Ideal Property to launch RM1.1bil project in Penang

Datuk Alex Ooi showing the scale model of the RM1.1bil Penang International City project

GEORGE TOWN: The RM1.1bil Penang International City, located on a 100-acre site in Bayan Lepas, will be the most expensive and largest project unveiled on the island this year when it is launched in October, said Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi.

Ideal Property is developing the project through a joint venture with Koperasi Tunas Muda.

It comprises some 1,800 landed residential and high-rise properties, which make up 80% of the project, with commercial properties taking up the rest, according to Ooi.

“Our strategy is to first launch the residential components, strengthen the infrastructure, and then move on to the commercial phase, comprising a four-star hotel, a 250,000 sq ft lifestyle shopping mall, and a 150,000 sq ft resort office building, equipped with recreational facilities, besides modern IT infrastructure,” he said.

“The landed residential components, over 500 terraced and semi-detached units, will be launched in three phases between October 2009 and April 2010.”

Subsequently residential high-rise properties, comprising over 1,000 condominium units will be launched while “sometime in late 2010 or early 2011, the commercial components will be launched,” he added.

Ooi said the landed properties would be priced between RM550,000 and RM780,000, while the apartments between RM300,000 and RM500,000, adding that a 12-acre site would be allocated for the development of an education institution.

“We will also create a one-acre man-made lake as part of the project,” he said.

The project would be marketed in Hong Kong, Singapore, Indonesia, and other parts of Asia, Ooi said.

“We are confident as the property market in China has rebounded, which will have a positive impact on the regional market,” he said.

The recent brisk sales of the One World and One Sky high-rise projects in Bayan Baru showed very strong demand for residential properties on the island, Ooi said.

“The One World and One Sky high-rise properties by Ideal Property and Kuwait Finance House were respectively sold out after their launches in May and July.

“Both projects have over 500 condominium units, priced between RM235,000 and RM410,000,” he said.

Ooi said Ideal Property was also exploring to launch other projects with Koperasi Tunas Mudas, which owns other strategically located sites in the southwest district of the island.

“We are considering the development of modern office buildings next year,” he said.

Ideal Property is part of the Penang-based Ideal Group, comprising over 20 companies, involved in property development, property investment holding and business process outsourcing.

In property development, the group has since 2002 developed over 600 units of landed and residential high-rise properties in Penang and Kuala Lumpur.

The group currently owns and manages three properties on the island, including the landmark Northern Tower at Jalan Sultan Ahmad Shah (or the millionaires’ row) and a light industrial park in Kepong.

Besides Penang, the group also has property investment businesses in Cambodia, Shanghai and Beijing in China.

By The Star (by David Tan)

Glomac selling corporate tower to govt agency

Property developer Glomac Bhd is selling one of its two corporate towers at its upmarket RM800 million Glomac Damansara development in Petaling Jaya to a government agency for RM200 million.

Its executive vice-chairman Datuk Richard Fong Loong Tuck said the deal is due to be finalised by month-end.

Glomac Damansara consists of a 15- and 30-storey corporate tower, two 25-storey serviced apartment blocks, five- and eight-storey shop offices, nine- and 11-storey office suites and a hybrid retail mall.

Fong told Business Times the government agency will buy the 30-storey corporate tower but it wants the height reduced by five floors.
"We are in negotiations with the agency and will plan the design of the building according to their request. Since we are reducing the height of the tower, we will raise the floors for the other buildings," Fong said.

Fong said the office suites, which will be launched in mid-2010, may be increased by two floors, increasing its value from RM120 million currently.

Fong said other investors have approached Glomac for the 15-storey tower, which is valued at RM60 million and earmarked as its new headquarters.

He added that negotiations are ongoing with some of the parties.

"We will launch and hope to sell the corporate tower, shop offices and office suites before introducing the serviced apartments and mall next year. There is demand for office space in this area," Fong said.

Glomac has sold 70 per cent of the five- and eight-storey shop offices, launched in March this year.

Fong said sales of the shop offices were slow initially but picked up from late May.

As for the apartment blocks, Glomac is mulling to launch the units in early 2010, targeting locals within Petaling Jaya, Taman Tun Dr Ismail, Bandar Utama, Damansara and Bangsar, Fong said.

Fong said the price of the apartments have been pegged at RM600 per sq ft and above.

"When we first planned the apartments, we were looking to have 208 units, each with a built-up of 1,500 sq ft. However, we have reduced the sizes to 800 sq ft to 1,500 sq ft so we are now offering 300 units for sale to the man on the street," Fong said.

"We are not targeting en bloc buyers as there are not that many around. Previously, there were a lot of buyers from the Middle East but they have become very cautious and are cash-strapped as a result of the financial meltdown," Fong said.

Fong said Glomac will start construction on the mall, which is worth RM150 million, by the end of 2010.

By Business Times (by Sharen Kaur)

'Offer local firms incentives to invest in Iskandar Malaysia'

Iskandar Malaysia in Johor is likely to recover from the economic slowdown much faster than other parts of the country.

Despite the downturn, foundation infrastructure work has begun, and there is clear political will to make the economic corridor a success, a senior valuer said.

Chartered valuation surveyor Samuel Tan said Iskandar Malaysia's proximity to Singapore and the multi-million-ringgit allocation from the federal government are also factors which will help Johor pick itself up better than others.

"A lot of overseas interest was generated when Iskandar Malaysia was launched in 2006. Johor Baru, which had been in a property slump for the past decade, is now seen as a place with good investment potential.

"Malaysians are sceptical (of Iskandar Malaysia's success) because of how the past years went, but I would remind them that it's a 25-year plan. Things will not change overnight," he said.

Tan, who is also executive director of KGV-Lambert Smith Hampton in Johor Baru, added that a statutory body like the Iskandar Regional Development Authority (Irda) also helps to convince foreign investors of the groundwork which the government has set up.

And while much still needs to be done on projects such as EduCity and the Newcastle University of Medicine Malaysia, important foundation work has begun.

"I can give examples of the Eastern Dispersal Link, Jalan Yahya Awal interchange, Southern Link and Senai-Desaru Expressway - all these facilitate traffic flow. "I believe that by the time these roads are ready, Johor Baru will have recovered from the slump and be ready to move forward."

Tan was cautious when asked to comment on reports of soaring property prices, following the Iskandar Malaysia development.

"It's true that following extensive promotion, Iskandar Malaysia captured a lot of foreign interest and things started looking up.

"Unfortunately, the present slowdown set in soon after that. So recovery has been derailed a bit."

House prices in Johor fell nearly 25 per cent following the 1997-98 economic crisis.

A two-storey house in Perling, Johor Baru, which sold for RM280,000 in 1997 will fetch about RM180,000 today.

Tan said although this trend was likely to continue next year, there could be some light at the end of the tunnel next year.

"For instance, about four years ago, a company bought 12ha of commercial land at RM30psf for a large department store in Johor Baru. More recently, they bought another plot of land but this time at RM65psf.

"Even in these uncertain times this company was willing to pay twice the price for this new piece of land. This is a sign that we're slowly moving towards better times, most probably in 2011 or 2012."

The next two years, Tan said, will be a time for Iskandar Malaysia to build up its foundation and strengthen ties with new and prospective investors.

He suggested that Iskandar Malaysia stop depending on foreign investments for the next couple of years.

"I've heard local investors claim that they're not given a level playing field. For the next two years, make it easier for local investors to set up in Iskandar Malaysia. Why not offer incentives for local companies to come in.

"The reason I'm suggesting this is because foreign investors first need to get their own house in order before they can invest overseas whereas Iskandar Malaysia cannot wait, it has to continue.

"And in the meantime, where else do we get investors from, but from our own shores," he said.

Despite the uncertainties surrounding the current business climate, Tan was hopeful about the property market in Johor.

"We're at the stage of building a foundation for Iskandar Malaysia, which is made easier with the close collaboration of the federal and state governments and the private sector.

"With that in mind, we can work towards recovery, which I believe we can expect to see in 2012," he said.

By Business Times (by Anis Ibrahim)

Mayland to expand retail mall business

Malaysia Land Properties Sdn Bhd (Mayland), a privately held property developer controlled by Tan Sri David Chiu, could add a new mall under its wings by as early as next year.

Mayland, which owns and manages the RM50 million Hartamas Shopping Centre, sees the operation of shopping complexes as an ideal avenue for recurring income.

"We are looking at expanding our recurring income division mainly by doing more retail. We believe in the Malaysian market," said its director Winnie Chiu.

"There will be something coming up soon within the Klang Valley. We expect to finalise the details by year-end," she told Business Times in an interview.

Chiu added that Mayland would consider other locations for a mall if it meets the group's criteria.

Mayland's keenness to expand the retail mall segment of its business is partly due to the double-digit revenue growth notched by its maiden 300,000 sq ft Hartamas Shopping Centre in Kuala Lumpur.

The mall, which forms part of the integrated Plaza Damas project, provided a return on investment within three-and-a-half years.

In the first three years, it grew at an average of 10 per cent year-on-year.

"Hartamas Shopping Centre has a proven track record. Our revenue has grown 35 per cent this year," she said.

This year's handsome growth numbers are the result of an additional 20,000 sq ft of space, a rental increase following tenancy renewals as well as a better tenant mix.

Tweaking its tenant mix coupled with the opening of Taylor's College a year ago has seen average patronage to the mall increase to 8,500 a day from a daily average of 6,000 last year.

"A 20 per cent increase in revenue next year is possible," Chiu said, when asked about the outlook for 2010.

She said this will be made possible by the creation of additional space through the reduction in space wastage. The improving economy will further lend support to improved revenue.

The mall has a total of 138 outlets and 35 per cent of its tenants are in the food and beverage business. Its best performing tenant is Japanese restaurant Rakuzen.

By Business Times (by Vasantha Ganesan)

Room for more listed REITs in Malaysia

REIT transactions account for only 11% of local market capitalisation

PETALING JAYA: Malaysia, which has 11 listed real estate investment trusts (REITs) and two property trusts, can accommodate more listed REITs to add further depth, liquidity and asset choices to the stock market.

Currently, REIT transactions account for only 11% of market capitalisation in the country compared with 52.1% in North America.

According to the latest Asian Public Real Estate Association’s weekly REIT report, Asia’s REIT industry has a market capitalisation of US$58.86bil, with Japan taking the lead with US$30.5bil.

Malaysia’s US$1.43bil in market capitalisation is behind the rest of the pack, including Singapore (US$15.1bil), Hong Kong (US$8.3bil), Taiwan (US$1.53bil) and Thailand (US$1.52bil).

Come next year, if Sunway City Bhd goes ahead with its proposed listing of its RM3.7bil REIT on the local bourse, it will be the industry’s largest. Also in the pipeline is CapitaLand Ltd’s retail REIT, which will be the first foreign-sponsored REIT on Bursa Malaysia.

Axis REIT Managers Bhd chief executive officer and executive director Stewart Labrooy said shareholders’ current expectations of high dividend yields would not be conducive for new REIT listings.

“The average prevailing yields of 8% to 10% are considered high. When the market stabilises and the unit price of REIT goes up, yields should come back down again to around 7% to 8%. When that happens, it will be a better time for new REITs to be listed,” he said.

Although the market environment has turned more positive following the Government’s liberalisation measures, Labrooy said there was a need to create a more attractive tax regime for REIT investors in relation to withholding tax.

“We would like to see distributions for Malaysian REITs not to be taxed to promote greater retail participation. A higher retail investor participation in the market will create a higher liquidity and trade volume,” he said.

He lauded the Securities Commission (SC) for doing a great job in supporting the local REIT industry by constantly engaging with industry players for feedback and acting on them.

“There was a complete revamp of the REITs guidelines last August. The SC has been very innovative and was the first to come out with Islamic REIT guidelines,” Labrooy said.

He said there was potential for new sectors to be introduced including toll-roads, airports, serviced apartments, university accommodation and even prisons.

In terms of total returns over the past one year, Labrooy said five Malaysian REITs (M REITs) emerged among the top 10 performing REITs in Asia. They were Al-Hadharah Boustead REIT, UOA REIT, Al-Aqar KPJ REIT, Axis REIT and AmFirst REIT.

The total returns (comprising the share value plus dividend yields) for these top performing REITs ranged from 17% to 30%.

Labrooy said M REITs had bounced back from their lows in December last year and were “displaying the true characteristics of how REITs should behave in a volatile market by making steady gains over a period.”

Although the worst may be over for M REITs as most of their unit prices have recovered to match their net asset value (NAV), there are still some challenges that need to be addressed by industry players.

“There is a need to move short-term debt into medium to long-term debt to match the leasing period and remove uncertainties of volatile interest rates. At the end of the day, it is better for industry players to opt for longer term debts and a good ratio will be 60:40 of long term to short-term debts,” he added.

There is also a need for a higher retail investor participation in the REIT market as currently the market liquidity is still low. This can be addressed by expanding portfolios and market capitalisation of each of the listed funds.

Labrooy said following the improvement in the market, Axis REIT has recently got back on its asset acquisition trail with the latest addition of a RM65mil logistics centre in Port Klang.

At the same time it is also planning a placement of 51.18 million new units into the market which will provide the funding for the purchase of an additional RM120mil of new assets which have already been identified.

“Our intended goal of achieving RM1bil in assets under management was delayed by the crisis last year but we are back on track and will continue to execute our strategy for the benefit of our unitholders,” he said.

As at June 30, Axis REIT has 19 properties under its stable with assets under management worth about RM728mil and approved fund size of 255.9 million units.

By The Star (by Angie Ng)

Have we bounced off the bottom of the property cycle?

It was barely a year ago that property prices were plummeting.

Since then, the world’s central banks have flooded the markets with an unprecedented liquidity tsunami that has lifted prices of assets like stocks and property. Liquidity comes in many forms, the most evident and tangible is lower interest rates, which immediately lower mortgage costs and allow potential borrowers to borrow more with the same level of disposable income.

It also reduces the returns on deposits which make it more attractive for depositors to redeploy their funds into higher yielding and more speculative assets like shares and property. Other forms of less tangible liquidity measures involve providing cheap funding for banks and printing money.

In China, the liquidity came in the form of generous lending by state-owned banks which boosted lending in the first half of 2009 by 7.37 trillion yuan (RM3.8 trillion) – 2.3 times the amount of loans issued during the same period last year.

Some would argue that policymakers are creating a bigger bubble to counter the effects of the one that just burst. It was the bursting of the property and debt bubble in the United States that precipitated the global financial crisis.

The global liquidity tsunami appears to have succeeded in arresting the fall in global property prices. The mother of all property indices, the Case Shiller Composite 20 Home Index – which measures property prices in 20 US metropolitan cities – saw its first month-on-month rise in May 2009 after falling 33% from a peak in July 2006. The peaking of US house prices was followed by the global financial crisis two years later, so hopefully a bottoming of US house prices is a lead indicator of better economic times. Home prices in the United States are less overvalued after the price correction but are not particularly cheap as they have risen more than the inflation. Nevertheless, the affordability of the homes has improved as interest rates have declined.

The stabilisation of the US housing market is crucial as it means household wealth will also stabilise. Higher household wealth, closely tied to property and stock prices, will boost consumer sentiment. This in turn could boost US consumer spending and, hence, Asian exports. It would also boost the US economy as consumer spending accounts for 70% of the US economy.

However, it would appear that any recovery is likely to be muted as unemployment remains high and households are still deleveraging from high debt levels.

Ironically, a weak recovery and the deflationary effects of excess capacity will allow policymakers to keep interest rates low for a long time. After all, policymakers are unlikely to want to raise interest rates prematurely and be blamed for tipping the economy back into recession. Property prices and transactions in Asian countries like China, Hong Kong, Singapore, Taiwan and South Korea have risen from depressed levels in the first quarter of 2009.

In fact, the prices for the Housing Development Board (HBD) units, in which the majority of Singaporeans live, are at an all-time high. Low mortgage rates of less than 2% in Singapore have helped boost property prices. This is good news for property owners but bad news if you are a new graduate aspiring to own a property.

In Malaysia, lower interest rates, a buoyant stock market and better consumer sentiment have combined to boost demand for properties. Bargain hunters queued for properties launched by Island & Peninsular in Bandar Kinrara and Glenmarie and IJM Land in Jelutong, Penang.

Property companies are generally seeing better demand for property, and property agents are seeing renewed interest from home buyers.

Ironically, the rental market is not improving due to the ample supply of new property at a time when economic activity remains weak. The new supply of high-end condominiums and office space in KL is arising at a time when some multinational companies are downsizing. Higher supply and weak demand are likely to translate into lower rentals but not necessarily lower property prices as the alternative is to invest in deposits yielding only 2%.

This phenomenon has been observed in many countries like Hong Kong, Singapore and Taiwan where rental yields are at only 2% as deposit rates in those countries are at 1% or less. In the end, the effect of this liquidity is to punish the savers and reward borrowers with high risk-taking behaviour. Nothing much has changed despite all the touted reforms and we are on the way to creating a new bubble which would hopefully compensate for the current downturn before it eventually bursts.

In the meantime, property prices and property stocks are likely to rise in the liquidity-induced asset price inflation. The prices of property stocks have risen sharply from their lows in March 2009. The larger property stocks in Malaysia and the region are priced more than one times book. Many smaller property stocks are still trading at below one times book and offer more attractive valuations.

The party is on, the participants are intoxicated with liquidity but when the music stops, make sure you are not the player caught without a chair in a game of musical chairs.

● Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd. Readers’ feedback is welcome. Please email to starbiz@thestar.com.my

By The Star (by Choong Khuat Hock)

Holiday Villa to open 2 more hotels in Cambodia, China

Having made its presence felt in eight countries, Holiday Villa Hotels & Resorts, one of the leading hotel chains in Malaysia, expects to open two more properties in Cambodia and China by the end of the year.

In a statement made available to Business Times, Holiday Villa, a member the public-listed Advance Synergy group, said two more properties were in the pipeline, namely in Sihanoukville, Cambodia, and Kaifeng in Henan, China.

Holiday Villa opened its door to guests in Doha, Qatar, with the soft launch of the Holiday Villa Hotel and Residence City Centre on July 20.

With the launch, Holiday Villa now operates 18 quality hotels and resorts with a total of 4,000 rooms and suites.

Besides Malaysia and Qatar, Holiday Villa Hotels and Resorts are located in the UK, Indonesia, Australia, Sudan, Cambodia, Vietnam and China. Early this year, the hotel group expanded to Halong Bay in Vietnam and Shenzhen in China.

On its property in Doha, Holiday Villa said the hotel is strategically located at Al-Muntazah Signal, opposite the Muntazah Park.

By Business Times

Dubai property prices in free fall

DUBAI: Just one year ago, property prices in Dubai were surging to record peaks undeterred by a real estate slump in major markets, but they have since gone into free fall and have yet to find the bottom.

Market watchers in the former Gulf boomtown differ slightly on the magnitude of the decline so far, but all seem to agree that the prices of Dubai property, which was selling unchecked over the past three years, should drop further.

"The decline in prices still has a little bit to go before bottoming out," said Sana Kapadia, vice president of equity research at the regional investment bank EFG-Hermes.

"We expect a total drop in Dubai of between 50 to 60 per cent from peak prices in 2008. We have seen a cumulative decline of 45 to 50 per cent so far in Dubai," she said.

Consultancy firm Colliers International echoed similar estimates in its quarterly report this month stating that the prices of Dubai housing units had dropped by half by the end of June, compared to peak prices last summer.

A report by Landmark Properties last week put the drop in villa and apartment prices in the same period at 44 and 36 per cent respectively.

According to a price index set by the real estate brokerage firm, the average sale price for apartments has dropped from around US$405 per sq ft to around US$257 per sq ft (US$1 = RM3.52).

Prices are expected to fall further as market liquidity remains tight and costly. Mortgages are scarce, with interest rates between 8.5 and 9 per cent, Landmark Properties said.

"Our forecast is that prices will have bottomed out by the end of the year, and should stabilise in the first half of 2010," Kapadia said.

This crash has dragged the emirate's economy into contraction after years of breakneck growth, driven mainly by a property sector benefiting from an abundance of cash from a huge regional oil windfall and foreign investments.

Economic slowdown has also led to job losses in the emirate, which had become a workforce magnet during boom time, leading to forecasts of a drop in population that would put further pressure on demand and prices.

A few areas, however, have seen flickering signs of recovery.

Prices in the recently completed upmarket neighbourhoods on the palm-shaped island Palm Jumeirah, which took a severe beating after shooting to record levels, rose slightly in the second quarter as investors with cash appeared to jump on bargains.

A report by the property management company, Asteco, last month said the prices of villas and apartments on the Palm have risen respectively by 20 per cent and 7 per cent in the second quarter, compared to the first quarter, when they tumbled up to 65 and 53 per cent respectively from peak levels.

Asteco, still however, registered an average drop of 13 and 15 per cent in the average value of villas and apartments in Dubai in the second quarter.

"It would be a terrible mistake to believe that we are out of the woods," said Jeremy Mayhew-Sanders, head of investments and development at Sherwoods Property, referring to such few recovery signs.

He said that some prices had improved due to an artificial shortage of units on offer in some areas, as low prices had pushed some owners to pull their units from the market.

But a shortage of new housing units - a major catalyst for the surge in prices and rents over the past few years - should be the least worry for buyers as thousands of new units are being delivered this year, with more scheduled to be ready next year.

Landmark Properties projects some 22,700 residential units to be delivered by the end of this year, with 40,400 others to be delivered in 2010, although many projects have reportedly been put on hold for lack of cash and interest.

By AFP

KFH seals US$450m deal to invest in US properties

KUWAIT CITY: Kuwait's largest Islamic bank said yesterday it has signed a US$450 million (US$1 = RM3.52) deal with a US real estate investment trust to buy high income residential real estate in major American major cities.

The deal between Kuwait Finance House and Denver, Colorado-based apartment building owner UDR Inc is the second major foreign investment by a rich Gulf nation in the past few days.

"The joint venture will seek to acquire high-income residential real estate in major cities in the United States," according to a statement posted on KFH's website. Under the deal signed in London on Friday, KFH's participation is 70 per cent while UDR will shoulder a 30 per cent share, the statement said.

The Islamic bank said the joint venture will target class "A" assets with a minimum value of US$20 million that are less than seven years old, and the venture intends to be fully invested over a two-year period. The bank said it was targeting an internal return rate of 12 to 14 per cent annually.

Ali al-Ghanem, KFH's international real estate manager, said the partnership with UDR shows the bank was trying to return as a "major player" to the American real estate market, after it had liquidated a large portion of its investments there before the economic crisis began.

The statement quoted Tom Toomey, UDR's president and CEO as saying the company was looking forward to investing with its new partner during "these opportunistic times".

He said his company owns 50,000 apartment homes around the US, as well as thousands of houses under renovation.

The move is the latest in a string of recent investments from Gulf countries into Western property.

Student accommodation provider Unite Group on August 12 set up a five-year joint venture with Bahrain's Oasis Capital Bank to develop student housing in London worth an estimated STG194 million (STG1 = RM5.83).

An Omani wealth fund in June month bought a 75 per cent stake in London office landmark Bishops Square from Hammerson.

Bahrain- and London-listed investment house Investcorp also recently acquired mortgage loans in the US worth US$170.9 million to take advantage of low real estate prices.

By AP, Reuters

New trend from SoHo

Courtyard view of CENTRIO

Small office and Home office (SoHo) property is definitely gaining momentum in Malaysia, particularly given the advent of information, communication and technology (ICT).

Khoo

Tempo Properties Sdn Bhd chief executive officer Khoo Boo Hian says it’s definitely a budding trend given the working culture and the mushrooming of young entrepreneurs who tend to spend long hours at work or in the office.

“SoHo is becoming a trend in the market especially for young executives. The advantages of SoHo are convenience and flexibility as you can work and live within the same space,” he says.

Khoo says SoHo can either be perceived as a living area with complete office facilities and amenities such as a conference room, waiting lodge, business centre or an office space that provides all your out-of-office needs and privacy.

“You can also customise your SoHo suite to suit the functionality, performance and aesthetic aspects of your businesses. It allows young business owners a more private but compact and efficient space to express their brand and to grow their businesses,” he says.

The Atmosphere Sdn Bhd with its partner, Ekson Corp Bhd, is developing a 53-acre site of The Atmosphere, an integrated concept-driven commercial development comprising modern corporate-styled shop-offices, boulevard shops, a hypermarket, retail outlets, designer SoHo suites, apartments, a hotel and a regional retail centre in Serdang, Selangor.

“Our SoHo suites are designed in the form of a spacious duplex complete with residential and business amenities and we have received very positive feedback especially from our young urban customers – from couples, professionals to single working groups,” he says.

Previndran

Zerin Properties chief executive officer Previndran Singhe says the trend of SoHo development started in the 1960s and 1970s in Manhattan, New York City.

He says the place was formerly known as Cast Iron District which originally housed warehouses and factories and was famed for its cobblestone streets.

“Living in SoHo was deemed illegal during that time but in 1980s, the neighbourhood rapidly rose up the socio-economic scale due to location, lots of living space, the architecture and the fact that it was considered hip,” he says.

He says the SoHo trend in Malaysia started 4-5 years ago due to emerging young executives working in service sectors such as finance, insurance and real estate.

“As the new culture of working emerges that includes flexible working hours, limited service workers, connection all around the world and service-based business, SoHo has become a hit among these young executives.

He says among the critical success factors for SoHo developments are locations with good accessibility and amenities.

“Apart from that, buyers are also looking for such factors as design and functionality and also technology before they decide to purchase them,” he says.

YTL Land & Development Bhd is also another developer involve in the SoHo property development through CENTRIO at Pantai Hill Park in Bukit Kerinchi, Kuala Lumpur.

“Our SoHo at the CENTRIO concept comes after our research revealed that an increasing number of young people are looking for living spaces that offered greater flexibility, with many of them wanting to work from home,” says sales and marketing senior manager Jessica S.S. Loo.

She says the majority of them are from creative and entrepreneurial fields such as insurance, design, advertising, real estate and IT, where work will require them to be always on the move with no need for big office spaces.

“They are also looking for their first home, hence they will be drawn to a concept that allows them to work from home specifically designed with lifestyle flexibility in mind,” she says.

She adds that SoHo units at CENTRIO are really a success as 70% of the development was sold when they were opened for sales in 2006.

“Last weekend, we managed to sell all the remaining units of our SoHo units during our special promotion package that gives rebates up to RM150,000 to our buyers,” she tells StarBizWeek saying that CENTRIO offers a total of 238 units of duplex SoHo with build-up between 623 sq ft and 1,536 sq ft.

By The Star (by Edy Sarif)

Mah Sing’s missing link

Today’s topic is “managing the news” and here’s a question for discussion: What does a listed company do when it has two unrelated major deals to disclose in one day? That doesn’t happen often, of course. Fortunately, we have a fresh case study.

On Wednesday, Mah Sing Group Bhd had a couple of stories – actually three, but we’ll get to that later – to tell and each involved a hefty sum of money.

It’s apparent that the property developer knew in advance that it would be making the news that day. On Aug 7, it sent out an invitation to a press conference on Wednesday morning. The purpose? To announce a “material corporate development”.

Then on Tuesday, the property developer requested for a one-day suspension of trading in its shares “pending announcements relating to material transactions”. Note the company’s use of plural nouns.

However, at the press conference, the Mah Sing management talked about only one deal – its proposed acquisition of almost 47 ha of freehold land in Cyberjaya.

Wholly-owned subsidiary Myvilla Development Sdn Bhd is buying the property from Cyberview Sdn Bhd and Setia Haruman Sdn Bhd for RM130.5mil cash.

Myvilla also has an option to buy an adjacent plot of commercial land (2.6ha) within 12 months from the date of the sale and purchase agreement.

Mah Sing’s plan is to develop medium to high-end homes on the land. The project will be called Garden Residence and its estimated gross development value is RM690mil.


Leong

The press release handed out at the function dwelled primarily on the proposed acquisition. It quotes group managing director and chief executive Tan Sri Leong Hoy Kum as saying: “As major infrastructure is readily available and the vendor shall provide other infrastructure, we are confident that the project shall fit our business model of having a quick turnaround which is highly cash generative.

“Developing land in Cyberjaya has an added economic advantage as there are no low-cost components requirements since the master developer is relocating them to another location.”

Nevertheless, Mah Sing accords higher priority to a different bit of news. The press release kicks off by stating that the company’s sales for the first 7½ months of financial year 2009 has surpassed expectations.

Says the developer: “Mah Sing Group Bhd has achieved RM543mil sales in just 7½ months, exceeding its full-year target of RM453mil by 1.2 times. The group’s unbilled sales in 7½ months now stand at RM800mil, approximately 1.6 times the revenue recognised from the property division last year.”

Leong attributes this to “pre-emptive measures” over the last few years in project planning, pre-construction, cost management and cash management. He also credits the company’s marketing strategy, which includes coming up with the 5/95 home loan package.

Here’s when things got a little curious. After the press conference, Mah Sing issued not one, but two announcements through the Bursa Malaysia website.


Artist's impression of Southgate Commercial Centre

One was regarding the Cyberjaya land acquisition. The other was about a proposed en bloc sale and leaseback of an eight-storey office building by another wholly-owned subsidiary, Jastamax Sdn Bhd. The building is part of the ongoing Southgate development fronting Jalan Sungai Besi, Kuala Lumpur. Koperasi Permodalan Felda Bhd (KPFB) is buying the property for RM226mil cash and Jastamax will subsequently lease it back for two years.

It’s pretty much a standard announcement of a deal until you get to the six-paragraph rationale. Mah Sing is eager to explain the transaction, pointing out that the proposed en bloc sale has been structured to ensure a win-win for both the vendor and purchaser.

“Following the overwhelming success of the 5/95 programme, the group is extending this programme to KPFB,” says the company.

“As per the normal terms of this programme, 5% of the sale consideration will be paid upon the execution of the sale and purchase agreement and the purchaser’s financiers shall release the balance 95% of the sale consideration to the vendor based upon the architect’s certification of each stage of completion.”

But the most intriguing part is the third paragraph: “With the proposed en bloc sale, the group has achieved sales of RM543mil in just over 7½ months of financial year 2009, exceeding the group’s full-year sales target of RM453mil by 1.2 times. It also allowed the group to reach an unbilled sales level of approximately RM800mil which is 1.6 times of our property revenue last year.”

By omitting the proposed en bloc sale from its press release and yet highlighting the sales that had benefited from the transaction, Mah Sing has presented a distorted picture. And why did it choose to be silent about the en bloc sale at the press conference?

The developer had three developments to publicise – the proposed Cyberjaya land purchase, the proposed en bloc sale and its claim that it has exceeded its sales target with more than four months to spare. The third is a consequence of the second.

Yet, when the management issued a press release and briefed the media, it did not offer all the facts. In its Aug 7 invitation to the press conference, Mah Sing says: “We understand the importance of keeping both retail and institutional investors informed on our plans and business strategies.” Sometimes, things are easier said than done.

Deputy business editor Errol Oh wonders if it’s hard to get things right when there are too many stories to tell. He doesn’t know the answer because he hardly has any developments worth talking about in a year, let alone two announcements to make in a single day.

By The Star (by Errol Oh)

Sunrise in talks to buy more land

The property developer is looking at three or four of land in the Klang Valley and some may be purchased before the year is out

Sunrise Bhd, a property developer with extensive projects in Kuala Lumpur's upmarket Mont'Kiara area, is actively looking to buy three or four parcels of land in the Klang Valley, executive chairman Tong Kooi Ong said.

"We are currently actively looking at three or four (parcels) ... but these are all still pending negotiations," he told reporters after an analyst briefing late yesterday.

Some may be purchased before the year is out, he said, adding that joint ventures will also appeal to the group as they do not involve a lot of capital.

"We have limited capital and don't really want to keep going into debt," he remarked.
Sunrise has a landbank of 348ha, including 175ha of agriculture land. Its landbank in Mont Kiara alone is 33ha.

Tong said the Malaysian property market appeared to be stronger than a year ago and it was likely that developers would be rushing to launch projects once again.

"We do think it is quite likely that the property momentum will stay. There shouldn't be any shocks," he said.

Sunrise has a pipeline of projects ready to be launched depending on market conditions, Tong added, declining to be specific.

The group reported fourth quarter net profit of RM43.1 million yesterday, slightly lower than the RM44.9 million it made a year earlier.

This brought its net profit for the full year ended June 30 2009 to RM156.2 million, a slight drop from RM159.9 million before. Revenue was up 17 per cent to RM803.9 million.

The group had unbilled sales of RM971 million as at June 30, which will underpin its earnings for the next two years to 2011, Tong said.

These would further be boosted by property sales of RM39.3 million last month and another RM157.1 million pending the formalisation of sale and purchase agreements, he added.

Most of the unbilled sales - essentially sales that have yet to be booked into its accounts - were from higher-margin products.

In the last fiscal year, Sunrise chalked up new property sales of RM344.1 million.

Its introduction of innovative financing packages for two of its projects, 11 Mont'Kiara and Mont'Kiara Residence, have been well received and helped add up RM264.2 million in bookings between March and July.

By Business Times (by Adeline Paul Raj)

Sunrise Q4 net profit down to RM43mil

KUALA LUMPUR: Sunrise Bhd, known for its luxury high-rise projects in Mont’Kiara, reported a slightly lower net profit of RM43.1mil for the three months ended June 30 against RM44.9mil a year ago.

For the fourth quarter to June 30, the group’s pre-tax profit fell 3.4% to RM53.6mil from RM55.5mil on a turnover of RM237.3mil.

Earnings per share (EPS) fell to 8.72 sen from 9.98 sen in the previous corresponding period. The company declared a final dividend of 3 sen per share for the quarter.

In a filing to Bursa Malaysia, Sunrise said the group’s pre-tax profit of RM53.6mil achieved in the fourth quarter showed an increase of RM10.9mil, or 26% from the preceding quarter.

“The increase is mainly due to sales of The Residence during the period,” it said in the notes accompanying its results.

For the financial year ended June 30 (FY09), Sunrise posted a net profit of RM156.2mil on the back of a 17% growth in revenue to RM803.9mil.

Its EPS stood at 31.90 sen compared with 35.70 sen in the previous corresponding period.

Its total expenses for the financial year were 2% lower at RM81.5mil compared with RM83.2mil previously.

Net debt rose to RM445.7mil in the period under review from RM393.2mil previously due to funding for ongoing projects.


Tong

The developer’s executive chairman Tong Kooi Ong said the company had unbilled sales totalling RM971mil as at June 30 which would underpin its earnings till FY11.

He said the unbilled sales excluded sales of RM39.3mil recognised in July and another RM157.1mil pending sale and purchase agreement signing.

“Profits from future billings will be recognised over the next two financial years and will sustain earnings in the near future,” he said at a briefing to announce its quarterly results.

On new launches, Tong said the timing and pricing of future launches would be dictated by market conditions.

“We will take into consideration what the market demands and what the market is prepared to pay, to establish our cost and product mix,” he said.

Tong said property prices in Malaysia had been consistent with the country’s economic growth and did not see a property bubble in Malaysia for the time being.

Among the supportive factors for the property market are low unemployment and ample liquidity while the approval rate for mortgage loans is resilient with low interest rates, according to Tong.

However, he cautioned that there were some pockets of oversupply around the KLCC area.

By The Star (by Leong Hung Yee)

Looking for the perfect buy

It has been a tough and challenging ride for Malaysians and people the world over this past one year or so.

Their confidence in the free market economy must have been shaken badly after so much wealth and asset value have been eroded by the global financial meltdown.

The leveI of confidence going forward will depend on how the people perceive their general well-being and whether there’s hope for the future, which depends among other things on their expectation on the health of the local and global economy.

It will be a herculean task to reinstate the same robustness to the economy to that of the pre-global crisis days and much work remains to be done in many parts of the world.

The same goes for Malaysia and hopefully all parties will get down to work expediently for the common goal of lifting the country’s chance of a sustainable economic recovery and growth.

The liberalised measures introduced by the Government, aimed at raising the country’s competitiveness and attract foreign direct investments to the country, will need the total commitment and cooperation of all to succeed.

Based on the strong sales registered by developers these past few months, one wonders whether there is a pent-up demand for residential properties, especially landed properties, as the supply pipeline has been put on hold or substantially scaled down when the crisis hits.

The question on whether property buyers will be flocking back into the market after the days of easy financing packages for house purchases are over remains to be seen.

There is still some hesitation among buyers on whether this is the best time to seal the deal as some are still waiting for better deals or offers to come along.

To be sure of striking the right chord with buyers, developers should literally put themselves in the buyers’ shoes and proactively seek their feedback on what type of property products are being sought after.

Housebuyers today are looking for more than a roof over their head. Expectations have certainly gone up many notches and they want more value from developers before committing to buy.

Besides the basic requirements of a good location, quality standards and developer’s reputation, buyers are also giving more priority to safety and conducive environment, well landscaped parks and surroundings, community facilities, good infrastructure and accessibility.

There is still much liquidity in the system and property is one of the time-tested investment tools with potential for capital appreciation and rental yields.

The prevailing low interest rates and slew of incentives offered by developers are helping to fan property buying interest.

After all, property in Malaysia has proven to be a good investment tool and hedge against inflation. Prices of most of the residential property, except for high-end condominiums in the Kuala Lumpur City Centre and Mont’Kiara areas, have held out quite well throughout the crisis period.

Developers will not go wrong if they target their products at the mass market segment as the country’s young population, where at least a third of the 26 million population are between 25 and 44 years, will need a fairly big number of houses each year.

Those with high-end projects may opt to wait out a little longer until market sentiment has recovered before putting out their projects for sale.

It will certainly help with the sales if developers take the proactive steps of making sure their housing units are designed practically and buyers will not need to do any further renovation before moving in.

Having the housing units fitted with some basic necessities such as air conditioners, wardrobes and kitchen cabinets will prove to be a big plus for buyers as it will save them substantial time and money to shop around by themselves.

Offering a few choices of colours, materials and designs will be a practical option for buyers.

By sourcing for these fittings for a whole project, developers will be able to enjoy economy of scale and lower average cost which can then be passed on to their buyers.

Deputy news editor Angie Ng believes every little extra effort and value adding initiatives by developers will go a long way to raise the chances of success for property projects these days.

By The Star (by Angie Ng)

Sui Wah to open sixth outlet in October

GEORGE TOWN: Penang-based departmental cum supermarket operator Sui Wah Corporation Bhd is opening its sixth outlet this October at the Times Square shopping mall in George Town.

Group executive director Cynthia Hwang told StarBizWeek that the new outlet, known as Sunshine City, would be the anchor tenant for the shopping mall, occupying some 120,000 sq ft on the third and fourth floors.

“What differentiates this outlet is the availability of brand names that are not normally found in other stores, the personalised shopping experience that will be provided, and a local designer brand corner,” she said. “We will have promoters to provide consultancy on fashion to our customers.”

Hwang said the group sent a surveying team to various countries in Asia to obtain interior design ideas for the new outlet.

“Sunshine City is the product of many mid- and high-end departmental and supermarket stores that we visited in Asia.

“We want to ensure that Sunshine City has the appeal to attract shoppers from all income segments.

“For example, the interior is designed with a lot of glass panels to generate a classy and feel-good shopping experience,” she said.

Hwang said there would also be over 50 brand names of apparel.

“We are confident that Sunshine City will be able to compete during these economically challenging times as our apparels are trendy and affordably priced,” she said. “The apparels and the foodstuffs in the supermarket are targeted at the a broad range of customers from diverse income backgrounds.”

On the group’s departmental and supermarket business, Hwang said business at its five other outlets on the island experienced a drop of about 10% for the first five months of 2009, compared to the corresponding period a year ago.

“But starting June, business is picking up on a month to month basis. We expect August to be 5% to 10% better than July,” she added.

Besides Sunshine City, the Sui Wah group owns and manages Sunshine Square, Sunshine Farlim, Sunshine Wholesale, Sunshine Jelutong and Sui Wah Air Itam on the island.

After Sunshine City, the group plans to build a two million sq ft commercial building on the island in the near future.

“The plan is for the building to accommodate a budget hotel, serviced apartments, retail outlets and offices,” Hwang said.

For the 2009 fiscal year ended May 31, the group posted RM12.8mil in pre-tax profit on the back of RM368mil in revenue.

In fiscal year 2008, its pretax profit was RM15mil while revenue was RM373mil.

By The Star (by David Tan)

Niecon to woo Malaysians to Gold Coast apartment project

Niecon Development aim to sell the remaining units of 'The Oracle' to high networth individuals in Malaysia within the next three months

NIECON Development aims to sell about a fifth of its A$850 million (RM2.4 billion) luxury twin-tower apartment project in Australia's Gold Coast, dubbed "The Oracle", to Malaysian investors.

The 515-apartment project, located on Broadbeach, Gold Coast, is 83 per cent sold with prices averaging A$1.4 million per unit (RM4.11 million).

The bulk of the buyers are Australians and the rest from Malaysia, Singapore, China, Russia and the UK.

Chief executive officer of Jalin Realty International Pte Ltd, the exclusive marketing agent for Niecon in Malaysia, Ian T.K. Chen, said although the apartments are expensive and the market is soft, the units were sold in six months from its launch.

The Oracle is one of the most prestigious projects in Australia and interest is strong as it is close to Jupiter's casino and the Gold Coast Convention Centre.

Launched in early 2008, it features 510 units of 1-3 bedroom apartments ranging from 850 sq ft to 3,000 sq ft, worth A$690,000 to A$3 million (RM2.2 million to RM8.8 million).

The two duplexes are worth up to A$5 million (RM14.7 million) each, and three penthouses for over A$9 million (RM26.46 million) apiece.

Chen said one penthouse was recently sold for A$9.6 million (RM28.22 million), smashing the Gold Coast record for highest penthouse value transacted.

"Australians are relatively wealthy and people are buying into The Oracle because it is an iconic building with beach frontage," Chen said in an interview in Kuala Lumpur yesterday.

The Oracle is being developed on 8,000 sq m of offices and 4,500 sq m of retail space, making its appeal more attractive to buyers. The whole development, which will be completed by end-2010, is worth A$1 billion (RM2.94 billion).

Chen added that Gold Coast is the fastest growing regional city in Australia currently.

He said since The Oracle was launched, the value of the apartments have appreciated by 10 per cent and he expects the trend to continue year-on-year, as it has for other properties in the region.

"We aim to sell the remaining 77 units of the 1-3-bedroom apartments to high networth individuals in Malaysia within the next three months. We have a long list of potential buyers," Chen said.

The units will be launched tomorrow at Mandarin Oriental Hotel in Kuala Lumpur.

According to the Australian Bureau of Statistics, Malaysia ranked 10th in terms of top investors in Queensland in 2008.

"Malaysians spent A$22 million (RM64.68 million) to buy residential properties, a bulk of which are in Gold Coast. So we are confident of sales here," Chen said

By Business Times (by Sharen Kaur)

Strong local interest seen in Australian property

KUALA LUMPUR: Jalin Realty International Pte Ltd, a real estate agent that specialises in Australian prime properties, expects its latest offering in the Gold Coast – The Oracle – to be a major attraction to affluent Malaysian investors.

Jalin Realty International principal and chairman William Chen (left) and Ian Chen with a model of The Oracle.

Chief executive officer Ian Chen said the company anticipated strong buying interest from locals for the remaining 77 units of The Oracle worth a total A$77mil.

The residential portion of The Oracle, which sits on two towers (Tower 1 – 50 levels, Tower 2 – 40 levels), has 515 apartments and cost A$850mil to build.

“About 83% of the 515 units have been sold, mainly to Australians, and we expect strong take-up for the unsold units from Malaysia and Singapore,” he told StarBiz yesterday.

The prices of residential units range from A$690,000 for single units (850 sq ft) to A$5mil for penthouses.

“The largest penthouse located in Tower 1 was sold for A$9.6mil, which was a record for penthouses in Broadbeach,” Chen said, adding that there were two smaller unsold penthouses.

The residential units sit on top of one acre of retail area and 8,000 sq m of commercial space from level one to three.

The total gross development value of the project is about A$1bil.

On the selling point of The Oracle, Chen said it fronted the beach and was adjacent to the Oasis Shopping Centre, Jupiter Casino and Gold Coast Convention Centre in Broadbeach.

“Another attraction for buyers is that they only have to place a 10% deposit with no other charges until the building is completed, which would be late 2010,” he said.

He noted that The Oracle was being built by Niecon Developments Pty Ltd, a highly-reputable Australia developer that had won several awards for constructing iconic buildings.

Chen said that on average, high-rise buildings in Broadbeach could deliver 10% capital growth per annum.

“The Oracle offers buyers stable and steady capital growth with little or no risk,” he said.

Jalin Realty is the exclusive marketing agent for The Oracle.

A sneak preview of the property will be held in Mandarin Oriental Hotel, Kuala Lumpur, for selected guests today and during its launch tomorrow.

By The Star (by Danny Yap)

SP Setia sees 20pc return from maiden retail project

Property developer SP Setia Bhd expects its maiden retail venture to register a 20 per cent return-on-equity per annum over a 15-year period.

The Setia City Mall, a retail mall in Setia Alam, Shah Alam, will be developed by Greenhill Resources Sdn Bhd, a 50:50 joint-venture company between SP Setia and Lend Lease Asian Retail Investment Fund 2.

The RM450 million mall, which will start construction in two months, is expected to be fully occupied even before it opens in 2012.

"We have secured three anchor tenants and are in talks with 50 retailers. We are confident that by the time the mall is completed, it (the 300 units of retail space) will be fully taken up," said SP Setia president and chief executive officer Tan Sri Liew Kee Sin.
He was speaking to the media after the signing of a RM315 million syndicated banking facility with CIMB Bank, Public Bank and Affin Bank in Shah Alam yesterday.

"This deal, and the commitment from three leading banks, demonstrates that there is no shortage of financial support for good projects," said CIMB's group chief executive Datuk Seri Nazir Razak at the event.

The mall will be developed in two phases. The first phase, which has a gross development cost of RM450 million, will begin construction in two months and to be completed sometime early 2012. It will offer about 700,000 sq ft of net lettable area.

The second phase, which is expected to have a net lettable are of 1 million sq ft, will be developed in five years.

"We will let the first phase stablise first before we start the second phase," Liew said.

Also at the signing ceremony, which was witnessed by Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim, were SP Setia chairman Tan Sri Abdul Rashid Abdul Manaf and Public Bank managing director Tan Sri Tay Ah Lek.

"We expect Setia City Mall to dramatically enhance Shah Alam's shopping and leisure offer and draw customers from a wider catchment area with a population of approximately one million people.

"The mall also reinforces SP Setia's Live Learn Work and Play vision for Setia Alam and Setia Eco Park. These developments which already have over 20,000 new residents are set to expand to over 50,000 by the time the mall opens," said Abdul Rashid.

By Business Times (by Goh Thean Eu)

SP Setia gets three anchor tenants for Shah Alam mall

SHAH ALAM: SP Setia Bhd has secured three major anchor tenants for the first phase of its Setia City Mall in Setia Alam, Shah Alam, says president and chief executive officer Tan Sri Liew Kee Sin.

“Unfortunately, we cannot reveal who they are for now. So far, we have also spoken to about 50 potential retailers for the mall and expect a full take-up by the time construction is completed by end-2011.

“Construction is expected to begin within the next two months,” Liew said after an agreement signing between Greenhill Resources Sdn Bhd and CIMB Bank Bhd, Public Bank Bhd and Affin Bank Bhd for a RM315mil syndicated loan facility.

Greenhill Resources is a 50:50 joint venture between SP Setia and Lend Lease Asian Retail Investment Fund 2 Ltd.

The event was witnessed by Selangor Mentri Besar Tan Sri Khalid Ibrahim.

Lend Lease, which has operations in Australia, Asia, Europe, the Middle East and the United States, is the mall’s designer while SP Setia is the developer.

The first phase will have a net lettable area of about 700,000 sq ft and comprise a department store, 250 local and international specialty stores, major anchor retailers and an entertainment precinct. Its gross development cost is RM450mil.

The mall includes access to about 2,000 parking lots and easy connectivity to nearby roads, towns and major highways.

“It is targeted at the mid to high-end income group and we hope to attract retailers that cater to that demographic,” Liew said, adding that construction of the second phase would depend on response to the first phase.

“But we plan to begin construction of the second phase in five years.”

SP Setia chairman Tan Sri Abdul Rashid Abdul Manaf said the mall was expected to “dramatically enhance” Shah Alam’s shopping experience and appeal to the growing population in the area.

“Setia Alam has over 20,000 new residents and is expected to grow to over 50,000 by the time the mall opens,” he said.

CIMB group chief executive Datuk Seri Nazir Razak said the shopping centre was the first mall in Malaysia to be financed since the global economic downturn.

“This project is timely, given the quiet market currently in light of the economic climate.

“This also shows that banks will still lend if the development is a good quality project,” he said.

Nazir said local developers should not shy away from projects due to the downturn. “A crisis always presents opportunities,” he said.

By The Star (by Eugene Mahalingam)

More REIT listings expected early next year as yields fall

Among the potential REITs that may list on Bursa Malaysia next year are Sunway City REIT and Singapore's CapitaLand REIT

MORE real estate investment trusts (REITs) could be listed on the Malaysian bourse early next year as yields fall to levels more manageable for the issuers.

Malaysian REIT yields are averaging at some 9 per cent but issuers are holding off for yields to drop to pre-crisis levels of 6 to 7 per cent. REIT yields rose as markets were hit last year, causing huge discounts to the net asset value (NAV).

"Most investors looking to launch new REIT IPOs (initial public offerings) will want yields to come down. That depends on risk appetite and how the whole global economy pans out in the next 3 to 6 months," said Maybank Investment Bank Bhd equities capital markets director Ramesh Manimekalanandan.

He was speaking at a press conference held in conjunction with the Malaysian REITs Investor Education Programme in Petaling Jaya, Selangor, yesterday.

Ramesh added that REIT listings could be as early as the first quarter of next year.

Among the potential REITs that may list on Bursa Malaysia next year are Sunway City Bhd's (SunCity) REIT and Singapore's CapitaLand Ltd REIT.

Currently, Malaysia has 13 REITs listed on Bursa Malaysia with an estimated market capitalisation of RM4.1 billion as at January 2009.

Axis REIT Managers Bhd chief executive officer and executive director Stewart LaBrooy said it did not make sense for companies to list REITs in prevailing market conditions as they will not be able to sustain the high yields.

"REIT managers are looking for acquisitions but it is hard to find acquisitions that can get you more than 9.5 per cent. It is a tough environment for REITs," said Ramesh.

Meanwhile, LaBrooy urged retail investors to consider local REITs as an investment option for regular income and capital growth.

"The share price (of REIT) does not matter until the day you decide to exit the REIT. So if your investment horizon is for five to 10 years, the market price is just noise that happens from day to day," said Amanahraya-REIT Managers Sdn Bhd director Sharizad Juma'at.

Am ARA REIT Managers Sdn Bhd chief executive officer Lim Yoon Peng added that investors could choose to exit during a market upcycle and re-enter when the REIT's share price falls.

Similar to physical property, the regular dividend payment from a REIT serves as rental income while the share price gain serves as capital gain.

Individuals wanting to learn more about REITs can attend a talk held at Hilton Petaling Jaya on August 15 at 8.30am. It is jointly organised and sponsored by Axis REIT, Amanahraya-Reit, Am ARA REIT, Regroup Associates Sdn Bhd, Maybank Investment and CIMB Investment Bank Bhd.

By Business Times (by Jeeva Arulampalam)