HK's property market sees good sales, low rental values

KUALA LUMPUR: The Hong Kong property market is being pulled into two directions. On one hand, sales are rising but leases are on a downward trend. According to Colliers International Hong Kong 2Q 2009 property report, the general market mood is still conservative but investors are snapping up properties to ensure they are in good position to reap the benefits when the global economy recovers.

OFFICE SPACE

Due to ample liquidity and with near zero interest rates, real estate purchasers, including a number of local private investors, have entered the market in anticipation of a global economic recovery in 4Q2009 to achieve capital gains, said the report.

As a result, prices increased in 2Q. For example, the average asking price for strata-titled office buildings in Admiralty rose to between HK$10,000 to HK$13,000 psf compared with between HK$8,000 to HK$9,000 psf in the previous quarter.

Rental, on the other hand, have gone down, with tenants preferring to play it safe with downgrades to less expensive offices or second-tier buildings. The vacancy rate across the various business districts increased 0.43% from 7.43% in February to 7.89% in 2Q2009.

Overall, Colliers predicted that Grade A office rentals will see a further slide of 15% over the next 12 months unless there is a change in the economic climate.

RESIDENTIAL

The luxury residential sector also saw an increase in sales in 2Q09 thanks to the low mortgage rates of as low as 1% per annum based on certain conditions making investment buying attractive. The number of sales in the three traditional luxury residential districts of The Peak, Mid-levels and South Side all saw a leap of more then 100%.

On the leasing front, however, the market is weak, no thanks to the low occupational demand for luxury units by multinational companies' employees. A number of tenants have opted for cheaper areas due to tightening purse strings.

Colliers said luxury residential capital values should rise by 5% over the next 12 months, although rentals are likely to edge down 3% during the same period.

INDUSTRIAL

Transactions in the industrial sector rose 129% quarter-on-quarter from 393 in March 2009, the lowest level since 1999, to 900 in May 2009. The most active areas were industrial districts of Kwai Chung/Tsuen Wan and Kowloon East.

There was a rather subdued feeling in terms of leasing due to the global recession. Although individual warehouses are taking advantage of the market downturn to upgrade their premises to be in prime position when the economy recovers, tenants remain cautious when it comes to rental expenses. As a result, industrial rentals are expected to fall by 5% to 15% over the next 12 months.

RETAIL

The drop in tourist numbers, the A(HINI) flu pandemic situation and the global slowdown has resulted in a downward trend in rents of retail property. The average retail rent in the four traditional shopping districts of Central Causeway Bay, Mong Kok and Tsim Sha Tsui showed a decrease of 4.7% quarter-on-quarter in 2Q2009, compared to the fall of 3.1% quarter-on-quarter in Q12009.

Nonetheless, Colliers predicted that rentals will decline further by another 12% over the next 12 months.

However, investment buying has grown thanks to increased capital inflow and more relaxed lending policies by local banks. The number of major transactions with lump sum considerations of HK$10 million or above increased by 70% quarter-on-quarter.

By The EDGE Malaysia (by Wong King Wai)

Mudajaya wins RM75mil job

PETALING JAYA: Mudajaya Group Bhd’s wholly-owned unit Mudajaya Corp Bhd has been awarded a contract for the construction of a hospital in Pahang for RM75.39mil.

In a filing with Bursa Malaysia, Mudajaya said the contract was awarded by Mudajaya-Takdzim Joint Venture, which was awarded the project by Takdzim PMC Sdn Bhd.

“The project is expected to contribute positively to the future earnings and net assets of the company,” it said.

The project is expected to be completed by Jan 31, 2012.

By The Star

Harp Soon to build integrated resort in Malacca

PRIVATELY-HELD construction and property firm Harp Soon Construction Bhd plans to develop a 8.72ha integrated resort in Malacca, with the help of Crystal Crown Hotel & Resort Group.

The resort, to be named Bayou Lagoon Park Resort, will be a mixed development comprising a hotel, retail centre, four blocks of service apartments, a water park, convention hall and a club house.

The resort will be developed in stages, with the completion of two of its serviced apartment blocks by early 2012.

The entire serviced apartment development has a gross development value of RM250 million.

The water park, which will be exclusive for guests and residents of the resort, will be ready by the time the apartments are up, and has a gross development value of RM8 million.

The convention hall, club house and hotel, meanwhile, are to developed later.

Bayou Lagoon Park Resort Sdn Bhd executive director Marco Seow said the development is the company's first foray into integrated resort development after developing residential and commercial developments in the Klang Valley for the last 30 years.

"This is why we brought in Crystal Crown, which has experience in the planning, development and management of hospitality project, as a consultant for the project," Seow said.

Crystal Crown and the manager of the resort, Bayou Lagoon Park Resort Sdn Bhd, entered into a distinctive partnership yesterday.

Under the pact, Bayou Lagoon will be a member of the Crystal Crown Group, allowing it to leverage on the established brand name as well as be accorded technical and feasibility advice on layout and hotel system solution.

By Business Times (by Presenna Nambiar)

invest Penang GM tipped to head PDC Properties

INVESTPENANG general manager Wan Zailena Noordin is tipped to replace Osman Kallahan as the next head of PDC Properties Sdn Bhd, the property development arm of Penang Development Corp (PDC).

It is understood that chief executive officer (CEO) Osman's contract, which ends this month, has not been renewed.

Sources told Business Times that Wan Zailena is tipped to take over, but as managing director.

It is not known if Wan Zailena will relinquish her post at investPenang, where she had served as CEO and then resigned. She rejoined investPenang as its general manager last year.

Osman has more than a decade of property development experience under his belt when he was hired to helm the company during its inception.

Incorporated in 2005 as a private limited company and wholly-owned by corporation, PDC Properties has been actively playing the role of a major property developer of high-end properties to low-cost housing, condominiums, offices and shop lots.

On Penang island, its projects include the sea-fronting Bayan Mutiara, Ixora Heights and Halaman Kenanga at Sungai Nibong.

PDC Properties' Bandar Cassia development at Batu Kawan on the mainland is strategically located close to the landing point of the second Penang bridge.

A restructuring exercise at the PDC in 2004 saw the emergence of PDC Properties, which is understood to be making higher profits.

In April this year, PDC appointed former banker Julian Candiah as its deputy general manager, in a bid to help Penang woo more investors to its shores.

By Business Times (by Marina Emmanuel)

Bandar Raya unit to buy stake in Oman firm

PETALING JAYA: Bandar Raya Developments Bhd’s wholly-owned subsidiary BRDB (Oman) Ltd has entered into an agreement for the proposed development of an integrated real estate tourism project on about 40ha in Oman through Amouage Hotels & Resorts LLC, Oman.

In a filing with Bursa Malaysia, Bandar Raya said BRDB would acquire 30% stake in Amouage from its shareholders, Mamas Loizou Ioanou Christodoulides and Mohammed Saleh Bin Eid Al Khaldi, for RM423,000 cash.

“Subject to the relevant approvals in Oman, the project will comprise residential and commercial units, hotel and other facilities,” it said.

The acquisition is in line with Bandar Raya group’s intention for new property development projects locally and overseas to enhance its earning base.

“The proposed joint venture represents an opportunity for the group to expand to and take advantage of the fast growing economies of Oman and the Gulf Cooperation Council countries,” it added.

By The Star

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)