US housing market stabilising but consumers lack confidence

NEW YORK: US home prices rose in May for the first time in three years, suggesting the housing market is stabilising, but a weakening job market hit consumer confidence in July and could prevent near-term economic recovery.

Potential home buyers afraid of committing to a fast depreciating asset have been clamouring for such signs of house price stabilisation. But rising unemployment and wage cuts are straining consumer optimism and keeping many potential buyers out of the housing market, impeding spending and prospects for economic rebound.

"People are getting a bit discouraged. Jobs are not coming as quickly as expected," said John Silvia, chief economist at Wells Fargo in Charlotte, North Carolina. "This won't be a V-shaped recovery for either the economy or the jobs market."

Home prices have plunged more than 32 per cent on average from their 2006 peaks, but the pace of the annual declines slowed in May for the fourth straight month, according to Standard & Poor's/Case Shiller home price indices yesterday.

"This could be an indication that home price declines are finally stabilising" after tumbling to 2003 levels, David M. Blitzer, chairman of the index committee at S&P, said in a statement.

The index of 20 metropolitan areas rose 0.5 per cent in May from April, after a 0.6 per cent drop the month before, in contrast with the 0.5 per cent drop forecast in a Reuters poll.

"The pressures are all working in alignment to support that we're at the turning point" in the worst housing market since the Great Depression, said Steve Hagenbuckle, managing principle for TerraCap Partners, a distressed real estate private equity fund in Cape Coral, Florida.

"Affordability is at all time highs, inventories are shrinking, there's competition for properties, and we're not building as much new product to compete with the existing homes," he said.

Still, caution is warranted as long as the US unemployment rate keeps rising, economists advised. That rate is at its highest in nearly 26 years and is headed to double-digit levels.

For a rebound, consumer confidence needs to improve, foreclosures need to start falling from their record pace and potential buyers need to have a sense that it won't be even cheaper to purchase if they keep waiting.

Consumer confidence, however, fell more than expected this month because of the worsening job market.

The US Conference Board's index of consumer sentiment fell to 46.6 in July from 49.3 in June, according to data published yesterday. A reading of 49 was forecast in a Reuters survey.

The eroding sentiment came as Americans saying jobs are hard to get increased and those who thought jobs were plentiful fell to its lowest in more than a quarter century.

"Consumers are feeling no love in this recovery," said Boris Schlossberg, director of foreign exchange research at GFT in New York. "Consumers are still concerned about the labor market and their own security."

By Reuters

Survey: Dubai hotels hit hardest in region in first half

DUBAI: Dubai hotels saw the biggest falls in revenue in the region in the first half of 2009, according to a survey of key Middle East cities published yesterday.

Hotels in 22 cities in the region witnessed an average 10.9 per cent decrease in occupancies and a 17.2 per cent drop in revenue per available room (RevPAR), an industry benchmark, said a report by US hospitality research firm STR Global and Deloitte & Touche Middle East.

Occupancy rates in Dubai, the region's trade and tourism hub, fell 12.9 per cent compared to the year-earlier period, and RevPAR plunged 35 per cent.

Dubai, which attracts hundreds of thousands of tourists to its beaches and luxury hotels, predominantly from Europe and Russia, continued to suffer as the global financial crisis bit into the spending power of those countries.

Hotels in Oman's capital Muscat were among those badly hit as they experience "high seasonality in occupancies and revenues". Occupancies were down 21.7 per cent and RevPAR 16.6 per cent in the first six months of the year.

Lebanon's main tourism destination, Beirut, remained the top performer in the period, as it enjoyed "increased political stability". Beirut's occupancy levels soared 69.4 per cent and RevPAR surged 125.2 per cent, due to a significant inflow of tourists, the survey said.

By Reuters

China building materials expo from Oct 20 to 24

The China-Asean Expo (CAEXPO), which showcases Chinese building materials and processing machinery that caters to the Malaysian market, will be held for the sixth time in Nanning, China, from October 20 to 24.

CAEXPO secretariat said there will be more Chinese brand enterprises joining this year’s show The Chinese Ministry of Commerce of China has listed CAEXPO as one of the four major trade fairs in China under its direct guidance

By Business Times

Naza TTDI looks for land to undertake niche projects

NAZA TTDI Sdn Bhd says the 202.34ha it has in the Klang Valley has a total of about RM8 billion in gross development value (GDV) and is looking to increase its landbank to undertake more niche projects.

Naza TTDI also expects its latest upmarket project launched in Ampang on Saturday to rake in RM360 million in GDV.

The project joins other niche developments by Naza TTDI such as the RM4 billion Platinum Park at the Kuala Lumpur City Centre, Laman Seri in Shah Alam and TTDI Plaza in Taman Tun Dr Ismail.

"Our landbank is small. We have plots of land in Taman Tun Dr Ismail in Kuala Lumpur and Shah Alam, among others. We want to buy more in the Klang Valley," managing director SM Faliq SM Nasimuddin said at the launch of The Valley TTDI, Ampang.

The Valley TTDI, which boasts units priced from RM2.67 million to RM5 million onwards each, has been warmly received. Half of the total 134 units of link villas and bungalows have been sold.

Faliq expects the sales rate to hit at least 80 per cent by year-end.

There are 66 units of seven-room link villas priced at RM2.67 million onwards and another 56 units of eight-room bungalows costing RM2.97 million onwards.

If the eight-room bungalows are not premium enough, there are 12 units of "exclusive" bungalows that cost over RM5 million each. Nine units had been snapped up, company officials said.

The "exclusive" bungalows sit on 7,000 sq ft each and have 10 rooms with internal lifts and a swimming pool, bringing the total built-up area to 8,412 sq ft.

The Valley TTDI itself is located on a 14.36ha site. It will also have a broadband-enabled central community centre and park amenities such as a jogging track, waterfront decks, meditation garden and spring water spa.

"The Valley TTDI was designed to personify living harmony with nature. Another unique selling point is its relative short distance to the Kuala Lumpur city centre," Faliq said.

The Valley TTDI is targeted for completion in July 2010.

By Business Times (by Zuraimi Abdullah)

DTZ: Klang Valley property market remains challenging

Conditions in the Klang Valley's property market remain challenging, according to a property market report from global estate agent DTZ.

DTZ said the office property sector faces downward pressure on rental and capital values due to weak demand and the new supply that will be completed in the next few years.

In the second half of the year, there is an impending supply of some 3.43 million sq ft in Kuala Lumpur.

DTZ said the downward trend may, however, be cushioned by the government's recent liberalisation on economic policies targeting the services and financial sectors.

"The relaxation in policies is expected to promote foreign direct investment, with more foreign interests in the commercial property sector specifically," it said in its DTZ Research Report, Malaysia Property Times Q2 2009, released yesterday.

Nevertheless, rents of prime office space in Q2 2009 remained unchanged at an average of RM6.14 per sq ft per month. This is attributed mainly to the fact that there was no new completion of office space in the city centre, and most of the prime office buildings were close to full occupancy at the time of review.

On the retail front, DTZ said there was no significant change in occupancy of existing shopping centres as at end Q2 2009, which remained at above 90 per cent.

But prospects for the retail property sector are expected to be weighed down by the continued contraction in the economy, which is forecast to recover only in the fourth quarter of this year.

"Rents in prime shopping centres remained stable as they are less vulnerable to the economic slowdown.

"However, new and upcoming centres that are currently under construction are expected to experience downward pressure in targeted rents in their efforts to build occupancy up to a higher level," it said.

"With the oversupply of retail malls in the market, it will be a testing time for shopping malls, especially those in the secondary area with poor population catchments," it added.

Meanwhile, the residential property sector would be challenging over the next six months as any improvement in the economic situation is not expected until the fourth quarter of this year.

"Prices continued to undergo corrections and are expected to continue softening in the short term in view of impending new supply and weak economic conditions," it said.

Generally, prices of high-end condominiums in the Kuala Lumpur City Centre (KLCC) area have dropped by 20 per cent year-on-year.

Average rents of high-end condominiums in the KLCC area increased by 6.5 per cent quarter-on-quarter to RM4.08 per sq ft per month.

However, the rental market is expected to face downward pressure as a result of incoming massive supply of condominium units in and outside the city centre during the second half of this year and towards the early part of 2010.

DTZ said on a positive note, the recently announced overhaul in economic policies, particularly on the repeal of the foreign investment committee's approval for property transactions involving foreigners, would boost interest from foreigners in the local property market, specifically on the high-end residential segment.

In terms of selling and buying of commercial properties on the market, DTZ revealed that there were only two major transactions in the second quarter, of which one is between related parties.

"There are still some investors out in the market looking for commercial properties with investment value.

"Over the next six months, sentiment is likely to recover with some investment activities by opportunistic funds but this will be selective and driven by value hunting," it added.

By Business Times

UM Land expects RM1.2bil from mixed development project

JOHOR BARU: UM Land Bhd expects to generate RM1.2bil in gross development value from its ongoing mixed property development project Taman Seri Austin near here.

The 202.34ha project was launched in July 2005 and is being developed by UM Land wholly owned unit Dynasty View Sdn Bhd.

Wong Kuen Kong (right) says the project will keep the company busy for the next eight years. With him is Datuk Abdul Halim Suleiman.

Dynasty View general manager Wong Kuen Kong said the project would keep the company busy for the next eight years.

Todate, 25% of Taman Seri Austin has been developed with 1,300 units of residential and commercial properties, of which 90% had been sold.

“Upon completion, the scheme will have 5,700 property units and 30,000 residents,” Wong told StarBiz at the launch of 122 double-storey terrace houses on Sunday by Puteri Wangsa assemblyman Datuk Abdul Halim Suleiman.

The four-bedroom four-bathroom Deanna II units with a built-up area of 180.88 sq m in a gated and guarded precinct are priced from RM300,048 to RM552,472 each.

Wong said although the property market was experiencing a slowdown due to the current economic downturn, demand for houses priced from RM250,000 and above in Johor Baru was still encouraging.

Wong said the company always believed that despite the bad times, there were still potential buyers willing to pay more for the medium-high and high-end properties.

“Another trend is that customers will only ink the sale and purchase agreement when they see the houses reaching 50% completion,” he said.

Wong said when the RM997mil Eastern Dispersal Link Expressway (EDL) was completed by end-2011, it would take only 15 minutes to travel from the Johor Baru city centre to Taman Seri Austin from the current 30 minutes.

EDL will link the Sultan Iskandar Customs, Immigration and Quarantine Complex at Bukit Chagar and the North South Expressway via the Pandan Interchange.

Wong said the surrounding amenities such as 36-hole golf and country resort, shopping mall, hypermarkets, education facilities and a public hospital were other selling points of the project.

By The Star (by Zazali Musa)

TA to buy firm with 4-star hotel in Singapore

PETALING JAYA: TA Enterprise Bhd has proposed to purchase the entire issued shares of Mauritius company Quayside Gem Ltd, which owns Merchant Quay Pte Ltd of Singapore.

Merchant Quay is the owner of the 4-star hotel Swissotel Merchant Court Singapore.

In a filing with Bursa Malaysia, the company said it had entered into a memorandum of agreement with LaSalle Asia Opportunity II SARL of Centre de Paris to purchase the entire issued shares of Quayside.

TA said the purchase would be financed through internally generated funds and external borrowings.

TA had paid an earnest deposit of S$5mil, according to the agreement.The company expected to enter into a sale and purchase agreement with LaSalle Asia by Aug 25.

The total transaction value for the acquisition was not mentioned in the statement.

The company had last December acquired the property and business known as The Westin Melbourne in Australia for RM389.12mil from RPHT Pty Ltd and RPHT Operations Pty Ltd.

TA registered a net profit of RM30.5mil for the first quarter ended April 30.

Its revenue dropped 38.1% to RM72mil from RM116.4mil previously.

By The Star

GenCorp on track to complete S’pore hotel by 1Q10

KUALA LUMPUR: GENERAL CORPORATION BHD (GenCorp) is on track to complete the Hard Rock Hotel in Singapore, which is part of the Sentosa integrated hotel and casino resort, by the first quarter of next year.

GenCorp executive director Datuk Marco Low said despite the weak global economic conditions, “the owners of the project continue to support the project and are sticking to the date of completion”.

GenCorp subsidiary Low Keng Huat (Singapore) Ltd was awarded the S$346 million (RM845.73 million) hotel construction contract in April last year by Resorts World at Sentosa Pte Ltd, a member of Genting International Group.

Then the expected completion date for the hotel was by December 2009, but that has since been changed to completion in two phases with phase, one by December 2009 and phase two within the first quarter of 2010.

Earlier this month, another casino owner, the Las Vegas Sands group announced the delay in the opening of its US$5.5 billion (RM19.41 billion) Marina Bay Sands hotel and casino resort in Singapore to January or February 2010 from December this year.

GenCorp’s other construction project announced at the same time as the The Hard Rock project, the S$146 million construction contract on the additions and alterations to the retail and hotel podium of the Meritus Mandarin Hotel at 333 Orchard Road is expected to be completed by the end of the year.

The group, which derived 71.8% of its consolidated revenue of RM766 million for its financial year ended Jan 31, 2009 (FY09) from its Singapore operations, is also working on the S$295 million Serangoon Central Mall to be completed by end-2010.

GenCorp, which posted a RM64.93 million net profit in FY09, expects “earnings to be sustained” in the current financial year, said its executive director Michael Chong.

He said its 33-storey Panorama freehold luxury condominium project here had seen a 90% take-up rate since its launch in April last year. Construction on the project has started and it will contribute to earnings this year.

The Panorama, located near the Corus Hotel, is worth about RM300 million in gross development value and scheduled for completion by end-2010.

Malaysian operations are the second-highest contributor to group revenue, after Singapore, making up about 15% in FY09.

Going forward, the group plans to develop a 1.6ha (3.95-acre) freehold site in Jalan Conlay here for high-end condominiums.

Ongoing projects in Malaysia are the 25-unit “zero lot” bungalows at Taman Esplanad, Bukit Jalil, and 12 semi-detached luxury residences in Jalan U-Thant.

The group, which does not have any major landbank in Singapore, undertakes property development in the republic on a joint-venture basis. Its projects include One-North Residences and South Bank.

By The EDGE Malaysia (by Loong Tse Min)

Aliran Perkasa to buy land

Property developer Metro Kajang Holdings Bhd’ subsidiary Aliran Perkasa Sdn Bhd, plans to buy a 45.4ha plot of land in Semenyih, Selangor, from Bandar Centre Development Sdn Bhd for RM34 million.

The group will jointly develop the land with another 8ha land it owns next to it.

By Business Times

Dijaya keen on replicating Damansara Intan in Johor

Property developer Dijaya Corp Bhd may replicate its successful RM1 billion Damansara Intan development in Petaling Jaya, Selangor, in Johor in late 2010 or early 2011.

"We are toying with the idea. We like what we have in Damansara Intan and believe it will be as successful in Johor.

"We are looking for prime land in good locations now," managing director Datuk Tong Kien Onn told Business Times in an interview in Kuala Lumpur recently.

The 8.1ha Damansara Intan, launched in 1995, comprises two blocks of 533 office suites and 28 shops, and over 600 units of serviced apartments.

Although the Asian financial crisis hit in 1997, Dijaya was able to complete the business park in three years. It fully sold the apartments within six to eight months from its launch in 1998 and 2000.

"People like the idea behind our developments. We are providing five-star facilities with added security and after-sales service. We offer more than a work-and-stay environment," Tong said.

Ongoing developments in Damansara Intan include the integrated Tropicana City, launched in 2006.

It consists of the three-level Tropicana City Mall, which has been built and is fully tenanted, the 29-storey Tropics serviced apartment and a 12-storey office tower.

The apartment and office buildings are set to be completed by June 2010.

Dijaya is famous for its Tropicana brand. Its signature developments are the Tropicana Golf & Country Resort and Tropicana Indah Resort Homes.

"We are at the tail end of completing Damansara Intan. While we can do something similar again in the Klang Valley, we want to spread our wings.

"The southern region would be the best bet. There are a lot going on in Singapore such as the Marina Bay Sands Hotel & Casino and Sentosa Integrated Resort and, in Johor, we are talking about Iskandar Malaysia.

"These developments call for new housing. Investors are also coming in to buy buildings in Johor and we don't want to miss the boat. We will include hotel elements in our plan for Johor," Tong said.

Dijaya is preparing the launch of RM1.8 billion worth of properties in fiscal 2010 to expand and sustain earnings.

For the year to December 31 2008, it made a net profit of RM34.4 million on RM244.1 million revenue.

By Business Times (by Sharen Kaur)

Golden Corporate Heritage’s RM1.2bil project in Malacca on track

KUALA LUMPUR: Golden Corporate Heritage Sdn Bhd’s RM1.2bil development to turn parts of Malacca into an Arab City by 2012 is progressing well, said managing director Hesham Fathi.

“The pillar structures are already completed on Pulau Melaka as we are planning for the grand opening by March,” he told StarBiz recently.

The company, a collaboration between Arab and local businessmen, is transforming parts of Malacca city, namely Pulau Melaka, Klebang and Kg Jawa, into an Arab City after the first proposal to build the project in Klang Valley fell through.

The state government has a 10% stake in the project through Chief Minister Inc (CMI).

“We feel that the proposed Arab City in Bukit Bintang was inappropriate because of the surroundings. When the Chief Minister of Malacca invited us to do the Arab City in that state, the approval was done in just five hours,” Hesham said.

When completed, the RM250mil Arab City project on Pulau Melaka, which is reclaimed land located off the Bandar Hilir coast, will have 240 lots offering products from the Arab world, including 10 restaurants specialising in authentic Middle Eastern cuisines and a museum with genuine Egyptian artefacts.

“We are not going to sell or lease these lots as we are going to operate them by ourselves. The completion of Arab City will create about 850 jobs for the locals,” Hesham said.

Meanwhile, piling works in Klebang will start in three months for the construction of an Arab healthcare city, according to Hesham. It was reported that the Klebang site, which covers about 4ha and investment of RM700mil, will also involve the construction of a five-star hotel, a water theme park, an aquarium and a floating restaurant.

For the Kg Jawa development, Hesham said the site would see an establishment of 12 Arabic restaurants and coffee shops from different Arabic cultures.

As the site is facing the Malacca river, it would be “tastefully” constructed with Andalusian-styled domes, he said.

“I would like to stress here that the perception of eliminating business people (currently operating) in Kg Jawa and their heritage buildings is not true. What we are going to do is to develop the area and build much better business bazaars for them. By this, we are helping them upgrade their living and income as we are bringing tourists from the Middle East to shop here,” he said.

It was reported that on April 2, Chief Minister Datuk Seri Mohd Ali Rustam visited Kg Jawa and agreed that the historical section of the village would be excluded from the Arab acquisition.

The state had initially intended to acquire the entire village comprising 84 lots and covering 6.34ha but agreed to scale down the project following protests by the MCA.

By The Star (by Edy Sarif)

Sime Darby to equip new townships with energy efficient materials

SIME Darby Bhd will install energy-efficient (EE) building materials such as solar water heating and energy-saving (ES) light bulbs at 13,200 houses currently under construction at its new townships in Selangor and Negri Sembilan.

Group chief sustainability officer Puvan J. Selvanathan said each home will be installed with an average of 25 ES bulbs.

Compared to an ordinary incandescent bulb, an ES light bulb uses up to 80 per cent less energy and lasts almost 10 times longer.

Lighting cost takes up 8 to 15 per cent of the total utility bill per household. By installing the ES bulbs, there will be savings of up to 80 per cent for the lighting cost, Puvan told Business Times in Kuala Lumpur recently.

"There will be different EE packages offered to buyers, depending on the type of properties they buy," Puvan said.

Puvan added that the policy of Sime Darby was to equip each home with EE features, for branding and product differentiation.

"We are looking at EE and environment responsibility. We don't look at it as a cost to Sime Darby but as part of our good business practice. It's an after-sales service," Puvan said.

Sime Darby is the first company in Malaysia to embark on EE and sustainable townships.

For houses already built and currently occupied, Puvan said home owners can install ES bulbs under its "Switch!" campaign, which will be rolled in a few phases.

In the first phase, it is offering 100,000 ES bulbs to 12,500 households at its townships in Subang Jaya, UEP Subang Jaya/USJ Heights, Bandar Bukit Raja, Ara Damansara, Denai Alam, Bukit Jelutong and Putra Heights.

Home owners can buy a box of eight (8) ES light bulbs at RM50, discounted from the usual retail price of RM160.

There are 65,000 houses within the townships and the remaining households will be offered different packages, Puvan said.

"We will engage all the 65,000 houses in different ways over the course of this year," Puvan said.

By Business Times (by Sharen Kaur)

Rosier financials seen for builders

KUALA LUMPUR: The Malaysian Construction fraternity is expected to show a better performance in the second half of this year given cheaper construction materials, said an industry body.

Ng: Third and fourth quarters should be quite encouraging.

“Third and fourth quarters should be quite encouraging. You can see the number of tenders coming from both government and private sectors,” Master Builders Association Malaysia (MBAM) president Ng Kee Leen told The Edge Financial Daily in an interview. MBAM represents some 3,000 construction companies across the country.

Updates by the Construction Industry Development Board Malaysia (CIDB) indicated that a total of RM90.88 billion and RM74.16 billion worth of jobs were awarded in 2007 and 2008, respectively.

OSK Research Sdn Bhd analyst Jeremy Goh said builders which had secured projects based on costlier building materials last year could anticipate fatter profit margins this year. This is because the current price of materials such as steel bars has fallen substantially from its peak then, while the value of the jobs secured had remained unchanged.

“Although steel prices have rebounded, they are still way below what they were last year. Most of what was secured last year will be reflected in this year’s profits.

“We are going to see continued profit margin expansion in the third and fourth quarters of this year,” Goh said.

Domestic steel bars are transacted at some RM2,000 a tonne now, up from a low of around RM1,700 a tonne in November last year. Prices of the material had climbed to some RM4,000 a tonne in the middle of 2008 amid record high crude oil prices.

While the Malaysian steel sector has been liberalised to allow builders to use imported steel bars, it is worth noting that the bulk of the steel bars used domestically is derived locally due to complexities in importing the bars.

Imported items would first have to be evaluated to comply with Malaysian standards before they can enter the country, hence, extra time and money spent to buy these items from abroad.

This is in contrast to the mutual recognition agreement adopted by certain countries which recognises internationally-approved steel bars that need not undergo further quality control measures.

MBAM’s Ng said: “No doubt we have liberalised a lot, but there is still room for improvement.”

Recently, local builders spoke out against the amended Stamp Duty Act. The amendment, effective Jan 1 this year, imposes a 0.5% tax on the contract value in ordinary service agreements. The stamp duty rate was previously fixed at RM10.

Ng has said the new tax regime results in construction cost rising by between 1% and 2%.

Meanwhile, RHB Research Institute analyst Joshua C Y Ng foresees large-scale government projects being deferred further, given its emphasis on dishing out smaller-scale jobs under the two economic stimulus packages within the next one-and-a-half years.

These mega projects include the extension of the Putra and Star light rail transit facilities, estimated at about RM4 billion each, besides the about RM5 billion Gemas-Johor Bahru double-tracking railway project.

“Also, the government’s recent move to ask Bank Pembangunan Malaysia to fund RM6.7 billion, equivalent to 54%, of the RM12.5 billion Ipoh-Padang Besar double-tracking project may be a tell-tale sign that the government is facing financial constraints in funding mega projects.

“All these do not bode well for large construction players,” Ng wrote in a note.

The analyst, who is underweight on the local construction sector, also highlighted the possibility of a weak private sector job flow due to funding scarcity against a fragile global credit backdrop.

OSK’s Goh, however, argued that private projects constituted a minor portion of domestic construction jobs, hence, no substantial risk to the sector’s growth.

By The EDGE Malaysia (by Chong Jin Hun)

Quill Capital Trust Q2 net profit up 20%

PETALING JAYA: Quill Capital Trust’s (QCT) net profit rose 19.8% year-on-year to RM8.09mil for its second quarter ended June 30.

According to a company statement, the improved results were due to the full-quarter gross revenue and income contribution from all 10 assets currently under its portfolio as compared with nine assets in the corresponding period last year.

Gross revenue for the quarter under review jumped 21.7% to RM16.67mil from RM13.69mil, while gross revenue from the first half of this year surged 33.9% year-on-year to RM33.59mil from RM25.07mil previously.

Correspondingly, gross profit from the first half of 2009 rose by 11.5% to RM15.44mil from RM13.85mil in the same period last year.

QCT is a commercial Real Estate Investment Trust (REIT) managed by Quill Capital Management Sdn Bhd (QCM).

Currently, QCT owns 10 buildings comprising five in Cyberjaya, two in Kuala Lumpur, and one each in Shah Alam, Petaling Jaya and Penang.

According to QCM chairman Datuk Mohammed Hussein, QCT will distribute 3.78 sen per unit for the six-month period ended June 30, which is 12.5% higher than the last distribution per unit of 3.36 sen.

Chief executive officer Chan Say Yeong also revealed that QCT has secured in advance a RM80mil financial facilities from Great Eastern Life Assurance (M) Bhd and Alliance Bank.

“The facilities will mainly be used for repayment of a bridging loan which is maturing in November 2009.

“With this, we would have completed all of QCT’s refinancing requirements for this year, and there will be no refinancing needs till December 2010,” he said.

By The Star

Consumer, financial and property are sectors to watch in China

KUALA LUMPUR: Investors are pricing in potential gains in sectors which are deemed beneficiaries of the massive four trillion yuan (RM2.07 trillion) stimulus package in China.

In anticipation of an encouraging outloook in the medium term, three sectors are expected to perform — consumer, financial and property, according to UOB Kay Hian (Hong Kong) Research analyst Elvic Ng.

Ng foresees private sector investment and consumer spending gaining momentum in the second half of 2009 and contributing to the economic recovery in China.

In a note, Ng wrote that corporate earnings downgrades in China had been reversed in April this year, and an upward revision could be expected for financials in the banking, coal, metal and property sectors there.

“We believe China stocks are still in an early stage of a new multi-year bull market because of a steady consumption-driven economic expansion in the medium term, low interest rates, abundant domestic liquidity, and declining risk premium.

“Those who are long-term bullish should focus on consumer, financial and property stocks,” Ng said.

Consumer product companies are expected to benefit from policymakers’ intention to boost domestic consumption from 49% of gross domestic product (GDP) to some 80% by 2020. At the same time, an expanding distribution channel in the form of retail outlets is anticipated to enhance the sale of consumer products.

Within the financial services industry, it is worth noting that China’s life insurance market has a low penetration rate of 1.8%, compared with 9.6% in Japan, 11.8% in both South Korea and Hong Kong, and 15.7% in Taiwan.

Meanwhile, banks in China are expected to see an expansion in retail activities and fee-based income operations like investment banking and wealth management over the next few years as the economy continues to grow.

Real estate is another sector to watch as rapidly increasing personal wealth and urbanisation prompt demand for houses.

The research firms’ top five medium- and long-term picks include China Life Insurance Co Ltd, China Merchant Banks, China Overseas Land & Investment Ltd, Hengan International Group Co Ltd, and Hong Kong Exchanges and Clearing Ltd.

Meanwhile, CLSA Asia-Pacific Markets analyst Francis Cheung said while China posted an impressive 7.9% annual expansion in its GDP for the second quarter of this year, a notable concern is that the growth was spurred mainly by investment rather than domestic consumption.

“The weak consumption growth explains why the government has repeatedly stated that the economy is still not stable and monetary policy will remain ‘moderately loose’. Loose monetary policy will continue to fuel asset inflation and the stock market.

“The economy is not as strong as the headline numbers report and the government will likely err on the side of safety. An investment-driven recovery is not sustainable unless private consumption also increases,” Cheung wrote in a note.

CLSA foresees a major improvement in the soon-to-be-announced second-quarter earnings, particularly in sectors which are deemed beneficiaries of the government’s stimulus package. These include the automotive, property, construction and consumer product sectors.

However, the telecommunications, steel and banking industries could see pressure on their profit margins, according to the research firm, whose list of potential performers include Angang Steel Co Ltd, China Shenhua Energy Co Ltd, Dongfeng Motor Co Ltd, Jiangxi Copper Co Ltd and Shanda Interactive Entertainment Ltd.

By The EDGE Malaysia (by Chong Jin Hun)

UOA keeps Kuala Lumpur as staple market

David Khor showing the integrated mixed development of Bangsar South

UOA Holdings Sdn Bhd, a subsidiary of Australian Stock Exchange-listed UOA Ltd, aims to bring more positive changes to the local property market by focusing on niche projects that will add value to the living and working environment.

Built on small parcels of land, its residential and commercial projects combine modern and contemporary elements with focus on good landscaping, natural lighting and spacious designs.

Although UOA has often been mistaken as a unit of life and general insurer, United Oriental Assurance Bhd, the “perceived association” with the financial services group has come in handy during its initial early years when it was etching out a mark in the industry.

Since its debut in the local property scene two decades ago, the company has completed a number of impressive and innovative residential and commercial projects in various parts of the city.

It has to-date completed more than 3,000 residential and commercial properties worth a gross development value of close to RM2.5bil.

In an interview with StarBizWeek, UOA general manager David Khor says the company’s projects have established UOA as a strategic and niche developer of quality projects in well sought after locations.

“Although most of our projects are located on small parcels of an acre to 30 acres, they are in highly visible and strategic locations, and these factors have contributed to the projects’ success,” Khor says.

Since starting out in Kuala Lumpur in 1989, UOA has not ventured out of prime real estate and well sought after locations – a hallmark of all its projects. Having such highly visible projects have also helped to establish UOA as a formidable name in Kuala Lumpur’s property scene.

Most of its projects have quick turnaround time of between 1 1/2 to 2 1/2 years from land purchase to project launch and sales.

“We do not want to overly extend ourselves by having too large a landbank that will incur very high holding cost. But we believe that it is good to have land in strategic locations such as around the Kuala Lumpur City Centre (KLCC) as prices have came off quite a bit due to the global financial crisis and should be on a recovery mode in the coming months,” Khor points out.

Presently, it has a land bank of around 100 acres in various locations including Kepong, Taman Desa, Segambut and Bangsar.

The company is keeping busy with its 60-acre Bangsar South integrated mixed development, located on the former Kerinchi squatter colony, off the Federal Highway.

Khor says the company’s healthy financial position allows it to undertake projects under the build-then-sell (BTS) system with three residential projects – The Happy Garden, Villa Yarl and Halimahton projects, all located off Jalan Klang Lama – completed before they were launched for sale about two years ago. Its first boutique projects comprise Villa Mont’Kiara in Mont’Kiara and One Desa Residence in Taman Desa, off Jalan Klang Lama, that were completed five years ago, have further raised UOA’s profile in the local market.

The company has also made a major foray in commercial properties, four of which have been injected into the UOA Real Estate Investment Trust (UOA REIT) that was listed on Bursa Malaysia in 2005.

UOA Holdings and its subsidiary companies own 71% of UOA REIT.

The REIT contributes approximately RM20mil to the UOA group’s bottomline annually.

Khor says the performance of the REIT has been good. Since its listing three years ago, the trust’s assets have grown by over 50% to RM481mil through a combination of asset revaluation and acquisitions. Its asset portfolio comprise commercial parcels in UOA Centre (or UOA I) and UOA II, both located along Jalan Pinang and adjacent to the Kuala Lumpur City Centre (KLCC); UOA Damansara and UOA Pantai.

Ong says the company’s commercial properties will be made available to UOA REIT for right of first refusal.

The company’s other recently completed commercial projects include Menara UOA Bangsar and Wisma UOA Damansara II.

A strong proponent of light structures and use of glass and stainless steel to create an elegant and spacious effect in its office buildings, Khor says UOA believes in adding value to its developments by giving more than the features specified in its project agreement with buyers.

With its focused business plans and strategies, the company has enjoyed uninterrupted profit since 1991 and an annual average growth rate of 20%.

“We are proud of all our development projects as they each have their own unique design themes and features that cater to their particular location and target buyers,” Khor notes.

He says UOA is continuously seeking growth opportunities in its staple market of Kuala Lumpur and in other potential markets in other parts of the world.

“In fact the group has been looking for overseas ventures over the past decade and we have concluded that Malaysia is still the most conducive and preferred market for our businesses at this juncture,” Khor adds.

On whether UOA is seeking to list its property development outfit on Bursa Malaysia, he says: “The company has the intention to seek a listing on the local bourse pending the right timing. At the moment, the value of listed property companies are under performing in relation to their net asset value and we are not pursuing the listing initiative at this juncture.”

By The Star (by Angie Ng)

Integrated mixed development for Bangsar South

Villa Mont'Kiara is the first boutique project under UOA.

UOA Holdings Sdn Bhd’s urban renewal initiatives of the Kerinchi squatter colony into an integrated mixed development called Bangsar South has taken off well with about a third of the commercial precinct currently under construction and two residential blocks completed to-date.

The 60-acre development, located off the Federal Highway, kicked off in 2007 and will take around 10 years to complete.

UOA general manager David Khor says Bangsar South will comprise 34 office blocks, one retail block, and seven residential blocks.

This will translate into a total gross lettable space of 5 million sq ft of office space, 600,000 sq ft of retail space and more than 2,000 residential units for a total gross development value of RM2.5bil.

So far the company has sold RM253mil worth of boutique office towers of 10 to 11 storeys to corporate buyers who will have the naming rights for the property.

The residential properties were opened for sale since 2007 and so far 60% of the 470 units have been sold.

The retail space on the three storey The Sphere boutique mall is only available for lease.

So far, the company has sold eight office blocks worth a GDV of RM253mil and another six blocks have been completed. Two of the completed blocks have been rented out and another four blocks are available for en-bloc sale or rental.

The selling price for the office space is around RM700 psf while the asking rental rate is RM4.50 psf.

Khor says UOA has improved the infrastructure access between the residential and commercial precincts by widening the main road leading into the area into three lanes and upgraded the Putra LRT’s Universiti station. Pedestrian pavements and sheltered pavilions have also been built.

Some of the completed office blocks in Bangsar South

According to him, Bangsar South projects will continue to be the main growth driver for the company over the medium to long term.

“Going forward, the development in Bangsar South should remain the company’s focus as it will contribute positively to the company’s bottomline over the next seven to 10 years,” he adds.

The company also has other on-going niche development projects in Taman Desa, Segambut, Bangsar and Kepong just to name a few.

Its investment properties in both commercial and residential properties will continue to contribute stable investment income on an annual basis. “We anticipate both the commercial and residential components to be well balance in the future. Their contribution will largely depend on the demand and supply of properties in the coming years,” Khor says.

By The Star

RM400m sales expected at luxury properties expo

Some RM400 million worth of luxury properties are expected to be sold by the end of the three-day iProperty.com Expo "Luxury Collection", which features high-end properties locally and abroad.

About US$2 billion (RM7.08 billion) worth of luxury properties, award-wining townships and developments are being showcased by top local and foreign developers at the expo.

iProperty.com chairman Patrick Grove said two properties have already been sold by a local developer in the morning the expo started.

While Malaysia's property sector is not shielded from the global recession, he said, investors still see Malaysia as one of the cheapest in Asia to buy property.

"This is a testament of the strong Malaysian property market and is also indicative that luxury real estate everywhere is still, undoubtedly, a hot commodity," he said at the launch of the expo by Housing and Local Government Minister Datuk Seri Kong Cho Ha in Kuala Lumpur yesterday.

Also present was iProperty.com Group chief executive officer Ken Tsurumaru.

The luxury property exhibition, which ends tomorrow, is organised by iProperty.com, a subsidiary of the iProperty.com Group, which owns and operates property and real estate website and property magazine.

Grove said property prices in Malaysia's luxury segment have dropped between 10 per cent and 20 per cent since the start of the global economic crisis, while prices in the mass market have maintained or increased a little.

"But there are some indications since last month that prices are picking up.

"Traffic at our website shows that people are window-shopping but they have not made purchases yet," he said.

Last month, the company's website, iProperty.com Malaysia, registered the highest traffic of one million, up from 900 in May and 800 in April.

The average number of online visitors to its website last year was 750.

"This indicates that people's confidence is returning," he said.

This is the fifth year iProperty.com is organising the expo, which serves as an avenue for buyers and investors to expand their financial portfolio.

Grove said some 15,000 high net-worth individuals and institutional buyers from local and internati onal markets are expected to visit this year's expo, which showcases award-winning properties and luxury townships by Malaysia's top developers in high-growth areas such as Kuala Lumpur, Putrajaya, Petaling Jaya, Penang and Johor.

Luxury properties from key cities around the world including London, Sydney, Melbourne, Gold Coast, Brisbane, Perth and Singapore are also available.

The event, which is participated by 80 local and international developers and investment organisations, also features property and investment seminars covering various topics.

By Business Times (by Hamisah Hamid)

To boost or not to boost property

Property is not just any investment because if the costs spiral, everyone is affected for good – and for bad.

HOW many of you all out there want property prices to rise? If you said “yes,” you are probably already highly invested in property, a property developer, a property agent or someone else who has vested interests in property prices rising.

If you said “no,” most likely you don’t have a property and aspire to buy one, if not soon, then in the foreseeable future. And you will be in the majority because most people in the country don’t own properties.

So let’s establish the first point in our argument: Most people don’t want property prices to rise because they do not own property yet, even if it is just a modest house.

But there seems to be a general feeling that rising property prices are good, so much so that some have argued that a multi-billion-ringgit high-speed rail link between Singapore and Kuala Lumpur will be good because it will raise KL property prices by narrowing the differential with Singapore prices.

Although it is not clear how such a situation will happen (even with a high-speed rail link, I don’t see anyone living in KL and travelling to Singapore daily or vice-versa), the assumption that higher property prices are generally good for the country is simply not valid.

That’s the key point to remember when we encourage foreign investment into the property sector, arguing that Malaysian property prices are relatively low. If enough foreign investors buy the argument, property prices will rise.

Yes, some will argue that only high-end property prices will rise because this is the segment that foreigners will be investing in, but there are knock-on effects which will inevitably work their way down into the entire property sector.

If high-end property prices rise, Malaysian buyers who would have bought at the old price would be pushed into the next lower tier which would push the prices of that tier up and so on. Eventually property prices will rise across the board – that’s economic certainty.

But that does not mean foreign investment in the property sector should not be encouraged. There should probably be substantial restrictions in the residential sector but ownership of office, commercial and industrial properties should be substantially liberalised.

There is less likely to be great speculation here because much of the needs will be based on requirements of foreign and local companies here.

Therefore, price spirals, bubbles and collapses are likely to be less severe as long as there is some oversight of the rate at which new properties are developed. But it is different for residential properties.

One wonders whether foreigners should be allowed to purchase even high-end residential properties. Such moves often price prime quality properties out of the affordable range of locals.

Worse, some developers of local properties, especially those with foreign links, actually offer the best space to foreigners first, with these not being made available to locals even if they could pay the asking prices!

Developers, of course, have a vested interest in enlarging the pool of people that they can sell too. The greater demand will inevitably raise prices and give them fatter margins. But the cost is that Malaysians have to pay higher prices for these properties and eventually other properties too.

Singaporeans have generally been very content with their government for all the development it has brought to them. But they are unhappy with one thing – the high price of quality residential projects because of foreign purchasing which has pushed these properties beyond their affordable level.

We really don’t need that here. From a macroeconomic point of view, if one considers the ringgit to be undervalued as many do, liberalising property purchases effectively means that foreigners will be picking up local property at attractive, discount prices.

We don’t want to create a property bubble. What we want is movement of property prices reflecting underlying economic trends.

Property prices should increase along with the real demand for them, which means actual people living in them and paying for them or the rental for the properties.

The recent collapse in property prices around the Petronas twin towers should be an instructive example.

When property prices rise because of hype and speculation without real people to occupy them; it’s a matter of time before you have big buildings and no lights at night. And, eventually, fallen prices.

As economic prosperity increases, and everyone becomes richer, property prices will increase by themselves and keep pace with the overall increase in incomes. Even as property prices increase, they will still remain affordable. Everyone will be happy but none too much.

Like for all other investments, speculative inflow of funds into the property market can lead to unwelcome volatility as well as steep rises in prices followed by steep falls. That’s not good for most people.

Managing editor P. Gunasegaram is an interested party – he has property.

By The Star (by P. Gunasegaram)

Malaysian Property Inc sets RM20b target

Malaysian Property Inc (MPI), a government-private sector initiative to woo foreign direct investment (FDI) into local real estate, has set a target of RM20 billion over the next 10 years.

Formed late last year, the tie-up will have an initial fund of RM50 million over five years to brand and market Malaysia as an international real estate investment destination.

MPI chairman of the board of governors Tan Sri Thong Yaw Hong said the government has provided a grant of RM25 million and the private sector has to match the amount provided.

The target markets include the UK, West Asia (including the Middle East, India, Bangladesh, Pakistan), Japan, South Korea, Hong Kong, Singapore and Indonesia.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said Malaysia is an attractive destination given that prime properties in the Kuala Lumpur city centre area are tagged at around US$600 (RM2,124) per sq ft compared with US$2,000 (RM7,080) per sq ft in Singapore and Hong Kong.

Nor Mohamed, who launched the MPI on behalf of Prime Minister Datuk Seri Najib Razak, added that Malaysian structures should also carry its own local brand identity.

Interestingly, FDI in Malaysian real estate at best stood at 2.5 per cent of the value of total properties transacted in the country. This is much lower than other locations in the region where the level is over 30 per cent.

Datuk Richard Fong, the chairman of the board of directors of MPI, said that last year, FDI was only some RM200 million.

He added the task at hand included the need to dispel certain perceptions about Malaysia, especially in relation to policies on real estate.

Since its set-up in December 2008, the MPI team is said to have made headways in organising property fairs in Japan twice, which has led to 30 groups of Japanese investor visiting to view commercial and residential properties.

MPI has also taken local real estate developers to the UK thrice this year, which is expected to have another showcase later this year.

In order to achieve its goal, MPI has forged strategic alliances with the Ministry of Tourism, The Malaysian Industrial Development Authority (MIDA) and The Malaysia External Trade Development Corp (Matrade).

By Business Times (by Vasantha Ganesan)