Selling office towers en bloc

The proposed 50-storey Menara Felda in Platinum Park. The iconic building in the prime KLCC area is set to boost the corporate image of Felda. Inset: Datuk Johan Ariffin

NAZA TTDI Sdn Bhd plans to sell en bloc its remaining two office towers in the RM3.5bil Platinum Park development in the KLCC area in Kuala Lumpur.

Group managing director Datuk Johan Ariffin said instead of selling piecemeal, the strategy now was to focus on en bloc sale given the current good demand for Grade A office buildings in the capital’s Golden Triangle.

“We are targeting purchasers with very strong financial positions. By selling en bloc, we eliminate sales and funding risks and this will stand us in good stead in any future downturn. It will also put Naza TTDI on a stronger footing to ensure the success of Platinum Park,” he told StarBiz.

On fears of an over-supply of condominiums in the KLCC area, Johan said the three high-end condominiums called Platinum Residences in Platinum Park would have only 265 units or a mere 4.4% of the estimated 6,000 units in the KLCC neighbourhood.

Moreover, these condominiums catered to a very niche market where the residents would enjoy a private 1.5-acre park with 80,000 sq ft of retail space in Platinum Park.

“We don’t believe there is an over-supply of condominiums in the KLCC as we are very niche. Not withstanding that, our current strategy is to side-step into a different market and that is to focus on selling our office towers en bloc. This will circumvent any downturn in the condo market,” Johan said.

The two remaining office towers are of 50 and 38 stories.

The first tower, a 50-storey Grade A building was sold to the Federal Land Development Authority (FELDA) for RM640.7mil or about RM900 psf when the company launched the Platinum Park on Jan 22 this year.

Named Menara Felda, it is about 700 metres from the Petronas Twin Towers and the Suria KLCC shopping centre.

Johan said work on Menara Felda is in full swing and would be completed in 2011.

“We have completed the diaphragm wall two weeks ahead of schedule and we’re hoping to complete piling three weeks ahead of schedule. We hope to call for the superstructure tender by the first quarter of 2009,” he said, adding that construction of the other two office towers should start early next year.

“We feel we have a very strong advantage as Platinum Park is in a super prime location within the KLCC area where about 93% of Grade A office buildings are occupied,” he said.

At the end of the day, people who owned offices in such locations would be in a better position to weather any downturn as offices in prime addresses would be much sought after, he added.

“Our buyers can make more money than us. For example, we have got offers for Menara Felda for nothing less than RM1,200 psf but we told them that we have sold it to FELDA which has made a very smart move by buying the building from us,” he said.

Platinum Park, a world-class high-end integrated residential and commercial development, will also have a five-star, 452-unit, 30-storey serviced apartment called Platinum Concierge Suites. The 80,000 sq ft of lifestyle retail space will feature international products and services never seen before in Kuala Lumpur. There will also be three levels of auto showrooms.

By The Star (by S.C.Cheah)

Going for high-end projects

Construction of residential projects in progress at KL inner city.

Good demand for high-end and super high-end residential properties is offering a silver lining to industry players in an otherwise dampened housing market.

Amid rising construction costs and a softening demand for bread and butter property products, developers are feeling the heat of squeezed margins and lower profits. Those with the acumen for high-end luxurious products are venturing into more of such products to meet their target sales and earnings projections.

Industry players said the launch of more high-end properties, especially in the high-rise segment, has placed Malaysia on the radar of international investors.

Exclusive developments with iconic architecture and designs have helped Malaysia move up the real estate value chain.

The high-end and super high-end residential projects, which are targeted at high net worth Malaysians and foreigners, will not be much affected by the spiraling cost increases that are affecting a broad segment of the population.

These luxurious residences, which are deemed one of the cheapest in the region, offer potential for good capital appreciation and yields.

The positive environment in the country’s property market, including investor friendly policies and tax breaks, good infrastructure, easy access to financing and strong upside potential is raising Malaysia’s prominence as a real estate hub.

According to Real Estate and Housing Developers Association president Datuk Ng Seing Liong, Malaysia still offers foreign investors low entry prices and good capital appreciation potential and the onus is on developers to augment the country’s good standing in real estate investment by offering quality properties to investors.


Ng Seing Liong

“Projects that emphasise exceptional quality of life and designed with unique Malaysian characteristics to meet the needs of the savvy homebuyers, including the international community, should do well,” Ng told StarBiz.

New price benchmark

Popular locations for high-end landed properties have traditionally been Bangsar, Kenny Hills and Ampang, with new development concepts and price benchmarks cropping up over the years.

Today, there are even super high-end landed residential properties with price tags of RM15mil to RM30mil a unit, or at RM3,000 per sq ft (psf).

SP Setia Bhd’s Kenny Hills Grandé project in Bukit Tunku, Kuala Lumpur will be one of the most upmarket residential projects to be introduced in the market when it is launched at the year end.

The 15 bungalows with average land sizes of 15,000 sq ft and built-up from 18,000 to 22,000 sq ft will be priced at RM30mil a unit.

These trophy mansions with “colonial chic” architecture will set a new benchmark for the super high-end sector.

“We are essentially offering the buyers an entirely customised and personalised experience in building their ultimate dream home in the most coveted address in Kuala Lumpur, minus all the administrative hassle. With a price that spells the pinnacle of luxury, we believe this project will appeal to the well-heeled and status conscious,” SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said.


Tan Sri Liew Kee Sin

Another interesting project is the enclave of 77 Bayrocks garden waterfront villas at the Sunway South Quay in Sunway Integrated Resort. Sunway City Bhd (SunCity) is pricing the 2- and 21/2-storey villas between RM4.5mil and RM7.7mil.

Since the project’s recent soft launch, sales have reached close to RM140mil, SunCity managing director Ngian Siew Siong said.

E & O Property Development Bhd marketing and sales director K. C. Chong said despite the current economic changes in the country, the company would focus on innovatively designed homes with outstanding architectural concepts and thoughtful layout, such as those in Seri Tanjung Pinang in Penang.

“In Kuala Lumpur, we continue to place emphasis on premium homes located in prime locations, although we will have to ensure that we deliver these homes with the accompanying finesse expected of our projects.

“In the current challenging times, we will need to look more at our design planning, be more innovative in terms of materials and finishes, and concentrate on the issues which are more important to our target markets,” Chong said.

Bungalows in the sky

Meanwhile, response has been good for the new project launches in the high-end condominiums market, dubbed bungalows in the sky.

Industry players said at current prices of around RM2,000 or US$625 psf, the super high-end products were still below benchmark rates of US$3,205 in Singapore and US$2,470 in Hong Kong, making them very attractive to foreign investors.

Real estate consultants Knight Frank Ooi and Zaharin Sdn Bhd anticipate prices of high-end condominiums to hit a new high of RM3,000 psf this year as new products are targeting at a niche market driven mainly by foreign demand.

“Interesting luxury projects that stand out such as the The Binjai, Millenium Residence, Four Seasons Place, and St Regis Residences in Kuala Lumpur could push benchmark prices to new highs,” managing director Eric Ooi said.


Eric Ooi

The Regent Residences (across the Petronas Twin Towers), with benchmark pricing at an average of RM2,600 per sq ft, has been receiving good response from foreign interests, since its pre-sales in April 2008.

The market also saw the entry of Sunway Vivaldi in Mont’ Kiara, setting a new benchmark in the Mont’ Kiara locality, with average pricing of RM850 to RM900 psf. The 228 condominiums with built-up of up to 4,000 sq ft are priced from RM2.6mil to RM6.3mil.

By The Star (by Angie Ng and Yvonne Tan)

Property consultants offer mixed views

Property consultants have mixed views on the high-end property segment amid the current tougher economic environment.

Regroup Associates Sdn Bhd Christopher Boyd is cautious. “Generally the residential market in the Klang Valley has been weak this year, and will probably remain so for the next 12 months,” he told Starbiz.


Christopher Boyd

“At the top end of the condominium market (priced at RM350 per sq ft or higher), we see a general oversupply with 19,183 completed units and 13,902 under construction.

“The greatest number of existing units and future supply is in the city centre including the Golden Triangle area,” he said.

However, despite a very competitive market, Boyd said there was still turnover.

“Investors looking for upward price correction should focus on areas such as Damansara Heights and Kenny Hills where there are very few high rise approvals and only a trickle of new condominium projects.

“These are extremely popular and old established residential areas where occupational demand has always been strong and lettability should not be a problem,” Boyd said.

“Over the next one year, prices will probably plateau in most areas for mid-upper products. Beyond that, it would not be surprising to see moderate gains as a result of cost push inflation, occupational demand, ready availability of end finance and a return of investor confidence,” he added.

Boyd said developers would inevitably scale back in an uncertain market. “Some of the strategies they could employ include free furnishing, better payment terms and enhanced finishes for clients,” he said

Alternatively, they could also embark on road shows in new markets such as Britain and Russia.

Boyd advises investors to look for good value in the areas of Damansara Heights, Kenny Hills, Bukit Pantai, Bangsar and Ukay Heights. “A view to the Twin Towers enhances value!,” he said.

According to VPC Alliance (KL) Sdn Bhd managing director James Wong, current demand for Klang Valley high-end properties remained robust due to limited supply and easy access to financing.


James Wong

“If Bank Negara decides to increase the base lending rate (BLR) to curb inflation, then this may put a slight damper to demand, otherwise, we think demand will continue to remain strong for some time,” Wong said.

Currently, interest rates for housing loans are 0% to 2% below the BLR which is about 6%.

‘While there is an overhang in the mass housing market, supply in the high-end segment is limited owing to very niche development styles,” Wong said.

The “hot” areas in the Klang Valley included the established developments of Desa Park City, Kuala Lumpur City Centre (KLCC), Bangsar and Mont’ Kiara, he added.

KGV-Lambert Smith Hampton Sdn Bhd director Anthony Chua is not as optimistic as Wong. “From having a bullish outlook earlier on, we have turned cautious given the slow down in the economy.

“We think there is now less excitement in the market and believe that property investors have been spooked by the recent events and are adopting a wait and see attitude,” he said.

However, Chua opines that prices of high-end property will continue to hold at current levels, especially in “hot” areas such as KLCC and Mont’ Kiara.

“The KLCC area continues to be on the radar of investors while Mont Kiara is catching up with it in terms of price,” he said.

City Valuers & Consultants Sdn Bhd general manager C. Y. Lim said the demand for high-end landed properties such as detached, semi-detached and wide frontage terraced villas was steady in the high demand areas of KL and PJ.

“These units are now being priced on the same basis, in terms of price per sq foot, as condominiums. Due to the greater demand compared with supply, their prices will continue to rise,” Lim said.

For condominiums, supply has already matched demand and thus the price would consolidate and might even move lower with the exception of the “very best” units, he said.

“This trend will continue until the economy starts to boom again and more expatriates come to KL,” Lim added.

By The Star

Luxury projects on track to go on

Tough times or not, property players are still going ahead with their high-end property launches.

Ken Holdings Bhd executive director Sam Tan remains excited about the company’s exclusive Ken Bangsar project.


Sam Tan

Ken Holdings’s high-end service apartments Ken Bangsar, which averaged about RM1,000 per sq ft will be launched next year, Tan said.

“Our outlook remains positive. We are still attracting a lot of interest from top end property market investors with our location at the top of Bukit Bandaraya plus the very high specifications fitted into the (Ken Bangsar) building,” he said.

The project on less than one acre has over 80 units. As at May, more than 60% of the units have been sold.

Mah Sing Group Bhd managing director and chief executive Datuk Seri Leong Hoy Kum is no less optimistic.

“If you have a good product in a good location, you would probably see constant demand. There will always be pent-up demand for housing as it is a fundamental necessity.” he said

For developers, it was a matter of good concept and product, location, branding and timing, Leong added.

Mah Sing’s focus is on semi-detached homes and bungalows in the Klang Valley, as they account for only 5% of residential supply.

The property company will soon launch properties under its middle to high end Residence series with units ranging from RM800,000 to RM1.5mil, as well as its high end Legenda series with units priced from RM1.5mil and above.

“These are niche, gated and guarded developments, each with their unique selling points,” Leong said.

It also has plans to launch Phase 2 of its Hijauan Residence project comprising 30 units of garden bungalows starting from RM1mil per unit by year end and Phase 3 comprising four-storey hill villas with an indicative selling price from RM2mil each next year.

Located next to the Hulu Langat Forest Reserve, Hijauan Residence’s Phase 1 comprising 120 units of semi-detached and linked semi-detached homes have been sold out.

“We are launching RM22mil worth of properties for Kemuning Residence in Shah Alam - some of them under the build-then-sell concept — in 2009,” Leong said.

In Penang, Leong said the company had previewed 82 units of three storey super-link homes worth RM67mil at its Residence@Southbay.

This is a gated and guarded scheme with its own clubhouse, and all 288 units in the development should be progressively launched over the next two years.

“We also plan to launch our Legenda@Southbay, which comprises 76 units of three-and four-storey resort bungalows with built up from 5,000 sq ft to 8,000 sq ft, priced from RM2mil to RM5mil from 2009 onwards,” Leong said.

Sunway City Bhd (Suncity) plans to launch its BayRocks Garden Waterfront Villas this year. It is the first phase of the Sunway South Quay project which is part of the Sunway Integrated Resort.

Managing director Ngian Siew Siong said the 77 units were in the super high-end category with prices of RM5mil upwards and a gross development value of RM400mil.

“The BayRocks Garden Waterfront Villa project is targeted for launch in the fourth quarter,” he said.

and is a guarded and gated community facing the lake with an overall development concept based on horizontal strata in a low density development,” he said.

He added that the high-end to super high-end segment still presented growth opportunities for the industry, as Malaysian properties remained attractive to investors, domestic and foreign.

Although property prices were rising, they were still very much lower compared with mature markets such as Singapore and Hong Kong, where homes in prime locations were known to exceed S$5,000 per sq ft, he said.

By The Star

Developers using regional standards as benchmark

Developers are raising the bar in their product quality and designs to benchmark against the best in the region and the advent of expensive residences, including super high-end homes. They are also giving more credence to aesthetics, status and location.

Other factors which dictate the qualification of a super high-end residence include spacious built-up, quality of finishing, façade, a posh feel, grandeur of the property, and of course the view.

Buyers also place importance on considerations such as the reputation of the developer and consultants, accessibility, land tenure and status, unique features and layout, and property maintenance standards.

Gamuda Land Sdn Bhd managing director Chow Chee Wah said the differentiating factors for winning projects include creative design concepts, top-notch quality standards, developer’s reputation and management capability.

“There is also the prestige of being in the league of Kuala Lumpur’s most expensive addresses that attract buyers to these expensive residences,” Chow said. Knight Frank Ooi & Zaharin Sdn Bhd managing director Eric Ooi said with the increasingly competitive market conditions, developers needed to be more innovative in their product offerings.

“For instance, 51 Gurney, located at Jalan Perumahan Gurney, Kuala Lumpur has attracted considerable foreign interest with its unique selling point of car lift system that allows residents to park their cars within their premises. This had led to its good sales performance of more than 35% within the first two weeks of launch,” Ooi said.

Mah Sing Group Bhd president Datuk Seri Leong Hoy Kum said buyers of super-high end properties look for prime locations, good products in terms of concept and quality as well as good branding.

“Super-high end properties tend to be close to iconic buildings or landmarks, and are served by good infrastructure, amenities and facilities.

“Pricing would be a function of product and location. For example, condominiums in the KLCC areas with a good view of the Petronas Twin Towers would command a premium, as would condominiums designed by superstar architects and developed by branded developers,” Leong said.

Investors would also look at the potential for capital appreciation, rental yield, branding and the reputation and track record of developers.

E & O Property Development Bhd marketing and sales director K. C. Chong said in the current market conditions, buyers would be more selective, preferring location, developer’s reputation and development concept before committing. “Seasoned investors will invest as they are likely to consider these purchases as prudent investments and a hedge against inflation, particularly given the rising costs of building materials. “Purchasers may consider smaller investments, hence smaller condominiums and service apartments catering to specific niche markets will be popular,” he said.

Chong said E&O’s St. Mary’s serviced apartments that comprise luxurious one and two bedroom apartments designed with great flair and services would suit the international businessman. Landed properties and gated homes within the city limits will continue to be popular although the supply may be limited due to scarcity of sizeable tracts of prime land.

Meanwhile the popularity of residences in chic addresses in the centre of the capital will continue to fuel the rush for KLCC developments as seen in the rising prices.

The first two high-end condominiums in the KLCC area - Stonor Park and 2 Hampshire - launched in 2003 and 2004 respectively, have seen their prices doubled to RM1,000 and RM950 per sq ft respectively.

Other condominium projects that were launched after that have breached those levels while the prices for projects under construction have gone even higher.

Troika residences are going at average prices of RM1,800 per sq ft, Ampersand at RM1,450 psf, One KL at RM2,000 psf while the Four Seasons Place residences will most likely breach the RM2,000 to RM3,000 psf level.

By The Star

Delivering ahead of schedule

Two popular radio channels recently broadcasted Naza TTDI’s new tagline: “Delivering quality ahead of schedule, not just a few months but up to 20 months.”

Is this possible given that many developers these days are struggling to launch new projects not to mention completing existing ones with soaring construction costs and sluggish sales?

Naza TTDI Sdn Bhd group managing director Datuk Johan Ariffin has the facts to show that it is not empty talk - the company completed the 350,000 sq ft Giant hypermarket in Shah Alam in six months in 2001, a Malaysian Book of Records Achievement.

It delivered Phase 1 and 2 of its Jayamas shop offices in Shah Alam 20 months ahead of schedule and it is 15 months ahead of schedule for The Residence condominium in Taman Tun Dr Ismail. It also completed the TTDI Plaza shop offices and the Laman Seri bungalows and semi-detached units a year ahead of schedule.

“Naza TTDI has been at the forefront of property development since 1973. Being one of the leading players in the industry for over 35 years, the company has earned the distinction very few premier property developers have, that is the consistently delivering quality products ahead of schedule,” Johan said.

He added that purchasers would not have to worry about time delays and other costs associated with delayed and abandoned projects.

“Projects that are delivered ahead of schedule will give buyers significant savings in progressive interest amounting to thousands of ringgit. Our purchasers can also move into their units earlier thus saving on rental or if they are purchasing the properties for investment they will enjoy earlier rental income,” he said.

“We are relentless in our pursuit of quality. We have a technical team that is responsible for ensuring daily quality control and an independent quality assurance team that conducts regular checks to ensure quality is up to the mark.” All contractors are briefed on the company’s strict quality benchmarks before they are awarded projects.

“We also adopt the Construction Industry Development Board’s QLASSIC standards and subject our projects to their audits and scoring. We are also ISO 9001/2000 certified and are audited by SIRIM for strict compliance of the quality management system,” Johan said.

He said buyers were increasingly discerning and developers were taking note of their demand for quality.

“We believe that purchasers will single out companies that are sensitive to such needs and that have policies geared to deliver quality. Such quality focused developers should do well in the future as their products would be much sought after due to lower incidence of defects and delays due to defect rectifications,” he said.

Such stringent controls would result in higher construction cost, as contractors would have to price in for better quality and shorter completion period, he said.

“However, we help to minimise such cost increase by pre-qualifying contractors and making prompt payment on progress claims. There are even instances where we can actually purchase materials at more competitive prices than our contractors. It is more a question of networking and managing logistics. If done well, the cost can be controlled,” he said.

By The Star

Far East may sell Malaysian assets to REIT next year

FAR East Consortium International Ltd, a Hong Kong-listed hotel and property group, may sell Malaysian assets valued at over RM1 billion to a real estate investment trust (REIT) next year.

Sources said that pending favourable market conditions for a listing, the group is looking to buy more hotel and shopping complexes to be injected into the trust.

"They are getting the properties ready for listing ... but it will not be listed under current market conditions," a source said.

It is understood that due diligence on a majority of the properties that will be placed under the trust has been conducted.

"There is no rush to list the REIT. They are looking for more properties to be added to the REIT. Listing could be next year," the source told Business Times.

Far East has also delayed the listing of its planned REIT in Hong Kong, comprising seven hotels, to raise HK$4 billion (RM1.8 billion).

Despite a more favourable listing environment for REITs in Malaysia, announced during the tabling of Budget 2009, it is believed that Far East is still undecided whether it will list on Bursa Malaysia or Singapore Exchange.

Representatives of the company could not be reached for comment.

It was reported that Far East would include its properties and possibly even one property owned by Malaysia Land Properties Sdn Bhd (Mayland).

Far East and Mayland have a common shareholder in Tan Sri David Chiu Tat-cheong. Chiu is the deputy chairman of Far East.

Far East may sell Malaysian properties such as the four-star Dorsett Regency in Bukit Bintang, Kuala Lumpur, the five-star Sheraton Subang and the Grand Dorsett Labuan Hotel (previously known as Sheraton Labuan).

The recently completed Maytower Hotel Serviced Apartments and its new hotel in Johor Baru will also be part of the trust.

The existing hotels are said to be valued at about RM500 million.

Mayland's Hartamas Shopping Centre in Kuala Lumpur, which may be included into the REIT, could add another RM400 million to the size of the property trust.

By New Straits Times (by Vasantha Ganesan)

'Malaysia has 1st class infrastructure, 3rd class salaries'

After 50 years of development, we can say that we have one of the world's best infrastructure in terms of roads, airports, ports and even the Multimedia Super Corridor.

We only realise this when we travel overseas or to neighbouring countries or when we get visitors from the United States or Europe.

As visitors leave the Kuala Lumpur International Airport, travel on the highway, visit KLCC or the surrounding shopping complexes, they can immediately access the Internet. They all say we are better than the developed countries.

The government has done a lot in that we have a roof for every head, a desk for every school-going child, a bed for the sick and even jobs for 2.5 million foreign workers.

Lately, the government has been taking strides to improve the salaries of the government servants while businessmen have had to increase the cost of food items at groceries or restaurants.

Whilst we have first-class infrastructure, we still have Third World salaries.

While the economy has grown in the last 50 years - at six to eight per cent annually, salaries have not matched these types of growth. As such, most of the private sector companies still pay Third World salaries.

We cannot afford to measure ourselves against the McDonald's index in terms of how many people can afford to buy McDs. We can't even say we can use the Astro index in terms of how many people can afford an Astro at home, which I believe is less than 10 per cent.

It becomes worse when we say how many per cent of our population can afford to buy computers for their homes.

We can ask for first-class infrastructure but can the population afford to use it?

The key question is: Can the population afford handphones, highway tolls, computers and high taxes on cars?

As such, to keep astride with our economic growth and our super infrastructures, private sector salaries need to be increased.

It is sad that after 50 years, we still don't have a minimum salary structure and we bring in foreign workers whom we are happy to pay below RM600.

On top of this, we have 950,000 Malaysians working overseas, including 150,000 professionals, because the salary scales abroad are better.

Maybe we have to compare not only taxation in other countries, and ask the government to reduce income tax and corporate tax.

The government has done well to increase the salaries of civil servants by 35 per cent.

The private sector complains bitterly that petrol prices have gone up by 100 per cent, steel prices up by 100 per cent and food prices by 50 per cent. However, they try to contain salary increases between six and 10 per cent.

We need to have a minimum wage urgently because even at RM600, who can afford to live in Malaysia?

Just look at cost of rentals for homes and the cost of a loaf of bread for breakfast, lunch and dinner. This is even before we add the cost of transportation, amenities at home and the cost of educating our children.

In the last 50 years, salaries in Singapore have gone up by 7.5 times that of Malaysia.

Fifty years ago, our salaries and currencies were the same. Today, salaries are three times higher and the currency is 2.5 times higher across the Causeway.

Comparatively, the Hong Kong people are earning more than the Singaporeans and the Japanese are earning more than the Hong Kong people.

The government is responsible for first class infrastructure and as well as the hefty 35 per cent increase in government salaries.

Who is responsible for third-class salaries in Malaysia? Who is driving away the more than a million Malaysians who work overseas? Don't we need that human capital at home?

By Bernama

Institutional buyers to drive office property market

PETALING JAYA: The office property market will continue to hold out well with strong interest from local and foreign institutional buyers, industry players said.

Knight Frank Ooi & Zaharin Sdn Bhd managing director Eric Ooi said in the past year, the capital values of Grade A office space had appreciated by between 20% and 30% to RM1,000-RM1,300 per sq ft. Rentals grew by 20% to 30% as well to RM7.50-RM8 per sq ft.

Meanwhile, super prime office space in the Petronas Twin Towers commands rentals of between RM10 and RM12 per sq ft.

According to Ooi, institutional buyers continue to see good upside potential in capital values and rentals of quality office buildings in Kuala Lumpur and this bodes well for the market going forward.

An analyst with a local brokerage said a lot of foreign and local institutional funds wanted to hedge against inflation and were on the lookout for strategic acquisition of prime office buildings with high yield potential.

“Property investment, especially in commercial properties, is still considered the better option for high yield potential compared with investment in the lacklustre equity market,” he said.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said with the recent budget incentive for real estate investment trust (REIT) in the form of lower withholding tax for local and foreign investors, REIT managers would be looking at more ingenious ways to enhance their asset values by making more yield accretive purchases.

The tax rate on REIT dividend received by foreign institutional investors will be slashed to 10% from 20% while for individual investors (both foreign and local), the withholding tax will be reduced to 10% from 15%.

LaBrooy said the office market, which had made substantial gains in capital values and rentals in the past 12 months, continued to offer good upside potential.

“There is no overbuilt situation for Grade A office space in the city centre and the number of transactions at new record prices underscores the positive market sentiment,” he added.

In its latest Real Estate Highlights, Knight Frank Research said the first half of this year saw several transactions on “forward purchase” basis that recorded capital values surpassing RM1,000 per sq ft.

Kuwait Finance House (KFH) entered into an agreement with YNH Property Bhd for the purchase of half of Menara YNH along Jalan Sultan Ismail for RM920mil or about RM1,230 per sq ft.

KFH was also involved in another forward purchase agreement to buy Glomac Tower for RM576.85mil, or RM1,120 per sq ft.

The latest office building in the city to be transacted is Menara Citibank in Jalan Ampang, Kuala Lumpur. The buyer, IOI Corp Bhd, is said to have proposed a price of RM573mil or RM970 per sq ft for the building.

Another building that is believed to be up for sale is Menara Standard Chartered on Jalan Sultan Ismail, which has a price tag of close to RM300mil. The front-runner to bid for the building, which is owned by Government of Singapore Investment Corp Real Estate, is said to be ING Real Estate.

By The Star (by Angie Ng)

IJM Land in talks for more projects in China

From left: IJM Land chairman Datuk Krishnan Tan, IJM Corp Bhd deputy CEO and MD Teh Kean Ming, Datuk Soam Heng Choon and Minister of Housing and Local Government Datuk Seri Ong Ka Chuan at the launch of IJM Land’s new corporate identity

KUALA LUMPUR: IJM Land Bhd is in talks with various parties to venture into mixed property developments in China’s second-tier cities.

Managing director Datuk Soam Heng Choon said these new projects were likely to be commercial and residential developments and they could be done through joint ventures with local partners in China.

“IJM Land is always in talks with parties either locally or abroad for joint property projects.

“We haven’t set any time frame for the new ventures in China,” he told reporters after the launch of IJM Land’s new corporate identity yesterday.

“Our people are there and we will continue to look for new business in China and replicate what we have done in Malaysia, such as niche and township developments,” he added.

IJM Land expects its China ventures to contribute to profits in the next three to four years.

The company now has a presence in Changchun where it is jointly developing a RM500mil mixed property project. Soam said it expected to launch the project next year.

He said China represented its second overseas venture after Singapore and IJM Land also planned to tap other emerging markets like Vietnam.

Soam said the company was also looking at en bloc sales for its upcoming commercial projects in the Klang Valley and elsewhere.

“We are talking to fund managers operating out of Hong Kong and Singapore and these could be European or American funds,” he said.

Asked whether IJM Land was on track to launch 28 projects in the financial year ended March 31, 2009, he said it was reviewing some of the projects and might put some on hold.

He said upcoming projects might have higher selling prices which were adjusted according to the construction costs.

Soam said margins were mainly squeezed for lower-end products and there was still demand in the medium to medium-high market.

The unveiling of IJM Land’s new corporate identity and logo yesterday signalled the completion of the rationalisation exercise involving RB Land Bhd and IJM Properties Sdn Bhd.

It also denoted the company’s emergence as a major player in the Malaysian property scene.

The new entity brings together RB Land’s proficiency in township development and IJM’s expertise in high-rise condominiums, niche developments and commercial buildings.

By The Star

IJM Corp may place out IJM Land shares

SUBANG JAYA: IJM Corporation Bhd may place out IJM Land Bhd shares that it owns to institutional investors, as part of its efforts to unlock liquidity at the group level.

IJM Corp managing director Datuk Krishnan Tan said ideally, the group would want to own a 60% stake in IJM Land, but it would only consider placing out the shares once market conditions had improved.

Speaking to reporters after launching IJM Land’s new corporate identity here yesterday, he said: “At some point, we will have to do a share placement, preferably to institutional investors, as IJM Corp is currently holding more than 75% stake in IJM Land.”

He said IJM Corp preferred to place the shares to institutional investors as IJM Corp itself had many institutional investors on its shareholding list. Topping the list is the Employees Provident Fund (EPF), which owns about 20.5% of IJM Corp.

Nevertheless, Krishnan said IJM Corp was still comfortable with holding the bulk of shares in IJM Land and would not place them out immediately.

IJM Land was a creation from a merger between RB Land Holdings Bhd and IJM Properties Sdn Bhd, which was completed a week ago.

Krishnan said IJM Land would focus on developing its more than 4,046 hectares of landbank in the country, instead of aggressively pursuing overseas markets given that IJM Land was still early in the game.

“We have been lesser known as a property player but with the merger completed and a huge landbank now, IJM will be put to the forefront as a serious developer, just as we are as a construction player,” he said.

Apart from developing its huge landbank in the country, IJM Land has a 50% joint-venture to develop a RM500 million-mixed property development project in Changchun, China.

Its managing director Datuk Soam Heng Choon said IJM Land would eye expansion opportunities in other locations in China, particularly second-tiered cities and said the developer was “always in talks” with local and overseas investors to get more businesses.

“We have various options, and we hope to replicate our success in China as we have experience in developing niche property development projects and townships,” he said, adding that expansion in China would be IJM Land’s direction in the next three to five years.

Soam said IJM Land had not received any overseas contributions to its revenue, but would see revenue streaming in from its development project in China within the next three to four years.

On the local front, he said currently IJM Land’s plates were full, as it had more than 60 on-going projects and planned to launch another 28 new projects in FY09.

He said given the tougher operating environment and higher building materials costs, the developer was constantly reviewing its plans and might hold back some of the projects planned.

“So far, we have not faced any significant costs overruns, but our low-to-medium end housing projects might be affected from increased building costs,” he said.

However, Soam said although margins from its low-to-medium housing products might be squeezed mainly due to rising building costs, they would be mitigated by commendable sales of medium-to-high end and commercial products that gave better margins.

By The EDGE Malaysia (by Yong Yen Nie)

Lehman plans asset sales, posts US$3.93b loss

NEW YORK: Lehman Brothers Holdings Inc said it plans to sell a majority stake in its investment management division and spin off commercial real-estate assets as the struggling US investment bank fights to raise capital.

Wall Street's fourth-largest investment bank also reported a much-larger-than-expected third-quarter loss of US$3.93 billion (US$1 = RM3.46), hurt by US$5.6 billion of net writedowns.

"This is an extraordinary time for our industry and one of the toughest periods in the firm's history," chief executive Richard Fuld said in a statement.

Lehman shares erased early gains that pushed them above US$10. The shares, which fell 45 per cent on Tuesday, were down 49 cents at US$7.30 in pre-market trading as the company failed to announce a deal to sell its asset management business.

"What you are dealing with is a confidence issue," said Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, New Jersey, "There is still an underlying level of uncertainty as to what Lehman's future is."

Lehman said it has reduced exposure to toxic assets, including cutting its residential mortgage exposure by nearly half, and slashed its annual dividend to five cents per share from 68 cents.

Lehman said it intends to sell about 55 per cent of a portion of its investment management unit, including Neuberger Berman asset management and the private equity and wealth management businesses. It said it is in "advanced discussions with a number of potential partners" for such a sale.

The company also said it intends to spin off US$25 billion to US$30 billion of its commercial real-estate assets into a separate, publicly-traded company.

Lehman said its third-quarter net loss applicable to common shareholders was US$4.09 billion, or US$5.92 per share. Net revenue was negative US$2.9 billion, reflecting the write-downs.

Analysts' average forecast was a loss of US$3.43 per share on revenue of US$88 million, according to Reuters Estimates.

Selling the investment management division is designed to boost the company's capital levels; spinning off commercial real-estate assets is meant to reduce the toxic investments that have reduced Lehman's market value by more than US$40 billion since February 2007.

Before yesterday, Lehman had already taken US$7 billion in credit-related writedowns and losses since the start of the global credit crisis.

By Reuters

Singapore group may sell tower to ING

Menara Standard Chartered likely to go for RM300M, sources say



DUTCH insurer ING has emerged as the front-runner to buy the Menara Standard Chartered on Jalan Sultan Ismail for almost RM300 million, sources said.

A decision and an announcement on the winner may be made as soon as next week, a source told Business Times.

It is believed that the Government of Singapore Investment Corp Real Estate (GIC RE) is selling the office building to ING Real Estate Investment Management.

While it could not be determined how much ING would be paying for the property, industry executives estimate it would be around RM900 per sq ft.

"Based on the recent Menara Citibank transaction of RM970 per sq ft, Menara Standard Chartered should go for about RM900 psf," one source said.

It was also reported that the owners were looking for a yield or return on investment of about six per cent.

Based on a nett lettable area of 321,000 sq ft, the building could be sold for around RM285 million.

ING said it could not comment on the matter immediately.

"The purchase of properties is an ongoing investment initiative that ING Malaysia conducts in the markets we operate in of which to date we have an estimated investment assets under management of RM10 billion," said Karen Yoong of ING Insurance Bhd's Branding & Corporate Communications division.

GIC RE did not respond to Business Times' query while calls to Rahim & Co's representative handling the deal went unanswered.

According to GIC RE's website, it bought Menara Shahzan Insas through its affiliate Reco City Sdn Bhd in November 2001 for RM135 million.

Built in the mid-1980s, Menara Shahzan Insas is a 42-storey office tower with a total gross floor area of 46,700 sq m.

The building was later renamed Menara Standard Chartered in July 2004 after Standard Chartered Bank relocated its corporate headquarters there.

The website also said the building required extensive renovation due to its age and condition at the time of acquisition.

Once renovation was completed, GIC RE repositioned Menara Standard Chartered as a premium office building, attracting class "A" office rentals and international tenants.

GIC RE is one of three business units under GIC, one of two of Singapore's investment arms. Temasek is the other arm that is more well-known among investors. Together, they manage Singapore's foreign reserves.

GIC RE's website states that its current assets in Malaysia include holdings in the Sunway Pyramid Mall, Sunway Hotels and Resorts and a stake in the City Square shopping mall in Johor Baru.

By New Straits Times (by Vasantha Ganesan)

YTL may open shopping malls in Singapore, London

SINGAPORE: YTL Corp, Malaysia's biggest builder, may open shopping malls in Singapore and London under its Starhill brand in the next 12 months, managing director Francis Yeoh said.

"London is actually pursuing us to do a Starhill," Yeoh told reporters in Singapore yesterday, referring to the company's luxury Starhill mall in Kuala Lumpur.



A recent decline in commercial rental rates has made the plan more viable, he said.

YTL's fourth-quarter profit dropped 36 per cent as income from its property and power businesses slowed, the company said on August 19. Demand for real estate has eased as Malaysia's economy grew in the second quarter at the slowest pace in a year.

YTL in April paid a record price of RM85 million for property of less than an acre in Kuala Lumpur, the Edge newspaper reported at the time, without saying where it obtained the information.

YTL also in November bought an apartment building in Singapore for a then-record S$435 million (RM1.05 billion), increasing its investment in a city where home prices had climbed to a 10-year high.

Gains in residential property prices have since eased in Singapore, rising 0.4 per cent last quarter, the slowest in four years.

By Bloomberg

YTL keen to launch Starhill brand in Singapore and London

SINGAPORE: After having successfully launched the Starhill brand in Dubai, YTL Corp Bhd wants to expand the concept to Singapore and London.

“We are being pursued by people from London. We also want to do a Starhill in Singapore and it can either be a greenfield or an existing property,” managing director Tan Sri Francis Yeoh said during the “The Luster of Luxury” forum at the Forbes Global CEO conference yesterday.

“Time is now a window for us and I can wait for 12 months to make a capital investment in Singapore,” he said.

YTL owns the Starhill brand concept. It first developed the concept in Kuala Lumpur and last April it launched the Starhill Gallery in Dubai.

Yeoh believes there is a booming market for luxury products and that “luxury should come to a person instead of the person going to luxury.” Malaysia will also be home to the “Forbes Asia Luxury Forum: The Art of Time” for the first time in Kuala Lumpur on Dec 5. It will examine the booming market for luxury timepieces in the region. A half day conference will also be held.

The event is held in conjunction with YTL’s “A Journey Through Time II” which kicks off from Dec 4 to 14 at the Starhill Gallery. It will be Asia’s largest watch and jewellery showcase. “YTL is an ideal partner for Forbes Asia in co-hosting this event given its expanding portfolio of luxury lifestyle resorts, luxury retail outlets such as the Starhill Gallery and other luxury-related projects,” Forbes vice chairman Christopher Forbes said.

By The Star

Next Malaysian property boom seen in 2-5 years

MALAYSIANS expect the country to experience its next property boom in two to five years, according to a survey conducted by property website, thinkproperty.my.

In a statement yesterday, thinkproperty.my said the survey, which received responses from almost 950 participants, showed a surprise strengthening of the people's perception of the Malaysian property market compared to last month, although overall confidence was still low.

“According to a survey, 43 per cent of the participants believe that the next property boom will be in 2-5 years, 20 per cent said within two years, 25 per cent thought it will happen in 5-10 years and 12 per cent more than 10 years,” it said.

Thinkproperty.my chief executive officer Asim Qureshi said the data from the survey were positive for Malaysia's property market.

“People perceive that the medium term for property in Malaysia is strong,” he said.

By Bernama

Cyberjaya office occupancy rate high

CYBERJAYA landowner Cyberview Sdn Bhd says that the average occupancy rate for offices in the MSC status area is at 94 per cent.

The demand for office space is so great that Cyberview will start work on SME Technopreneur Centre III a year ahead of schedule.

Cyberview had planned to start work on the third instalment of offices catered to small and medium enterprises in 2010.

Cyberview was set up by the government in 1996, with the Minister of Finance Inc owning 70 per cent and the remaining stakes held by different government agencies, which include the Multimedia Development Corporation (MDeC).

Between September 2007 and August 2008, the supply of office space in Cyberjaya had increased by another 1.05 million sq ft to 4.22 million sq ft.

Another additional 1.64 million sq ft of office space will be ready by the third quarter of 2009, bringing the total space for businesses in Cyberjaya to 5.86 million sq ft.

Cyberview managing director Redza Rafiq said interest in the intelligent city has also not waned, adding that MDeC is in talks with between five and six multinational corporations (MNCs) to set up base in the area. He did not elaborate.


MORE PROJECTS: MDeC is in talks with five to six multinational corporations to set up base in Cyberjaya, says Redza.

There are 474 companies located in Cyberjaya, 30 of which are MNCs.

Meanwhile, the master developer of Cyberjaya, Setia Haruman Sdn Bhd, is also upbeat about its housing projects in Cyberjaya.

Demand is now shifting to out-of-town buyers from just those working and living in Cyberjaya, said Setia Haruman chief operating officer Lao Chok Keang.

The Emkay group owns 75 per cent of Setia Haruman, which was appointed as master developer of Cyberjaya in 1998.

Setia Haruman has developed some 3,000 houses, of which 250 are high-end developments while the rest are medium-cost housing.

To date, some 750 medium-cost houses and about 200 high-end units have been sold. More medium-cost houses are expected to be built in the area to meet demand for homes within the RM200,000 to RM500,000 bracket.

By New Straits Times (by Presenna Nambiar)

China remains major real estate powerhouse

SINGAPORE: China will remain a major real estate powerhouse even after the Beijing Olympics and despite the backdrop of weaker property prices, according to Hang Lung Properties Ltd.

Chairman Ronnie Chan said the market had been growing very fast in recent years before the slowdown about eight months before the Olympics.

Hence, he said, a long-term players would have to devise ways to overcome the bear market.

“Property is a long gestation industry,’’ Chan said during a session on “Rolling the Dice on Real Estate,’’ at the Forbes Global CEO forum yesterday.

He said the biggest opportunity in China would include the large commercial and retail investments which could still bring in double-digit returns.

On the impact of the US credit crunch, he said there had yet to be a fallout on China and Hong Kong.

“Sooner or later, it (the impact) will reach here but, as long-term players, we are not perturbed.

“China is an opportunity of a lifetime and we are buying land for future projects.’’Hang Lung allocated US$5bil for projects in China and it had already nine projects under way, he said.

Apart from China, Vietnam also provided opportunities, although at a smaller scale, and that property prices had fallen 30% to 40% from their peak in 2007.

“It is like getting into China 10 years ago,’’ said VinaCapital group chief executive officer Don Lam. “For those who missed the first round, it could be time to enter (the Vietnamese market).

“True, there is a liquidity crunch, but for those who plan it right, it may take two to three years,’’ Lam said.

He added that inflation had no follow-through impact in Vietnam where 75% of the population is agriculture based.

VinaCapital is planning its second real estate investment trust of US$500mil, a follow-up from the successful US$800mil earlier.

By The Star

British home prices on downward spiral

LONDON: British house prices kept falling sharply in the three months to August even as the average number of home sales per surveyor hit a new low, a survey showed yesterday.

The Royal Institution of Chartered Surveyors (RICS) said its house price survey balance improved slightly to 81 in August from 83 but still showing a weak picture for the housing market, which is now slumping after a decade-long boom.

”A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery,” said RICS spokesman Jeremy Leaf.

Faced with a global credit crunch, mortgage lenders have tightened up the terms on which they make new loans, demanding as much as 25% of a property’s value as a deposit when before they would look for 5% or even provide as much as 120% of the value themselves.

The result has been a sharp fall in house prices and transactions drying up the effects of which are being felt right across the economy with construction and furniture retail companies particularly hard hit.

RICS said completed sales per surveyor stood at just 12.7, the lowest figure since the question was first included in the survey in 1978. Inventory levels on surveyors’ books also fell back.

As a result, the ratio of sales to the stock of unsold property an indicator of market slack fell to 15.4 from 16.9 in July.

The tentative improvement in sentiment seen in July’s survey have also proven to be short-lived, with a bigger balance of surveyors expecting sales to fall further.

By Reuters

The Pearl @ KLCC sold for RM550m

A KUWAIT Finance House (Malaysia) Bhd-led consortium has bought The Pearl @ KLCC at Jalan Stonor, Kuala Lumpur, for around RM550 million.

The Pearl @ KLCC is a 41-storey luxurious high-end condominium block, offering 175 units ranging from 3,000 sq ft to two 20,000 sq ft penthouses with stunning architectural design.

Each floor is to house six units with private lifts.

The consortium of four or five companies, known as Flora Bliss Development Sdn Bhd, acquired it from project developer Cera-mic Home Tiles (CHT) Sdn Bhd, a firm believed to be closely linked to main board developer Malton Bhd.

The purchase of the property is funded by KFH, the second major asset acquisition in the prime KLCC area financed by the banker.

Last December, KFH financed the purchase of the 40-storey Glomac Tower nearby Petronas Twin Towers by local Bumiputera firm Prestige Scale Sdn Bhd for RM1,160 per sq ft (psf), or RM577 million.

A source told Business Times Flora Bliss was offered a discount for The Pearl @ KLCC, which sold at less than RM1,000 psf.

Market prices for condominiums in the neighbourhood are doing at more than RM1,200 psf, while that of properties closer to the Petronas Twin Towers has soared above RM2,000 psf.
The Pearl @ KLCC will be constructed on 0.72ha of freehold land by China-listed Beijing Urban Constructive Group Ltd, hired by CHT.

Main structural works will commence in November and the building is expected to be ready by the end of 2010. The construction cost is estimated at RM280 million.

CHT has appointed Pintaras Geotechnics Sdn Bhd, a unit of Pintaras Jaya Bhd, for sub-structure foundation works due for completion next month.

It also appointed Malton's wholly-owned unit, Domain Resources Sdn Bhd, as project development manager.

"Flora Bliss may undertake a second sale of the building later or sell units to individual buyers when price escalates," a source said.

By New Straits Times (by Sharen Kaur)