Menara Citibank back on sale

Menara Citibank is back up for sale now that IOI Corp Bhd has called off its purchase for RM586.73 million, said agent Regroup Associates Sdn Bhd.

"Interested parties with a strong financial background can make an offer as the seller is still willing to consider a good offer," Regroup Associates executive director Paul Khong told Business Times yesterday.

However, Khong said it would not be possible to complete the sale of the building by the end of this year as deals of such nature take a few months to complete.

"The timeframe depends on how quickly the parties come to an agreement on the terms of the deal and sign the SPA (sale and purchase agreement), which will then be subject to the FIC approval," he said, adding that this could take up to six months.
While Khong was unable to comment on which parties have expressed interests, he said there were many enquiries on the building as it was still an attractive income-yielding asset.

"Menara Citibank is a Grade A office building with good tenants, who will not look to move out in a slowing economy," he said, adding that the exclusive agent for the deal was CB Richard Ellis Singapore.

IOI backed out of the deal on Thursday, forfeiting its RM73.36 million deposit paid to Inverfin Sdn Bhd, citing concerns over the economy.

Inverfin is 50 per cent owned by Menara Citi Holding Co Sdn Bhd, a unit of US bank Citigroup. Singapore's CapitaLand Ltd holds another 30 per cent, while Amsteel Corp Bhd owns the rest.

In August, Business Times reported that IOI Corp Bhd, a private equity fund and a Korean fund were short-listed as bidders for the building.

Menara Citibank has a net lettable area of 733,626 sq ft and a 99 per cent occupancy rate.

The net book value of the building as of December 31 last year was RM458 million and the gross rental revenue was RM43.3 million (excluding the revenue from the car-park of RM3.3 million).

By Business Times (by Jeeva Arulampalam)

Putera Capital bidding for RM9b local jobs

Despite its status as a financially-troubled group, Putera Capital Bhd has bid for construction jobs worth about RM9 billion in Malaysia.

The group, which had its first restructuring proposal rejected by the authorities, is awaiting response to its second revamp plan.

"If all goes well, than we can embark on these projects with our strategic partners," chief executive officer Wan Azman Wan Salleh said after the group's annual general meeting in Kuala Lumpur yesterday.

However, he declined to comment further on the revamp plan.
The group has not made money in seven years and it faces the threat of having its shares taken off the stock exchange.

For the financial period ended May 31 2008, the group posted a loss of RM9.2 million on revenue of RM1.5 million.

Putera Capital has closed its loss-making textile division and it wants to focus on the construction and infrastructure business.

It holds a 20 per cent stake in the West Coast Expressway, a multi-billion-ringgit project that has yet to take off.

On its partnership with Melewar Industrial Group Bhd to build a proposed RM2.2 billion monorail system in George Town Penang, Wan Azman said the group remains hopeful of the project.

They are still waiting for a response from the state government, he added.

By Business Times (by Zurinna Raja Adam)

PJD to unveil two projects next year

KUALA LUMPUR: PJ Development Holdings Bhd (PJD) expects to launch two property projects in the Klang Valley next year, said managing director Wong Ah Chiew.

“We expect to launch the first project in the next six to seven months,” he said after the company AGM yesterday.

The projects scheduled for launch is Duta Kingsbury @ Dutamas in Sri Hartamas and a yet-to-be-named mixed residential project in Cheras.

The Duta Kingsbury residential project would have a gross development value (GDV) of RM600mil and the Cheras project, a GDV in excess of RM1bil, said Wong.

PJD currently has 10 ongoing projects and some 600ha of undeveloped landbank all over Malaysia.

On another note, Wong said PJD was cautiously optimistic on the outlook of the local property market.

“We do see a slowdown but we do not think it would become as bad as the US property market,” he said.

Wong said PJD would be revising the design of one or two of its ongoing projects to cope with the softening property market.

“We want to maintain the quality of these projects while making it more affordable at the same time,” he said.

Wong also said the rise in raw material prices since the fuel price hike earlier this year posed big challenges on its construction division.

However, the recent drop in fuel and steel prices would help reduce any impact on the sector going forward, he said.

PJD owns and manages the chain of Swiss-Garden International hotels, resorts and inns in Malaysia.

Swiss Garden International Sdn Bhd vice president of operations Raymond Yeoh said while the occupancy rate for its hotels was healthy, he expected the local tourism sector to slow down next year.

“The last two to three months have put a question mark on the local tourism industry. Forward bookings from January have been a little slow. With the current economic downturn, tourists are more cautious about their travel plans,” he said.

By The Star

Sunrise profit at RM43mil

KUALA LUMPUR: Sunrise Bhd announced yesterday a pre-tax profit of RM42.79mil for its first quarter ended Sept 30, down from RM85.59mil in the previous corresponding period.

Pre-tax profit for the quarter was lower as the previous period had included total gains of RM52.1mil arising from the sale of commercial units and carpark lots in Plaza MontKiara to Quill Capita Trust, as well as a piece of land, Sunrise said in a statement.

Excluding these one-off gains, the group’s underlying pre-tax profit for the quarter would have chalked up a 28% year-on-year growth, it said.

Its revenue, however, increased to RM198.21mil from RM130.62mil previously.

Main contributors to the group’s financial performance for the quarter were its ongoing commercial and residential developments, namely Solaris Dutamas, Mont’Kiara Meridin, 10 Mont’Kiara and 11 Mont’Kiara.

The group chalked up property sales of RM216mil during the quarter.

By Bernama

Gadang in running to win RM500m Abu Dhabi jobs

GADANG Holdings Bhd, a construction and property firm, may win two contracts worth RM500 million to build residential towers in Abu Dhabi in the United Arab Emirates by the middle of next year.

It will soon sign a pact with a local party, believed to be from the royal family of Abu Dhabi, to form a joint-venture company.

Gadang's partner will hold a majority stake in the venture, which will source for local funds in Abu Dhabi for the project, managing director and chief executive officer Tan Sri Kok Onn said.


KOK: There is big demand for properties in Abu Dhabi

Besides residential, it will also build office and commercial blocks, Kok said after the company's shareholders meeting in Kuala Lumpur yesterday.
"There is great demand for housing and commercial. There are areas in Abu Dhabi where foreigners can own properties, so there are a lot of investors coming here to buy," he said.

The two contracts are part of the over RM2 billion jobs Gadang is bidding for in Abu Dhabi.

In addition, Gadang is gearing to launch condominiums, semi-detached homes and bungalows worth over RM100 million in Tanjung Bungah, Penang, by the middle of next next year.



It is also waiting for the final results of a tender it submitted two years ago to build a RM200 million sewerage treatment plant in Malacca, Kok said.

"We have a lot in the pipeline. Earnings-wise, we hope to do better next year, driven by current projects and also because construction material prices have dropped. This will improve the situation for us," Kok said.

For the year to May 2007, the company posted a net profit of RM7.5 million on the back of RM172 million revenue.

Gadang expects to benefit from projects under the Ninth Malaysia Plan that the government will call for next year.

By Business Times (by Sharen Kaur)

Gadang bidding for RM6b jobs

GADANG Holdings Bhd, a construction and property group, is bidding for some RM6 billion worth of infrastructure and construction contracts in the country and the Middle East, to ride out the global economic downturn.

It is bidding for an estimated RM4 billion worth of government jobs and private finance initiative (PFI) projects in Malaysia, and over RM2 billion worth of projects in Abu Dhabi in the United Arab Emirates.

Managing director and chief executive officer Tan Sri Kok Onn said Gadang expects to sign a pact with a partner in Abu Dhabi soon to work jointly on the projects there.



Abu Dhabi will be a new growth area for Gadang, which has been scouting for jobs there in the last two years.
Apart from Malaysia and the Middle East, the main board-listed firm is also exploring for infrastructure work to build water treatment and power plants in Vietnam and Indonesia.

It wants to be proactive in building its construction, property and utilities divisions despite concerns over the global financial market.

"We will grow the businesses cautiously. While there are lucrative projects in the pipeline in Malaysia and overseas, we will study the jobs first before making submissions," he told Business Times in an interview.

Kok said Gadang will remain resilient against the current market challenges and will continue to put in place various measures to reduce the impact of rising prices of construction materials on the operating margins.

The group hopes to do better financially this year, supported by its two ongoing contracts worth RM716 million to build the Kemuning-Shah Alam highway and the Cheras Rehabilitation Hospital.

Kok said its four water-supply concessions in Indonesia will also add to the group's revenue.

It also expects higher earnings from its property division, which has been enjoying brisk sales.

"Demand for cheaper housing has been on the uptrend. Buyers are looking for affordable homes in these trying times. We will continue to build them so long as there is continued demand," Kok said.

Gadang's construction orderbook stands at some RM550 million, with unbilled property sales worth RM50 million.

For the financial year ended May 31 2008, Gadang saw a 42.4 per cent drop in net profit to RM7.95 million, from RM13.80 million a year ago.

Revenue was RM172.50 million, down 23.7 per cent from RM225.96 million.

By Business Times (by Sharen Kaur)

Magna Prima cuts target

MAGNA Prima Bhd, whose luxury homes fetched record prices last year, slashed by almost half projected revenue from its biggest development as the global recession cuts demand for retail property.

Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said.

Lim cut his sales forecast from the development to RM600 million from RM1.1 billion.

"We have to reposition our direction," Lim, 47, said in an interview on Monday in Petaling Jaya. The "downscaling" will help Magna Prima "manage sales according to market conditions".
A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects.

The Southeast Asian nation's government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.

Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won't be affected by the cutback. He's seeking a profit margin of between 25 percent and 30 percent from the development.

The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 11/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.

By Bloomberg

Magna City project to be downsized

PETALING JAYA: Magna Prima Bhd has downsized its Magna City project in Kuala Lumpur to RM600mil from RM1.1bil in gross development value (GDV) due to slowing growth, according to chief executive officer Lim Ching Choy.

“In view of the slowing economy, we reposition our development to suit the market demands,” Lim told StarBiz. “We (downsized) the development because we anticipated that the retail mall business would be tough going forward.”

Lim said the decision would also “lighten up” the company’s cash position, adding that the project’s profit margin could be maintained at 25% to 30% of sales value.

“Magna Prima is able to retain a healthy profit margin because we may not keep any of the assets in the amended RM600mil (project),” he said, revealing that the company had planned to retain 45% to 55% of the original project.

As of end of October, the group had RM230mil in unbilled sales.

The Magna City will have over 1.6mil square feet of net floor area while the construction is targeted to commence in the middle of 2009.

It sits on 10.23 acres of freehold land comprising 67 units of lifestyle shop offices, two levels of retail lots, two levels of corporate offices and 800 units of service apartments.

By The Star (by Law Kai Chow)

Funds look to investing in China property

HONG KONG: Property investors are pencilling “second half, 2009” in their diaries as the likely time to start pouring money into China again as they search for bargains in its ailing real estate market.

But they are wary of slowing economic growth, overbuilding in some areas, difficult partnerships with developers and red tape.

Private equity fund manager Gaw Capital Partners is looking to raise up to US$1.5bil for Chinese property, while ING Real Estate is marketing a US$750mil fund it wants to launch in the first quarter of next year.

“I think it’s a good time to start looking,” said Goodwin Gaw, cofounder of Gaw Capital, which manages US$4.7bil of assets in 14 Chinese projects. “2009 and early 2010 could be a sweet spot.”

Many among the 540 investor groups at the MIPIM Asia property conference in Hong Kong last week pinpointed China as the market that would recover quickest from the global economic crisis because of growing domestic demand for housing and office space. And they are keen to raise funds to prepare.

Behind the enthusiasm is a hope that capital starved property firms will offer plum investment deals to foreign investors looking for internal rates of return of 25%-30%.

China has announced four trillion yuan (US$586bil) in fiscal stimulus measures, with 800 billion yuan going to low income housing and one trillion yuan on infrastructure spending.

While economists admit they do not know how much is new spending, they believe more steps are in the offing - probably tax and interest rate cuts and perhaps more spending in earthquake-hit Chengdu.

By Reuters

Investors scour Asian property marts for bargains

HONG KONG: Asia's battered property markets are starting to attract strong interest from investors, with Japan, Australia, China, Hong Kong and Singapore among their top picks in the region.

Property fund manager LaSalle Investment Management, which raised a US$3 billion (US$1 = RM3.63) fund in August, expects Hong Kong and Singapore to recover first from the financial turmoil, its regional director David Edwards said.

"We are seeing a decline in values throughout the region.

There are properties that are being sold at much lower prices than the market's perception of their values," Edwards said.
ING Real Estate plans to double its investments in Asia to US$1 billion, with most of its investors in Europe wanting to diversity into the region, said the firm's Asia Pacific managing director Nicholas Wong.

ING invested mostly in China and Japan, he said, and was now marketing a US$750 million fund to build Chinese housing.

Several Asian markets were already 30-40 per cent off their peaks, Wong said. And a Reuters poll last week found that analysts believe Hong Kong and Singapore prices are set to fall by at least a fifth in the next year.

"Most of our clients are from the UK and Europe and traditionally, they invest only at home," Wong said. "Now, they want global exposure and most of them want to go to Asia for diversification."

With Hong Kong, Japan and Singapore in recession, Asian developers are battling falling demand and tighter credit, even after efforts by central banks to encourage lending by slashing key rates.

"The risk of bankruptcies are still higher throughout Asia and most financial institutions are not out of the woods yet," said Kelvin Lau, economist at Standard Chartered Bank in Hong Kong. "That's why overall lending conditions have not yet returned to normal."

In Japan, more than 400 small and medium-sized developers have gone out of business this year as the residential market slowed and as credit dried up.

But the tough environment is not stopping property investors from prowling the region for bargains.

"The present environment is incredibly difficult. As a business, we are taking a cautious approach. But we are still looking," said LaSalle's Edwards.

LaSalle had so far invested US$10 billion in Asia and nearly half of the amount was in Japan, Edwards said. The company was also keen in Australia and China, he added.

Other investors were optimistic that some property segments would recover soon.

China's ailing housing market, for instance, may stabilise in about six months and recover in two years, before most other Asian countries, said Cheng Soon Lau, managing director at Invesco Real Estate Asia.

Invesco is planning to invest directly in China, Japan, Hong Kong and Singapore, buying office blocks and building housing.

Managers of securities funds are becoming less worried that investors will withdraw money, according to Chris Reilly, director of property for Asia at Henderson Global Investors. "Right now, there is really not much redemption," he said."

By Reuters

Property downturn not as bad as in 1997

The current down cycle in the property market is not as bad as the 1997 Asian financial crisis, said ECM Libra Capital Sdn Bhd.

"We are more inclined to see a moderate property downturn similar to the dot-com bust days in 2001. Although oversupply is evident in varying degrees in various sub-segments of the property market, indications are that the market is fairly resilient," it said in a report yesterday.

"With the exception of luxury condominiums, correction of capital values and rental of properties should be moderate," it added.

ECM Libra recently hosted a property talk and invited property consultants from Regroup Associates as speakers to shed some light on whether the Malaysian property market is resilient enough to ride out the economic downturn.
"We came away from the talk with reinforced belief that the current property downcycle is not as bad as the Asian financial crisis," it said.

ECM Libra also said a "crash" test was carried out, revealing that the risk of declining sales is moderate and not likely to crash, especially residential properties.

"Further risk of margin erosion is also minimal as building material prices have stabilised, and developers are in a better financial position now as leverage is half that of the 1998 Asian financial crisis.

"Besides that, property stocks are already trading at "mini" distressed valuation last seen in 2001," it said, upgrading its call on the property sector from underweight to neutral.

"Although there may be more negative news in the near term, we believe most of the bad news have already been priced in. We believe that the fundamentals of the economy and property market are stronger now and the current downturn should be more moderate," it said.

Prices of property stocks have fallen by 50 per cent to 70 per cent year-to-date. However, ECM Libra warned that the change in its stance is more of turning less bearish than turning bullish, as property stocks will still operate under challenging environment over the next six to 12 months.

Sunway City is its top pick for the sector due to its more resilient earnings from property investment as well as its undemanding valuation.

By Business Times

Sales forecast for Magna City slashed

MAGNA Prima Bhd, whose luxury homes fetched record prices in Malaysia last year, slashed by almost half projected revenue from its biggest development as the global recession cuts demand for retail property.

Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said. He cut his sales forecast from the development to RM600 million (US$165 million) from RM1.1 billion.

“We have to reposition our direction,” Lim, 47, said in an interview yesterday in Petaling Jaya, outside Kuala Lumpur. The “downscaling” will help Magna Prima “manage sales according to market conditions.”

A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects. The Southeast Asian nation’s government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.
“The whole market is bearish on property stocks,” said Ang Kok Heng, who oversees US$156 million as chief investment officer at Phillip Capital Management in Kuala Lumpur. “They have a few choices, either you delay the launches, hold or scale them down to suit the conditions.”

Yesterday, Malaysia’s central bank cut interest rates for the first time since 2003 and lowered the amount lenders need to set aside as reserves to help shield the Southeast Asian economy from the global recession.

Shares of Magna Prima, based in the Kuala Lumpur suburb of Damansara, have fallen 59 per cent this year, outpacing a 41 per cent slide in the benchmark Kuala Lumpur Composite Index.

Still Profitable

Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won’t be affected by the cutback. He’s seeking a profit margin of between 25 per cent and 30 per cent from the development.

The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 1 1/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.

A slump is the “best time to make more money,” he said. “Land cost is reasonable if you have money.”

With the Magna City project scaled back, Lim plans to focus on building higher-priced homes. Demand for low-priced homes has been “drastically affected” by the slowdown, he said.

Bank loans approved for Malaysian home purchases in September fell to a seventh-month low, according to the central bank.

Economic growth in 2009 is expected to slow to 3.5 per cent from about 5 per cent this year.

Magna Prima will roll out two high-end residential projects worth as much as RM300 million each next year, and is in talks to acquire 2.5 acres (1 hectare) in Kuala Lumpur near the Petronas Twin Towers to construct an office building, he said.

Last year, Magna Prima sold the last unit in a luxury residential block in the center of Kuala Lumpur for a record RM2,100 per square foot. Space now goes for an average RM1,300 per square foot and above, according to Mervin Chow Yan Hoong, an analyst at OSK Research Sdn Bhd.

Magna Prima last week said third-quarter profit tumbled 85 per cent to RM1.1 million.

By Bloomberg

Contruction boom is over for Dubai

DUBAI:The United Arab Emirates (UAE) began to bail out and consolidate Dubai's rattled banking sector and curb a building frenzy yesterday as the former boomtown started cutting state spending in the face of the global crisis.

In a major policy shift, the federal government will inject capital into Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel.

And in what marks the end of an era for Dubai, Mohamed Alabbar, a member of the emirate's ruling council, said the emirate would now pare its construction ambitions back in anticipation of waning demand after spending the past five years building as much property as fast as possible.

He assured investors the Gulf's regional financial hub of Dubai was able to meet its sovereign obligations.

By Reuters

Elegant designs

Lago, from Mobalpa's Tendance Collection, imparts a classic yet modern feel to any kitchen.

Cabinets set a kitchen's style and tone. Therefore, it is crucial to explore all your options before making the final decision.

Renowned French brand Mobalpa was founded in 1949, at Thônes, France, by Societe Fournier. The company is now 100 years old and has made a name for itself in three areas, namely kitchens, bathrooms and fitted wardrobes.

Working with wood is a tradition among the mountain dwellers of the region, which is dotted with alpine chalets built entirely of wood that, for centuries, have withstood the ravages of weather at its worst.

Mobalpa certainly benefits from this environment and from its time-honoured traditions. When it began, the company consisted of a modest workshop in which a handful of craftsmen produced solid rustic fittings for its local clientele.

In 1947, Mobalpa produced its first fitted kitchens, and has been producing fitted kitchens for over 40 years and customised bathroom cabinets since 1993. Development of the state-of-the-art techniques is devoted specifically to this activity.

Today, Mobalpa is the among leading makers of kitchen cabinets in France. There are over 40,000 homeowners in France whose homes get fitted with Mobalpa kitchens every year.

Mobalpa kitchens are available in three collections. These are the 100 % Design Collection which focuses on elegant, creative and contemporary designs, the Tendance Collection, which concentrates on classical, timeless designs and the Heritage Collection featuring country designs accented by the nobility of wood.

Check out the classic, modern feel of Lago. The beige kitchen has a unique combination of moulded lacquered doors. A wedged oak island unit doubles up as a food preparation counter or dining counter.

It is crafted for ample storage space. A mineral worktop complements its façade. Lago is a design from the Tendance Collection.

Managed by Advantage Resources Sdn Bhd (ARSB), the sole distributor of Mobalpa products in Malaysia, Mobalpa kitchen cabinets are showcased in its latest outlet in Damansara Utama.

By The Star

Keen interest prompts latest YNH launch

An artist's impression of the Kiara 103 project

YNH Property Bhd is targeting to officially launch its RM1bil Kiara 163 suites, a mixed development project in Mont’ Kiara, Kuala Lumpur, next month.

The project comprises a 23-storey office tower (175,000 sq ft), two 42-storey serviced apartment blocks (595,000 sq ft), retail podium (142,000 sq ft), and an auditorium (175,000 sq ft).

“We are launching the project due to keen interest from prospective local and foreign purchasers and also due to its prime location.

“There are always investors who look at property investment as a good hedge against inflation.

“We have secured about RM260mil in sales for the office and retail space to-date,” said group corporate services head Daniel Chan.

Chan said that to add value to Kiara 163, the retail podium and serviced apartments had eye-catching architectural designs and recreational facilities.

The two 42-storey serviced apartment blocks had a unique curved block design that was accentuated by the extensive use of glass windows, he said.

“The apartments will be equipped with facilities such as a swimming pool, jacuzzi, a gym, squash court with garden setting, and an entertainment pavilion,” Chan added.

The four-level retail podium is positioned as a neighbourhood retail centre catering to affluent expatriates and the local population.

“Food and beverage outlets, a supermarket, specialty stores which deals in fashion, eyewear and watches as well as service providers, including laundry outlets and medical and dental clinics, are on our list of retailers.

“The unique feature of the retail podium is the sunken outdoor courtyard where the food and beverage outlets will be located,” Chan said.

The office tower block, which would provide an alternative to corporate headquarters that did not require a city centre address, was also designed to accommodate small home-office units, Chan added. “This would help us tap into diverse markets,” he said.

The group’s other mixed-development projects, Duta Kiara 1, Duta Kiara 2, Duta Kiara 3, Duta Kiara 5, Duta Kiara 6 and Project 3KL, located in Mont’ Kiara, Hartamas and Kuala Lumpur city centre, would be launched over the next two years, Chan said.

These projects have a total gross development value (GDV) of about RM2bil.

“Our projects in KL and Mont’ Kiara, such as the Fraser Place KL and Ceriaan Kiara, have been well received with Fraser Place KL achieving sales of about 99% and Ceriaan Kiara 87% to-date,” said Chan.

Fraser Place KL is scheduled for completion soon, while Ceriaan Kiara will be ready by end-2009.

In Manjung the group’s “bread and butter” township development will continue to contribute to earnings for the next 20 to 30 years due to the demand from employees of the Lumut Naval Base as well as workers at the oil and gas fabrication and biodiesel plants there.

On the status of Menara YNH, the group had accepted Kuwait Finance House’s offer to buy 50% of the iconic “Grade A” office tower in January, Chan said.

“This property, located in the central business district, is designed by a world-renowned architect firm, Fosters and Partners.

“We are not in a rush to sell the second block as we want to get the best value for our shareholders.

“Based on our earnings before interest, tax, depreciation and amortisation of 50%, we are able to achieve a yield of above 7.20% if the rental is conservatively priced at RM3.80 per sq ft,” he said.

Chan said the company’s dividend policy was at least 30% of profits but the group had paid a higher rate in the past few years.

By The Star (by David Tan)

Freebies galore as developers push sales

Developers need to be innovative to create demand for their projects

TIMES must be getting quite bad, judging from the recent spate of generous freebies and incentives thrown in by developers to push property sales.

While in the past such incentives were offered by big and small players, this time around it appears that the “big boys” are going all out to sell their products while the smaller ones are mostly lying low.

For example, Soon Tiek Development Sdn Bhd is offering a whopping 21% guaranteed rental return to buyers of its retail outlets at Leisuretainment @ Endah Promenade.

Sime Darby Property Bhd has also been aggressively marketing its products with a host of incentives, including a “Guaranteed Buy-Back” programme to allay any fears among buyers during the current “uncertain and challenging times”.

Buyers of its houses, including those in Bandar Bukit Raja, Planters’ Haven, Bukit Jelutong, Denai Alam, USJ Heights and Nilai Impian, also stand to win big cash prizes: RM100,000 (first prize), RM60,000 (second prize). RM40,000 (third prize) and RM20,000 (fourth prize).

The SPK Group is also wooing buyers of its Cahaya SPK two-storey superlink homes, priced from RM468,000, with its “Year-End Bonanza” which consists of a grand prize of a Toyota Camry, first prize of a seven-day, six-night Australia Gold Coast holiday for two and for the other winners, vacations to South Korea and Hong Kong.

The IOI Group, which has many developments in the Klang Valley, recently offered several incentives that included a 45-day interest-free period for EPF withdrawal applicants and a 90-day interest-free period for government loan applicants. Buyers of its latest two-storey terrace houses and The Grand 2, comprising three-storey shop offices in Bandar Puteri Klang, also get a chance to win RM10,000.

A few months ago, purchasers of Phase 2 Jelutong Heights’ 2½-storey semi-detached houses priced from RM1.12mil were offered a RM50,000 “early bird” discount at a special preview. Buyers need only pay 10% upon signing the sale and purchase agreement with “no cumbersome progressive interest” until vacant possession.

These incentives, usually thrown in with free lunches, tea parties and sometimes elaborate dinners with classical music for upmarket products where only a handful of privileged guests are invited, are becoming the norm.

Most developers will not openly admit that their sales have slowed but the “off-the-record” consensus is that 2009 will be very challenging.

But will these freebies and incentives have any impact on sales? Those with steady-paying job and sound finances may find the incentives attractive enough to help them decide to buy.

However, generally, people are still wary and uncertain of the economy and are adopting a “wait-and-see” attitude, something that developers do not want.

Developers have not only delayed launches but some of them are forced to downsize or make major changes to their projects.

Some are looking for greener pastures abroad and have re-branded while others are trying to create new demand with unique products.

Berjaya Land Bhd and AP Land Bhd have new projects in Cheju Island, South Korea, and Hokkaido, Japan, respectively. It can be expected that more developers will be venturing abroad as local demand is set to shrink.

Instead of competing with each other, developers must pool their resources to collectively woo more foreign investors to Malaysia under the Malaysia Property Inc, tasked with promoting the country as an international property investment destination.

The International Real Estate Federation Malaysia is facilitating this collaborative effort between the Government, Real Estate and Housing Developers Association, Malaysian Institute of Estate Agents and the private sector.

Britain, the Middle East and Japan have been identified as the main target markets to launch Malaysia’s branding and promotional initiatives, with the Malaysia My Second Home (MM2H) programme being given priority.

Foreigners should find our products, especially the high-end ones, comparable with some of the best in the world. What we need is to let the world know more of what we have to offer. The pricing of our properties and the cost of living are still favourable.

The Government can do more, not just by injecting funds but, more importantly, addressing issues such as rising crime rates to ensure that Malaysia is seen as a safe place for MM2H, and offering tax incentives to spur people to buy their first home.

By The Star (by S.C.Cheah)

Karambunai says Sabah mart still hot

Property developer and resorts operator Karambunai Corp Bhd (KCB) will launch three new projects next year worth RM1.1 billion collectively in Kota Kinabalu, Sabah.

The Sabah firm is unfazed by the global financial crisis, expecting the property market in the state to remain buoyant, chief executive officer Datuk Robin Loh Hoon Loi said.

"We are fortunate the property market is still hot and active in the state, which is busy with palm oil, petroleum and tourism activities. Because of this, there is demand for new products," Loh said.

Loh told Business Times in an interview recently that foreigners are still looking for exotic products under the Malaysia My Second Home programme and for investment purposes.

KCB has over 766ha of prime land in Kota Kinabalu with two active big developments - Nexus Karambunai in the Karambunai peninsula and Bandar Sierra township - where the new launches are scheduled to take place.

In the Karambunai peninsula, KCB will launch Amabilis, a RM400 million upscale project in Nexus Residence Karambunai, featuring 100 luxury villas; and a 26.5ha Korean Village Resort, comprising villas and condominiums with recreational facilities worth over RM400 million.

Amabilis is expected to be launched in the first quarter of 2009, in conjunction with the opening of Dillenia, a new hotel under the Nexus resort brand, encompassing 80 units of semi-detached villas and 163 units of low-rise condominiums, some of which have been sold to investors under a leaseback option.

KCB has leased back some 90 per cent of the units to complement its existing five-star, 500-room Nexus Resort Karambunai, operating since 1997.

The launch of the Korean Village Resort, which is a 30:70 joint venture between KCB and Landlovers Korea Co Ltd, is still being finalised.

In Bandar Sierra, it will launch by mid-2009 200 units of terrace and semi-detached houses and cluster homes; 416 units of walk-up apartments; and 80 units of three- and four-storey shoplots worth RM180 million, utilising 16ha.

Loh is confident that sales will be vibrant, boosted by the location and demand.

While Nexus Karambunai is world renowned, Bandar Sierra, which is about 15 minutes' drive from the city centre, has become a landmark project for Kota Kinabalu with natural demand as government offices are relocating close by, he said.

By Business Times (by Sharen Kaur)

Silver lining for developers

Developers with a good line-up of pre-constructed projects for launch and high unbilled sales can look forward to commendable year-on-year financial results in the upcoming reporting season.

While most industry players have experienced an erosion in profit margin as a result of higher construction costs that started a year ago, companies that have projects in advanced stages of construction and recorded good take-up for their products will hold out well, performance-wise.

According to analysts’ estimates, Mah Sing Group Bhd is expected to turn in a higher net profit of RM98.7mil for its current financial year ending Dec 31 (FY08), from RM81.1mil in FY07, while revenue is set to rise to RM680.5mil from RM573.4mil.

In the first half of 2008, Mah Sing recorded sales of about RM263mil.

Mah Sing is one of the favourite picks for its sound balance sheet, strong branding and project execution capabilities.

Based on the company’s quick turnaround model, projects are usually launched six to nine months after land acquisition, although there could be some delay in the coming months following the softer market sentiment.

The company’s cash surplus of RM143mil as at Sept 30 will stand it in good stead to look for opportunistic acquisitions to expand its market presence.

In a research note, CIMB Research said Mah Sing was eyeing more land in Malaysia and hoped to wrap up several acquisitions over the next few months.

It is also scouting around for landbank in Vietnam, as the asking price for land should now be more realistic in view of the difficult market conditions there.

“Mah Sing is well-positioned to embark on more land acquisitions with its cash in hand, which should increase to RM213mil by mid-2009.

“It also has the capacity to borrow up to RM250mil should it choose to increase its net debt-to-equity ratio to a comfortable 0.5 time from 0.1 time in September,” the research house said.

Another developer with an identical financial year, United Malayan Land Bhd (UM Land), can expect some improvement for its third-quarter results following two quarters of losses.

The company recorded a loss of RM1.5mil for the first quarter ended March 31 and a further RM4mil loss in the following quarter.

However, on a year-on-year basis, UM Land’s results for FY08 are expected to be significantly short of last year’s.

In FY07, UM Land turned in a profit after-tax and minority interest of RM46mil on revenue of close to RM400mil.

The good response to its Suasana Sentral Loft condominiums in KL Sentral worth a gross development value (GDV) of more than RM300mil contributed to bottom line in FY06 and FY07.

Going forward, its latest project Suasana Bangsar, which was launched in July, will contribute to sales and earnings.

The project, with GDV of RM190mil, will take two to three years to complete.

Other projects in the pipeline will be a joint venture with MMC Corp Bhd to develop serviced residences in Persiaran Raja Chulan next year and a joint venture with Bolton Bhd to build high-end condominiums in Jalan Mayang, Kuala Lumpur, by 2010.

Meanwhile, companies which derive their income from investment property are in a better position to weather the current challenging market conditions as their rental income has been locked in.

Being the largest owner of superprime commercial properties in Kuala Lumpur City Centre (KLCC), the performance of KLCC Property Holdings Bhd is not expected to be much impacted by the market slowdown.

Hwang-DBS Vickers Research said the company had the most defensive earnings in the sector through locked-in rental income from blue-chip tenants on long-term leases.

It said KLCC Property’s earnings should continue to grow at a stable three-year cumulative average growth rate of 9%.

By The Star (by Angie Ng)

Ireka to build on i-Zen brand in Vietnam

IREKA Corp Bhd plans to aggressively grow the i-Zen brand for its overseas property development, especially in Vietnam, says executive director Lai Voon Hon.

“The Vietnamese market offers vast opportunities for the i-Zen brand, as the country has a young and educated population, strong foreign direct investment and a proactive government that promotes changes and liberalisation,” he told StarBiz.

He added that that the group was targeting the upper middle income segment in Vietnam.

i-Zen is an embodiment of quality products, contemporary lifestyle, high security, continued relationship with buyers, after-sales services and property management services.

Ireka’s property development in Vietnam is via its associate Aseana Properties Ltd. Currently, Aseana has seven projects in Malaysia and three in Vietnam.

Aseana’s joint ventures in Vietnam have an estimated gross development value of US$1.9bil. Its upcoming projects include Queen’s Place and Hi-Tech Healthcare Park, both in Ho Chi Minh City.

Queen’s Place sits on two acres and is a US$200mil joint-venture project in which Aseana owns 65%. It comprises residential units, offices and a retail mall.

Hi-Tech Healthcare Park is a US$420mil mixed commercial and residential development on 93 acres. It is 51%-owned by Aseana.

Lai said Mont’ Kiara had provided Ireka with the “branding showcase” and expertise to promote i-Zen outside Malaysia.

“The i-Zen brand has helped Ireka differentiate itself from others. This will not only benefit us during property launches but also allow buyers to command a premium resale value.

By The Star (by Law Kai Chow)

UAE intervenes in merger of mortgage lenders

DUBAI: Two of the United Arab Emirates' (UAE) largest mortgage lenders, already on track to merge, will be brought under a government-owned bank, the UAE finance ministry said yesterday, in the first sign of federal government intervention in Dubai's troubled property sector.

Trading in both Amlak and Tamweel, which have been struggling amid the global credit crunch, was suspended after the finance ministry said it will supervise their merger under the government's Real Estate Bank to ensure a fair valuation and protect shareholders.

"For Amlak and Tamweel it was always clear that some level of government support was necessary," said Raj Madha, a banking analyst at EFG-Hermes. "There were three problems that Amlak and Tamweel were facing: funding, liquidity and solvency.

"A merger between the two would have made no difference to those problems but an integration with Real Estate Bank effectively addresses all three of those issues," he said.

The combined market value of the firms is 2.5 billion dirhams, or US$681 million (US$1 = RM3.63) roughly one-third of their worth since October 4 when the two Dubai-based firms first announced merger plans.

Little-known Real Estate Bank, which comes under the finance ministry, is a government-owned entity aimed at supporting the real estate sector and provide housing for UAE nationals, according to its website.

Earlier this month, Tamweel said it was in talks with the central bank and the finance ministry about their "short-term requirements facility", and long-term funding options once its merger with Amlak had gone through.

A finance ministry official said yesterday that more details would be announced in coming weeks while an Amlak official declined to comment. Tamweel was not immediately available.

The companies will be combined as the UAE Real Estate Bank to create the largest real estate finance institution in the country, the state news agency WAM said.

Lenders and developers in the UAE have been battered by the credit crisis as market financing evaporated, property values plunged and buyers fled a market where land values have ballooned during a five-year boom.

Speculation has grown, as the financial crisis squeezes credit and hits stocks and real estate markets, that the federal government may step in to help shore up confidence in Dubai. Becoming a licensed bank would enable the two mortgage lenders to take deposits and access emergency federal funds.

By Reuters