MRCB to develop project with estimated GDV of RM300m

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is set to develop a luxurious high rise project with an estimated gross development value of RM300mil in Jalan Kia Peng, Kuala Lumpur.

MRCB acquired the 0.4 ha (one acre) tract of land for the project on Jan 7.

The planned project will be alongside established, luxurious service residences, within the general neighbourhood of the Kuala Lumpur City Centre.

MRCB chief executive officer Datuk Mohamed Razeek Hussain said although the status was leasehold, the prime location and scarcity of land in this posh area, as well as its proximity to numerous world class facilities and amenities, made the new development ideal for luxury residences.

By Bernama

China to replace property index

SHANGHAI: China has said it will stop publishing its much-watched national property price index a lightning rod for public anger over soaring housing costs and replace it with two new property indexes.

The National Bureau of Statistics said it was compiling two new indexes to gauge new and second-hand home sales starting with January figures and was halting the release of its survey of average home prices in 70 major cities.

It said the first data under the new system would be released today.

By AFP

MRT system to spark more JVs, M&As for land

KUALA LUMPUR: The Mass Rapid Transit (MRT) project is expect to spark more joint ventures and mergers and acquisitions (M&As) by property developers to secure strategic land banks near rail lines, says HwangDBS Vickers Research associate director Yee Mei Hui.

Yee said on Friday, Feb 18 companies without land bank near proposed MRT stations were likely to start hunting for land plots to benefit from expected gains from having property projects near the massive public transport infrastructure.

"For those without land bank, they'll need to act quite fast,” she said at a press briefing on property plays related to the MRT project.

Yee, who covers the property and gaming sectors, also said three mixed developments near MRT stops would set the tone for future property plays along the MRT system.

The three projects are KL Eco-City near the Mid Valley area, Capers in Sentul East and Damansara City in Damansara Heights.

By The EDGE Malaysia

Will an MRT affect the price of your properties?

File picture shows MRT and surrounding properties. - The Star

PETALING JAYA: While some property consultants and analysts have been bullish on the overall impact of the mass rapid transit (MRT) on property prices, another group of property consultants has reservations about the blanket “price hike” touted by their counterparts and other parties.

This second group of property consultants, together with sources familiar with the project, have an alternative view.

Their conclusion is: not all properties affected by the Sg Buloh-Kajang line will have a positive impact. In fact, there will be properties that will have an adverse impact.

A source who declined to be named said: “If you can hear it, see it, feel the vibration, but cannot access it, your property will be negatively impacted. You want it (MRT) close, but not too close.”

The 50km line that begins from Sg Buloh will splice through the monorail and light rail transit (LRT) in the city and head south towards Kajang, affecting a total 91,900 properties along the way. Of these, 82,700 units, or 90%, will be residential units with a total population of about 341,000. About 40% of these are located in the Sg Buloh-Semantan area, and 46% in the Cheras-Kajang area.

It will be the country's largest infrastructure project, reportedly costing RM36.6bil.

A source said: “Logically speaking, people should not oppose the MRT or any form of public transport. But, if it is going to affect your standard of living, either by the noise, vibration or visual impact, then it is logical for them to oppose it.

“Imagine this: you live in a quiet, serene area for years, and all of a sudden you have the MRT line running in front or behind your property. Your serenity is broken, your standard of living is negatively impacted, and so will the value of your property.”

The noise level will be tremendous. The MRT begins from 6am to midnight. In time to come, the MRT will run every 1.8 minutes.

The affected areas are Section 4 and 6 of Kota Damansara; Pelangi Damansara condominium; Taman Tun Dr Ismail; Damansara Utama; Section 17/52 Petaling Jaya; Bukit Bandaraya; Jalan Bukit Ledang; Bukit Damansara; Taman Desa Aman; Taman Connaught; and Taman Koperasi.

According to the executive summary posted on the Department of Environment website, as the line enters Kota Damansara, which is predominantly residential and remains so until TTDI, the line visual, vibration and noise level will be significant to properties in that area. And as the line enters the residential area of Cheras, the visual impact, noise and vibration level will also impact negatively on the property values there.

“Most of the measured noise levels exceeded the recommended limit for suburban residential area and urban residential area,” the executive summary said.

Reports that property prices would go up by between 100% and 500% were “too bullish”, said the group of property consultants. A property developer who has several projects in Kota Damansara said the visual impact, noise and vibration would affect values negatively.

Last week, the Land Public Transport Commission (LPTC) and Prasarana exhibited the alignment at Mid-Valley Megamall. They are seeking a location in Petaling Jaya to exhibit the alignment.

The MRT route will be displayed for three months at local authority offices in the Klang Valley, in Bangsar LRT station and at LPTC in KL Sentral. The environmental impact assessment will be displayed for one month from Feb 14 to March 14.

By The Star

MRCB to develop luxurious high-rise project with GDV of RM300mil

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) plans to develop a luxurious high-rise project with an estimated gross development value (GDV)of RM300mil in Jalan Kia Peng here.

In a statement today, it said the group had purchased a one-acre tract of prime land for the project on Jan 7.

The project, slated to be developed over three years would be set alongside established, luxurious service residences within the general neighbourhood of the Kuala Lumpur City Centre.

Chief executive officer Datuk Mohamed Razeek Hussain said although the land status is leasehold, the prime location and scarcity of land at this posh area as well as its proximity to numerous world-class facilities and amenities would make the new development ideal for luxury residences.

“Our experienced in mix commercial urban development involving high-rise residential towers in Kuala Lumpur Sentral and our constant access to market trends will enable us to inject new ideas that will ensure a project that is specially designed and will stand out in KLCC,” he said.

By The Star

Metro Kajang looks to grow its plantation business

KAJANG: Diversified group Metro Kajang Holdings Bhd, which currently has its core business in property development, is aggressively looking to grow its plantation division into another core business.

Metro Kajang other current businesses are trading, manufacturing, property investment and integrated livestock processing.

Executive Chairman Datuk Alex Chen said for the financial year ended Sept 31, 2010 (FY10), property development represented 62% of the company's turnover, while the balance 38% was spread between the other divisions.

Chen said, while property development remains Metro Kajang's core business the company expects its oil palm plantation division - which is still a fairly new business, to contribute more significantly to revenue in the coming years.

In Jan 2008, the company acquired 16,000 hectares in East Kalimantan, Indonesia via its subsidiary, PT Kam, in preparation for its second core business.

“We expect the plantation division to contribute about 20% to total revenue in FY12 onwards,” he said at a media briefing on Metro Kajang's current and upcoming projects.

On the property division, he said Metro Kajang ongoing and new projects were in Kajang, Semenyih, Bangsar and Kuala Lumpur. “We expect to generate a total gross development value (GDV) of RM2.1bil in the next five years or RM3bil over the next seven years from these projects,” he said.

He said in FY10/FY11 new property projects should amount to a GDV of RM586mil and expect more property projects to be launched the following years.

Within Kajang and Semenyih the company has about 800 acres landbank.

Metro Kajang's ongoing property projects include Kajang 2, its flagship integrated urban lifestyle township development covering 270 acres of freehold land in Kajang.

He said Kajang 2 would benefit from the rail transit extension and KTM network. Phase 1 of Kajang 2 slated to be launched first quarter this year has a GDV of RM157mil.

The selling price of two-storey terrace and semi-detached houses under Phase 1 range from RM429,000 to RM889,000.

Future phases of Kajang 2 would consists of residential and commercial units and has a GDV of RM1.25bil over eight years.

In a filing to Bursa Malaysia yesterday, Metro Kajang had proposed to implement a 1-for-10 bonus issue of 24.05 million new shares of RM1 each.

The company said the proposed bonus issue would be implemented by capitalising RM24mil on its retained earnings and it aims to maintain a minimum 5% per share dividend in FY11.

By The Star

Metro Kajang sees gem in plantation business

Metro Kajang's executive chairman Datuk Alex Chen expects contribution from plantation to exceed 30 per cent from 2013 onwards, instead of zero now.

PROPERTY developer Metro Kajang Holdings Bhd is beefing up its plantation business so it could account for a fifth of its earnings in 2012, its chief said.

Metro Kajang ventured into plantation in 2007 when palm oil prices were on the rise.

It bought 95 per cent of PT Khaleda Agroprima Malindo Plantation and is involved in the cultivation of oil palms and production of crude palm oil.



PT Khaleda owns 15,942ha of plantation land in east Kalimantan and 94 per cent has been planted as at February this year.
Executive chairman Datuk Alex Chen said he expects contribution from plantation to exceed 30 per cent from 2013 onwards, instead of zero now.

Currently, a bulk of the company's earnings come from property development. The rest is from property investment, integrated livestock processing, manufacturing and trading of building materials.

Chen said the fresh fruit bunch (FFB) output is targeted at above 10 tonnes per hectare in the first year, and 30 tonnes per hectare upon full maturity in five to six years.

Metro Kajang is spending RM42 million to set up a 60-tonnes a day mill near the plantation by this September. It will upgrade the mill to produce 90 tonnes daily by 2013 for some RM15 million more, he said.

Chen said going forward, Metro Kajang will focus on plantation and property development.

"We may raise capital through borrowings or a corporate exercise to buy land for our property and plantation divisions when the need arises.

"Plantation is a rising jewel for Metro Kajang. We are very ambitious for growth but will be cautious in any investment that we make," Chen said.

At a media briefing yesterday in Kajang, Selangor, Chen said it is looking to buy 20,000ha of plantation land from a local land owner in East Kalimantan for an undisclosed amount.

Chen, who is not new to plantation, having been in the business some 20 years ago, said Metro Kajang may buy rivals or merge with other plantation firms when the opportunity arises.

On property development, the company has RM3 billion worth of properties in its bag, which it is launching in phases until 2015.

The properties, comprising high-end landed residential and high-rise apartments as well as shops, are located in Kajang, Semenyih, Desa Melawati and Bangsar.

By Business Times

Plantation and property sectors boost IOI results

PETALING JAYA: IOI Corp Bhd's net profit rose 12.8% to RM520.2mil in the second quarter ended Dec 31, 2010 compared with RM461.2mil in the previous corresponding period mainly on higher contribution from its plantation and property divisions.

Revenue for the second quarter stood at RM3.97bil, which was 29.7% higher than RM3.06bil posted in the same period last year.

The company proposed an interim single-tier dividend of 80%, or 8 sen per ordinary share of 10 sen each, which is not taxable in the hands of the shareholders, be declared in respect of the financial year ending June 30, 2011.

In a filing with Bursa Malaysia, IOI said the plantation segment reported a 14% increase in operating profit to RM363.7mil for the second quarter compared with RM319. 9mil previously.

“The higher profit is mainly due to higher crude palm oil (CPO) and palm kernel prices realised. Average CPO price realised for second quarter in this financial year (FY11) is RM2,800 per tonne comp ared with RM2,225 per tonne for the second quarter of FY10,” it said, adding that the average palm kernel price realised for the second quarter o f FY11 was RM1,979 per tonne compared with RM1,089 per tonne previously.

It said the higher operating profit for property development and investment was mainly due to gains recognised on disposal of investment properties amounting to about RM61mil during the second quarter.

“Despite the higher profits achieved in refining activities, the resource-based manufacturing segment recorded lower profits mainly due to fair value losses on the adoption of FRS 139,” it said.

During the second quarter, the total fair value losses on derivative contracts recognised were about RM73mil.

For the first six months ended Dec 31, 2010, IOI's net profit jumped 8.4% to RM1.02bil from RM939.6mil in the same period last year. Its revenue was RM7.49bil, which was 18.2% higher th an RM6.34bil previously. IOI said the group was expected to perform satisfactorily in the current financial year underpinned by strong palm oil and palm kernel prices and a resilient property market.

CIMB Research said at 40% of its full-year forecast and 42% of consensus projections, IOI's core net profit for the firs t six months was broadly in line as it expected better secondhalf earnings.

“The second-quarter resourcebased earnings missed our forecast because of RM73mil fair value losses on derivative contracts following the adoption of FRS 139 in the current year. However, this was offset by a RM61mil gain on the disposal of investment properties,” the research house said.

It said the second-quarter results also included a RM20.6mil loss on foreign-denominated debts, which was a reversal from a gain of RM159.7mil in first quarter.

An analyst told StarBiz that IOI's results for the quarter under review were within market expectation and the group was expected to post better results in the second half.

“The group is expected to do well in the second half given the higher CPO price as well as manufacturing earnings, particularly a stronger earnings from downstream business. The current CPO price is over RM3,000 per tonne, which is higher than RM2,700-plus per tonne realised in the first half,” the analyst said.

By The Star

Race to let out office space

Colliers International says office investment yields are likely to remain stable at between 6 per cent and 6.5 per cent

Competition among lessors of office space in Kuala Lumpur is expected to intensify this year, with average rental of office space in the business district projected to remain unchanged at US$24.31 (US$1 = RM3.05) per sq ft a year.

Global real estate firm Colliers International said office investment yields are likely to remain stable at between 6 per cent and 6.5 per cent.

It said landlords will compete to secure tenants as vacancy rate is set to rise this year.

"Despite the improvement on the nett take-up, average vacancy rate is expected to increase towards the end of 2011," Colliers said in its Asia Pacific Office Market Overview for the fourth quarter 2010.

The publication, made available to Business Times, states that the office market in Kuala Lumpur will see an increase in fresh supply in the second half of 2011.

However, it said if completion schedules are deferred, prime office rentals are set to stay firm over the near term.

According to Colliers, over three million sq ft of new supply of office space in Kuala Lumpur business district is expected this year compared with 677,000 sq ft new office space last year.

This brings the total stock of office space in the area to 31.1 million sq ft compared with 28.1 million sq ft in 2010.

The take-up rate is likely to rise to 1.6 million sq ft, up from 1.2 million sq ft last year.

Colliers said the average vacancy is set to widen by nearly two-thirds to 15.5 per cent, from 9.7 per cent last year.

"One of the latest market trends is that tenants are increasingly focusing on 'green' office buildings for their present needs," it said.

In neighbouring countries, the supply of new office space in the central business district of Singapore, Bangkok and Ho Chi Minh City is also expected to rise this year. In Jakarta, the new office supply in its central business district is likely to drop, while there is no new supply in Manila's Makati.

While the average rental space in Kuala Lumpur is projected to be stagnant, the rental in the neighbouring countries is anticipated to increase.

In Singapore, the average rental of office space is set to grow from US$73.69 to US$88.85 per sq ft a year. Similarly, in Bangkok, the rate is projected to rise to US$25.14 from US$24.37 per sq ft a year.

In Jakarta, the rate is expected to grow to US$20.20 from US$19.28 per sq ft a year, while in Makati, it is projected to rise to US$19.33 from US$16.89 per sq ft a year.

However, in Ho Chi Minh City, the rate is projected to fall to US$41.20 from US$46.82 per sq ft a year.

On the regional outlook, Colliers said the office market in Asia Pacific will continue its recovery in anticipation of a further pick-up in demand this year.

"Despite the challenge of forthcoming supply cycles in individual centres, the overall absorption rate is predicted to increase, amid further enhancement of market sentiment largely spilling over from the buoyant asset markets in the region," it said.

By Business Times

MRT to have big impact on property prices

Those within 500-metre radius from station to appreciate the most

PETALING JAYA: Property valuers and developers expect the Klang Valley Mass Rapid Transit (MRT) project to have significant impact on the prices of residential and commercial properties along the MRT route.

Eric Oii, a member of the board of valuers, appraisers and estate agents said property prices - commercial and residential - along the MRT route could appreciate by 15% to 25% depending on the location of the property to the stations.

“We expect generally properties within a 500-metre radius of the MRT stations to have the most appreciation in value,” he told StarBiz yesterday.

Oii, who is also managing director of property consultancy firm Knight Frank Ooi said MRT linked to a network of lines integrated with the LRT, monorail, KTM Komuter and intra-intercity buses city would help ease traffic congestion and cut the cost of travelling.

However, Oii said in the short term, especially when the MRT was being built, it might cause inconvenience to some people especially those living or working close to the stations.

“The impact of building the MRT is expected to be more physiological to the community,” he said, adding that any major structural developments were expected to impact a certain group of individuals negatively.

There was an outcry by some residents in some suburbs (where the MRT stations are earmarked to be built) including those in Taman Tun Dr Ismail, who had criticised the development, claiming that the MRT station would cause traffic congestion, and possibly lower the value of their properties.

Ho Chin Soon Research Sdn Bhd director Ho Chin Soon concurred with Oii that there would be some disgruntled individuals who opposed the MRT project but in the long run it would benefit the majority of people, especially the lower income group that depended on public transport.

Ho Chin Soon Research is a local mapping and property research based company.

Based on the company's compilation of data on MRT stations in various countries, it can be concluded that they would help raise property prices.

“Properties close to the MRT stations can expect better appreciation once the station is built. And those very close to the station are likely to benefit also. In certain circumstances, some properties very close to the station may be impacted too resulting in a fall in prices,” he said, adding that such cases would be an exception rather than a rule.

Ho also said it would be reasonable to conclude that properties around a 500-meter radius to a MRT station would appreciate value once the station was built.

“Those within walking distance would still appreciate from its proximity to the station. Our tropical climate makes it not very conducive to walk longer than 10 minutes to a station,” he noted.

Ho also said a 15% to 25% upside in property prices (depending on locations) was be a reasonable level of appreciation for properties close to the MRT route, especially to the stations.

“We can also expect the MRT integration with other trasports lines like the LRT to further enhance the property prices of those especially in the Kuala Lumpur Golden Triangle as it would improve inner city connectivity.

An established property developer said many developers were looking to strategically build properties. especially condominiums close to the MRT stations.

“We want our property projects to be located within walking distance from a MRT station as we believe it would be a a major factor to potential home buyers. It is also easier to rent a property that is close to a station. All these factors should help boost the property value,” said the developer.

Information on the first stretch of the MRT route that connects Sungai Buloh to Kajang is available to the public at six designated location from Feb 14 to May 14.

They are Dewan Bandaraya Kuala Lumpur, Bangsar LRT Station, Majlis Bandaraya Petaling Jaya, Majlis Bandaraya Shah Alam, Majlis Perbandaran Kajang, Majlis Perbandaran Selayang and Suruhanjaya Pengangkutan Awam Darat.

The Sungai Buloh to Kajang MRT line is a 51km, of which 9.5km is underground.

The line will have 35 stations and is expected to have a ridership of over 400,000 passengers per day when completed.

Work on the line is targeted to commence in July and is expected to be completed in 2016.

By The Star

Naim plans more affordable houses as demand rises

KUCHING: Naim Holdings Bhd, which is focusing on building more affordable houses, targets to sell 850 properties this year.

Corporate services and human resource senior director Ricky Kho said as houses below RM200,000 were in strong demand, the company would launch more such properties, particularly at its flagship satellite township Bandar Baru Permyjaya in Miri.

Naim, Sarawak's largest property developer, has built about 12,500 houses and other properties in Permyjaya.

“We sold about 480 houses worth RM150mil last year compared with 530 units valued at RM152mil in 2009.

“Houses of higher value were sold in 2010,'' Kho told StarBiz.

He said about 65% of the houses sold last year were in Permyjaya. Naim's other property developments are Desa Ilmu and the Riveria in Samarahan.

Kho said the construction of RM60mil Permy Mall in Permyjaya was progressing well and the mall was expected to open its door before Christmas this year.

The mall will house a hypermarket, 160 retail shops, a food court and other facilities to serve the increasing population in the township.

Naim has a landbank of some 1,050ha in Miri, Kuching and industrial town Bintulu which has a combined gross development value (GDV) of some RM6bil when fully developed.

Naim recently entered into a joint venture (JV) with Cahya Mata Sarawak Bhd (CMSB) and Bintulu Development Authority (BDA) to develop Samalaju township in Bintulu.

The JV company, Samalaju Property Development, is now constructing temporary camp facilities for construction workers of industries in the Samalaju Industrial Park within the Sarawak Corridor of Renewable Energy (SCORE).

The first industry in the park is Japan's Tokuyama Corp, which is expected to start the construction of a poly-silicon plant next month.

On Naim's proposed extension of its property development activities to Sabah, Kho said the company had set up an office in Kota Kinabalu.

"We have identified several properties for acquisition or joint venture in Sabah but nothing has been finalised," he added.

By The Star

IGB ready to sell Gardens Mall - estimated at RM1bil - to KrisAssets

The proposed disposal of The Gardens Mall, seen here with Christmas decorations, will enable the IGB group to streamline its property holdings.

PETALING JAYA: IGB Corp Bhd's move to dispose of Mid Valley City Gardens Sdn Bhd (MVCG) to its 75%-owned KrisAssets Holdings Bhd is not entirely a surprise move as IGB has made its intention known for a while.

Analysts said IGB had expressed its intention to inject its investment properties into KrisAssets to unlock its value as well as to streamline its retail operations.

A local bank-backed analyst said the injection of The Gardens Mall into KrisAssets had always been in the books but the management had wanted the shopping centre to stabilise first before proceeding with any sale.

“The announcement confirms earlier speculation that IGB might divest some assets. IGB had said it would inject The Gardens Mall into KrisAssets way back even when it was commissioning it,” he said.

“Market talk is circulating that the announcement would be related to the divestment of The Gardens Mall to KrisAssets. This has been the plan although timing is an issue the management wanted the mall to stabilise before crystallising the value of the asset,” AmResearch Sdn Bhd said in a report prior to IGB's announcement.

“Further more, KrisAssets had recently executed the subscription agreement for the issuance of RM300mil convertible secured bonds, which would result in about RM500mil cash in hand,” it added.

On Monday, IGB announced that it had entered into a heads of agreement with KrisAssets to divest MVCG to rationalise and streamline its retail operations.

In a filing with Bursa Malaysia, IGB said it entered into an agreement with KrisAssets for the proposed disposal of 100,000 ordinary shares of RM1 each representing the entire issued and paid-up ordinary share capital in MVCG for a cash consideration.

MVCG is the owner and operator of The Gardens Mall, a retail property located in the Mid Valley City. The Gardens Mall is located adjacent to Mid Valley Megamall. The Gardens Mall has a strong tenant mix comprising about 200 stores.

“The proposed disposal will also enable the IGB group to streamline its property holdings whereby its retail properties will be consolidated and held under KrisAssets and this will allow the group to achieve greater operational efficiency and synergistic benefits,” IGB said in the statement.

It said both parties had reached an understanding that the purchase consideration would be based on the net tangible assets of MVCG based on the audited financial statements for the financial year ended Dec 31, 2010 (FY10) and the market value of The Gardens Mall and the land it sat on, with an indicative value of RM820mil.

“The proceeds from the proposed disposal will be utilised for new investment opportunities. IGB will continue to derive benefits from the future growth of The Gardens Mall via KrisAssets,” it said.

KrisAssets said the proposed acquisition would substantially increase the net lettable area of its retail assets and, upon completion of the proposed acquisition, KrisAssets would own two prime retail properties in Kuala Lumpur.

AmResearch estimated The Gardens Mall to be valued at close to RM1bil. “This is based on a cap rate of 6.5%. This would most likely be funded by cash with outstanding warrants of 106.3 million (at strike price of RM2.50). There will be an additional cash of RM266mil assuming full conversion of the warrants,” the research house said.

“If this was to go through, we view the exercise positively given that the unlocking of The Gardens Mall would provide a stronger ammunition for landbanking for IGB we estimate the group to be in net cash position post-exercise,” AmResearch said.

However, the research house said the divestment of other assets might take some time, as KrisAssets would be faced with funding issues to acquire the remaining of the Mid Valley City's assets such as Mid Valley and Gardens office towers and hotels with an estimated combined value of RM2bil to RM3bil. Thus, it thinks the establishment of a real estate investment trust (REIT) may not materialise.

An analyst agrees with AmResearch. He said KrisAssets' plan for a REIT seemed unlikely for now though IGB would be injecting its newer Gardens assets, such as office towers and hotels, as they matured into KrisAssets. “This could also unlock value we saw when IGB injected Mid Valley Megamall into KrisAssets at market value for cash and shares in KrisAssets, which resulted in a gain of over RM800mil,” he said.

He expects a similar transaction involving cash and shares for the disposal of MVCG to KrisAssets.

By The Star

IGB to sell The Gardens Mall to subsidiary

IGB Corp Bhd plans to sell The Gardens Mall, which has an indicative value of RM820 million, to its subsidiary KrisAssets Holdings Bhd, for cash as part of its ongoing streamlining scheme.

KrisAssets, its 75 per cent unit, essentially operates like a real estate investment trust, and the purchase will give it a new source of recurring income.

IGB entered into an agreement yesterday for KrisAssets to buy all of the shares in Mid Valley City Gardens Sdn Bhd (MVCG).

The purchase price will depend on the net tangible asset of MVCG for the fiscal year ended December 31 2010. The four-year-old The Gardens Mall has an indicative value of RM820 million.
KrisAssets now has two subsidiaries - Mid Valley City Sdn Bhd, which owns and operates the Mid Valley Megamall and Mid Valley Capital Sdn Bhd (MV Capital), which is the funding vehicle for the issuance of the RM400 million redeemable secured serial bonds in September 2004.

IGB said the proposed sale will enable the group to streamline its property holdings whereby its retail properties will be consolidated and held under KrisAssets. It would also allow the group to achieve greater operational efficiency and synergistic benefits.

IGB will use the sale proceeds for new investment opportunities.

"IGB will continue to derive benefits from the future growth of The Gardens Mall via KrisAssets," it said.

KrisAssets said the deal would enable it to achieve the required scale to enhance its competitiveness in the retail sector.

"There would be potential synergistic benefits arising from the proposed acquisition, which include, amongst others, cost savings, operational streamlining and collaborative marketing strategies in the Mid Valley City as a whole," KrisAssets said.

Trading in shares of both IGB and KrisAssets have been suspended since February 11 pending the announcement.

By Business Times

IGB, unit ink deal to streamline retail ops

KUALA LUMPUR: IGB Corp Bhd has entered into a heads of agreement (HOA) with its 75%-owned KrisAssets Holdings Bhd to divest Mid Valley City Gardens Sdn Bhd (MVCG) to the latter to rationalise and streamline its retail operations.

In a filing with Bursa Malaysia yesterday, IGB said it entered into an HOA with KrisAssets for the proposed disposal of 100,000 ordinary shares of RM1, representing the entire issued and paid-up capital in MVCG, for a cash consideration.

MVCG is the owner and operator of The Gardens Mall, a retail property in Mid Valley City. The Gardens Mall, located adjacent to Mid Valley Megamall, has a strong tenant mix comprising about 200 stores.

“The proposed disposal will also enable the IGB group to streamline its property holdings whereby its retail properties will be consolidated and held under KrisAssets,” IGB said in the statement.

IGB said both parties had reached an understanding that the purchase consideration would be based on the net tangible assets of MVCG based on audited financial statements for the financial year ended December 31, 2010 (FY10) and the market value of The Gardens Mall and the land it sat on, with an indicative value of RM820mil.

“The proceeds from the proposed disposal will be utilised for new investment opportunities. IGB will continue to derive benefits from the future growth of The Gardens Mall via KrisAssets,” it said.

In a separate statement, KrisAssets said the proposed acquisition would substantially increase the net lettable area of its retail assets, noting that upon completion of the proposed acquisition, it would own two prime retail properties in Kuala Lumpur.

“The proposed acquisition is a key step to merge the property investment business in the retail segment of IGB and would enable KrisAssets and its subsidiaries to achieve the required scale to enhance its competitiveness in the retail sector,” KrisAssets said.

It added that there would be potential synergistic benefits arising from the proposed acquisition which include cost savings, operational streamlining and collaborative marketing strategies in Mid Valley City as a whole.

IGB's net profit jumped 70.5% to RM53.1mil for the fourth quarter ended Dec 31, 2010 (FY10) from RM31.1mil previously. Revenue for the period rose 29% to RM214.9mil against RM166.3mil a year ago due to higher contributions from all operating divisions.

For the full year, IGB's net profit rose to RM174.3mil from RM158.9mil on a 11.9% rise in turnover to RM719.4mil. It has declared an interim dividend of 5% less tax for FY10.

In addition, a share dividend was also declared for FY10 by way of distribution of a tax-exempt share dividend on the basis of one IGB treasury share for every 100 existing IGB ordinary share of 50 sen each.

By The Star

Malaysia ranks 'average' in Green City survey

SINGAPORE is Asia's greenest city, while Kuala Lumpur ranks average in a green city survey, together with the likes of Bangkok, Jakarta, Beijing, Shanghai and Delhi.

This was the finding of the Asian Green City Index survey carried out by the independent Economist Intelligence Unit.

The EIU examines the environmental performance of 22 major Asian cities in eight categories - energy and CO2 (carbon dioxide), land use and buildings, transport, waste, water, sanitation, air quality and environmental governance.

Singapore stands out in particular for its ambitious environmental targets and efficient approach towards achieving them.

"Overall, the index is a good reflection of where Kuala Lumpur stands in terms of its sustainability.

"Ranking average overall is a great start for Kuala Lumpur and this index is a stepping stone for us to move forward to improve our city's livability factor," Siemens Malaysia Sdn Bhd president and chief executive officer Prakash Chandran said in a statement.

Kuala Lumpur scores well for better-than-average levels of sulphur dioxide, nitrogen dioxide and suspended particulate matter. Average daily sulphur dioxide emissions are particularly low here at 6 micrograms per cubic metre.

Kuala Lumpur also ranks average in terms of environmental governance, land use and buildings. With 44 sq m of green space per person, the city is above the index average of 39 sq m.

According to the study, energy and CO2 are among the biggest challenges facing Kuala Lumpur's environmental condition.

"Automobiles have driven annual CO2 emissions per capita past the index average of 4.6 tonnes to an estimated 7.2 tonnes," according to the statement.

Sanitation is also another issue where only an estimated 70 per cent of the city's population has access to sanitation, while a significant number of households are still served by primary sewage treatment plants, such as septic tanks.

Meanwhile, the city centre's waste generation is 816 kg per capita per year, more than double the index average of 375 kg.

Rapid population growth and relatively poor waste collection and disposal played a major factor in determining the scores for the city in this category.

The study also found that Kuala Lumpur was well below average in the water category, due to a combination of relatively high water consumption and one of the highest leakage rates in index, with water leakages running at an estimated 37 per cent, compared with the index average of 22 per cent.

By Business Times

Mah Sing has RM3b projects in the pipeline

Mah Sing's group MD says there will be sustained demand in mid-tier to high-end properties, both landed and high rise in the residential, commercial and industrial segments.

Mah Sing Group Bhd, Malaysia's fifth largest property developer by revenue, is ready to roll out RM3 billion worth of new launches this year on positive domestic economic outlook.

Group chief executive and managing director Tan Sri Leong Hoy Kum said he was bullish on sales moving fast paced as ripple effects from recent government initiatives will bring more to buy properties.

Speaking to Business Times, Leong said initiatives under the Economic Transformation Programme and 10th Malaysia Plan should boost property demand with expected increase in job creation, urbanisation, the standards of living and income level.

He expects wealth creation from the local stock market to also have an impact on the property sector as gains are invested in physical properties.
"The property market has done well in 2010 and we are confident that the momentum is sustainable into 2011 as the current buying pattern is backed by fundamentals of the economy and purchasers," Leong said.

Leong feels there will be sustained demand in mid-tier to high-end properties, both landed and high rise in the residential, commercial and industrial segments.

Mah Sing's new launches will comprise a mix of landed residential, niche size serviced residences, shop offices, retail units, small office/home office and industrial.

Leong said projects featuring lifestyle elements and community living with facilities like a clubhouse and pool will continue to do well.

To meet the demand in this segment, Mah Sing will offer Garden Residence in Cyberjaya, Kinrara Residence in Puchong, One Legenda and Hijauan Residence in Cheras, and Legenda@Southbay on Penang island.

These projects will feature superlink homes, semi-detached homes and bungalows.

Mah Sing will also offer smaller units for serviced residences and condominiums in the second half of this year to provide easier entry for investors, leading to higher take-up rates. Here, it will roll out M-City@Jalan Ampang, Leong said.

The company will also launch Icon Residence and Ferringhi Residence in Penang, and Austin Suites in Johor Baru, Johor.

For commercial projects, Mah Sing intends to launch Star Avenue in Damansara, and Icon City in Petaling Jaya in the first half of this year.

Meanwhile, the third industrial project under the iParc series, iParc3@Bukit Jelutong, will be launched by mid-year.

Leong said in line with the company's strategy of a fast turnaround, it will preview these new projects soon, while scouting for prime land.

"Although our landbank is enough to sustain us for the next seven years, we are looking for sizeable pieces of land and we have the balance sheet to fund the acquisition," he said.

Mah Sing, which has a cash pile of RM233 million, made 10 land transactions involving 118ha for RM756 million last year.

By Business Times

Mah Sing upbeat on achieving RM2.5b sales

Mah Sing Group Bhd is expected to be one of the best performers this year, with a bullish sales target of RM2.5 billion.

The target is 70 per cent more than 2010 and the highest on record.

Group chief executive and managing director Tan Sri Leong Hoy Kum told Business Times he was confident of Mah Sing meeting the sales target considering it has 33 ongoing projects valued at over RM9 billion and RM3 billion worth of new launches planned for this year.

Leong said the confluence of strong fundamentals and its branding, locations, concepts and products will make 2011 another good year for Mah Sing.

The company is one of the fastest growing property development companies in Malaysia and the most diversified property player as it offers products in various segments.
Its products offering are mainly commercial projects, mixed development and medium-to-high end residential properties with focus on the Klang Valley and Penang. Mah Sing also has township projects in Johor, and all these offer stable earnings stream.

The company's revenue and net profit, over the past five years, has grown at a compounded annual growth rate of 8.2 per cent and 14.3 per cent respectively.

The growth was achievable because of Mah Sing's quick turnaround strategy in developing smaller parcels of prime landbank that offer quicker turnaround timeframe.

The strategy had enabled the company to unlock land value in shorter timeframes and free up cashflow.

MIDF Research opined that Mah Sing's 2010 financial results, to be released by end-February, is expected to exceed 2009's top and bottom lines by 37 per cent and 20.9 per cent respectively (base on consensus forecast).

For fiscal 2009, Mah Sing posted a net profit of RM94.3 million on revenue of RM701.6 million.

On the company's stock movement, MIDF said investor's confidence in Mah Sing has improved after undergoing transformation with consistent growth of revenue and earnings as well as maintaining a healthy balance sheet over the past five years.

By Business Times

Encouraging sales in second half of 2010 likely to continue, says Johor Rehda

A view of the clubhouse in Horizon Hills in Nusajaya. Nusajaya has become a property hotspot in Iskandar Malaysia.

JOHOR BARU: Property developers in Johor can look forward to a better year ahead as the industry in the state is beginning to show signs of recovery.

The chairman of the Johor chapter of the Real Estate and Housing Developers Association (Rehda) Simon Heng said a majority of its members reported encouraging sales in the second half of 2010.

“Our members are upbeat that the momentum is likely to continue this year and probably until the first quarter of 2012, provided there are no unforeseen circumstances in the economy,'' he told StarBiz.

Heng noted that in the last Malaysia Property Expo (Mapex) held here in November, the 33 developers which took part in the four-day event raked in RM300mil in sales over a one-month period compared with RM140mil recorded in April.

He said the 30-day period starting from the first day of Mapex was the benchmark used by Rehda to determine the value of sales by participating developers.

Heng said the RM300mil was the highest figure recorded in the history of Mapex Johor in many years and attributed the jump in sales to factors such as the improvement in the regional economy after the 2008-2009 global recession, and an increase in the number of first time buyers and “upgraders” in the local property market.

“Many first-time house buyers and upgraders bought their properties in the second half of 2010, as they anticipated that prices of properties were going to increase further this year,'' Heng said, adding that prices of residential properties in Johor had increased by 10% in the second half of last year, and would increase further between 5% and 10% within the next six months.

Heng said commercial properties and industrial buildings had recorded even higher price increases of between 20% and 30% as demand for these properties increased in the recent years.

Driving factor

Higher prices of buildings materials as well as labour woes, especially a shortage of Indonesian workers, who form much of the workforce in the construction industry, have also contributed to rising property prices, according to Heng.

“Iskandar Malaysia will continue to be the driving factor in boosting demand for properties in the southern-most part of Johor, especially the high end residential properties,'' he said.

SP Setia Bhd executive vice president Datuk Chang Khim Wah said property buyers had accepted that an increase in the prices of properties in Johor was inevitable, as the same was happening in other parts of the country.

Despite that, buyers were coming back to the market, especially first-time house buyers and upgraders, on anticipation that propety prices would continue to rise, he noted.

Chang said there was an equal division between first timers and upgraders in its four ongoing projects in Johor namely Bukit Indah, Setia Tropika, Setia Indah and Setia Eco Gardens.

He said the completion of several major ongoing road projects in Iskandar Malaysia such as the New Coastal Highway, Eastern Dispersal Link Expressway and Senai-Pasir Gudang Desaru Expressway in the next one to two years would improve connectivity in the southern-most part of Johor.

“We also see the demand for strata-title properties in the Johor Baru market going up in the recent years and we are going to tap on this growing segment,'' said Chang.

He said buyers for the strata-title properties were mostly young professionals, newly married couples, expatriates working in Iskandar and Malaysian professionals working in Singapopre.

Chang said prospective buyers in the Johor Baru property market were now becoming more selective and demanding and wanted more than just roofs above their heads unlike 10 to 15 years ago.

He said they were willing to pay more for their properties and had high expectations, including better designs, layout, amenities, nice landscaping and safety and security features.

Country View Bhd marketing manager Andrew Tan said 2010 was generally a bullish year for developers in Johor compared with 2008 and 2009, which was considered “slow years ” for many developers due to the global economic recession.

Tan said landed properties remained the most sought after in the Johor Baru property market but strata-title properties were also gaining popularity, especially among young people.

He said strata-title properties, especially those located nearer to the Johor Baru city centre and the Customs, Immigration and Quarantine complex in Bukit Chagar, were popular because of the close proximity to Singapore.

Tan said the 9,712.45ha Nusajaya area was currently the property hotspot in Iskandar, overtaking the Tebrau area which has established housing schemes.

The completed projects in Nusajaya are the phase one of the Johor State New Administrative Centre, Kota Iskandar Complex and Puteri Harbour, while the ongoing projects include Asia's first Legoland Theme Park, Newcastle University Medical Malaysia, New Coastal Highway and Indoor Theme Park @ Puteri Harbour.

Country View is currently developing the 121.4ha Nusa Sentral project in Nusajaya which will keep the company busy for eight years.

It is also building 12 bungalow units priced between RM3.6mil and RM6.5mil each at Johor Baru's most sought after address Jalan Straits View.

“Demand for properties in Nusajaya is set to rise in the future,'' said Tan.

By The Star

APM sees brisk sale of The Arc@Cyberjaya

Datuk Vincent Tiew with a model of The Arc@Cyberjaya project.

ANDAMAN Property Management Sdn Bhd (APM), which is currently undertaking its largest property project by far The Arc@Cyberjaya in Cyberjaya with a gross development value of RM700mil expects to sell all of its 1,000 units by year-end.

APM was incorporated in 2009 as a property management and property-related services company by a few individuals of the previous management of the Andaman Group, an established property developer.

APM executive director and head of sales and marketing Datuk Vincent Tiew says since the company's formation, it now has ten property projects in hand with a total gross development value of RM2bil.

“We have been operating for only three years and I believe we have come far to anchor ourselves as a respectable property management company; our clients are mainly property developers and landowners,” he tells StarBizWeek in a recent interview.

Tiew says The Arc@Cyberjaya, the company's single largest freehold property project is expected to be launched in March.

“We have several phases to the project. The first phase will comprise 250 units priced at an average of RM350,000 per unit.

The Arc@Cyberjaya should be fully occupied by 2015,” he says, adding that the property project would be an iconic landmark in Cyberjaya once the apartments and 15 badminton courts with five office/campus tower blocks are completed.

Tiew is confident of full occupancy for the project as the company has provided “strong incentives” for home-buyers.

Homebuyers of The Arc@Cyberjaya can expect an 8% gross rental guarantee per annum for up to 25 years based on the company's four-year + four-year lease-back-option for six times plus an additional year.

“We can afford to guarantee the gross rental rate because we have a contract with the Multimedia University to provide hostel like accommodation for first and final year students,” Tiew points out.

The owner of The Arc@Cyberjaya is developer Maju Puncakbumi Sdn Bhd.

It is APM's strategy to price their property units at “affordable” levels for the mass market. “We generally build homes for the mass market and price them to allow for favourable upside in capital gain in the medium term with secured rental-yield return,” he elaborates.

He points out that some of the company's other property projects also have a gross rental guarantee of 8% per annum, but the tenure was shorter. They include the Cova Villa at Kota Damansara comprising 346 units at an average of RM300,000 per unit with three years and another three years lease-back-option.

Cova Villa at Kota Damansara, which was completed in 2009, says Tiew mainly caters to the students of Segi College.

Yet another property project of APM Casa Residenza at Kota Damansara, which has a GDV of RM126mil comprising 357 units at average price of about RM380,000 per unit was launched last year and was sold off within two days.

The property project also has a three-year + three-year lease-back-option at 8% gross rental guarantee per annum.

Its recently-launched 44 units of commercial shops at Kota Damansara was also sold out within two days for the total sales value of RM135mil. Construction is in full steam now and completion with Certificate of Fitness is anticipated within 18 months from sales and purchase date.

Other upcoming projects include the Selangor Science Park 2 in Cyberjaya (GDV RM180mil), The Academia@South City Plaza in Seri Kembangan (GDV RM65mil) and four and five-storey shop offices that include a mall at Bangi with a GDV of RM500mil.

APM markets its property projects via its five sales galleries located in Bangi, USJ, Kota Damansara, Ipoh and Johor Baru and it has a strong 2,000 odd loyal existing customers/buyers for the various projects in the pipeline.

According to Tiew, the company plans to brand itself as a premier property management company that provides developers and landowners the option to leave the job to APM to fully build and manage their properties.

“APM has the expertise to customise a building for a developer/owner and to run the day-to-day property-service related activities including rental and tenancy management, security, billing/credit control, carpark management, and food and beverage,” he says.

“We have scalability and can source for building materials at very competitive prices because we constantly have ongoing property projects,” he adds.

By The Star

Is it more viable to buy or rent a house?

In today's environment of rising home prices, is it more advantageous to buy a house or rent a house?

While most people unanimously agree that owning a home is better, the financial situation of the individual is important in assessing whether he or she can afford the home.


James Wong ... ‘It’s better to buy than rent as the loan you pay to the bank is equivalent to the rental you are forking out.’

VPC Alliance (KL) Sdn Bhd managing director James Wong says it is always better to own a home. But one's financial ability will play a big part in the choice of a house, he adds.

“Of course, it's better to buy than rent as the loan you pay to the bank is equivalent to the rental you are forking out,” says the boss of the property consultant firm.

Young people are advised to look into their finances and ensure their existing debt ratios are not too high before buying a house. They also need to consider the stability of their jobs to ensure they will be able to make the monthly loan instalments, Wong says.

“If a person's debt ratio in relation to his salary is already close to 50%, chances are banks will not qualify the loan. If a person's salary is too low, meaning that the mortgage amount to be paid is more than 50% of a person's salary, the bank may also hesitate and require more documentation to approve the loan.

“These days, with the easy payment packages by banks and the ability to withdraw from one's Employees Provident Fund (EPF) savings, owning a house has become more affordable,” says Wong.

Certainly, potential house buyers can now tap on their EPF account 2 to purchase a property. First-time house buyers can still qualify for loans of up to 90%

During Budget 2011, the Government said it will introduce Skim Rumah Pertamaku through Cagamas Bhd, which will provide a guarantee on the downpayment of 10% for houses below RM220,000.

This scheme is for first-time house buyers with household income of less than RM3,000 per month. In other words, the buyers will obtain a 100% loan without having to pay the 10% downpayment.

First-time house buyers will also be given a stamp duty exemption of 50% on instruments of transfer on house prices not exceeding RM350,000. The Government also proposed that a stamp duty exemption of 50% be given on loan agreement instruments to finance such first-time purchase of houses.

“If you rent a home, especially in today's environment of rising prices, you will never benefit from the increase of the property value. Furthermore, even if the value of the home does not increase over time, the mortgage balance decreases and equity builds,” says another property consultant.

“With the problem of inflation creeping up, the more you delay buying a house, the more expensive it becomes over time. Buying property is one way to fight inflation,” he adds.

In terms of disadvantages in owning a house, there are many variable costs involved, for example the house assessment, service or maintenance fees and fire insurance among others.

“Selling the house may also not be as quick as, say, selling your investments in shares. The whole process of selling, along with documentation by lawyers can take up to a year, depending on the location of the home. If there is already a potential house buyer, the process can be sped up to 3 months,” says the property consultant.

Khong & Jaafar managing director Elvin Fernandez gives a quantitative example between buying and renting a property.

If a typical middle class 2-storey terrace house in Kuala Lumpur is RM400,000 and the rent is RM1,500 a month, the nett yield is RM3.8%.

“This is a reasonable return from such a landed property,” he says.

Assuming that the household income is about RM7,000 a month, this means that the ratio of the household income per annum to the house price is 4.76 times.

“To buy this house based on 90% financing at a fixed interest loan for 30 years, you would have to pay a 5% interest, which means a monthly expense of about RM1,900 a month. At this point of the exercise, it is clearly better to rent than buy,” he elaborates.

Still, he adds: “This analysis is based on what I consider the typical housing unit. Different considerations may apply for different types of housing units in different areas.”

Another powerful motivation in favour of buying rather than renting is the social imperative to own a home.

“Owning a house also allows you to raise credit as and when it is needed, for family expenses and for business purposes, and this is a powerful motivation for ownership,” says Fernandez.

By The Star