Property prices to weaken on slower economy

KUALA LUMPUR: Property prices and demand will weaken by 5% to 10% in 2009 due to slower economic growth and a decline in foreign investment, says an industry official.

Association of Valuers and Property Consultants In Private Practice Malaysia (PEPS) president James Wong ruled out a property price plunge but said he expected a “gradual correction” as prices had peaked in the third quarter of last year.


James Wong

“At this point, there is no panic and force selling. Our property market is more mature and there is less speculation,” he said.

Real estate investment trusts cutting back on property acquisitions, which had been a significant factor in the rising property market for the past two years, was partly blamed for the slowing property demand, he told a press conference yesterday.

Wong forecast property launches to soften this year and said he expected a prolonged economic slowdown.

To boost the property market, development and consumption had to increase, which he said were unlikely to happen this year as many potential buyers would opt to save.

“Many potential buyers and investors are adopting a wait and see strategy (and thus are not spending).

“How resilient our economy is in 2009 will depend on domestic demand and the recovery of the Asian giants, including China,” he said.

He added that the RM7bil stimulus package was too small to have a meaningful impact, as it only represented 1.4% of the national gross domestic product (GDP). He stressed that Malaysia needed a second stimulus package to prevent the economy from falling into recession.

“Government should reduce personal income taxes and increase disposable income to directly increase domestic demand and consumption.

“It should also improve the investment climate such as liberalising the Foreign Investment Committee (FIC) guidelines on foreign purchase of real estate, licensing, visa and work permit requirements and relaxing the foreign equity participation policy,” he said.

If possible, he hoped the Government would emulate the approval process adopted by Singapore and Hong Kong for manufacturing projects.

Wong also recommended further interest rates cut by Bank Negara to help revitalise the economy.

By The Star

Malls told to think of shoppers

KUALA LUMPUR: Developers of hypermarkets should consider the needs of shoppers if they want to keep pulling in the crowds.

Regroup Associates managing director Allan Soo said with the weaker market sentiment currently, hypermarkets needed to be more than just “faceless big boxes”.

“There are too many poor quality malls around. Many of them are not well planned or family-orientated. Developers need to change the architecture and not just build a shoe box,” he said in his presentation at the property summit yesterday.

He said many malls were monotonous and had the same problems, such as insufficient parking space, which often deterred people from shopping.

Soo added that developers of hypermarkets should conduct surveys with shoppers before starting construction and not just go by their “gut feeling.”

“Shoppers also should be more vocal about what they want,” he said, adding that hypermarket developers needed to consider issues such as size, location and accessibility.

On another note, Regroup Associates executive chairman Christopher Boyd said hypermarkets should have a different mix of brands to attract a wider audience.

“Every mall has the same brands. This creates mall and brand fatigue. There should be a better mix of new brands, products and merchandise,” he said, adding that there were too few local brands in hypermarkets.

“There aren’t enough Malaysian brands in a conventional mall. All it takes is a sense of adventure and a little bit of skill.

“Alternatively, they can always outsource if they lack the skill.” Soo said.

By The Star

Mustapha Kamal-related company buys land from MK for RM150m

PETALING JAYA: Property developer Tan Sri Mustapha Kamal Abu Bakar’s company Ketara Megah Development Sdn Bhd has acquired 23 acres of land in Selangor from MK Land Holding Bhd for RM150mil.

Ketara Megah had acquired the two parcels of leasehold land in Sungai Buloh in an open tender exercise from MK Land, of which Mustapha Kamal is chairman and chief executive director.

MK Land said in a statement on Tuesday the sale consideration of RM150mil was in excess of the forced sale value of RM118.35mil indicated in the valuation by PPC International Sdn Bhd.

At the close of the tender exercise on Dec 15 last year, only one tender was received, which was Ketara Megah.

The land was originally acquired by MK Land’s unit Saujana Triangle Sdn Bhd in 1995 for RM3.72mil. As at June 30 last year, the book value was RM151.9mil due to the fair value adjustments, said MK Land.

“The entire proceeds from the proposed sale will be used for working capital,” it said. It added the proposed sale would unlock the value of land which MK Land had no immediate plan to develop.

MK Land said the proposed sale was by open tender and the transaction was not regarded as a related party transaction under the Bursa Malaysia Securities’ listing rules.

By The Star

Malaysian property developers throw in perks

PROPERTY developers are finding new ways to boost sales as they grapple with a slowing economy and fragile consumer confidence.

OSK Research analyst Mervin Chow said more developers will offer incentives, especially for landed properties, to boost sales.

"There is more competition. So developers will have to do something new to survive. They may offer more giveaways or discounts," he said.

SP Setia Bhd yesterday unveiled a scheme that halves the downpayment on a house to five per cent. Rival Mah Sing Group Bhd is set to follow with its own plan this week.

Group managing director and chief executive officer Tan Sri Liew Kee Sin expects a good reaction to its Setia 5/95 Home Loan package, which is available until April 19.



"We had soft launches recently (at Setia Alam) and the responses have been good. People have money but are shaken a bit. So sales have been slow. There are some cases where buyers cannot get loans. This is why we came up with the 5/95 package to assist them to own a home," Liew said.

Liew was speaking to reporters after launching the 5/95 package with Housing and Local Government Minister Datuk Seri Ong Ka Chuan at the Setia Alam township in Shah Alam, Selangor.

The package requires buyers to make a 5 per cent downpayment on a property with no interest payable during construction. The buyer only starts to service the 95 per cent loan when the property is completed.

The campaign is supported by CIMB Direct Access, Maybank, Public Bank and EON Bank and is applicable to all of SP Setia's residential properties in the Klang Valley, Penang and Johor.

As for Mah Sing, it will launch its easy ownership campaign on Thursday.

Under the campaign, buyers can buy completed semi-detached homes or bungalows with a RM1,000 deposit, and thereafter pay a minimum of RM1,200 a month for the next five years.

They will enjoy an attractive loan interest package from the fifth year, Mah Sing senior manager, corporate communications, Lyanna Tew said.

Last year, Sime Darby Property Bhd (SDP) sold 241 properties worth RM141 million in one month, at its 10 ongoing townships.

Sales were boosted by its Guaranteed Buy Back scheme, which is valid until June 15. Under the scheme, buyers can sell back their properties to SDP with "no question asked".

By Business Times (by Sharen Kaur)

SP Setia’s latest 5/95 Home Loan package

Minister of Housing and Local Government Datuk Seri Ong Ka Chuan (left) and SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin at the launch of Setia 5/95 Home Loan Package on Monday.

SHAH ALAM: In the current difficult times, SP Setia Bhd has come up with a scheme to make it easier for buyers to own homes.

And four local banks – Malayan Banking Bhd, Public Bank Bhd, CIMB Bank Bhd and EON Bank Bhd – have committed more than RM1bil to provide financing facilities to the company’s new 5/95 Home Loan Package.

Under the package, buyers need only make a downpayment of 5% and the balance is payable upon completion of the property.

Under the 10:90 variant of the build-then-sell system, buyers have to make a downpayment of 10% of the property cost.

SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said: “We want to reassure buyers that bankers are not shying away from lending.”

Besides the banks’ support, the group also had RM600mil in cash to fund the campaign, he said after the launch of Setia 5/95 Home Loan Package by Housing and Local Government Minister Datuk Seri Ong Ka Chuan yesterday.

The three-month campaign ends on April 19 and is applicable to all SP Setia’s residential properties in the Klang Valley, Johor and Penang.

SP Setia would also bear other entry costs such as legal fees, stamp duty on the sale and purchase agreement and loan agreement as well as memorandum of transfer for purchases under the campaign.

“We believe Malaysians are still looking to buy and have the purchasing power to do so but got shaken a bit by the current market,” Liew said.

He added that the company had received “very encouraging” response from buyers to the promotion it introduced two weeks ago.

Ong said the Government encouraged developers to embark on build-then-sell system.

“As the country faces pressure from the global financial meltdown, Malaysians have become more cautious in spending. By introducing this 5/95 package, I believe SP Setia has managed to work out the right mechanics to offer prospective homeowners an attractive plan that is difficult to ignore,” he said.

However, Ong said the Government could not fully implement the build-then-sell system yet as smaller developers might find difficulty in securing loans from financial institutions to start a housing project.

The Government, he added, would provide incentives including fast-track approval for projects of developers who opted for the concept.

By The Star

Building materials prices to remain stable

PETALING JAYA: Prices of most construction building materials are likely to remain stable this year amid slowing demand and lower production costs on falling commodity prices.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen predicted prices of all construction materials would eventually drop closer to the levels before the fuel hike in June last year. He said the current prices should stay stable unless the Government made drastic changes to the base materials prices.


Ng Kee Leen

“Government policies have to be consistent and predictable, as investors dislike uncertainty,” he told StarBiz yesterday.

Ng also said MBAM’s ongoing discussion with cement manufacturers on price reduction was encouraging and the association was confident of a positive outcome.



Meanwhile, National Ready-Mixed Concrete Association of Malaysia on Sunday announced a 5% price reduction for ready-mixed concrete effective Feb 1. It said the new recommended selling prices would be applicable in Kuala Lumpur and Selangor.

Transportation charges and steel bar prices have been revised several times since last year.

Ng said prices of domestic steel bars had declined to about RM1,900 per tonne, which was about RM200 per tonne above the imported steel price. He estimated domestic steel demand at about 2 million tonnes in 2009.

However, since the conditional steel import liberalisation on May 12, the import of other steel products, for both the construction and non-construction industries, had faced new setbacks such as higher import fees, more frequent product testing and longer importation procedures, he said.

“It (import of steel products other than steel bars) has become less efficient and unproductive,” he said.

On the RM7bil stimulus package and the second scheme, Ng hoped the Government would implement them quickly.

“New contracts must start entering the market as many ongoing jobs were awarded in 2007 and will be completed soon.

If not, the construction industry will be affected in 2010,” he said.

He said the impact of the stimulus package would be felt only in the second half of 2009.

An analyst with Maybank Investment Bank Bhd who has an “underweight” on the construction industry this year projected that construction materials, whose prices had fallen since the fourth quarter of 2008, would not revert to an uptrend anytime soon.

She forecast the domestic construction industry would remain quiet this year, while local construction companies with overseas projects such as in the Middle East could risk jobs cancellation and potential delayed payments.

She added that construction material costs in India had not come off as quickly as in Malaysia. She also predicted international steel prices to average US$600 per tonne in 2009 from around US$400 per tonne currently.

By The Star (by K.C.Law)

1Utama owner wants to run own mall

See Hoy Chan Holdings is unlikely to renew a lease that lets Aeon Co (M) Bhd manage the first phase of the 1Utama shopping complex in Bandar Utama, Petaling Jaya.

The 15-year lease between Aeon and See Hoy Chan, which owns the shopping complex, will end sometime next year.

Aeon, operator of the Jusco department stores, manages the first phase, which opened in 1995, handling two million sq ft of gross space and 680,000 sq ft rentable area.

The second phase, with three million sq ft of gross space and 1.2 million net rentable area, is owned and operated by the developer See Hoy Chan. It opened in December 2003.

"We are negotiating a new arrangement with Jusco," See Hoy Chan director Datuk Teo Chiang Kok told Business Times.



"We prefer to run it on our own to present the mall as an integrated and wholesome centre," Teo said.

Nevertheless, See Hoy Chan would like Aeon to continue being its anchor tenant.

Apart from the department store and supermarket, Jusco also operates the Jusco Home Centre and Jeans Studio in 1Utama.

Aeon derives its revenue both from retail sales and mall management.

According to Aeon's website, there are 21 Jusco stores in the country, of which 16 are located in shopping complexes which it also manages.

In the first nine months ended September 30 2008, Aeon posted RM75.77 million profit on RM2.5 billion revenue.

Profits from retail operations (before tax) accounted for RM70.66 million and from property management, RM46.49 million.

By Business Times (by Vasantha Ganesan)

Local property market still attractive and sustainable

Ireka Corp Bhd executive director Lai Voon Ho expects downward adjustment in property prices

What is your outlook on the domestic property market in 2009?

The property market is likely to soften in 2009 unless the global economy is able to recover swiftly. There is an expected downward adjustment in property prices in general, but I believe prices in prime locations will hold out relatively well.

A rational property buyer with a long-term perspective would believe that Malaysia’s properties are still at an attractive and sustainable (price), as opposed to a lot of the other cities in the world.

The Malaysian property market is much more resilient as financial institutions have been more prudent in project lending.

Property companies today are also better capitalised, as stringent regulations are in place by both financial institutions and regulatory bodies, reducing the risk of widespread abandoned projects.

The other stabilisation factor has been the strong mortgage market, largely driven by domestic consumption and the young population. The local mortgage market remains resilient, thus maintaining access to relatively cheap home financing, ensuring the property market remains attractive.

With strong macroeconomic fundamentals, ample domestic liquidity and relatively robust job market, the belief that Malaysia will avoid ‘property price crash’, in my opinion, would hold true.

When do you think the domestic demand for property will pick up?

It is difficult to be certain when the property market will pick up again. However, I am optimistic it will ride out this uncertainty over the next two to three years and may return to a ‘boom market’ in the next four to five years.

Lessons learned from the current economic turmoil?

We can draw two important lessons. The first is the immutable fact that we are becoming a ‘globalised’ nation. At Ireka, we have always acknowledged the importance of thinking global in whatever we do, venturing into Vietnam while staying focused in Malaysia.

We will monitor the market very closely throughout 2009 and undertake in-depth feasibility studies, especially before embarking on new product launches.

We now have Mont’ Kiara as our i-ZEN branding showcase, providing us with the necessary experience and expertise to expand to new locations, such as Vietnam.

We will take a cautious yet opportunistic approach so that we will be in an advantageous position when the market recovers.

The second lesson is the vitality of ‘change’. ‘Change’ will be the guiding principle for the world economy in 2009 as we start to redesign the entire global financial architecture and change the way most financial businesses operate.

Our mantra for 2009 will be to ‘Embrace Change.’ It is no longer adequate for us to undertake tasks in a conventional manner – be it business decisions, branding platforms, marketing and sales strategies or product innovations.

The slowing economy has made it harder for consumers to part with their cash. However, our partnership with reputable property players such as CapitaLand of Singapore as well as leveraging on our i-ZEN brand of properties have provided greater value for each development and encouraged repeat buyers for our projects.

Business strategies for Ireka in the next two to three years?

Ireka will focus on its two main core businesses – construction and property development.

Over the next two to three years, Ireka will focus on completing its four construction projects in Malaysia with a total order book of RM1.14bil, which will help the group maintaining a healthy revenue inflow up to 2011. Ireka will continue to focus on providing integrated design-and-build services.

With an experienced team, Ireka is able to ensure cost and resources are optimised. With prudent cost management, the group hopes to achieve healthy margins while delivering completed projects in a timely manner.

On the property development front, Ireka will continue to earn a management fee from Aseana Properties Ltd (Ireka holds a 19.6% investment stake in Aseana) as its exclusive development manager. We will focus on completing projects like Tiffani by i-ZEN by the third quarter of this year.

For new projects, it is important for us to continue undertaking detailed market studies on the specific target markets. Innovative, targeted marketing strategy and branding initiatives are important steps to ensure that we focus on reaching the right audience.

By The Star

Analysts upbeat on REIT market

ANALYSTS remain upbeat on the real estate investment trust (REIT) market, with Axis REIT being one of the more favoured stocks.

The company is expected to release its full year results this Thursday for FY08 ended Dec 31.

An analyst with HwangDBS Vickers Research said Axis REIT was expected to deliver dividend per unit of 14.3 sen, or 12% gross yield, compared with 11% industry average in FY08.

Despite the weaker property market, it was anticipated that there was little risk of asset devaluation and tenancy non-renewals for Axis REIT given its diverse tenant mix, where only 19% of leases will expire in FY09 forecast.

“However, we have trimmed our FY09 and FY10 forecast net distribution by 8% and 9% respectively to reflect flat rental growth and one percentage point increase in interest cost, but maintain a “buy” call on Axis REIT for its strong operating cashflow and attractive 12% yield,” the analyst said.

“We believe Axis REIT’s RM1.65 net asset value per unit is intact despite the current weak sentiment, as demand for office and warehousing space in prime locations remains stable, and foreign direct investments have not dropped significantly in recent months.”

He said Axis REIT’s tenant mix comprised of 55% of properties in Petaling Jaya, 21% in Johor, 15% in Shah Alam and 5% each in Klang and Kedah.

“About 75% of Axis REIT’s properties are offices and warehouses, and the locations and tenant mix should cushion the REIT against a slowdown in demand in any one particular market segment or location,” he said.

The analyst said Axis REIT’s properties achieved 11% average gross property yield for 2008 and only about 19% of its leases were due for renewal in FY09.

“The tenancy renewal risk is low,” he said.

On the company’s expansion plans, the analyst said Axis REIT was unlikely to proceed with its planned placement of up to 120 million new units in the near term due to the weak market sentiment.

“Given its 33% gearing against the maximum allowable limit of 50%, we conservatively assumed that there will not be any acquisition for Axis REIT in FY09 to FY10. Management will only consider new purchases if they are accretive to unitholders,” he said.

On financing issues, the analyst said Malaysian banks were unlikely to pull back credit lines for properties with secured long-term tenants.

“But interest rates could rise slightly because of higher risk premium as a result of the global financial crisis,” he said, adding that the research unit estimated that for every one percentage point increase in interest rate, it will reduce Axis REIT’s FY09 forecast distribution by 5.4%.”

By The Star (by Danny Yap)

New loan plan to drive SP Setia home sales

Property developer SP Setia Bhd is confident of securing more sales this year with the introduction of its new 5:95 home loan package, its group managing director and chief executive officer Tan Sri Liew Kee Sin said today.

The package is expected to attract more buyers despite the economic slowdown as it offers a build-and-sell concept, Liew said.

“We had the soft launch last two weeks ago and the response was very encouraging,” he said.

Speaking to reporters after the launch of the package in Shah Alam, Liew said the concept required buyers to pay only five per cent of the purchase price and the remaining 95 per cent after completion of the property.
Legal fees, and stamp duty are also waived for the consumers under the new loan package, he said.

He added that the loan package will be applicable to all residential properties in the Klang Valley, Johor and Penang for three months starting today.

By Bernama

Malaysian firms put on hold Vietnam projects

With the economic situation in Vietnam deteriorating by the day, it is only natural that investors have concerns over the fate of Malaysian businesses in the country.

Similarly, against the backdrop of such uncertainty, even Malaysian companies are holding back on their projects in Vietnam, says an analyst with TA Securities. Vietnam’s economic growth slowed to 6.2% for 2008, its weakest since 1999 largely attributed to lower demand for exports as recession hit the US, Europe and Japan last year.

“Basically, it is good that they should hold back first, given the situation in Vietnam.

“They are facing a high interest rate environment and growing economic pressure on demand, even though input costs have come down,” says the analyst.

Construction and property development costs are generally considered to have come down with the bursting of the commodities bubble since the middle of last year.

As for potential losses to Malaysian developers and construction players, “the amount committed so far is not large. Losses would be minimal,” the analyst adds.

The analyst, who covers WCT Bhd, SP Setia Bhd and Gamuda, also points out that many Malaysian companies have not begun work on any projects in Vietnam as they are held back by the global economic crisis.

He says in his coverage that only Gamuda Bhd has commenced infrastructure work on the RM8bil Yen So Park project.


Artist’s impression of Yen So Park (left) and Vietnam International University Township


Artist’s impression of Yen So Park (left) and Vietnam International University Township

The Yen So Park lake-side project in Hanoi covers 130.8ha that will include a five-star hotel, an international convention centre, offices, apartments, luxury condominiums and villas, a recreational club, community facilities and a botanic park.

Responding to StarBizWeek queries, Gamuda says there has been no further change in the company’s operations in Vietnam.

Last month, Gamuda announced that it would maintain the total value of its projects in Vietnam at RM10bil. However, it added that the financial crisis and investors’ difficulty in getting funding might delay the development of the retail mall, office block and hotel parcels for one or two years. It pointed out that although the project was scheduled to run for 12 years, the delay would not be significant.

Berjaya Land Bhd which has received investment licences in Vietnam for four projects covering 920ha, expects some slowdown in demand for properties there and is prepared to defer projects.

Berjaya Land chief executive officer Datuk Francis Ng says: “With the current economic situation, we expect some slowdown in demand for properties as purchasers adopt a more cautious attitude, and we may have to slow down or defer some of our projects if the demand is not there.”

Even so, Berjaya Land aims to launch the first phase of its Thach Ban project in Hanoi by the second half of 2009.

Thach Ban City in Hanoi is the company’s maiden project in Vietnam comprising 148 units of condominiums worth a total of US$550mil (RM1.97bil).

Ng adds: “We have started work on our Dong Nai Residential Development project, and are also planning to launch it in the second quarter of 2009.

“We have also received investment licences for the Vietnam Financial Centre and Vietnam International University Township projects, and are now awaiting construction permits for these projects.”

“We believe that once the global economy has stabilised, the take-up rate for property will improve.

“We view our investments in Vietnam on a long-term basis and we have confidence that the country is resilient enough to weather the downturn and recover when the global economy picks up.”

Berjaya Land currently has no contribution from its overseas projects in Vietnam as it only entered the market in the last two years.

The company has a target that all its overseas property development ventures will contribute some 30% to group revenue in three to four years.

Currently SP Setia, which has one ongoing project in Vietnam and another in the planning, says there would be no change in schedule and it was going ahead with the development.

Its on-going project is the 226ha township EcoLakes at My Phuoc, Ho Chi Minh City in a joint venture with Vietnam’s state-owned conglomerate, Becamex IDC Corp.

The project in planning is called EcoXanh, (meaning “Eco Greens”) which will be a range of villas with club house facilities on 31.6ha in Ho Chi Minh City.

EcoXanh is a joint venture between unit Setia Saigon East Ltd and Saigon Hi-Tech Park Development Co.

Tan Sri Liew Kee Sin, group managing director of SP Setia says: “We are going ahead. Where EcoLakes is concerned, our show village is almost ready and should be launched in the first quarter of this year.


Tan Sr Liew Kee Sin

“This will enable us to market our properties better. The Vietnam market has never seen or experienced such a development before, let alone an entire show village that showcases different types of properties.”

SP Setia says it is confident its ideas will take off in Vietnam, despite the current economic turmoil.

“We feel that the sub-urbanisation of housing and offices is inevitable given the congestion, inadequate infrastructure, cramped living quarters and expensive office space in central cities like Ho Chi Minh City and Hanoi.

“In this sense, we feel that SP Setia has a distinct advantage in Vietnam as building sub-urban townships is our forte,” he adds.

At present SP Setia’s revenue solely comesfrom the domestic market.

Main board-listed Ireka Corp Bhd’s exposure to the Vietnam market is mainly through its 19.6% stake in London-listed Aseana Properties Ltd as well as the appointment of wholly-owned subsidiary Ireka Development Management Sdn Bhd as the exclusive development manager for Aseana. The successful London-listing of Aseana in April 2007 was initiated by Ireka.

In mid-2008, Aseana received investment licences for Queen’s Place (formerly known as Horizon Place) and International Hi-Tech Healthcare Park in Vietnam; both are mixed developments with residential component.

Queen’s Place will cover 8,400 sq m adjacent to the central business district in Ho Chi Minh City and the Hi-Tech Healthcare Park will be a fully integrated “Medical City” with approximately one million sq m of gross floor area.

Meanwhile, all of Aseana’s other pipeline projects in Vietnam are still at the master planning and approval stages.

Ireka Development president Lai Voon Hon says: “This includes Wall Street Centre (District 1, Ho Chi Minh), Nam Khang Resort & Residences (Danang) and One Saigon.


Lai Voon Hon

“In July last year, Aseana also acquired a strategic stake in Nam Long Corp, one of Vietnam’s leading property developer with over 500ha of land bank in Ho Chi Minh City and neighbouring provinces.

“Through this partnership, Aseana is expected to co-develop at least four property development projects with Nam Long in Vietnam.”

On the company’s outlook for Vietnam, he says: “Vietnam is frequently compared to China of a decade ago and therefore is thought that the current challenging environment mirrors that of China in the mid-1990s. This is as a result of rapid growth, in which there is bound to be a reactionary correction but eventually will be followed by stabilisation and growth.

“Hence, though it may be a challenging environment today, I am optimistic that the property market will ride out this uncertainty and will be on an upturn in the next four to five years). We will take an opportunistic approach in our involvement so that we will be there when the market takes an upturn.”

That pretty much sums up most Malaysian companies’ aspirations in their Vietnam ventures.

By The Star (by Loong Tse Min)

Good time for value buys

DESPITE the gloom and doom encompassing much of the global economy these days, there are still good opportunities for cash-rich entrepreneurs and companies looking for value acquisitions.

As a more meaningful recovery of the local economy and property market will only become more evident around year-end or in early 2010, most developers will be consolidating their positions to get ready to ride on the next wave of growth.

Companies with strong balance sheets and cash reserves should look out for the right opportunities to snap up good quality assets, both within and outside the country, that may be available at more realistic prices now.

Besides local opportunities, companies should also look to the global market and consider investing in assets overseas for a wider geographical expansion as it would cost less to do so now.

Companies that have laid the groundwork by building up a pool of top-notch management and technical capability, internal processes, and financial resources should take advantage of the current slowdown to further enhance their areas of competency.

Regional markets like Singapore, Vietnam, India and China have much to offer investors as asset values have eroded by 20% to 30% since they succumbed to the contagion effect of the global financial meltdown.

According to the latest market report on Singapore by CB Richard Ellis (CBRE), out of 2,200 units in luxury projects that were launched in the city state between 2006 and 2008, 55% or 1,204 units remained unsold as of last November.

The average launch prices of new luxury condominiums fell from a range of S$2,000-S$4,000 per sq ft (psf) in the last quarter of 2007 to S$2,000-S$2,600 psf in the fourth quarter last year.

CBRE is projecting a 10% to 15% fall in prices of existing projects this year. That means retail property buyers can also look around for some value buys.

Vietnam, which is still reeling from the effects of an overheating economy and high inflation in the first half of last year, also offers good potential for some good cherry picking.

Companies with strong net cash position such as YTL Corp Bhd has already started shopping around for distressed assets.

With its war chest of more than RM10bil cash, YTL Corp is making great headway in the construction, property and infrastructure sectors in Malaysia, Australia and Britain, via acquisitions.

Last October, the company agreed to pay S$285mil for control of Macquarie Prime Real Estate Investment Trust (MP REIT).

With the price at a 49% discount to the net asset value, the proposed acquisition of MP REIT will provide stable earnings and good upside potential to the company.

By having a REIT in Singapore, YTL will be well placed to tap the city-state’s expanding real estate sector and promote its Starhill brand in the international market.

A consolation for local property players in the current challenging market is that their low gearing position and prudent financial management will likely pay off and enable these companies to ride out the current downcycle.

In fact, a number of property companies have net cash reserves to expand their landbank and pick up some value assets.

As the saying goes, “Every cloud has a silver lining.” While developers have been forced to review and delay project launches, the market slowdown also offers them the chance to consolidate and identify new opportunities to thrive when the good times return.

# Angie Ng is deputy news editor of The Star and she believes with right planning and foresight, developers will be able to ride out the tough times.

By The Star (by Angie Ng)

Retail space faces mounting pressure

Both are components of the commercial real estate business and neither will escape the pressures of the economic slowdown, but the performance of office space and retail space in the coming months will also depend on a few factors unique to each segment.

For one thing, office space may not do well if many companies opt to stay put instead of shifting to larger and better premises. In retail, occupancy depends significantly on the growth strategies of the business operators, and the kind of products and service they sell.

Regroup Associates executive chairman Christopher Boyd says the Malaysian commercial property market will remain quite competitive this year as the take-up of new space is expected to be affected by the global financial crisis.

“We have already seen a lot of potential tenants saying they would like to wait and see. With so much uncertainties in the world, companies will play safe and defer any decision to move if they can avoid it,” he told StarBizWeek.

Boyd says it costs about RM100 per sq ft to fit out an office. This is a big commitment. For example, a 5,000 sq ft office may require about RM500,000 just for the furniture and fittings.

“The poor sentiment will lead to weaker demand for commercial space. The asking rentals will probably weaken but there isn’t going to be a crash because supply is fairly tight,” he adds.

However, he believes that international companies that are looking for a lower-cost environment will still choose Malaysia because the rental rates are still low as compared with those in other parts of the region.

“Businesses like service centres and back-office services might decide to come to Malaysia simply because of the low rental rates,” he says.

According to Boyd, this year alone, 10 new buildings in Kuala Lumpur will be completed, thus adding to the market a total area of about 3.4 million sq ft.

“However, approximately half of these building will be pre-let, like the SSM building, Menara Bumiputra Commerce and MIDA building. The available space to let is actually about 1.9 million sq ft only,” he says.

Among other buildings available for lease this year are G Tower, KL Pavilion, Menara Worldwide and Towers B, C and D of KL Sentral. He says the average rental rate for Grade A buildings in the Golden Triangle is currently at about RM7 to RM9 per sq ft.

Retail rumblings?

On the outlook for the retail sector this year, Regroup Associates managing director Allan Soo says the market has dipped since the third quarter of 2007.

“Although companies like Parkson, Jaya Jusco, the hypermarkets, and some local fashion operators and food retailers seemed to be doing well until the third quarter, they all faced business decline by the fourth quarter,” he adds. Everybody agrees that the fuel hike last June has affected sales.

“In most cases last year, there was a sales drop of about 5% to 10%, while the drop for some higher-end fashion brands was about 10% to 30%,” says Soo.

“Because of the huge drop last year, we don’t expect another plunge this year. There will be a fall but it won’t be dramatic. Overall, most sectors will see turnover shrinking by 5% to 10%.”

However, he reckons that the hypermarkets will keep faring well because people still need to shop for groceries. Their margins may narrow because of price competition, but the total sales volume should increase.

More hypermarkets will open this year to cater for the demand for bargains and lower-priced goods.

Soo says there will be 1.5 million sq ft of additional retail space this year and it will badly affect the market.

He points out that there is already about 39 million sq ft of retail space in the Klang Valley. The new properties will increase the available space by 3%.” The new malls will be much smaller and are mostly located in the suburbs.

“By 2010, the incoming supply of retail space will drop to 1.7 million sq ft from the proposed 3.4 million sq ft. This is good news for the industry, for that avoids an oversupply of space,” he adds. Some of the planned projects are put on hold.

“Based on our survey of 13 shopping centres, the occupancy rate is still stable. We foresee some people closing their shops but it will be very limited,” he says.

DTZ Nawawi Tie Leung Property Consultants Sdn Bhd director Adzman Shah Mohd Ariffin says some mall operators will start looking seriously into repositioning their properties. The aims are to remain competitive, attract more shoppers and retain tenants.

“Well-located and well-managed malls will continue to do well in weathering the downturn. More spending on advertising and promotion activities will have to be carried out to attract or at least, retain shoppers,” he adds.

He, however, cautions that mall operators should be prepared to come up against stiff resistance should there be any attempt to raise rental rates after the Chinese New Year. Some tenants have begun to consolidate and downsize to reduce operating expenses.

Although lower growth and sales are expected, retailers are more prepared now than in previous downturns, to revise their sales projections. They may want to consider moving to new locations to achieve better market penetration.

Optimistic owners

The building owners and managers are somewhat more upbeat. Joyce Yap, president of the Malaysian Association for Shopping and Highrise Complex Management, says the outlook for shopping malls this year is still vibrant despite the slowdown.

“Though people are a bit cautious, the traffic flow at the malls is still strong,” she adds. As she points out, shopping is a way of life among Malaysians and they will still go to the malls even in these tough times.

She says good shopping centres will still record good occupancy rates, such as Pavilion in Kuala Lumpur, which is 100% occupied.

She believes that shopping centres that will be ready this year will survive although they have to face more competition from the existing complexes.

“However, malls that have still some way before completion will face tough times ahead to fill the space as retailers are now more cautious and are putting their expansion plans on hold,” she contends.

Yap says shopping malls that are located in the city centre will still be attractive, especially among the tourists, and can benefit from their spending power. “The ones that are located in the suburbs will face difficulty in boosting sales,” she adds.

Berjaya Land Bhd chief executive officer Datuk Francis Ng agrees that the current economic situation will dampen the demand for commercial properties.

“Purchasers are exercising more caution and we expect the market to be soft during this period. However, we believe that once the global economy stabilises, the take-up rate for commercial property will improve,” he told StarBizWeek in an e-mail.

Boustead Curve Sdn Bhd director Datuk Ghazali Mohd Ali says the company’s shopping mall, The Curve at Mutiara Damansara, Petaling Jaya, is still doing very well, with existing tenants eager to expand their businesses.

This is a good sign that their businesses are doing well, he says, adding that the mall’s occupancy rate is about 98%.

By The Star - StarBizWeek - (by EDY SARIF)

Slew of aborted deals

Over the past several months, there have been at least 10 aborted deals in some form or the other. Some of them were biggies like Menara Citibank in Jalan Ampang. Others may be considered just a scratch, but no less interesting, involving land and old buildings.

Among them is Bok House, built in the 1880s, in Jalan Ampang. At one time it was known as Le Coq Dor, where English tea and scones were served.

Will this be the way to go for the rest of the year?

Consultants are reluctant to say what’s coming simply because they don’t know. “We don’t even know what’s going to happen next week,” one of them says.

Instead, they prefer to wait until after Chinese New Year, and after that the transition period when Deputy Prime Minister Datuk Seri Najib Tun Razak takes over the premiership in March to see what sort of policies he will unveil.

What precipitated the slew of aborted deals? YY Lau, executive director of YY Property Solutions Sdn Bhd says business uncertainty became an issue overnight.


Lau: Some of them feel they are able to get better pricing if they wait a little.

“If you are buying for own occupation, the need to buy remains. Or they can wait and go for short-term tenancy. But if you are buying for yield, the question to ask is, will there be tenants? Will rentals be stable and attractive? If you are building, will cement and building materials cost go up or down?”

All of a sudden, the scene appears to have changed. The US sub-prime issue imploded in the first quarter of 2007. We in Asia took little notice, until the fall of Lehman Brothers and reality set in.

Lau says another reason why deals were called off was the hope for better pricing later on.

“Some of them feel they are able to get better pricing if they wait a little longer,” says Lau.

Consultants and developers say they have been getting calls from clients and friends, asking whether there are any “fire-sale”. The answer is no.

A third concern is financing. Although commercial banks say they have not unplugged this channel, consultants say the margin of financing has dropped. If banks were prepared to lend 80% for the project, now they are looking at 70%, they say.

The fourth reason has much to do with sentiment and confidence, or lack of it, as echoed by three consultants – Lau, Jerome Hong, managing director of PA International Property Consultants (KL) Sdn Bhd, and C H Williams Talhar & Wong Sdn Bhd (WTW) managing director Goh Tian Sui.


Goh: There are various issues to be handled at home.

Says Goh: “You have the external situation, with bad news coming hard and fast from the US and Britain. At home, there are various issues to be tackled.”

These, he says, have dampened sentiment.

A factor to note is the entry of foreigners, particularly from the Middle East, South Korea and Singapore, who have entered the local property market in a significant way in recent years, snapping up commercial properties and some others, as developers.

Assuming they have, thus far, merely forked out 10% or less, chances are they may choose to forfeit the sum rather than move ahead with the project if they feel that it is in jeopardy or may not be a sound investment any more.

When things turn sour back home, it is logical for them to liquidate here to move their money home, says Lau. And this may be what is happening in some of the projects in Ampang and U-Thant area where South Korean developers have gone into niche developments.

Some of the aborted deals involve condominium projects in the city centre. With so many condominiums in the market, developers are beginning to doubt the viability of adding to the swelling numbers, hence aborting the purchase to avoid holding costs. But generally, it is not a single factor but a combination of reasons that lead to the decision to scrap the transactions.

Says Lau: “Be they locals or foreigners, because of the scenario before us today, many of them are readjusting their real estate strategy. There may be losses elsewhere and they may now want to readjust that loss. There will be opportunities, in good or bad times. Some prefer to wait and see and this is what many are doing today. They are sitting out the situation.”

“The property market is not dead. Deals are being done. It is just slow due to the various festivities and December and January are generally slow months; but this time, it is slower than usual. And compared with the past crisis, there appears to be more aborted deals.


Hong: The property market is not dead. It is just slow.

“Companies and businessmen are reassessing their position with property not being the flavour of the month. Cash is. This first half will be crucial as everybody adjusts to the situation,” says Hong.

Some of the aborted deals

Vendor: E&O Bhd unit KCB Trading Sdn Bhd

Buyer: Magna Universe Sdn Bhd

The deal: Vendor terminated an agreement to dispose of a piece of freehold land in Jalan Yap Kwan Seng, Kuala Lumpur for RM84.3mil.

Reason: Magna’s failure to make payment. Magna paid KCB RM8.43mil in damages.

Vendor: Well-Built Holdings Sdn Bhd

Buyer: Axis Real Estate Investment Trust (REIT)

The deal: Axis REIT proposed to acquire two factories in Jalan Seelong in Senai, Johor for RM27mil.

Reason: Unfulfilled conditions precedent in the sale and purchase agreement as at the expiry of the conditional period.

Vendor: Fraser & Neave Holdings Bhd subsidiary Elsinburg Holdings Sdn Bhd

The deal: F&N accepted an offer to purchase a site for Ampang Hilir 233 Condo but the offer was terminated on Nov 3, 2008.

Reason: Land Office acquired an additional 24 sq m (0.4% of total net area) of the project site and the buyer exercised the right to rescind the transaction following the acquisition notice. F&N refunded the deposit.

Vendor: DutaLand Bhd subsidiaries

Case 1:

Purchaser: Stonehage Westcity Property Fund Ltd and SWX Malaysia Ltd

The deal: Buyer to take over 8.78 acres within Kenny Heights.

Reason: Certain conditions were not fulfilled within the agreed timeframe.

Case 2:

Another letter of intent for a joint venture between DutaLand subsidiary and Merrill Lynch (Asia Pacific) Ltd to develop 16.2 acres within Kenny Heights also lapsed.

These two terminated JVs constitute two of nine parcels under the 88-acre Kenny Heights development, scheduled for completion in 15 years with residential and commercial portions accounting for 30% and 70% of the total estimated built-up area of 23 million sq ft.

An official statement from developer DutaLand said the freehold Kenny Heights projects will continue with Phase 1 having been successfully launched through private events and roadshows in Kuala Lumpur, Singapore and Hong Kong since April and the official launch in November 2008.

Vendor: Inverfin Sdn Bhd

Buyer: IOI Corp Bhd

The deal: IOI to acquire Menara Citibank for RM586.73mil

Reason : IOI Corp forfeited its deposit of RM73.36mil when it decided not to proceed with the proposed acquisition “due to the recent sudden adverse developments in the global economic environment which have spread to this region and impacted negatively on business sentiments”.

Vendor: Sunrise Bhd unit KHP Sdn Bhd

Buyer: Malaysia Commercial Development Fund Pte Ltd (MCDF)

The deal: Sunrise to sell a commercial space (comprising retail, office and car parks) and unsold serviced apartments within the project known as Mont Kiara 20.

Reason: Both vendor and buyer decided to mutually terminate the put and call option agreement which involved RM767mil worth of properties, one of the largest deal to be aborted thus far.

Vendor: SYF Resources Bhd

Buyer: AM ARA REIT Managers Sdn Bhd

The deal: To sell and lease back a shoplot in Summit City USJ (36,361 sq ft) by the AM ARA REIT group for RM8mil.

Vendor: Warta Development Sdn Bhd and Yap Khay Cheong & Sons Realty Sdn Bhd

Buyer: IJM Land unit Serenity Ace Sdn Bhd (a subsidiary of RB Land Sdn Bhd and IJM Land)

The deal: To build Laman Duta condominium to enable RB Land to expand its presence in a prime Klang Valley location without having to fork out the initial capital outlay to acquire the land

Reason: The intended objective of the joint venture was unlikely to be achieved due to a change in the conceptual plan for the proposed development.

By The Star (by Thean Lee Cheng)

More residential units in store for Nusajaya

PETALING JAYA: UEM Land Holdings Bhd has lined up a wide range of residential units this year in Nusajaya, Johor as it expects Iskandar Malaysia to continue attracting investors despite the generally cautious property market in the country.

Managing director and chief executive director Wan Abdullah Wan Ibrahim said UEM Land would develop new phases at its existing projects in Nusajaya.


Wan Abdullah Wan Ibrahim

“These include 450 bungalows and semi-detached (houses) in East Ledang, 300 mid-market housing units in Nusa Idaman and Horizon Hills. We also expect to launch high-end condominiums near East Ledang, commercial units in Nusajaya Industrial Park Phase 2, and the commercial and canal homes units in Puteri Harbour,” he said in an interview.

Wan Abdullah said despite the current economic situation, he expected the company to record reasonable sales.

He said the group was looking to acquire more land in well-established areas such as the Klang Valley and Penang.

In December, UEM Land had proposed to acquire 98.04 acres in Sepang, Selangor for RM102.5mil from Cyberview Sdn Bhd and Setia Haruman Sdn Bhd.

The proposed acquisition would be funded entirely by internal funds,

“We have close to 10,000 acres in Nusajaya and this gives us the flexibility to adapt as demand changes. Because of our strategic location, we (our development) can cater to both regional and local markets,” said Wan Abdullah.

Wan Abdullah said UEM Land, being the master developer of Nusajaya, could reach out to many different target segments, including strategic partners and property investors. “The strategic partners can add value and excitement to the development,” he said.

Nusajaya also benefited from excellent infrastructure while the company had strong balance sheet with low leverage, he added.

UEM Land had also undertaken a corporate exercise to raise RM1.25bil and this was expected to be completed by March.

Wan Abdullah said the RM1.25bil would be used to develop the 688-acre Puteri Harbour and Phase 2 of the 1,300-acre Southern Industrial and Logistics Clusters.

“We are not facing any difficulty (in financing) yet due to our low gearing ratio and being part of UEM Group Bhd,” he said.

Nusajaya spans over 23,875 acres and has been identified by the Government as one of the five zones of Iskandar Malaysia. Upon its completion in 2030, Nusajaya would comprise a range of high quality development including Federal and State Government offices, residential, industrial park, medical park and resort.

By The Star (by K.C.Law)

TH Properties to build 4-star hotel in Bandar Enstek

KUALA LUMPUR: TH Properties Sdn Bhd is building a new RM50mil four-star hotel in Bandar Enstek to benefit from the proposed low-cost carrier terminal (LCCT) in Labu, Negri Sembilan.

Chief executive officer Zaharuddin Saidon said the hotel, near the KL International Airport (KLIA), would cater for foreigners and transit passengers that come through KLIA and the new LCCT at Labu.

“The hotel will be an ideal destination for them as a pit-stop as it only takes about a few minutes from the hotel to the airports,” he said yesterday at the signing of two memoranda of understanding (MOU) and a joint venture (JV) agreement between the company, the developer of Bandar Enstek in Nilai and Seri Pajam Development Sdn Bhd.

The MOUs were for building the new hotel and and for the implementation of the industrialised building system (IBS) for the construction of future buildings at Bandar Enstek. The IBS is a construction process that involves pre-fabricated and on-site installations.

“The construction of the 400-room four-star hotel will commence around August and will take about 16 months for completion,” Zaharuddin said.

The signing of the JV was for the development of the second phase of Bandar Warisan Puteri near Seremban.

“The construction works of Vila Suria (at Bandar Warisan Puteri) using the IBS (in the first phase) has enabled us to complete the project in 12 months and ensure the delivery of high-quality finished products,” said Seri Pajam managing director Lai Suit Choong.

He said the second phase of Bandar Warisan Puteri had a gross development value of RM160mil and would see the development of some 1,000 residential units of various types, over a period of five years.

By The Star

TH Properties to build hotel at Bandar Enstek

TH Properties Sdn Bhd is to build a four-star, 400-hundred room hotel at Bandar Enstek in Nilai, Negeri Sembilan.

The property developer today signed a memorandum of understanding (MoU) with Seri Pajam Development Sdn Bhd for the project.

TH Properties chief executive officer Zaharuddin Saidon said the hotel was a RM50 million investment.

He said the first phase of construction would commence in August this year and is expected to be competed in early 2011.
“With its close proximity to the KL International Airport and the present LCCT or Low Cost Carrier Terminal, we expect the hotel to be well received,” he told reporters after the signing ceremony.

He added that with the proposed construction of the new LCCT at Labu, Negeri Sembilan, the company expects the traffic towards Bandar Enstek to increase significantly.

TH Properties is a wholly-owned subsidiary of Lembaga Tabung Haji and is the developer of Bandar Enstek, a joint venture effort with the Negeri Sembilan Development Corporation via TH-NSTC Sdn Bhd.

At the event, TH Properties also signed another MoU with Seri Pajam Development to implement the industrialised building systems (IBS) in the construction of buildings at Bandar Enstek.

Apart from the MoUs, TH Properties also entered into another joint venture agreement with Seri Pajam Development for the second phase of development of Bandar Warisan Puteri, Negeri Sembilan.

By Bernama

Financials lift S'pore, property boosts Thailand

BANGKOK: Most Southeast Asian stock markets gained on Jan 16, with financials such as DBS Group and UOB pushing Singapore higher and Thai property firms like Land & Houses and Asian Property getting a boost from tax break hopes.

A rise in Wall Street stock futures after Washington pumped US$20 billion (RM72 billion) into Bank of America buoyed Asian sentiment and encouraged investors to put money into equities, even though dismal economic data has made market players wary again.

"The equity market's risk/return profile has improved because it is already reflecting an exceptionally dismal scenario," Swiss Clariden Leu bank said in a strategy report for January.

Singapore's Straits Times index gained 1.6%, recovering from a 3.4% fall on Jan 15, with DBS Group rising 3.4%, and United-Overseas Bank and Oversea-Chinese Banking both up 3.1%.

Data on Jan 16 showed Singapore's exports fell sharply in December, hammered by recession in the United States and Europe, but UBS said in a report on Singapore's banks that their share prices could rebound significantly once a GDP trough was reached.

That is not in sight: the broker expected the first quarter to record a 6% contraction in the economy.

In Bangkok, the index climbed 2.1% to close at its highest level of the day in thin turnover of US$204 million, with property outperforming. Top housing firm Land & Houses surged 4.4% and Asian Property jumped 7.1%.

Investors were hopeful that the Thai Cabinet would approve more property tax measures next Tuesday, including a tax deduction for home mortgage payments, analysts said.

"Part of the buying was from punters who looked for sectors with a good future," said Chaiyaporn Nompitakcharoen, head of research of Bualuang Securities. "Property is a good play, with more tax incentives and falling interest rates."

In Kuala Lumpur, the index slid 0.11%, extending losses into a fourth day ahead of a key by-election at the weekend. Market heavyweight Tenaga Nasional fell 1.6% ahead of its first-quarter results on Monday.

In Jakarta, shares climbed 1.5%, recouping part of a 3.1% loss on Jan 15, with advancers led by Bumi Resources, which rose 20.0%, and Telkom Indonesia, which gained 1.6%.

By Reuters

Timber prices fall on global housing slump

PETALING JAYA: Timber prices in the United States had fallen to their lowest levels since early 1990s, as the worldwide housing slump dries up wood demand for use in construction.

The drop in timber prices was less severe for tropical hardwoods, local players said, but prices were expected to head lower as key markets the US, Europe and Japan fell into recesssion.

“We are still getting good volume from Japanese buyers, but prices had gone down quite substantially compared with a year ago,’’ a company official at Sarawak-based Ta Ann Holdings Bhd said.

Ta Ann exports timber logs mostly to India, while Japan is its biggest market for plywood products.



The official said bad weather in Sarawak in the past few weeks had somewhat limited logging activities in the country’s biggest timber-producing state and this might help keep prices in check in the coming months.

Lumber prices, however, are worst hit in the US. On the Chicago Mercantile Exchange, lumber contract for March delivery fell US$3.40 on Tuesday to close at US$172.30 per 1,000 board feet.



The contract had dropped 32% over the past six months and is now down to its worst level since 1991.

Home prices in 20 major cities in the US declined at their sharpest rate on record in October, depressed by rising foreclosures and weak sales. Bloomberg, quoting a Morgan Stanley report, on Monday said house prices in the US were likely to drop until mid-2010 because of growing unemployment, an excess of unsold homes and low levels of lending.

The US is Malaysia’s top timber export market, behind Japan and Europe.

Dwindling demand from traditional export destinations was compounded by the loss in new export markets. Eksons Corp Bhd said exports of plywood to the Middle East had almost dried up, as the construction boom in the oil-rich region came to a sudden halt as crude oil price tumbled.

Analysts said local plywood prices were likely to head lower this year from mid-November levels after an uninterupted gain in the past nine consecutive months.

The downturn had already prompted some timber firms, especially the smaller ones, to curb logging activities - at least in their own timber concession areas.

Recent filings on Bursa Malaysia showed that Perak-based Leweko Resources Bhd’s log production in November was zero. This was due to the company’s shift in strategy to log in forest areas belonging to third parties to supply its sawmills.

“We will start logging in our own area when prices recover,’’ a company official said.

By The Star (by Izwan Idris)

TA Ent on lookout for distressed assets

MALAYSIAN financial-to-property group TA Enterprise is still in talks to place shares of its TA Global unit despite weak markets, and is also looking to buy distressed property assets overseas, its deputy chief executive said.

“We are currently talking to underwriters for the placement of our (TA Global) shares and exploring the best way to structure the IPO so that the market will be able to absorb the listing,” Deputy CEO Tiah Joo Kim said today.

“In the event we do have to delay the IPO due to whatever reasons, we can always apply for an extension,” Tiah said in an email interview to Reuters.

TA Enterprise said last September it would spin off its property assets for a separate listing on the local bourse.
The property business will be housed under TA Global, a newly formed company to facilitate the listing. TA Enterprise, which houses the stockbroking and unit trust businesses, will remain listed on the exchange.

Tiah said TA is still on the lookout to buy more property assets after a string of acquisitions last year.

TA Enterprise’s cash and short-term investments stood at RM822.8 million (US$230.5 million) by the end of October, according to Thomson Reuters data.

“The current economic downturn presents many great opportunities to acquire assets. We are on the lookout to acquire prime assets that are undervalued or distressed,” said Tiah.

But the company will focus on markets outside Malaysia such as the hospitality industry in Australia, Canada and Hong Kong.

“Local property prices haven’t fallen enough to excite us, Tiah added.

The company’s earnings are unlikely to fall this year despite a weak operating environment, he said.

By Reuters