KPJ to build specialist centre in Iskandar

JOHOR BARU: A new specialist hospital on a 500,000 sq ft of land will be built in Bandar Dato' Onn in the Iskandar Malaysia development region in Johor Baru.

Specialist hospital operator KPJ Healthcare Bhd will collaborate with Johor Land Bhd to build the modern hospital.

The project will be undertaken in two phases, KPJ chairman Kamaruzzaman Abu Kassim said yesterday.

The hospital will have the capacity of 400 beds, encompassing 280,000 sq ft. The first phase of the construction with 150 beds, is expected to start by the end of 2012.

Its total invesment has yet to be determined, but an average of RM1,000 is budgeted for a bed.

"Approval for zoning has been obtained from the Health Ministry and the details are being finalised," Kamaruzzaman said.

Kamaruzzaman, who is also Johor Corp chief executive and president, said the new hospital will house a "Centres of Excellence" featuring a heart centre, a geriatric centre, cancer centre and a cosmetic and reconstructive centre, among others.

"It will serve as a one-stop centre for all medical services of the highest standards to cater to both local and foreign patients to promote health tourism," he told a press conference yesterday.

At the same time, the group is currently developing new specialist hospitals in Bandar Baru Klang, Muar, Pasir Gudang and Kuantan.

KPJ is investing between RM50 million and RM80 million for each hospital.

It recently completed a deal to buy Sibu Specialist Medical Centre and Sibu Geriatric Health and Nursing Centre in Sarawak at RM28 million on April 6.

Kamaruzzaman expected the new project in Bandar Dato' Onn to further sustain its consistent financial growth in the coming years.

For the year ended December 31 last year, KPJ posted a total revenue of RM1.65 billion, up 13 per cent, compared with RM1.46 billion previously.

Group pre-tax profit improved16 per cent from RM143.89 million to RM166.69 million.

On another note, KPJ is venturing into the retirement and aged care market following its agreement to buy 51 per cent interest in Australian operator Jeta Gardens Waterford Trust for RM19 million.

The deal is expected to be completed by September this year.

"There is a huge market for retirement and aged care. We are in the midst of studying the business and is planning to build several retirement villas around the country," Kamaruzzaman said.

By Business Times

New RM1.5bil project to give trendy look to Puchong

Modern street mall: Tan (left) and Millennium Land senior operations manager Chua Chin Eng with a model of Millennia City.

PUCHONG: Millennium Land Sdn Bhd will embark on a RM1.5bil mixed-development project, M Square, which it is optimistic will become the new commercial centre for Puchong and turn it into a trendy township.

Located on 10.12ha, M Square comprises a 380,000 sq ft shopping mall located in the podium block below the 18-storey 255-room Hilton Garden Inn and a 2.1 million sq ft street mall comprising of 13 six-storey blocks of retail and office units.

The development will start by the third quarter this year and is targeted for completion by 2014.

Millennium Land executive director Benjamin Tan said the company also planned to build residential units targeted at the higher income group.

“Puchong is one of the fastest growing districts in Malaysia in terms of growth especially in three key areas population, monthly household income and commercialisation.

“The primary catchment in Puchong reaches an estimated 420,000 people while its secondary catchment area, some 10 minutes away, reaches some 1.2 million people,” he added.

International hotel chain Hilton Worldwide will be managing the 255-room Hilton Garden Inn Hotel set for opening in 2014. It is targeted at business and leisure travellers.

Tan said one of the project's main selling points was that when completed, it would showcase the largest street mall in the country.

“It ties in together with today's lifestyle trend with alfresco dining and outdoor live performances amid a conducive environment,” he said.

He said the project's major pull factors included its size which puts it into the regional mall category.

The size allows for a good tenant mix, and the ambience of a street mall will give it a very different feel compared to the other shopping centres.

“Our design, being modular, allows for flexibility as it does not have lift shaft in the centre like other conventional shop lots. Instead it is served by glass lifts on the exterior of the building,” he said.

“For the convenience of shoppers, every block was planned to cater to specific target markets, such as a Kids' Corner, Japanese Street and Digital Centre that can take up an entire block or a large portion of it, and by itself serves as an anchor tenant,” he added.

By The Star

Dijaya’s condo named best high-rise project

PETALING JAYA: Dijaya Corp Bhd's golf-fronted luxury condominium development, Tropicana Grande, has been named the “Best Residential High-Rise Development” in Asia Pacific at the 2011 International Property Awards in Shanghai recently.

The development was also named the best residential high-rise development with the highest five-star rating in Malaysia in the competition held on May 31 in association with Bloomberg Television and Google.

Dijaya managing director Datuk Tong Kien Onn said in a statement yesterday that the awards were testimony to the company's efforts to create its Tropicana-branded products that offered buyers more than just properties, but also contemporary lifestyle living.

By The Star

Ivory confirms bid for Bayan Mutiara project

George Town: Ivory Properties Group Bhd confirms that it has responded to a tender to develop over 40 hectares of land at Bayan Mutiara on Penang Island.

"I can confirm that we have submitted a bid by responding to the Penang government's request for proposal to develop the land and are now awaiting word from the state authorities," the company's deputy chairman and executive director Datuk Seri Nazir Ariff Mushir Ariff told Business Times after Ivory Properties' first annual shareholders' meeting.

Last Tuesday, Business Times reported that Ivory and SP Setia Bhd are in the race for a multi-billion ringgit development of some 40.47ha land at Bayan Mutiara.

Both companies have already established their presence as property players in the southwestern part of the island via existing developments.

The Bayan Mutiara tender is part of the state government's efforts to unlock the value of the land it owns in selected areas.

Sources had said that of the two companies, Ivory Properties had submitted the higher bid, for which the reserve price was reportedly set at RM200 per sq ft.

Nazir, however, declined to comment on this.

The state government had asked for a request for proposal (RFP) via Penang Development Corp to develop an initial 24.8ha, which is located south of the Pe-nang Bridge, overlooking Pulau Jerejak.

The RFP comes with the potential to develop an additional 14ha via a future re- clamation after the development of the initial 24.8ha land.

Meanwhile, Ivory Properties' operations director Murly Manokharan said luxury condominiums are set to be the group's next offering in Batu Ferringhi, where Ivory has already established its presence as a property developer.

Unlike its Moonlight Bay and Island Resort developments, which are sited on hillslopes commanding ocean views, the proposed The Bay development is set to be located on the beachfront.

Murly said the proposed development will comprise a single block of low-density condominiums, in compliance with environmental and developmental requirements set by the local authorities.

"We are hoping to offer units with large built-up areas ranging from 3,000 to 5,000 sq ft and they will likely be priced between RM600 and RM650 per sq ft," he said.

Ivory Meadows, a wholly-owned subsidiary of Ivory Properties, entered into a conditional agreement last year with Lim Soon Hin and Lim Soon Vin to buy 0.49ha of freehold land in Batu Ferringhi for RM25 million.

The project is expected to be completed three years after construction begins.

Also on the cards for Ivory Properties is the proposed City Mall located in Tanjung Tokong, which is set to be a mixed development project of luxury condominiums perched above a shopping mall.

"We are awaiting approvals from the local authorities before proceeding with this project which we hope to launch by the fourth quarter of this year," Murly said.

The project, with RM433.3 million gross development value, is set to offer 300,000 sq ft of shopping space and is expected to cater to tourists in meeting their dining, rest, travel and information needs.

Murly said the resident component, meanwhile, is set to cover 120,000 sq ft.

Property watchers said the proposed development is set to boost the area's new positioning as Penang island's new lifestyle and commercial hub.

Fronting the Island Plaza shopping mall, Ivory's proposed mall is set to join the ranks of projects that include Eastern and Oriental Bhd's master-planned Seri Tanjung Pinang development, Boon Siew Property Group's Precint 10 food and beverage mall, and IOI Properties' upmarket Fettes Residences condominium project.

By Business Times

E&O, Mitsui to jointly develop properties in Malaysia

PETALING JAYA: Lifestyle property developer Eastern & Oriental Bhd (E&O) and Japan's largest property developer Mitsui Fudosan Co Ltd are looking at opportunities to jointly develop residential properties in Malaysia and the region.


Partners: (from left) Zushi, Shotaro and Eric Chan at the collaboration signing ceremony.

“This is a significant start,” said E&O deputy managing director Eric Chan after signing a marketing collaboration agreement with Mitsui Real Estate Sales Co Ltd, the real estate brokerage arm of Mitsui Fudosan.

Mitsui Fudosan is one of Japan's corporate giants whose parent company, Mitsui Group, goes back to the Edo period. Mitsui Fudosan is listed on the First Section of the Tokyo and Osaka Stock Exchange and as at March this year, its total assets stood at US$47bil.

“With a market cap of US$15bil, they are not here for the (brokerage) commission,” said Chan.

Mitsui Fudosan (international department planning and administration group) executive manager Chishu Zushi said the marketing collaboration was the first step in other future collaborations.

“There will be other collaborations later on. We have been looking at various opportunities in the (residential) development business. It can be in Malaysia, Singapore or Japan, but it is too early (to announce) anything right now,” he said.

Future joint residential developments may involve E&O's existing projects or may include new ones, but yesterday's marketing partnership was project specific, that is to sell St Mary Residences in Kuala Lumpur and the Quayside Seafront Resort Condominiums in Penang.

The partnership would last until everything was sold, said Chan.

E& O has several projects, the largest of which is the 980-acre seafront development Seri Tanjung PInang in Penang. The first phase comprising 240 acres has been completed. It also has pockets of land in Jalan Kia Peng and Jalan Yap Kwan Seng in Kuala Lumpur and 365 acres at Gertak Sanggul in Penang plus bungalow lots in Damansara Heights.

Chan said about 20% of its buyers for both its Seri Tanjung Pinang and St Mary Residences in Penang were foreigners, with British being the largest group and Japanese the second largest group.

The percentage of foreign buyers for its Kuala Lumpur properties is smaller.

Ishihara Shotaro, the managing director of Tropical Resort Lifestyle Sdn Bhd, a Japanese support company that will be facilitating the cross-border collaboration said the number of Japanese buyers was expected to grow after the March 11 tsunami and earthquake.

“They invest in properties priced between RM1.5mil and RM2mil with built-up of 700 to 1,500 sq ft. They have found that investing here has been pretty rewarding compared with their investments in Japan. In Singapore, property prices are very high. We see greater possibilities here. After the March 11 tragedy, they are also looking for a country with no natural disasters,” said Shotaro.

By The Star

E&O plans 4 new Quayside condo blocks

KUALA LUMPUR: Property developer Eastern & Oriental Bhd (E&O) expects to launch four new blocks at its Quayside Seafront Resort and Condominiums project in Penang this year.

Its deputy managing director Eric Chan said the company was optimistic about the project.

"So far, out of the total seven condominium blocks planned under the project, three have been launched with more than 75 per cent taken up," he said, noting that phase one will be completed by 2013.

The Quayside project is also home to Malaysia's largest water themepark.

Speaking to reporters after signing a marketing agreement with Mitsui Fudoson Co Ltd yesterday, Chan said one more condominium block will be launched next month while the rest is scheduled for launch either by the year-end or early 2012, with gross development value at more than RM2 billion.

Mitsui, Japan's largest property developer, through its unit, Mitsui Real Estate Sales Co Ltd, will market E&O properties to its high net worth clientele in Japan.

Chan said the collaboration is the first step that marks the beginning of efforts to bring the homegrown E&O brand to the Japanese market.

"We are honoured and excited by the opportunities presented by this collaboration with a giant like Mitsui," he said.

Besides E&O's Quayside project, other projects to be marketed in Japan include the company's St Mary Residences in Kuala Lumpur, due for completion next year.

"Our products are local but we believe demand can be global, especially if our standards of quality and innovation are international," he said.

By Business Times

1MDB acquires land for Bandar Malaysia project

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has signed an agreement to buy and transfer a 200.5ha airport land in Sungai Besi, which will be transformed into Bandar Malaysia.

1MDB, as the master developer of the project, signed the deal yesterday with the Federal Land Commissioner.

A second agreement between 1MDB and the Menteri Besar Incorporated of Negri Sembilan was signed for the latter to buy 303.8ha in Sendayan. This location will be the replacement site for the Royal Malaysian Air Force.

At the same time, 1MDB also entered a master relocation agreement with the Ministry of Defence and the Home Ministry to develop eight replacement sites.

"Bandar Malaysia will have several attractive elements to further strengthen Kuala Lumpur's global competitiveness as cities compete to attract international investors and businesses," 1MDB said in a press release.

"Bandar Malaysia aims to promote livability as a distinctive cha-racter of Greater Kuala Lumpur. It will be a mixed development filled with livable space for/ life balance such as open green space and people's avenue as well as higher learning institutions," the statement added.

Tan Sri Nor Mohamed Yakcop, the minister in the Prime Minister's Department witnessed the signing at the Economic Planning Unit of the PM's Department.

1MDB was represented by its chief executive officer Shahrol Halmi. Its chairman Tan Sri Lodin Wok Kamaruddin was also present.

The release added that this is the third game-changing use of the historical site.

In 1956, it served as the first international airport and it was also the birthplace of RMAF from where it grew to become an ultra modern air force.

By Business Times

Dijaya’s Tropicana Grande named best in Asia Pacific

KUALA LUMPUR: DIJAYA CORPORATION BHD’s Tropicana Grande has been named the best residential high-rise development in Asia Pacific at the Asia Pacific Property Awards in Shanghai.

The Tropicana Grande, the golf-fronted luxury condominium, was also named the best residential high-rise development with the highest five-star rating in Malaysia in the competition held on May 31, 2011 in association with Bloomberg Television and Google.

In a statement Wednesday, June 15, Dijaya managing director Tong Kien Onn said the awards were testimony to the company’s efforts to create its Tropicana-branded products that offered buyers more than just properties, but also contemporary lifestyle living.

“We are honoured to win these awards and we attribute this success to all the employees of Dijaya for their passion, dedication and hard work as well as the trust which our customers have in our company,” he said.

The Asia Pacific Property Awards forms part of the International Property Awards which is the world’s most prestigious property competition covering residential and commercial categories and sets out to identify the very best real estate professionals across the globe.

The process involves a judging panel of over 50 experts chaired by Lord Bates of Langbaurgh and covers every aspect of the property business such as development, architecture, interior design and marketing.

By The EDGE Malaysia

CMMT buys East Coast Mall for RM310m

Kuantan attraction: CMMT’s proposed acquisition of East Coast Mall is expected to be completed by the last quarter of 2011.

PETALING JAYA: CapitaMalls Malaysia Trust (CMMT), through its trustee AMTrustee Bhd, has entered into a conditional sale-and-purchase agreement with Astral Realty Sdn Bhd for the acquisition of East Coast Mall in Kuantan for a cash consideration of RM310mil.

In an announcement to Bursa Malaysia yesterday, CIMB Investment Bank Bhd on behalf of CapitaMalls Malaysia REIT Management Sdn Bhd, the management company of CMMT, said the acquisition consisted of a four-storey shopping mall with one basement level comprising retail space on the ground, first, second and third floors, together with 1,170 car parking bays at the basement level, surface car park on the ground floor, third floor and on the rooftop.

As at May 1, CMMT was the largest “pure-play” shopping mall real estate investment trust in terms of property asset value in Malaysia, and the proposed acquisition will further strengthen this position.

“Following the completion of the proposed acquisition, CMMT's property asset value is expected to increase from approximately RM2.37bil to about RM2.7bil,” it said.

CMMT intends to fund the proposed acquisition through debt and equity to be raised via a proposed placement of up to 298.971 million new units in CMMT by way of book building, representing up to 20% of the existing units in CMMT.

Barring any unforeseen circumstances, the proposals are expected to be completed by the last quarter of 2011.

By The Star

S&P lowers China’s real estate devt to negative

KUALA LUMPUR: Standard & Poor's Ratings Services has revised its industry outlook for China’s real estate development sector to negative from stable, as credit conditions in that country have become increasingly challenging.

In a statement Wednesday, June 15, Standard & Poor's said that elsewhere in the region, the soaring market in Hong Kong may be at risk of a sharp correction.

In a report titled "Asia-Pacific Real Estate Developers: China Sector Outlook Revised to Negative on Regulatory Tightening; Other Markets Are Stable", Standard & Poor's suggested that conditions were stabilising in Japan and credit profiles were largely improving in Southeast Asia.

Standard & Poor's credit analyst Bei Fu said it was likely to see more negative rating actions among Chinese developers in the next six to 12 months because tightened onshore credit conditions and increasingly restrictive government policy have deepened the market downturn.

"Any meaningful slippage in sales will significantly weaken the developers' cash flow protection measures amid higher leverage and stiff competition,” she said.

The report noted that many developers shored up liquidity ahead of the anticipated market downturn at the expense of weakening their capital structures and increasing their refinancing risks due to the concentration of debt maturities.

A protracted negative cycle would therefore intensify the pressure on credit profiles, said the report.

"Property sales were satisfactory for many rated issuers in the first five months of this year, but we expect the sales momentum to slow as policy tightening starts to bite.

"We expect meaningful price adjustments in the second half of 2011. If sales volumes remain sluggish, developers' liquidity will quickly dry up, suggesting sporadic price discounting will likely intensify,” said Fu.

By The EDGE Malaysia

Agreements inked to develop Sungai Besi airport land into Bandar Malaysia

KUALA LUMPUR: Several agreements were inked Wednesday, paving the way for the old Sungai Besi airport land to be transformed into Bandar Malaysia a strategic development for long-term national growth.

Bandar Malaysia will have several attractive elements to further strengthen Kuala Lumpur's global competitiveness as cities compete to attract international investors and businesses, a statement on the 1Malaysia Development Berhad (1MDB) website said.

1MDB, the master developer for Bandar Malaysia, signed, among others:

* Sale and purchase agreements with Federal Land Commissioner for the transfer of 495 acres of Sungai Besi airport land to 1MDB;

* Sale and purchase agreement with the Mentri Besar Incorporated of Negri Sembilan for the purchase of 750 acres in Sendayan, which is the replacement site for the Royal Malaysian Air Force (RMAF);

* A master relocation agreement with the Defence Ministry and Home Ministry to develop eight replacement sites.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop witnessed the signing at the Economic Planning Unit of the Prime Minister's Department here.

Bandar Malaysia aims to promote livability as a distinctive character of Greater Kuala Lumpur. It will be a mixed development filled with livable space for work/life balance, such as open green space and people's avenue as well as higher learning institutions, the statement said.

This is the third game-changing use of the historical site. In 1956, it served as the first international airport, opening up the aviation, travel, tourism and hospitality industries.

It was also the birthplace of the RMAF from where it grew to become an ultra modern air force.

By The Star

1MDB inks deal to redevelope Sungai Besi airport

1Malaysia Development Bhd, a sovereign fund, signed agreements today to transform Kuala Lumpur’s former Sungai Besi military airport into a township development.

The Federal Land Commissioner will transfer 495 acres of land to 1MDB, as the fund is known, according to a statement on its website. 1MDB will be master-planner for the project which will be known as Bandar Malaysia, it said.

The Royal Malaysian Air Force signed a separate agreement for a replacement site in Sendayan, it said.

By Bloomberg

MRCB poised to clinch RM800m LRT contract

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is poised to secure soon a contract worth as much as RM800 million from Syarikat Prasarana Negara Bhd, people familiar with the matter said yesterday.

The contract is for civil works for phase two of the Ampang light rail transit (LRT) extension line linking Putra Heights to Shah Alam, Selangor.

Other parties which had tendered for the job include Sunway Holdings Bhd.

Prasarana, a unit of the Ministry of Finance Inc, is the asset-owner and operator of the Ampang and Kelana Jaya LRT lines.

It is further understood that Prasarana will award a similar contract to TRC Synergies Bhd for phase two of the Kelana Jaya LRT extension, also linking Putra Heights to Shah Alam.

In addition to that, Prasarana will also award by this week a RM850 million contract to a consortium comprising Hartasuma Sdn Bhd, Bombardier Inc and SNC Lavalin.

The contract is for the electro-mechanical (E&M) system for the Kelana Jaya LRT extension.

The consortium has edged out CMC Engineering Sdn Bhd-Colas and Ingress Corp Bhd-Balfour Beatty Rail Sdn Bhd to secure the contract.

It is learnt that CMC-Colas and Ingress-Balfour Beatty had submitted a bid worth RM750 million and RM650 million, respectively but did not meet the technical requirements.

This are the first LRT-related contracts Prasarana is farming out this year. Last November, Prasarana gave out two civil contracts worth as much as RM1.6 billion of the RM7 billion Kelana Jaya and Ampang LRT extension project.

It had appointed TRC as the main contractor for phase one of the 17km extension of the Kelana Jaya Line from Kelana Jaya to Putra Heights. The contract value is RM950 million.

It had also appointed Bina Puri-Tim Sekata JV as the main contractor to implement the first phase of the 17.7km extension for the Ampang LRT line between Sri Petaling to Putra Heights. The contract value is RM634.64 million.

By Business Times

Competition for office tenants set to intensify

KUALA LUMPUR: Competition among lessors of office space in Kuala Lumpur is expected to intensify this year, with the annual average rentals of office space in the business district projected at US$25.19 (RM76) per sq ft.

Global real estate firm Colliers International said completion of individual projects has been deferred from late 2010 to 2011.

"With a total of over 3.0 million sq ft new space coming on line by the end of 2011, competition for tenants is anticipated to intensify," Colliers said in its Asia Pacific Office Market Overview for the first quarter 2011.

According to the publication, which was made available to Business Times, prime office rental and capital values in Kuala Lumpur central area have improved slightly in the first quarter this year.

Colliers predicts the overall market to remain stable over the near term, on the back of economic growth of between 5 and 6 per cent this year.

The real estate firm anticipated that the new supply of office space in Kuala Lumpur business district to reach 3.2 million sq ft by year-end, bringing the total stock in the area to 31.1 million sq ft.

The take-up rate is expected to be 1.2 million sq ft, while the average vacancy for the year is estimated at 13.6 per cent.

For 2012, Colliers expects the average rentals to stay at US$25.19 per sq ft, while the new supply of office space in Kuala Lumpur to halve to 1.4 million sq ft, with the take-up rate to drop by a third to 800,000 sq ft.

Total stock is expected to increase slightly to 32.6 million sq ft, while average vacancy is also expected to trend upwards to 15 per cent.

Regionally, Colliers saw investment demand for office real estate remain strong in the first quarter this year, despite the recent interest rate rises.

"Firstly, the potential capital appreciation remained promising, given the continued rental catch-up in the market. Secondly, investors were encouraged by the sustained low-cost borrowing in the first quarter 2011," it said.

Buoyed by strong investment demand, it said individual centres such as Hong Kong and Taipei had seen office values reach new highs in the quarter under review. End-users remained keen on acquiring their office buildings for owner-occupation, it added.

On leasing, the real estate firm said although the individual centres are going to see an increase of three to four times of new supply this year, office rentals remained firm. This is due to positive business confidence and encouraging pre-commitment rate for a number of new developments.

The potential impact from the growing inflation is going to be the key uncertainty anticipated by most players in the office market.

Colliers, from its research, expects further rental and capital growth this year.

However, individual centres with major developments due for completion this year would provide a window of opportunity for tenants going for corporate relocation and upgrading over the near to medium term, it said.

"In particular, seismic concerns in Japan are expected to prompt more tenants to go for newer developments," it added.

By Business Times

Property at ‘upper band’

KUALA LUMPUR: Property companies on Bursa Malaysia, which have lagged behind the performance of the broader market in the past month, are trading at valuations that put such counters at the upper band against its regional peers.

Some analysts admit the valuations of the larger property companies are frothy but say there are reasons why such stocks are seeing such valuation differences from property companies in Singapore, Hong Kong or Indonesia.

“They have a premium because of execution, a track record and branding,” said HwangDBS Vickers Research analyst Yee Mei Hui, when comparing SP Setia Bhd, the country's top property company, with companies from other countries.

The regional comparison, which was made by CIMB after SP Setia released its second quarter results, showed the biggest property companies on Bursa Malaysia are generally trading at a slim discount to their share price as compared with the regional peers on a revalued net asset value (RNAV) basis.

The RNAV is what analysts think the market value of land and assets on a company's books amounted to compared with the book value of such land.

The small discount is more pronounced for the country's largest property counter by market-capitalisation terms - UEM Land Holdings Bhd, which has a market capitalisation of US$3.8bil - as the counter is trading at about a 9% discount to the stock's RNAV. SP Setia was trading at about 2% as of last week.

In comparison, the larger property companies, such as CapitaLand in Singapore and China Overseas Land & Investments Ltd, are trading at a much steeper discount to their RNAV.

One analyst thinks the difference in pricing compared with Singapore and Hong Kong is down to the mechanics of the markets there.

“Property prices there are volatile and investors who buy such stocks can overshoot in either way,” said ECM Libra Investment Bank Bhd research head Bernard Ching.

He said the land value in Malaysia was not as volatile and tended to rise on a gradual basis.

Concerns over a property bubble in Hong Kong and Singapore has also led to investors taking a much more cautious view of the value of property stocks in those countries in relation to their RNAV.

Some analysts feel the reason why Malaysian property counters have a higher valuation than regional companies was also down to a few factors.

Concentration of Malaysia-based funds seeking investments in Malaysia has seen a lot of money chasing a few quality companies and the bigger the stock, the better their following is.

“Property development is a medium term business and it's not solely about land value,” explained an analyst. He said investors generally want to look at stocks that generate a return on the value of the land the companies own and explained that companies that generally sit on large land reserves with little activity often see bigger discounts to their RNAV.

That argument has been used to explain Mah Sing Group Bhd's share price that is trading close to the company's estimated RNAV.

“Mah Sing works on a fast turnaround model and does not have a lot of landbank,” said an analyst.

Although property stock valuations were high, analysts said the divergence of the property index and that of the FTSE Bursa Malaysia KLCI (FBM KLCI) was down to investors chasing after the more liquid blue chip counters.

“The property index has a big number of mid and small cap stocks,” said an analyst.

“When the market turns south, buying will concentrate on the large, blue chip stocks.”

Property companies on Bursa Malaysia still, on average, attract “buy” calls with analysts saying the prospects of choice developers are still bright.

By The Star

SP Setia plans to increase Australia landbank

MELBOURNE: Malaysian property developer SP Setia Bhd plans to increase its landbank in Australia, predominantly in popular cities such as Melbourne, Sydney and even Gold Coast, as it seeks to capture the growing opportunities from the population boom of these cities.

Having made its first Australian investment last year, the developer is in the midst of scouting for more investment opportunities in Melbourne.

“For the first few years, we are looking for investment opportunities and to take on projects that will provide quick turnaround and are easy sell. Subsequently, we will look at greenfield projects and (at building) townships,” Setia (Melbourne) Development Co Pty Ltd chief executive officer Choong Kai Wai told Malaysian reporters here last Friday.

SP Setia is known for its township developments in Malaysia, which include Setia Alam in Shah Alam, Setia Indah in Johor and Setia Vista in Penang.

The developer, through its unit Setia (Melbourne) Development, will undertake a mixed-use development on the 4,340 sq metre site purchased last year for A$30mil in the central business district of Melbourne.

The property, dubbed Fulton LN, will comprise two towers of housing apartments as well as offering commercial and retail outlets closer to the ground level. It has dual street frontage, with the first tower facing Franklin Street and a two minute walk to the Queen Victoria Market while the second tower faces A'Beckett Street and is a five minute walk from RMIT University.

The first tower, which will be open for an exclusive preview on June 24, stands at 107 metres and will have 28 storeys offering some 300 apartments. Meanwhile, the taller tower at 44 storeys will be some 150 metres in length offering 400 apartments and should be open for sales in the next six to 12 months.

Most of the apartments will be one or two bedroom units although there will be units offering three bedrooms as well. Apartments start from A$370,000 for one bedroom at 45 sq metre, A$515,000 for a two bedroom starting at 60 sq metres and A$1.05mil for three bedroom dwellings starting at 114 sq metres.

Construction of this project, which has a gross development value of A$470mil, will commence next year and the development is expected to be ready by 2014.

The architectural design of the mixed development is by Karl Fender of Fender Katsalidis Architects, which happens to be the firm behind the proposed 100-storey tower Warisan Merdeka in Kuala Lumpur.

“The size of Fulton LN's ground plan gives us the opportunity to ignite activity movement around the laneway with retail, restaurants and cafes,” Fender said. Fulton LN is within walking distance of several universities and colleges such as Melbourne University and RMIT University. It is also close to Melbourne's central shopping centre.

and easily accessible by public transportation services.

SP Setia is looking to appeal to and monetise its Malaysian customer base, with many local parents having sent their kids to Australia, particularly Melbourne, to further their tertiary studies.

By The Star

CapitaMalls to buy Pahang mall for RM310m

AmTrustee Bhd, the trustee of CapitaMalls Malaysia Trust (CMMT) has entered into a conditional sale and purchase agreement with Astral Realty Sdn Bhd to acquire East Coast Mall in Pahang for RM310 million.

In a statement today, CMMT said the mall a nearly-full occupancy rate of 97.0 per cent, with a forecast property yield of about 7.1 per cent for 2011.

Based on CMMT's closing price of RM1.17 on June 13, CMMT's implied property yield for 2011 is about 6.4 per cent, it said, adding that it would be yield-accretive to CMMT unitholders.

The East Coast Mall is a four-storey shopping mall with one basement car park level and 1,170 car park lots, with a net lettable area of more than 440,000 square feet.

By Bernama

SP Setia forays into Aussie property mart

MELBOURNE: SP Setia, Malaysia's largest property development company will make its debut in the Australian property market with the Fultan LN, a mixed development project with a gross development value of A$470 million (A$1=RM3.20).

Chief executive officer of Setia Melbourne Development Company Pty Ltd, Choong Kai Wai, said the property project, comprising 730 apartments as well as new commercial and retail units would be located at the Melbourne Central Business District (CBD) here.

"Standing at 107 metres tall with 28 storeys, at the site linking Franklin and A'Beckett Street, it is the largest remaining undeveloped site in the central spine of the Melbourne CBD," Choong said during a media familiarisation tour of the Melbourne CBD recently.

Work on the project, covering a site measuring 4,340 square metres, is expected to begin next year with completion due middle of 2014.

The Fultan LN, apart from being a short walk to the Melbourne Central Shopping Centre and railway station, would be also close to the Royal Melbourne Institute of Technology, La Trobe University and Queen Victoria Market.

A preview of the first phase of the property in Malaysia will be held by June 24, he said.

The first phase will comprise 300 units of apartments with a gross development value of A$200 million. Already there are 600 potential takers for the property, said Choong.

"We expect more interest in the property with the coming preview and the scheduled launch in early September in both Malaysia and Melbourne," he said.

Choong also said the commercial units on the ground floor will not be for sale at the moment, explaining that it will be better for the developer to keep retail ownership in order to ensure control over the type of commercial or tenant mix to ensure sustainability to the development.

However, he added that the commercial units may be sold at a later date when development is matured.

"Our selling point is design, location and you get a piece of Melbourne," he said.

The property's architecture was done by acclaimed Australian architect Karl Fender.

On the property, he said it would offer "one one, two and three bedroom dwellings, a green pergola, communal garden, gymnasium, pool and roof terrace with theatrette and communal entertaining kitchen and dining space inspired by Adam D'Sylva, the famous chef in Melbourne."

Choong said SP Setia was also committed to a number of Environmentally Sustainable Building design initiatives to achieve a Green Four Star Certified Rating which incorporates bicycle facilities, grey-water recycling, water tank, natural ventilation, green wall and good energy rating.

Prices for the Fultan LN properties start from A$370,000 for a one-bedroom apartment, while two-bedroom apartments would start from A$515,000 and three-bedroom apartments from A$1.05 million.

"At the moment, we are looking at substantial amount of financing from banks who could give us the most competitive rates," he said, adding that this will be finalised soon.

Choong said SP Setia was in Australia for the long haul and was keen on property development in Melbourne and Sydney.

By Bernama

Analysts puzzled as UOA fails to shine on debut

UOA Development Bhd chairman, Tan Sri Alwi Jantan (right) together with managing director CS Kong (centre) and non-independent non-executive director Alan Charles Winduss (left) looking at the main screen after the listing ceremony. AZMAN GHANI/The Star

PETALING JAYA: Last Wednesday marked UOA Development Bhd's debut on the Main Market of Bursa Malaysia.

Year-to-date, the property developer's initial public offering (IPO) was the largest such exercise in South-East Asia.

Based on the IPO's institutional price of RM2.60 per share, UOA Development has a market capitalisation of RM3.1bil, which makes it among the five largest property developers listed on Bursa Malaysia, together with UEM Land Bhd, SP Setia Bhd, IJM Land Bhd and IGB Corp Bhd.

The company is a unit of United Overseas Australia Ltd (UOA), which was founded and listed on the Australian Stock Exchange (ASX) in 1987.

Its headquarters and business operations has been based in Kuala Lumpur since 1989.

UOA is also listed on the Singapore Stock Exchange (SGX) in 2008, while its associate company, UOA Real Estate Investment Trust (UOA REIT), was listed on the Main Market of Bursa Malaysia in 2005.

UOA Development is known as a fully integrated property developer with in-house capabilities in project conceptualisation and design, construction as well as sales and marketing.

UOA Development's property launches in the second half of this year include One @ Bukit Ceylon Hotel Suites, which consists of 354 units located on a freehold 1,566 sq m site off Jalan Ceylon, Kuala Lumpur, and Kiara IV, which is a freehold residential project with 80 units on a 39,700 sq m site in Bukit Segambut, Kuala Lumpur.

Both projects, due to be completed in 2013, have a combined GDV of RM400mil.

In a recent StarBiz interview, UOA Development director Alan Charles Winduss pointed out that the company's integrated operation model had helped it to remain competitive and also mitigate rising land costs to a degree.

As at Dec 31, 2010, UOA Develop-ment had a total saleable and lettable area of more than 300,000 sq m of properties under development with a gross development value GDV) of RM2bil to be completed over the next three years.

The company has a further total potential saleable and lettable area of more than 1.2 million sq m being held for future development projects with an estimated GDV in excess of RM8bil.

For financial year 2010 (FY10), UOA Development posted a net profit of RM285.8mil on revenue of RM375.2mil.

This was a 61% jump in net profit, compared with its reported net profit of RM177.6mil on revenue of RM427.8mil in FY09.

For the first quarter of this year, the company posted a net profit of RM130mil on the back of revenue of RM145.7mil.

However, it should be noted that in its profit calculation for the quarter under review, the company also recognised fair value gains amounting to RM92.3mil (which was not included as revenue for the quarter) due to the completion of Blocks 3 and 4 of The Horizon Phase II which are held as investment properties in the flagship Bangsar South City development.

Prior to UOA Development's listing, many research analysts were quite bullish about the shares' prospects as they said the company had solid fundamentals with a strong parent in UOA, prime landbank in strategic locations in the Klang Valley, and reasonably high margins attributable to its in-house construction and procurement unit.

Several research firms accorded fair values in the RM3.50 range for the share prior to listing.

However, the company's lacklustre debut on Bursa Malaysia left investors disappointed and analysts puzzled.

The stock touched a high of only RM2.62 on its first day of trade, and ended at RM2.52 as at last Friday, down 3.1% from its initial public offering (IPO) institutional price of RM2.60 per share.

The volume traded last week was 82.5 million shares, with some 78 million shares changing hands on Wednesday but only about 4.5 million shares on Thursday and Friday.

In a filing with Bursa Malaysia, UOA also raised its stake in UOA Development to 66.58% or 796.15 million shares by acquiring shares in the open market last Wednesday.

One analyst from a local research firm said investors' perceptions might have been affected by the share's low 5 sen par value against its offer price, as well as the flat performance on the local bourse last week.

Another analyst pointed out generally, investors preferred property stocks with more diversified township developments and were perhaps unhappy that UOA Development was mainly renowned for its ongoing 60-acre Bangsar South City project in Kampung Kerinchi, Kuala Lumpur.

Kenanga Research said in a IPO note last month that there was “single” area concentration risks for the company as the bulk of its projects were in Bangsar South City while the property sector's risks included negative real-estate policies, rising interest rates, tightening banking system liquidity and an economic slowdown.

A note issued by ECM Libra Investment Research last month said the company was also overly exposed to non-residential properties which accounted for 86% of its remaining GDV.

However, the company's chief operating officer (development division) David Khor said recently he hoped the ratio would change in the next two years, with higher volume contribution from residential projects.

As part of this strategy, the company announced last week, in a Bursa Malaysia filing, that its wholly-owned subsidiary, Magna Tiara Development Sdn Bhd, had entered into a conditional sale-and-purchase agreement with Sim Nam Housing Development Co Sdn Bhd to acquire two parcels of freehold land measuring 4.86 acres in Sri Petaling, Kuala Lumpur, for RM50mil cash from internally-generated funds.

The company plans to build a high-rise residential development on the site, located 15km from Kuala Lumpur City Centre, with a launch slated in the fourth quarter of this year.

By The Star

Sime Darby to invest RM280m in 2 hospital projects

KUALA LUMPUR: SIME DARBY BHD’s healthcare division is investing RM280 million in two hospital projects in the Klang Valley as part of the government’s health tourism plan under the Economic Transformation Programme (ETP).

The conglomerate said on Monday, June 13 it would invest in a 220-bed Sime Darby Medical Centre Ara Damansara in Subang which will be operational by the third quarter of 2011.

The 300-bed Sime Darby Medical Centre ParkCity will be operational by the second half of 2012.

Sime Darby’s investment in the two hospitals is part of the Entry Point Project 4 under the Economic Transformation Programme.

“To achieve this target, the healthcare sector will require an additional 1,900 beds. The bulk of the investment required to achieve this target is expected to come from the private sector,” it said.

Under the EPP 4, the target is to attract two million people under the health tourism programme.

By The EDGE Malaysia