The pros and cons of redeveloping used land

The Bukit Bintang Plaza located in the heart of Kuala Lumpur will be integrated with the My Rapid Transit project.

Some call it urban renewal, others prefer to call it regeneration. Yet there are those who prefer a less politically charged term like transformation. By whatever name it is called, each of these involve changes to land use.

The last several years, the Government announced several mega projects which involve some form of change in the use of land. There is the Sungei Besi Airport, which involves the conversion of an airport and its surrounding land into a mixed commercial project where hotels, service apartments and retail commercial space will be incorporated. In the case of the Sungai Buloh Rubber Research Institute, that involves the change of agricultural land to commercial use.

While both involve changes of considerable degree, the first is a redevelopement, while the second is development. The dropping of the “re” carries huge connotation. In the case of development, the landowner has the mandate to plan what he wants out of that piece of land. He can carve it out how he pleases, in whatever shapes and sizes. He can allocate different purposes for each of the parcels he has carved out and can plan the timeline for each of the parcel and why the development of one should precede another, a developer in Section 13 says.

He is the master planner. And his task begins on a clean slate where he wants to put the different buildings, and whether there will be a library for each of the community he plans to build on that piece of land.

In the case of redevelopment, that freedom to do as he pleases may not be available, especially where the acreage is small, and on both sides gleaming structures are already in place. His task is to give new uses to the land but within narrow bands. He may demolish the tired-looking commercial building and put in a new one. He does not have wide perimeters to seek changes to the land use, simply because that would be dictated by land laws, which differs state to state. The above is a simplistic explanation between development and redevelopment. There are many legal and social issues that have been omitted about land use.

In the Klang Valley, because of the high premium put on land, every little bit of empty land is used even when the structure is an eye sore. In other words, there is a lot of ad hoc development going on and some of these structures may seem totally out of place and out of sync with the environment.

As one drives along the highway, out of nowhere, a boxy monstrous structure emerges from what used to be a field. Because the approval has been given, the road infrastructure has to change in order to provide access to that building and traffic has to be detoured and directions to enter the building have to be put up to lead traffic there.

On one hand, it may benefit the authorities as an empty field generates no taxes, and they will have to pay staff to maintain the field. On the other hand, the community has lost another open space.

It is a balance between revenue and social cause. Currently, the regeneration or renewal that occurs in and around the Klang Valley are economic driven, says a town planner.

A developer who purchased a factory lot in Section 13, Petaling Jaya says when it was a factory, it was generating taxes of about RM40,000 a year to the local authorities. After he has put up the structure redevelopment has taken place the project is generating revenue of about RM900,000 for the local authorities.

The same applies to the many serviced apartments that are coming up in that area. Serviced apartments, although with a strong residential element, are built on commercial titles. It generates a lot more revenue for the authorities than something that is on residential title. While it is revenue generating for the authorities, it is money depleting for those who buy into such projects because taxes and utilities are 25%-30% higher. These are issues that local authorities should consider as they approve a project on commercial land status. The same explanation applies to density. The higher a building, the more offices and residences and the higher the revenue it generates for the town council.

Which takes us to the next question: Should renewal benefit the people or the developer and local authorities? It should not be a zero sum game.

Models for urban renewal

There are many models for urban renewal. In the case of Kampung Baru, it involves a parliamentary process. In Malaysia, and other parts of the world, land use is a political matter. It is also a state matter. Which may be the reason why there is no one-size-fits-all urban renewal policy.

While the renewal of Kampung Baru is one model, it is a political decision and involves many stakeholders, there are other simpler models of urban renewal. A town planner who declined to be named says the changes that are still in progress in Section 13 in Petaling Jaya is another model, and one which is vastly different from that of the Kampung Baru renewal process.

In this particular case, the landowners themselves took charge.

“The collaboration among landowners in Section 13 would be among the more cohesive although there are challenges. Some of them had invested heavily in machinery and were not ready to move until land prices move further up.

“Other landowners did not want to go into the challenges of becoming developers,” says a town planner who declined to be quoted. So they sell out to developers who are able to see the opportunities that such a proposition offers.

Parcel by parcel, the land continues to change hands. Says the principal of a real estate company: “There is huge demand with land prices fronting Jalan Semangat going for about RM400 per sq ft or thereabouts.”

Among the most popular form of developments seem to be high-rise serviced apartments targeted at the young professionals. Centrestage project by Cherish Springs Sdn Bhd will have 1,160 comprising 352 units of serviced suites and 775 office suites. There will also be 33 units of retail shops.

F&N too is planning a RM1.6bil mixed development in its ex-dairy premises in Section 13. Approval for a F&N tower, a hotel, offices, retail outlets and residential suites is pending.

The Pacific Star, with a gross development value of about RM900mil, will have about 260 serviced apartments and office tower and office suites.

The project will be undertaken by developer Island Circle Development (M) Sdn Bhd, who is also building the 21-storey Pacific 63 at PJ Central, near Jaya One. Another serviced apartment project in that location is Avenue D'Vogue, with 300 units, by the Inspiration group. More of such projects are expected in the future.

Inter-connectivity

With traffic flow being a concern, local town planner Ahmad Jefri Clyde, the director of Garis Architects, has suggested inter-connectivity within the buildings in Section 13 in order to reduce traffic on the roads in that area.

This loose cohesive structure came about because landowners were not agreeable to the proposal given by the authorities initially, which resulted in them coming together on a single platform to seek the help of a planner.

This was the “workable model” for Section 13, the town planner says. There are a myriad of models.

In the case of PJ Sentral, the regeneration work undertaken by Gapurna Sdn Bhd is slightly different. Gapurna owns the 12 acres located behind PJ Hilton and set up a company PJ Sentral Sdn Bhd to construct new structures after it has demolished existing ones. That is the plan.

Gapurna's director Imran Salim says the plan is to have another hotel in the area, which will be competition for PJ Hilton, which is owned by Tradewinds Corporation Bhd.

“Gapurna's objective is to develop a business district in that 12 acres to complement the surrounding areas like PJ 8 and other upcoming developments in that area,” says Imran, adding that there is a need for critical mass.

“There is a need for a business district within Petaling Jaya,” Imran says. The projects he is considering will have a gross development value of RM2.2bil.

Currently, what Petaling Jaya has are commercial areas located in each of the housing areas. Although PJ New Town used to be a centre of activities, the lack of work done there to renew the place has resulted in much of the renewal being carried out today outside the PJ New Town Centre. It is happening in Gapurna's PJ Sentral behind PJ Hilton and across the Federal Highway near the Tun Hussein Onn Hospital.

This trail of renewal continues on to Section 13, as a source from the Petaling Jaya City Council says. In a way, it is this lack of focus to plan a proper district which has resulted in ad hoc groupings of new buildings and office towers coming together with serviced apartments. A single thread links them all, they are all built on commercial land status, which generate much revenue for the council.

But spanking new buildings, hundreds of small apartments ranging from 500 sq ft onwards and retail may not amount to successful renewal of a township.

Road infrastructures, open space and parks with ponds and other water features, recreational areas which may take the form of sports fields, libraries and games courts are part of the renewal equation. Unfortunately, these important pieces of the puzzle are missing in the regeneration that is happening today.

Economics vs social benefits

Often, one may have heard about the proliferation of malls in Petaling Jaya and Kuala Lumpur and the weekends are used visiting one mall or another. That is because there is an abundance of malls around us. One one drives along Lebuhraya Damansara-Puchong, a monstrous brown building has emerged next to the highway. But are there new parks? This is a question only the populace can address and demand from their local representatives.

Renewal is not only happening in Petaling Jaya. It is also happening in Kuala Lumpur. Recently, Tradewinds Corp Bhd said it will demolish the Crown Plaza Mutiara Hotel and Kompleks Antarabangsa to make way for the RM6bil Tradewinds Centre project. The company said the project will take about seven years to complete and is expected to commence in early 2013. The project will be built on a 2.8ha at Jalan Sultan Ismail, Kuala Lumpur.

This is another model of renewal. In this particular case, two buildings will give way to several because the new structures will go upwards.

The integration of Bukit Bintang Plaza (BB Plaza) and possibly the Yayasan Selangor building adjacent to it with the My Rapid Transit station in the new structure is yet another model. In this particular case, it is value-adding to regeneration because a new service, in this case a public rail project, will be incorporated.

Which takes us to yet another question? Should renewal benefit the community and the rakyat? Certainly, otherwise, what's the objective of the renewal process if it were to benefit only the local authorities, or the developers or in this case, MRT Co?

Should it be purely economically driven? No, there has to be a balance. In the case of the BB Plaza, public transportation will be improved by leaps and bounds with the rail service. It provides connectivity and at the same time, enables access and connectivity to business and commerce. It will also help to reduce congestion.

While the inclusion of rail transport is a service, what good or value add do parks and green lung offer? As more people live in high-rise, and even if they do not, there is a need to link with the environment, with trees and parklands, to have a bit of space. In short, to get away from the maddening crowd.

If one were to consider some of the world's most expensive and desirable properties, be it an office or a sanctuary to return to after a hard day's work, chances are these properties are located next to or on a park or some green open space. Consider Hyde Park in London, Central Park in New York, Hyde Park in Sydney.

The Petronas Twin Towers, straddled by the KLCC Park, is a fine example of a successful redevelopment

Closer home, there is the KLCC Park and The Binjai on the Park. Incidentally, that too involves a change in land use. That location used to be a race course, today it houses some of Malaysia's most desirable real estate. There is money to be generated in open space, but this channel is slower and more sustainable and more beneficial to the populace than just plonking a mall next to the highway, or a high-rise residential development next to a set of traffic lights.

City Hall and Petaling Jaya City Council did not respond to questions or attempts to seek interviews with them.

By The Star

Successful redevelopment projects in Malaysia

MALAYSIA has successfully undertaken a number of redevelopment projects over the years and one of the most recognised and touted is the Kuala Lumpur City Centre (KLCC) development that sits on the former site of the Kuala Lumpur Race Course.

The gleaming Petronas Twin Towers which still holds the record as the world’s tallest twin towers has undoubtedly put the country on the world map.

The KL Sentral project, which sprung up from what used to be an old workshop and depot for KTM Bhd, is also hailed as another regeneration project that has spruced up the city’s landscape.

VPC Alliance (KL) Sdn Bhd managing director James Wong says the growing interest for redevelopment of old buildings is mainly confined to Kuala Lumpur’s city centre as the majority of the old buildings in the capital city are located there.

Wong says the landmark redevelopment projects that have been completed include that of the KLCC Twin Towers, the KL Sentral, the Integra Building @ The Intermark was built on the site of the former City Square, and Menara Binjai which used to be the Chua’s family bungalow.

Going forward, he says projects in the pipeline include that of the redevelopment of Kampung Baru into a mixed development by Kampung Baru Development Corp; the Jalan Cochrane government quarters into a shopping mall, serviced apartments and a hotel; Warisan Merdeka’s 100-storey office tower cum hotel; and the former Pudu Jail into Bukit Bintang City Centre comprising a transit centre, service apartments, office space, recreational area, hotel and commercial space.

There is also the redevelopment of the Sungei Besi military airport into the Bandar Malaysia mixed development; the ex-Unilever site in Bangsar into service apartments, shopping mall, hotels and office towers; a 15.9 acre site in Section 17, Petaling Jaya into a mixed development comprising commercial, retail and residential units; and Crowne Plaza Mutiara Hotel and Kompleks Antrabangsa in Kuala Lumpur into service apartments, hotels, and office towers.

DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh says economic obsolescence dictates that the old use or form is no longer viable and it makes lots of financial sense to redevelop the land.

“Redevelopment is part of the life cycle of urban rebirth, renewal and rejuvenation that creates new life out of the old that are no longer relevant,” he adds.

According to Koh, usually where a whole area is involved and there will be many political issues, a decisive and focused political will from the government will be required to make it successful.

He says the KLCC, KL Sentral, Bangsar South and Mid Valley are really very successful projects in rejuvenating the city and adding value to the surroundings.

“Pavilion KL is another recent example although there are mixed views on whether the old school building should be retained for adaptive reuse rather than knocking down the whole place,” Koh says.

Mah Sing Group Bhd group managing director and chief executive officer Tan Sri Leong Hoy Kum says the 100-storey Warisan Merdeka tower which is currently being planned is an example where historical value will be preserved whilst the economic value is extracted.

“PNB which initiated the project has clarified that Stadium Merdeka and Stadium Negara will be preserved, and the mega project will be developed on the remaining surrounding land and designed to complement and blend in with the heritage theme.”

Leong says Mah Sing is involved in two redevelopment projects – Icon City, Petaling Jaya on the 20-acre site of the old Matsushita factory, and Southgate on the site of the old Malaysian Tobacco Corp company building.

Leong’s picks of overseas regeneration projects include Canary Wharf in London, Cheonggyecheon River in Seoul, and the industrial town of Bilbao in Spain.

“In Bilbao, the opening of the Guggenheim Museum designed by American architect Frank Gehry is deemed to be one of the most important structures of the last 30 years, giving a new lease of life to Bilbao by spawning various service industries,” he says.

Meanwhile, Koh’s overseas picks of good redevelopment projects include Dockland in London, Xintiandi in Shanghai, Sudirman CBD in Jakarta and Grassmarket in Edinburgh.

By The Star

Mayland to turn Cheras Sentral into bustling spot

PROPERTY developer Malaysia Land Properties Sdn Bhd (Mayland), which is set to open a second shopping centre by year-end, expects return on investment (ROI) in as early as five-and-a-half years.

Typically, a mall in Malaysia could take up to 10 years to see ROI and at best, in seven years.

Mayland, which owns and operates the Sri Hartamas Shopping Centre, is currently working on Cheras Sentral, the shopping complex which was previously Phoenix Plaza and is now undergoing a RM110 million transformation.

The projected time to recoup investment in Cheras Sentral is commendable even though the investment is possibly only a fourth of what it would take to build an entirely new mall and the renovated mall will have less retail space.

The previous mall, Phoenix Plaza opened in 1994 but closed in 2005.

Mayland's retail general manager Michael Chee is confident that the company will be able to make the mall, which once failed, into an bustling spot.

The mall, with 500,000 sq ft of net lettable area (NLA), anticipates 85 per cent occupancy on the opening day, which will be before Christmas this year. Rent at the malls is expected to be between RM4.50 and RM5.00 per sq ft.

Chee projects that the tenants within the mall will be able to rake in between RM150 million and RM200 million in sales in the first year of operations.

In an interview with Business Times, Chee, who has 25 years of experience in the shopping complex scene, said the mall had previously failed due to the mismatch between the tenants and the surrounding demography.

By taking this into consideration, as well as the needs of the growing Gen Y population, Chee feels he now has the right formula for the new upcoming mall.

"Cheras Sentral is being positioned to cater to the Gen Y, who tend to visit the malls on an average of one to two times a week and make it a social activity," Chee said.

He said that very often, people are judged by where they shop as it points to the status of the individual.

Cheras Sentral will include coffee joints, leisure and entertainment elements as well as health and lifestyle. It will house a karaoke, eight screens cinema and Celebrity Fitness.

The catchment for the mall include 1.6 million people within a 15 minutes drive, with 65 per cent of the average monthly household income at RM10,000.

The anchor tenant at the mall is Jaya Grocer, that will occupy 24,000 sq ft and a 15,000-sq ft Chinese restaurant that can seat 1,000 people.

Mayland, a company controlled by Tan Sri David Chiu, bought property in 2009 and took on the task of refurbishing it and adding a hotel and car parks. The entire investment is for RM160 million.

The hotel, to be either a three or four-star category, will carry the group's hotel brand - Silka or Dorsett and will have about 300-odd rooms. The hotel is scheduled for opening at year-end or early next year.

Chee said things could only get better when the MRT line is ready in three years.

By Business Times

Mayland in talks to acquire 2 malls

KUALA LUMPUR: Malaysia Land Properties Sdn Bhd (Mayland) is in talks to acquire two malls in the northern part of Peninsula Malaysia, as the group looks to grow its shopping complex business.

"Our discussions are in the preliminary stage. Together, both malls have a net lettable area (NLA) of 1 million sq ft," Mayland's retail general manager Michael Chee said of the mall he is in talks with.

Chee told Business Times that while the group prefers to acquire existing malls, it is also open to looking at greenfield projects.

The property developer model is to own and operate the shopping complex rather than be just a shopping complex manager.

Mayland's first shopping centre is the seven year old Sri Hartamas Shopping Centre which has NLA of 200,000 sq ft in Kuala Lumpur. The second mall Cheras Sentral will open at the end of 2012 with 500,000 sq ft of NLA.

By Business Times (by Vasantha Ganesan)

PJ Section 13 gets a new facelift

SECTION 13 in Petaling Jaya is probably one of the most recent examples of urban renewal. The 260 acres bordered by Section 14, Section 12 and Section 17 started out as an industrial area in 1960s and 1970s. At that time, some parts of Section 17 were rubber plantations and the setting up of factories there seem to be a good idea. The population around Section 13 was scarce and there was an abundance of land.

Growth, progress and development of residential properties soon resulted in communities forming around the residential areas of Section 13.

Today, there are plans to turn it into a business park.

A town planner who declined to be quoted says current environment can no longer sustain the manufacturing sector in that area.

“There are labour issues, traffic involving large trucks all of which are having a negative impact on the surrounding lots,” he says.

He says it was not possible to have shophouses there, resembling those in Section 14. Neither was there a need for another town centre as there was the commercial areas of Section 14, Paramount and SEA Park and Section 14 and further away, SS2.

It was then decided to turn it into a service-oriented commercial and business area to complement surrounding areas. The more focused approach has also allowed the landowners, planners and the local authorities develop the place according to their respective aspirations based on certain guidelines.

Demolished

“There are different ways to go about urban renewal or regeneration. There is the Kampung Baru model where laws and statues have to go through a parlimentary process. Or it can be done on a more ad hoc basis, as what is happening in some parts of Kuala Lumpur and Petaling Jaya where old buildings are demolished to make way for new ones,” he says.

Over at Section 13, the template for change started decades ago when the Malaysian Feedmill factory was purchased by niche developer Jaya33 Sdn Bhd and converted into the current Jaya 33 which comprises several blocks and a retail entity.

The second phase is the ongoing development of Plaza 33. The successful conversion of that piece of factory land subsequently resulted in the construction of Jaya One, by Tetap Tiara Sdn Bhd, another family entity.

Says the town planner: “The collaboration among land owners in Section 13 would be among the more cohesive although there are challenges. Some of them have invested heavily in machinery and were not ready to move until land prices move further up.

“Other land owners did not want to go into the challenges of becoming developers,” he says.

The main driver behind the changes was purely economics. A factory may pay RM40,000 annually to the local council. If that same piece of land were used for serviced apartment, assessment collected may be about RM1,000 a year. If there are 100 units, there is RM100,000 going into the coffers of the local authorities.

Garis Architects director Ahmad Jefri Clyde says it is easier to transform an area when the landowners hold the title deeds to large tracts of land and are fairly united, compared with having to deal with hundreds or thousands of houseowners.

Clyde is the planner for Section 13.

Controlled activities

Fraser & Neave Holdings Bhd, for example, owns about 13 acres. The Aluminium Company of Malaysia sold its 10 acres in 2004 to Tetap Tiara Sdn Bhd for RM47mil for the development of Jaya One.

Says Clyde: “It is economics that is pushing for change. Factories are getting old. There is a greater demand for land for other uses. So there is the push and pull factors.”

Instead of manufacturing, the area will now be used for limited commercial use, where the land use will not be as intense and activities are more controlled, as in the setting up of a showroom and other service-oriented activities, says Clyde.

Several of the landowners are planning to build serviced apartments, which means there will be a huge residential element there. Two of the factories have been converted to churches. These two elements, says Clyde, will help to form the basis of a community.

Because there will be a lot more people on that 260 acres in time to come, it is important to provide connectivity among the buildings to reduce the number of cars on the road, Clyde says.

“People travelling from one part of Section 13 to another can walk, which takes the pressure off roads like Jalan Universiti, Jalan Kemajuan and Jalan Semangat,” he says.

The commercial and residential elements will result in a population of about 103,000 people living and working there as the plot ratio will be increased to 3.25 compared to 2.75 before.

Clyde says developers will have to adhere to green issues and the provision of landscaping to beautify the area.

By The Star

Out of necessity in the Klang Valley

The KL Sentral development on the right is progressing smoothly. (Bottom pic) The old KL Central Market.

The redevelopment and regeneration of huge swathes of Kuala Lumpur and other parts of the Klang Valley is taking on a fresh fervour with new residential and commercial projects set to juxtapose with the existing city skyline and landscape.

The upcoming regeneration projects that will change the skyline and landscape of the Klang Valley include that of the new Kuala Lumpur International Financial District (KLIFD) at the old government quarters at Jalan Tun Razak; Bandar Malaysia at the former Royal Malaysia Air Force site in Sungai Besi; Warisan Merdeka in Stadium Merdeka and Stadium Negara; and the redevelopment of Pudu Jail.

There are also the planned redevelopment of the Pekeliling Flats at Jalan Tun Razak and the former Wisma Angkasa Raya building in Jalan Ampang.

In the Klang Valley, the development of the 3,300 acres of the Rubber Research Institute land in Sungei Buloh has also hyped up much interest among industry players.

According to Mah Sing Group Bhd group managing director and chief executive officer Tan Sri Leong Hoy Kum, the scarcity of prime land in good locations as well as rising cost of good land and properties have made it more commercially viable to redevelop land.

“These kind of land generally serves an established demographic, and the projects will be able to attract a ready target market,” he says.

Leong says redevelopment is a good way to effectively utilise prime landbanks, unlock land value, and pursue new projects that cater to current market needs.

These projects will hopefully raise Kuala Lumpur's liveability index and catapult it to join the ranks of the other global cities.

“At the same time, it is also important to give due consideration to whether the proposed sites have buildings with historical importance or architectural significance. With input from all stakeholders and with careful planning, a win-win solution can be reached.”

Leong points out that the Kuala Lumpur Central Market is a good example of a redeveloped project as it holds historical importance and architectural significance due to its strong art deco design language, and its ability to be re-purposed to modern needs.

“Back in 1888, it used to be an open wet market and by the 1930's a permanent structure was put up. Towards the end of 1970s, the Malaysian Heritage Society decided to preserve the building under its heritage programme. It is now a tourist attraction and a one stop shopping centre for local products such as handicraft, art, kebaya, songket, batik and a wide variety of Malaysian cuisines,” Leong says.

Benefits of regeneration

Property consultancy CB Richard Ellis executive director Paul Khong says redevelopment projects will bring back vibrancy to the city and if done right, this renewal factor will continue to enhance property values.

“A good and new major redevelopment project like the KLCC can turn around the entire locality into a popular neighbourhood, change the focus of the super prime locations in the city, increase capital values and demand, and change the real estate value patterns of the entire neighbourhood,” Khong points out.

He notes that although the authorities are moving in the right direction with regard to redevelopment initiatives, “there must be a well-planned and holistic approach to this effort.”

“It is necessary to adopt a well planned approach in the redevelopment process and proper town planning must be done with the relevant authorities taking into account or anticipate the problems which are also associated with such redevelopment projects.

“I think we need a mechanism like Singapore's where a general consensus from about 80% of the unit owners are required to allow for a redevelopment of their own residential project. A strong legislation on this aspect will be welcomed,” Khong adds.

VPC Alliance (KL) Sdn Bhd managing director James Wong concurs with Khong.

Wong says while the redevelopment of major parcels of land in and around Kuala Lumpur is healthy as it is part of a regeneration process of the city, “the scale of all these developments is too much and will create an oversupply in the property market and affect property values.”

“Hence, all these redevelopment projects have to be phased to take into consideration the supply and demand in the property market. Otherwise, the planned projects will generate millions of square feet of residential towers, hotels, office blocks and shopping malls.

“Based on the moderate economic growth of about 5% for the next three years and with Malaysia recording a net negative outflow of investments to the tune of RM48.9bil from 2009 to 2011, there will be not enough effective demand to absorb the millions of square feet of these upcoming developments,” Wong cautions.

He says DBKL as the planning authority has a role to play to regulate the supply by providing planning approvals on a staggered basis instead of giving blanket approvals.

And the banks also have a role to play by insisting on market and financial feasibility studies to ensure the viability of a project prior to granting bank loan approval.

“The Greater Kuala Lumpur covers an area of 2,793.27 sq km and is administered by 10 municipalities surrounding Kuala Lumpur. Each local authority and municipality currently acts independently on planning approvals without referring to the planning approvals of the other neighbouring municipalities. Amongst the 10 municipalities, there should be a coordinating committee to oversee the planning application and planning approval of large development projects.

“The coordinating committee should carry out studies on the impact of these projects to the property market and the environment. This is to enable developers to have greater awareness of the incoming supply and they will be able to better plan and phase out their developments. Such a measure will help to minimise another crisis similar to the Asian financial crisis of 1998 where many commercial buildings and large projects in Kuala Lumpur failed and were abandoned,” Wong explains.

To avoid such a potential situation, Wong echoes Khong's calls for the local authorities to emulate the planning model of Singapore's Urban Redevelopment Authority (URA).

“Singapore's URA's planning is so systematic. They will ensure all properties are developed and used according to the master plan for each individual lot parcel. The URA will only release land parcel for sale for redevelopment purposes if there is effective demand in that particular location, and for each land parcel, there are clear cut planning guidelines of the number of storeys, type of uses, density, and the number of car parks a developer can built,” Wong says.

DTZ Nawawi Tie Leung executive director Brian Koh says given the escalating land cost and the need to better utilise scare land resources, there is a lot of potential to redevelop the older properties in the capital city.

“These projects will bring back life, commercial activities and value to blighted areas within the city centre, and create an anchor for the revitalisation of the entire area.

“The potential impact to the property's value and the overall property landscape will be significant over the long run. An anchor project will help to trigger off the forces, so it will help if we have a financially strong consortium to manage such projects, especially if it involves a big area that need acquiring and putting capital into,” Koh says.

Maintaining heritage

Koh also points out the need to take into account conservation issues for the older parts of the city where there are cultural or architectural heritages.

VPC Alliance's James Wong concurs with Koh on the need to preserve and restore heritage and historical buildings.

“Many old buildings in KL's city centre are of neo classical and the art deco design, and such buildings should be preserved and restored,” Wong says.

He says the Kuala Lumpur City Hall (DBKL) has a policy involving redevelopment of high rise buildings whereby a developer has to maintain the front facade and allow redevelopment of the balance of the building to a higher density. “This is so that the face' of the old buildings will still maintain its character.”

He stresses that the charm of a city is in the old buildings, “hence old buildings should be restored and the front facade of the original building be maintained.”

“The Government encourages the preservation of historical buildings including those of the Portuguese, Dutch and British periods by providing consultancy services on the proper way to carry out the conservation work. The public's attitude towards building conservation is also gradually changing since the successful adaptation and reuse of the Kuala Lumpur Central Market.”

Wong says the government has appointed organisations such as Malaysia Heritage Trust, DBKL's Conservation and Townscape Unit, and the Museum and Antiquity Department of the National Museum to implement, monitor and supervise conservation activities of old buildings.

By The Star

OSK Property sees higher earnings

You’re hired: (From left) OSK Property Holdings Bhd director Ong Ju Xing, executive director Tan Sri Ong Leong Huat, executive chairman Datuk Nik Mohamed Din, Embassy of the People’s Republic of China in Malaysia economic counsellor Xuan Guoxing, BUCG overseas department general manager Li Dao Song and BUCG (M) Sdn Bhd managing director Yang Hong Lin at the signing ceremony appointing BUCG as the main contractor for the Atria Damansara project.

KUALA LUMPUR: OSK Property Holdings Bhd (OSK Property) executive director Tan Sri Ong Leong Huat expects the company to have a significant increase in earnings for the financial years ending Dec 31, 2012 (FY12) until FY14 from unbilled sales worth RM800mil.

The RM800mil unbilled sales are contributed by eight concurrent projects. “These unbilled sales can be realised over the next two to three years,” he said, adding that the eight projects had a gross development value (GDV) of RM5bil.

In FY10, OSK Property recorded 134% year-on-year increase in net profit to RM11.87mil on the back of improved sales from its projects located in the Klang Valley, Seremban and Sungai Petani, Kedah. In the following year-end FY11, it saw a further rise of 107% to RM24.62mil compared with its results in FY10.

The increase was again attributed to continuous good take-up of its properties launched and also due to advanced stages of construction work progress in some of its projects.

In the first quarter ended March 31, 2012, the company's net profit increased 174% to RM12.05mil compared to the corresponding quarter last year, attributed to yet again higher sales achieved from its projects.

In addition, certain phases of the projects have reached advanced stages of construction, resulting in a higher percentage of profit recognition.

Ong said: “Now that the group is independent and fully focused on property development, the significant growth in the company is evident.”

Yesterday, the group signed an agreement to engage Beijing Urban Construction Group (BUCG) via BUCG (M) Sdn Bhd as the main contractor for the Atria Damansara project that was launched last November.

BUCG's portfolio includes 19 Olympic projects for the 2008 Olympic games held in Beijing. This included the national stadium, the national indoor stadium and the Olympic village.

“We are very excited to have engaged an international company with an impressive track record and financial standing for the redevelopment of Atria.

“We are confident that BUCG will demonstrate strong execution capabilities to complete the project in a timely manner with a high quality delivery,” Ong commented.

The project would see the redevelopment of Atria, which would see the demolishment of the existing four-storey building structure and two three-storey car park buildings.

The construction would be carried out in two phases, the first of which would be for a four-storey lifestyle shopping mall. The second phase would feature two 16-storey small office flexi office (SOFO) towers.

“The demolition has been done.

“Also the earthwork and foundation has been complete. We are now proceeding with construction of the building,” Ong said.

He added that the Atria project could be partially completed by end-2013, and be operational by early 2014. “The full completion of the project could be in end-2014,” he said.

The 5.48-acre freehold Atria project valued at RM1bil, has a gross floor area of 294,683 sq ft and a net lettable area of 208,400 sq ft. “We have close to 400 SOFO units, which was completely sold within three hours of launching. There are still hundreds on the waiting list,” Ong said. The gross development cost stands at RM270mil, which includes infrastructure costs.

OSK Property has a current landbank size of 1,700 acres. “The 1,700 acres is not inclusive of the eight current projects mentioned earlier. Of course, we are still looking to increase our landbank size,” Ong said.

In terms of the outlook for the Malaysian property market, Ong said there was no real property bubble. “There is still a need for houses, as seen in recent take-up rates of property launches,” he said.

By The Star

TA Global to ‘add value’ to its Phuket resort

KUALA LUMPUR: TA Global Bhd, a 74% subsidiary of financial services group TA Enterprise Bhd, is looking into building a new block of hotel rooms for its latest acquisition, Movenpick Karon Beach Resort and Spa in Phuket, Thailand.

Tiah: ‘There is definitely potential to build another block just to cater to the convention business as there is a shortage of rooms during peak season.’

“We believe that we can add value (to this asset) because there is a redevelopment potential,” managing director cum chief executive officer of TA Enterprise Datin Alicia Tiah said.

The hotel, which sits on a piece of 20-acre freehold land, is one of two in Phuket that can hold convention facilities.

“There is definitely potential to build another block just to cater to the convention business as there is a shortage of rooms during peak season,” she said.

She reckoned that with direct flights from India and China to Phuket, the number of tourists would increase.

“We can build something, sell it and put back into the inventory. There are currently four blocks with all rooms sold except for one which does not have a sea view,” she told the media. The hotel, with an occupancy rate 86%, generates a yield of 9.1% according to Tiah.

The company has also gained approval from its shareholder in an extraordinary general meeting to enter a join venture with Birkbeck Trust to develop a hotel and residences building in Vancouver, Canada.

“The current risks for this project are construction risk and selling risk. The construction risk has been mitigated because 60% of the construction contract has been firmed up.

“We don't foresee any great height in the budget because prices of raw material and labour costs are still manageable,” she said.

Tiah expects the company to benefit from this project upon its completion as the market would have recovered by then.

She declined to name any hotels that would anchor the building but revealed that there were “many suitors”.

The building, which will stand as the second tallest in Vancouver, is also the last piece of work by the late Arthur Erickson, a prominent architect in Canada. The estimated gross value of this project is RM1.5bil.

“The basement is done so they will be putting up the structure soon,” she said.

She also revealed that the board had discussed the possibility of setting up a real estate investment trust now that the company held properties that are worth more than RM2bil.

On the group's stock broking business, she said TA Enterprise would be opening its seventh branch in Melaka in August. Tiah said the company would sell more products to raise the bottomline.

On the possibilities of acquisitions and mergers, Tiah said she said was open to join ventures if there were good partners.

By The Star

Hektar REIT bullish on strategies

CEO says acquiring neighbourhood malls will pay off

KUALA LUMPUR: Hektar Real Estate Invesment Trust (REIT) is firmly confident and bullish that its strategies in acquiring neighbourhood malls that are not necessarily located in the Klang Valley will pay off for its unitholders, especially in times of economic trouble.

You have to do your own analysis – history shows that we pay quarterly dividends for the last five years. — DATU JAAFAR ABDUL HAMID

REIT manager Hektar Asset Management Sdn Bhd's chairman and CEO Datuk Jaafar Abdul Hamid said that despite being among smaller listed REIT entities in the industry presently, it counted its strengths as being diversified and defensive in times of economic uncertainties around the world.

“We are too small to be compared with the bigger (retail) players. But, we have our niche. Of course people will say, Hektar REIT is small, compared with others which are bigger and more stable. But you have to do your own analysis history shows that we pay quarterly dividends for the last five years,” Jaafar told journalists after its EGM yesterday.

“Even though we are small, we are well diversified. The big ones (REITs), they are concentrated one big mall with big asset values. Imagine if you have any incidents (happening),” its executive director and chief financial officer Zalila Mohd Toon said.

Hektar REIT yesterday obtained the approval of its unitholders for the proposed acquisition of two shopping malls in Kedah Landmark Central Property (LCP) with a net lettable area of 280,000 sq ft in Kulim, and Central Square Property (CSP) with a net lettable area of 300,000 sq ft in Sungai Petani.

LCP opened in 2009 and its main anchor tenant is Giant Hypermarket. It has a 77% occupancy rate which is expected to rise to 99% once The Store commences its tenancy on Oct 15.

CSP was launched in December 1997 with The Store being its main anchor tenant with an occupancy rate of 99.5%.

These purchases will be partly funded by a renounceable rights issuance of up to 93 million net units in Hektar REIT, which have also been approved by its unitholders.

The manager is allocating RM19mil to refurbish the two malls which will be financed via internal funds and bank borrowings and is expected to be spent in 2013.

LCP will be bought for RM98mil and has an audited historical yields of 5.8% while CSP will be purchased at RM83mil with an audited historical yield of 6.4%.

“These are based on audited numbers that have been produced by the vendor. When we did our assessment when deciding whether or not we should acquire it is on the basis that it will be 7% at the point of entry. The minute Hektar REIT injects these two malls into its portfolio, the starting point will be 7% onwards,” its senior finance manager Raziff Suhairi Shaaban said.

“Post-acquisition there may be a slight earnings per unit dilution in the short term but, in terms of dividends per unit, we assure you that the dividends that we will be paying post-acquisition will be maintained at least as per 2011. Unitholders dividends will be maintained or improved from this year onwards,” Raziff said.

The acquisition signified its expansion into the northern region of Malaysia and was in accordance with its investment strategy of targeting prime neighbourhood malls as they were more resilient during times of economic downturn, capitalising on the economic growth and the vibrancy of the retail market, a statement issued by the manager stated.

By The Star

Battersea project to be worth £8b in 15 years

ICONIC LANDMARK: Sime Darby, SP Setia and EPF, via newly-formed Battersea Project Holding Co Ltd, will develop 15.6ha site into homes, offices and shops

The consortium comprising Sime Darby Bhd, SP Setia Bhd, and Employees Provident Fund (EPF), which bought London’s iconic Battersea power station for £400 million (RM1.97 billion), will redevelop the site to create a gross development value of £8 billion (RM39 billion) over 15 years.

The development of the Battersea Power Station project, which will see its four iconic chimneys preserved, covers an area of 15.64ha, involving homes, offices and shops.

In a statement issued yesterday, the consortium said the project is expected to see strong capital growth as it will be part of the strategic Vauxhall Nine Elms Battersea Opportunity Area Planning Framework, the largest urban redevelopment network area in central London.

The consortium agreed to buy the Battersea plant, Europe’s largest brick building, after its owner failed to pay debts and was put into administration.

A joint-venture agreement was signed between the three parties on Wednesday in Jersey, Channel Islands, to form a company called Battersea Project Holding Co Ltd (BPHCL).

Sime Darby and SP Setia each has a 40 per cent stake in BPHCL, while EPF holds 20 per cent.

BPHCL plans to implement the approved master development plan for the Battersea site, which was drawn up by award-winning architect Rafael Viñoly.

“London is a strategic and important target destination for property investment. As such, the Battersea project represents an excellent opportunity for us and our partners to expand our footprint in a key international market,” said Mohd Bakke Salleh, Sime Darby president and group chief executive.

The Battersea Power Station is located in the heart of London, on the south bank of the River Thames in the vicinity of Westminster.

Last month, about 15 bidders including Chelsea football club, owned by Russian billionaire Roman Abramovich, submitted plans to buy the site, the subject of repeated failed redevelopment attempts since it was closed almost three decades ago.

By Business Times

Kenanga Research maintains Market Perform on SP Setia

KUALA LUMPUR: Kenanga Investment Research is maintaining its Market Perform on SP Setia with a target price of RM4.05.

It said on Friday the target price was based on a 21% discount to its FD sum of parts RNAV of RM5.11 (excluding Battersea Power Station).

SP Setia had on Thursday entered into a contract for the proposed acquisition of Battersea Power Station site in London for 400mil pounds (RM1.97bil), post-28 days of the due diligence period.

Under the agreement, SP Setia, Sime Darby and the EPF's unit KWASA Global (Jersey) Ltd (KWASAJ) has proposed to set up a JV Co on equity stakes of 40:40:20.

Kenanga Research said the project gross development value (GDV) of 8bil pounds (RM39.4bil). Accounting for equity stake, this will increase SP Setia's total GDV by 30%.

“However, further details are still lacking. Details of project margins, initial size of first launch, etc. are still unavailable. The debt-equity funding structure has also not been finalised yet.has also not been finalised yet,” it said.

Kenanga Research said SP Setia's portion of land payment and the two years' development cost amounts to 240mil pounds (RM1.18bil).

“Assuming the typical 80:20 debt-equity ratio, SP Setia's net gearing will increase to 0.64 times from 2Q12's 0.32 times, which will be a record high level since 2007 and above our comfort level of 0.50 times.

“Although its strong billings can pare down the debt quickly, we do note that there are other capital intensive projects in the pipeline (KL Eco City, MoH land, Qinzhou Industrial Park@China),” said the research house.

By The Star

Malaysians to save Battersea after buy

Malaysia’s SP Setia Bhd and Sime Darby Bhd said they plan to develop 8 billion-pounds ($12 billion) worth of homes, offices and shops on the south bank of the River Thames after buying London’s Battersea Power Station site from liquidators for 400 million pounds.

The investors will retain the Art Deco power plant, according to an e-mailed statement by the companies in Kuala Lumpur today.

The building, with four iconic 350-foot-high smokestacks, has been vacant since it closed in 1982.

“The development will be the catalyst for strong rental and capital growth in the area,” Liew Kee Sin, SP Setia’s group chief executive officer, said in the statement.

Previous plans for the site, 2.2 miles (3.5 kilometers) from the House of Parliament, included a theme park and a mall that would have been suspended between the chimneys.

At least 10 bids were submitted for the building, including one from Russian billionaire Roman Abramovich’s Chelsea Football Club Ltd, a person familiar with the matter said in May.

SP Setia, the Southeast Asian nation’s biggest publicly traded property developer by sales, and Sime Darby will each take a 40 percent stake in the project.

The Employees Provident Fund, Malaysia’s biggest pension fund, will hold the remainder, they said.

Development will be carried out over 15 years with expected total sales of as much as 8 billion pounds, according to the statement. Construction is estimated to cost 200 million pounds in the first two years, it said.

Urban Redevelopment

“The Battersea project represents an excellent opportunity for us and our partners to expand our footprint into a key international market,” Mohd Bakke Salleh, Sime Darby’s group chief executive, said in the statement.

The project will be part of the largest urban redevelopment area of central London. The Malaysians bought the London landmark, Europe’s largest brick building, after its owner failed to pay debts and was put into administration.

Planning permission was granted to Real Estate Opportunities Plc, controlled by Irish developer Treasury Holdings Ltd., last year for a 5.5 billion-pound redevelopment of the power station.

SP Setia tried to buy the debt related to the power station in November for 262 million pounds and the offer was rejected.

Creditors led by Lloyds Banking Group Plc and Ireland’s National Asset Management Agency put the REO units that owned the site into administration, a U.K. type of bankruptcy reorganization, in December after they failed to make loan payments.

By Business Times

Sime Darby may seal Battersea deal this week

TA Securities says it does not rule out the possibility of the Employees Provident Fund taking up a minority equity stake in the project at a later point in time.

SIME Darby Bhd, the country's largest publicly-traded plantation company by revenue, is poised to sign by as early as this week a sales and purchase agreement (SPA) for the coveted Battersea Power Station in London.

"(The) management is targeting to sign the SPA today. According to (the) management, the development plan has been acquired from the previous owner (Real Estate Opportunity plc), which has already been approved by the authority," TA Securities said in a report dated July 4th.

"This would enable the joint-venture company to commence the development immediately instead of getting a new development approved, which in a typical development size could take few years," the report stated.

TA added that it does not rule out the possibility of the Employees Provident Fund taking up a minority equity stake in the project at a later point in time.

Last month, Sime Darby and its partner in the venture, SP Setia Bhd, said that they had emerged as the preferred bidders for Battersea.

The duo had outbid rivals from parties such as Russian tycoon Roman Abramovich, whose Chelsea football club is located close to London's Battersea Power Station.

The power station is a famed part of London's skyline and its cultural influence has led the British government to list it as a Grade II-status building, meaning "particularly important building of more than special interest".

"The project will be on a build-and-sell concept. The first phase of development will be the residential unit. More than 50 per cent of the site will consist of residential unit, while the balance portion will be for commercial purposes," TA said in the report.

It is understood that the redevelopment of Battersea will fetch a gross development value of STG8 billion (RM39 billion) over 17 years and that profits from the project are expected to kick in from 2016 onwards.

"(The) management declined to reveal any financial details but indicated that the return on invested capital of the project will be higher than the group's hurdle rate of 15 per cent.

Profit before interest and tax margin is expected to be higher compared with the typical 20 per cent to 25 per cent that a property development project in the UK could fetch," the research firm said.

Also in the report, TA said it has a "buy" call on Sime Darby, with a target price of RM11.38 a share.

Sime Darby shares closed at RM9.93 a share, giving it a market capitalisation of RM58.53 billion, or more than two times the market capitalisation of Felda Global Ventures Holdings Bhd, which stood at RM20.06 billion yesterday.

By Business Times

Hektar REIT to acquire malls for RM181m

Hektar Asset Management Sdn Bhd, the Manager of Hektar Real Estate Investment Trust (Hektar REIT), is set to acquire two prime shopping malls in Kedah for RM181 million.

The malls, the Landmark Central in Kulim and Central Square in Sungai Petani, are to be acquired for a purchase consideration of RM98 million and RM83 million, respectively.

"The two malls in Kedah would further enhance the long-term value of Hektar REIT’s property portfolio. With that, we can now spread our portfolio to the entire west coast of Peninsula Malaysia, augmenting our presence in Selangor, Melaka and Johor.

"Additionally, the acquisition is in line with the REIT's investment strategy to create and enhance the value of its acquired assets," Chairman and Chief Executive Officer of Hektar Asset Management, Datuk Jaafar Abdul Hamid said in a statement, today.

The acquisition of both malls signifies Hektar REIT's expansion to the northern region.

It is in accordance with its investment strategy of targeting prime neighbourhood malls, as they are more resilient during times of an economic downturn, capitalising on the economic growth and vibrancy of the retail market.

"Approximately RM19 million has been allocated as the initial cost of exterior and interior refurbishments of both malls, which will be financed via internal funds and bank borrowings.

"The refurbishments will endeavour to improve the value of both assets by drawing a good tenancy mix, facilitating improvements in rental rates and eventually attracting a commendable consumer traffic," Jaafar said.

Currently, Hektar REIT's portfolio comprises Subang Parade, Mahkota Parade (Melaka) and Wetex Parade (Johor).

The acquisition will also increase the REIT's gross asset value to RM1.04 billion.

The enlarged net lettable area (NLA) of Hektar REIT is expected to increase by 54 per cent, from 1.1 million square feet to 1.7 million square feet, after the proposed acquisition of both malls.

By Bernama

TA Enterprise plans to set up REIT

TA Enterprise Bhd plans to set up a Real Estate and Investment Trust (REIT) to unlock the value of its properties under management.

"If we were to put all the major assets into a REIT, then we can unlock the value and raise money to repay bank loans, while funding projects in the pipeline," its Chief Executive Officer, Datin Tan Kuay Fong said.

She was speaking to reporters after the company's annual general meeting here today.

However, she declined to reveal further details, as to when the company plans to launch the REIT.

"We will let you know when we ready. Currently, we are still exploring the opportunities," she said.

Meanwhile, TA Enterprise Bhd subsidiary, TA Global Bhd, has received shareholders' approval to jointly develop a hotel and residential building in West Georgia Street in Vancouver (Canada) with a Canadian company, Birkbeck Trust on a 50-50 basis.

The building has a projected Gross Development Value (GDV) of RM1.54 billion and is expected to generate a profit of RM423.46 million with both companies receiving an equal profit.

On the domestic front, the company is expected to launch the Peninsular Puchong residential project in the fourth quarter of this year, or in the first quarter of 2013.

The launch of the project will also depend on market demand as at present, the local property outlook is not so vibrant.

By Bernama

TTDI residents want MRT tracks to be realigned

RESIDENTS of Pinggir Zaaba in Taman Tun Dr Ismail, Kuala Lumpur, want Mass Rapid Transit Corporation (MRT Corp) to realign the MRT track away from their area.

During a press conference held at one of the residents’ homes yesterday, 44 owners voiced out their concerns and grievances, stating that the encroachment of the final Klang Valley Mass/My Rapid Transport (KVMRT) will definitely affect their lives.

“From the very beginning, MRT Corp has been telling us not to go to the press or picket and we took this in good faith, until a recent meeting in March when MRT Corp met with 25 other owners along the street (not inclusive of the 44 home owners present) and negotiated with them to buy their houses.

“MRT Corp has to understand that we are not against the project but are worried about the remaining 44 houses? While the 25 houses selected by MRT Corp have the option to stay put, sell or move out, the remaining owners are left without any options,” said Mokhtar Abdul Karim, 68, who has been living in the area for the past 35 years.

Mokhtar said with the upcoming MRT project, the value of properties along Pinggir Zaaba had dropped significantly by 20 to 25%.

“Would anyone consider buying the properties here when there is so much noise pollution with the MRT passing by every minute of the day?

“We want MRT Corp to consider making amends in the form of compensation for devaluation of properties, other losses as well as financial assistance for renovation of the properties to make them ‘livable’.

“Mitigation work for individual households in terms of noise, vibration and dust should also be done,” he said.

Pinggir Zaaba Home Owners Association (PZHOA) pro-tem committee chairman Teoh Chye Tee said the presence of a massive structure in front of their homes would definitely affect their lives during and even after the construction period.

“With the construction taking place, there is bound to be foreign workers walking around and heavy machinery in the area. We cannot imagine the condition of the streets or even our homes when the project starts. To-date, we have not received any Detailed Environment Impact Assessment (DEIA) for Pinggir Zaaba.

“There is still time for MRT Corp to realign the track or else we have to face the consequences of property value loss, risk exposure and its impact on our daily lives,” said Teoh, adding that MRT Corp should be mindful of their responsibilities and obligations to the people who are adversely affected by the mega project.

He added that the residents would prefer to engage an independent body to decide on the value of their property and that MRT Corp should not be the one deciding on the final price.

Dr Saiful Azhar Rosli, a resident in the area since 1987, also agreed with the concerns of his neighbours and wants MRT Corp to realign the track.

“This has always been a peaceful neighbourhood and the majority of residents are senior citizens. We rely on the facilities and amenities in the area and when the project starts, how do you expect us to sell our homes and move out immediately?” Dr Saiful asked.

PZHOA pro-tem committee had scheduled numerous meetings with Land Public Transport Commission (SPAD), Syarikat Prasarana Negara Bhd (SPNB) and MRT Corp since Jan 15 last year.

Despite certain assurances, both written and verbal by MRT Corp over the period of time, residents feel that they have been kept in the dark in terms of plans and reports, which were requested from MRT Corp earlier.

Segambut BN chairman Jayanthi Devi Balaguru, who was present at the meeting, said she had written to MRT Corp on June 19 stating the Pinggir Zaaba residents’ request, but had not received any response to date.

“Residents want the track to be realigned or else compensated adequately.

“Why can’t MRT Corp just revert to the original blue print or realign the route underground?” asked Jayanthi, adding that this would be more cost-effective compared to the current plan.

She said she would propose for a meeting with representatives from the Prime Minister’s Department, Federal Territories and Urban Wellbeing Ministry, SPNB, Kuala Lumpur City Hall and MMC-Gamuda Joint Ventures Sdn Bhd to be held with the residents.

By The Star

Harrods Hotel to open in KL

From left: Dr Hussain, Tourism Minister Datuk Seri Ng Yen Yen and Jerantas representative Tan Sri Abdul Aziz Ismail viewing a model of the project.

It is part of a RM2bil tie-up between Qatar Holding and Jerantas

KUALA LUMPUR: Malaysia could be home to the world's first Harrods Hotel if everything goes according to plan under a RM2bil collaboration between Qatar Holding LLC and Jerantas Sdn Bhd.

The project, located on a 5.48-acre land between Jalan Raja Chulan and Jalan Conlay, would be one of the world's first three Harrods Hotel chain to be built. The other two on the drawing board would be in London and Italy.

Qatar Holding vice-chairman Dr Hussain Ali Al-Abdulla said the Malaysia Harrods Hotel should be the first to complete, with the London hotel completed slightly later.

The project would be built on two parcels of land where Chulan Square and Sri Melayu Restaurant are sitting. The land was acquired by Jerantas from the Government for 1,800 per sq ft or RM429.68mil.

The development would be a one-structure building housing the seven-star hotel, serviced apartments and some retail space. The hotel is designed to have 250 to 300 rooms but the capacity of the serviced apartment has not been decided.

Both Qatar Holding and Jerantas will fund the project evenly, with construction work slated to commence a year from now.

Jerantas, which would be the sole developer, said the existing structures would be taken down within a year and the occupants would be notified.

Qatar Holding and Jerantas has signed a memorandum of understanding to study the potential development of the hotel, with both expressing confidence in the project.

Hussain said at the signing: “We have done our due diligence and don't think we will do any more study. We will execute.”

On the pricing of the serviced apartments, Hussain said it would “definitely be higher than Banyan Tree Residences but (the specific price) depends on the market”.

“We are looking to invest more in Malaysia because we believe the local economy will grow over the next two years at around 5% (per year),” encouraged by political stability and strengthening ringgit, he said.

“We will continue to invest in hotels because Malaysia is a good destination for tourism, with a lot of things to offer,” he added.

Hussain said that apart from hotels and shopping centres, Qatar Holding is interested to invest more in natural resources in Malaysia, having been the cornerstone investor in Felda Global Ventures Holdings Bhd with US$100mil.

Jerantas is a joint-venture company set up by PS Trading Sdn Bhd (34%) and Gagasan Simfoni Sdn Bhd (66%). PS Trading is a wholly-owned subsidiary of Tradewinds Corp Bhd.

Tradewinds, which holds the Harrods retail franchise in Malaysia, had indicated in its 2008 annual report that it planned to work with Harrods on hotel, residential and commercial projects.

Qatar Holding, which owns the rights to the Harrods brand, will have an equity participation in the project through its shareholding in Gagasan Simfoni.

In a statement, Qatar Holding said the development was part of its strategy to grow the Harrods brand and expand the group's portfolio by opening Harrods hotels in key cities like Kuala Lumpur, New York and Paris as well as in China.

“Preference will be given to construct on sites already owned by Qatar Holding or its affiliates, for example at Chelsea Barracks in London or Costa Smeralda in Sardinia (Italy),” it said.

By The Star

Two restaurants to make way for Harrods Hotel

KUALA LUMPUR: Two popular dining joints in the popular Bukit Bintang shopping zone here, will be making way for Asia's first Harrods Hotel and Residence.

The RM2 billion project will be located on the site of Chulan Square Restaurant in Jalan Raja Chulan and Restoran Seri Melayu in Jalan Conlay.

The Harrods Group portfolio is owned by Qatar Holding LLC, a unit of the Qatar Investment Authority.

In Malaysia, Tradewinds Corp Bhd (TCB) owns the franchise for the Harrods brand of products.

Qatar Holding vice-chairman Dr Hussain Ali Al-Abdulla said its objective was to open hotels in London, Sardinia in Italy and Kuala Lumpur.

"We have done the due diligence and will execute the projects. We are building Harrods hotels, Harrods apartments and retail units. The project here will cost RM2 billion."

Dr Hussain said the opening of the Harrods Hotel in London would be at around the same time as the one here, making it possible for Kuala Lumpur to host the world's first Harrods Hotel.

The Harrods Hotel here could be ready as early as 2016 if construction starts next year as planned.

The luxury hotel will boast of between 250 and 300 rooms and a residential component as well as retail.

Dr Hussain said the residential component would be sold at a higher price than that of the Pavilion Banyan Tree and Banyan Tree Residences, which is understood to be going for about RM2,000 per sq ft.

Dr Hussain said this at the signing ceremony yesterday between Qatar Holding and the sole developer of the property, Jerantas Sdn Bhd.

Both Qatar Holding and Jerantas will plough in an equal amount into the project.

Meanwhile, Ooi Ah Heong, the adviser for the development, said the hotel cum residences would be built on a 2.22ha site, which was bought for RM1,800 per sq ft, or roughly RM430 million.

Restoran Seri Melayu, which is owned by Amcorp Group Bhd, sits on land leased from Lembaga Kraftangan Malaysia.

Lembaga Kraftangan comes under the Information, Communications and Culture Ministry and acts as the custodian for the Federal Lands Commissioner.

It is understood that the land was tendered for sale by the government last year.

Ooi said the tenants had yet to be notified to vacate the land.

The land is now owned by Jerantas, which is a 34:66 joint venture between PS Trading Sdn Bhd (a wholly-owned unit of Tradewinds Corp Bhd) and Gagasan Simfoni Sdn Bhd.

Qatar Holding has an interest in Jerantas via Gagasan Simfoni.

Ooi, who is also a director of Pavilion Reit Management Sdn Bhd, said the opening of Raffles Hotels & Resorts within Pavilion Mall, here, was no longer possible.

By Business Times

Qatar to build Harrods hotel in Malaysia

Gas-rich Qatar’s sovereign wealth fund plans to build luxury hotels in Malaysia, Paris, London and China named after Harrods, the world’s famous department store, a report said today.

Under a US$636 million plan Qatar Holding will partner a local Malaysian firm Jerantas to construct a hotel in Kuala Lumpur’s golden triangle’s shopping district of Bukit Bintang.

Construction work is expected to begin next year on the development, which will comprise up to 300 hotel rooms, apartments and retail space covering a 5.5-acre (2.2 hectare) site, the Star newspaper said.

“We are looking to invest more in Malaysia because we believe the local economy will grow over the next two years at around 5.0 per cent,” Qatar Holding vice-chairman Hussain Ali al-Abdulla said.

Besides London where a Harrods hotel would be opened, Qatar Holding said:

“The target plan is to open Harrods hotels in key cities such as Kuala Lumpur, New York and Paris as well as China.

“Preference will be given to construct on sites already owned by Qatar Holding... for example at Chelsea Barracks in London or Costa Smeralda in Sardinia,” it said in a statement Tuesday.

Qatar Holding bought Harrods in 2010 and plans to establish a hotel management company to conduct feasibility studies as part of a decision-making process to select suitable sites around the world for development of Harrods hotel properties.

“Qatar Holding ultimately intends to grow Harrods into a global enterprise that defines the luxury retail and leisure sectors,” it said.

Egyptian-born businessman Mohamed al-Fayed previously owned the popular London department store.

In April SWF declared assets under management had far exceeded US$100 billion.

It was one of the high-powered cornerstone investors in the recent listing of Malaysian palm oil giant Felda Global, the world’s second-largest IPO this year.

Qatar, a member of the oil cartel OPEC, celebrated in 2011 raising its production capacity of LNG to 77 million tonnes annually, boosting its position as the world’s largest producer. It pumps some 800,000 barrels per day of oil.

By AFP

More hotels in key cities

KUALA LUMPUR: Qatar Holding LLC, as owners of the Harrods brand, plans to expand the Harrods Group portfolio in key cities.

This includes the opening of Harrods-branded hotels in London and other prime locations worldwide.

"The plan is to open Harrods hotels in key cities, such as Kuala Lumpur, New York and Paris as well as in China. Preferences will be given to sites already owned by Qatar Holding or its affiliates, for example at Chelsea Barracks in London or Costa Smeralda in Sardinia," Qatar Holding said a statement yesterday.

Qatar Holding will set up a hotel management company to conduct full market and feasibility studies before selecting suitable sites for the Harrods hotels.

The group ultimately intends to grow Harrods into a global enterprise that defines the luxury retail and leisure sectors.

By Business Times

HDB flat prices up again in Q2

Upward swing: The Punggol Residences HDB BTO apartment blocks under construction This resurgence in prices comes on the back of a downward trend in the two previous quarters. – The Straits Times/ Asian News Network

SINGAPORE: Resale HDB flat prices have inched upwards yet again, this time by 1.3% in the second quarter of this year, according to the Housing Board’s flash estimates released on Monday.

This resurgence comes on the back of a downward trend in the two previous quarters.

The percentage increase in the fourth quarter of last year, and the first quarter of this year were 1.7% and 0.6% respectively.

A more detailed release, said the HDB, would be out on July 27.

The agency has committed to offer 25,000 Build-To-Order flats this year, and has launched more than 15,000 flats in the first quarter alone.

There will be 5,200 more flats launched this month, and will be in areas such as Bedok, Bukit Merah, Choa Chu Kang, Clementi, Geylang and Punggol.

On the private homes front, estimates released by the Urban Redevelopment Authority (URA) on Monday showed that prices have risen by 0.4% in the second quarter of this year.

Non-landed private home prices increased by 0.6%, while prices for properties outside the central region went up by a more moderate 0.4%.

There was no change in the prices in the rest of the central region.

The latest price increase is a reversal of last quarter’s price decrease of 0.1% , the first quarterly price fall since Q2 of 2009.

More detailed data will be revealed on July 27 when URA releases the full second quarter real estate statistics.

By The Straits Times / Asian News Network

Jetson unit teams up with Fortress Effect

KUALA LUMPUR: Kumpulan Jetson Bhd has entered into a heads of agreement with Fortress Effect Sdn Bhd for the joint development of a luxury residential development project.

In a filing with Bursa Malaysia, Kumpulan Jetson said the project, known as The Macalister, would be developed on three pieces of freehold land in George Town, Penang.

Meanwhile, China-based Everbright International Engineering Sdn Bhd was appointed the designated contractor to undertake the construction and completion of the project. “Everbright International Engineering will participate in the project on a joint venture basis,” Kumpulan Jetson said.

Kumpulan Jetson’s entitlement under the proposed joint development shall be 30% of the gross development value, while Fortress Effect takes 70%.

By Bernama

SP Setia’s Viet project cancelled

KUALA LUMPUR: SP Setia Bhd's proposed 32ha property development project in Vietnam has been cancelled, the company told Bursa Malaysia in a filing yesterday.

It said that the condition precedent (CP) set out in the cooperation agreement between Setia Saigon East Ltd and Saigon Hi-Tech Park Development Co were not met by yesterday, which was the expiry date of an already extended CP fulfilment period.

The termination is mutual, SP Setia said, but added that the group is still positive on the property development prospects in Vietnam.

By Business Times

REITs stand to gain, defensive qualities will shine in current trying times

PETALING JAYA: Real estate investment trusts (REITs), which focus on higher-than-market average yields, will stand out in the current uncertain economic and market environment due to their defensive qualities.

The impending listing of IGB REIT and KLCC Property Holdings Bhd's planned REIT could potentially raise investor attention to a sector otherwise viewed as a low-beta proxy to the economy.

Analysts contacted by StarBiz said they did not discount the possibility of eventual increased attention on REITs, saying that this could be a prelude to a re-rating for the sector.

“These two REITs are huge in terms of potential flotation volume and market capitalisation. For IGB REIT, its asset valuation of RM4.6bil will make it the largest retail REIT to date,” RHB Research Institute's REIT analyst Loong Kok Wen said over the telephone.

Loong said the huge asset base due to high liquidity in the financial system would also attract the attention of institutional investors.

“This is a good opportunity to buy into such initial public offering REITs amid the sustained global uncertainties,” he added.

Loong noted that interest in REITs was currently high and this could be sustained, moving forward, should global uncertainties persist.

“There has been a lot of attention lately on consumer-based dividend-paying stocks and their prices have been going up.

“It is the same for REITs their asset revaluation had seen increased prices on the backdrop of high liquidity in the economic system,” Loong added.

A property analyst with TA Research said the other qualities of REITs that would be appreciated by investors in these volatile times were their dividend yielding nature compared with other fixed-income securities.

“I am positive about retail REITs as their dividends are stable because these cash stream comes from their rents.

“Retailers are resilient amid booming economies in the East. And locally, consumers here are always shopping and buying goods during the weekends,” the analyst said.

However, the analyst noted that while REIT yields had declined slightly from the past, one could still find yields as high as 8%.

Yields today still offer 2%-3% premium over fixed-deposit (FD) rates.

“For example, if I am a person with a lot of money, I would like to diversify my returns and risk. So REIT is the next best alternative after FD.

“Today, we are also looking at richer valuations for REIT stocks,” the analyst said.

In a report, Hong Leong Investment Bank said foreign funds and investors were continuing to show strong interest in Malaysian retail assets due to their attractive yields and pricing.

“The retail segment is blessed with a highly favourable macroeconomic backdrop sustained consumption theme in Malaysia, rising disposable income and discretionary spending, high consumer confidence, strong employment market (and) the tourism boom of Malaysia,” Hong Leong's REIT analyst Sean Lim wrote in the report.

By The Star

Ho Hup and Malton settle out of court

PETALING JAYA: Ho Hup Construction Co Bhd and its 70%-owned Bukit Jalil Development Sdn Bhd (BJD) have agreed to discontinue their appeal to the Federal Court and have opted to settle out of court with Pioneer Haven Sdn Bhd, a subsidiary of property developer Malton Bhd.

Ho Hup was previously trying to invalidate the joint development agreement (JDA) signed between the two parties on 60 acres in Bukit Jalil.

In a statement issued to Bursa Malaysia, Ho Hup executive director Derek Wong said: “The board of directors is of the view that the amicable settlement reached through a variation of the original terms of the JDA was for the mutual interest and benefit for all parties.”

Ho Hup said the settlement comprised two key variations to the JDA, developed more than two years ago on March 16, 2010. Under the variations, the joint development would now be on 50 acres instead of the 60 acres agreed upon in the previous JDA. The other 10 acres would be developed solely by BJD.

Out of the 10 acres, 5.9 acres had been approved based on a plot ratio of 3.09 and would comprise an office tower and shop-offices. The remaining 4.1 acres were earmarked for highrise residential units.

BJD would also be entitled to 18% instead of 17% of the estimated gross development value, which was subject to a minimum of RM220mil.

In addition to that, Pioneer Haven have agreed to pay for and on behalf of BJD and Ho Hup towards the servicing of monthly interests and the redemption of the secured loan of RM75mil from Insas Credit & Leasing Sdn Bhd and the payments would be treated as an advance of part of BJD's entitlement. Pioneer Haven has also agreed to assist BJD in securing bank financing of up to RM20mil to develop BJD's land.

The company said Pioneer Haven would then be entitled to restrict the land as security for the refinancing and indebtedness to Insas Credit & Leasing Sdn Bhd as well as to partly finance the development cost of the joint-venture land.

Ho Hup executive director Derek Wong had said earlier that the company would focus on expanding its ready-mix concrete operations and reviving its construction arm. The company is in the midst of bidding for a few medium-size Economic Transformation Programme-related construction jobs.

He added that the company was looking at developing properties in the Klang Valley and Johor on a joint-venture basis.

By The Star

Mah Sing upbeat on Penang projects

Teh (right) and Mah Sing executive director Lim Kiu Hock with a model of Southbay Plaza.

Contribution to sales expected to rise to 13% this year

GEORGE TOWN: Mah Sing Group Bhd's projects in Penang is expected to generate about RM325mil or 13% of the projected RM2.5bil sales for 2012, compared with RM70mil or 3% of the RM2.2bil sales for 2011.

The key contributors from Penang included the Southbay Plaza and Legenda@Southbay, group chief operating officer Teh Heng Chong said at Mah Sing's “Realising Dreams Property Showcase” held in conjunction with the group's 18th anniversary celebration in Penang recently.

The event showcased 11 projects that it was currently undertaking nationwide.

“The Legenda@Southbay has generated about RM40mil since January, while the Southbay Plaza has generated RM80mil since May.

“The other project that we expect to generate the remainder this year is the first phase of the Ferringhi Residence in Batu Ferringhi.

“Pending approval, we plan to launch about RM180mil worth of low-rise condominium villas in July 2012,” Teh said.

He said Mah Sing would focus on residential properties priced below RM1mil in Kuala Lumpur, Johor, and Penang. “At present, about 70% of our launches are in this price segment, which comprises mainly small serviced residences and linked homes.”

Teh said: “We are also continuing to develop gated and guarded residential properties priced above RM1mil in good location, which is about 30% of the group's launches for 2012.”

He said the Klang Valley would still make up the bulk of the group's sales target, as it had 28 projects there.

Penang was also an important market as its contribution had risen to 13% from 3% in 2011, he added. “We are looking now for an over 100-acre site in Seberang Prai for a township development.”

Teh said he was positive on the outlook for the property market in Penang as the most of the buyers of Mah Sing's properties are largely Penangites. “Our foreign customers come from Singapore, Indonesia, and Hong Kong.

By The Star

Ho Hup, Malton settle development dispute of Bukit Jalil land

KUALA LUMPUR: Ho Hup Construction Company Bhd and its 70% owned Bukit Jalil Development Sdn. Bhd (BJD) have reached an amicable settlement with Malton Bhd over the developmental rights of the 60-acre land in Bukit Jalil.

Ho Hup said on Tuesday they had reached a settlement with Malton's unit Pioneer Haven Sdn. Bhd and agreed to discontinue its appeal to the Federal Court.

Ho Hup would also "withdraw the suit and any ancillary matters related thereto without admission of any liability and with no order as to costs and no liberty to file afresh, inter alia, upon the execution of the supplemental agreement".

The company said the settlement saw two key variations to the joint development agreement signed more than two year ago.

Under the variations, the joint development would be on 83.3% or 50 acres of the Bukit Jalil land instead of the entire 60 acres.

The remaining 16.7% or 10 acres would be developed by BJD. Of the 10 acres, it said about 5.9 acres of land had approved development order based on plot ratio of 3.09.

"Parcel A consists of an office tower and shop offices. The balance of BJD's land measuring approximately 4.1 acres and with a minimum of 139,321 sq metres in gross floor area is earmarked as development for high rise residential units," it said.

BJB would also be entitled to 18% instead of 17% of the estimated gross development value, subject to a minimum of RM220mil.

In addition, Pioneer Haven agreed to pay for and on behalf of BJD and Ho Hup towards the servicing of monthly interests and the redemption of the secured loan of RM75mil from Insas Credit & Leasing Sdn Bhd and the payments would treated as an advance of part of BJD's entitlement.

Pioneer Haven also agreed to help BJD secure bank financing of up to RM20mil to develop the latter's land.

By The Star

Kumpulan Jetson in JV to build 33 condominiums in Penang

KUALA LUMPUR: Kumpulan Jetson Bhd is teaming up with Fortress Effect Sdn Bhd to undertake a luxury residential development project in Penang, comprising of 33 high-rise condominiums.

Kumpulan Jetson said on Tuesday Fortress Effect was nominated by China's Everbright International Construction Engineering Corporation to be the co-developer in the project.

Everbright's unit Everbright International Engineering Sdn Bhd will take part in the project on a joint venture basis.

Kumpulan Jetson's entitlement under the proposed joint development would be 30% of the gross development value and Fortress Effect's entitlement 70% of the GDV.

The parties agreed that Everbright International Engineering would be appointed the designated contractor to undertake the construction and completion of the project.

By The Star

Qatar Hlg, Jerantas to sign MoU on Harrods Hotel

KUALA LUMPUR: The world-renowned Harrods department store has set its eyes on Malaysia as the site of a Harrods Hotel.

An invite sent to the media said Qatar Holding LLC would be signing a memorandum of understanding with Jerantas Sdn Bhd today to explore Malaysia, specifically Bukit Bintang, as the ideal site for the next Harrods Hotel development.

According to sources, Qatar Holdings will be working with Tradewinds Corp Bhd (TCB) on the venture.

TCB holds the franchise for the Harrods retail stores in Malaysia and had indicated as early as 2008 in its annual report that it could collaborate with Harrods in future residential, commercial and hotel projects, especially in Kuala Lumpur.

According to a source, there is also a possibility of Harrods Residences opening together with the Harrods Hotel.

“The Harrods Residences will be sold at a higher price than The Banyan Tree Residences,” the source said.

In September last year, the then Kuala Lumpur mayor Tan Sri Ahmad Fuad Ismail revealed that a consortium of three developers was proposing to build the Harrods Hotel.

Apart from Qatar Holding and TCB, sources identified the third interested party as Datuk Desmond Lim.

Qatar Holding and Lim both are the major unitholders of the Pavilion Real Estate Investment Trusts.

Ahmad Fuad had at the time identified a piece of land in Jalan Conlay near Restaurant Seri Melayu as a suitable site for the hotel.

The restaurant, which is owned by Amcorp Group Bhd, sits on land that is leased from Lembaga Kraftangan Malaysia.

Lembaga Kraftangan comes under the Information, Communications and Culture Ministry and acts as the custodian for the Federal Lands Commissioner.

It is understood that the government had put out a tender for the sale of the said land.

It also understood that Lim owns the lease on the strip of land where the Chulan Square restaurants are located.

The signing of the MoU, to be held at the Pavilion Mall, here, will be attended by Qatar Holding vice-chairman Dr Hussain Ali Al-Abdulla and Jerantas corporate representative Tan Sri Abdul Aziz Ismail.

A search on the Companies Commission of Malaysia (SSM) revealed that Jerantas' main shareholders are PS Trading Sdn Bhd (33.99 per cent), Gagasan Simfoni Sdn Bhd (65.99 per cent), with Saharuddin Abdullah and Sumami Kiman each holding one share.

The directors of the company, appointed in March 2012, include Datuk Manan Md Said, Raja Sa'adi Raja Amrin and Shaharul Farez Hassan. Shaharul is group chief executive officer of TCB.

Manan and Raja Sa'adi have an equal share in Gagasan Simfoni and are directors of the company.

The Harrods department store in Knightbridge, London, was sold in 2010 by Mohammed Al Fayed to the Qatari royal family's investment firm Qatar Holding, which is also the investment arm of Qatar Investment Authority (QIA).

It was reported previously that a Harrods Hotel was planned on the rooftop of the department store. The status of this project is unknown.

By Business Times

Qatar plans Harrods hotels in Kuala Lumpur

Qatar Holding LLC said it plans to open Harrods-branded hotels in cities around the world including New York and Paris, two years after buying the British luxury retailer from the family trust of Mohamed Al-Fayed.

The Doha-based company, an arm of Gulf Arab state’s sovereign wealth fund, signed an agreement with Malaysian partners today for a proposed hotel in Kuala Lumpur’s Bukit Bintang shopping district. A hotel management company will be established to seek out similar projects around the world, according to a joint statement by Harrods Ltd and Qatar Holding.

“We have already decided to build a Harrods Hotel in London, one in Kuala Lumpur and one in Sardinia, Italy,” Qatar Holding Vice Chairman Hussain Ali Al-Abdulla told reporters in the Malaysian capital today. “We are looking to invest more in Malaysia because we think the economy is growing.”

Qatar Holding paid 1.5 billion pounds (US$2.3 billion) for Harrods in 2010, including its landmark store in London’s Knightsbridge district, which opened in 1849 and counted Sigmund Freud and Oscar Wilde among its customers. The hotel initiative is part of a strategy to develop the brand beyond retailing

The Kuala Lumpur hotel would be the group’s first in Asia. It also wants to open in China, Al-Abdullah said.

Chelsea Barracks

Construction will start in a year on a 5.5-acre (2.2 hectare) site in the Malaysian capital, he said. About RM2 billion (US$634 million) will be spent on the development, which will comprise as many as 300 hotel rooms, apartments and retail space, said Al-Abdullah.

Its preference is to build on sites already owned by Qatar Holding or its affiliates, such as London’s Chelsea Barracks site or Sardinia’s Costa Smeralda, according to the statement.

“Qatar Holding ultimately intends to grow Harrods into a global enterprise that defines the luxury retailer and leisure sectors,” it said.

Qatar Holding is part of the Qatar Investment Authority, which is the largest shareholder in the J Sainsbury Plc grocery chain in the U.K, and invested US$2.8 billion in Agricultural Bank of China Ltd’s initial public offering last year.

By Bloomberg

BB Sentral Station be built as standalone

The BB Sentral Station will be built without integration with Bukit Bintang Plaza (BB Plaza), said a joint statement by MRT Corp and UDA Holdings today.

As such, access to the station will now be independent of the mall, but located along the five-foot way in front of BB Plaza, the statement said.

Several other access points to the station will also be built from the surrounding roads, it added.

MRT Corp and UDA issued the statement in response to recent media reports related to the construction of the BB Sentral Station, located near the plaza.

The statement said MRT Corp has revised the station design to avoid having direct integration with BB Plaza. However, the revised design allows for integration to take place later, if and when BB Plaza is re-developed in the future.

Thus, based on the revised standalone design, neither BB Plaza nor UDA office building need to be demolished to accommodate the construction of BB Sentral Station.

According to the statement, the standalone BB Sentral Station will be accessible from the ground level in front of BB Plaza. At all times during the construction, pedestrian access into BB Plaza from the front entrance will remain open, it said.

A covered walkway will be built for the safety of pedestrians and shoppers, while a hoarded entry into BB Plaza will also be built. “Business As Usual” signages will be put up at strategic sections of these hoardings, it said.

The statement said four businesses namely Gloria Jeans’ Coffees; Hot & Roll; Starbucks Coffee (seating area only); and MADO Ice Cream located outside BB Plaza will make way for the work. MRT is a new rail transport system for the Klang Valley.

The Sungai Buloh – Kajang (SBK) Line runs for 51 km, from the north-west town of Sg Buloh to the south-east city town of Kajang. Upon completion, it will comprise 31 stations, and serve 1.2 million people along the route.

By Bernama

Crest Builder on firm footing

CREST Builder Holdings Bhd has received a letter of intent from Lembaga Getah Malaysia (MRB) via its 51% subsidiary, Landasan Bayu Sdn Bhd, for a proposed joint-venture development of the 4.8-acre MRB site in Ampang.

Landasan Bayu is a joint venture (JV) between Crest Builder and its partner, Tindakan Juara Sdn Bhd.

The proposed JV involves Landasan Bayu as the developer while MRB is the landowner. MRB will get RM299.9mil, which will be settled by a combination of cash and completed units.

We think the structure is similar to the Dang Wangi redevelopment project, which is 60% paid in kind and 40% in cash.

The cash portion will likely be paid progressively over the project life. The land to gross development value (GDV) ratio is slightly lower at 17% versus the Dang Wangi project at 21%.

This means margins should be better, if not similar to Dang Wangi's 20% pre-tax margin. We also believe that the group will undertake the construction of the project, implying a two-pronged revenue stream.

The project will be a mixed development with a GDV of RM1.33bil. Based on the guided gross floor area of 1.65 million sq ft, with the assumption of an utilisation rate of 70%, we derive an average selling price of RM1,150 per sq ft.

We understand the project will span five to six years and will start work in late-2013, with the launch likely to be in 2014, so the future pricing appears to be fair as neighbouring MSuites was launched at an average selling price of RM1,000 per sq ft last year.

We are overall positive on the project, as the group is moving towards catalytic property development projects, which will re-rate the stock from a contractor to a developer.

We expect a firm agreement to be inked in the next few months.There are no changes to our financial year ending Dec 31, 2012 (FY12) till FY13 estimate pending a firm agreement. Either way, earnings contributions will only be significant towards end-FY14 estimates.

We maintain our “outperform” call on Crest Builder with a target price of RM1.49.

Crest Builder is at its inflection point with re-rating catalysts as it moves from its traditional construction business into the property development scene while riding on the ETP play with Dang Wangi and MRB.

Risks for the company include capital management risks as well as property and construction sector risks, including negative policies and slow contract awards.

By The Star