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Tuesday, April 5, 2011

AP Land to complete resort project despite March 11 quake

KUALA LUMPUR: Asia Pacific Land Bhd (AP Land) plans to complete the Shiki Niseko project in Niseko, Japan by the end of 2012 despite the March 11 earthquake and tsunami in the country.

AP Land joint managing director Low Su Ming said the ground-breaking for the project would be held next week.

“We have awarded the contract for the construction of the project and locked in the cost. So, we won't be affected by the expected increase in the cost of construction materials in Japan as a result of the reconstruction of the devastated areas caused by the earthquake and tsunami. Despite the catastrophe, we are not overly concerned over the impact to our project as the disaster area is located more than 600km away from Niseko.

“We are still confident in the vast untapped potential of Niseko as an international ski resort to cater to the growing affluence in various Asian markets,” Low added.

The company would be organising road shows to Australia and other target markets, she said, adding that the buyers were from Hong Kong, Singapore, China, Malaysia and Australia.

Shiki Niseko is AP Land's maiden development in Japan. The project comprises 69 units of one, two and three bedroom high-end residences with commercial component in the heart of the ski village, known as central Hirafu.

About 60% of the project have been booked and of this, 30% of the buyers have paid the downpayment.

While most investors had taken a long-term position and were prepared to ride out any short-term volatility, two to three buyers might pull out from the deal due to concerns about radiation from the quake-stricken nuclear plant in Fukushima, she said.

To address the concerns, AP Land had invited property consultancy LJ Hooker Niseko Resort branch manager Derek Kennewell to brief the project's buyers and the media on the actual situation in Niseko.

According to Kennewell, Niseko is located more than 600km from the disaster zone and there is no threat of radioactivity contamination.

By The Star

New Age buys land in Kuantan from EPF for RM12m

KUALA LUMPUR: Boutique developer New Age Portfolio Sdn Bhd is buying a piece of land in Kuantan, Pahang, from the Employees Provident Fund (EPF), which has potential to generate RM120 million in gross development value.

New Age is buying the 10.4ha land for RM12 million, said its chief executive officer Lai Yeng Fock.

The land is part of the 200ha Indera Mahkota 2 township, in which Pasdec Holdings Bhd is one of the major developers.

"We are negotiating the terms of the sales and purchase agreement with the EPF. We hope to start building the houses by the third quarter of this year," Lai told Business Times in an interview recently.

According to Lai, the project will be undertaken by a new company called Armada Bayumas Sdn Bhd, controlled by him and two other property investors.

Lai said he is also talking to a land owner in Klang, Selangor, for a big project.

"I want to be a long-term player in property development and some day develop a township that I can be proud off. My initial target is Klang Valley," Lai said.

Lai has over 20 years of experience in property development, starting with Talam Corp Bhd in 1986 and Brisdale Holdings Bhd. His final post was at WCT Land Bhd as its executive director.

At WCT, Lai was involved in key projects such as Bandar Bukit Tinggi in Klang, d'Banyan Residency @ Sutera Harbour, Sabah, and The Platinum Plaza in Vietnam.

He left WCT in 2008 to set up New Age with four partners, all businessmen. Its first project was Kinrara Hills in Puchong, Selangor, featuring 50 units of semi-detached houses that were fully sold.

"My selling point is extending the defect liability to 36 months from 24 months and offering three-year after sale service," Lai said.

New Age is planning a luxury condominium project in Kota Kinabalu due for launch this year, via its associate, Laser Plus Sdn Bhd.

Lai expects New Age to generate revenue of RM40 million in the current financial year to December 31, with two-digit growth year-on-year.

By Business Times (by Sharen Kaur)

Iris Corp in Senegal property JV

PETALING JAYA: Iris Corp Bhd (ICB) through its subsidiary Iris Land has entered into a joint venture agreement (JVA) with Caisse Des Depots Consignations (CDC), a Senegalese government-owned trust company, for the proposed joint venture (JV) to construct and complete a mixed development of residential and commercial units in Senegal with gross development value of RM800mil.

The group told Bursa Malaysia yesterday that Iris Land will hold 49% stake in the JV while the remaining will be own by CDC .

It said Iris Land will finance its obligations via a combination of bank borrowings and internally-generated funds.

It added that the JV is an additional opportunity for ICB to venture into the property development sector in Senegal and this proposed JV represented an additional revenue stream to ICB.

ICB said the JVA would not have any effect on the issued and paid-up share capital, substantial shareholder's shareholding earnings, earnings per share, net assets per share and gearing of ICB group for the financial year ending Dec 31, 2011.

Barring unforeseen circumstances, the board is of the opinion that the JVA will contribute positively to the earnings and earnings per share of the ICB group in the future.

By The Star

MRCB expects to land more govt jobs

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is expecting more government jobs under the Economic Transformation Programme (ETP), having bid for projects worth over RM2 billion.



Chief executive officer Datuk Mohd Razeek Hussain said one of its key performance indicators for 2011 is to grow the company's revenue by 20 per cent to RM1.3 billion and achieve RM150 million in profit before tax (PBT).

For fiscal 2010, MRCB posted a PBT of RM97.6 million on revenues of RM1.1 billion.

Among the projects MRCB is bidding for are package A and B of the LRT extension project, worth some RM1 billion and RM600 million respectively.

"If we can get one of the two packages, we would have achieved 40 per cent of our target," he said yesterday after the company's shareholders meeting.
MRCB has secured two projects under the ETP - the development of the 6-star St Regis Hotel at Kuala Lumpur Sentral in Brickfields, and the River of Life project.

Razeek said MRCB is negotiating with the government on the scope of works for the project, where it holds the letter of intent with its joint-venture partner, Ekovest Bhd.

The project includes cleaning and beautifying the Klang and Gombak river, and planning some developments along it. He declined to reveal the project cost.

OSK Research estimates the project to be worth RM8 billion to RM10 billion.

Meanwhile, MRCB, which has RM4.2 billion worth of ongoing property projects, plan to launch three new developments valued at RM2.6 billion between May and December this year.

These include an office tower and residences at KL Sentral and a high-end condominium project at Jalan Kia Peng, Kuala Lumpur.

MRCB is also aiming to launch Penang Sentral soon, Razeek said.

"We are looking at substantial growth this year, majority of that will be contributed by our existing projects," he said.

By Business Times

Monday, April 4, 2011

Mah Sing to launch Icon City next quarter


KUALA LUMPUR: Mah Sing Group Bhd, the country's fifth largest developer by revenue, will launch Icon City, a RM3 billion integrated commercial development in Petaling Jaya, Selangor, in the next quarter.

Group managing director and group chief executive Tan Sri Leong Hoy Kum said Mah Sing will be launching more commercial and industrial projects this year to build the two segments.

Mah Sing has 33 ongoing developments with remaining gross development value and unbilled sales of RM11.4 billion, and RM4.2 billion has been earmarked for commercial and industrial projects.

Mah Sing may replicate the development of Icon City to offer mix products, but it would depend on location and land size, he said.
Icon City comprises seven- to eight-storey lifestyle shop-offices, gourmet street with 20 two-storey food outlets, small office versatile-offices (Sovo), serviced apartments, lifestyle mall, boutique hotel and office towers.

Leong is bullish that Icon City will command good sales because of the product mix, design and location.

Icon City is located on a 7.93ha site in SS8, Sungei Way, a site formerly occupied by Matsushita Group of Co. The land is situated at the crossroads of the Lebuhraya Damasara-Puchong and the Federal Highway.

With unique architectural features, the development would showcase designs, such as forest and water themed plazas, sky glass bottomed pool roof garden and moulded landscapes.

"The shops are on en-bloc sales and we have overwhelming response from potential buyers. It is a testament to our product quality, branding and track record," he said.

Leong said for the serviced apartments and Sovo, Mah Sing is looking at both strata and en-bloc. He added that the five- to seven-year development will comply to the Green Building Index, Green Mark and LEED standards.

By Business Times (by Sharen Kaur)

Mah Sing builds war chest for expansion

Mah Sing will use its internally generated funds and loans for land acquisitions in Greater Kuala Lumpur/Klang Valley, Penang Island and Johor Baru

KUALA LUMPUR: Mah Sing Group Bhd is buying more land in Greater Kuala Lumpur/Klang Valley, Penang Island and Johor Baru that has potential to generate over RM7 billion in gross development value (GDV).

"We are building our war chest for further expansion," group managing director and group chief executive Tan Sri Leong Hoy Kum told Business Times recently.

The company, which has 300ha of undeveloped landbank, will use its internally generated funds and loans for land acquisitions and new projects.

As at December 31 2010, Mah Sing has RM309 million cash in hand.
Last year, Mah Sing was the most active developer in terms of land banking, completing 10 transactions valued at RM756 million.

Leong said these land deals have potential to generate about RM4 billion in GDV.

Mah Sing currently has 33 ongoing developments with remaining GDV and unbilled sales of RM11.4 billion, compared with 23 projects in 2009.

Meanwhile, Leong said Mah Sing is on track to achieve its sales target of more than RM2 billion this year, having achieved almost 18 per cent or RM363 million in the first two months.

He said the spillover demand from 2010, coupled with the confluence of strong fundamentals and its branding, location, concept and products, will make 2011 another good year for the company.

Leong is also encouraged by external catalysts for growth. He said the multiplier effect via the 10th Malaysia Plan and the Economic Transformation Programme would enhance Malaysia's appeal as an attractive investment destination.

Leong said Mah Sing is keen to participate in government land privatisation projects and is currently looking at several deals.

It also plans to partner good business associates to tap on each other's strength and expertise to build and enhance potential business opportunities.

By Business Times

MRCB eyes RM150m pre-tax profit this year

Malaysian Resources Corporation Bhd (MRCB) aims to achieve RM150 million in pre-tax profit on a revenue of RM1.3 billion this year, backed by steady performance of its property and construction operations.

Its chief executive officer, Datuk Mohamed Razeek Hussain, said the company expected to launch property projects, comprising office buildings and condominiums, totalling over RM1.7 billion in gross development value.

Its order book for the property sector, now standing at RM1 billion, and RM600 million for the construction sector would sustain the company's growth for the next two to three years, he told reporters after MRCB's annual general meeting today.

For the financial year ended Dec 31, 2010, the company posted a higher pre-tax profit of RM97.58 million from RM46.49 million previously while its revenue rose to RM1.07 billion from RM921.62 million.

"The Economic Transformation Programme (ETP) projects are rolling out which is really helping the economy and boosting confidence. We hope MRCB will be a successful participant in these projects," Mohamed Razeek said.

Under the ETP, he said, MRCB was undertaking the St Regis Hotel & Residences in Kuala Lumpur Sentral and the River of Live project which involves the clean-up and rehabilitation of Gombak river.

"At the moment, we are working with the government on the scope of works," he said.

Mohamed Razeek said MRCB had also submitted tenders worth almost RM2 billion for general construction works including those related to the LRT extension projects.

The company was also one of the bidders to develop the former Pudu Jail site which is managed by UDA Holdings Bhd, he said.

Asked on the cancellation of its merger with IJM Land, he said: "We could not agree on the definitive terms of agreement."

The disagreement was on the issue of cash and share distribution, he added.

By Bernama

iProperty.com ranked 14th in SE Asia

Effective Measure, the Australia-based audience measurement company, has confirmed iProperty.com Malaysia as the number one property website among Malaysian visitors under its real estate category.

iProperty.com Malaysia was also ranked 14th among South East Asia's most visited Malaysian website by Effective Measure in its recent February 2011 findings.

iProperty.com Malaysia Country manager Timothy Hor said Effective Measure's internet measurement system is impressive in its accuracy and in the audience insights it provides.

Russel Conrad, the Regional South East Asia Director of Effective Measure, said that iProperty.com Malaysia, had the most unique visitors of any property website in the country.

The Malaysian Digital Association (MDA), of which iProperty.com Malaysia is an associate member,recently named Effective Measure as the company to undertake the official Internet Audience Measurement for Malaysia.

By Bernama

SunREIT to give Putra Place a facelift

PETALING JAYA: Sunway Real Estate Investment Trust (SunREIT) acquisition of Putra Place in Kuala Lumpur for RM519.95mil will likely lead to an overhaul of the property with analysts saying the property might not make an immediate bump in SunREIT's earnings.

AmResearch in its report on Friday said SunREIT planned to undertake a major renovation exercise on Putra Place to enhance the property.

“The new management may terminate the contract with the current operator of the Legend Hotel and take over running of the hotel or it would tie-up with a global operator,” it said.

It added that while SunREIT has a commendable track record, especially in managing retail assets such as Sunway Pyramid, it remained to be seen if SunREIT would be able to turn Putra Place around.

“The property needs a strong pull-factor to get a decent visitor traffic as the location, although in the city, is not too favourable,” it said.

Putra Place encompasses The Mall shopping complex, the Legend Hotel and an office tower.

The purchase will also strengthen Sunway REIT's position as Malaysia's largest trust.

JPMorgan Securities (M) Sdn Bhd said the management of the real estate investment trust would only release details on profitability and acquisition yield of the property once the deal was completed.

“The group stated that this is an asset with turnaround potential but some renovation works needed to be done. We believe that this has been a low yielding assets and hence not likely to be making earnings immediately, ” it said in a report.

The real estate investment trust, a 36.7% owned associate of Sunway City Bhd, won the bid at an auction held on Wednesday through its trustee OSK Trustees Bhd.

It has 120 days to complete the purchase.

Commerce International Merchant Bankers Bhd (CIMB) put the property up for auction to recover loans given to property owner, Metroplex Holdings Sdn Bhd.

The auction price of the property was reduced thrice as no bids were received.

The property was first auctioned in April 2008 and the price was then set at RM705mil. The latest reserve value was RM513.95mil.

The Mall comprises eight levels of podium retail/shopping units. The Putra Place office tower starts from the 10th to the 33rd floor, while the 25-storey Legend Hotel includes serviced apartments and penthouses. It is located on Jalan Putra opposite the Putra World Trade Centre. The freehold property, with 193,621 sq ft space, has 1,323 parking bay.

SunREIT told Bursa Malaysia on Thursday that it aimed to provide the unit holders with exposure to a diverse portfolio of authorised investments that will provide stable cash distributions with the potential for sustainable growth.

“This involves selectively acquiring properties that meet investment criteria that will provide attractive cash flows and yields, as well as opportunities for further revenue growth through asset enhancement,” it said, adding that it saw enhancement and turnaround opportunities for the property and planned to undertake major renovation works.

It believed that the property will enjoy upside on capital appreciation as well as improved yield.

By The Star

Saturday, April 2, 2011

How liveable is Kuala Lumpur?


Cities are built for tomorrow. As Asia progresses and joins the ranks of advanced economies, green-related issues such as sustainability, liveability and smart cities have cropped up as this drawing by a child from India illustrates.

There is a 20-something person let's call him T who has a I Wanna Be a Millionaire ringtone on his iPhone. Every now and then, he would touch base with his roots in Gemencheh, Negri Sembilan. There are many Ts in Kuala Lumpur, and other Ts from neighbouring countries who have made Kuala Lumpur their home and job market. The city and its promise of a better life draws many young people here.

They come, or their parents came decades ago, to eke out a living and over the years, this working class moved up to join the ranks of the middle-class who make up much of Kuala Lumpur today. But like any other city, the have and the have-nots create the diverse demographic landscape of Kuala Lumpur.

T lives in a nice middle-class Petaling Jaya, about 15km from the Kuala Lumpur City Centre. There are many others who are not so fortunate. Many live in slums, besides rivers and on the fringes of Kuala Lumpur.

It is not that the city draws the poor and succours the rich, but that the working class are attracted by job and economic opportunities in the city and the rich enjoy the urban pleasures like art and culture (or what we currently have) and consumption culture of the city. They may not live cheek by jowl as housing from low-cost government-subsidised flats and gated communities and shopping districts, separate them, but all of them are here because they want to be at the centre of activities, be it political, economic or cultural. As the country evolves, so does the city. In fact, because the city is the gateway to the nation, the rate of evolution begins and goes at a faster pace than the country.

The city we know today is the result of an evolution which began in 19th century Malaya. Kuala Lumpur started at the meeting point of the Gombak and Klang Rivers when early travel was by foot, boat and on bullock carts.

Today, the Federal Government is planning to have mass rapid transit (MRT) among other infrastructures. Much has taken place between the bullock days and today's rail travel. There is the Petronas Twin Towers and, before that, the current railway station and Bangunan Sultan Abdul Samad.

Heritage buildings have today given way to iconic buildings. But it is not buildings that make up a city. It is the community of people who gave breath and life to the city.

According to the United Nations Population Division, the share of Asians living in urban areas has grown from 32% in 1990 to 42% last year. In 15 years, the UN forecasts that half of Asians will be city dwellers.

This can be seen in the population growth of Kuala Lumpur. In 2000, it had a population of 1.305 million (density of 53.7 persons/ha). Today, it stands at 1.627 million (density of 66.9 persons/ha).

Says Dewan Bandaraya Kuala Lumpur, or City Hall, the guardian of the city in a statement: “KL's population is growing at the rate of 2.2% per annum in the last 10 years, exceeding the national population growth rate of 2.17% per annum.” This excludes the number of foreigners who have made Kuala Lumpur their home.

What will this mean for the city's infrastructure? More people also means a greater demand on the infrastructure transport, water, amenities, healthcare, education and services. More people also means greater waste. How will the city manage this? These are the challenges confronting Kuala Lumpur today.

The Economist Intelligence Unit has ranked Kuala Lumpur 79 out of 130 listed liveable cities. The ranking has given Federal Territory and Urban Well Being Minister Datuk Raja Nong Chik a new vision to see it in the top 20 by the year 2020. That is just nine years away. Before getting to the 20th spot, he says there are several measures that need to be fulfulled, and one of the main criteria is an effective infrastructure.

In its Asian Green City Index, German power house Siemens independently commissioned the Economist Intelligence Unit to assess the performances of 22 Asian cities. Kuala Lumpur is one of them. It was given a rating of average. It was judged based on its performance in eight areas: energy and CO2 emission, transport, land use and buildings, waste management, water mangement, sanitation, air quality and environmental governance. Among the greatest concerns were waste and water management. It scored well in transport.

Says Siemens chief sustainability officer Barbara Kux: “The battle against climate change will be decided in cities. This applies to Asia, with its booming conurbations, more than anywhere else on earth. Only green cities will make life worth living over the long-term.”

US-based technology company IBM did a presentation on Smart Cities last month. It compared Kuala Lumpur with some of the best international practices in areas such as city services, people, business, communications, transport, water and energy. Kuala Lumpur was ranked below international best practices in all areas and lagged further behind in the people, business and city services systems. It was just close to average in its water and energy segments.

IBM's general manager (government and healthcare) Nazerollnizam Kasim in his paper notes that “smarter cities are working to infuse intelligence into each of their core systems.”

Therein lies the crux of the issue human intelligence. A city thrives because of its creative, productive and talented workforce. Smart people go out in search of smart people to benefit from that interaction. Over this, there is the great need for governance and government. Which is why the Government is trying hard to pull talent and high-value human capital back to the country.

But people will only return, and new ones come, if Kuala Lumpur promises more than just tall skyscrappers. Security, amenities, liveability, education, financial rewards for hard work and talent among other urban pleasures are their measure.

Harvard economic professor Edward Glaeser in his book Triumph of the City writes: “London's amenities have helped the city attract 32 billionaires, according to Forbes, an impressive share of the world's wealthiest people. About half of those mega-rich Londoners are not English ... Human capital, far more than physical infrastructure, explains which cities succeed.”

The fact that we are trying to bring back our own is very telling.

Last year, the Government through Minister in the Prime Minister's Department Datuk Seri Idris Jala unveiled the Government's plan to improve the city's liveability. His tool urbanisation.

His rationale is that the city will provide the engine of growth for the entire country. That means, the next 10 years will be crucial. A decade is a short time, actually, to do all that he has laid down. His emphasis on liveability is based on improving the public transport system, stability, healthcare, edcuation, infrastructure, culture and environment.

At the moment, the city has big plans for infrastructure. By the middle of this year, the Government will begin work on the RM50bil MRT system to connect the entire city. Seven mega projects are currently being planned in and around the city. There is another type of infrastrasture which is not so physically visual, but of utmost importance water and waste management. Both the studies by Siemens and IBM have highlighted the fact that these two areas need attention.

The issue of water management was brought up by Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui last week. He lamented that Malaysians use an average of 226 litres of water per person daily, which is way above Singapore's 154 litres and Thailand's 90 litres.

Unlike our neighbour Singapore, which has two-thirds of its land area as water catchment areas, Kuala Lumpur, together with the state of Selangor and Putrajaya, are expected to suffer water shortage by 2014.

Says Syarikat Bekalan Air Selangor Sdn Bhd corporate affairs department executive director Abdul Halem Mat Som: “We only have 6% reserve (of water supply). By right, we should have 20%. During the dry season, the demand goes up, so the reserve is gone. We cannot maintain a 20% reserve, which is why the Selangor government is buying water from Pahang.”

Says Economist Intelligence Unit head of research Jan Friederich: “The wastage comes from old pipes and high water consumption. Water leakages is running at an estimated 37%, compared with the Asian Green Index of 22%.” Today, there is an impasse as the water sector is being restructured.

Water and waste management is crucial because many diseases are water-borne. Before the days of air travel, some of the diseases that had ruined many a city were due to contaminated water. City Hall is also planning to plant more trees from 25,000 to 100,000 and clean up the Klang river. All these efforts are to add value to the city.

“Intensive cleaning of the river and flood mitigation works are the most crucial parts of the whole programme. These works will include rivers from upstream in Gombak and Selayang and scheduled progressively until 2020. The budget allocated for these works is RM3bil,” City Hall says.

Botanist and researcher Dr Francis Ng is all for beautification. But he stresses the need for diversity. “We have a total of 4,000 species compared to Britain's 50. But our city does not reflect the biodivesity of our forest. There are about 50 species planted in and around Kuala Lumpur today, about half of which are imported.

“Diversification will help to address the problem of extinction, as more areas are opened up for development and other uses besides putting a bit more creativity in our planting, such as creating small clusters of three to five trees.”

Ng, who is the former deputy director-general of the Forest Research Institute of Malaysia, says the country works with five-year plans, “basically to keep contractors going and all they can think of is having concrete, but no maintenance. So the lack of maintenance is built into our culture. That's why trees fall on rail lines and cars in the city. There has to be a tree maintenance programme which includes fertilising and pruning.”

But beautification programmes alone will not draw people into the city. Security, still an issue, is being progressively and successfully addressed. Cities are crime-prone because people bring their social problems such as poverty with them. It's hard to make a living as a snatch thief in small towns, although some do as some of our newspaper headlines testify. The many pockets riding on the rail system promise better returns.

So as Kuala Lumpur restructures and weeds out crime, builds new rail linkages, addresses water and waste management issues, the issue of balancing competing needs comes into the picture. Opening up green fields versus reducing water catchment areas, congestion versus crime, carbon dioxide emissions versus selling more cars, there is no end to competing needs.

But if it is to be ranked as a city for the future, it must build for the future.

By The Star

SP Setia eyes RM300m from villas project

Property developer SP Setia Bhd aims to achieves sales of RM300 million for its luxury Duta Villa project this year, its Bandar Setia Alam, General Manager, Tan Hon Lim said.

The amount is equivalent to 10 per cent of the group gross development value (GDV)of RM3.0 billion, he said.

"We will conduct a more exclusive product preview to attract and convince potential buyers, especially from Petaling Jaya, Damansara, Kuala Lumpur and Shah Alam," he told Bernama in an interview.

Duta Villa comprises 300 units of three-storey villas priced from RM1.62 million as well as three-and-a-half storey villas from RM1.95 million.

The project is located at one of the highest spots in the 1,600 hectare Setia Alam and Setia Eco Park site in Shah Alam and allows residents to enjoy a 360 degree view from the club house.

This gated and guarded strata landed development combines elegant architecture, with a big built area, of a minimum 4,515 sq ft.

Tan regards the project as an investment type product, similar to its development, Duta Tropika in Hartamas several years back, which now has appreciated from RM1.6 million to RM3.5 million.

SP Setia will launch the first phase comprising 123 units of villas by end-April and expects completion by June 2013, he said.

"About 400 people have registered during several private preview sessions and are very keen to purchase the units," he added.

The company is still offering its 5/95 home loan package with a considerably low interest rate.

On new projects, Tan said SP Setia plans to launch cluster homes by May, small office home offices (SOHO) by August as well as medium low and medium cost apartments by October.

He said the launch of the apartment units is in line with the government campaign of a 100 per cent loan for those earning RM3,000 and below for houses priced between RM100,000 and RM220,000, with an up to 30-year repayment.

Meanwhile, Tan said the demand for properties will continue to be strong for years to come, backed by the support from government under the Economy Transformation Plan (ETP).

"There is still a lot of demand in the market, especially for landed properties at good locations.

"A good track record of the developer and development concept, competitive prices and an attractive financing package will help sustain the sales," he added. --Bernama

By Bernama

Maju Assets: Unrivalled projects coming

KUALA LUMPUR: Maju Assets Sdn Bhd, a member of Maju Group plans to launch several projects, which it claims to be of unrivalled quality, that will help it be one of the country's top-notch developers.

The company - known for its Bandar Tasik Selatan township development in Cheras, Kuala Lumpur - has ample landbank in Kuala Lumpur, Johor and Malacca, which could rake in more than RM7 billion in gross development value (GDV).

Over the next three years, it will launch three projects worth some RM5.6 billion in Kuala Lumpur and Johor.

Next month it will launch Maju Linq @ Lingkaran Maju in Bandar Tasik Selatan, being the last piece of land for development at the township, which started in 1991.

The RM310 million Maju Linq will comprise six units of seven to eight-storey office blocks, each with built up of 50,000 sq ft and a 200,000 sq ft 29-storey office tower.

Maju Assets chief operating officer Fatimah Wahab said the company is bullish the project will sell out within 12 months.

She told Business Times in an interview recently that Maju Assets has received en bloc offers for the office blocks, which are worth RM160 million, collectively.

For the officer tower, it has received some requests from local corporate clients to buy the building, or lease it on long term.

Fatimah declined to name the clients, but said the offers range from RM100 million to RM130 million.

"Once completed by mid-2014, Maju Linq will be an iconic project in the area. It will be the tallest development in its surrounding," she said.

By the end of 2011, Maju Assets will launch Infinity, a mixed development in Sungai Besi, Kuala Lumpur, worth RM1.3 billion, featuring retail, small-office-home-office, serviced apartments and office towers.

In Johor, it will launch a high-end development on 520ha in Ulu Tiram, earliest by the end of 2013. The eco-friendly project, which is under planning, is expected to generate some RM4 billion in GDV, Fatimah said.

By Business Times

Suria KLCC ready for expansion


There are over 320 specialty outlets at Suria KLCC with each having its own strengths and specialties.

MALAYSIA'S iconic retail destination, Suria KLCC, looks set for a higher profile with an expansion under way and the unveiling of new specialty stores at the shopping mall.

The six-level Suria KLCC, which anchors the base of the Petronas Twin Towers, the world's tallest twin towers, will see an addition of 140,000 sq ft of net lettable area to the 1 million sq ft shopping mall.


Andrew Brien ... ‘The new retail component will be a seamless integration to Suria KLCC.

Suria KLCC Sdn Bhd chief executive officer Andrew Brien says that in response to demand for space from retailers, KLCC Property Holdings Bhd, the main shareholder of Suria KLCC, has undertaken the development of the new retail space as part of the office development adjacent to Suria KLCC.

“The new retail component will be a seamless integration to Suria KLCC at the Ramlee Mall end on the south side of Suria KLCC. It will be an extension of brands, design and architecture.

“Targeted for completion by June, it will feature more than 30 specialty outlets including international high-end specialty stores such as flagship Cartier and Chanel stores, a new Giorgio Armani store and South-East Asia's first Armani Caf,” Brien adds.

One of the main highlights will be the remarkable interior architecture only available in Milan, Paris or New York, he says, adding that the additional parking space will be linked to the current existing parking structure.

As the owner operator of the mall, Suria KLCC continuously adopts and adapts best practices and benchmark the shopping mall against the world's best to keep up with shoppers' expectations, Brien says.

“This has in turn led to our retail partners benchmarking themselves against the best in their respective category in the pursuit to meet customers' expectations,” he adds.

Starting in May, one of its anchor tenants, Isetan store will undergo a massive refurbishment to reinvigorate its overall look and feel, and add new features including a world-class food offer on the concourse level. New travelators will directly link the concourse level to levels one and two of the car park.

There are over 320 specialty outlets at Suria KLCC with each having its own strengths and specialties.

Among its anchor tenants are Isetan, Parkson Grand, TGV Cinemas and Marks & Spencer.

Some of the stores which are unique to Suria KLCC are Jimmy Choo, Brioni, Chanel, Aseana, Pucci, Emporio Armani, Giorgio Armani, Paul Smith, Replay, HIT Gallery, Kinokuniya, Ed Hardy and Harley Davidson.

Its other attractions include Galeri Petronas, featuring various types of art; and Petrosains, an interactive petroleum discovery centre. The shopping mall is also linked to Dewan Filharmonik, the country's premier concert hall.

To ensure Suria KLCC gets the right retail partners, Brien says the shopping mall benchmarks itself against global operators.

“We benchmark fashion retailer against major fashion retailers, we also benchmark with Malaysia brands and look at how those brands relate to international brands. After completing this process, we come up with a tenancy mix which we think is right for our mall based on the sales growth and positive reaction we receive from our customers.

“The fact that retailers at Suria KLCC have seen sales turnover of over RM2bil over the past year shows that the mall has the right tenant mix based on customers' wants and needs,” he says.

On complaints that there are now too much focus on foreign brands compared with home-grown brands in the mall, Brien says: “Retail is all about trends and change. It is also about responding to customer demand. A good mall operator must be able to change. “The internationalised brands will enjoy greater success as they transcend boundaries. This applies to Malaysian brands as well since some of them have gone big internationally.”

From 95 homegrown stores in May 2000, Suria KLCC now has 111, while the number of Malaysia-owned specialty stores have expanded from 184 to 242. Foreign-owned stores also increased to 83 from 77.

Addressing complaints that rental rates have risen sharply on each rental review, Brien says: “Suria KLCC's level of productivity per sq ft is growing from strength to strength.

“Given the size of the mall which is 1 million sq ft with over 40 million visitors and a sales turnover of RM2bil over the last 12 months, our retailers are reaping the benefits of a premium business environment. With a steady occupancy rate of over 99%, it proves that retailers have faith in our capability to operate the business professionally, meeting their expectations and bringing them to greater heights,” he adds.

Brien believes Malaysia's retail sector remains largely untapped given its young population and a steadily rising income level.

“Malaysia is classified as an upper-middle income country by the World Bank, with the proportion of middle-income households estimated at more than 50% in 2007.

“According to the Department of Statistics Malaysia, urban households on average spent 1.8 times more than rural households between 2004 and 2005. Average income spending was RM2,285 a month in urban areas and RM1,301 a month in rural areas. With the urban population predicted to account for almost 76% of the total by 2015, this is likely to have a positive effect on retail sales,” he says.

By The Star

The liveability index and complexities of urban living

EVERY year, cities around the world are judged according to the quality of life, how safe they are and how green they are among other rankings in global surveys.

Other criteria that they are ranked on include access to healthcare, public transportation and education besides political stability, safety and culture.

Increasingly, such surveys have drawn much interest from politicians and the media with much debate on how cities are ranked and on what grounds.

“Liveability” as most will point out, is subjective. The periodic global surveys carried out judge cities on various criteria mentioned above but none are fool-proof.

Experts say developed countries are more concerned with “quality of life” and other aspects that pertain to “the good life” while their developing counterparts are more concerned with infrastructure issues.


Ramanathan Sathiamutty ... ‘If we’re going to build a smarter planet, we’ll have to start from our cities, to solve problems at the most intense pressure points.’

IBM Malaysia managing director Ramanathan Sathiamutty tells StarBizWeek that as the world continues to urbanise, problems such as transportation, food and water supply are most stressed in cities.

“If we're going to build a smarter planet, we'll have to start from our cities, to solve problems at the most intense pressure points,” he says.


Nik Ruiz Razy ... ‘Does the city provide a conducive environment for people in their everyday lives?’

Rekarancang Sdn Bhd urban designer Nik Ruiz Razy says liveability in the context of a city can basically be understood in terms of live, work and play.

“Does the city provide a conducive environment for people in their everyday lives? Does the infrastructure accommodate them? Is it safe and secure?” he asks.

Nik Ruiz says measures of liveability can be found in the time taken to commute between home and office, whether the urban living areas have the proper amenities or whether schools are located in a conducive environment.

He says cities such as Vancouver, Canada and Sydney, Australia are examples of cities where the infrastructure and people interact comfortably while Putrajaya and Kota Iskandar are some of the newer townships that have taken steps towards making their urban spaces liveable.

“These are cities which are friendly to pedestrians, where one can easily walk to work, to school or to do groceries, these are factors that may impact whether a city is liveable or not,” Nik Ruiz says.

Nevertheless, critics have argued over the rankings and the criteria used to judge the cities as oftentimes, many will argue, how livable is a city where affordability is concerned?

For example, the Economist Intelligence Unit (EIU), which is part of The Economist, has a global liveable cities index judging cities on 30 factors spread across five areas: stability, healthcare, culture and environment, education and infrastructure.

The latest EIU report which came out in February 2011 again showed Vancouver as the world's most liveable among 140 cities surveyed.

This is the fifth year in a row that Vancouver has been named the most liveable city in the world. Kuala Lumpur was ranked in the bottom half 78th, improving from 79th.

Underscoring the affordability argument is the fact that the top 10 in the EIU survey are made up of cities that are by no means the most expensive but certainly are where most ordinary wage earners are concerned.

Furthermore, a city's liveability will often mean how attractive it is to businesses and people. A number of global human resource consultancies including Mercer LLC, which publishes the annual “Quality of Living Survey”, also use these surveys to advise their clients on how to compensate their employees.

As many observers and various news reports have showed, successful cities will not only attract the requisite investments as businesses relocate all or part of their operations in that city but also lure smart people.

However, smart people will only come if there are good schools for that matter.

In Malaysia, this has become an area of concern as the mediocre public education system including the universities, while universally accessible, has driven quite a number of people who can afford it to send their children abroad to study.

HELP University College co-founder and president Datuk Dr Paul Chan says universities are also recruiting grounds for corporations and are important for research and development.

“The university is an integral part of a metropolitan area,” he remarks, adding that they also exist in a “symbiotic relationship” with museums, art galleries and other cultural institutions to make a city attractive to talent.

Chan says universities also provide thought leadership and are part of a socio-political spectrum of institutions that challenges the status quo on issues of the day such as corruption, the environment and governance.

For HELP's vice-president and dean of the faculty of applied sciences and multimedia Dr Choong Yeow Wei, the availability of good schools ranks high for families who relocate.

“That's a very important factor to consider when moving to another country, that's why Singapore has managed to attract foreign talent,” he says.

So where does policy stand in defining how liveable Kuala Lumpur will be in the years to come?

The Performance Management & Delivery Unit (Pemandu) of the Prime Minister's Department estimates that some RM172bil will be needed over the next 10 years to bring Kuala Lumpur and its surrounds to simultaneously achieve “a top-20 ranking in city economic growth while being among the global top-20 most liveable cities”.

It has been estimated by Pemandu that Kuala Lumpur's population will grow by 5% per year over the decade to 2020 while gross national income (GNI) will grow by 10% a year.

Forming part of the Greater Kuala Lumpur/Klang Valley national key economic area identified under the Economic Transformation Programme, the city and its surrounds will get 34% of the funding from public-sector sources for public transportation, covered walkways, river rehabilitation, parks and redevelopment among others.

Ramanathan says IBM's “Smarter City” framework, which highlights six areas of focus, namely: government services, education, public safety, healthcare, energy and utilities and transportation is very much in line with the National Key Result Areas under the Government Transformation Programme.

“IBM defines a smarter city as one that makes optimal use of all the interconnected information available today in order to better understand and control its operations and optimise the use of limited resources,” he says.

Ramanathan says there is no single global model to apply to the unique conditions of a given city. “But there are guidelines that cities can use to help frame their thinking and their solutions, and today those guidelines should include the Smarter City idea,” he says.

Ramanathan points out that local leaders need to identify the critical challenges confronting the city; then they harness the collaborative efforts of a public-private-people relationship; and consciously leverage the “smarter” elements of information and communications technologies to tackle the issues.

He says technology can help in creating great centres of business and culture, promote strong education and health services and grow in ways both dynamic and sustainable where city governments do not have adequate budgets to address all of their city's challenges and achieve their primary objective - to increase prosperity for their citizens.

Ramanathan says the right technology is needed to support decision-making.

“When city leaders use the right information, they can make better decisions and have more insight into the impacts of their decisions. But truthfully, the majority of our cities have more information than they know how to use,” he adds.

By The Star

Property bubbles and bank non-performing loans


Real estate assets account for 25.6% of total assets, and that has lost US$2.4 trillion or 26% from its peak in 2007. — EPA

How worrisome are real estate bubbles for the banking system?

Based upon the recent subprime and then global financial crisis, very worrisome indeed. The reason why real estate is so important to our whole economic life is because we take it for granted. For households, our house is likely to be the largest single investment for most families.

For companies, the real estate and fixed assets are often, other than inventory, the most important asset, especially as collateral for loans from banks. For banks, the largest single asset held for collateral against bank credit is real estate. For local governments, real estate sales and property taxes comprise the most important source of revenue.

Hence, most people equate buoyant house prices as an indication of prosperity, and most property developers would like to convince governments that they should never let property prices deflate.

The surprising thing about real estate value is how often economists ignore balance sheet values until it is often too late. The real estate value is 225% of US GDP. It took only a 20% drop in real estate prices to wipe nearly 45% of GDP, precipitating the deepest crisis in US recent history. It was only after the US regulators finally decided to look closely at the credit of the US banking system that it was discovered that as much as half of total credit are real-estate related (particularly through mortgages or mortgage-backed securities).

On March 10, 2011, the 2010 Fourth Quarter US Flow of Funds data was published by the Federal Reserve Board. Real estate assets comprise US$18.2 trillion or 25.7% of total household assets. Real estate values lost US$6 trillion in the two years 2006-2007, US$1.2 trillion in 2009, and after a modest recovery in the first half of 2010, for the full year, lost another US$0.6 trillion in 2010. The result is that net worth of households may have recovered a bit from higher financial assets due to the zero interest rate policies, but is still US$7.9 trillion down from its peak year of 2007.

The same pattern is seen in the US non-financial corporate sector. Real estate assets account for 25.6% of total assets, and that has lost US$2.4 trillion or 26% from its peak in 2007. Commercial real estate seems to have stabilised somewhat in 2010, but the numbers do not completely show up in the non-performing loans of the banks.

Based upon the testimony of the Federal Deposit Insurance Corp to Congress, there is a clear association between the number of failed or failing banks with their exposure to real estate loans, particularly commercial real estate acquisition, development and construction loans (ADC). In the three years 2005-2008, ADC loans increased 75% and the concentration of ADC loans to total capital rose from 26% in 2000 to 50% in third quarter 2007.

Loans disbursed quickly tend to go bad. More than half of the subprime loans originated in 2006 and 2007 had defaulted by November 2010. Foreclosure of mortgages reached 2.8 million in 2009 and exceeded 2 million in 2010.

At the end of 2009, non-current residential construction loans held by FDIC insured banks rose from 1.45% of such loans to 25.7%. As a result of bad loans to the real estate sector, 322 FDIC institutions failed since 2008 (out of roughly 7770 such institutions) and another 860 banks are designated as “problem institutions”.

Many of these troubled institutions failed because of high concentration in ADC loans in commercial or residential real estate.

The S&P/Case-Shiller Housing Index showed a 2% decline in the year to September 2010, whereas commercial real estate prices showed around 3% increase. Nevertheless, rents for commercial real estate are still falling.

Thus, despite the quantitative easing, which seems to have helped in causing equity prices to go up, real estate prices have not recovered that much, suggesting that if real estate prices still go down, the banking system would still be vulnerable.

Why is real estate so important in the banking sector books? The main reason is that real estate is the primary collateral and base asset against leverage. What securitisation and financial derivatives have done is to leverage these assets considerably and, therefore, when the primary base asset price is falling, the value of the financial derivative assets fall on a multiplied basis, due to the leverage effect.

In a recent speech to Cambridge University, Lord Adair Turner, chairman of the UK Financial Services Authority, argued that neither the Basel III reforms nor the measures against “too big to fail” are sufficient to ensure global financial stability. He argued for higher capital ratios than those set under Basel III and also further regulatory measures against shadow banking.

In particular, he argued that it was the balance between debt and equity contracts in the economy and financial system, as well as the maturity transformation that are the basic risks in the financial system.

He is surely correct that financial instability is driven by human myopia and imperfect rationality as well as poor incentives” and that in order to make the financial system more stable, it will require a multi-faceted and continually evolving regulatory response.

Like Lord Turner, the US Financial Crisis Inquiry Commission is finally convinced that it is human failings that caused the financial crisis. It was the failing in ideology that markets are self-correcting that caused financial regulation to be “market friendly”. However, it is also the low interest rates that gave rise to asset bubbles and central banks cannot continue to deny that they had no role in allowing asset bubbles to form.

As we have now seen from the Japanese experience, real estate booms and busts have a long demographic cycle. In the growing stage for the population, real estate prices can grow, but when the population ages and then declines, real estate prices can deflate, causing massive losses if there was an asset bubble.

You may not be able to stop bubbles completely, but surely there are tools to stop the banks over-lending to that sector. What goes up can come down.

Tan Sri Andrew Sheng is author of the book From Asian to Global Financial Crisis and adjunct professor at the Tsinghua University and University of Malaya.

By The Star

Friday, April 1, 2011

Developer’s green concept building earns gold certification


Nature inspired: The form of the building capitalises on the natural terrain of the land.

Property developer Emkay Group celebrated a new achievement with the opening of Bangunan Lestari Kumpulan Emkay (BLKE) in Cyberjaya — the first building in Malaysia accredited with the Leadership in Energy and Environmental Design (LEED) gold certification.

LEED is an internationally recognised green building certification system developed by the US Green Building Council.

It is a third-party certification programme and a widely accepted benchmark for the design, construction and operation of high-performance green buildings.

The LEED green building rating features four levels of certification — Platinum, Gold, Silver and Certification.

The BLKE, which was launched by former prime minister Tun Dr Mahathir Mohamad, will be occupied by Shell Business Service Centre Sdn Bhd under a 10+five-year lease agreement.

Emkay Group director Fazwinna Mustapha Kamal said the BLKE marks the group’s move from low-cost development to high-end development with Grade A buildings purpose built green building.

Joyful Gateway Sdn Bhd project coordinator R. Balasundram highlighted that the building was designed to conserve energy and natural resources, provide for a healthier and safe environment, improve the quality of human life, and increase the productivity of its occupants.

“The LEED rating system is based on six design categories — sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation in design,” he said.

The BLKE was developed by Emkay subsidiary Joyful Gateway, a joint venture company between MKN Embassy Development Sdn Bhd and partner Lucky Cottage Sdn Bhd.

Construction of the building located at Jalan Teknokrat 3, Cyberjaya, commenced in October 2009 and was completed within 12 months.

Its gross development value is approximately RM255mil, with an average yield of more than seven per cent per annum over its 10-year lease period.

The BLKE houses five levels of office space and three levels of sub-basement car parks.

In addition to the nett lettable area of 337,000 sq ft, there is a provision for additional office space of 23,000 sq ft on the fourth floor.

The form of the building capitalises on the natural terrain of the land, which slopes down the back, allowing the sub-basement car park levels to be naturally ventilated and minimising energy usage.

Among the BLKE’s green features are use of materials with higher recyclable content and energy efficient equipment, enforcement of water efficiency strategy through a rainwater harvesting system, as well as control and management of the environment which was monitored during construction.

Balasundram said: “Other key features include accessibility via public transport, a stormwater management plan, reducing the heat island effect by painting heat-reflective paint and having a roof garden, having high-efficiency flush and shower fixtures, maximising open space, providing dedicated recycling collection and storage area (during construction stage).

“The BLKE consumes 50 per cent less energy compared to the average building, and incorporates a host of designs and fixtures that are energy-efficient.”

Fazwinna said the Emkay group has a dedicated team of consultants, contractors, engineers, suppliers and other technical staff to focus on Purpose Built Green Building projects.

“A lot of development is heading towards green development now due to factors like social responsibility in protecting the environment, and for economic reasons like saving energy cost,” she said.

“We are adapting green features into projects under MK Land Holdings, and the BLKE will serve as a benchmark for us to move forward towards a greater and greener group.

“The green features will be extended across the board to all our projects, including houses, apartments and hotels, like the Rafflesia semi-D houses in Damansara Perdana.”

Setia Haruman Sdn Bhd chief operating officer Lao Chok Keang, whose company is the master developer of Cyberjaya, noted that more multinational corporations require Green Buildings or green features incorporated into their building premises.

“It is easy to develop green technology so long as one adheres to keeping the construction site neat, ensuring proper garbage disposal methods, educating the construction workers, and employing other proper safe and effective construction method,” said Fazwinna.

“There is much more that we can learn in terms of improving building efficiency and green technology.”

By The Star

Applications for housing loans down

PETALING JAYA: Households applied for less money to buy houses in February with applications falling to RM10.26bil in February from RM12.56bil in January, but the amount applied for was 23% higher than in February 2010.

For the fourth consecutive month, ever since new loan-to-value (LTV) rules for the third or more house was enforced in November last year, households have applied for less money to buy residential property, data from Bank Negara’s monthly statistical bulletin showed.

Analysts have said that the decline in the first couple of months might be seasonal and believe data from March onwards would accurately display the effect from the LTV rule.

In a statement, Bank Negara said that interbank rates were stable in February.

In terms of retail rates, the average base lending rate (BLR) of commercial banks was unchanged at 6.27% as at the end of the month. Retail deposit rates were also stable.

It said broad money (M3) expanded at a more moderate annual rate of 7.9% in February.

“During the month, the expansionary effects of higher credit extension by the banking system to the private sector and net foreign inflows were offset by the fund raising activities of the Government,” it said in the statement.

Meanwhile, narrow money (M1) also expanded at a more moderate pace in February due to the return of currency to the banking system after the Chinese New Year festivities.

Net financing to the private sector increased by RM13.4bil in February on a month-on-month basis, driven by higher PDS issuances.

“PDS issuances rose due to several large issuances mainly for refinancing and working capital,” said the central bank.

“Loans outstanding and other major loan indicators, however, moderated compared with the previous month as there were fewer working days due to the Chinese New Year holidays.”

By The Star

Sunway REIT plans major Putra Place renovation

Sunway Real Estate Investment Trust (Sunway REIT) has bought The Putra Place in a public auction for RM513.95 million, confirming a Business Times report yesterday.

Sunway REIT said the deal will provide geographical diversification and enlarge its portfolio of properties.

Sunway REIT Management Sdn Bhd, the manager for Sunway REIT, is planning a major renovation of the property under a turnaround exercise.

"Upon completion of this turnaround exercise, the manager believes that the property will enjoy upside on capital appreciation as well as improved yield," it said.

By Business Times

Thursday, March 31, 2011

Putra Place finally sold for RM514m


The Putra Place in Kuala Lumpur has finally been sold to OSK Trustee Bhd for RM513.95 million, some three years after the property was first put up for auction.

The auction, held yesterday, is believed to be the largest public auction in Malaysia.

Sources said OSK Trustee may have bought the property on behalf of one of the real estate investment trusts (REIT).

Among OSK's clients, speculation is that Sunway REIT is the buyer. Sunway REIT's chief executive officer Datuk Jeffrey Ng Tiong Lip did not answer calls from Business Times.

This move is not surprising as Sunway REIT manages malls, hotels and offices. Putra Place encompasses The Mall shopping complex, the Legend Hotel and an office tower.

This purchase will also strengthen Sunway REIT's position as Malaysia's largest trust.

Commerce International Merchant Bankers Bhd (CIMB) put the property up for auction to recover loans given to property owner, Metroplex Holdings Sdn Bhd.

CIMB's counsel, Alan Gomez of Tommy Thomas Advocate & Solicitors, when contacted by Business Times said: "We confirm the successful auction of this property at the reserve price. The successful bidder was OSK Trustee Bhd."

Gomez said OSK has placed a 10 per cent deposit and now has 120 days to complete the purchase.

"The amount outstanding to the first chargee (CIMB) is in the region of RM140 million," he added.

The second chargee Aseambankers Malaysia Bhd is said to be owed a substantial amount.

Over the years, the auction price of the property was reduced thrice, as no bids were received.

The property was first auctioned in April 2008 and the price was then set at RM705 million. The latest reserve value was RM513.95 million.

The Mall comprises eight levels of podium retail/shopping units. The Putra Place office tower covers the tenth floor to the 33rd, while the 25-storey Legend Hotel includes serviced apartments and penthouses. It is located on Jalan Putra opposite the Putra World Trade Centre.

The freehold property, with 193,621 sq ft space, has 1,323 parking bays.

By Business Times

50pc more hotel rooms needed

BY 2020, Malaysia needs 50 per cent more hotel rooms to cater for the anticipated tourist arrivals of 36 million.

As at February this year, there were a total of 1,610 hotels in the three to five star category and budget hotels in Malaysia. Together the hotels provide 161,117 rooms.

The increase, Deputy Minister of Tourism Datuk Dr James Dawos Mamit said, would be required throughout the country.

Malacca records the highest number of tourists, he added.

Mamit, who read the speech on behalf of Tourism Minister Datuk Seri Dr Ng Yen Yen at the official launch of InterContinental Kuala Lumpur, said that in Kuala Lumpur alone there are 236 hotels, offering 30,000 rooms.

The average occupancy of hotels in Kuala Lumpur in 2010 was 66.9 per cent, which was 4.2 per cent higher than in 2009.

However, the average occupancy of hotels in Malaysia declined by 1.6 per cent, registering 59.3 per cent. This was despite an increase in arrivals in 2010 of 24.6 million compared with 23.6 million in 2009.

Mamit said the decline could have been a result of people opting for Malaysian Homestay.

"There was a dramatic increase in the number of homestays," he said.

This year's tourist arrivals target is set at 25 million and the government is looking at bringing in high-yield tourists.

He added that any decline in arrivals from Japan will be cushioned by higher arrivals from China and India, particularly affluent tourists.

Meanwhile, some of the confirmed new room inventory to enter the Klang Valley market over the next five years are St Regis Kuala Lumpur, Grand Hyatt, Pullman Bangsar, Best Western Premier Dua Sentral, Hilton Garden Inn, Movenpick, Park Regis Kuala Lumpur and Four Season Place.

By Business Times