SP Setia remains optimistic, plans new launches

SP SETIA Bhd, Malaysia's most valuable property developer, will continue to launch new projects this year despite tougher business conditions.

It aims to launch two projects worth RM1.2 billion before its fiscal year ends on October 31 2008.

They are Setia Sky Residences, the group's maiden luxury condominium project at the intersection of Jalan Tun Razak and Jalan Raja Muda Abdul Aziz Shah, Kuala Lumpur, and the second wave of its Setia Walk integrated commercial and residential project in Pusat Bandar Puchong.

SP Setia will also launch new phases within existing townships by October, executive director and chief operating officer Datuk Voon Tin Yow said.


Voon: SP Setia is unfazed by the recent hike in fuel and raw material prices... In fact, it is optimistic of brisk sales during this trying time.

Voon told Business Times in Kuala Lumpur recently that SP Setia is unfazed by the recent increases in fuel and raw material prices. In fact, it is optimistic of brisk sales during the current trying times.

For Sky Residences, the group is projecting a gross development value of RM850 million, pegging each unit at an average RM850 per sq ft.

It is positioned as an "urban chic" development targeted at sophisticated urbanites aspiring to live and work close to the city.

"We will proceed with the project based on feedback from clients.

"So far, there has been no new launches in that area in this price range. So we are quite optimistic of the product," Voon said.

For Setia Walk, it will launch 800 units of service apartments worth RM280 million to RM300 million in four phases starting September.

"As far as market is concerned, there is opportunity to buy. If people wait and see, prices would rise further. What is possible is that property prices would not come down for new launches," Voon said.

"It won't be viable to maintain the selling price for new products because of fixed land and construction cost," he said.

Voon believes the current market scenario is short term and the situation will improve.

"If people hold back on buying, there will be less launches, which may lead to shortage of supply of new units," he added.

SP Setia has 1,937ha in Penang, Johor, Klang Valley and Kota Kinabalu, Sabah, with 16 ongoing projects worth RM30 billion. It is confident of meeting its RM1.5 billion sales target this year.

The company made a net profit of RM260 million on revenue of RM1.15 billion in 2007.

By New Straits Times - Business Times - (by Sharen Kaur)

I-Berhad in talks on en bloc sale of The Peak@KLCC

I-BERHAD, the developer of luxury serviced residence The Peak@KLCC, is in talks with several parties for a possible en bloc sale for this property.

The Peak, with an estimated gross development value of RM500 million, is expected to be officially launched by year-end.

The 41-storey property, located on a 0.43ha of land on Jalan Kia Peng, Kuala Lumpur, will have 104 units measuring between 3,000 sq ft and 5,000 sq ft each.

"There are potential en bloc buyers... we are talking to a few. The enquiries have come from Koreans and Middle Easterners," its deputy chief executive officer Lim Boon Siong said.

Lim hopes the property will fetch at least RM2,000 per sq ft based on recent property transactions in the area.

The land is owned by I-Bhd's majority shareholder Sumurwang Sdn Bhd which owns 58.59 per cent of I-Bhd. Sumurwang, controlled by I-Bhd chairman Datuk Lim Kim Hong, bought the land in 1993 for RM280 per sq ft.

I-Bhd will form a joint venture with Sumurwang to develop The Peak.

To be ready by end-2011, the project will be funded either through internal funds, cash raised from a rights issue or a combination of both.

"We are looking at the market condition now given the fuel price increase and the US recession that does not help the situation," Lim said, adding that he expects that the property market here to soften in the short term.

"However, in the long term, since land is very limited in Kuala Lumpur, things look promising," he said.

"The location of The Peak is fantastic as it is within walking distance of Suria KLCC and the Convention Centre," he added.

I-Bhd is also in talks with international hotel chains like Marriott, Starwood, Hilton and Accor to manage the property.

By New Straits Times (by Vasantha Ganesan)

Gamuda gains on report bid has support

GAMUDA Bhd, Malaysia’s second-biggest builder, rose the most in a week in Kuala Lumpur trading after a newspaper reported the company’s largest shareholder supports a takeover bid by a Middle Eastern fund.

At 12.30am, the stock rose 9 sen, or 3.7 per cent, to RM2.52, headed for its biggest advance since July 14.

A Middle Eastern fund has gathered enough support to make a takeover bid for the construction company, the paper reported, without saying where it obtained the information.

Gamuda’s largest shareholder, the Malaysian royal family in Perak, agreed to sell its 7.5 per cent stake to the fund, the paper reported. The acquisition of the royal family stake is crucial to any takeover, according to the newspaper.

Such a bid “is not attractive enough for the privatization to succeed,” Vincent Khoo, who has a “buy” rating on Gamuda at Aseambankers Malaysia Bhd., said in a report today. “The stock is still trading significantly below its core net assets value of RM2.90.”

Gamuda stock has tumbled this year after managing director Lin Yun Ling sold most of his stock.

By Bloomberg

Govt asked to temporarily ban exports of steel

Many property developers and contractors have urged the Government to impose a temporary ban on the exports of steel and allow it to be imported to stabilise rising prices and meet growing local demand.

Although there is currently no serious shortage of steel in the country, industry players fear that this situation might not hold on for too long as there are currently many projects being undertaken by the public and private sectors.

They also claimed that some steel traders and suppliers were manipulating steel prices. “Those who can afford to pay can get their supply of steel but the smaller developers and contractors who cannot pay a higher price may not be able to carry on with their projects,” said a developer.

Master Builders Association of Malaysia (MBAM) president Ng Kee Leen said it was important that the Government allowed all steel bars that met the Malaysian standard MS146 or its equivalent the BS4449 standard to be imported tax free. As it is, he said not a single steel bar had been officially imported since the Government lifted the ceiling price of steel about two months ago.

This was because what happened on the ground was very different and there was still a lot of confusion as to the type of steel that could be imported. “The Government must fully liberalise and clarify the process and procedure in the importation of steel,” Ng said, adding that international steel traders have lost confidence in Malaysia as they found the process and procedure of importing steel vexing.

He said if the Government did not take action now, more than 140 related industries including the tin mining, timber, electrical, air-conditioning and joinery industries might collapse.

The country consumes some two million tonnes of steel per year or about 150,000 tonnes a month. Steel prices have soared from about RM3,000 per tonne two to three months ago to RM4,200 per tonne depending on the term of payment.

“The rising price of steel is like a roller coaster except that it does not come down. The situation is very critical,” said Ng.

MBAM past president Patrick Wong said MBAM had earlier called on the Government to stockpile steel and stabilise raw material prices to help government and low-cost housing projects.

He also urged the Government to monitor the situation.

International Real Estate Federation (FIABCI) Malaysia Chapter president Datuk Richard Fong said many developers were facing a “double squeeze” from increased construction cost and falling sales.

Many contractors have refused to tender for new jobs although some developers have agreed to absorb any rise in cost of steel and cement. This is because they feel that other raw materials such as tiles, copper, wires and even rocks have also increased in prices.

By The Star (by S.C.Cheah)

Steel prices in UAE surge

DUBAI: Steel prices in the United Arab Emirates have risen almost 10 per cent in one week as demand for construction materials continues to drain the local market, traders said yesterday.

Gulf Arabs are investing heavily in real estate and suppliers of building material are struggling to keep up with demand in the UAE, the second largest Arab economy.

The rising cost of building materials is helping fuel inflation across the Gulf, where economies are flourishing on a more than sixfold rise in oil prices since 2002.

A tonne of reinforcing steel bar (rebar), used in construction, fetched around US$1,700 (US$1 = RM3.24) yesterday, up from around US$1,550 on June 13, dealers said.

By Reuters

Konsortium Logistik hopes to get RM65m from land sales

KONSORTIUM Logistik Bhd, a logistic company, plans to sell several pieces of land in Indonesia, Thailand and Malaysia for an estimated RM65 million.

The sale of its land in Jakarta, Indonesia is due to be finalised within a couple of months, said its chairman Ismett Azyze Hamad Abbdul Azyze.

"We are looking to dispose no-yield or low-yield assets ... it is not a fire sale, we will sell if the price is right," Ismett told Business Times.

"We have land in Thailand, Indonesia and Penang (Seberang Prai) with an estimated value of RM45 million. We also have other pockets of land in Port Klang and Johor worth another RM15 million to RM20 million," Ismett added.

"We have agreed on the pricing for the land in Indonesia. It will go for about RM13 million or RM14 million. Hopefully, the deal is done within one or two months," he said.

For the land in Sadao, Thailand measuring 32.4 ha and in Seberang Prai measuring 12.2 ha, Konsortium Logistik has received various enquires and offers, none of which is the price the company is seeking.

"We are likely to make a small margin from the sale," Ismett said.

Meanwhile, the firm is also exploring the possibility of selling another piece of land measuring 3.65 ha and valued at RM42 million in Puchong, Selangor.

"We are looking at the operational requirement of the group. If we do not need the warehouse (in Puchong), we may move to another location," he said.

Ismett said that it had received an offer to set up a real estate investment trust for the land in Puchong and in Port Klang but it put the option on hold.

By New Straits Times (by Vasantha Ganesan)

A frank assessment of property & construction

According to census only 5% of households in the country have a monthly income of RM10,000 or more. You would think the figure was a lot higher judging from the number of property launches over the last 2 years with condos, semis and bungalows selling for over RM1mil.

If you bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

The recent fuel price hike coupled with higher cost of living and inflation may require a sober assessment of the local property and construction sectors.

There are about 4 -5 million households in the country, so we are talking of just 200,000 to 250,000 households with income of more than RM10,000 a month.

A property purchase of RM1mil on a 30-70 deposit-loan ratio would be staring at a RM700,000 mortgage. That would be a monthly payment of RM7,000 - RM9,000. Even if you bring that down to RM400,000 it is still RM3,500-RM5,000 a month.

Hence one can safely conclude that it’s a market for rich folks and foreign buyers mainly. Rich folks being those who can put up all cash or 50% deposit hoping for a nice fillip in the near future.

According to the Masters Builders Association of Malaysia, building material cost for local contractors have risen by 25% on average since January this year. Following the recent electricity tariff hike, they should be looking at another 5%-10% hike in the coming months.

Coffee shop talk has it that contractors are already putting requests for price variations of a 30%-40% hike on the original contract.

Over the last few weeks more than 200 contractors have turned down letters of award for government projects. Some are asking for mutual termination.

Let’s look at some building material cost items:

Sand (washed)/t: 2006 24.00 / Q108 27.00 / June08 34.00

Readymix Concrete 40 M3: 2006 152.00 / Q108 186.80 / June08 234.00

Re-bar High Tensile/t: 2006 1,855.00 / Q108 3,169.00 / June 08 4,050.00

Property companies have been jumping on the super luxury market as the trend and sentiment were on their side. The huge success of casinos in Macau followed a very spectacular property boom in Singapore triggered by the IRs over the last 2 years. Hence some spillover effect is understandable.

Currently property prices in Asia-Pacific is still high but largely flat in recent months. The proverbial stuff has not hit the fan as yet. The wait and see attitude is masking grave dangers.

The big fallacy is to see property companies reporting enormous profits. Do bear in mind these are profits booked for the past 12 months.

Naturally developers would be the last people who would want to come out and sound the alarm bells. Many property companies in Asia-Pacific have delayed their IPOs over the last 6 months. These are the alarm bells.

We have to remember that property affordability and property speculation have a high correlation to local stock markets performance. In particular, it is more prevalent for Asia-Pacific because we tend to have a large portion of our GDP being listed, plus the fact that Asians prefer to do direct investments themselves.

Just look at the equity markets from 2005-2007 and note the markets’ performance. Now look at the markets’ performance over the last 6 months. The doldrum is only just working its way into the financial economy.

Looking ahead, we will still have firm commodity prices, high inflationary expectations and likely higher interest rates – all not exactly friendly to stocks or property markets. Enough said.

In fact the real demand in the market place is for properties between RM300,000 to RM700,000 which has been sorely lacking. Even semis in Balakong and Rawang are nearing the RM1mil in new launches. It all boils down to affordability, and that’s the affordable range.

If you had bought properties that are worth more than RM1mil, you’d better be living in them when they are completed.

Ask anyone in property about the price for concrete and steel bars, and you will get a good idea of the huge jumps in construction and material costs. All things being equal, higher material cost should mean that your existing property should be worth a lot more as the replacement cost has gone up significantly.

If you bought 12-24 months ago, technically speaking your house is worth a lot more based on higher building materials’ cost alone.

Why then is the property market flattening out? When things dictate that property prices should move higher, but it doesn’t, then something is very wrong. It’s an old adage but worth repeating here (for property and equity investors): If something that is supposed to go up doesn’t, it is very likely to go down.

Sub contractors are now more willing to give up on the jobs secured, even paying the penalties and giving the jobs back to the main con because cost of building materials have gone up so much that they will be making losses if they go ahead. Just look at the run up in billing estimates for the second Penang bridge and you will have a good idea what we are dealing with.

For the super luxury market, probably less than half will be tenanted if at all. One can expect more to come back onto the market place in the coming months even though the replacement cost for these properties are actually higher.

The merry-go-round has stopped for super luxury items. Just witness the property markets in Singapore, Hong Kong, Thailand, Indonesia, China and even Australia.

The only sub-sector that may hold up well might be commercial buildings but that’s largely due to under-investment the few years following the Asian financial crisis of 1997.

As things stand today, just in Selangor alone there are already 140 abandoned projects from the previous cycle, involving the 47,000 odd units worth RM2bil. The huge cost run up will increase the likelihood of more new abandoned projects.

We Asians tend to view property investments differently. We tend to do it with minimal discussions with friends or relatives, as if its a crime to let others know that we are buying properties.

Maybe people will think we are rich, or too rich. In the end we end up discussing property investments with property agents, and reading tomes from property magazines. Just note the number of new property magazines launched over the last 2 years. After all, this is probably the most important financial decision we make in our lives.

The probable consequences in coming months

· Properties having sold 100% off the plan will see some of the developers starting to lose money if they are less than halfway through their projects as they may not have secured the building materials cost budgeting.

· Some smaller developers will be hit even harder and there will be more abandoned projects. Better to run than to continue the project. Developers cannot really go back and ask buyers to pony up another 30% to their purchase price, or can they?

· A substantial portion of the economic vibrancy in Asia-Pacific over the last 3 years has been due to strong property prices. A similar contraction effect will happen if things slow substantially in the property and construction side.

· Luxury properties will see at least a 15%-20% easing in the coming months even though the holding power is stronger. 15%-20% is about the loss that speculators are willing to take going forward.

· Real affordability is between RM300,000 to RM700,000. Anything above that is a different market, but they will still be affected. Completed units will have to be left empty or be rented at cut-rate prices. Maybe we can rent a RM1.5mil house in a gated community at RM3,000 ? who knows.

· Affordability is a function of outlook on inflationary expectations as well, and that’s not looking good

· Government construction projects will have to be revised higher to be viable or else the successful bidder will just walk away, even with penalties. Construction spending will rise in the coming budget but not in actual number of projects. Just accommodating the higher costs alone will move the budget a lot higher.

· Developers who sold 100% off the plan over the last 12 months may now be looking at making losses just to complete the projects.

· Coming months: a slowing US economy; higher inflationary expectations; commodity prices to stay firm; global equities under pressure.

· Rental market is a lot better in Hong Kong and India, showing a preference to defer property purchase. Expect that trend to be replicated in Singapore and Malaysia as well.

· While Asia-Pacific has weathered the US sub prime implosion well enough, the recent Vietnam implosion has rattled some feathers of regional developers.

· Be prepared for margins destruction, projects disruptions and scrapped/deferred projects.

Things we need to do now

· Lower your leverage and borrowing substantially, even if it means making some loss.

· By lowering your leverage, you are basically making it available at a future point in time to capitalise on probable better opportunities in stocks and property.

· Re-evaluate your property portfolio, be careful if there are yet to be completed properties you have bought.

· Be very wary of buying from smaller developers as the risk quantum has increased substantially.

· The state and federal government should start imposing adequate “capital requirements” for existing projects and new projects. Don’t wait till they abandon the projects. It is a lot harder to revive once abandoned.

· Think about the potential jobs constriction within the property and construction market place and plan your policies to mitigate those effects on the broader economy.

· Even developers with overseas projects may not be immune unless the rise in material cost has been factored in fully. Even if they were factored in, a 50% jump in cost may make many of these projects unviable. Only places such as the Middle East countries swishing in petrodollars can maintain the aggressive infra spending plans over the next 1-3 years.

· The economy may hold up a lot better than the general population as oil and gas receipts and plantation receipts will be positive. Generally speaking the general public’s wallets does not have a high correlation to oil or CPO prices, if there is even a correlation at all.

· Authorities should only allow build-and-sell developers over the next 3 years. As consumers, buying from the secondary market place would be a much better option than off the plan.

· A three-year contract in the Middle East with lucrative terms on a construction related job should look a lot better now.

· The government should defer the big projects which may not be the priority now. Instead it should spend more on Klang Valley’s transportation system.

By The Star (by S.Dali) (Article posted on 20 July'08)

S Dali is a pseudonym. He is an ex analyst/fund manager and active blogger. (malaysiafinance.blogspot.com) who says he is too young, too old, too sarcastic, too dark, too funny, too charismatic, too poor, too Cantonese, too Malaysian, too frank, ...too bad ..

Danga City Mall to add hotel, serviced apartments

JOHOR BARU: Danga City Mall Sdn Bhd (DCMSB) plans to build a hotel tower and serviced apartment block as part of its Danga City Mall development.

Managing director Gary Lee Seaton said the project would be located on the mall's existing outdoor car park, measuring about 40,000 sq ft.

The interior of Danga City Mall.

“The retail and hospitality sectors in Johor Baru will chart a good growth with the influx of local and foreign investors to Iskandar Malaysia,” he said.

Johor would also benefit from the spillover of the tourism sector in Singapore if local retail and hospitality players worked together to tap this market, he said.

Seaton said this during a preview of the newly refurbished mall, opening for business on Aug 31.

The mall, formerly known as the Best World Plaza, closed down two years after its opening in 1996 due to the Asian financial crisis.

DCMSB, which is closely linked to the developers of Danga Bay waterfront project, acquired the building in 2005 from Pengurusan Danaharta Sdn Bhd.

The former has spent RM100mil on the mall, including a RM50mil makeover, to reposition it as the city’s premier retail complex.

Located along Jalan Tun Abdul Razak, the mall has a gross built-up area of one million sq ft and 500,000 sq ft of lettable space over seven floors.

“The upgrading of the road to give the mall greater accessibility is our main priority as previously shoppers had problems coming to the mall,” said Seaton.

He said Metrojaya would be the main anchor tenant, occupying 120,000 sq ft.

Seaton said Metrojaya would have a 1,500-sq-ft café within its premises – the first of five such Metrojaya stores in Malaysia.

The other stores are at Mid Valley Megamall, Berjaya Times Square and Bukit Bintang Plaza in Kuala Lumpur, and Island Plaza Penang.

By The Star (by Zazali Musa) (Article posted on 20 July'08)

Floored by the pure beauty and warmth of solid wood

Wood flooring is renowned for its natural beauty, versatility, strength and endurance. It creates an ambience of warmth and vibrancy.

Solid timber is 100% natural and extremely durable.

There are many different wood species to choose from, each with its own character and identity.

Add that to today’s huge range of stains and finishes, the possibilities are endless and exciting.

Therefore, wood flooring blends in seamlessly with any style and décor.

Solid timber is 100% natural, extremely durable and can last for generations.

It can also be refurbished many times over and has real market value as it is a commodity.

Maintaining wood flooring is easy; you just need to dry mop or vacuum twice or thrice a week and clean up spills as soon as possible before they dry.

There are cleaning products which are specially designed to ensure your floor sparkles and looks great.

To refurbish wood flooring, you can either do light sanding and varnishing or grinding and varnishing, depending on the level of damage.

At Asia Timber House, you can find a range of high quality wood floorings that will suit any preference.

All the wood here is kiln-dried for the Malaysian climate, resulting in wooden floors that are more stable and stronger, with smoother finishing.

As Asia Timber House is a wholesale company, their wood is also budget-friendly.

They offer personalised consultancy to cater for different environments and design requirements of each home.

By The Star

Pelangi sees GDV of RM55m

JOHOR BARU: Pelangi Bhd sees D'Serambi, its last residential project in Taman Perling near here generating gross development value (GDV) of RM55mil.

Chief executive officer Azmar Talib said the project comprised 116 double-storey link houses priced from RM420,000 and would be completed in the next two years.

Datuk Ahmad Zahri Jamil (left) with Azmar Talib looking at a model of the D’Serambi project in Taman Perling

He said the gated and guarded project featured homes that combined modern needs with traditional values and classic architecture.

“Taman Perling’s close proximity with Bandar Nusajaya in Iskandar Malaysia and Singapore via the second crossing are the strong selling points of the project,” Azmar said at the project launch by the Local Government, Housing, Arts, Culture and Heritage committee chairman Datuk Ahmad Zahri Jamil on Saturday.

Azmar said the modern Malayan Homes concept was chosen as it brought back the good old days of living in government quarters where residents of all races mingled freely.

D’Serambi was the first residential project in Johor to have landscaped gardens in its back lanes, he said, adding that Pelangi wanted to be at trendsetter in property development in Iskandar Malaysia.

“The construction will involve minimum cutting down of trees as we want to preserve most of the 20-year-old mahogany trees on the 3.642ha site,” said Azmar.

He said the project had received good response, mostly from existing residents of Taman Perling who wanted to upgrade to high-end properties.

He said the recent completion of the Perling Highway and the good accessibility to the Johor Baru city centre, Senai Airport, Singapore and Pasir Gudang would add to the project's attraction.

Azmar said Pelangi was also planning to redevelop Perling Mall in view of several new retail complexes opening in the nearby Bukit Indah, Taman Sutera Utama and Taman Nusa Bestari.

He said the opening of the state new administration centre, private medical centres, foreign universities, resort style living projects, waterfront development and industrial estates in Nusajaya would have a positive impact on the retail sector in the nearby areas.

By The Star (by Zazali Musa)

Boustead close to privatising property arm

BOUSTEAD Holdings Bhd (BHB) says it is on course with its plan to successfully complete its privatisation of Boustead Properties Bhd, having gained 97.4 per cent control of the property arm.

In a statement in Kuala Lumpur today, BHB said it was confident that the remaining shareholders who have yet to accept its offer under its voluntary takeover exercise of Boustead Properties will accept its attractive offer which is open until July 24.

The privatisation move is in line with the group’s efforts to streamline and drive its growth.

“The offer for shareholders to take this up is now deemed unconditional.

All shareholders will begin to receive payment for their shares or receive their BHB share entitlement over the next 21 days effective July 16,” it said.

“We have been given to understand by our advisors that the small portion of shareholders who have yet to accept this offer are in the process of doing so.

“On this premise, we would like to accommodate them to provide them with sufficient time to take up our offer,” group managing director, Tan Sri Lodin Wok Kamaruddin said.

BHB launched a voluntary take-over of Boustead Properties on June 5, where Boustead Properties shareholders were offered a premium of 31 per cent above the company’s five-day weighted average market price with a strike price of RM5.50 compared to the said market average of RM4.20.

Kamaruddin said with the take-over plan, the group was confident of growing organically and further strengthening its business.

“This will be complemented by the synergies in terms of consolidation of assets within the larger BHB group,” he said.

By Bernama

Kumpulan Hartanah agrees to sell land

KUMPULAN Hartanah Selangor Bhd (KHSB) has agreed to sell a piece of land in Pulau Indah, Selangor, to Inai Kiara Sdn Bhd for RM30.1 million cash.

The 50.2ha land at Section 11, Pulau Indah, is still undeveloped, KHSB said in a statement to Bursa Malaysia yesterday.

"The sale of the land will accelerate the development of Pulau Indah and help to enhance the economic level in Pulau Indah by providing job opportunities," KHSB said.

By New Straits Times

New ideas to beat higher costs

KUALA LUMPUR: The rising cost of building materials provide the best opportunity for developers to be innovative and seek other alternatives to overcome the current situation.

The Institution of Surveyors, Malaysia (ISM) former president Datuk Abdullah Thalith Md Thani said new ideas needed to be injected for developers to cover higher costs.

Abdullah Thalith Md Thani

“Developers need to find ways to tackle the rising costs by focusing more on research and development (R&D). Engineers also need to look for alternatives building materials to tackle this problem,” he told a press conference here yesterday.

The press conference was to announce the 19th National Real Estate Convention (NREC) to be held on Aug 26-27 in Petaling Jaya.

The convention is jointly organised by the International Real Estate Federation (FIABCI), ISM and Association of Valuers and Property Consultants in Private Practice Malaysia.

FIABCI Malaysia president Datuk Richard Fong said the convention would address current issues faced by the real estate industry and strategies to counter them.

“The current construction costs have increased by about 30%. Now it's either build smaller houses at the same price or increase the price for better quality houses,” he said.

However, this was the good time to buy houses as developers would surely increase the prices for new project launches, he said.

The theme for this year's convention is “ Real Estate Leadership - Strategies for the 21st Century”.

NREC is expected to attract 600 delegates from Malaysia and around the region.

Registration is RM599 per person and includes convention materials, tea breaks and lunch.

By The Star

Developers holding back projects amid rising costs

The housing sector will suffer from a lack of new products as developers are holding back projects amid rising costs.

The number of projects abandoned by developers may also rise as they are not able to sustain the development cost, said the Malaysian head of Fiabci, an international real estate federation.

"While some developers are increasing selling price by 30 per cent due to higher costs, others may build smaller homes, or one third of the current size and maintain prices, to remain profitable," said Datuk Richard Fong, who is also Glomac Bhd group executive vice-chairman.


Fong: A slowdown in the housing sector will have a cascading effect

Fong was briefing the media on the upcoming 19th Real Estate Convention Conference (NREC 2008).

Besides cement price, which has gone up by 50 per cent in the last three months, and steel, which has doubled to RM4,000 per tonne, developers are burdened with more expensive copper wires, cables and transport charges.

"Some developers are taking the stand to postpone launches until prices stabilise," he added.

Fong said a slowdown in the housing sector, which encompasses 140 sub-sectors, will have a cascading effect on real estate, engineers, architects and consultants.

Banks and transport firms will also suffer unless the market improves, he said.

"The market is still sound. It's a good time to buy houses which have been launched as the next time a developer launches a new project, it will cost 30 per cent more," added Fong.

Institution of Surveyors Malaysia immediate past-president Datuk S.R. Abdullah Thalith Md Thani said new launches will slow down unless prices in the secondary real market rises, encouraging developers to launch again.

"The current scenario is an opportunity for the industry to innovate. In these challenging times, the government should revise the quota for low-cost housing and Bumiputera ownership," he said.

"The country is not facing a recession but cash flow problem," he added.

NREC 2008, which will be held at One World Hotel from August 26 to August 27, is organised by Fiabci, ISM and the Association of Valuers and Property Consultants in Private Practice, Malaysia.

It will address current industry concerns and strategies, among others.

More than 600 local and foreign delegates are due to attend the event, which will be launched by Minister of Housing and Local Government Datuk Ong Ka Chuan.

By New Straits Times (by Sharen Kaur)

Gamuda’s earnings to take a hit

PETALING JAYA: Gamuda Bhd’s earnings growth will be affected by lower domestic property sales and tougher competition for jobs in the construction sector, both locally and abroad.

MIMB Investment Bank in a report said escalating prices of raw materials, such as steel, would affect the operating cost of Gamuda and grind down its profit margin.

“Gamuda may not be able to reload its order book as well to maintain its construction earnings growth due to the grim outlook for the sector currently,” the report said.

Gamuda registered positive growth as net profit in the third quarter ended April 30 increased to RM76.7mil on revenue of RM562.3mil compared with RM45mil and RM297.3mil respectively in the previous corresponding period.

The company attributed the better performance to higher contributions from all divisions, namely construction, property and infrastructure concessions.

Going forward, MIMB noted that to sustain its earnings, Gamuda needed to have a strong balance sheet to hedge or even stock up raw materials.

On a positive note, Gamuda’s electrified double-tracking project from Ipoh to Padang Besar was running on schedule, it said, adding that 75% of its contract works and services had been awarded to various subcontractors and suppliers.

“However, Gamuda is still finalising the concession and power purchase agreement for its hydropower dam project in Laos,” MIMB said.

On the Vietnamese front, MIMB noted that Gamuda was confident of the long-term growth of its economy and the long-term viability of its projects there remained unaffected despite the current inflationary pressures and its currency crisis.

The company has a total land bank of 1,400 acres in Vietnam with a gross development value of RM12bil.

Gamuda’s share price had plunged more than 45% since March on concerns relating to Vietnam’s unstable economy. It closed at RM2.43 yesterday from a high of RM3.54 in early March.

Aseambankers in its report said Gamuda was significantly undervalued since the plunge, and maintained its “buy” recommendation on the counter with a target price of RM2.90.

Meanwhile, MIMB said the counter was due for a price correction since its sharp drop and maintained its “buy” call with a target price of RM3.04.

By The Star (by Laalitha Hunt)

CapitaLand sets up US$1b China fund

SINGAPORE: CapitaLand Ltd, Southeast Asia's biggest developer by sales, said it set up a US$1 billion (RM3.23 billion) private equity fund to invest in properties in Chinese cities.

The Raffles City China Fund will initially own the developer's 55.9 per cent stake in the Raffles City development in Shanghai and buy the three Raffles City projects that are being developed in Beijing, Chengdu and Hangzhou, it said in a statement to the Singapore stock exchange. The assets are valued at about US$2 billion, CapitaLand said.

CapitaLand, which owns more than 70 malls and developed homes in cities such as Shanghai and Beijing, made close to 30 per cent of its revenue in China last year, up from 20 per cent in 2006. China's economy may grow 10.1 per cent this year, following the 11.9 per cent growth in 2007 that was the fastest in 13 years, according to economist estimates in a Bloomberg survey.

By Bloomberg

Iskandar Malaysia woos RM33m investments

ISKANDAR Malaysia has attracted RM33 billion investments so far or 70 per cent of the RM47 billion needed to develop the region, the Dewan Rakyat was told today.

Deputy Minister in the Prime Minister’s Department SK Devamany said the government had provided “adequate and comfortable” infrastructures to woo more foreign investors to invest in the area.

The government had allocated RM4.3 billion to finance infrastructure projects in Iskandar, he said when tabling the Supplementary Supply Bill 2008 at committee stage.

Devamany also said projects approved for implementation at the East Coast Economic Region (ECER) have started operations.

Among them are agropolitant projects to eradicate poverty in the agriculture sector and setting up of the Centre for Academic Excellence at Universiti Malaysia Kelantan to stimulate human capital development.

Projects at other development corridors were still at planning stage, he said.

Devamany said the government would ensure development plans for all the corridors were implemented well to generate economic activities and woo investments to the areas.

The government had set aside RM173.2 million to meet the operational expenditures of the Iskandar Regional Development Authority, Northern Economic Development Council and East Coast Economic Regional Development Council besides financing the Managed Portal Services project, expanding rukun tetangga sectors and voluntary patrol scheme, added the Cameron Highlands MP.

By Bernama

Asian shopping mall operators meet to tackle issues

ASIA'S shopping complex operators will meet on October 29 to discuss current and future shopping trends and find ways on how to tackle the various challenges.

Malaysian Association for Shopping and Highrise Complex Management president Joyce Yap said among issues facing mall operators include rising inflation, dwindling tourist arrivals, rising costs, poor sales, staff-pinching and intense competition among Asia's shopping complex operators.

"Malaysia's 200,000 shopping tenants, for example, are not sure about the impact of the recent political uncertainty which could lead to a drop in tourist arrivals and shopping activities.

"We will get a clearer picture once the Mega Sales, which started on July 5 ends on September 5," Yap told Business Times in Kuala Lumpur yesterday after a preview of the upcoming conference.

Organised by the Council of Asian Shopping Centres, the three-day conference, which will be held at One World Hotel, Petaling Jaya, will be launched by Tourism Deputy Minister Datuk Seri Sulaiman Abdul Rahman.

Council members include the shopping centre associations of Malaysia, Singapore, Indonesia, Hong Kong, China and the Philippines.

During the conference, working papers will also be delivered by speakers like Limkokwing University of Creative Technology founder Tan Sri Dr Lim Kok Wing, AirAsia group chief executive Datuk Seri Tony Fernandes and Metro Kajang Group managing director Datuk Eddy Chen.

By New Straits Time (by Zaidi Isham Ismail)

Nomad aims Bangsar serviced apartments at expatriates

KUALA LUMPUR: The Nomad Residences Bangsar, the first serviced residency in the area, hopes to tap the rising number of expatriate business travellers converging in the city.

Nomad Group Bhd general manager of service residences, Jimmy Chow, said the apartments provided everything a hotel could offer with its fully furnished units and other services that suited this business group.

Nomad Group is the owner and manager of the residency.

“Bangsar is always a favourite area among the expatriates because of its location and easy access to shopping malls, dining and entertainment. However, there are no serviced residences in this area.

“We are the first to open, taking advantage of the location and people's lifestyle,” he said at the launch of the residency yesterday.

With the choice of 10 one-bedroom units and 48 three-bedroom units, the tenancy tenure is flexible.

A one-bedroom unit costs RM5,500 while a three-bedroom unit is RM9,500 per month. The rates include utility charges, housekeeping services and maintenance.

“Our philosophy at The Nomad Residences is simple – just bring your luggage and nothing else. Everything is provided here at a very affordable rate,” Chow said.

Formerly Bangsar Suria, The Nomad Residences Bangsar has recorded an average occupancy of 28% since it was refurbished and opened for business early this month. In two months, the occupancy is expected to double.

“After spending about RM15mil on renovations, we are really happy with the feedback. We are targeting 70% occupancy by year-end, based on the good response, especially from expatriates,” he said.

By The Star

Bandar Sunway to be first integrated wireless township in Malaysia

PETALING JAYA: The Sunway group will turn Bandar Sunway into the first integrated wireless township in Malaysia by year-end.

The group will provide 30,000 Bandar Sunway residents and two million visitors yearly access to the Internet without boundaries.

The group with its partner, Packet One Networks (M) Sdn Bhd (P1), had just completed the first phase of the township’s wireless broadband development while the second phase is expected to commence soon.

Sunway Group President Datuk Chew Chee Kin( (right), Subang Jaya Assemblywoman Hannah Yeoh (centre) and Packet One Networks Sdn Bhd (P1)CEO Michael Lai exchanging souvenirs after an MOU signing between P1 and the Sunway Group and the launch of the wireless broadband services at Sunway Resort Hotel & Spa in Petaling Jaya - Starpic by Brian Moh

Sunway group president Datuk Chew Chee Kin said currently 60% to 70% of the township, minus the residential areas, had the Internet service.

“We have set up 100 wireless fidelity (WiFi) hotspots, benefiting business users, students and visitors. At the moment, you can access the Internet for free at Sunway Pyramid,” he said after Sunway group signed a memorandum of understanding with P1 to continue with the second phase of broadband development yesterday.

“After 20 years of developing this city to epitomise ‘resort living within the city’, we are moving ahead to become the first integrated wireless township in Malaysia and maybe in the region too,” he said.

P1 is a subsidiary of Green Packet Bhd, which was awarded one of four worldwide interoperability for microwave access (WiMAX) licences by the Government last year.

P1 chief executive officer Michael Lai said the first phase of broadband development cost about RM5mil while the second phase’s cost had yet to be worked out.

“The current phase involves deploying (WiMAX) to cover more areas within this 800-acre township, complementing the WiFi usage that had been used in the first phase,” he said. The areas covered in the first phase include Sunway Pyramid Shopping Mall, Sunway Lagoon Theme Park, Monash University Sunway Campus, Sunway University College, Sunway Metro and Sunway Mentari.

By The Star