PETALING JAYA: The developer of the Damansara 21 hillside project in Medan Damansara needs six more months to complete soil stabilisation works to guarantee the safety of the hill.
Selangor Dredging Bhd (SDB) managing director Teh Lip Kim said it was imperative that work to stabilise and strengthen the slope continue.
“We have spent about RM30mil so far to strengthen the slope because we want to make sure the houses and the surrounding areas are safe,” she added.
Teh explained that the stabilising works included placing 282 pilings along the back of the hill without using machines. Anchors were also driven into the base of the hill.
Group general manager Loong Ching Hong said the portion of the slope between the middle and top of the hill would be removed and the 21 bungalows built on flat ground.
“The bungalows will effectively be built on terraces,” he said, adding that SDB would never compromise on the safety or lives of housebuyers or those in neighbouring areas.
SDB had acquired the land, which came with a development order, from MAA in 2005.
Loong said it was the terrace design, which received support from 16 government agencies, that led to SDB’s amended development order being approved.
On the stop-work order and RM100,000 fine slapped on SDB in April, Loong said the stop-work order, which actually had delayed soil stabilisation works, was lifted in October.
Loong said the plan then was to continue soil stabilisation works at the base of the hill. He added that SDB had received verbal agreement from City Hall to use the access road that cuts through the residential area so that the work could be sped up.
“However, when the residents complained, we were slapped with the stop-work order and fine, with the authorities saying that we had no permission to use the access road.”
Loong said this meant they could no longer touch the site, and what they had feared most – a landslip – occurred.
Teh said SDB had not even launched the Damansara 21 project and yet was spending money to make the hill safe.
By The Star
Thursday, December 11, 2008
Aeon confident on Malaysian retail industry
JOHOR BARU: Aeon Co (M) Bhd remains bullish on Malaysia’s retail industry despite the gloomy global economic outlook, says chairman Datuk Abdullah Mohd Yusof, adding that the industry was valued at about RM70bil annually.
Managing director Nagahisa Oyama said apart from Klang Valley and Penang, the company was focusing on Johor Baru as part of its mid-term plan until 2010 for future expansion.
With South Johor being developed into a retail hub, Iskandar Malaysia offered good business prospects for retailers, he said.
He said over five years, Aeon had opened four shopping centres within Iskandar Malaysia at Taman Universiti, Permas Jaya, Tebrau and Bukit Indah.
“We believe the retail sector in Iskandar Malaysia will continue to grow in years to come in tandem with the growth of the corridor,’’ Oyama said at the tree planting ceremony to mark the opening of Aeon’s Bukit Indah shopping centre last Saturday.
The RM300mil shopping centre on 15.132ha is Aeon’s 21st Jusco store. To date, 95% of the three-storey shopping centre has been taken up by 200 tenants.
Oyama said the shopping centre would open for business on Dec 19 in time for Christmas while the grand opening would probably be early next year.
Meanwhile, Johor Mentri Besar Datuk Abdul Ghani Othman said many local and foreign retailers would be opening in Iskandar Malaysia be it shopping complexes, hypermarkets or supermarkets.
He said a world renowned property group would open a premium outlet in Iskandar Malaysia soon, making it the first premium outlet in South-East Asia.
Ghani said the outlet would also attract shoppers from this region as similar outlets had proved popular in cities like London, Tokyo, New York and Seoul.
By The Star (by Zazali Musa)
Managing director Nagahisa Oyama said apart from Klang Valley and Penang, the company was focusing on Johor Baru as part of its mid-term plan until 2010 for future expansion.
With South Johor being developed into a retail hub, Iskandar Malaysia offered good business prospects for retailers, he said.
He said over five years, Aeon had opened four shopping centres within Iskandar Malaysia at Taman Universiti, Permas Jaya, Tebrau and Bukit Indah.
“We believe the retail sector in Iskandar Malaysia will continue to grow in years to come in tandem with the growth of the corridor,’’ Oyama said at the tree planting ceremony to mark the opening of Aeon’s Bukit Indah shopping centre last Saturday.
The RM300mil shopping centre on 15.132ha is Aeon’s 21st Jusco store. To date, 95% of the three-storey shopping centre has been taken up by 200 tenants.
Oyama said the shopping centre would open for business on Dec 19 in time for Christmas while the grand opening would probably be early next year.
Meanwhile, Johor Mentri Besar Datuk Abdul Ghani Othman said many local and foreign retailers would be opening in Iskandar Malaysia be it shopping complexes, hypermarkets or supermarkets.
He said a world renowned property group would open a premium outlet in Iskandar Malaysia soon, making it the first premium outlet in South-East Asia.
Ghani said the outlet would also attract shoppers from this region as similar outlets had proved popular in cities like London, Tokyo, New York and Seoul.
By The Star (by Zazali Musa)
Wednesday, December 10, 2008
TH Properties and mSET team up
KUALA LUMPUR: TH Properties Sdn Bhd, the property arm of Lembaga Tabung Haji, will be tapping the expertise of the Malaysian Society for Engineering & Technology (mSET) for continued value-add to its development projects.
TH Properties chief executive officer Zaharuddin Saidon said it was vital for a developer to look at quality and not just the bottom line.
“The tie-up with mSET will help us better identify building procedures and improve construction efficiency and quality,” he told a press conference announcing the tie-up with mSET yesterday.
Set up in December 2007, mSET comprises a large pool of engineers, quality surveyors, architects, engineering technologists, technicians and allied professionals.
Its president Prof Abang Abdullah Abang Ali said mSET was formed to reach out to the large number of engineers, engineering technologists and technicians who were not professionally networked.
“Collaborating with TH Properties will help improve the level of performance of our professionals,” he said.
Zaharuddin said TH Properties would be seeking mSET’s assistance in the development of all of its projects. Besides its flagship project in Bandar Enstek, Negri Sembilan, the company also has a number of projects in the Klang Valley.
“We will seek its (mSET) assistance as and when necessary,” he said, adding that mSET was well-connected with foreign-based professional organisations.
“Finding the right consultants can take time and delay projects. Through mSET, we can have speedy access to a host of local and foreign professionals,” he said.
He added that by having a pool of consultants at its disposal, TH Properties could carry out its construction works more prudently.
On another note, Zaharuddin said it was premature for the Government to consider reviewing all existing developments near hillslopes following the landslide at Bukit Antarabangsa last Saturday.
“Projects should not be halted just because of a disaster. Land is scarce and we still need to develop projects on hillsides.
“This is where engineers and architects play a crucial part in giving good advice to developers on their projects,” he said.
By The Star
TH Properties chief executive officer Zaharuddin Saidon said it was vital for a developer to look at quality and not just the bottom line.
“The tie-up with mSET will help us better identify building procedures and improve construction efficiency and quality,” he told a press conference announcing the tie-up with mSET yesterday.
Set up in December 2007, mSET comprises a large pool of engineers, quality surveyors, architects, engineering technologists, technicians and allied professionals.
Its president Prof Abang Abdullah Abang Ali said mSET was formed to reach out to the large number of engineers, engineering technologists and technicians who were not professionally networked.
“Collaborating with TH Properties will help improve the level of performance of our professionals,” he said.
Zaharuddin said TH Properties would be seeking mSET’s assistance in the development of all of its projects. Besides its flagship project in Bandar Enstek, Negri Sembilan, the company also has a number of projects in the Klang Valley.
“We will seek its (mSET) assistance as and when necessary,” he said, adding that mSET was well-connected with foreign-based professional organisations.
“Finding the right consultants can take time and delay projects. Through mSET, we can have speedy access to a host of local and foreign professionals,” he said.
He added that by having a pool of consultants at its disposal, TH Properties could carry out its construction works more prudently.
On another note, Zaharuddin said it was premature for the Government to consider reviewing all existing developments near hillslopes following the landslide at Bukit Antarabangsa last Saturday.
“Projects should not be halted just because of a disaster. Land is scarce and we still need to develop projects on hillsides.
“This is where engineers and architects play a crucial part in giving good advice to developers on their projects,” he said.
By The Star
New retail outlets set to boost MAHB growth
MALAYSIA Airports Holdings Bhd (MAHB) has completed the first phase of its satellite retail optimisation project (SROP) at the KL International Airport (KLIA) in Sepang, which began in May this year and due for completion end-2009.
With the completion of the East Zone, the airport operator will continue to work on the West, South and North zones soon.
The East Zone boasts more than 12 new outlets at the satellite building, including Choc Shop International, Dome, Eraman Malaysia, Harrods and Pusrawi Medicare.
The launch of East Zone yesterday also marked the start of the second phase of the KLIA Shopping Campaign, which offers RM2.7 million of prizes at the KLIA and the low-cost carrier terminal LCCT.
MAHB managing director Datuk Seri Bashir Ahmad said the company is expecting a one to two per cent growth in passenger arrivals at all 39 airports it operates in the country in 2009.
"The growth will partially be attributed to the availability of more retail space and reduced operating costs," Bashir told reporters after the launch of the East Zone retail units.
By Business Times (by Zuraimi Abdullah)
Investing in the British market
BUYING property in another country is not for the faint-hearted and even professional institutional investors spend a great deal of time and money researching the markets they are interested in before committing. This article will focus on advice for individual investors interested in the British market.
Historically, Malaysians have purchased property overseas for various reasons, the most common of which is to diversify their property portfolio and to invest in more stable and transparent markets than many in Asia.
Homes are also purchased overseas as corporate residences or to provide accommodation for children studying in foreign universities. Part of the joy of buying overseas can be the research into the market and enjoying a working holiday.
A great deal has changed in the British economy since early 2007.
In summary, the British currency has weakened, the capital value of homes has dropped and the economy registered zero economic growth in the second quarter and into negative growth of -0.5% in the third quarter.
The pound recently slid beneath the US$1.80 mark for the first time in two years and dipped to a new record low against the Euro.
Attention is increasingly turning to the extent to which house prices must fall before confidence is regained. Savills’ expectation is that values of prime property in London will fall by 25% over the course of 2008 and 2009 and marginally less so in the regions.
Only in the very top of the market have prices held firm, with the £10mil-plus market in London and £4mil-plus market in the country continuing to show marginal growth (1.2% and 0.7% respectively in the first half of 2008).
On a more positive note, Savills’ research in London estimate that the recovery in the housing market will be led by London and the South East of England and by 2012 house prices will have recovered to those of pre-slump levels.
Changes in the law have made buying a home easier and more transparent, which should appeal a great deal to foreign investors. Investors must always ask the selling agent for a Home Information Pack (HIP), which became compulsory since Dec 14, 2007.
Following the start of the global credit crisis in 2007, activity in Britain’s commercial development sector started to fall steeply.
On average, prime offices have become 20% cheaper across Europe as at end of the third quarter with average prime central business district yields of 6%.
The City of Birmingham seems to be bucking this trend, with a take up 606,292 sq ft of Grade A office space in the third quarter and an upward pressure on rents, the highest rent secured this year was £33 (RM179) per sq ft per month.
Despite this, there are many ways to invest in unique commercial opportunities, from Britain’s fledgling real estate investment trust market to direct commercial property ownership.
While much residential property investment is driven by expectations of the growth of its capital value, commercial property returns are more focused on their rental income.
In conclusion, history has shown that the only certainty in the future is that capital values will bounce back and the rental market should strengthen in the immediate term since the introduction of tighter lending criteria.
Investing in the British market must be carefully timed to make the most of the weak currency and falling prices and as always the right location is paramount.
By The Star
Historically, Malaysians have purchased property overseas for various reasons, the most common of which is to diversify their property portfolio and to invest in more stable and transparent markets than many in Asia.
Homes are also purchased overseas as corporate residences or to provide accommodation for children studying in foreign universities. Part of the joy of buying overseas can be the research into the market and enjoying a working holiday.
A great deal has changed in the British economy since early 2007.
In summary, the British currency has weakened, the capital value of homes has dropped and the economy registered zero economic growth in the second quarter and into negative growth of -0.5% in the third quarter.
The pound recently slid beneath the US$1.80 mark for the first time in two years and dipped to a new record low against the Euro.
Attention is increasingly turning to the extent to which house prices must fall before confidence is regained. Savills’ expectation is that values of prime property in London will fall by 25% over the course of 2008 and 2009 and marginally less so in the regions.
Only in the very top of the market have prices held firm, with the £10mil-plus market in London and £4mil-plus market in the country continuing to show marginal growth (1.2% and 0.7% respectively in the first half of 2008).
On a more positive note, Savills’ research in London estimate that the recovery in the housing market will be led by London and the South East of England and by 2012 house prices will have recovered to those of pre-slump levels.
Changes in the law have made buying a home easier and more transparent, which should appeal a great deal to foreign investors. Investors must always ask the selling agent for a Home Information Pack (HIP), which became compulsory since Dec 14, 2007.
Following the start of the global credit crisis in 2007, activity in Britain’s commercial development sector started to fall steeply.
On average, prime offices have become 20% cheaper across Europe as at end of the third quarter with average prime central business district yields of 6%.
The City of Birmingham seems to be bucking this trend, with a take up 606,292 sq ft of Grade A office space in the third quarter and an upward pressure on rents, the highest rent secured this year was £33 (RM179) per sq ft per month.
Despite this, there are many ways to invest in unique commercial opportunities, from Britain’s fledgling real estate investment trust market to direct commercial property ownership.
While much residential property investment is driven by expectations of the growth of its capital value, commercial property returns are more focused on their rental income.
In conclusion, history has shown that the only certainty in the future is that capital values will bounce back and the rental market should strengthen in the immediate term since the introduction of tighter lending criteria.
Investing in the British market must be carefully timed to make the most of the weak currency and falling prices and as always the right location is paramount.
By The Star
Tuesday, December 9, 2008
YTL Land to push ahead with Pantai Peak launch
YTL Land & Development Bhd, the property arm of YTL Corp Bhd, will push ahead with the launch of the last phase of its Pantai Hillpark development in Kuala Lumpur next year despite the global financial crisis.
Dubbed Pantai Peak, the RM500-million project features a 16-ha gated community, which will be located on YTL Land's final parcel of land in Pantai Hillpark.
It is set to be the latest icon in the area, with 233 units of luxury three-storey hillside semi-detached homes and bungalows with a variety of layouts and design options.
Deputy managing director Datuk Yeoh Seok Kian said each home will be priced from RM2 million.
"It will come with a lap pool and a stunning panoramic view of the Gasing green belt and the entire Petaling Jaya landscape" Yeoh told Business Times in an interview in Kuala Lumpur recently.
The main board-listed developer is optimistic that the property market will improve as banks revise their base lending rate from 6.75 per cent per year to 6.50 per cent per year this month.
This is following Bank Negara Malaysia's recent downward revision of the Overnight Policy Rate by 25 basis points to 3.25 per cent to uplift the country's economic activity.
"It will boost the sector as bank loans will be cheaper for home buyers. While we are more liberal than Singapore, we have to internationalise our properties."
YTL Land, which has locked-in sales of RM100 million from its Sentul East project in Kuala Lumpur, expects its financial performance to remain flat this year due to fewer launches than the previous year.
For the 12 months to June 30 2008, it posted a net profit of RM10.3 million and revenue of RM336.1 million.
"We had lesser launches due to the US-led subprime crises. We hope America will clean up the mess so that there will be a quick chance of recovery. If the prices of petrol and interest rates can remain low, we will be able to recover fast," Yeoh said.
Meanwhile, YTL Land will pace itself with the market for new launches at its on-going 120ha Sentul East and Sentul West project, and 48ha Lake Edge project in Puchong, to ride out the current crisis.
"We will continue to introduce high-end products. Malaysia has not gone through a bubble like that in the US, the UK and Singapore. Prime locations with good product packaging will suffer the least and pick up the fastest," he said.
Yeoh said Malaysian properties are still more competitive than those in Singapore and Hong Kong.
"People with money should buy properties but selectively, to hedge against inflation," he said.
Hot property areas in the Klang Valley remain in Sri Hartamas, Mont' Kiara, Damansara Heights, Bangsar, Sentul, Taman Seputeh and the Kuala Lumpur City Centre area.
By Business Times (by Sharen Kaur)
Dubbed Pantai Peak, the RM500-million project features a 16-ha gated community, which will be located on YTL Land's final parcel of land in Pantai Hillpark.
It is set to be the latest icon in the area, with 233 units of luxury three-storey hillside semi-detached homes and bungalows with a variety of layouts and design options.
Deputy managing director Datuk Yeoh Seok Kian said each home will be priced from RM2 million.
"It will come with a lap pool and a stunning panoramic view of the Gasing green belt and the entire Petaling Jaya landscape" Yeoh told Business Times in an interview in Kuala Lumpur recently.
The main board-listed developer is optimistic that the property market will improve as banks revise their base lending rate from 6.75 per cent per year to 6.50 per cent per year this month.
This is following Bank Negara Malaysia's recent downward revision of the Overnight Policy Rate by 25 basis points to 3.25 per cent to uplift the country's economic activity.
"It will boost the sector as bank loans will be cheaper for home buyers. While we are more liberal than Singapore, we have to internationalise our properties."
YTL Land, which has locked-in sales of RM100 million from its Sentul East project in Kuala Lumpur, expects its financial performance to remain flat this year due to fewer launches than the previous year.
For the 12 months to June 30 2008, it posted a net profit of RM10.3 million and revenue of RM336.1 million.
"We had lesser launches due to the US-led subprime crises. We hope America will clean up the mess so that there will be a quick chance of recovery. If the prices of petrol and interest rates can remain low, we will be able to recover fast," Yeoh said.
Meanwhile, YTL Land will pace itself with the market for new launches at its on-going 120ha Sentul East and Sentul West project, and 48ha Lake Edge project in Puchong, to ride out the current crisis.
"We will continue to introduce high-end products. Malaysia has not gone through a bubble like that in the US, the UK and Singapore. Prime locations with good product packaging will suffer the least and pick up the fastest," he said.
Yeoh said Malaysian properties are still more competitive than those in Singapore and Hong Kong.
"People with money should buy properties but selectively, to hedge against inflation," he said.
Hot property areas in the Klang Valley remain in Sri Hartamas, Mont' Kiara, Damansara Heights, Bangsar, Sentul, Taman Seputeh and the Kuala Lumpur City Centre area.
By Business Times (by Sharen Kaur)
Ireka laying groundwork for projects in Vietnam
IREKA Corp Bhd, which has over RM500 million worth of construction jobs in hand in Sabah and the Klang Valley, is preparing to work on new projects next year including in Vietnam.
Its associate firm, London-listed Aseana Properties Ltd, is finalising the master layout plan for approval for a 32ha seafront resort and residential development in Kota Kinabalu, Sabah, worth more than US$200 million (RM728 million).
The project will be developed in two phases, which involve building villas, a hotel and resort homes, executive director Lai Voon Hon said.
"We are currently working on the submission of plans and will assess the market conditions before launching this project," he told Business Times.
In Vietnam, Aseana has plans to launch seven property projects in Ho Chi Minh City, Hanoi and Danang worth a combined US$2 billion (RM7.28 billion). It has submitted development plans for most of the projects to the local authorities in Vietnam for approvals.
Lai said it expects to launch by next year Queen's Place and Hi-Tech Healthcare Park, worth a combined US$650 million (RM2.36 billion), in Ho Chi Minh City.
Queen's Place will comprise twin residential towers, offices, serviced apartments and retail space.
Other projects in the pipeline are Wall Street Centre, Nam Khang Resort & Residences and One Saigon.
In addition, Aseana's stake in Nam Long Corp, Vietnam's leading property developer with over 500ha under its belt, will hold water.
Lai said through the partnership, Aseana expects to co-develop at least four property projects in Ho Chi Minh City and in neighbouring provinces.
There is currently a shortage of housing in Ho Chi Minh City and Hanoi, which are attracting Malaysian developers such as WCT Engineering Bhd, SP Setia Bhd and Bina Puri Holdings Bhd to those areas.
Prices of high-end residential condominiums in Ho Chi Minh City remain high at US$1,500 (RM5,460) to US$4,000 (RM14,560) per sq m, while Grade A office rental rates reflect an upward momentum. Demand is growing but there is tight supply.
People's Committee of Long An Province in Ho Chi Minh City vice-chairman Nguyen Thanh Nguyen said Vietnam is opening its doors to foreign investors for infrastructure and building works in the country.
"Foreign direct investments in Vietnam has grown from US$20 billion (RM72.8 billion) last year to US$60 billion (RM218.4 billion) year to-date. Our local and foreign banks are lending. We have a few Malaysian firms looking for investments here now," he told Business Times via email.
By Business Times (by Sharen Kaur)
Its associate firm, London-listed Aseana Properties Ltd, is finalising the master layout plan for approval for a 32ha seafront resort and residential development in Kota Kinabalu, Sabah, worth more than US$200 million (RM728 million).
The project will be developed in two phases, which involve building villas, a hotel and resort homes, executive director Lai Voon Hon said.
"We are currently working on the submission of plans and will assess the market conditions before launching this project," he told Business Times.
In Vietnam, Aseana has plans to launch seven property projects in Ho Chi Minh City, Hanoi and Danang worth a combined US$2 billion (RM7.28 billion). It has submitted development plans for most of the projects to the local authorities in Vietnam for approvals.
Lai said it expects to launch by next year Queen's Place and Hi-Tech Healthcare Park, worth a combined US$650 million (RM2.36 billion), in Ho Chi Minh City.
Queen's Place will comprise twin residential towers, offices, serviced apartments and retail space.
Other projects in the pipeline are Wall Street Centre, Nam Khang Resort & Residences and One Saigon.
In addition, Aseana's stake in Nam Long Corp, Vietnam's leading property developer with over 500ha under its belt, will hold water.
Lai said through the partnership, Aseana expects to co-develop at least four property projects in Ho Chi Minh City and in neighbouring provinces.
There is currently a shortage of housing in Ho Chi Minh City and Hanoi, which are attracting Malaysian developers such as WCT Engineering Bhd, SP Setia Bhd and Bina Puri Holdings Bhd to those areas.
Prices of high-end residential condominiums in Ho Chi Minh City remain high at US$1,500 (RM5,460) to US$4,000 (RM14,560) per sq m, while Grade A office rental rates reflect an upward momentum. Demand is growing but there is tight supply.
People's Committee of Long An Province in Ho Chi Minh City vice-chairman Nguyen Thanh Nguyen said Vietnam is opening its doors to foreign investors for infrastructure and building works in the country.
"Foreign direct investments in Vietnam has grown from US$20 billion (RM72.8 billion) last year to US$60 billion (RM218.4 billion) year to-date. Our local and foreign banks are lending. We have a few Malaysian firms looking for investments here now," he told Business Times via email.
By Business Times (by Sharen Kaur)
Pacific Regency looking for small boutique hotels
PACIFIC Regency Hotels & Resorts Sdn Bhd, the hospitality arm of Pan Global Bhd, is looking to expand its hospitality business, particularly into boutique hotels.
The group, which operates the Pacific Regency Hotel Suites on Jalan P. Ramlee, Kuala Lumpur, is keen to own and operate hotels on islands off the east coast of Peninsular Malaysia.
"We set up Pacific Regency Hotels & Resorts earlier this year to manage new and upcoming projects. We are now looking for small boutique hotels on islands in the east coast to buy and manage," its general manager Kenny Teo said in an interview with Business Times.
Teo said that it was keen on taking over existing properties to grow the business faster.
"We are looking at properties with 50 to 60 rooms, which are exclusive," he said.
These properties would be able to offer an average room rate (ARR) of RM1,000 to RM1,500 per night.
Teo said that earliest possible date when this plan may materialise is in 2010.
Meanwhile, Teo has put in place strategies to help its existing 153-suite Pacific Regency ride through a possibly trying times in 2009.
Based on the current scenario, the hotel hopes to be able to increase its ARR by about 20 per cent in 2009. It expects to finish 2008 at an ARR of RM245 per night and an average occupancy of 85 per cent.
"We are not worried about our occupancy (in 2009). We have no reason why it will not fill up ... we are more concerned about the rates," he said, saying that competition would get stiffer in terms of rates if the impact of the worsening economy hits Malaysia further.
Up to 70 per cent of the hotel's business comes from the corporate market, mainly from France, Italy, Australia and the UK.
For next year, the hotel plans to tap into the Scandinavian countries, Spain and Portugal as well as the Asian market including Indonesia and Thailand.
Pacific Regency will also look at locking in more long-term guests. This group now makes up 30 per cent of its room inventory.
Pacific Regency is like a serviced apartment in its set-up of rooms and offers a fully-equipped kitchen. At the same time, it offers the services like in a hotel including laundry, food and beverage outlets and room services.
Teo said that creating awareness of the brand has been a challenge even though the hotel is a homegrown brand and 14 years old.
By Business Times (By Vasantha Ganesan)
The group, which operates the Pacific Regency Hotel Suites on Jalan P. Ramlee, Kuala Lumpur, is keen to own and operate hotels on islands off the east coast of Peninsular Malaysia.
"We set up Pacific Regency Hotels & Resorts earlier this year to manage new and upcoming projects. We are now looking for small boutique hotels on islands in the east coast to buy and manage," its general manager Kenny Teo said in an interview with Business Times.
Teo said that it was keen on taking over existing properties to grow the business faster.
"We are looking at properties with 50 to 60 rooms, which are exclusive," he said.
These properties would be able to offer an average room rate (ARR) of RM1,000 to RM1,500 per night.
Teo said that earliest possible date when this plan may materialise is in 2010.
Meanwhile, Teo has put in place strategies to help its existing 153-suite Pacific Regency ride through a possibly trying times in 2009.
Based on the current scenario, the hotel hopes to be able to increase its ARR by about 20 per cent in 2009. It expects to finish 2008 at an ARR of RM245 per night and an average occupancy of 85 per cent.
"We are not worried about our occupancy (in 2009). We have no reason why it will not fill up ... we are more concerned about the rates," he said, saying that competition would get stiffer in terms of rates if the impact of the worsening economy hits Malaysia further.
Up to 70 per cent of the hotel's business comes from the corporate market, mainly from France, Italy, Australia and the UK.
For next year, the hotel plans to tap into the Scandinavian countries, Spain and Portugal as well as the Asian market including Indonesia and Thailand.
Pacific Regency will also look at locking in more long-term guests. This group now makes up 30 per cent of its room inventory.
Pacific Regency is like a serviced apartment in its set-up of rooms and offers a fully-equipped kitchen. At the same time, it offers the services like in a hotel including laundry, food and beverage outlets and room services.
Teo said that creating awareness of the brand has been a challenge even though the hotel is a homegrown brand and 14 years old.
By Business Times (By Vasantha Ganesan)
Bandar Raya set to clinch tower sale deal with foreign firm
PROPERTY developer Bandar Raya Development Bhd (BRDB) is tipped to sign a deal with a foreign firm to sell a residential tower at its RM2 billion CapSquare integrated development in Kuala Lumpur.
It is understood that the buyer is from the Middle East, who is looking to acquire Six CapSquare.
It is one of two residential towers at the CapSquare development. The other is known as CapSquare Residences, which has been constructed.
The two parties are negotiating on the price, but are expected to conclude a deal by the first quarter of next year, a source told Business Times.
"Based on the estimated purchase price and size of the 36-storey tower (featuring 170 exclusive units), the deal may equate to a value of RM600 to RM700 per sq ft," the source said.
BRDB chief executive officer Datuk Jagan Sabapathy declined to comment, except to say that the company has been talking to people for one of its condominium blocks at CapSquare.
"But we have not finalised any deal yet. We are still in talks on several matters," Jagan said.
CapSquare, located between the city's Golden Triangle and central business districts, is a 6.1ha freehold project with 3.8 million sq ft of space.
It comprises a 300-metre long retail street, two Manhattan-inspired residences, four signature offices, two eight-storey corporate offices, two high-rise office towers including Menara Multi-Purpose, a four-storey mall and an entertainment complex.
The properties are attracting investors due to its appeal and location.
In January, Union Investment Real Estate AG, one of Europe's leading real estate investment management companies, had signed a deal with BRDB to acquire a high-rise office tower (Tower 2) for RM440 million.
Tower 2, which is scheduled for completion by 2010, is a 41-storey Grade A office building with nett lettable area of 600,000 sq ft.
Meanwhile, BRDB is expected to do better this year, thanks to higher property sales and effective cost management.
For the first nine months of its current fiscal year ending December 31 2008, BRDB posted a net profit of RM60.7 million from RM46.5 million last year.
Revenue was RM709.1 million, up from RM513 million, thanks to sales of properties at CapSquare, One Menerung in Bangsar and Troika in Kuala Lumpur.
By Business Times (by Sharen Kaur)
It is understood that the buyer is from the Middle East, who is looking to acquire Six CapSquare.
It is one of two residential towers at the CapSquare development. The other is known as CapSquare Residences, which has been constructed.
The two parties are negotiating on the price, but are expected to conclude a deal by the first quarter of next year, a source told Business Times.
"Based on the estimated purchase price and size of the 36-storey tower (featuring 170 exclusive units), the deal may equate to a value of RM600 to RM700 per sq ft," the source said.
BRDB chief executive officer Datuk Jagan Sabapathy declined to comment, except to say that the company has been talking to people for one of its condominium blocks at CapSquare.
"But we have not finalised any deal yet. We are still in talks on several matters," Jagan said.
CapSquare, located between the city's Golden Triangle and central business districts, is a 6.1ha freehold project with 3.8 million sq ft of space.
It comprises a 300-metre long retail street, two Manhattan-inspired residences, four signature offices, two eight-storey corporate offices, two high-rise office towers including Menara Multi-Purpose, a four-storey mall and an entertainment complex.
The properties are attracting investors due to its appeal and location.
In January, Union Investment Real Estate AG, one of Europe's leading real estate investment management companies, had signed a deal with BRDB to acquire a high-rise office tower (Tower 2) for RM440 million.
Tower 2, which is scheduled for completion by 2010, is a 41-storey Grade A office building with nett lettable area of 600,000 sq ft.
Meanwhile, BRDB is expected to do better this year, thanks to higher property sales and effective cost management.
For the first nine months of its current fiscal year ending December 31 2008, BRDB posted a net profit of RM60.7 million from RM46.5 million last year.
Revenue was RM709.1 million, up from RM513 million, thanks to sales of properties at CapSquare, One Menerung in Bangsar and Troika in Kuala Lumpur.
By Business Times (by Sharen Kaur)
Proposed Act to protect contractors
The CIPAA will help contractors to survive the current difficult economic environment — AFP
There are signs that deteriorating economic conditions have begun to hurt the construction industry despite the Government’s injection of an additional allocation of RM7bil into the economy.
This is indeed worrying for the industry as it continues to deal with eroded profit margins, escalating costs and diminishing of projects.
A main issue affecting the construction industry has always been the problem of delayed as well as non-payment. Partly because of the complexity of construction work and partly because of financing issues, there are bound to be disputes relating to non-payment.
Remedies such as suspension of work and direct payment are difficult to be properly and lawfully exercised unless there are expressed provisions in the contract and the disputes are resolved by an independent third party.
What is needed is an avenue where dispute resolution methods can be quickly effected and are affordable. More importantly, the disputes must be resolved quickly as and when they happen.
Existing dispute resolution mechanisms in the construction industry such as arbitration and litigation are time-consuming and are often expensive.
The arbitration or litigation process normally takes two to five years or longer to be resolved and costs tens or hundreds of thousands of ringgit which will further eat into contractors’ already thin margins.
In fact, arbitration and litigation often take a long time because a detailed meticulous fact-finding process is required since the decisions are final.
Another issue is that most standard terms in construction contracts stipulate that arbitration can only commence after the project is completed or terminated.
This may be due to the fact that prolonged arbitration or litigation during the construction stage can be very disruptive.
As a result, cash flow of contractors will be affected and this will inevitably affect the progress of construction.
Consequently, innocent third-parties, such as the purchasers, are often the victims of delayed or abandoned projects.
The existing related statutory laws such as the Contracts Act 1950, Sale of Goods Act 1957 and Arbitration Act 2005 can be applied generally and are not efficient enough to deal with current problems.
To address the problem, various recommendations were made during a construction industry roundtable in June 2004 which was chaired by the former Works Minister Datuk Seri S. Samy Vellu.
One recommendation was for the creation of a Malaysian Construction Industry Payment and Adjudication Act (CIPAA).
It must be noted that there are already similar acts in Britain, Australia, New Zealand and Singapore. These include:
# Building and Construction Industry Security of Payment Act 2002 (Victoria, Australia)
# Construction Contracts Act 2002 (New Zealand); and
# Building and Construction Industry Security of Payment Act 2004 (Singapore).
All these countries recognise that timely payments are vital to the very survival and continuity of business of the construction industry. Clients are under contractual obligation to pay contractors, within the stipulated period, for services rendered and issuance of certificates of payment.
The construction industry has been waiting for far too long for the Act to be in place as it has been more than four years since CIPAA was mooted. In fact the draft for CIPAA was circulated for comments early last year.
Based on the feedback, certain parties have some strong reservations on the proposed Act. It must be stressed that they are not the main players who are being aggrieved in this regard.
The Act should be seen as vital to protect the interest of the primary players in the construction industry and more so when the contractual bargaining powers of the primary players are often not equal.
It is understood that the proposed CIPAA is now awaiting submission to the Cabinet for approval and directive so that a formal Bill can be presented to Parliament.
MBAM, therefore, urges the Government to facilitate the speedy enactment of CIPAA as the Act will help contractors across the board from G7 to G1 to survive during this difficult period where banks may adopt more prudent lending policies and the overall expected outlook for 2009 does not seem rosy.
The Act would provide some relief if contractors are assured or given some security and remedies in the key issue of payment.
Without any security of payment and quick justice through adjudication, the unpaid party either suffers in silence or is put out of business at the end of the current dispute resolution through arbitration or litigation.
In conclusion, the problems on payments in the construction industry as identified above cannot be effectively resolved contractually thorough provisions in the standard terms of construction contracts.
The most effective solution is, therefore, to enact a separate and specific Act of Parliament to address the problems.
MBAM sincerely hopes that the Government and all parties concerned will work together to get CIPAA enacted in the soonest possible time for the benefit of the industry.
By The Star
Developers: Govt’s cooperation needed to avoid future mishaps
KUALA LUMPUR: The Real Estate and Housing Developers Association (Rehda) Selangor has urged the Government and developers to work together in getting to the bottom of the Bukit Antarabangsa landslide.
“The Government shouldn’t jump the gun in restricting hillside development while developers should cooperate with the authorities and offer a helping hand in search and rescue efforts,” said branch chairman Datuk FD Iskandar Mohamed Mansor.
He was commenting on the Government’s call to review all existing developments near highlands following the landslide on Saturday.
“Various parties have offered explanations for the cause of the landslide.
“But as long as we don’t have a technical report on the incident, let’s not speculate,” Iskandar said.
The association would email its members feedback regarding their hillside projects. But for now, people should offer their sympathy to the landslide victims and not point fingers, he said.
Housing developer Datuk David Kong Hon Kong said issuing a stop-work order on all hillside development was not fair to developers.
Datuk David Kong Hon Kong
“It is fine for local governments to penalise developers who do not comply with regulations.
“But it is unfair to pull the plug on other developers who have already obtained approval from the authorities.
“Imposing a blanket ban on such projects would also reflect negatively on the nation’s construction sector and erode the confidence of investors,” he said in an interview.
“The landslide in Bukit Antarabangsa should not mar the entire sector because other developments such as that in Genting Highlands and Damansara Heights did not encounter major problems.”
He said the Government needed to step up monitoring at construction sites to avoid any mishaps.
The local authorities should also find ways to improve construction work at hillsides instead of closing down such development, Kong added.
By The Star
“The Government shouldn’t jump the gun in restricting hillside development while developers should cooperate with the authorities and offer a helping hand in search and rescue efforts,” said branch chairman Datuk FD Iskandar Mohamed Mansor.
He was commenting on the Government’s call to review all existing developments near highlands following the landslide on Saturday.
“Various parties have offered explanations for the cause of the landslide.
“But as long as we don’t have a technical report on the incident, let’s not speculate,” Iskandar said.
The association would email its members feedback regarding their hillside projects. But for now, people should offer their sympathy to the landslide victims and not point fingers, he said.
Housing developer Datuk David Kong Hon Kong said issuing a stop-work order on all hillside development was not fair to developers.
Datuk David Kong Hon Kong
“It is fine for local governments to penalise developers who do not comply with regulations.
“But it is unfair to pull the plug on other developers who have already obtained approval from the authorities.
“Imposing a blanket ban on such projects would also reflect negatively on the nation’s construction sector and erode the confidence of investors,” he said in an interview.
“The landslide in Bukit Antarabangsa should not mar the entire sector because other developments such as that in Genting Highlands and Damansara Heights did not encounter major problems.”
He said the Government needed to step up monitoring at construction sites to avoid any mishaps.
The local authorities should also find ways to improve construction work at hillsides instead of closing down such development, Kong added.
By The Star
Asiatic Dev up on talk of mall project
ASIATIC Development Bhd rose the most in a month in Kuala Lumpur trading after it was reported that the property developer is in talks with US mall owner Simon Property Group Inc for a project in south Malaysia.
The stock climbed 6 sen, or 2 per cent, to RM3.06 at mid-day, headed for its biggest advance since November 10.
A weekly reported on December 6 that Asiatic and Simon Property plan to build a RM2 billion (US$551 million) mall on a 50-acre (20 hectares) site in Kulai in Johor.
By Bloomberg
The stock climbed 6 sen, or 2 per cent, to RM3.06 at mid-day, headed for its biggest advance since November 10.
A weekly reported on December 6 that Asiatic and Simon Property plan to build a RM2 billion (US$551 million) mall on a 50-acre (20 hectares) site in Kulai in Johor.
By Bloomberg
Boustead to boost Islamic REIT, eyes more
MALAYSIAN planter Boustead Holdings will boost the size of the world’s first sharia plantation real estate investment trust to RM805 million (US$221.5 million), the firm said today citing strong demand for palm oil and Islamic banking products.
Boustead’s plan to inject RM189 million of plantation assets into the REIT comes as property and palm oil markets struggle to cope with excess supply and a grim global economic outlook.
Crude palm oil prices have fallen about two-thirds from their peak of RM4,486 set in March and the industry is cautious about prospects for a modest recovery next year.
Rents of Asian properties, which were bolstered by robust demand as firms expanded, are forecast to slide next year as businesses slash costs to survive the deepening economic downturn.
Still Boustead, which is also a financial and property firm backed by the Malaysian armed forces fund, said global demand for palm oil in the food and biofuel industries would underpin the plantations sector.
“We believe that the price of CPO (crude palm oil) will improve towards the first half of next year,” Lodin Wok Kamaruddin, Boustead group managing director, told reporters.
“The present price is probably a factor of excess stocks ... and also the fact that crude oil has come down from a high of US$144 six, seven months back to only about US$40 presently.”
He said crude palm oil prices were expected to reach RM2,000-RM2,200 a tonne in the first half of 2009.
Malaysia’s benchmark February palm oil contract was last traded at RM1,524 at 0718 GMT.
Under the deal announced today, Boustead would sell two plantation estates to the Al-Hadharah REIT, bringing its asset portfolio to 16,420 hectares. Its holding in the REIT would rise to 337 million units or 60.5 per cent, from 53.4 per cent now.
The sale would be paid through cash, the issuance of consideration units and lease of the plantation assets to Boustead Plantations Berhad, a subsidiary of the Boustead group.
Boustead could inject more assets into the Al-Hadharah REIT later, Lodin said, adding that there could be plans for another REIT.
“Of late, there seems to be a strong interest in Islamic products of this nature,” he said. “So we are quite bullish on the prospects and the future of our Islamic plantation REIT.”
Malaysia’s Islamic banking market has boomed in recent years, thanks to an aggressive government push and demand from the country’s mostly Muslim population.
The global Islamic finance industry has weathered the US-led housing credit crisis relatively well, but bankers and regulators expect the sector to be hit as the economic downturn spreads.
The US$1 trillion Islamic finance sector is based on sharia, or Islamic law, and advocates ethical investing and a fair distribution of wealth. Gains must not be made from interest-related investments or activities such as gambling and alcohol.
By Reuters
Boustead’s plan to inject RM189 million of plantation assets into the REIT comes as property and palm oil markets struggle to cope with excess supply and a grim global economic outlook.
Crude palm oil prices have fallen about two-thirds from their peak of RM4,486 set in March and the industry is cautious about prospects for a modest recovery next year.
Rents of Asian properties, which were bolstered by robust demand as firms expanded, are forecast to slide next year as businesses slash costs to survive the deepening economic downturn.
Still Boustead, which is also a financial and property firm backed by the Malaysian armed forces fund, said global demand for palm oil in the food and biofuel industries would underpin the plantations sector.
“We believe that the price of CPO (crude palm oil) will improve towards the first half of next year,” Lodin Wok Kamaruddin, Boustead group managing director, told reporters.
“The present price is probably a factor of excess stocks ... and also the fact that crude oil has come down from a high of US$144 six, seven months back to only about US$40 presently.”
He said crude palm oil prices were expected to reach RM2,000-RM2,200 a tonne in the first half of 2009.
Malaysia’s benchmark February palm oil contract was last traded at RM1,524 at 0718 GMT.
Under the deal announced today, Boustead would sell two plantation estates to the Al-Hadharah REIT, bringing its asset portfolio to 16,420 hectares. Its holding in the REIT would rise to 337 million units or 60.5 per cent, from 53.4 per cent now.
The sale would be paid through cash, the issuance of consideration units and lease of the plantation assets to Boustead Plantations Berhad, a subsidiary of the Boustead group.
Boustead could inject more assets into the Al-Hadharah REIT later, Lodin said, adding that there could be plans for another REIT.
“Of late, there seems to be a strong interest in Islamic products of this nature,” he said. “So we are quite bullish on the prospects and the future of our Islamic plantation REIT.”
Malaysia’s Islamic banking market has boomed in recent years, thanks to an aggressive government push and demand from the country’s mostly Muslim population.
The global Islamic finance industry has weathered the US-led housing credit crisis relatively well, but bankers and regulators expect the sector to be hit as the economic downturn spreads.
The US$1 trillion Islamic finance sector is based on sharia, or Islamic law, and advocates ethical investing and a fair distribution of wealth. Gains must not be made from interest-related investments or activities such as gambling and alcohol.
By Reuters
Dubai awards US$1.3b contract
MELBOURNE: Leighton Holdings Ltd, Australia's largest construction company, said it won a US$1.3 billion (US$1 = RM3.64) contract with its partners to build a new concourse at Dubai Airport.
Dubai's Department of Civil Aviation awarded the contract to the Al Habtoor Leighton Group, Murray & Roberts Holdings Ltd and Takenaka Corp joint venture, Sydney-based Leighton said in an e-mailed statement.
The concourse development, to be completed by April 2011, will include a four-star hotel and a five-star hotel.
By Bloomberg
Dubai's Department of Civil Aviation awarded the contract to the Al Habtoor Leighton Group, Murray & Roberts Holdings Ltd and Takenaka Corp joint venture, Sydney-based Leighton said in an e-mailed statement.
The concourse development, to be completed by April 2011, will include a four-star hotel and a five-star hotel.
By Bloomberg
Friday, December 5, 2008
Work on Johor cybercity to start in Q2 2009
ICT HUB: An artist's impression of Bandar MSC Cyberport
The development of Bandar MSC Cyberport, Johor's first Multimedia Super Corridor (MSC) cybercity, is set to commence in the second quarter of next year.
The cybercity is a RM1.16 billion development within Iskandar Malaysia development corridor operated and managed by MSC Cyberport Sdn Bhd.
Executive director Ramlee Jaafar said so far, memoranda of understanding have been signed with two foreign companies.
"One of them is Sunil Mantri Realty Ltd from India and the other is a Korean company which I cannot reveal at this moment in time," he said.
"Submissions for development will be made in the first quarter of 2009, so we expect network development to begin by the following quarter," he added.
Speaking at a roadshow for the MSC Malaysia-British Telecom Digital Lifestyle Initiative in Johor Baru, Ramlee said despite the economic slowdown, the company will not review the cost of the project.
"We will instead be re-setting our priorities and focusing on important projects," he said.
MSC Cyberport is a 60-hectare information, communication and technology (ICT) city within Iskandar Malaysia.
Its location in Kulai where the Second Link and the North-South Expressway meet is seen as strategic for its function as a global ICT business hub with a world-class living environment for ICT companies within Iskandar Malaysia.
By Business Times (by Anis Ibrahim)
MK Land to focus on affordable homes
PETALING JAYA: MK Land Holdings Bhd’s strategy to turn around the company amid the current economic slowdown will see the property developer focusing on medium-cost and affordable homes, said chief operating officer Lau Shu Chuan.
The turnaround planto be carried out in three phases was expected to be completed in three to five years, depending on the market outlook, he said yesterday after the company AGM.
“We are at phase one now where we are strengthening our cashflow positions and transforming into a more structured and focused entity,” Lau said.
“We are now returning to black with positive first quarter results and will move forward with the turnaround plan.” For the first quarter ended Sept 30, MK Land posted RM4.91mil net profit compared with a net loss of RM8.45mil a year ago.
For the financial year ended June 30, the company posted a net loss of RM60.9mil.
Although the property sector was softening, it would navigate around that by offering a good mix of products, Lau said.
“We build niche property, medium and also affordable houses. In other words, we offer different type of products for different markets. If market is looking for more affordable house, we have the products for them. By this, we are able to position ourselves to take advantage of different market situations,” he said.
From July to November, MK Land sold RM54mil worth of properties including apartments and shop offices, while projects valued at RM23mil ar are being built.
Lau said although the group did sell plots of lands, the main focus would be on selling completed properties, adding that there would be new property launches next year.
However, he declined to offer details on the new property launches.
By The Star
The turnaround planto be carried out in three phases was expected to be completed in three to five years, depending on the market outlook, he said yesterday after the company AGM.
“We are at phase one now where we are strengthening our cashflow positions and transforming into a more structured and focused entity,” Lau said.
“We are now returning to black with positive first quarter results and will move forward with the turnaround plan.” For the first quarter ended Sept 30, MK Land posted RM4.91mil net profit compared with a net loss of RM8.45mil a year ago.
For the financial year ended June 30, the company posted a net loss of RM60.9mil.
Although the property sector was softening, it would navigate around that by offering a good mix of products, Lau said.
“We build niche property, medium and also affordable houses. In other words, we offer different type of products for different markets. If market is looking for more affordable house, we have the products for them. By this, we are able to position ourselves to take advantage of different market situations,” he said.
From July to November, MK Land sold RM54mil worth of properties including apartments and shop offices, while projects valued at RM23mil ar are being built.
Lau said although the group did sell plots of lands, the main focus would be on selling completed properties, adding that there would be new property launches next year.
However, he declined to offer details on the new property launches.
By The Star
Zerin rules out property slump next year
Malaysia'S property market is expected to be resilient next year due to lower borrowing costs and as demand from foreign buyers remain strong, an industry executive said.
"It will be harder to do deals next year but there won't be a slump. People are still looking for homes to stay and invest in," said Previndran Singhe, chief executive officer of real estate consultancy Zerin Properties.
Previndran: People are still looking for homes to stay and invest in.
There will be a slew of new residential property launches from the second quarter next year and these are high-end products.
Key launches next year include 6 Stonor by Tan & Tan Development; The Pearl@KLCC by Malton Bhd; Platinum Park Residences by Naza TTDI; The Oval by Guocoland (M) Bhd; and Idaman Bintang by TA Properties Sdn Bhd.
Previndran said there is demand from locals, and investors from Europe and the Middle East for completed properties and new products in the Klang Valley.
"We are seeing more genuine buyers from these regions," he said.
Previndran said while the price of new landed and high-rise properties will be relatively similar to current levels, there will be more attractive marketing schemes.
"Developers are not going to lower property prices as construction cost is still volatile. What they will do is offer more goodies," he said.
He also expects a few en bloc deals over the next few months.
"There will also be more sales and leaseback, which will be fed into REITs," Previndran said at a property outlook briefing in Kuala Lumpur yesterday.
Zerin also introduced its new website www.expathomekl.com for expatriates at the briefing.
By Business Times (by Sharen Kaur)
"It will be harder to do deals next year but there won't be a slump. People are still looking for homes to stay and invest in," said Previndran Singhe, chief executive officer of real estate consultancy Zerin Properties.
Previndran: People are still looking for homes to stay and invest in.
There will be a slew of new residential property launches from the second quarter next year and these are high-end products.
Key launches next year include 6 Stonor by Tan & Tan Development; The Pearl@KLCC by Malton Bhd; Platinum Park Residences by Naza TTDI; The Oval by Guocoland (M) Bhd; and Idaman Bintang by TA Properties Sdn Bhd.
Previndran said there is demand from locals, and investors from Europe and the Middle East for completed properties and new products in the Klang Valley.
"We are seeing more genuine buyers from these regions," he said.
Previndran said while the price of new landed and high-rise properties will be relatively similar to current levels, there will be more attractive marketing schemes.
"Developers are not going to lower property prices as construction cost is still volatile. What they will do is offer more goodies," he said.
He also expects a few en bloc deals over the next few months.
"There will also be more sales and leaseback, which will be fed into REITs," Previndran said at a property outlook briefing in Kuala Lumpur yesterday.
Zerin also introduced its new website www.expathomekl.com for expatriates at the briefing.
By Business Times (by Sharen Kaur)
Thursday, December 4, 2008
Office space, condos -what’s in for 2009?
This is my inaugural contribution to this series for StarBiz and since we are at the end of the year, I offer some predictions for 2009.
I specifically want to discuss the fate of the market for high-end condominiums and office space in Kuala Lumpur.
All such predictions naturally hinge on a guess when the world’s leading economies will start to heal, and most of them have just gone into recession.
There is a great diversity of opinion on whether we are entering a ‘V’ curve (maybe one year of pain) or a ‘U’ curve (maybe four years.)
Personally, I’ve never experienced a downturn in the market which went away in a year.
If in doubt, I turn to the words of George Soros, who reckons it’s all going to be very bad.
Soros was kind enough to pitch up in KL in 2006 with copies of his remarkably predictive book The Age of Fallibility, which said: “I do not think the current calm is going to last…I believe the global economy has been sustained by a housing boom that took on the characteristics of a bubble…I expect an initial soft landing to turn into a hard one when the slowdown does not end…I expect a worldwide slowdown starting in 2007.”
Those of us who took Soros seriously (I did) sold all their shares in 2007 (well, I was going to, honestly, but you know, things didn’t seem all that bad and there was always a chance that the crisis would blow over).
America’s nemesis arrived after nine years of boom conditions when property prices and credit rose at a far greater rate than real incomes.
Britain, most of Europe and Australia witnessed similar but more restrained booms.
But sadly bubbles are ephemeral things and even champagne goes flat after a while.
Fortunately for us, we had only enjoyed two years of real estate euphoria before the westerly wind blew in. Our markets were only just beginning to pick up.
Had this financial plague reached us in say, 2011 or 2012 then we could well have been caught with our pants down as we were in 1997/98. In this respect, if we were going to suffer a global financial crisis, it came at an opportune time for Malaysia.
Right now, we are fundamentally strong and what has only gone up a little bit will only suffer a limited decline.
Nevertheless we are in for a tough year or longer. There are some highly geared developers who may have to struggle for survival.
There is a growing crisis of confidence and we are peering into a dark pit of irrational pessimism.
Deals are falling over as buyers walk away for fear of a severe market correction.
The condominium market at the top end has been the most speculative of all markets over the past three years.
Projects such as Troika and One KL which launched at a breathtaking RM1,000 per sq ft in 2005 rose in value to RM2,000 or more.
The opportunity to own property close to KLCC has attracted a large community of foreign buyers for whom Malaysia has successfully created a very investor friendly environment.
Sadly, many of these buyers are feeling the squeeze in their own countries and some are in a hurry to cash out.
Those who bought early can afford to sell at RM1,000 per sq ft or less and so, we may see this secondary market leading values down in this sector.
Sentiment is not helped by the number of new properties coming up.
Currently, Kuala Lumpur has some 19,170 luxury condos and serviced apartments (with a value of RM350 per sq ft or more.) New projects under construction or approved could potentially add another 19,299 units.
Even without a global financial crisis, some indigestion was looking inevitable before the market regained equilibrium.
By contrast, the office space market enjoys a totally different set of dynamics. Rentals, yields and capital values are well established.
There is a history of supply and absorption so well documented that it enables regression analysis.
Demand for office space has a set of underlying fundamentals that can be tied back to economic growth and the maturity of the economy.
Best of all, there are no twitchy secondary players prone to panic and flight.
As recently as the second quarter of this year, office rentals were moving up to a realistic level of RM6 to RM8 per sq ft per month after nearly a decade of stagnation.
Capital values had breached RM1,000 per sq ft and were cruising towards a peak which might have been RM1,500 per sq ft. Yields were down to 5% or 6% in anticipation of this growth.
Despite the fact that KL currently has a shortage of ready office space, any growth in value next year is now unlikely.
It is not that we are heading for an oversupply; it is only that tenants are going to “wait and see” before they consider upgrading or expanding.
Perversely, with construction costs falling, now is a good time to start an office development in KL.
The key word of course, is confidence. One has to have faith in the future. We can only hope that the banks will hold strong in their support of the property industry so that predictions of doom do not become self-fulfilling.
Chris Boyd is executive chairman of Regroup Associates Sdn Bhd property consultants. He is a long-time registered valuer in Malaysia.
Boyd feels strongly about the need for heritage conservation in Malaysia and is an active member of Badan Warisan. He keeps meaning to go to the gym but actually prefers cross-country running.
By The Star (by Christopher Boyd)
Tokyo is best Asian city to buy real estate
TOKYO overtook Shanghai as the best Asian city to buy real estate as investors seek less risky investment for 2009, a survey by the Urban Land Institute and PricewaterhouseCoopers LLP showed.
The Japanese capital has the best prospects and lowest risk among the 20 locations covered by the Emerging Trends survey.
Singapore is in second place and Hong Kong is third, according to the ULI, a Washington-based research firm, and PricewaterhouseCoopers, a New York-based accounting firm.
By Bloomberg
The Japanese capital has the best prospects and lowest risk among the 20 locations covered by the Emerging Trends survey.
Singapore is in second place and Hong Kong is third, according to the ULI, a Washington-based research firm, and PricewaterhouseCoopers, a New York-based accounting firm.
By Bloomberg
Developer to review US$95b Dubai project
DUBAI: Dubai-based developer Meraas said it will review a recently launched US$95 billion (US$1 = RM3.64) property project, as more developers reassess and scale back work due to the global financial crisis.
The government-owned developer said it was reviewing the phasing and rollout of its Jumeirah Gardens project which was launched at a Dubai property exhibition in October.
There would be more clarity and details on the project's masterplan and the product rollout by the beginning of 2009, the statement said.
By Reuters
The government-owned developer said it was reviewing the phasing and rollout of its Jumeirah Gardens project which was launched at a Dubai property exhibition in October.
There would be more clarity and details on the project's masterplan and the product rollout by the beginning of 2009, the statement said.
By Reuters
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