Chor sees no property asset bubble

PETALING JAYA: Malaysia does not foresee a property asset bubble in the near future unlike China, Hong Kong and Singapore, which have such concerns.


Chor: ‘Increase in RPGT among measures to curb speculation.’

Housing and Local Government Minister Datuk Chor Chee Heung said that many local developers were still rushing to submit their applications for various projects.

“No, I don't think so because we have not reached that stage. If you think this (slower property sales) is the sign, then why are developers jumping in to continue to build?” he said after the opening of the 19th International Real Estate Federation Asia-Pacific Real Estate Congress 2011.

On another note, Chor said the increase in the real property gains tax (RPGT) was among the measures taken by the Government to curb speculation.

The Budget 2012 proposed that the RPGT on properties held and disposed of within two years be raised to 10% from 5%.

Chor said although the additional 5% was not too much of a deterrence, it would not give much room for speculators to buy property and flip it shortly, adding that the additional tax would not affect genuine home buyers.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, in his speech at the congress, said the real estate and business services sector was projected to expand by 6.8% and 5.7% respectively in 2011 and 2012.

“As we move forward, we cannot abandon the underprivileged and the poor. In this respect, we have put in place numerous measures to ensure that there is adequate supply of affordable homes. In March this year, the Government launched the My First Home Scheme.

“Under Budget 2012, the ceiling selling price of these homes has been raised to RM400,000 from RM220,000. The new ceiling would allow a greater number of aspiring homeowners to take advantage of the 100% financing scheme by participating financial institutions,” Husni said.

He also said unique public-private partnerships would be forming, where the Government would provide the land on which private property developers could build homes for the less fortunate group.

By The Star

UOA plans more projects

PETALING JAYA: With property stocks trending lower over the past several weeks and its shares halved from the initial public offer price of RM2.60 in June, UOA Development Bhd is manoeuvring around the current soft patch with a proposed purchase of 9.8 acres.

In a filing with Bursa Malaysia, the company said it had proposed to buy the freehold Kepong land for RM72.9mil cash.

The stock closed three sen higher at RM1.28 yesterday.

Chief operating officer David Khor told StarBiz that a residential development was being planned for that land and work would commence next year.

“It will be one of several projects about five or six being planned for next year,” he said. No gross development value is available.

UOA is a subsidiary of United Overseas Australia Ltd, which is listed in both Australia and Singapore.

UOA is known for its flagship project comprising 60 acres in what is currently known as Bangsar South, located between Petaling Jaya and Kuala Lumpur.

“We are unable to comment on the share price. However, we are extremely pleased to share that UOA has recorded a gross profit of RM161mil in the first half of 2011.

“This marks an impressive first half-yearly results compared with RM183mil recorded for the full year of 2010,” Khor said.

He said UOA would continue to focus on its core development activities while delivering a sustainable and strong financial performance to shareholders.

“UOA's expertise is in office development although we are also able to do high-rise residential and landed properties,” Khor said.

Close to 90% of its office space of 2.26 million sq ft, divided between 14 blocks and eight subsequent blocks in Bangsar South, have either been rented out or sold, he said.

Khor said residential component contributed about 60% of UOA's revenue in the second quarter.

He said contribution from the residential component was expected to continue to increase. This is based on the company's upcoming developments and potential land acquisitions that would form a solid basis for its growth over the next five to seven years.

CIMB Research said UOA had about 100 acres of undeveloped land with a gross development value (GDV) of RM11bil. Bangsar South has a GDV of RM8bil and will take several years to complete.

The company has completed two high-rise condominium blocks in Bangsar South comprising a total 470 units besides 14 blocks comprising 760,000 sq ft of office space and another subsequent four blocks of 600,000 sq ft.

Khor said besides Bangsar South, UOA had seven other ongoing projects in the Klang Valley that would generate RM2.43bil in GDV. The company will launch another six next year with a GDV of RM1.35bil.

“After 2012, there will be other developments comprising residential and commercial, with GDV totalling RM6.9bil,” he said.

By The Star

SP Setia's major shareholders seeing eye to eye

KUALA LUMPUR: The major shareholders of SP Setia Bhd have appeared to patch up their differences, after a joint statement by both the property developer and Pemodalan Nasional Bhd (PNB), say analysts.

This has also meant that SP Setia chief executive officer (CEO) Tan Sri Liew Kee Sin is now less likely to seek a higher takeover bid.

"Market talk was that PNB and Liew did not see eye to eye on some issues, particularly on PNB's intention to have more say in the company. The statement yesterday certainly squashed market rumours and addressed the concerns of investors, employees and business partners.

"With the statement, it is also less likely that Liew will be seeking for higher bidders, as this may not look professional," said a research head from a local brokerage.

Early this week, PNB in a statement, said it wants Liew to remain at the helm of SP Setia and the existing management team to continue to manage the company. It added that "it is committed, once markets stabilise, to maintain an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation".

Liew, in the statement, added that he was "heartened" by the reassurance from PNB president Tan Sri Hamad Kama Piah.

To recap, about two weeks ago, PNB announced a conditional takeover offer for SP Setia, which involves PNB buying SP Setia shares it does not own for RM3.90 a piece and warrants it does not own for 91 sen each.

The takeover bid, which appears to be hostile, was immediately rejected by Liew on the same day, saying that the offer undervalues the company. He asked PNB to reconsider higher offer and said it will seek offers from rival bidders.

The takeover is conditional upon when PNB receives more than 50 per cent of shareholders accepting the offer.

Since PNB's announcement, the group has increased its shareholding from about 33.2 per cent to about 38 per cent in SP Setia, mainly via the open market.

However, interestingly, it appears that PNB's acquisition from the open market has slowed lately.

This week, SP Setia's average daily trading volume is about one million shares a day. In contrast, between September 29 and October 7, its average trading volume was 15 million shares a day.

"It is now likely that investors will just sit out for the time being while waiting for the independent advice circular to be out," said an analyst.

By Business Times

New condo? No, it’s an office block

SINGAPORE: With their swimming pools, gyms and immaculate rooftop gardens, they could almost be mistaken for executive condominiums.

In fact, they are office buildings in industrial estates – part of a new breed of developments designed to provide a stylish workplace for young entrepreneurs keen to get the creative juices flowing.

Gone are the days when their firms had to settle for space in staid grey blocks alongside small factories. Instead, developers say they are concentrating on aesthetics and recreational facilities, which help them to attract tenants such as start-ups run by bosses who want somewhere “cool” to do business.

Take Bizhub 28 @ Chai Chee. Due to be completed in 2013, it will have a pool, barbecue pits and a gym. Seah Yam Seng, the property agent in charge of selling the office space, said it was attracting mainly foreign firms and new tech businesses.

“It’s the lifestyle,” he said. “Some local companies may be happy with just an office space to work in but, nowadays, tenants do demand a little more.”

Oxley BizHub is another trendy development, this time aimed at light industry companies or those that produce small consumer goods. The developer of the Ubi Road 1 project, which is due to be completed in 2013, said it was not interested in slapping together a simple design.

Oxley Rising chief executive Ching Chiat Kwong said: “We believe that injecting a bit of ‘lifestyle’ into our projects encourages people to be more productive at work. It helps to have a lot of greenery and a nice area to work in.”

He added that the concept was likely to catch on fast with developers who realised their customers expected modern features.

Oxley paid S$158.1mil, or S$169 per sq ft (psf), for the Oxley BizHub 60-year leasehold plot in August last year. Since its launch, the property has sold its 728 units at an average S$677 psf. Prices there are said to be higher than those at other 60-year leasehold properties in the area, which go up to slightly over S$400 psf.

While the building’s design sets it apart from others in the neighbourhood, property agent Benson Koh said prices at the project depended just as much on the economy.

“Whether or not the price can be justified will depend on market demand,” he said. “The recent cooling measures on residential property have driven a lot of investors to buy units in industrial projects, so demand is very high right now.”

The move to add more frills to office buildings is also catching on in downtown developments. Asia Square, in the Central Business District, will have a 32,300-sq-ft gym and a fully sheltered landscaped plaza where tenants can relax, socialise or hold corporate events.

Existing office buildings equipped with facilities like these include Capital Tower and One George Street, both of which have pools managed by Fitness First. Capital Tower even has an indoor golf club on its ground floor. CapitaLand, which developed both buildings, said it wanted to provide its tenants with a balanced environment for work and play.

When IT consultancy Acian Technologies decided to set up its new office at the futuristic Fusionopolis in Buona Vista in 2007, the building’s design, gym and roof garden were a major draw. “It’s great for the employees to visit the garden, and it helps us when we are recruiting staff,” said chief executive Julien Arnaud, 33. “I’m a member of the gym, and I usually drop by in the morning or after work.”

Wesley Oxenham, director of design at technological firm Peekspy, said he planned to move his office somewhere “cooler”. Right now, his company is based in an older industrial building.

“I visited the Google offices in Singapore a few years ago, and I was quite inspired by the way they did the place up,” said the 28-year-old. “It’d be nice if the office building and the interior were well designed. It could help us think in a more innovative way.”

By Straits Times Singapore

Sunway in JB and Singapore projects

PETALING JAYA: Construction and integrated property developer and manager Sunway Bhd has been awarded a contract worth RM308.9mil from Iskandar Malaysia Studios Sdn Bhd for the construction of an integrated media studios facility in Johor Baru.

In a statement to Bursa Malaysia, Sunway said that its wholly-owned subsidiary Sunway Construction Sdn Bhd had received the letter of award for the project.

Called Pinewood Iskandar Malaysia Studios, work on the project would take 19 months for completion by May 10, 2013.

Among other things, the project would comprise a TV block, with two TV studios and two scene docks; a film block with five studios; an annex block with a viewing theatre and audience-holding area; a production block, with offices, dressing room and wardrobe studio; and ancillary building and space, with a guard house, carpark and a 10-acre backlot for filming.

The project is expected to contribute positively to the earnings of Sunway group from financial year ending Dec 31, 2012 onwards.

In a separate announcement, Sunway said that Sunway Developments Pte Ltd, together with Hoi Hup Realty Pte Ltd and Oriental Worldwide Investments Inc, had been awarded the tender for a piece of land in Jalan Loyang Besar/Pasir Ris Rise, Singapore for a 99-year lease term at S$140.96mil (RM345mil).

Sunway Developments, a wholly-owned subsidiary of Sunway Construction, would set up a joint-venture company with Singapore-based Hoi Hup and Oriental World based on a 30:60:10 equity ratio to undertake the development of the land.

The proposed development is expected to complete within 60 months, commencing Oct 10.

By The Star

Sunway to develop land in Singapore

SUNWAY Bhd won a RM345 million tender from the Urban Redevelopment Authority of Singapore to develop a piece of land in Jalan Loyang Besar, Singapore.

Sunway’s partners in the venture are Hoi Hup Realty Pte Ltd and Oriental Worldwide Investments Inc.

By Business Times

E&O mandatory general offer unnecessary

PETALING JAYA: In a move market observers said was not unexpected, the Securities Commission (SC) has concluded that Sime Darby Bhd does not need to make a mandatory general offer (GO) for shares in Eastern & Oriental Bhd (E&O).

In separate announcements to Bursa Malaysia, Sime Darby and E&O said the SC had found that Sime Darby and Datuk Terry Tham Ka Hon were not parties acting in concert and as such a mandatory offer obligation would not arise.

The SC also told Sime Darby that its finding was without prejudice to a review of the decision should new facts arise and it was the regulator's right to take appropriate action provided under the securities laws as a consequence of such review.

Trading in Sime Darby and E&O shares was suspended yesterday till 2.30pm pending the announcement on the SC's decision.



The news comes after more than a month of speculation over the implications of Sime Darby's acquisition of a 30% stake in niche property developer E&O for RM2.30 per share, a 60% premium to its then market price.

In a statement, the SC said: “In the course of the review (of the circumstances of the acquisition), parties involved in the transaction were interviewed and relevant documents procured. The review included an assessment of possible concert party relationships between and among the parties involved. Precedents in Malaysia and practices and rulings in other jurisdictions on similar issues were also examined.

“Having analysed all the evidence gathered, it is the SC's finding that the acquisition of the 30% equity interest in E&O by Sime Darby had not given rise to a mandatory offer obligation under the Malaysian Code on Take-Overs and Mergers 2010.”

Besides Sime Darby and the three vendors from whom it had bought the 30% interest, the other name in the spotlight was E&O chairman Datuk Azizan Abd Rahman, who had purchased 450,000 shares on the open market in five separate transactions from April to August this year, with the last purchase of 100,000 shares done on Aug 12 about two weeks before Sime Darby announced its acquisition.

Azizan is also SC chairman Tan Sri Zarinah Anwar's husband. She recused herself from the review as a result.

Although the SC has said a GO was not necessary, the review of all stock transactions by all parties of E&O shares is still ongoing.



Sime Darby's purchase, coming just under the 33% threshold that would have required it to launch a GO, had sparked much debate in the market and consternation among minority shareholders of E&O.

After both companies resumed trading, Sime Darby shares hit a high of RM8.68 before settling at RM8.50, 1.19% above its closing price on Monday. E&O shares, meanwhile, traded mostly below their previous close and ended 1.45% lower at RM1.36.

Analysts said the SC's decision came as no major surprise. Speaking to StarBiz, a Sime Darby analyst said the outcome was more or less expected by industry watchers. He said the news would not significantly impact Sime Darby and did not warrant a change in his valuations.

Hong Leong Investment Bank Research said in a report that it was positive on the development as it would mean Sime Darby does not have to acquire the remaining 70% of E&O at a GO price that was much higher than E&O's market price.

Another analyst pointed out that the bigger concern for Sime Darby was crude palm oil (CPO) prices as the conglomerate derived some 58% of its operating profit from its plantation business. Sime Darby is the world's largest listed palm-oil producer by acreage.

CPO prices have come under pressure after the Malaysian Palm Oil Board released figures on Monday that showed supply was getting ahead of demand, as palm oil stockpiles jumped 12.17% in September from August against an 8.8% drop in exports.

As for E&O, analysts anticipate its share price could face some selling pressure because the prospect of a GO has diminished.

An analyst reckoned that E&O shares might touch RM1.20 on the disappointment of investors who bought into it expecting a GO.

By The Star

SP Setia's Liew gets 'sweet' offer

Kuala Lumpur: Permodalan Nasional Bhd (PNB) wants Tan Sri Liew Kee Sin to remain at the helm of SP Setia Bhd, following its proposed takeover of the company.

Analysts said if Liew remains as chief executive officer, there is a strong possibility the various funds with sizeable stakes in SP Setia may not accept the takeover offer and instead choose to remain as shareholders in the company.

As at December 23 last year, the various funds, excluding the Employees' Provident Fund, owned close to 19 per cent of SP Setia while as of last Friday, the EPF holds a 14.95 per cent stake.

The funds are not expecting better offers from rival bidders, considering the size of the takeover, which is said to be the biggest in more than two decades.

PNB is offering shareholders RM3.90 a share, as well as 91 sen for every warrant they hold, after it raised its stake in SP Setia to 33.2 per cent last month, exceeding the 33 per cent threshold.

In their first joint statement to Bursa Malaysia, PNB said it appreciated the strong branding of SP Setia, thanks to its entrepreneur-led management team.

"Liew will continue to lead SP Setia as its CEO... the existing management team will also continue to manage the company," said PNB in the statement.

The asset manager also said "it is committed, once markets stabilise, to maintain an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation".

Liew, in the same statement, said he was "heartened" by the reassurance from PNB president Tan Sri Hamad Kama Piah at their meeting last Friday.

The tycoon, who joined the SP Setia board in 1996, owns 11.26 per cent of the company and is widely recognised as the main driving force behind its transformation into one of the country's biggest property developers.

TA Securities property analyst, Tan Kam Meng, said following PNB's assurance that it would not be involved in the day-to-day operations of SP Setia, it is now unlikely that Liew will accept the (RM3.90 a share) offer.

"This should lend support to the share price as PNB is expected to continue buying SP Setia shares from the open market at any price below RM3.90 per share."

PNB said its involvement in its investee companies is mainly through board representation, while the day-to-day operations are left to professional managers.

Mercury Securities head of reseach, Edmund Tham, said the statement seems to indicate that Liew may not be seeking alternative bidders.

He said since there is no update from AmInvestment Bank as the independent adviser, investors may opt to take up the offer or hold on to the shares.

"The immediate concern for the public investors would be the liquidity of the shares, meeting the public spread requirement (at least 25 per cent) and the listing status."

Liew, meanwhile, reiterated SP Setia board's advice to non-interested shareholders to wait for both PNB's offer document as well as the independent advice circular before deciding on their next move.

When contacted, an SP Setia official said the company needs to see the whole process through before it can comment further.

By Business Times

Hamad: PNB not taking active role in SP Setia

PETALING JAYA: The nation's largest asset manager, Permodalan Nasional Bhd (PNB), has taken the step of reassuring stakeholders of property developer SP Setia Bhd that it does not intend to seek an active role in the management of the latter despite a bid to increase its stake.

PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman, who issued a joint press release with SP Setia president and chief executive officer Tan Sri Liew Kee Sin, said the asset manager's role was to look for good companies to invest in and not to manage those companies.

Hamad had met Liew last Friday following concerns over the fate and future direction of the company after PNB made an offer of RM3.90 per share and 91 sen per warrant with the aim of increasing its stake to more than 50%.

“Tan Sri Liew will continue to lead SP Setia as its CEO. The existing management team will also continue to manage the company with the same high professional standards and spirit of excellence which has caused SP Setia to be voted number one developer in Malaysia time and again,” he said.


Hamad: ‘Liew will continue to lead SP Setia as its CEO.’

Hamad added that PNB's involvement in its investee companies was mainly through board representation, while the day-to-day operations were left to professional managers.

PNB was seeking to increase its stake in the company because there was a disconnect between the fundamental value and share price caused by the global market turmoil, he said.

“As a long-time shareholder of SP Setia, and more recently a substantial shareholder owning more than 30% of the company, PNB fully appreciates the strong branding and deep-embedded value which has been created in the company through its entrepreneur-led management team,” he said.

He said the asset manager was also committed to maintaining an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation once the market stabilised.

Liew, on the other hand, was heartened by PNB's reassurance that it would continue to work with the existing management.

He expressed confidence that SP Setia would continue to have a bright future with solid growth prospects and thus create greater value for all stakeholders with the strong backing of PNB as a supportive long-term institutional shareholder committed to working synergistically with SP Setia's management.

However, Liew reiterated the board's advice to non-interested shareholders to wait for both PNB's offer document and the independent advice circular before deciding on their next move.

“This is to enable all shareholders to make a more informed decision regarding their investment in SP Setia,” he said. AmInvestment Bank Bhd was appointed the independent adviser for the offer.

According to Bloomberg data, PNB together with Skim Amanah Saham Bumiputera has a total stake of 31.73% in the company.

By The Star

Mah Sing, China firm in deal on 3 towers at Mont' Kiara project

KUALA LUMPUR: Mah Sing Group Bhd, Malaysia's fifth largest property developer by revenue, has partnered a Chinese firm to build three towers at its RM408 million Icon Residence Mont' Kiara project in Mont' Kiara, Kuala Lumpur.

The firm, a diversified group from China, will build the towers in exchange for 96 units from Mah Sing.

The units are worth a combined of RM220.8 million, or an average RM1,200 per square foot, said Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum.

Icon Residence Mont' Kiara comprises three towers with a total of 260 units. Each unit is worth an average of RM2.3 million.

With the Chinese firm taking up 96 units, this would mean Mah Sing has sold 60 per cent of the project since the project launch in June this year.

Leong said this is the first arrangement between Mah Sing and the Chinese firm and also the first of its kind for the group.

He said this arrangement will free up the construction cost for Mah Sing, allowing the group to use its cash flow for other opportunities.

Leong added that it will also set a precedent for similar arrangements in the future for Mah Sing's other projects.

"This is a win-win arrangement for both parties as we believe there is plenty of upside to the project once it is completed, and Mah Sing effectively does not have to come up with further cashflow to complete the project," Leong said.

Dubbed an architectural masterpiece, Icon Residence Mont' Kiara is a one of its kind serviced residence and the first in the region to adopt a distinctive Mediterranean theme.

It will be Green Building Index and Green Mark compliant with some features, such as variable refrigerant flow air-conditioning system with energy saving benefits and automated waste collection and rain water harvesting system.

Leong said the project has attracted strong interest from Hong Kong, China, Singapore, Indonesia, Taiwan, Korea and Malaysia.

Meanwhile, Leong said Mah Sing will not revise its sales target of RM2 billion for 2011. The company has achieved RM1.7 billion as at September 2011.

By Business Times

VI Properties woos Malaysians to Canadian real estate

KUALA LUMPUR: Vision International Properties (VI Properties), a real estate investment group, aims to sell up to RM80 million worth of its properties in Canada within a year of opening its office in Malaysia.

A spokesman said the firm is confident of achieving the target in view of overwhelming demand for its properties in Canada from buyers and investors in the Asia Pacific region.

"The minimum investment starts from RM500,000 and after four months in Malaysia, we have sold every single unit of our first project, called the Royal Oaks Manor. We only have two units left for our second project, known as Foxbend Manor in Lethbridge.

"Looking at these developments, we are confident that the target can be achieved," the spokesman told Business Times.

VI Properties offers ready-built properties with positive and immediate cash-flow, whereby investors will receive individual title to their property immediately upon purchase.

"We only market residential properties with proven good track record in tenancy rate and high rental yields. Our properties are already rented, ensuring that investors receive returns from day one. We provide a hassle-free full-service property management programme, hence investors get paid every month.

"Investors can obtain a loan of up to 80 per cent of the purchase price at interest rates from as low as 2.35 per cent through the company's cooperation with HSBC Premier and TD Bank in Canada," the spokesman said.

The spokesman added that VI Properties concentrates on residential properties in Alberta, Canada where the "Silent Oil Boom" is located.

On why an office in Malaysia, the spokesman said the company sees the potential of having Kuala Lumpur as its hub for business expansion in Asia Pacific.

"Due to the economic slowdown in the US, Europe and the Middle East, VI Properties sees the opportunity to establish and expand the company's business in the Far East or Asia Pacific." the spokesman said.

To date, the firm has concluded 12 real estate investment projects across Canada.

By Business Times

Bina Puri unit secures RM20mil housing project

KUALA LUMPUR: Bina Puri Holdings Bhd's wholly-owned subsidiary Bina Puri Construction Sdn Bhd has secured a RM20.4mil project from Jabatan Perumahan Negara.

The 14-month job, to commence this month, would involve the construction of Taman Topaz housing project in Dengkil, Selangor, said group managing director Tan Sri Tee Hock Seng.

He said with the new project, the group's orderbook now stood at RM2.73bil.

“This year, we have secured new projects worth over RM1bil, which is consistent with our performance over the last few years,” he added.

By Bernama

Bina Puri climbs on housing contract

Bina Puri Holdings Bhd rose to its highest in almost a month after saying it won a RM20.4 million building contract from Jabatan Perumahan Negara.

The stock climbed 2.9 percent to RM1.08 at 9:02 a.m. Kuala Lumpur time, set for its highest close since Sept. 15.

By Bloomberg

Mah Sing secures RM221mil bulk sales in Icon Residence Mont Kiara

KUALA LUMPUR: Mah Sing Group Bhd has secured a RM220.8mil bulk sale of 96 units of serviced residences in Icon Residence Mont Kiara, at an average pricing of RM1,200 per square foot.

The units were taken up by an established Chinese corporation that would undertake the construction of buildings and external works of the entire project in return for the 96 selected units, Mah Sing said in a statement today.

Mah Sing will be the sole marketing agent for the 96 units. “This is indeed an innovative arrangement as it frees up the construction cost for Mah Sing and allows us to use our cash flow for other opportunities. “It also sets a precedent for similar arrangements in the future for other Mah Sing projects,” said Mah Sing Group Managing Director/Chief Executive Tan Sri Leong Hoy Kum without naming the Chinese corporation.

Icon Residence Mont Kiara, dubbed the first in the region to adopt a distinctive Mediterranean theme, comprises 260 units in 3 iconic towers.

This bulk sale brings the take up of the project to more than 60%.

Mah Sing said the project had attracted strong interest from Hong Kong, China, Singapore, Indonesia, Taiwan, Korea as well as Sabah and Sarawak.

“Mah Sing intends to start a series of roadshows to these countries to reach out to its registrants and facilitate their purchase,” it said.

By Bernama

Developers drawn to ‘less prime’ locations

With the supply of land-bank getting scarce in the Klang Valley, it's not surprising to see developers expanding their presence in “not-so-prime” locations.

This was evidenced as recently as last week, when SP Setia announced it was acquiring a RM381.2mil plot of land in Rinching, located mid-way between Semenyih and Bangi old town, to be followed soon after by Mah Sing Group Bhd's purchase in Rawang for RM92mil.

“Granted, it is often developers with prime land-bank in Kuala Lumpur and Penang that stand to benefit more from rising property prices,” says an industry observer.

“But property conglomerates such as SP Setia and Mah Sing are well-known brand names with a proven track record. They can probably attract buyers and chalk up sales even if they bought land in Timbuktu,” he adds in jest.

A huge boost to the land acquired by SP Setia and Mah Sing is that they are both well connected. Malaysia Equity Research in a report pointed out that the former's Rinching land is located within 15 minutes from the proposed Bandar Kajang MRT station. “(It is) near the terminal station for the approved MRT Blue Line (Sungai Buloh-Kajang) and 25km south of KLCC (which is 40 minutes via existing highways).”

The report also says SP Setia is planning to replicate the success of its twin flagship Setia Alam and Setia Eco-Park development, including investing in infrastructure to improve connectivity.

An analyst at a local bank-backed brokerage says investing in infrastructure is “part of the package” when developing land that is considered “less prime”.

Similarly, analysts are also positive about the connectivity for Mah Sing's Rawang land. The developer has proposed to develop a mixed township, M Residence@Rawang, that includes beginner homes on 90.3ha.

“M Residence@Rawang is directly accessible from the North-South Highway, being only 10km from the exit point at the Rawang toll via Jalan Batu Arang. The Kuala Lumpur-Kuala Selangor Expressway (formerly known as Latar Highway) was opened in June,” says UOB KayHian in its research report.

“The Rawang KTM Station is also a short drive away, within 12km from the land, according to the management,” it adds.

According to Mah Sing, the M Residence@Rawang township has an estimated gross development value of about RM948mil and preliminary plans include two-storey link homes, townhouses, semi-detached homes, three-storey shops and various facilities and amenities.

“M Residence@Rawang is expected be developed over three to four years and the group is also actively scouting for more well-located mega township land that fit the group's business model of quick turnaround and allow for value enhancement,” the company says.

The first launch is slated for the first half of next year for the mass market, in line with the Government's call for private developers to build more affordable housing.

The move to provide affordable homes has been praised by analysts and industry observers and considered a good way to attract buyers in less prime land within the Klang Valley.

“With absorbitant property prices today, especially in the Klang Valley, it is becoming increasingly difficult for first-time home buyers to even place a downpayment for a house,” says one industry observer.

On the proposed Mah Sing development, UOB KayHian says: “The price tag for a two-storey link house (built-up of about 2,000 sq ft) is indicatively priced from RM390,000 onwards, or RM195 per sq ft. Ground checks indicate that selling prices for a two-storey link house in nearby developments such as The Emerald and Bandar Country Homes range from RM150 per sq ft to RM250 per sq ft.

“We believe the township concept should be able to attract buyers given the decent selling prices.”

Macquarie Research in its recent report says Mah Sing's project could see good demand with the significant rise in property prices in Kuala Lumpur and Klang Valley in the past year.

“As a comparison, Kuala Lumpur Kepong Bhd (KLK) launched its link houses in June this year in Bandar Seri Coalfields with prices ranging from RM328,000 to RM368,000. We understand from KLK that the sales for the launch were very strong with over 90% sales achieved, primarily due to upgrader demand.

“Mah Sing's new land is further up north of KLK's project, but has good connectivity with the KL-Kuala Selangor Expressway and is 20km from Rawang city centre.”

By The Star

Bina Puri awarded RM20.4m housing job

Bina Puri Holdings Bhd's wholly-owned subsidiary, Bina Puri Construction Sdn Bhd, has secured a RM20.4 million project from Jabatan Perumahan Negara.

The 14-month project, to commence this month, will involve the
construction of a housing project in Dengkil known as Taman Topaz.

In a statement today, Group Managing Director Tan Sri Datuk Tee Hock Seng said with the new project, the firm's outstanding orderbook, now stood at RM2.73 billion.

"This year, we have secured new projects worth over RM1 billion, which is consistent with our performance over the last few years," he added.

Tee also said the company was optimistic the construction sector would benefit from the new allocation recently announced in the 2012 Budget coupled with the spillover effects from the Economic Transformation Programme.

By Bernama

Bina Puri secures RM20mil project

Kuala Lumpur: Bina Puri Holdings Bhd has announced that its wholly-owned subsidiary, Bina Puri Construction Sdn Bhd, has been awarded a project from the Jabatan Perumahan Negara worth RM20.4mil.

The project is to undertake the construction works of a housing project in Dengkil known as Taman Topaz. Construction will commence in Oct 2011 and is expected to be completed in 14 months.

Group Managing Director Tan Sri Datuk Tee Hock Seng, JP said, “Inclusive of this project, our outstanding orderbook now stands at RM2.73bil. This year, we have secured new projects worth over RM1bil, which is consistent with our performance over the last few years.”

“Moving forward, we are confident our clients will be assured of our ability to deliver quality and timely projects. Additionally, we are optimistic that the construction sector will benefit from the new allocations recently announced under the Budget 2012 coupled with the spillover effects from the Economic Transformation Programme,” Tee added.

By Bernama

PNB not taking active role in SP Setia

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) has given its assurance that Tan Sri Liew Kee Sin will continue to lead SP Setia Bhd as the company's CEO.

In a joint statement to Bursa Malaysia, PNB said its role in its investee companies is mainly through board representation while the day-to-day operations are left to professional managers.

"PNB is an investment fund and its role is to look out for good companies to invest in and not to manage these companies," it said.

The statement said PNB president and group CEO Tan Sri Hamad Kama Piah Che Othman had met Liew on Friday to “personally reassure him of PNB's best intentions for SP Setia."

“PNB is also committed, once markets stabilize, to maintain an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation,” it added.

In September, PNB had launched a takeover offer for SP Setia for RM3.90 cash per share and 91 sen per warrant after its shareholding surpassed the 33% threshold.

Since then, PNB has steadily acquired shares through the open market, with the most recent acquisition indicated in a Bursa Malaysia filing this morning that showed the state investment firm added 9.14 million shares at an average of RM3.89 apiece and 1.06 million warrants at 89.5 sen apiece.

SP Setia shares were traded at RM3.89 at 3pm.

By The Star

PNB says to keep SP Setia management

Permodalan Nasional Bhd, Malaysia’s biggest state-asset manager, plans to retain SP Setia Bhd’s current management team with Liew Kee Sin as chief executive officer following its proposed buyout, according to a joint stock exchange filing in Kuala Lumpur today.

PNB is also committed, once markets stabilize, to maintain an “appropriate” shareholding spread to attract local and foreign investors, the statement said.

Liew reiterated the board’s advice to wait for PNB’s offer document and a circular from independent advisor AmInvestment Bank Bhd before deciding on the general offer, it said.

The joint statement followed a meeting last week between Liew and PNB President Hamad Kama Piah Che Othman, it said.

By Bloomberg

Pavilion said to raise RM800m in IPO

Pavilion REIT, part-owned by the Qatar Investment Authority, plans to sell units on Malaysia’s stock exchange as early as next month through a property trust, said two people with knowledge of the matter.

The company, which owns the Pavilion shopping, residential and office project in Kuala Lumpur, aims to raise about RM800 million (US$255 million), said the people, who declined to be identified as the information is private. The size of the initial public offering may rise to as much as RM1 billion depending on demand, one of the people said.

At RM800 million, the Pavilion IPO would be Malaysia’s third-biggest share sale this year, after offerings by Bumi Armada Bhd and MSM Malaysia Bhd. Companies canceled or postponed US$8.9 billion of IPOs around the world in the third quarter as stocks plunged, putting the market on track to set a record for pulled deals.

Fitness First Ltd, which had sought to list in Singapore by the end of this year, is among those delaying IPO plans, people with knowledge of the matter said this month.

Pavilion is owned by Malton Bhd. Chairman Desmond Lim Siew Choon and his wife, together with Qatar Investment Authority. Its flagship development comprises a 1.4 million square-foot retail mall with 450 outlets, plus one office building and two residential towers in Kuala Lumpur’s city center, according to Malton’s website.

CIMB Group Holdings Bhd, Malayan Banking Bhd and Credit Suisse Group AG are managing the offering, the people said. Desmond Lim and his wife were at meetings and couldn’t immediately comment, according to their secretaries. A spokeswoman for Pavilion, who asked not to be identified, had no immediate comment.

By Bloomberg