MRT station were the project's strong selling points.

“There are many Singaporeans living in the HDB flats who wanted to upgrade to living in private condominiums,” Heng told StarBiz after signing an agreement service with Telekom Malaysia Bhd to provide UniFi high-speed broadband network connectivity to house buyers of Parcels 3A and 4A of Bandar Putra here and Parcel 3A of Taman Kempas Utama in Johor Baru.

Singapore had in December introduced a new ruling where foreigners have to pay an additional 10% stamp duty when buying a private home in the republic, effectively raising the purchase price by 10%.

The move is seen to cool the private residential prices on the island state which are on the upward trend and there are complaints from Singaporeans that rich foreigners have push up demand and prices of private residential properties.

“We have yet to come out with the development details and land utilisation of 0.97ha site of the Clementi project,” said Heng adding transaction for high-end condominium in Clementi area could fetch S$1,000 per sq ft.

By The Star

Rising confidence in property mart: Napic

KUALA LUMPUR: Higher housing starts and building plan approvals last year signify confidence of developers and investors in the development activity, said National Property Information Centre (Napic) director Dr Zailan Mohd Isa.

Some 400,000 transactions valued more than RM100 million were undertaken during the first three quarters of last year.

Zailan said the second quarter of 2011 was the most active period during the period with more than 115,000 transactions recorded.

Housing starts, a key economic indicator, refer to the number of residential building construction projects begun during a particular period.

Speaking at the 5th Malaysian Property Summit 2012, Zailan said residential property sub-sector expanded significantly by 23.2 per cent after recording a 8.8 per cent growth for similar period in 2010.

At a media briefing, summit chairman and real estate agency CH Williams Talhar and Wong (WTW) managing director Foo Gee Jen does not expect prices to soften within KL although the external uncertainties may have led property buyers to be more cautious.

Choy Yue Kwong, who is president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPs) said past crises have shown that although property prices may drop in cities like Kuala Lumpur and Petaling Jaya for a short period, prices also pick up as fast.

Zailan expects the vacant space in the retail and office sectors to be absorbed as more space taken up from the market as private investment spurred by the Economic Transformation Programme takes place.

He described the outlook for the 2012 property market as bright with strong demand as developers and investors capitalise on the government's incentives.

Demand for development land will also increase from the spillover effect of projects such as highways such as Ampang-Cheras-Pandan Elevated Highway, Guthrie-Daman-sara Expressway, Damansara-Petaling Jaya Highway, Pantai Barat-Banting-Taiping Highway, Sungai Dua-Juru Highway and Paroi-Senawang Highway.

By Business Times

TM eyes 20 HSBB deals with developers

KUALA LUMPUR: Telekom Malaysia Bhd (TM) aims to sign service agreements with 20 property developers this year to deploy and provide its high-speed broadband service (HSBB) at their respective projects.

Its executive vice-president (SME), Azizi A. Hadi, said last year, TM inked agreements with 11 property developers, mainly for projects in the Klang Valley.

"This year, we plan to expand our services in Penang, Sabah, Sarawak, Johor and obviously the Klang Valley region," he said after signing the agreement with BHL Group of Companies here yesterday.

This move, Azizi said, will increase HSBB coverage to some 95 areas nationwide from the current 78.

"To date, the premium HSBB is offered to 1.19 million premises and we expect to increase the figures to 1.3 million by year-end ," he said.

Azizi said TM will launch Unifi in Ipoh and continue to expand it in key areas nationwide.

The agreement with BHL was for the deployment and provision of HSBB network infrastructure and services to the latter's three projects.

The projects are USJ One Park in Subang Jaya, KL Palace Court in Jalan Klang Lama and a development in Cheras.

By Bernama

UDA seeks investors for proposed complex

JOHOR BARU: UDA Holdings Bhd is looking for investors to undertake a joint-venture project to develop the Angsana II commercial complex.

Chairman Datuk Nur Jazlan Mohamed said the complex, adjacent to its existing Plaza Angsana shopping complex in Jalan Tampoi, would cost between RM200mil and RM250mil.

“We are open to any proposal from interested parties regardless of whether they are local or foreign investors,'' he said yesterday.

Nur Jazlan: ‘We need to start changing our mindset.’

The proposed Angsana II commercial project would be the first shopping complex in Johor Baru to incorporate a street-mall concept, Nur Jazlan told reporters after attending the corporate social responsibility programme at the home for the handicapped in Taman Sinar Harapan Tampoi, in conjunction with the company's 40th anniversary.

He said the company would not limit itself to working only with a domestic partner or investor in the project and was more than willing to work with a foreign investor.

Nur Jazlan said that certain parties including politicians should not politicise the decision made by the company to cooperate with foreign partners in its property development projects.

He said as a government-linked company (GLC), UDA's duty was to ensure that it was able to bring benefits to all Malaysians and not to a certain race only.

“We need to start changing our mindset. The country will not be able to move forward if we continue to use race-centric issues in business activities,'' added Nur Jazlan.

The company hoped to start Angsana II project this year if it was able to find a right partner for the project and “did not want to miss the boat again,” he said.

Nur Jazlan was referring to the directive made by the Finance Ministry (MoF) to UDA to review its decision on a proposed joint-venture project with China's GLC Everbright International Construction Engineering Corp.

He said a steering committee had already started reviewing the proposal made by the MoF to develop the former Pudu Jail site, better known as the Bukit Bintang City Centre.

“The committee will see whether the MoF's proposal is viable compared with the model proposed by Everbright and it (the study) will probably take months,'' said Nur Jazlan.

On an unrelated matter, he said UDA would spent RM15mil this year to renovate its 15-year-old Plaza Angsana shopping complex, including upgrading its faade and food court.

By The Star

IOI advances on Singapore land buy

IOI Corporation Bhd rose one sen or 0.19 per cent to RM5.34 as at 11.20am today as market players are bullish on its property business.

IOI announced yesterday its 99.8 per cent-owned indirect subsidiary Multi Wealth (Singapore) Ltd has won a bid for a parcel of land in the island republic for S$408 million (RM995.5 million).

Measuring about 24,417.6 sq metres (2.4ha), the land, in Jalan Lempeng, Clementi Avenue 6, is intended for condominium development.

HwangDBS Vickers Research said it was neutral on the deal as the aggregate impact over five years would be less than 10 per cent of IOI's forecast pre-tax profits (approximately RM2.8 to RM3.4 billion per annum).

"We believe the estimated S$709 million (approximately RM1,730 million) total investment cost is better spent on its higher-margin plantation operations," it said in a research note today.
The research house maintains a "hold" rating on IOI.

By Bernama

IOI Corp wins bid for S’pore condo land

KUALA LUMPUR: IOI Corp Bhd has won a bid for a parcel of land in Singapore for S$408mil (RM995.5mil) that would enable the company to be involved in mass property market in the island-state.

IOI Corp said its 99.8% indirect subsidiary Multi Wealth (S) Ltd had been notified by the Housing and Development Board of Singapore of its acceptance of Multi Wealth’s bid for the land measuring about 24,417.6 sq m at Jalan Lempeng.

“The land, which is a rare condominium site, is located in the mature housing estate of Clementi and will have a good potential to tap into a large catchment of upgraders from the existing residents living in the area,” it told Bursa Malaysia.

This win confirmed StarBiz report yesterday that IOI Corp would be a potential winner as it was the highest bidder.

CIMB Research said the win was a slight surprise as it did not expect the group to venture into another Singapore property venture so soon after its recent purchase of the South Beach project.

“The Clementi condo project is strategically located and should attract pent-up demand from residents around the area.”

But CIMB Research is cautious on the Singapore property market, given the recent hike in stamp duties.

By The Star

China's property market slows down

SHANGHAI: China's property market slowed last year, official figures showed yesterday, as the government sought to bring down runaway housing prices amid fears of a speculative bubble.

The country introduced a range of measures aimed at curbing the real estate market last year, such as bans on buying second homes in some cities, hiking minimum down-payments and introducing property taxes.

Overall property investment rose an annual 27.9 per cent to 6.17 trillion yuan (RM3 trillion) in 2011, slowing from growth of 33.2 per cent in 2010, the National Bureau of Statistics said.

Meanwhile, housing sales - excluding government subsidised homes - rose 12.1 per cent to 5.91 trillion yuan last year, marking a slowdown from 18.9 per cent growth in 2010.

"Our major progress is that speculative-based investment in the property market has been curbed," statistics bureau chief Ma Jiantang told a news conference in Beijing.

Analysts have warned the correction in the property market is threatening to drag on economic growth this year, despite government resolve to keep control measures firmly in place.

Alistair Thornton of IHS Global Insight in Beijing said the rapid slowdown in property investment in the final month of last year indicated the overall economy was undergoing an "aggressive" slowdown.

"In this light, the property market correction is providing the greatest downside momentum," he said.

At the same time, China has pledged to invest more than $700 billion in low-cost housing to help those priced out of the market, with plans to build or renovate 36 million homes over the next five years.

Property developers are hoping Beijing will ease control measures this year, though analysts are divided on the timing of such a move.

In Shanghai, among China's most vibrant property markets, city mayor Han Zheng has dashed hopes of an immediate relaxation.

"This year, the strength of the property market control measures will not be reduced and the policy will not change," he told a news conference on Monday.

Home prices in most major Chinese cities dropped in November last year from the previous month with 49 of the 70 Chinese cities tracked by the government reporting falls.

By AFP

Australian REITs seen outperforming

SYDNEY: Australian property trusts are likely to deliver a total return of 12 to 15 per cent this year, outperforming local equities and other Asia-Pacific property markets, analysts said.

Australian REITs have proved resilient last year, slipping seven per cent against a decline of 14.5 per cent in the broader S&P/ASX 200 index.

In comparison, Singapore's FT ST Real Estate Investment Trusts Index dropped 16 per cent, while Hong Kong's property sub-index has declined 24 per cent.

Simon Garing, analyst at Bank of America Merrill Lynch, said Singapore property stocks faced a slowdown after the government rolled out measures to cool the residential market.

"We expect Asian REITs will continue to underperform for the first half of the calender year," he said.

"Australian REITs have been sort of a safe haven," he added.

Morgan Stanley is also expecting Australian REITs to perform better than the broad market as investors look for defensive plays and focus more on income rather than capital gains.

By Reuters

SP Setia eyes move into Vietnam city centres

SP Setia Bhd, Malaysia’s second-biggest publicly traded developer, hopes to take advantage of lower prices in Vietnam’s property market by starting a development in downtown Ho Chi Minh City or Hanoi.

Setia’s first two projects in Vietnam are housing developments in Binh Duong province, adjacent to Ho Chi Minh City, the country’s business center. The developer is now looking for a “high-rise building with some branding” to boost its corporate image in Vietnam.

Vietnam’s property prices are falling amid a glut of high-end residential apartment developments, the U.K.-listed Vietnam Property Fund Ltd said last month. Asking prices have dropped over the past “six, seven weeks,” said Alex Loh, Setia’s chief resident representative in Vietnam.

“We are looking for opportunistic deals,” Loh said in an interview yesterday in his Ho Chi Minh City office, declining to give details on any potential projects or prices. “We have been trying for the last few weeks and months. We are looking at coming back closer to the city now.”

Vietnam marked SP Setia’s first move outside its home base and the company has now also expanded into Australia. Chief Executive Officer Liew Kee Sin said in 2008 that the Kuala Lumpur-based company planned to spend “a lot of effort and time” in developing its projects in Vietnam.

Sales in the country have been slow, hurt by commercial bank lending rates of “about 18 or 19 percent,” Loh said, as the Vietnamese central bank pushed up its policy rates to slow Asia’s fastest inflation.

“They’re not very happy with it,” Loh said about his company’s view on Vietnam five years after committing to its first project in the country. “The pace here is just not there. But head office understands it, so they’re still going along with a slower pace-type of sales over here.”

SP Setia expects to identify a downtown project in Vietnam by the second quarter, and be at the “negotiations stage” by that time, he said.

By Bloomberg

Work on KB Sentral project to take off in June

KOTA BARU: Construction and engineering firm Sara-Timur Sdn Bhd plans to invest up to RM600 million to develop an integrated commercial property project called Kota Baru Sentral@Tunjong in Kelantan.

Chairman emeritus professor Datuk Dr M. Zawawi Ismail said the project, which will feature shopping malls, luxury apartments and condominiums, a convention centre and office blocks, will be developed over three phases on a 16.5ha land in Tunjong.

"We expect to begin construction by June or July as land acquisition procedures and other preliminary engineering works are already completed," he told reporters here.

The project, Zawawi said, will be jointly developed with the Kelantan Menteri Besar Incorporated and Tunjong Development Corporation.

He said the first phase of the project involving a shopping centre called "village mall" is expected to be ready for occupation in two anda half years.

"We expect the entire project to be fully ready in five to seven years from now," Zawawi said.

He said Kelantan traditional architecture and contemporary Islamic designs will be infused into buildings in the project.

By Business Times

Iskandar set to reach tipping point

PETALING JAYA: Iskandar Malaysia is set to reach its tipping point in the next 24 months after the completion of key catalyst developments and infrastructure improvements, according to HwangDBS Vickers Research.

The research unit believed that prospects for the economic growth corridor in Johor would be boosted by the successful bilateral talks during the recent Malaysia-Singapore Leaders' Retreat, the entry of more property developers as well as spillover demand for properties in Iskandar due to Singapore's latest stamp duty hike and high property prices.

It was noted that the recent bilateral talks had resulted in fruitful discussions on topics such as the construction of an undersea tunnel linking Johor Baru and Singapore, sale of electricity to Singapore (possibly from Pengerang), co-operation in aviation and airport services between Johor's Senai International Airport and Singapore's Changi International Airport, and the formation of a work group on industrial co-operation to promote Iskandar and Singapore.

“The industrial co-operation work group may be a springboard for more investments by Singapore in Iskandar, and could be a key re-rating catalyst,” HwangDBS Vickers Research said.

Since 2006, Iskandar has received RM77.8bil worth of committed investments.

The region had also recently seen property launches setting new price benchmarks, the research house said.

“We were pleasantly surprised by the strong 65% bookings for UEM Land Holdings Bhd's Imperia@Puteri Harbour condominiums, which were launched in Nov 2011 at a record RM725 per sq ft.”

It was also noted that UEM Land's Impiana@East Ledang condominiums had seen brisk sales with two blocks almost fully sold within six months at RM480 per sq ft (compared with RM300 per sq ft for the adjacent Ujana apartments launched in 2009).

For SP Setia Bhd, Johor is also a core market (accounting for 29% of its sales) with sales surging 57% in its financial year ended Oct 31, 2011.

Meanwhile, land values in Johor's Southern Industrial and Logistics Clusters continued to appreciate with the latest transactions hitting RM35 per sq ft (compared with 2010's RM25 per sq ft).

HwangDBS Vickers Research said its top stock picks, for exposure to Iskandar, were UEM Land, SP Setia, Eastern & Oriental Bhd and Genting Plantations Bhd.

By The Star

UDA to spend RM15m on Plaza Angsana

UDA Holdings Bhd will spend RM15 million to give Plaza Angsana, a popular shopping complex here, a facelift.

Chairman Datuk Nur Jazlan Mohamed said the project would be undertaken in two stages with the first involving external renovation works costing RM8 million.

Another RM7 million would be spent in the second phase, focusing on replacing the lights and floors as well upgrading the food court, he said.

"Tender for the first phase will open in two or three weeks and we expect the uprading work at Plaza Angsana to take a year to complete," he told reporters when attending the company's community programme at Taman Sinar Harapan here today.

Nur Jazlan said other shopping malls of the same age as Plaza Angsana had undergone upgrading works and UDA Holdings had to do the same so that Plaza Angsana could remain competitive.

The company was also looking for investors for the Angsana 2 project which would be developed at the parking lot next to Plaza Angsana, he said.

The project was expected to cost between RM200 million and RM250 million, he said.

By Bernama

TM eyes HSBB service pacts with 20 property developers

From Left to Right: JPK & Associates Sdn Bhd Director Lai Kok Phooi, BHL Group of Companies Executive Chairman Datuk Lim Boo Kian, TM Executive Vice President Azizi A Hadi, TM MSC State General Manager R.Manivannan.

KUALA LUMPUR: Telekom Malaysia Bhd (TM) aims to sign service agreements with 20 property developers this year to deploy and provide its high-speed broadband service (HSBB) at their respective projects.

Its executive vice president (SME), Azizi A. Hadi, said last year, TM inked agreements with 11 property developers, mainly for projects in the Klang Valley.

"This year, we plan to expand our services in Penang, Sabah, Sarawak, Johor and obviously the Klang Valley region," he told reporters after signing the agreement with BHL Group of Companies here today.

This move, Azizi said, would increase HSBB coverage to some 95 areas nationwide from the current 78. "To-date, the premium HSBB is offered to 1.19 million premises and we expect to increase to 1.3 million premises by year-end.

"Currently, our take-up rate is around 20 per cent.

"As our service offering expands, I am sure the rate also will increase in tandem with the growing Unifi subscribers," he said.

Azizi said TM would launch its high-speed broadband services, Unifi, in Ipoh and later continue to expand in key areas nationwide.

The agreement with BHL was for the deployment and provision of HSBB network infrastructure and services to the latter's three projects.

The projects are USJ One Park in Subang Jaya, KL Palace Court in Jalan Klang Lama and another in Cheras, which account for a total gross development value of RM680 million.

By Bernama

Gurney Paragon set to welcome RM35m F&B investments

GEORGE TOWN: Penang is set to welcome investments totalling RM35 million this year from food and beverage operators into phase one of the Gurney Paragon development on Gurney Drive.

The project's developer, Hunza Properties Bhd (HPB), has already seen the entry of nine tenants into Phase 1B of its multi-billion ringgit waterfront development with capital investments in excess of RM10 million.

"We are working hard to continue bringing in established names which have yet to set up a presence in Penang to open their businesses in Gurney Paragon," HPB executive chairman Datuk Khor Teng Tong told Business Times yesterday.

Phase 1B of the project comprises some 100,000 sq ft of lettable space, and its developers are touting the entire Gurney Paragon project as the only one in the country for now which integrates a restored heritage building amidst modern residential, retail and commercial spaces.

The company last night officially opened its "St Jo's@Gurney Paragon" building, which is the restored heritage building built in 1918.

The building is flanked by two towers which house 220 high-end dwellings, along with eateries on its first three levels.

St Jo's, which was formerly known as St Joseph's Novitiate, was initially started by the De La Salle Brothers to train young Catholic men to enter the religious order.

The colonial building, which was restored by HPB for RM10 million, was also once the site for Uplands School now known as the International School of Penang.

The restoration works include retaining the building's teakwood floors, roof trusses, window frames, stairways and clay tiles.

Khor said the current tenants surrounding St Jo's are Goku Roku Ramen, Pacific Coffee Co, T.G.I.Friday's, Brussels Beer Cafe, The Coffee Bean and Tea Leaf, and Meet Fresh.

The tenants who will open soon for business, he added, are Italiannies (serving Italian cuisine), Wong Kok Char Chan Teng (Hong Kong's foods and treats eatery), Share Tea (Taiwanese bubble tea beverage) and Petite Millie (casual French cuisine).

Khor said HPB is expecting at least 30 per cent of its new tenants to be first-time investors in Penang where a lifestyle mall - the Gurney Paragon Mall - is due to be completed by the end of this year.

By Business Times (by Marina Emmanuel)