KSL stamping its mark in Iskandar Malaysia

KSL City, which is KSL Holdings Bhd’s latest mixed development in the Iskandar Malaysia growth corridor, is set to be a new landmark in Johor Baru when it is completed in two years.

Touted as the biggest commercial complex in the whole of Johor, the project consists of a four-storey podium block of retail complex, two blocks of 26-storey hotel tower with a total of 950 rooms and 355 apartments on two blocks of 33-storey tower.

The podium complex, with floor area of 500,000 sq ft, will comprise retail outlets, a department store, cineplexes and car parks.

The RM500mil project is located within the matured Century Gardens just opposite Holiday Plaza shopping complex near Jalan Datuk Suleiman.


Ku Hwa Seng (left) and Khoo Soon Lee Realty Sdn Bhd general manager Ku Keng Leong with the model of shop offices to be developed at the company's Taman Nusa Bestari project.

“The location of KSL City augurs well for the company and it is the last remaining piece of land in the city for such a project,’’ said KSL Holdings executive director Ku Hwa Seng.

KSL City is located just about two kilometers from the Johor Baru central business district (CBD) and the new Johor Baru Custom, Immigration and Quarantine (CIQ) complex.

Ku said the five-star hotel would be known as the KSL Resorts Hotel and would be managed by a local hospitality management company.

The podium block and the hotel towers are expected to be completed towards the end of next year and the apartment blocks in mid-2010.

The apartment blocks will have separate entrances and car parking bays from the hotel towers. Every apartment will have an individual private lift.

“This is the first such development in Johor that combines retail, hospitality and high-rise residential living like those in Kuala Lumpur and Singapore,’’ he said.

Ku said the company was confident the hotel would do well, considering that most hotels in the Johor Baru CBD were recording almost 90% occupancy rate.

“Johor will also benefit from the two integrated resort projects (IR) coming up in Singapore in two years.

“Malaysians and foreign tourists planning to visit the resorts in Singapore would probably stay in Johor Baru as the hotel rates in Singapire are too costly for the average visitors,” Ku said.

Presently, Singapore is facing a shortage of hotel rooms and the average room rates at S$280 could further increase to S$500 by the time the KSL hotel is completed.

“We plan to have a tie-up with the two Singapore casino operators to provide shuttle bus services from KSL City to the two resorts,’’ he said.

Ku said the Singapore Tourism Board has projected that some 17 million tourists would visit the island state next year.

As for the apartments, KSL would be looking at Malaysian professionals and expatriates working in the republic as potential buyers.

“Similar apartments like what we are building would carry a price tag of over S$500, 000. The price advantage will be the main reason for the people to stay in Johor Baru and work in Singapore.

“It is a well known fact that Johor and Singapore have been complementing each other economically for long,’’ he said.

Ku does not discount the possibility that the KSL City project could be a stepping stone for the company to further expand into the retail and hospitality sector.

By The Star

KSL plans to expand landbank in Iskandar Malaysia

KSL Holdings Bhd sees strong growth prospects in the Iskandar Malaysia growth corridor and is looking to expand its exposure and landbank there.

The Johor Baru-based company currently has four ongoing integrated developments located in the corridor – Taman Nusa Bestari on 91.9ha, Taman Bestari Indah Ulu Tiram (283.3ha), Taman Kempas Indah (95.9ha) and KSL City (2.73ha).

Upon completion in eight to 10 years, there will be 18,300 mixed residential and commercial properties worth a total gross development value of RM3.7bil.

“These projects will contribute up to 70% of group revenue and earnings in the current financial year ending Dec 31.

“Despite the sceptical views by certain quarters on the progress and benefits of Iskandar Malaysia, we are confident that the corridor has great potential, going forward,” executive director Ku Hwa Seng told StarBiz.

Iskandar Malaysia, formerly known as Iskandar Development Region before the name change in April, would be two years old in November.

The growth corridor covers 2,216.3 sq km within the southern-most part of Johor covering Johor Baru city centre, Nusajaya, Pontian-Gelang Patah, Senai-Kulai-Skudai and Pasir Gudang-Tanjung Langsat.

Ku commended Khazanah Nasional Bhd for having done a good job in promoting the growth corridor locally and internationally.

Iskandar Region Development Authority has secured RM33bil investment, representing 70% of the total investment target of RM47bil for the period between 2006 and 2010.

“KSL’s projects will be one of the main beneficiaries of the spillover effect of Iskandar Malaysia and Singapore,” he noted.

He said KSL would benefit from Iskandar Malaysia in view of the company’s niche market and strong brand in the Johor property scene.

As of last December, KSL has over 809.371ha of landbank in Johor Baru, Batu Pahat, Kluang, Segamat, Mersing and Muar. Of the total landbank, 60% are located within Iskandar Malaysia.

Ku said the land’s close proximity to the Senai Airport, the Port of Tanjung Pelepas, North-South Expressway and the Senai-Desaru Highway was a boon for the company.

The airport, the port and the highways are touted to be interlinked and will be developed into part of the transportation hub in Iskandar Malaysia.

About 80% of the land are available for immediate development as they have been granted approval for subdivision.

Together with the Maharani Riviera in Muar, the company’s projects in Johor have a combined gross development value of RM4.4bil, which will keep it busy for the next eight to 10 years.

Taman Nusa Bestari benefits the most, as the scheme is located just a few kilometers from Nusajaya where the Johor State New Administrative Centre is being built.

Nusajaya and its nearby areas are in for a boom as many development projects are being built and new ones in the pipeline.

Ku said when the company launched its three-storey shop offices in Taman Nusa Bestari in 2002, they were priced around RM300,000.

“Now, we are selling a similar unit at RM800,000 to RM1mil while the bigger units are priced at more than RM2mil,” he said.

Besides its traditional market in Johor, KSL is also looking to expand into the Klang Valley with the recent purchase of two parcels of land totalling 180.6ha in Klang, Selangor, for RM156mil.

The land is located along Jalan Klang-Banting within the Blackwater Estate about 15km from Klang town centre.

Ku said the company planned to develop its land in Klang into a mixed project with a gross development value of RM1.5bil. The project is targeted for launch early next year and will take eight years to complete.

Ku said the acquisition served as a platform for the company to tap into the Klang Valley property market.

“Our land in Johor and Selangor will help us sustain our medium to long-term growth and profitability,”he said.

On how KSL, being a Johor-based developer, could convince house buyers in the Klang Valley, Ku said: “Regardless where they are, purchasers are more or less the same.

“If you give them better quality products and good facilities, they will consider buying from you,” he said.

By The Star - StarBiz - (by Zazali Musa)

Developers look abroad

GOING international and attracting foreign property investors will be gaining momentum among developers as they look to tap the vast offshore market for their properties.

Industry players are realising that they have to widen their target market to beyond Malaysia’s shores to make up for the slowdown in local demand following rising inflationary pressures and prevailing cautious sentiment among potential property buyers.

Property developers who participated at The Star Property and Home Fair Penang 2008 roundtable discussion in Penang recently concurred that the foreign factor was the much needed link to promote greater buying interest in a more sustainable market for Malaysia’s real estate.

The three-day exhibition from Sept 5 will be held at the Penang International Sports Arena.

They also voiced their apprehensions over the state’s restrictive development guidelines, including the low plot ratio and restrictions on development at more than 250 feet above sea level.

To overcome a shortage of development land in land-scarce Penang, SP Setia Bhd executive director and chief operating officer Datuk Voon Tin Yow suggested more mixed use integrated developments with residential, commercial and leisure components be allowed.

This is because such projects would free up more land for better use, including landscaping and greening purposes.

He also said development plans on land above 250 feet should be given due consideration if the slope of the land is gentle.

The panellists also voiced the need for clearer guidelines for development in inner city George Town, especially around the buffer zones, to ensure a more optimum balance between restoration and development efforts.

They opined that a more efficient public delivery system with progressive and transparent guidelines and processes would contribute greatly as speed and timing are important attributes for projects to succeed.

According to Ivory Properties Group executive director Datuk Sri Nazir Ariff, it would be easier to formulate financial plans and projections if industry players could be assured of transparent governance.

Penang Town and Country Planning and Housing Committee chairman Wong Hon Wai, who also took part in the roundtable discussion, assured the developers that the new Penang state government would adopt the kaizen or continuous improvement approach in its civil service in line with its competence, accountability and transparency (CAT) governance.

“Where property development is concerned, we want to ensure Penang does not turn into a concrete jungle but will grow as an organic city with a soul,” Wong said.

In welcoming Wong’s assurance, Nazir said: “A competent, accountable and transparent government will make Penang cleaner, less congested and more liveable. That will help re-define the property market into a quality market.”

Real Estate and Housing Developers Association (Rehda) Penang chairman Datuk Jerry Chan said more needed to be done to promote Penang’s many attributes to the world, including building up a strong branding as an international real estate destination.

“There is also a need to rejuvenate the inner city of George Town to its old glory as a lively and liveable city,” he said.

Nazir said the declaration of George Town as a United Nations Heritage Site in July was a great branding opportunity for Penang and more cohesive efforts were needed between developers and the state government to leverage on the state’s unique charms.

He urged the state government’s Heritage Steering Committee to work hand-in-hand with the local government and developers when enforcing and implementing the heritage guidelines.

IJM Corp Bhd deputy managing director Teh Kean Ming said while Penang’s property market offered much potential for developers and investors, the onus was on industry players to work with the authorities to elevate the state’s profile in the international real estate arena.

“There is a need for more world-class products and infrastructure, such as waterfront developments, that appeal to savvy high-net worth foreign buyers,” Teh said.

Concurring with Teh, Henry Butcher Penang director Dr Teoh Poh Huat said current thinking seemed to focus on leveraging on foreign demand as a panacea for the more challenging domestic market.

“Making Malaysia a destination of choice for property investment and a second home is now the sine qua non.

“As this sector of the market is relatively less understood, it is imperative to conduct research to understand both the demographic and psychographic elements of the foreign market on the country’s real estate,” Teoh said.

By The Star (by Angie Ng)

'Good initiatives for people but more can be done for REITs'

BUDGET 2009 is announced amid very challenging times in view of the rising food and energy costs.

The government has introduced various measures to help increase disposable income to mitigate the impact of the higher cost of living, thus demonstrating that it is a caring government.


Ngian Siew Siong Managing Director Sunway City Bhd (property development division)

* Enhancing training and skills programmes is a timely move by the government to attract more locals into the industry and avoid being too dependent on foreign labour.

However, the current incentive of giving 50 per cent waiver of the CIDB levy to encourage use of the Industrialised Building Systems (IBS) is inadequate.

We urge the government to seriously consider providing additional incentives.

* Reducing the withholding tax rate on real estate investment trust (REITs) for foreign institutional investors to 10 per cent from 20 per cent puts us on par with Singapore.

However, we are still not competitive as local and foreign corporations are still subject to 26 per cent tax compared with 18 per cent in Singapore.

As for domestic and foreign individuals and domestic institutions, we are still subject to 10 per cent tax. In Singapore, REITs are exempted from tax.

As such, more can be done to make Malaysia more competitive regionally where REITs are concerned.

* The benefit of the tax exemption on interest subsidy for housing loans by employers is insufficient, taking the market average of two per cent subsidy. To encourage home ownership, we prefer that mortgage interest be fully tax-deductible.

* While it is good that the government is putting more emphasis on greater use of renewable energy and energy efficiency, there could be more incentives for the local property industry to incorporate "green" building designs and construction.

This could be achieved by abolishing taxes and duties, not only for local but also imported materials and equipment such as low E glass (to reduce heat emission) and inverter air-conditioners (which regulate thermal power flow).

We applaud the government's efforts to promote use of renewable energy and energy-efficient products. However, we hope the government will extend further incentives to the property industry to promote green building designs for sustainable developments that reduce long-term operation and maintenance costs.

By New Straits Times

Capital market perks

SHARE prices of real estate investment trust (REITs) are likely to rise when market starts on Tuesday as investors may rush in after the government cut tax on dividends received by them.

Foreign funds especially will find Malaysian REITs a bit more attractive now that their withholding tax is halved to 10 per cent, as announced under the Budget 2009 yesterday.

Local retail investors will pay a smaller tax of 10 per cent on their REIT dividends, compared with 15 per cent previously.

Other measures aimed at boosting the capital market include a tax exemption on fees that local investment banks get from helping to list foreign companies or investment products on Bursa Malaysia.

Fees and profits earned by deal-makers from non-ringgit sukuks issued in Malaysia and distributed abroad will also be exempted from tax for three years.

Malayan Banking Bhd's president and CEO Datuk Seri Abdul Wahid Omar welcomed the tax incentives for promoting international sukuk issuance out of Malaysia.

"The incentive will encourage more capital market players to conduct, arrange and invest in Islamic non-ringgit issuance," concurred Standard Chartered Bank Malaysia's head of Islamic banking Azrulnizam Abdul Aziz.

Meanwhile, both Axis REIT Managers Bhd chief executive officer Stewart LaBrooy and Am ARA REIT Managers Sdn Bhd chief executive officer Lim Yoon Peng are convinced that investors will buy more shares of REITs, since their after-tax returns are now higher.

"Share prices of REITs have been depressed under the soft market, which pushed dividend yield to around 8.5 per cent to nine per cent. I believe many foreign investors will rush in on Tuesday morning to lock in this high yield," Lim said.

Chan Say Yeong, who manages Quill Capita Trust, said the reduction in withholding tax will make Malaysia REITs more attractive to investors, especially foreign pension funds that are looking for long-term investment.

A lower withholding tax of 10 per cent for foreign institutional investors puts us on par with Singapore, Sunway City Bhd managing director Ngian Siew Siong said.

However, Malaysia REITs are still not competitive as local and foreign corporations are subject to 26 per cent tax compared to 18 per cent in Singapore, Ngian said.

Retail investors and domestic institutions are also still subject to 10 per cent tax, whereas REITs are tax-exempt in Singapore.

Yesterday's move was a good start and a step towards the right direction, but more can be done to make Malaysian property trusts more competitive regionally, industry players concurred.

"The tax cut will create some excitements. But I'm a little disappointed that individual investors are still being taxed on their dividend. At a time when real interest rates have turned negative, their investment in REITs should be encouraged as an alternative for positive yields," LaBrooy said.

By New Straits Times (by Chong Pooi Koon)

Singapore properties remain much sought after

IN most economies, while land and buildings generally form a significant portion of national wealth, the situation is more acute in land scarce Singapore and Hong Kong.

Although Singapore offers a plethora of investment instruments, property continue to be a much sought after asset to have.

Says an observer: “The government wants every Singaporean to have a home. That is why we have HDB (Housing Development Board) homes for everyone. There are the lower end HDB apartments and the more expensive ones. Then there is private housing.”

Malaysians today make up the city state’s third largest investors, says a property consultant.

Be it by marriage or Malaysians seeking permanent resident status or economies, the two countries share close ties.

To appreciate the dramatic hike in Singapore’s property sector today, there is a need to go back a decade.

Says a Malaysian hotel owner: “A decade or more ago, I was offered a hotel in Singapore at S$180mil. Today, it has gone up to S$350mil. I’ve made some good moves, but I lost that one.”

In 1998, parts of Asia were grappling with the Asian financial crisis and sentiments were poor, as with today. Over in Malaysia, property prices were also tumbling after a heady 1995-96 era when prices peaked.

While Malaysian properties were hit by the credit crunch, the Singapore property sector rolled with a certain level of resilience. Then came the severe acute respiratory syndrome (SARS) and the good times came to an end. The pain was short and intense, on every front.

By early 2005, prices began to escalate again, says sdb Asia Pte Ltd sales and marketing executive Jean Tan.

At the end of 2005, the Singapore government announced the setting up of the integrated resorts with casinos on Marina Bay and Sentosa Island.

Investors sat up and began pouring money into Singapore real estate one year later, especially Orchard and the surrounding areas like Tanglin, Bukit Timah Road, known as district 9 and 10.

“In 2007, the en bloc sale of apartment units resulted in prices going overboard. What was bought for S$800,000 went up to S$1.3mil during that period,” she says.

Prices reach a peak in August/September 2007. The tumble came in December after the government did away with the deferred payment scheme.

The scheme essentially requires a buyer to pay 20% upfront on signing of the sales and purchase agreement and paying the remaining 80% on completion.

This was done away with and buyers took this negatively, says CB Richard Ellis team director Dave Peh. There were also the measures by the government to cut down on supply.

“But these are not the only reasons. The world is going through a global economic crisis. It may take longer to sell, unlike the time when all the units were sold in two weeks,” he says.

By The Star (by Thean Lee Cheng)

Jia is SDB’s first Singapore development

JIA. Short, simple and chic. The meaning is even more profound. It means home in Chinese. There is something within each of us that is drawn to a place called home. It does not have to be something at the upper end, although in this case, it is.

It is on this premise that SDB Properties Sdn Bhd, the property arm of Selangor Dredging Bhd, has named its first residential development in Singapore ... Jia. The project was launched about a month ago.

Located at 65, Wilkie Road, on Mount Sophia, about 10 minutes from the republic’s shopping haven Orchard Road, Jia represents more than just another development for the former tin-mining company Selangor Dredging under the helm of its managing director Teh Lip Kim.

With an eye to establish the group as a regional property player, this is Teh’s first foray beyond Malaysian shores. She has also set her sights on Australia.

Teh is setting many firsts as she enlarges her property portfolio, both in Malaysia and Singapore. A single thread runs through each of the projects she has thus far launched – niche.

When Teh launched her first development in Kinrara, Puchong in Selangor in 2004, AmanSari was among the first semi-detached and bungalow development in a gated and guarded environment, and by far, the most upmarket, targeted at upgraders.

With Ameera in SS2, launched last year, it was the most high-end condominium in that location. What else can be said of Park Seven in the KLCC area, which started at RM2mil when it was launched three years ago.

In her last chat with the media early August, Teh emphasised that the company was not into township developments, which would take years to materialise and a lot of resources. Rewards from small niche developments come in faster, if not greater. Small developments also tend to need more attention and Teh and her team are pretty hands-on in that respect.

Jia comprises only 22 units in a seven-storey development on 17,000 sq ft with an average price of S$1,637 per sq ft. Prices begin at S$2.1mil for a two-room apartment and goes right up to more than $S5mil for a duplex (exchange rate: S$1 to RM2.4). There are also three-bedroom units. Three of the 22 units come with private gardens of varying sizes. The two-room unit with garden is priced at S$2.8mil.

Says SDB senior sales and marketing manager Leon Kim Yoke: “The garden units work out cheaper on a per sq ft basis.”

She says most city apartments are in the 500-700 sq ft range. There will be a group of buyers who will want larger units of 1,200 sq ft and above.”

The group bought the land in December 2006 for S$20.8mil. A sales value of S$64mil is expected from that project.

All the units will come fitted out with the latest quality built-in cabinets and kitchen appliances. The team went as far as to change the materials that will be used after a trip to a Milan furniture fair.

Leon says there will be an emphasis on details like design and materials to be used as these will be the differentiating factor compared with other mass market projects in that area.

SDB is not the only one building on Mount Sophia. In that vicinity, there are several Singapore developers who have already completed their projects or in the midst of building.

Besides Jia, the company will also be launching No. 2 Gilstead later this year. While Jia is small, niche and cosy; 2 Gilstead is a 33-storey development with 66 units of three-bedroom units located off Bukit Timah Road near Newton Circus, off Scotts Road. While Jia is in the centre of the city, the Gilstead project is in a suburb popularised by several schools.

Leon says most Singaporeans buy into a project because of the proximity of well-known schools. Places are allocated according to how close one lives.

The Gilstead project comprises a single tower block with an indicative price of S$2,200 per sq ft. That piece of land of 37,000 sq ft was bought in May last year for S$96.5mil.

That project is a 50:50 joint venture and its share of revenue will be around S$110mil based on its 50% stake in Chedstone Investment Holdings Pte Ltd. The other 50% is shared on a 30:20 basis between privately held Teh Wan Sang & Sons Sdn Bhd and Teh Wan Sang & Sons Housing Development Sdn Bhd.

Last month, the group purchased a third property – Balstier Complex in Balstier Road – in an established township the likes of Kuala Lumpur’s Jalan Ipoh, for S$47mil.

Currently tenanted, that complex offers potential redeployment when the time is right.

Other Malaysian companies that have gone to the Lion City are IOI and YTL group. While both of these have bought land on Sentosa Cove, all three properties belonging to Selangor Dredging are in the city or established suburbs.

Besides its interest to tap the Singapore market, the group has also invested RM24.6mil in Penang’s famed Batu Feringgi. It bought three pieces of beach-front land located between the Lone Pine and Casuarina hotels where it plans to develop a “good, villa-type resort development” sometime in late 2009 or 2010.

The group is also developing controversial Damansara 2 in Damansara Heights, where it plans to build 21 luxury bungalows on a hillslope, which has drawn a lot of flak from nearby residents.

By The Star

IOI Corp agrees to buy owner of Menara Citibank

PLANTATION group IOI Corp Bhd has agreed to buy Inverfin Sdn Bhd (ISB), the owner of 50-storey Menara Citibank in Kuala Lumpur, for RM586.7 million cash.

Inverfin, which is owned by US lender Citigroup, Singapore's CapitaLand Ltd and Amsteel Corp Bhd, also has a RM160 million debt from the sale of seven-year bonds.

IOI said the proposed acquisition presents a rare opportunity and strategic move for them to acquire a Grade A investment property located at a very prime area within the vicinity of Kuala Lumpur City Centre.

"Menara Citibank is presently enjoying close to 100 per cent occupancy rate with quality tenants consisting of multinational companies and reputable companies in their respective industries," IOI said in a statement to Bursa Malaysia yesterday.

ISB recorded a net profit of RM20.37 million for the financial year ended December 31 2007.

The net book value of the Menara Citibank based on the latest audited accounts is RM458 million and the gross rental revenue is about RM43.3 million. This excludes a RM3.3 million revenue from the car park.

The proposed buy is due to be completed within the fourth quarter of 2008.

By New Straits Times

Malaysia to chair rail project meeting

SINGAPORE: Malaysia will chair a special working group that oversees the implementation of the multi-billion rail project connecting Singapore to Kunming in China.

The group's meeting will be held on November 22 in Putrajaya.

These were among the resolutions adopted during the 10th Asean-Mekong Basin Development Cooperation (AMBDC) meeting held in conjunction with the Asean Economic Ministers and other related meetings here since Monday.

A conference and exhibition on the massive rail project will also be held early next year to promote the project.

The railway will link eight of the AMBDC countries, which includes the 10 members of Asean and China. Some 550km of missing links costing about US$2 billion (RM6.78 billion) still needs to be built.

At present, the "missing links" are at various stages of development.

Apart from this project, there are 44 other projects in various stages of implementation. Of these, 13 projects still need funding worth US$26.5 millon (RM90 million).

In a statement, Asean ministers said the AMBDC process needs to be realigned and synchronised with the Asean Economic Community.

By New Straits Times (by Kamarul Yunus)

Taxation regime for REITs (Real Estate Investment Trust)

WOULD a tax regime in a country be able to promote the real estate investment trust (REIT) industry? Malaysia currently has 13 REITs in the market (compared with 19 in Singapore and seven in Hong Kong).

The following are the overriding salient features of the tax regime in Malaysia for REITs.


Jennifer Chang

Tax transparency

This refers to the REIT not being subject to income tax and in Malaysia, this applies so long as the REIT has distributed at least 90% of its taxable income to investors for the year. This lessens the administrative burden at the REIT level since tax is not paid by the REIT.

Taxing investors directly at the tax rates applicable to them also leads to a more efficient method of taxation.



Withholding Tax (WHT)

Where tax transparency applies, the REIT will have to deduct WHT on distributions made. (See table)

Malaysian corporate investors continue to be taxed at the current corporate tax rate of 26% upon submission of their annual tax returns. Is the tax regime in Malaysia attractive enough for fund managers to locate REITs in Malaysia for regional investments?

Tax incentives

Malaysia has generous tax incentives for unit trusts and REITs. Stamp duty on property purchase by REIT has been exempted and, generally, most investment income earned by the REIT is not subject to tax.

These include interest from fixed deposits and bonds, gains from sale of investments and foreign sourced income which can be distributed as tax-exempt distribution to investors.

The WHT levied on the taxable rental income represents the bulk of a REIT’s revenue. Are WHT rates in Malaysia competitive?

If the investor is a pensioner or a tax-exempt body, the WHT of 15% is not equitable since they are mostly not subject to income tax.

High net worth individuals are better off since the WHT at 15% would generally be lower than what they usually have to pay.

Generally, most companies in Malaysia should not be worse off since rental income would be taxed at the normal corporate tax rate anyway.

Naturally, one can infer that this REIT tax framework was specifically crafted to attract specific investors or could merely be in tune with the existing investor profile for REITs in Malaysia.

The main question for foreign institutional investors is who would be eligible for the reduced WHT rate of 20% and whether specific application has to be made for each foreign institutional investor.

Although the term foreign institutional investors has been described to incorporate pension funds and collective investments funds, the breadth of investors to be included in this term has not been specifically identified.

Although the tax transparency system is meant to be a more efficient system for REITs, having various rates for various categories of investors means the administrative burden appears to have shifted to the fund manager, who has to have a very good tracking system to determine which portion of distribution has to be subject to WHT and which rate to apply.

With thousands of investors who buy and sell at any point in time, information on each investor may not be so easily tracked.

In comparison, Singapore’s WHT rates for REIT investors are simplified, i.e. individual investors are not subject to WHT while all corporate investors are subject to a reduced WHT of 10%. This simplifies the process for fund managers and the lower WHT helps promote REITs in Singapore.

It is important to note that individuals and foreign investors in Malaysian bonds do not incur any WHT on the interest or profits received. Therefore, providing the reduction in WHT would certainly put REITs in a better position. In this competitive environment, more can be done to enhance the industry and the streamlining and reduction in WHT would provide a boost to this industry.

The writer is senior executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd

By The Star

Glomac reviewing property launches

KUALA LUMPUR: Glomac Bhd is reviewing its property launches given the current challenging environment of inflationary pressures and the slowdown in demand for medium-range residential properties.

Managing director Datuk F.D. Iskandar said the company was relooking at some of its medium-range residential properties.


Glomac Berhad group executive chairman Tan Sri F.D Mansor and group managing director Datuk FD Iskandar at the press conference on Thursday.

“We find the margins have been squeezed,” he said after the company AGM yesterday.

However, he said, the company would still continue with the launch of its high-end niche projects as the takeup rate of such projects had not been as badly affected by the current situation in the market.

“With such volatility in construction material prices, it has not been an easy operating environment for us.

“Nevertheless, we are pleased to have achieved a favourable set of results for the year and, more importantly, our recent launches have been well received,” he said.

While the group enjoyed brisk sales of its township developments, Bandar Saujana Utama and Saujana Rawang, its commercial project in Sri Hartamas, Glomac Galleria, and the initial phases of its gated development in Bandar Sri Bangi were fully sold out within months of being launched, he said.

For the financial year ended April 30 (FY08), including the en bloc sale of Glomac Tower, the group achieved record sales of RM916mil, and unbilled sales stood at a high of RM667mil.

Iskandar said the RM650mil mixed development, Glomac Damansara, would likely be launched in the next quarter.

“The first phase will comprise shop/offices and an office block.

“We are also very excited about the new land bank we secured. We believe this latest phase of Plaza Kelana Jaya, where Restaurant Kelana Seafood Centre was formerly sited, offers strong potential for another commercial development. We expect to launch this project in 2009,” he said.

At present, the company has about 1,000 acres of land bank, with a gross development value of about RM3.5bil.

The company yesterday announced its latest unaudited revenue of RM71.6mil and pre-tax profit of RM4.9mil for the last quarter ended April 30.

For FY08, the group registered 10.4% growth in revenue to RM323.9mil, driven by contributions from Suria Stoner and Plaza Glomac.

It reported pre-tax profit of RM50.2mil and net profit of RM35.1mil, an increase of 9% from FY07.

On plans for further joint ventures, Iskandar said the group had been invited by the Al Batha Group of the United Arab Emirates to diversify into the Middle East.

By The Star

Glomac sees KL projects boosting 2009 earnings

GLOMAC Bhd expects to improve its net profit in fiscal 2009, thanks to sales of its Glomac Tower and Suria Stonor projects in Kuala Lumpur.

The property developer made net profit of RM35.1 million in the year ended April 30 2008, on revenue of RM324 million.

However, sales of properties costing below RM300,000 are affected by higher prices although demand for high-end properties is still firm, group managing director Datuk F.D. Iskandar said.


ISKANDAR: More launches over the next one year

"With more launches over the next one year, there should be more sales. But we will look back at figures in terms of profitability," he said after the company's shareholder meeting in Kuala Lumpur yesterday.

Glomac has raised by 20 per cent the prices for properties costing below RM300,000 at its townships in Sungai Buloh, Rawang and Johor.

"Margins are squeezed by higher construction cost, which has gone up by 30 per cent. By raising the selling price, it has affected sales," Iskandar said.

Glomac has 400ha in Sg Buloh, Rawang and Johor, with earnings potential of RM3.5 billion.

While the three townships may not do well this year, Iskandar said he was confident of sales for its seven other projects.

Glomac has pockets of land in Selangor. It aims to launch Glomac Damansara, an integrated project, a commercial complex at the site of the former Kelana Seafood Centre in Petaling Jaya, and two office towers and a serviced apartment block in Mutiara Damansara for RM1.1 billion.

Group executive vice-chairman Datuk Richard Fong was optimistic that margins from high-end properties would cushion rising costs.

Glomac has plans to venture to the Middle East.

Fong said it may do this through its partnership with Al Batha Real Estate Co of the United Arab Emirates or with other developers in the region.

By New Straits Times (by Sharen Kaur)

Sunrise pays RM179m for land near Petronas Twin Towers

SUNRISE Bhd may carry out a mixed development project on a piece of prime land opposite the Petronas Twin Towers where Wisma Angkasa Raya now sits.

This could include hotels, offices and service apartments, executive chairman Tong Kooi Ong said in a briefing in Kuala Lumpur yesterday.

Plans will be finalised by the third quarter of 2009.

"We'll get the best architects to come up with an iconic structure," he said.

The property developer, under a deal with Reliance Pillar Sdn Bhd and Lembaran Segimaju Sdn Bhd, will pay RM179 million for the 69,171sq ft land on which the building is situated, or an equivalent of RM2,588 psf.

That price is a record for land bought for redevelopment in the Kuala Lumpur City Centre area.

Wisma Angkasa Raya, which is around 29 years old, is Kuala Lumpur's first high-rise office building. The unencumbered property is a 24-storey commercial building comprising a 20-storey office tower and a four-storey podium with two basement carparks.

It has a total net lettable area of 167,728 sq ft and an occupancy rate of 96.4 per cent.

Sunrise reported a net profit of RM45 million for the fourth quarter to June 30 2008, a 28 per cent jump from the same quarter a year ago.

Revenue improved 48 per cent to RM258 million.

Sunrise has a dividend policy of 35 per cent of the group's profits but for the financial year ended June 2008, there is no cash dividends.

"We've already informed shareholders that Sunrise bought shares from the open market and gave out treasury shares in lieu of cash," Tong said.

By New Straits Times (by Ooi Tee Ching)

BLand signs pact to develop golf resort in Libya

KUALA LUMPUR: Berjaya Land Bhd (BLand) has entered into a memorandum of agreement with Libya’s Economic and Social Development Fund (ESDF) and the OYIA company to develop an integrated golf resort cum residential and commercial development in Libya.

The proposed project would be developed in phases with the Libyan government agreeing to bear the infrastructure costs, BLand said in a filing with Bursa Malaysia yesterday.

BLand would prepare the master plan for the project and with the assistance of the ESDF and OYIA, submit it to the relevant Libyan authorities for approval.

“The total estimated development costs for the project is to be determined upon completion of the feasibility study of the master plan.

“It is expected to be funded from internally generated funds and/or borrowings of the BLand group, the actually composition of which will be determined at a later stage,” BLand said.

By Bernama

MRCB sees better results in fourth quarter

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) expects a better fourth quarter on the back of moderating construction and building material prices, says group managing director Shahril Ridza Ridzuan.

Shahril Rodzha Ridzuan

The group posted a net loss of RM5.2mil for the second quarter ended June 30 amidst soaring construction costs, which resulted in substantially reduced margins despite a substantial increase in revenue to RM228.5mil from RM96.6mil in the previous corresponding period.

Due to accounting standards, Shahril said the company had to take into the books any possible increase in cost in its second quarter results even though the group was seeking variation-of-price compensation for some of its ongoing projects.

“The third quarter will still reflect the impact of the increase in electricity tariffs and fuel prices, which rose fairly high during the quarter,” he said after the unveiling of MRCB’s first Global Reporting Initiative (GRI)-based sustainability report on Wednesday.

MRCB has deferred some of its property launches until such time when material prices stabilise and the company is able to properly account for project costs.

“The price points of our projects will move up in tandem with rising building costs. New launches will have price adjustments to reflect those changes,” Shahril said.

On developments in the Middle East, he said the company had started work on a project in Saudi Arabia. “It’s something very similar to what we are doing at KL Sentral and Penang Sentral,” he said, adding that the project was still in the early design phase.

On its sustainability report, Shahril said: “We look at this report as an important first step to make sustainability a core value at MRCB. We are committed to transparency and making this information available to the public as we work towards our goals.”

The sustainability report includes key indicators on the group’s environmental and social governance performance.

It also highlights the importance of sustainable development as part of the group’s broader agenda, based on the G3 guidelines which have been harmonised with the United Nations Global Compact and other tools.

By The Star

South Korea keen on tourism ventures with Malaysia

SOUTH Korea, which is developing its tourism and leisure industry as a future growth engine, is keen to draw from the experience and strength of Malaysian companies.

"The Chinese tourism industry provides huge potential for Korea and since Malaysia has a very advanced tourism industry, it holds a promising area for both countries to do more in the future," said South Korean Ambassador to Malaysia Yang Bong Ryull at a seminar on forging partnership between South Korea and Malaysia in Kuala Lumpur yesterday.


YANG: The Korea-Asean free trade agreement will be a catalyst to strengthen partnership

The seminar was to provide Malaysians an insight to investment opportunities in South Korea's Jeju Island's real estate, tourism, education and medical industries.

Bilateral trade between both countries expanded over 10 per cent, registering around RM50 billion last year and Yang estimates that it can reach RM100 billion in five years.

"The Korea-Asean free trade agreement signed last year will be a catalyst to strengthen our partnership to greater heights," he said.

"Joint ventures and strategic alliances between both are countries have been expanding and diversifying from manufacturing to more value-added and technologically advanced sectors such as information and communication technology, oil and gas, finance, property development, tourism and education," he added.

Korea Telecom Freetel, one of the largest mobile service providers in South Korea, is in a joint venture of 3G mobile service with U-Mobile Sdn Bhd in Malaysia.

Daewoo Securities Co has also entered into a strategic alliance with CIMB Investment Bank Bhd, providing cooperation in investment banking and asset management and developing a sukuk market in South Korea.

Woori Bank and Woori Investment, one of the largest financial groups in Korea, recently opened their first representative office in Malaysia.

Governor of Jeju special self-governing province Kim Tae Hwan also urged Malaysian companies to look into the development of tourism complexes, hot spring centres, animal theme parks and resorts.

So far, Berjaya Land, a Berjaya group subsidiary, has invested US$2.6 billion (RM8.76 billion) in developing a resort-style residential complex on Jeju Island.

Malaysian Industrial Development Authority deputy director general 1 Datuk Afifuddin Abdul Kadir said last year, South Korean firms invested in 32 projects worth US$325.2 milllion (RM1 billion) in Malaysia, in which US$31 million (RM104 million) were in new projects and US$294.2 million (RM99 million) were in expansion and diversification projects.

By New Straits Times (by Rupa Damodaran)

UEM Land to woo Indonesian buyers

JOHOR BARU: UEM Land Bhd will be promoting its four ongoing mixed development projects in Iskandar Malaysia to attract Indonesian property buyers to Johor.

The projects are Nusa Idaman, East Ledang, Ledang Heights and Horizon Hills (a joint development between Gamuda Land and UEM Land).

Nusajaya Development Sdn Bhd sales manager Razali Bakhtiar (left) with marketing manager Yazidah Jemali and senior manager Daniel Lee Lock Soon showing the Nusa Idaman model.

Strategic marketing general manager Zamry Ibrahim said the company wanted to attract more wealthy Indonesians to buy properties in Iskandar.

He said for years, many affluent Indonesians preferred to buy private properties in Singapore due to the aggressive marketing strategy by the Singapore-based developers.

“It is high time for Malaysian property developers to look to Indonesia and attract wealthy Indonesianshere,” Zamry told StarBizrecently.

Nusa Idaman is developed by Nusajaya Development Sdn Bhd, a wholly-owned subsidiary of UEM Land, the master developer of Nusajaya, the key driver of Iskandar.

UEM Land will be taking part in a property exhibition – An Investment Opportunity@Iskandar Malaysia – tomorrow at The Shangri-La Hotel Jakarta.

The event is jointly organised by Iskandar Regional Develop-ment Authority, Nusajaya, Iskandar Investment Bhd and Danga Bay Sdn Bhd.

Zamry said the company had so far taken part in property shows in China, Singapore and South Korea and would be going to Dubai and Australia in October.

He said with the skyrocketing prices of private properties in Singapore, Johor Baru would be an attractive place for Indonesians to invest in properties.

“We want to promote Iskandar and Nusajaya City in particular to wealthy Indonesians under the Malaysia My Second Home Programme,” said Zamry.

By The Star (By Zazali Musa)

Property developers to get 2009 goodies

PROPERTY developers can expect to get some goodies from Budget 2009 to help them cushion the impact of rising fuel prices and raw material costs, says the Housing and Local Government Ministry.

Minister Datuk Seri Ong Ka Chuan said while the budget will be people-centric, the ministry has proposed to the government that incentives and assistance be pro-vided to developers to minimise the blow of a possible slowdown.

“We hope the government will render some assistance, especially on tax structures, as construction cost has escalated by some 30 per cent,” he said after opening the 19th National Real Estate Convention 2008 (NREC) in Petaling Jaya yesterday.

On the 30 per cent low-cost housing quota imposed on private developers, which has impacting all players financially, Ong said it is the prerogative of the state authorities to adjust the requirement.

“There must be flexibility. It should be lower in areas with the least Bumiputera concentration and can be more if otherwise. If really there is no demand, there is no point implementing it,” he said.

The Bumiputera Property Exhibition Selangor 2008 held last month to sell unsold Bumiputera lots saw a display of RM7 billion worth of properties offered by 50 developers or 200 times more than in 2007.

FIABCI Malaysia head Datuk Richard Fong told Business Times that the low-cost housing quota needs to be addressed as developers are losing money.

The ceiling price for low-cost houses currently is RM25,000, RM35,000 and RM42,000 per unit, set 10 years ago to assist the lower income group.

“Developers lose RM15,000 for every low-cost unit they build. With the rise in raw materials by 30 per cent, which the ministry has recognised, they are bound to lose much more,” Fong said.

“The other concern is, due to the drastic increase in raw material prices, smaller developers will be in the doldrums, hence there is a strong likelihood of a dramatic rise in abandoned projects,” he said.

NREC organising chairman Pre-vindran Singhe, who is also group chief executive officer and founder of Zerin Properties, said the biggest overhang currently is for houses priced below RM250,000.

“The market for medium- to high-end houses is superb. We are experiencing a growth in this sector,” he said.

Zerin’s wish list for Budget 2009 is to see the 10 per cent withholding tax removed for Real Estate Investment Trusts and a reduction in stamp duty.

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

Glomac scouts for more land in KLCC area

GLOMAC Bhd may buy more land within the Kuala Lumpur City Centre (KLCC) area to develop high-end properties, executive vice-chairman Datuk Richard Fong said.

“We are scouting for strategic land areas but the price must be right,” Fong told Business Times in an interview in Kuala Lumpur recently.

He was speaking at the handover ceremony of Suria Stonor, Glomac’s RM380 million condominium project in Persiaran Stonor, Kuala Lumpur.

Suria Stonor is Glomac’s flagship development in Kuala Lumpur and the most expensive project in its 20-year history.

The units are 95 per cent sold and the project has met its profit forecast, Fong said without revealing details.

Half of the units were bought by Singapore’s ING Real Estate Fund in 2005.

Launched in September 2005, it has two blocks of 23-storey and 24-storey respectively, featuring luxury “bungalows-in-the-sky” with eight triplex penthouses, 28 duplex condominiums and 78 single-floor units.

The project is on a 0.84ha freehold plot that was bought in 2004 for RM430 per sq ft (psf). The land price in the area is reaching RM2,000 psf, he said.

Fong expects profit from Suria Stonor to flow in this financial year ending April 30 2009.

Suria Stonor offers four units per floor with sizes of between 3,000 sq ft and 9,000 sq ft, each serviced by a private lift. The market prices for each unit now range from RM4 million to RM11.7 million, which is double its launch price.

By New Straits Times (by Sharen Kaur)

Property sector still a draw

KUALA LUMPUR : The Malaysian real estate still offers an attractive investment opportunity for foreign players despite uncertainties in the global financial markets.

According to Housing and Local Government Minister Datuk Seri Ong Ka Chuan, apart from the Middle East, the property sector was also attracting foreign investors from the Indian subcontinent and Asian countries such as South Korea, China and Japan.

“Malaysia is becoming more attractive to foreign investors,” he told reporters after officiating the 19th National Real Estate Convention (NREC) yesterday.

However, he did not discount the fact that the global rise in fuel prices had a domino effect on the local real estate industry, which could trigger a slowdown in the overall economy.

Existing projects should go on and new projects initiated to counter the rippling effect on the economy, he said.

While the rising construction and fluctuating fuel costs were an immediate challenge for the industry, Ong was optimistic that the budget would be “people-centric,” with more goodies to help alleviate the burden of these spiralling costs.

“We hope that the Government will give some incentives to the housing and building materials industry,” he said.

Ong also called for a review of the diesel prices

“An area that has been overlooked is the diesel-powered machinery being used in building sites,” he said, suggesting the Government review the road tax of diesel vehicles to be at par with petrol vehicles.

On the Real Estate and Housing Developers Association’s proposed change in housing policies with regard to the 30% bumiputra quota, Ong said there should be some flexibility. “Maybe in areas with not so many bumiputras residing, the quota could be adjusted.”

By The Star