YTL sees S'pore as next big market

SINGAPORE: YTL Corp Bhd expects Singapore to be its next big market, said managing director Tan Sri Francis Yeoh.

He said despite the global financial crisis, YTL went ahead to acquire some assets in the island-state in the past two years and these turned out to be highly successful ventures.

In late 2008, YTL bought a slice of Starhill Global REIT which owns 11 prime properties in Singapore, Japan, China and Australia.

Last March, it acquired PowerSeraya Ltd, Singapore's second-largest power generation company.


The dynamism of Asia's economy is very obvious. We believe the region will lead growth in the next 20 to 25 years« TAN SRI FRANCIS YEOH

In real estate, it is developing villas on Singapore's Sandy Island and Kasara in Sentosa Cove, and will redevelop Westwood Apartments on Orchard Boulevard.

Yeoh said the group was keen to tap Asia's growing utilities market, including power generation, water treatment, property and construction, hospitality and communications.

He believes the world's economic epicentre has shifted to the East, with more business opportunities mushrooming in the region.

“The dynamism of Asia's economy is very obvious. We believe the region will lead growth in the next 20 to 25 years,” he told StarBiz over the weekend.

The group, whose core businesses are ownership and management of regulated utilities and other infrastructural assets, derives about 85% of its revenue from abroad.

“We already have an Asian footprint, including shopping centres and a cement plant in China. We also own the second-largest power plant in Indonesia.

“In Singapore, we have PowerSeraya, property projects and Starhill Global REIT.

“China has tremendous opportunities. Even the average person pays cash when buying property,” he said.

To celebrate its successful ventures in Singapore, YTL hosted the Concert of Celebration in the city-state last Saturday.

The free outdoor concert at the Singapore Botanic Gardens saw Italian tenor Andrea Bocelli, renowned flutist Andrea Griminelli, Slovenian soprano Sabina Cvilak and popular Australian singer Delta Goodrem performed for thousands of people.

On whether the weaker pound sterling would affect YTL Power International Bhd's receivables from Wessex Water Ltd, Yeoh said being a diversified international player, there were bound to be earnings translation losses and gains from overseas investments.

YTL Power acquired Wessex Water, a water and sewerage operator in the United Kingdom, in 2002 for £1.24bil.

He said investors should look at the company's long-term operational efficiency and profitability instead of its quarterly performance.

“All our overseas assets operate on their own and having borrowings in their local currencies provide a natural hedge against foreign exchange fluctuations.

“We are very happy with our investment in Wessex and aim to make it the top water and sewerage company in the world,” Yeoh said.

An analyst with a local brokerage said most investors bought into YTL Power for its strong dividend yield.

In the financial year ended June 30, 2009, YTL Power paid 15.75 sen dividend per share, which translated to about 7% gross dividend yield.

For the six months ended Dec 31, 2009, YTL Power's net profit rose 21.7% to RM481.4mil while revenue increased 232.5% to RM6.3bil.

The YTL group has some US$3.5bil cash for its ongoing search of new acquisitions and projects.

Yeoh said whatever the economic cycle, there were opportunities to be seized. “Particularly in an economic downturn, it is a good time for cherry picking.”

By The Star

House auction ruled unlawful

JOHOR BARU: A woman whose apartment was auctioned off by a bank after she failed to settle her instalments of RM1,385.17 six years ago was awarded RM25,000 in damages by a magistrate’s court here.

In her statement of claim filed in the High Court in 2006, Metildah Louis Angel Perix, 51, said she had taken a RM23,750 loan from RHB Bank to buy a low-cost apartment in Taman Rinting in 1999.

However, she was unable to settle her instalments amounting to RM1,385 between May 2004 and November 2004 due to personal and health problems.

After receiving a telegram from the bank about the arrears, Metildah had paid a partial sum of RM500 in January 2005.

She was shocked that the bank had auctioned off the house together with all her belongings on March 2005.

Her claim, filed through lawyers R. Jeyabalan and K. Bharathi, to nullify the auction, sought RM14,543 in damages for her belongings and RM28,000 for the apartment.

Magistrate Khairulnadiah Hasmi ruled that the auction was unlawful and awarded Metildah RM25,000 in damages.

The bank was represented by lawyer Norlinda Lasri.

Metildah said she was happy that she had gotten something back as she spent almost RM30,000 renovating the house.

“I do not understand why my house was auctioned off when just a small amount of money was owed to the bank,” she said.

By The Star

Iskandar to announce RM250m construction packages soon

JOHOR BARU: Iskandar Investment Bhd (IIB) will be awarding six construction packages with a total value of RM250mil to successful bidders by the end of the month.


Arlida Ariff says catalytic projects are progressing well

President and chief executive officer Arlida Ariff said the packages were mostly for the actual construction work on the buildings related to the IIB strategic projects in Nusajaya, including work on facilities for the University of Newcastle Medicine Malaysia Campus (NUMed) in EduCity, the Marlborough College in International Resort and the Legoland Theme Park in Medini.

“Our planned catalytic projects within the Nusajaya development zone are progressing well and ready for completion as scheduled,” Arlida told StarBiz.

Nusajaya, spanning 9,307.76ha, is one of the five flagship development zones in Iskandar Malaysia. The others are the JB City Centre, Western Gate Development, Eastern Gate Development and Senai-Kulai.

Arlida said the RM300mil NUMed campus on a 5.26ha site in the 123.42ha EduCity was scheduled for completion in May 2011, and the Marlborough College should open in September 2012.

She said Asia's first RM700mil Legoland Theme Park would be the centrepiece of the 230.67ha Medini North, which was expected to open in April 2012, a year earlier than planned.

Work on the infrastructure facilities in Medini, a mixed urban development zone spanning 930.77ha in Nusajaya, was already 46% completed, she said, adding: “Some RM4.2bil has been allocated for the infrastructure inclusive of roads, drainage, earthworks, retention ponds, flood mitigation and telecommunication.”

She said earthworks for Legoland were under way while work on the buildings and attractions in the theme park would start in the third quarter of the year.

The development of projects in Medini is undertaken in partnership between the private and public sectors.

The key investors include IIB, Mubadala Development Co, Aldar Properties, Kuwait Finance House and Millennium Development International.

The overall development of Medini is divided into four distinct zones with separate themes - the Lifestyle and Leisure North, the Financial District, the Medini Central and Lifestyle and Leisure South.

Arlida said IIB and the Iskandar Regional Development Authority were accountable for the success of Iskandar as they were answerable not only to Johoreans but also all Malaysians, as the growth corridor would benefit the whole country.

IIB is backed by Khazanah Nasional Bhd, which holds 60% equity, while the Employees Provident Fund and government-linked company Kumpulan Prasarana Rakyat Johor Sdn Bhd each has 20% equity.

By The Star

PKNS to redevelop old, prime locations

The Selangor State Development Corporation (PKNS) has embarked on the redevelopment of old residential and commercial sites in Selangor to take advantage of their prime locations.

Its general manager, Othman Omar, said the corporation had identified 16 locations in the state to be redeveloped over the medium and long term.

"For a start, it has embarked on redevelopment of Pusat Bandar Keramat near the Jelatek LRT station in Kuala Lumpur," he told a briefing after signing a memorandum of understanding between PKNS and Bernama for the supply of news and information in Petaling Jaya today.

Othman signed on behalf on PKNS and Bernama general manager, Hasnul Hassan, signed on behalf of the national news agency.
Also present were PKNS deputy general manager Md Nasir Md Arshad and Bernama editor-in-chief, Datuk Yong Soo Heong.

The new development at Pusat Bandar Keramat, which will have a gross development value of RM1.3 billion, will be known as Datum Jelatek and will comprise residential and commercial properties, including a shopping mall and recreational facilities.

Othman said the redevelopment included providing compensation to the previous residential and commercial owners.

He said the objective of the redevelopment was to leverage on the prime locations of these areas and for PKNS to provide better amenities to the residents.

"Our old apartments used to be single room or studio types. Under our new development, we intend to provide more for the residents," he said.

By Bernama

China's property prices rise again in April

Property prices in China posted the biggest year-on-year jump in nearly five years in April, official data showed Tuesday, amid persistent fears about a growing bubble in the real estate sector.

Prices in major cities rose 12.8 percent on year in April, the National Bureau of Statistics said on its website, marking the biggest year-on-year rise for a single month since the survey was widened to 70 cities in July 2005.

The statistics bureau had previously collected data on 35 major cities.

The pace accelerated from the 11.7 percent increase in residential and commercial property prices recorded in March and a 10.7 percent rise in February.

The figure came after a top housing official said last week that China's recent measures to rein in soaring property prices had been effective in stabilising the real estate market.

"The trend of excessively fast rising residential property prices in some cities has been curbed, sparking a wide, positive response in society," Qi Ji, vice minister of housing and urban-rural development, said in a online chat.

Chinese authorities have issued a slew of measures in recent weeks as they seek to prevent the property market overheating and derailing the world's third largest economy.

The authorities have tightened restrictions nationwide on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum down-payments for second homes.

By AFP

Naim, CMS and BDA to develop RM1.5bil new township

From left: Datuk William Wei, Datuk Mohidin Ishak and CMS group managing director Datuk Richard Curtis exchanging documents at the MoU signing ceremony on Monday.

KUCHING: Naim Holdings Bhd, Cahya Mata Sarawak Bhd (CMS) and Bintulu Development Authority (BDA) have formed a joint venture (JV) to develop the proposed Samalaju new township, which is estimated to cost at least RM1.5bil.

Located within Sarawak Corridor of Renewable Energy, the project will comprise residential developments, schools, clinics, commercial centres and recreational facilities for about 50,000 people.

Naim has a 60% stake in the JV while CMS and BDA hold 30% and 10% respectively. BDA is the state agency tasked with the planning and development of Bintulu.

Naim executive director Datuk William Wei said the proposed new township, which would span more than 2,200ha, would be located about 15km north of the proposed Samalaju Industrial Park where energy-intensive industries would be sited.

He said at least 5,000 units of houses would be built in the new township.

“The JV (vehicle) will also develop and operate world class facilities for executives employed by the various industries,” he told reporters after the signing of a memorandum of understanding for the JV yesterday.

The houses and facilities are expected to be completed by the first quarter of next year.

BDA general manager Datuk Mohidin Ishak said construction work for the proposed plants for some of the energy-intensive industries in Samalaju Industrial Park would start next year.

Sarawak Aluminium Company Sdn Bhd' aluminium smelter and Japan's Tokuyama Corp polycrystalline silicon plant will be located at Samalaju Industrial Park.

Hong Kong-based Asia Minerals Ltd has also proposed to build a manganese smelting factory at the industrial park.

By The Star

Naim, Cahya Mata in RM1.5b project

Naim Holdings and Cahya Mata Sarawak will develop a township in Samalaju, Sarawak, to cater for an estimated 50,000 workers and their families.

Naim Holdings Bhd plans to partner Cahya Mata Sarawak Bhd (CMS) and a local government agency to build a RM1.5 billion township in Samalaju, Sarawak, which will cater for the expected boom in the working population.

The Samalaju Industrial Park is located 80km north of Bintulu and the proposed township will be home to those who will work at a giant aluminium smelter and other high-technology industries.

The new township, covering an area in excess of 2,200ha a few kilometres from the Samalaju Industrial Park, will cater for the estimated 50,000 workers and their families.

Construction will start next year and the township will be developed over 10 years.
"The township is really required there. It won't work to have the workers commute between Bintulu and Samalaju," Bintulu Development Authority (BDA) general manager Datuk Mohidin Ishak said in Kuching.

The state government has approved the town's master plan, he said.

Yesterday, BDA signed a memorandum of understanding with Naim and CMS to form a joint-venture company. Naim will hold 60 per cent of the tie-up, with CMS having 30 per cent and BDA the balance.

Naim was represented by executive director Datuk William Wei, and CMS by group managing director Datuk Richard Curtis.

Mohidin said that their first priority would be the construction of "world-class standard" temporary camps for the 3,000 to 5,000 workers involved in building the town and those whose companies would be relocating to the industrial park.

Construction of the camps just a kilometre from the park will start very soon and is scheduled for completion by the first quarter of next year, Wei said.

The camps will be converted into storage facilities when the construction frenzy is over.

Construction of the township will only start next year.

Wei said that it would have all the amenities of a modern township.

"There will be schools, a police station, medical facilities, commercial centres and recreational facilities."

The Samalaju Industrial Park is an integral part of the state's industrial development corridor, the Sarawak Corridor of Renewable Energy.

At least two smelting plants, including the proposed Sarawak Aluminium Co - a joint venture between mining giant Rio Tinto and CMS - will be sited in the area.

There will also be a plant from Japan's Tokuyama Corp that will make solar panels and a new deepwater port.

By Business Times

Sunway project in China’s Xuan Cheng

SUNWAY Holdings Bhd has signed a memorandum of understanding (MOU) with China’s Xuan Cheng Municipal Government to develop a two million sq m land into an integrated city in Xuan Cheng, 260km east of Shanghai.

The project will feature an international-standard entertainment park, an exhibition centre, hotels, shopping malls, offices and residential units on land owned by the Xuan Cheng Municipal Government.

Under the MOU, Sunway will be the master developer and will undertake a feasibility and market study on the proposed development.

By Business Times

Sunway Hldg rises on China property deal

Sunway Holdings Bhd, a Malaysian builder and property group, rose to its highest level in almost one week in Kuala Lumpur trading after signing a preliminary agreement for a China development.

The stock rose 2 per cent to RM1.52 at 9.20 am local time, set for its highest close since May 4.

By Bloomberg

Plenitude to buy Penang land

PETALING JAYA: Property developer Plenitude Bhd told Bursa Malaysia that it had entered into a sale and purchase agreement with Geotrade Sdn Bhd to acquire 27 parcels of freehold land in Batu Feringghi totalling 40.8 acres for RM45mil.

Plenitude said in an announcement to Bursa Malaysia that the acquisition would enable the company to tap on an existing project in the location.

By The Star

SunCity launched new development in Penang

An artist impression of the Sunway Aspera 3-storey terrace homes

Sunway City Berhad (SunCity) launched Sunway Aspera, a development that comprises 76 units of 2-storey and 9 units of 3-storey terrace homes in a relaxing seaside environment in Sungai Batu, Penang, on May 6.

These terrace homes are uniquely designed where life's best is experienced to its fullest in both an indoor and outdoor environment. Ideally nestled near the sea, these modern homes boast a built-up that is fitted with separate wet and dry kitchens, a spacious master bedroom with a dedicated walk-in wardrobe and a private bay window.

The estimated gross development value is RM47 million and pricing of the units starts from RM495,000 onwards. The lot sizes are 20’ x 60’ and 20’ x 65’ for 2-storey terrace houses and 22’ x 70’ for 3-storey terrace houses.

Sunway Aspera follows the success of the Group’s well-received development, Sunway Bukit Gambier which comprises of 3-storey courtyard homes, 3-storey semi-detached homes and 3-storey bungalows in Bukit Gelugor, Penang.

SunCity’s property development division, Malaysia, managing director Ho Hon Sang said, “The Group has been building quality properties in Penang since 1992 with the Seberang Jaya township which comprised of 3-storey shop offices while the first residential project was the 2-storey terrace houses and commercial shop houses at Sunway Tunas in Bayan Baru. At Sunway City, we place great emphasis on developing homes with lush greenery to provide families with a naturally relaxing and comfortable living environment as can be witnessed in completed developments such as Sunway Bukit Gambier and Sunway Tunas.”

“The launch of Sunway Aspera is another addition to our portfolio of properties in Penang and we intend to solidify our presence further with new launches in the future. We trust that with our established track record in building quality properties, Sunway Aspera will receive good response from the public.”

Apart from Sunway Aspera, SunCity has other projects in Penang, including Sunway Merica and Sunway Prima.

By The Star

Plenitude to buy land in Penang

PLENITUDE Bayu Sdn Bhd plans to acquire 27 parcels of freehold land for RM45 million in Penang's North East district to develop another residential project.

In a note to Bursa Malaysia today, the subsidiary of Plenitude Bhd said it would acquire the land from Geotrade Sdn Bhd-Eden Ferringhi Resort.

The acquisition is strategic as it would allow the group to tap on the success of the Bayu Ferringhi project in Batu Ferringhi, it said.

"The development of residential properties to be undertaken on the said land will not only provide Plenitude with a new sustainable source of income but it will also enhance its position in the property development sector," it said.

Plenitude Bayu, formerly known as Golden Valley Network Sdn Bhd has proposed to develop medium high-end, semi-detached houses and condominiums, with the target market being first and second home buyers, resort home buyers, expatriate community and Malaysia My Second Home applicants.

It said the purchase price of RM45 million for the parcels of land was derived after taking into account the development potential of the land arising from the surrounding matured housing and infrastructure.

It also took into account the established medium to high end, semi-detached and bungalow houses next to the land and the close proximity to Batu Ferringhi beach and town area.

The proposed acquisition is expected to be completed in the first half of the financial year ending June 30, 2011 and contribute positively to the group''s earnings in future years.

By Bernama

Allstones eyes deals to revive abandoned projects

Allstones Group Asia plans to revive a few abandoned housing and commercial projects in Malaysia, Thailand and Singapore, founder and chairman K.H. Sim said.

It has in the past revived three projects which are now called Taragon Yap Kwan Seng, Taragon Puteri Cheras and Taragon Puteri KL.

Sim said Allstones is focusing on Malaysia currently and is looking at two projects, but he declined to name them.

"We expect to complete the purchase of one project in the third quarter and start working on it by December. We hope to strike the deal for the second project in the fourth quarter and re-launch it early next year," he said.

The value of the two projects, including the three that Allstones has revived, is close to RM1 billion.
"It is challenging as sometimes banks don't want to take a haircut or shareholders don't want to sell. But it is a great satisfaction when it happens," he said.

Allstones has also been invited to do projects in Thailand and Singapore.

In Kuala Lumpur, Allstones is in talks to buy land for a residential development and hopes to seal the deal by year-end.

Sim said the outlook for residential properties in the Klang Valley is currently positive.

"If you are going to be an investor in properties, always look for projects that offer you value for money and go in early. And don't link yourselves to branded developers. Look for churns so you could have good returns," Sim said.

By Business Times

Allstones to set up RM750m fund

ALLSTONES Group Asia will set up a RM750 million property fund here by early next year to invest in distressed assets in Southeast Asia, founder and chairman K.H. Sim said.

The property development and investment group is also mulling to launch a real estate investment fund (REIT) in Malaysia or Singapore.

"I prefer a REIT instead of getting the company listed as we rather take the development risk ourselves and provide steady income to investors. We are building our investment portfolio," Sim said.

"In my view, REIT is quite an interesting valuation as it allows developers to monetise the assets. REIT is also a secured investment against buildings and assets," he said in an interview with Business Times in Kuala Lumpur recently.
On the fund, Sim said he is talking to a Singaporean and an Australian group as well as a local private investor to invest and make up about 10 per cent of the fund. The rest will be held by insurance and pension funds.

By Business Times

Sunway to build integrated city in China

SUNWAY Holdings Bhd plans to develop an integrated city in XuanCheng, 260 km east of Shanghai.

In a filing to Bursa Malaysia today, Sunway said the city would consist of an international-standard entertainment park, exhibition centre, hotels, shopping malls, offices and residential units.

It said the land would be acquired from XuanCheng Municipal Government.

"Sunway will be the master developer and will undertake a feasibility and market study on the proposed development.
"The project is expected to contribute positively to the future earnings of the company," it said.

By Bernama

New accounting method likely to affect property stocks

PETALING JAYA: The International Financial Reporting Interpretations Committee on real estate development (IFRIC 15), which will become applicable for the accounting period commencing July 1, is likely to affect investor sentiment in property stocks, analysts said.

Under the new ruling issued by the Malaysian Accounting Standards Board, property developers are to recognise revenue based on the completion method instead of the percentage-of-completion method in current practice.

ECM Libra Capital Sdn Bhd research head Bernard Ching said the new ruling could deter shareholders that based their investments on a company’s earnings.

“Investors that are not so sophisticated and less informed about the company’s operations will be deterred when they notice that the company’s earnings aren’t so consistent,” he told StarBiz.

“Fundamentally, this new ruling does not change anything as there is no cashflow impact. The only difference is recognition of the company’s accounting profits,” said Ching.

He said developers exposed to strata-high-end projects, which often take three years (as opposed to landed residential projects that take only two years) to complete would be most affected.

“Developers with projects that are few and spaced would have the most impact as opposed to say, township developers that have more projects. Large companies with good track records are least likely to see any impact.”

Ching said a way around this was for developers to become more transparent with their investors.

“The bulk of the listed property companies do not engage their investors. Companies like Sunrise Bhd are great at engaging investors, as they have regular analyst briefings and are quite transparent with their projects.”

“It’s up to the developer to be more transparent with their launches. Companies that consistently make headlines will continue to do well under the new ruling.”

An analyst from a local bank-backed brokerage who requested anonymity called the new ruling “silly.”

“It’s a silly rule. What is wrong with the way earnings are reported that requires it to be amended? Whoever came up with the ruling I feel has zilch industry experience.

“In terms of dollars and cents, it’s business as usual for the developers. Only on paper does it look different. However, it would deter investor confidence as company earnings would look choppy.”

He, however, added that the reaction, if any, would be temporary.

“Investors who are not aware may be shocked and this may create a knee-jerk reaction. But I think after a while, they will adjust.”

The analyst said he wasn’t going to revise his outlook for property stocks because of a “change in accounting rules.”

“A company’s share price is based on cashflow, not on accounting profit. A change in accounting rules does not mean the company isn’t making money.”

Affin Investment Bank, in a recent research report, said earnings for developers were expected to be lumpy and volatile, and might appear negative on the surface.

“Analysis on profit and loss, such as profit margins, (including quarterly earnings) will be tough, as it will be purely based on the guidance from developers on their job completion schedule. Earnings from newly launched properties can only be seen two to three years after the properties are completed.

“As such, valuations based on earnings are not quite valid to reflect future earnings prospects. Instead, valuations based on RNAV (revised net asset value) will be widely used to assess the relative attractiveness of different property stocks,” it said.

The research house does not anticipate developers to continuously launch projects just to have a healthy balance sheet.

“The property sector is known to be cyclical in nature and pretty much depends on economic conditions. Despite the adoption of IFRIC 15, we believe developers will still launch new properties at the best and right time that they reckon.

“Rolling out new properties regularly to smoothen out earnings does not make sense as developers will have to carry higher inventory, especially during bad times, which slows down turnaround time.”

It also said developers with fewer launches and smaller landbanks could be badly affected.

“Earnings could be in the red for a few years before we see positive earnings contribution from property sales. Furthermore, companies which have established a dividend policy may not be relevant anymore and investors and analysts will have to depend on guidance from management.”

By The Star

Sapura Auto to sell property for RM49m

SAPURA Auto Sdn Bhd is proposing the disposal of a piece of land in Kuala Lumpur, which presently houses an automobile showroom, to Sime Darby Motor Division Sdn Bhd for RM49.054 million, cash.

Sapura Auto, a subsidiary of Sapura Resources Bhd, said the proposed disposal could result in a net gain of RM22.98 million and address the continued losses arising from the group's automotive business.

"The proposed disposal enables the company to unlock the value of its assets and raise immediate funds which may be channelled towards the acquisition of new businesses, expansion of existing businesses and or pare down the group's borrowings," it said in a note to Bursa Malaysia today.

Sapura Auto bought the land and the building for RM26.13 million in November 2006.
However, the land and building has been collectively appraised by Messrs Henry Butcher for RM47 million in comparison with existing properties transacted around the vicinity.

By Bernama

Dubai house prices up 2pc year-on-year in Q1

DUBAI: Dubai house prices climbed 2 per cent year-on-year in the first quarter, their first annual rise since the 2008 financial downturn, but oversupply would pressure prices going forward, Colliers International said yesterday.

Prices in the Gulf Arab emirate, home to the world's tallest building, rose 4 per cent in the first quarter from the previous quarter.

That marked the third consecutive quarterly rise, Colliers said, in a sign that the property market is stabilising.

House prices in Dubai have slumped some 55 per cent since their peaks in the third quarter of 2008.
"There will be significant oversupply in the market by the end of the year so it is anticipated the index will experience fluctuations going forward," said Ian Albert, the firm's regional director, referring to its house price index.

"What will be important to watch is how much of the supply matches the end-user demand for community-oriented developments," he added.

Colliers International estimates that 41,000 homes will enter the market by the end of this year, mostly in the low to mid-income segments.

Colliers International said that while demand is not expected to match the supply growth.

Colliers remained unclear as to whether future supply would have a negative impact on established projects, which are typically more resilient to market conditions.

Albert added that while banks are starting to lend again, it was unlikely that all of the supply would meet the new and much stricter lending criteria.

Apartment prices in Dubai rose 6 per cent in the first quarter from the previous quarter, villa prices climbed 2 per cent while townhouse prices fell 4 per cent, the index showed.

House prices and rents are set to fall 10 per cent more in 2010 and not recover until 2012, a Reuters poll showed in April.

By Reuters

Mah Sing’s foray overseas

KNOWN for its shrewd land acquisition and fast project turnaround strategies, Mah Sing Group Bhd wants to leverage on its local success by venturing into new markets overseas.

The group aims to launch its maiden project in China by the first half of 2011. 


Tan Sri Leong Hoy Kum ... Supply and demand in China has still not yet reached an equilibrium, with demand for properties still far outstripping supply.

Group managing director cum chief executive Tan Sri Leong Hoy Kum says going offshore is one of the steps needed to realise the group’s aim to be a regional property player.

“Venturing overseas has always been our medium to long-term strategy. Our objective is to create an international brand by having offshore projects. At the same time, we will be able to improve our skills from these new markets,” he adds.

Within the next five years, Mah Sing is targeting sales from overseas to contribute 30% of its sales.

“The market is more global now and we feel there are opportunities to be tapped in other countries. Although our focus now is China, we have set up an office in Vietnam to evaluate opportunities there. We believe both China and Vietnam are population driven economies which will have a strong appetite for property,” Leong tells StarBizWeek.

It may also consider other countries like Singapore, Indonesia and Australia if there are opportunities.

Leong says Mah Sing will enter the foreign markets via joint ventures with suitable local partners.

“We will start with the right size so as not to stretch our balance sheet. When the returns are good and consistent, we will consider expanding our overseas presence.”

On the choice of China for its maiden offshore foray, Leong says property demand in China is population led and there are still plenty of opportunities there.

“Supply and demand in China has still not yet reached an equilibrium, with demand for properties still far outstripping supply,” he says.

China’s urban population is rising at 15 million per year, and assuming 15 sq m per capita living space and 40 sq m per unit, the potential demand requires 225 million sq m or 5 million units of smaller size housing units a year.

More than 70% of the land supply in 2010 has been allocated for urban renewal and for smaller to medium-sized apartments as they are in short supply. Developers focusing on smaller sized apartments from 45 sq m to 100 sq m will have a ready market.

He says landed properties should also do well due to the short supply.

“China has the world’s largest foreign exchange reserves, and it also has one of the most number of millionaires and billionaires in the world. The International Monetary Fund has forecast that China’s gross domestic product will grow by 10% these two years,” Leong says.

On the risk of a potential property bubble in China, he says the Chinese government has implemented swift and decisive steps including raising the downpayment for first time homebuyers to 30% from 20%, while those buying their second home have to make a 50% downpayment.

To curb speculative activities, the government has also reimposed the 5.5% transaction tax on properties held for less than five years. Credit lending has also been tightened and interest rates raised.

Last December, Mah Sing signed a letter of intent with its Chinese joint venture partner, Danlong Realty (Beijing) Co Ltd to undertake an integrated development in Wujin, Jiangsu.

Mah Sing has a 51% stake while the Chinese partner owns 49%.

It plans to develop a prime property project comprising medium to high-end residential and commercial properties.

The project on 87 acres along Wuyi Road, a major thoroughfare in the central of Wujin, has an estimated gross development cost of US$620mil.

“Since it is our first offshore project, we are careful in ensuring that our concepts, products and designs will fit in well with the local market. We certainly want to introduce some of our award-winning concepts and designs to China,” Leong says.

Residential products will include condominiums of around 1,000 sq ft while commercial projects will comprise retail outlets and offices.

Leong says Mah Sing is keen to explore other opportunities in China’s second and third-tier cities that are experiencing rapid residential, commercial and industrial developments.

“These are the cities that will be China’s engine of growth. Prominent international and Chinese developers are already entering these markets.

“There are so many cities that offer opportunities like Chengdu, Guangzhou, Dalian and Suzhou. The important thing is to find a good local partner, and also have the ability to work well with the local authorities,” he adds.

By The Star

Coping with the big tickets

Although there are buyers who have no qualms paying the prevailing high price for their dream house in a well sought after location, many Malaysians are really worried about the rising house prices and wonder how they are going to manage.

There is certainly cause for concern as a property is a big ticket item and paying for it takes up a big chunk of a person’s income. Depending on how much downpayment has been paid for a property, mortgage loan repayment can easily takes up to 40% of a borrower’s monthly paycheck.

National Housebuyers Association (HBA) honorary secretary-general Chang Kim Loong laments that even new graduates are finding it increasingly difficult to make ends meet these days.

He says a new law graduate who earns RM2,200 a month is also not in a position to sign up for a new house on their own (unless they have rich parents to chip in).

A decent terrace house in a relatively good location cost nothing less than RM400,000.

Owning a car is also another must-have item at least until the public transport system gets a total overhaul. Add them up with the other daily ancillary expenses including food, toll rates and petrol, among other things, we see why many people must be struggling to make ends meet.

There are some industry players who have the habit of comparing property prices in Malaysia with those in other countries like Singapore, China, Hong Kong and Bangkok, and comment that local property prices are still much cheaper.

It is not healthy to make such conclusions based on the property price alone. Other factors also should be factored in and it is important to see how much disposal income they have left after paying for all their expenses.

One of the most important considerations is the people’s income level. Malaysia is not yet a high income economy and most Malaysians are still stuck in the middle income trap. Although there is the aspiration to move the country up the income ladder, it will take a few years at least before that can be realised.

The whole economic structure needs to be revamped. Even at the service industry sector such as restaurants, employers have to be prepared to employ only Malaysians and pay them higher salaries.

Instead of relying on the cheap foreign labour, it is about time to revert back to our local staff. This is one of the necessary early changes that need to be implemented for the realisation of the Prime Minister’s New Economic Model.

As we know, things are getting more unpredictable these days and we are witnessing first hand that the only certainty is uncertainty.

The contagion effect of the global financial crisis is still raging in some parts of Europe and may spill over to other parts of the world.

Like pendulums, economies and industries are being subjected to the vagaries of the ever changing external environment. The most susceptible will be industries that depend on external demand, including commodities and manufacturers of products for export.

While the landed property market is still quite well cushioned from the external factors, there is still some degree of influence as far as foreign demand is concerned.

Being quite a “domesticated” market has its advantages as developers can depend on local buyers to drive demand.

The country’s relatively young population provides a ready catchment market and consistent demand for houses, especially mass housing products.

But the high-rise condominium market, especially in the KLCC area, is still languishing.

It will take a while for the new supply of condominiums to be absorbed and for prices to get back to their previous high.

For landed housing, demand has been kept robust by the prevailing low interest rates and easy availability of bank financing.

Given the intense competition among banks and ample liquidity in the system, mortgage rates will likely remain accommodative.

Nevertheless, it is important for all stakeholders to keep a close watch on the market and make the necessary changes whenever necessary to ensure the market remains stable.

Deputy news editor Angie Ng hopes buyers and industry players will exercise prudence for a sustainable and healthy property market.

By The Star (by Angie Ng)