SP Setia looking forward to PNB’s offer

KUALA LUMPUR: SP Setia Bhd Group is awaiting offer documents from Permodalan Nasional Bhd (PNB) for its shareholders to decide whether to sell their shares to the country's biggest fund manager.

President and chief executive officer Tan Sri Liew Kee Sin said sentiments aside, his company was still positive on the bid to increase PNB's stake in SP Setia.

“On the positive side, the company was very proud that a national and the largest fund manager is prepared to increase its interests in SP Setia and also boost the company's value.

“If SP Setia is not good, an entity such as PNB will not come forward to invest more.“Whatever it is, we must still wait for the official offer documents to come out,” he told reporters after the launching of KL Eco City project by Federal Territories and Urban Well-Being Minister Datuk Raja Nong Chik Raja Zainal Abidin yesterday.

Liew said the acquisition process was long and complicated, but the official offer documents should come soon, maybe by year-end, subject to PNB's convenience.

Asked whether he would helm the management after PNB held majority shares in SP Setia, Liew said he would if asked to.

“However, until this moment, our (SP Setia and PNB) relationship is very good,” he said.

Liew also ruled out SP Setia would convene an extraordinary general meeting to discuss the PNB takeover bid as reported in a newspaper.

“There will be no such meeting. It's all lies. It's in the shareholders' hands whether to sell or not to sell (their shares),” he added.

By Bernama

IJM brings RM5bil iconic waterfront project to Hong Kong

HONG KONG: IJM Land Bhd's RM5 billion iconic waterfront project in Penang, known as "The Light," is up for grabs at the ongoing MIPIM Asia 2011, the world's premier real estate exhibition and conference, at the Hong Kong Convention and Exhibition Centre.

Located just off the Penang Bridge on the island's eastern coastline, The Light is an integrated project comprising commercial and residential components.

Its chief executive officer and managing director Datuk Soam Heng Choon said: "We are bringing it up to Hong Kong (at MIPIM Asia) where there are more international investors who are looking at it.

"The residential component is on 16.8ha (42 acres) reclaimed land which we launched in 2009. Currently, we've launched four parcels of the residential projects.

"We already commenced reclamation for the commercial projects. We are now ready to go into the market to look for investors," he told BERNAMA on the sidelines of MIPIM Asia 2011, here.

MIPIM Asia 2011, which began yesterday, was opened by Hong Kong's secretary for development, Carrie Lam Cheng Yuet-ngor.

The three-day event will end tomorrow.

In the commercial component, Soam said the total land hectarage was about 42 hectares (105acres) comprising hotels, a business park, convention centre, shopping complex and a performing arts and cultural centre.

He said the first phase of the residential component was under construction.

"We've launched (the residential component) and was mostly sold to Penangites.

"This project will take 10 years (to complete). This, however, depends on how fast we can go. If we can get investors to come in to partner us in some of the commercial projects, this can go very fast, may be in the next five to eight years, it will be completed, he said.

Soam said IJM Land was not desperately looking for investors, however,"we are just looking for people who may be interested because we've already got a lot of interest and investors who are already there but there may be additional people who are also interested as well."

Back home, he said: "We've our local and also Singaporean funds looking at investing in this place as well."

"We came here to specifically network and showcase The Light project. So, we need to be more focused and today we are here to focus on The Light," he added.

IJM Land, with projects in Penang, Klang Valley, Johor, Sabah (in Kota Kinabalu and Sandakan) and Sarawak (Kuching), is among the Malaysian participants at MIPIM Asia 2011 being held at the Malaysian Pavilion.

The Malaysian Pavilion was initiated by Malaysia Property Inc, a Malaysian government initiative that acts as a "bridge" between institutions and corporate and private investors to real estate investment opportunities in Malaysia.

By Bernama

Ibraco buys prime land in Kuching

KUCHING: Ibraco Bhd is to aggressively expand its property development with the purchase of 49.5ha of prime land along Kuching-Kota Samarahan Expressway for RM41.6mil in cash.

Managing director Chew Chiaw Han said the land acquisition was a strategic move in line with the group's expansion and development plans.

“The said land is a strategic investment which will help to enhance the group's future earning potential,” he told StarBiz.

Ibraco, which has built more than 10,000 units of properties mostly in the Tabuan Jaya area here, expects the acquisition to be completed within 60 days.

The purchase will be funded by internally generated fund and bank borrowings.

Chew said the acquisition had boosted Ibraco group landbank to more than 404ha in Kuching.

Ibraco said the vacant land was strategically located in the greater Tabuan Jaya with good existing infrastructure and easy accessibility to public amenities.

It is sited near to Ibraco's most ambitious flagship development Tabuan Tranquility, a massive commercial, industrial and residential project on 66ha which had registered high take-up rates since it was launched last year.

The 49.5ha land has been approved by the Sarawak Land and Survey Department for mixed development.

“We are in the midst of drawing up a development masterplan for the vacant land.

“First phase development is expected to kick off in the first half of 2012,” he added.

The land is expected to be developed in phases, and would probably comprise commercial, office and residential properties.

As of Sept 30, Ibraco has sold all 76 units of four-storey shophouses under Tabuan Tranquility phase 1 and 81% of residential properties (204 units of terrace houses and 38 units of semi-detached houses) under phase 5.

Tabuan Tranquility will have 640 units of double-storey terraced houses, 108 units of semi-detached houses, 60 units of three-storey townhouses, 76 units of shophouses, 72 units of semi-detached industrial buildings, one office block and a petrol service station when fully developed in five phases by 2015.

The mixed development has a gross development value of RM517mil.

Two months ago, Ibraco launched a new residential scheme in Tabuan Stutong Jaya, which comprises 77 units of single-storey terraced houses and semi-detached houses.

It is also building a block of eight three-storey shophouse in Stutong.

“The group continues to post strong sales momentum for all projects,” Ibraco said in notes accompanying its third quarter (Q3) results.

Ibraco posted a group pre-tax profit of RM3.2mil on turnover of nearly RM27mil for the quarter ended Sept 30, 2011 against a group pre-tax loss of RM2.14mil on turnover of merely RM72,000 in the Q3 of 2010 when it was still categorised as a Practice Note 17 company.

For the first nine months this year, the group registered pre-tax profit of RM10.8mil on revenue of RM74.9mil.

By The Star

Details of loans can widen reach to help distressed US homeowners

WASHINGTON: The reach of a government effort to help distressed homeowners refinance their mortgages could be largely determined by details on lender liability that will be announced.

The regulator for government-controlled mortgage finance firms, Fannie Mae and Freddie Mac, said last month that it was widening a programme to help borrowers with little or no equity in their homes refinance.

The initiative, known as the Home Affordable Refinance Programme, or HARP, hinges on lenders voluntarily writing new loans for borrowers hard-hit by declining home prices.

But many lenders have been worried that they could be forced to buy back refinanced loans if defects with the initial mortgage are found, a concern that has undercut the programme's effectiveness.

The regulator, the Federal Housing Finance Agency (FHFA), said it would relax the representations and warranties participating lenders had to abide by as part of its revamp of the programme.

Lenders would have learnt yesterday to what extent those contracts, which determine their liability for bad loans, will be waived.

“For those originating the new loans, they will look at how these waivers are going to structured,” said Bose George, an analyst with Keefe, Bruyette & Woods Inc in New York. “If they provide enough of a comfort zone, these changes to the representations and warranties could bring meaningful participation.”

HARP is open to borrowers who have little or no equity in the homes as long as they are making timely payments and their loans are guaranteed by Fannie Mae and Freddie Mac, which currently back about half of all US residential loans.

As part of the revamp announced in October, FHFA said it would scrap a cap that prevented borrowers whose mortgages exceeded 125% of the value of their homes from participating in the programme.

Analysts at Barclays Capital estimate up to 3.1 million loans are eligible for the programme. So far, about 894,000 borrowers have used HARP to refinance.

FHFA said the changes could double that number, although that would still fall far short of the five million homeowners the Obama administration had hoped to reach when the programme was unveiled in 2009.

While borrowers may move through the refinancing process at a faster rate under the retooled initiative, the breadth of the waivers on representations and warranties will largely determine the degree to which lenders and mortgage servicers are willing to make these riskier loans.

Those originating the loans have been skittish about refinancing higher-risk borrowers with the possibility a loan's government guarantee could be stripped if it sours or it is deemed defective.

Edward DeMarco, acting director of FHFA, said during a conference call with reporters last month the plan would wind up producing “substantial relief” from the representations and warranties.

But George cautioned that Fannie Mae and Freddie Mac might try to offset the waivers with an additional fee to cover the potential costs of being stuck with bad loans.

The companies have been successful at getting lenders to buy back defective loans, which has helped them bring in revenue.

By Reuters

SP Setia launches KL Eco City project

SP Setia Bhd Group today officially launched the KL Eco City Project, an integrated mixed development project that may become a new iconic landmark of Kuala Lumpur.

President and Chief Executive Officer Tan Sri Liew Kee Sin said that with all the required funding secured, the 9.6-ha project was set to take off and be completed in 10 years.

"The project aims to be the country's first integrated green development, targeting both the Malaysian Green Building Index and US-based Leadership in Energy and Environmental (LEED) certifications.

"We are developing this project in line with the government's aim for the private sector to rejuvanate the squatter lands in Kuala Lumpur," he said at the launch ceremony officiated by Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin here.

Liew said the main priority for the development now would be to solve the traffic congestion problem in the area by the completion of its first out of four phases in three to four years.

"We expect 30,000 occupants in the city, comprising both commercial and residential," he said.

Connectivity-wise, Liew said the group would invest more than RM150 million to link KL Eco City to all major highways.

KL Eco City, a joint venture project between SP Setia through KL Eco City Sdn Bhd and Kuala Lumpur City Hall (DBKL), is situated along Jalan Bangsar, opposite the Mid Valley City.

At the same event, SP Setia inked a RM460 million syndicated Islamic financing facility provided by three Islamic financial institutions for the KL Eco City project.

The funding, Liew said, would be utilised mainly for the infrastructure purpose, namely the proposed transportation hub in the project itself.

The banks were HSBC Amanah Malaysia Bhd, Hong Leong Islamic Bank Bhd and Bank Mualamat Malaysia Bhd.

By Bernama

Dijaya, Ivory rise on Penang property tie-up

PETALING JAYA: Dijaya Corp Bhd and Ivory Properties Group Bhd shares were up after the companies announced a tie-up for a mixed-property project with a gross development value of RM10bil in Bayan Mutiara, Penang.

Dijaya rose 3.6%, or 5 sen, to RM1.44 while its warrants advanced 6.5%, or 3 sen, to 49 sen. Ivory Properties added 7%, or 7 sen, to RM1.07.

Dubbed Penang World City, the project will be undertaken by joint-venture vehicle Tropicana Ivory Sdn Bhd (TISB), which is 49% owned by Dijaya and 51% by Ivory Properties. TISB was set up on Oct 14.

Penang World City will be built on a 102.56 acre site, of which 35 acres is to be reclaimed. It will comprise residential units, a shopping mall, office suites, office towers, a hotel, retail spaces and an open mall with a boulevard.

The land is being bought for RM1.08bil from state-owned Penang Development Corp.

Bayan Mutiara is a new development hub in the eastern part of the Tun Dr Lim Chong Eu Expressway and is in the vicinity of Sungai Nibong.

Ivory Properties has proposed to finance the project via a renounceable rights issue of 186,000,000 new ordinary shares of 50 sen each as well as 186,000,000 new free detachable warrants.

Dijaya, meanwhile, will extend financial assistance to TISB in the form of shareholder advances, guarantee, indemnity or collateral of up to RM525.4mil, or 49% of the total consideration of the development land.

Analysts contacted by StarBiz have a positive view of the project, citing its prime location as a major plus factor.

“Land in Penang is scarce and the outlook for housing in the Bayan Mutiara area is booming,” an analyst said.

“It is not easy to get land in Penang for that price. Property developers prefer Johor Baru because land is much cheaper there.”

Another local bank-backed analyst said although he liked the land, he considered it pricey. At RM240 per sq ft, it was comparably higher than IJM Land Bhd's land further north of the island that was purchased at RM50 per sq ft. IJM Land has a 150.24-acre mixed-development called Light Waterfront Penang.

The analyst also said the upside for Ivory Properties' stock would be capped at around 30% as its share base would be diluted by two to three times following the rights issue.

He added that the choice of office towers in the development mix was surprising as the demand for office space in Penang was tepid.

Nonetheless, he said the project was still at its early stage and was subject to change.





“We haven't seen a detailed breakdown of the development components yet but the residential portion is likely to be larger,” he said.

Penang World City is scheduled to be completed in eight years. Work on the first phase is scheduled to begin at the end of next year.

By The Star

Pavilion looking to expand

Launched: (from left) Maybank Investment CEO Tengku Datuk Zafrul Tengku Abdul Aziz, CIMB Group corporate & investment banking deputy CEO Datuk Charon Wardini Mokhzani, Pavilion REIT Management executive directors Datuk Lee Tuck Fook and Datin Cindy Lim, and Ho at the prospectus launch.

KUALA LUMPUR: Pavilion Real Estate Investment Trust (REIT), en route to a listing on Bursa Malaysia, aims to add more assets to its portfolio and wants to continue its “shopping spree” to acquire at least three more retail properties within the next three years, depending on the economic situation.

Chief executive officer Philip Ho told StarBiz recently that the company, which will see its post-listing loan-to-value (LTV) ratio at 20%, could either finance these additional property injections by going back to its shareholders or through bank borrowings, although the latter was the preferred option for now.

“The proceeds of close to RM700mil is being utilised to pay down the debt. At 20% LTV ratio, I reckon this is a comfortable gearing ratio and will allow us to finance these acquisitions either through shareholders or with bank borrowings. We can acquire up to a billion ringgit without going back to shareholders,” Ho said.

“Under Securities Commission rulings we are allowed to gear up to 50% LTV ratio. We don't intend to gear up until that high though. I think the right formula is somewhere between 25% and 30% as most of our peers would. Our balance sheet is very strong, we can still borrow money,” he added.

The current Pavilion shopping complex, which has been fully occupied for two years with a potential-retailer waiting list of 200 and rental yields of about RM16 per sq ft, will begin extension works by the first half of next year. Ho said Pavilion REIT had “obtained all development approvals” for the extension.

“This is an extension of about 300,000 sq ft of retail space, and will be built by Pavilion REIT's sponsors (original shareholders Urusharta Cemerlang Sdn Bhd) on the former carpark of Millenium Hotel. They (the sponsors) will also build an apartment on top of the new retail space,” Ho said.

Pavilion REIT will also develop another shopping mall in UEP Subang Jaya, following the compact mall concept with an apartment block on top of it.

“This will be our first foray into the suburbs and we believe this concept will work. This compact mall which will be developed by Usurharta Cemerlang will have another brand name that will be managed by the Pavilion Group,” Ho said.

“We believe in our branding and good location which will enable this shopping mall to withstand the troughs of any economic crisis,” Ho said responding to qualms of the possible downward price pressure on rental yields due to oversupply.

Pavilion REIT Management Sdn Bhd, the manager of Pavilion REIT yesterday launched the prospectus in conjunction with its proposed listing on the Main Market of Bursa Malaysia on Dec 7.

Pursuant to the initial public offering (IPO), 755 million units would be offered to Malaysian and foreign institutional investors and selected investors at the institutional price (other than cornerstone investors) which would be determined by way of book building.

A total 265 million units has been earmarked for allocation to six identified cornerstone investors at an offer price of 90 sen per unit or the institutional price, whichever is lower.

The six cornerstone investors are Permodalan Nasional Bhd, Employees Provident Fund, Kumpulan Wang Persaraan, Great Eastern Life Assurance (M) Bhd, American International Assurance Bhd and HwangDBS Investment Management Bhd.

“About 35 million units will be offered to the general public in Malaysia, eligible tenants of Pavilion Kuala Lumpur Mall and Pavilion Tower, directors of the manager and the eligible employees of the manager, Urusharta Cemerlang Sdn Bhd, Capital Flagship Sdn Bhd and Kuala Lumpur Pavilion Sdn Bhd at the indicative retail price of 88 sen per unit,” Ho said at the event.

At an indicative retail price of 88 sen, the manager expected Pavilion REIT to provide a distribution yield of 6.41% and 6.51% for the one-month forecast period ending Dec 31, 2011 and the 12-month forecast period ending Dec 31, 2012 respectively.

Ho said the total appraised value of Pavilion REIT's initial property portfolio was about RM3.5bil. With the inclusion of Pavilion Kuala Lumpur Mall, which forms 96.4% of the total appraised value of Pavilion REIT's initial property portfolio, Pavilion REIT would become one of Malaysia's largest listed REITs with the largest exposure to the retail sector of any listed Malaysian REIT by appraised value.

“Based on an indicative retail price of 88 sen, Pavilion REIT is expected to achieve a market capitalisation of RM2.6bil upon listing,” he said, adding that Pavilion REIT remained an attractive option for investors looking for liquid investments in Malaysia's retail and corporate property sector.

On a pro forma basis, he said Pavilion Kuala Lumpur Mall and Pavilion Tower, collectively, achieved revenue of RM291mil and net property income of RM203mil for the financial year ended Dec 31, 2010.

By The Star

DKLS to buy Melbourne property for A$13.3m

KUALA LUMPUR DKLS Industries Bhd has proposed to participate in the acquisition of a property in Melbourne for A$13.3 million (RM42.96 million).

In a filing to Bursa Malaysia yesterday, the company said the property in Bourke Street, Melbourne, comprises an existing building erected on a piece of land measuring 1,162 sq m.

The existing building was completed in 1931 and was utilised as Barristers Chambers.

It comprises five levels plus basement, mezzanine and a rooftop caretakers unit.

There are also two prime Bourke Street shops and six on site car parks.

The gross building area of the existing building is measuring approximately 5,228 sq m in area.

The existing building is currently vacant except for the two Bourke Street shops which have been leased to two separate retail tenancies.

The company said the existing building was ideal for a range of uses such as commercial owner-occupation, strata subdivision, investment or hotel conversion.

"DKLS proposes to refurbish, re-lease and hold the existing building as a central CBD (central business district) office investment. It is also ideally suited to strata subdivision and selling down to barristers, lawyers and other professionals.

"The cost of refurbishment of the existing building is estima-ted at A$3 million (RM9.69 million)."

By Business Times

DKLS buying Aussie property

KUALA LUMPUR: DKLS Industries Bhd has proposed to take part in the acquisition of a property in Melbourne for A$13.3mil (RM43.04mil).

The company told Bursa Malaysia the property in Bourke Street, Melbourne, comprised an existing building on 1,162 sq m.

The existing building was completed in 1931 and was utilised as Barristers Chambers. It comprises five levels plus basement, mezzanine and a rooftop caretakers unit. There are also two prime Bourke Street shops and six on-site car parks.

The gross building area of the existing building measures about 5,228 sq m.

The existing building is now vacant except for the two Bourke Street shops which have been leased to two separate retail tenancies.

DKSL said the existing building was ideal for a range of uses such as commercial owner-occupation, strata subdivision, investment or hotel conversion.

By Bernama

Showcase of Negri properties

Properties worth about RM940mil will be up for grabs at the three-day Negri Sembilan Mapex to be held in Seremban beginning Nov 18.

The event, to be held at Seremban Parade, will be the biggest held to-date and will showcase dwellings priced as low as RM36,000 to a cool RM1.6mil.

State Real Estate and Housing Developers’ Association chairman S. Sivanyanam said 22 developers would be taking part in the event with 2,330 units ranging from single-storey terraces to bungalow lots up for sale.

“We had had to turn away several other developers due to space constraints. Despite this, we are confident that the Mapex will receive an even greater response from buyers this time around,” he told reporters.

Also up for sale at the event themed “Affordable, Accessible, Quality Living” are parcels of commercial land worth between RM729,000 and RM19.1mil, shop offices (RM180,000-RM1.28mil), bungalow lots (RM53,980-RM200,395) and single and double-storey semi-D units (RM260,000-RM1mil).

Among the 2,330 units, 469 are double-storey units, single-strorey terrace (436), double-storey semi-D (269), commercial units (260), shop offices (233), and low and medium-cost apartments (271).

Sivanyanam expressed confidence that more buyers from outside Seremban, particularly the Klang Valley will make a beeline to buy properties in Negri Sembilan during the event due to the much lower land prices.

“Some of the developers will also be offering incentives such as legal and disbursement fee waiver and stamp duty exemption and this will mean substantial savings for the buyers,” he said.

There would also be guaranteed rental returns, cash rebates and discounts, free feng shui consultation amd zero interest during construction of the said property.

Sivanyanam said at the state-level Mapex held from May 20 to 22 this year, 84 units of properties worth RM20.6mil were sold. Then, 1,630 properties worth about RM460mil were showcased.

This time around, a lucky draw of five 32-inch Samsung LED television sets will also be held on Nov 20 for all housebuyers.

All housebuyers who sign the sales and purchase agreement during the three-day Mapex will be entitled to a Touch&Go card worth RM110.

By The Star

Tiger Synergy gains on condo project

Tiger Synergy Bhd, a Malaysian developer, rose to a five-month high in Kuala Lumpur trading after saying it expects to make a RM68 million profit from a condominium project.

Its shares gained 7.4 percent to 14.5 sen at 9:05 a.m. local time, set for their highest close since June 2.

By Bloomberg

Malton to acquire Ulu Kelang land

KUALA LUMPUR: Malton Bhd is acquiring 56.05 acres in Ulu Kelang for RM105mil for a residential project with an estimated gross development value of RM500mil.

The company said in a filing with Bursa Malaysia that its wholly owned subsidiary, Gapadu Harta Sdn Bhd, had entered into a sale and purchase agreement with Ukay Spring Development Sdn Bhd to acquire the land.

The acquisition would be financed by internal funds and/or bank borrowings, said Malton.

By The Star

Pavilion REIT to acquire 3 malls

KUALA LUMPUR: En route to a listing, Pavilion Real Estate Investment Trust (REIT) plans to buy three shopping malls, namely the Fahrenheit88, the extension to Pavilion Kuala Lumpur Mall (Pavilion Mall) and a soon-to-be-developed mall in USJ Subang Jaya, within the next two years.

Pavilion REIT Management Sdn Bhd chief executive officer Philip Ho said this is part of Pavilion's growth strategy as outlined in its prospectus.

"We believe our listing will serve to enhance the growth of our retail and corporate property business. We hope to provide a platform for investors to invest in a REIT that provides a stable distribution income, capital appreciation as well as opportunities to benefit from its future acquisitions of yield-enhancing assets," he said at the launch of Pavilion REIT's prospectus here yesterday.

Speaking to reporters later, Ho said Pavilion plans to acquire Fahrenheit88 by 2013, Pavilion Mall's extension by 2014 and a retail mall in USJ Subang Jaya by 2015.

Currently, Pavilion has secured the right of first refusal (ROFR) for the acquisitions of Fahrenheit88, and the Pavilion Mall extension, both of which are close proximity to Pavilion Mall.

It has also obtained the ROFR for a six-storey retail mall to be developed in Subang Jaya.

With an appraised value of RM3.54 billion, Pavilion REIT is currently made up of two assets - Pavilion Mall and Pavilion Tower.

The mall, which contributes 96.4 per cent to the appraised value, has 1.3 million sq ft of net lettable area, with about 450 retail tenants, making it the largest premium retail fashion mall in Malaysia.

The award-winning mall, which was completed in 2007, is strategically located in Bukit Bintang, Kuala Lumpur.

Meanwhile, Ho said, the Pavilion Tower offers a premium corporate and business address and spans over a net leaseable area of about 167,000 sq ft.

Based on the indicative initial public offering (IPO) price of 88 sen per unit, Pavilion REIT expects to raise some RM695 million, making it one of Malaysia's biggest IPOs for the year.

With an appraised value of RM3.4 billion for Pavilion Mall, Pavilion REIT will also bear the distinction of being the Malaysian REIT with the largest portfolio of retail assets upon listing, slated for December 7.

For its IPO, Pavilion is offering 790 million shares, of which 755 million units will be offered to Malaysian and foreign institutional investors and selected investors at the institutional price, while 265 million units have been earmarked for allocation to six identified investors at an offer price of 90 sen per unit or the institutional price, whichever is lower.

The balance 35 million units will be offered to the general Malaysian public and eligible tenants of Pavilion Mall and Pavilion Tower, among others.

By Business Times

Tradewinds may further develop Langkawi

Langkawi Tradewinds Corp Bhd (TCB), controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary, is set to bring more developments to Langkawi, with at least two major projects on the cards.

Business Times has learnt that the company may build a new five-star resort and redevelop Telaga Harbour Park at Pantai Kok.

It is not immediately known if TCB will embark on these developments on its own or on a joint-venture basis.

Speculations are also rife that TCB may have recently bought over the three-star Mutiara Bay Beach Resort in Langkawi, which it manages and operates for the Langkawi Development Authority
(Lada).

“The proposed location of the new resort is likely to be sited on land leased out from Lada, somewhere between The Danna Langkawi and Mutiara Burau Bay Beach Resort,” a source said.

The redevelopment of Telaga Harbour, meanwhile,is said to see the construction of residential and commercial units.

TCB currently owns and manages Perdana Quay, a commercial and retail property made up of some 90,000 sq ft of business space.

In addition to Mutiara Burau Bay, TCB also owns luxury boutique hotel The Danna and the five-star Meritus Pelangi Beach Resort and Spa Langkawi.

By Business Times

RM600m condo deal in Iskandar Malaysia

Medini Land Sdn Bhd, a wholly-owned subsidiary of Iskandar Investment Bhd (IIB), is teaming up with Darul Tinggi Sdn Bhd to develop a high-rise condominium project in Iskandar Malaysia with a gross development value of RM600 million.

Both companies will set up a joint venture company, Distinctive Resources Sdn Bhd, which will be 80 per cent owned by Darul Tinggi and 20 per cent by Medini Land.



The condominium project will be implemented in two phases.

In a statement, IIB said that the construction work for phase one will start in May next year. It will involve 351 condominium units.

The second phase, comprising 334 units, will take place 20 months after the completion of phase one.

"The new residential project will cater to both local and international property markets and help spin off other projects to bring vibrancy to the vicinity," said IIB president Datuk Syed Mohamed Syed Ibrahim.

In the vicinity are Legoland Malaysia and Educity, which are expected to bring about multiplier effects to other nearby projects.

Darul Tinggi founder Datuk David Koh said Johor Baru is increasingly attracting property buyers due to Iskandar Malaysia.

By Business Times

Banks offering more attractive home loans

PETALING JAYA: With razor thin margins due to rising competition in the home loans market, banks are now aggressively value-adding their home loans to stay competitive and boost their market share.

OCBC Bank (M) Bhd head of secured lending Thoo Mee Ling said banks must value-add to their generic home loan offerings in order to not just survive but thrive, especially in this competitive climate.

“What separates those who thrive from the others today is how much they have moved from price to innovation. It is heartening to see a greater emphasis today on enhancements to loans products, rather than mere reliance on price cutting previously.

“This is where banks are getting even more creative by adding in the necessary finer details to a product that otherwise appears bland. Home loans with features and benefits that are tailored specifically to complement customers' lifestyles often serve to compel them to look beyond price and into a more holistic perspective,'' she told StarBiz.


File picture shows a housing are in Shah Alam - Starpic by BRIAN MOH

Thoo said customers were nowlooking for more than just a home loan as purchasing a house was simply the beginning.

Banks would also need to cater to their immediate follow-on needs like renovations and furnishing, for example, and this was where additional financing that came with the home loan would be helpful, she reckoned.

At OCBC Bank, she said there were bespoke home loans that were tied in with study loans, renovation loans and even overseas property financing schemes, adding that each of these took into consideration things that went beyond mere property purchase.

She said it was undeniable that investing in a product to bring in customers and then introduce them to other products remained a good strategy for growing the business, but banks would still need to strengthen their range of offerings to become a one-stop shop for their customers.

Outstanding home loans, valued at RM261bil, accounted for about 27% of the total banking system's loans as at end-September 2011. Although there has been strong expansion in home loans in the last couple of years, the proportion of home loans has been hovering at 27% in the past five years.


Thoo: ‘What separates those who thrive from the others today is how much they have moved from price to innovation.’

Commenting on home loans, RAM Ratings' head of financial institution ratings Wong Yin Ching said competition among banks in the home loan market had been rife, resulting in razor thin margins in recent years.

This stemmed from the homogeneity of the home loan products, whereby any innovation in product features and price competition (by lowering rates) were quickly replicated and matched by market players, she said.

Wong added: “While some banks have instilled more discipline in its risk-reward pricing, aggressive pricing is still seen in the market and this is unhealthy and unsustainable in the long run.

“Going forward, we think that personalised services and quicker turnaround times by banks would be key to stay relevant in the home loan market.”

Alliance Bank Malaysia Bhd executive vice president and head of consumer banking Ronnie Lim said competitive pricing aside, Malaysian banks were now re-inventing the mortgage landscape by extending superior customer experience at every customer touch point.

For the bank, he said having mortgage specialists, who also acted as advisory consultants, among others, had enabled Alliance Bank to become one of the key mortgage players in the market.

He said the bank has been growing its mortgage specialists force extensively to not only engage customers effectively but also deepen its relationship with developers, lawyers and real estate agents.

Lim added the bank was also able to provide fast “approval in principle” service to assist customers looking for home financing solutions to make informed decisions before committing to their choice property.

For mortgage players, he said one of the key challenges was about overcoming margin compression and the bank was able to achieve this by introducing new systems and processes to help staff increase their productivity.

This had since yielded results: “For the year under review, sales productivity has increased threefold compared to a year ago,” he said.

By The Star

OCBC Bank offers loans to buy properties in Australia

KUALA LUMPUR: OCBC Bank (Malaysia) Berhad (OCBC Bank) is for the first time, offering a new mortgage loan facility, to finance the purchase of residential properties in prime sections of Sydney and Melbourne, Australia.

Its Head of Consumer Financial Services, Charles Sik said the introduction of the facility, OCBC Overseas Property Financing-Australia, follows the success of a similar scheme for London properties launched six month ago.

"Like the earlier scheme, customers will be able to take advantage of the fact that this is also a ringgit-based loan, hence mitigating the effects of fluctuating foreign exchange risks," he said in a statement here today.

He said customers can now invest in Sydney and Melbourne properties with peace of mind, knowing their loan facility is fixed in the ringgit, mitigating forex risks.

"Australian property prices are certainly on an uptrend and we think it's really a good time now to capitalise on this," he added.

The scheme offers a margin of financing of up to 75 per cent and a loan tenure of up to 36 years for off-plan properties and 40 years for completed properties, or up to the time the borrows turn 70, whichever is earlier.

By Bernama

More hotels in Penang with GDV of RM860mil

GEORGE TOWN: Tourism projects comprising six hotels in George Town and a water theme park in Teluk Bahang in Penang, with gross development value (GDV) of over RM860mil, will be operational in 2013 and 2014.

IGB Corp Bhd's St Giles Hotel and Cititel Express, and NT Industrial Park (M) Sdn Bhd's five-star boutique hotel, with a combined GDV totalling over RM225mil, are the latest projects approved by the Penang Municipal Council (MPPP).

Construction work for the RM100mil NT Industrial Park's project on a one-acre site at Lebuh Gereja is scheduled for completion in 2013.

IGB's projects, with over RM125mil GDV, are expected to be completed in the first quarter of 2014.

The other hotel projects that will be ready by late 2012 and 2013 are the RM150mil new wing of Eastern & Oriental Hotel (known as Victory Annexe), which is scheduled for opening at the end of next year, the RM285mil Rice Miller Hotel & Residences in Lebuh China which will open in 2013, and the RM83mil Mansion One Hotel at Jalan Sultan Ahmad Shah.

Sim Leisure Consultant's RM120mil Escape Waterpark in Teluk Bahang is expected to begin work soon and scheduled for opening in 2013.

Approved by the Penang Municipal Council (MPPP) in September 2011 and scheduled to start work in six months, the NT Industrial Park project entails the development of a five-star five-storey hotel with 85 rooms. The design takes cue from the early 20th century port office and warehouse building in George Town.

Two heritage buildings on the site formerly used as offices will be preserved for adaptive commercial use to accommodate restaurants and boutiques.

The hotel, yet to be named, will be ready for operations in late 2013.

IGB Corp Bhd will also start the construction work soon on its St Giles Hotel and Cititel Express on a one-acre site in Jalan Magazine, the heritage city of George Town.

Cititel Hotel Management Sdn Bhd managing director Datuk Eric H.K. Lim said the GDV for both hotels was over RM125mil.

The hotels, which will be built back-to-back to each other, are scheduled for completion in the first quarter of 2014.

St Giles would house a grand ballroom with a seating capacity of 1,200 persons, several meeting rooms, a caf swimming pool, gymnasium, health centre, executive lounge and a helipad, he said.

“The development will also include retail shops, restaurants, a food court and car park bays for more than 500 vehicles.

“Adjacent to the St Giles Hotel Penang will be the 260-room Cititel Express Penang,” Lim added.

Asian Global Business chief executive officer Dr Noraini Abdullah said piling work was currently being done for the RM285mil Rice Miller Hotel & Residences, which comprised of a 48-suite hotel, retail space with 17,000 sq ft of lettable area, two five-storey office blocks, and 99 units of city residences.

“The piling work for the hotel has been completed and we are now doing the piling for the residences.

“The project will also accommodate clubhouse facilities such as a swimming pool and a gymnasium, and five restaurants catering Asian and Western cuisines.

“The entire project is scheduled for completion in June 2013,” she added.

The RM150mil new wing of Eastern & Oriental Hotel known as Victory Annexe, is now about 65% completed and is scheduled for opening at the end of 2012.


Battistotti: ‘The Sarkies Restaurant at the new wing is expected to open for business next month.’

Eastern & Oriental Hotel general manager Marco Battistotti said the new wing would add another 120 suites to the existing 100 suites of the hotel.

“The new wing would also have two banquet rooms, a state-of-art gymnasium, spa, and swimming pool.

“The Sarkies Restaurant at the new wing is expected to open for business next month,” Battistotti said.

The RM83mil Mansion One (formerly known as Northam Tower) building at Jalan Sultan Ahmad Shah is currently being transformed into a four-star hotel with 200 rooms.

Magna Putih Sdn Bhd director Adrian Tan said that the refurbishment work for Mansion One would be completed in 2013.

“There would be 200 hotel rooms, all facing the sea and George Town city.

“The competitive edge of Mansion One is its prestigious address and that its management would be provided by a well-known hotel chain group with strong presence in Asia and the Middle-East.

“To add further value to Mansion One, the Hardwicke House, a heritage building, would be renovated to become a fine dining restaurant,” he said.

Meanwhile, MPPP's technical review panel committee member Datuk Richard Jong said both the designs of the Rice Miller Hotel & Residences and the NT Industrial Park project were in line with Unesco's heritage guidelines.

“The architectural theme of both projects complements the other heritage buildings in inner George Town.

“Both projects should help revitalise the tourism belt of inner George Town,” he said.

Sim Leisure Consultant Sdn Bhd managing director Sim Choo Kheng said the company's was mobilising to start work for the RM120mil Escape Theme Park Resort on a 44-acre site in Teluk Bahang.

Sim said the first phase, comprising an adventure park and water park occupying a 17-acre land area, was due for completion in 2013.

“When the remaining two phases are completed in six years, the theme park would generate economic benefits for some 6,000 people involved in the services industry and supply chain business.

“We expect about 50% of our visitors to come from within the country and from the Asean region,” he said.

Yeng Keng Hotel owner Datuk Ong Gim Huat said entrepreneurs should explore developing hotels with larger rooms and interesting designs to differentiate themselves.

“If the land allows for a 100-room hotel, the developer should look into building a hotel with 60 to 70 rooms with innovative designs and interesting facilities.

“The local authorities should not impose rules on heritage buildings to have terracotta tiles or gable roofs.

“A modern building with interesting design can blend well in a heritage surrounding,” he added.

Yeng Keng is a well-known heritage boutique hotel located in inner George Town.

By The Star

Ivory, Dijaya rise on Penang venture

Ivory Properties Group Bhd had a record gain in Kuala Lumpur trading and Dijaya Corp rose after saying they will jointly develop a property project in Penang that may generate RM10 billion of sales.

Ivory jumped 13 percent to RM1.13 at 9:06 a.m. local time. Ivory also said it plans a bonus issue and rights offer, the company said in a statement. Dijaya added 1.4 percent to RM1.41.

By Bloomberg

Mixed feelings over mixed-development projects

At a glance: The launch of the KL Metropolis provides attendees with a first-hand view of how the mixed-development project is going to take shape.

Concerns rising over the possibility of an oversupply of office and retail space

As a new line of mixed large-scale property developments go on stream to spur economic growth, market observers and those involved in the property sector are cautious. Their main concern: an oversupply of officespace.

Reports and data coming from think tanks suggest there are concerns about the situation, despite some assurances that the Government has already done proper studies and planning.

Among the projects are the KL Metropolis by Naza TTDI Sdn Bhd that will add millions of square feet space of office, retail and residential space, in addition to the ongoing KL Sentral project and the recent launch of the KL International Financial District (KLIFD).

Property consultant Rahim & Co, through an e-mail, tells StarBizWeek that as for the first quarter, occupancy rates of prime offices in Kuala Lumpur and Petaling Jaya range between 60% and 97% and a healthier 75% and 98% respectively.

“We are in the opinion that the oversupply cannot be solely attributed to these mega-projects but also other stand alone purpose-built offices in the city centre,” the statement says.

Excluding the upcoming mega-projects, a total of 6.69 million sq ft of new office space will be completed in Kuala Lumpur by 2015. Based on an average annual take up of 1.8 million sq ft of office space in Kuala Lumpur, Rahim & Co estimates the occupancy rate of prime office building to be between 82% and 85%.

However, with the effort and incentives put forward by the Government, it believes more multi-national companies will be operating in Kuala Lumpur, and will subsequently occupy the available office space.

“We expect rental rates to stabilise in the next few years, especially with the completion of new office buildings by 2015 in Kuala Lumpur. Average rental rates of prime office buildings in Kuala Lumpur is expected to moderate around RM7 per sq ft by 2015 compared with current rates averaging at RM6 per sq ft,” it says.

Rahim & Co adds that due to locational factors, for example, integration with rail network and image branding, the mega-projects will be able to command higher rental rates; potentially 5% to 10% more than the average rate.

To date, it says the total net lettable area of prime office space in Kuala Lumpur stood at 40.88 million sq ft. By the end of 2011 and 2015, an estimated 6.69 million sq ft of new office space will be completed in Kuala Lumpur (excluding KL Metropolis and KLIFD) and most of these projects are currently under construction; contributed largely by stand-alone purpose built office towers and a few form part of a mixed development project. 50% of the new supply will be located in the Golden Triangle Area and are purely driven by private initiatives.

“Meanwhile, KL Metropolis, KLIFD and KL Sentral are Government initiatives, with strong synergies with the private sector, to propel Kuala Lumpur towards world class status. Prime components will be office space supported by retail, serviced apartments, hotels and a convention centre,” it says.

With total gross development value of RM15bil, KL Metropolis covers a total land area of 75.5 acres located near Matrade Jalan Duta. The key development component (apart from ratail, hotels and apartments) is the 1.07 million sq ft convention centre which aims to strengthen Kuala Lumpur as the preferred meeting, incentive, convention and exhibition destination over its regional competitors that include Singapore and Guangzhou.

“KLIFD is another national mega-project located near Imbi area fronting Jalan Tun Razak. This 75 acres integrated mixed development project aims to establish Kuala Lumpur as the regional financial centre.

KL Sentral, on the other hand, is a world class transportation hub valued at RM8bil and has been divided into 14 land parcels, each representing a different function. Some of these lots have been fully developed and are already in use, while others remain under construction or are still waiting for work to commence,” it says.

Upon completion, KL Sentral will comprise Stesen Sentral, corporate office towers and business suites, five-star international hotels, luxury condominiums, a retail mall, services apartments and, an international entertainment and exhibition centre.

The opening of The Hilton and Le Meridien hotels in September and October 2004 respectively has added a new dimension to KL, providing a myriad of prestigious lifestyle amenities at an international level.

By 2015, a total of approximately 6.3 million sq ft of office space will be available within KL Sentral. “In general, we are in the opinion that these mega-projects will act as a development catalyst which will then help to spur growth in the immediate locality. For instance, Brickfields enjoys a spill over effect from KL Sentral,” it says.

Over the last eight years, the profile of Brickfields has slowly morphed and there has been hardly any new land in Brickfields for further development over the last several years. Property prices there have shot up after KL Sentral opened in 2001 and have been going up steadily over the years. A 4-storey shoplot, with good frontage and in good condition, that was sold for RM1.7mil in 2002 can now command around RM2.8mil. The rent of a ground-floor space can go up to RM10,000 a month while the upper floors can command RM1,500 to RM2,000 a month.

“We believe KLIFD will eventually change the landscape of its surroundings. The prime challenge will be to establish the anchor tenant of the office tower. For instance, the establishment of Petronas in KLCC has raised the demand for office space surrounding KLCC which is mainly generated by oil and gas related companies. Similarly, KLIFD will need to identify the anchor tenant that will help to augur growth in its surrounding areas. In general, with more office space, more office population will be attracted. With higher influx of professionals, both local and international, demand for other components such as serviced apartments and retail will increase accordingly,” says the property consultant.

Connectivity to a rail network is also pertinent in ensuring the success of these mega-projects. It is learnt that KL Sentral and KLIFD will be connected to the proposed MRT line.

“This transit-oriented development will eventually create a new development corridor along the rail line similar to the Rossyln-Ballston Corridor in Arlington, Virginia served by Washington Metro Line and Burnaby, Vancouver served by Sky Train line. Upon completion of KLIFD, the surrounding areas which are currently occupied primarily by old retail businesses and offices will be transformed into a more modern, vibrant and liveable area,” says Rahim & Co.

Meanwhile, the development of KL Metropolis will help to disperse the concentration of office space to the outskirts of the Kuala Lumpur city centre.

Generally, it will be similar to Mid Valley City as being a self contained integrated commercial centre outside the city centre. While Mid Valley City is acting as the southern Kuala Lumpur commercial hub serving areas such as Bangsar, Seputeh, and Petaling Jaya, KL Metropolis will function as the northern Kuala Lumpur commercial hub with prime coverage areas including Mont Kiara, Damansara Heights and Sentul. The availability of a major convention centre will position the locality as an international trade and exhibition district in Kuala Lumpur.

“Notwithstanding the fact that these mega-projects will bring a positive impact to the nation's economy, we still need to be cautiously optimistic on its success. As these projects are highly dependent on private investments, both local and international, the uncertainty in the global economy may pose investment worries,” it says.

In addition, there has been a trend developing. Companies are shifting their operations outside the city centredue to bad traffic and higher operating costs in the city. Companies are also drawn to the larger and modern office space on offer in buildings outside the city area .Petaling Jaya is currently the focal point of new supply of office space and has gradually seen a higher influx of multi-national companies.

Property consultancy CB Richard Ellis (M) Sdn Bhd says the Klang Valley will face an oversupply of office and retail space within the next two to three years while capital values for residential units would see some increases in 2012, but at slower rates compared with the past 18 months.

Its executive chairman Christopher Boyd, in a recent briefing, says that while 2011 is a strong year in terms of demand for office space in the Klang Valley, rental values might succumb to the oversupply within the next 18 months.

The total office space supply in the Klang Valley stands at 80.8 million sq ft at the end of the first half of 2011 (compared with 80 million sq ft at the end of 2010).

However, Boyd says it is estimated that an additional 25 million sq ft of office space will come on stream in the Klang Valley by 2015 (excluding mega projects such as the Naza group's KL Metropolis development and the KLIFD).

He says that vacancy rates in Kuala Lumpur are under 13% and though this is not an alarming number, the vacancy rates are expected to increase in tandem with supply.

A report by CB Richard Ellis notes that prime gross asking rentals were flat at RM7 per sq ft with only a handful of buildings above this level.

Since rising steadily from 2002 to 2008, rentals at top city centre buildings have remained mostly flat for the past two years.

Boyd says recent average transaction prices of Grade A office space generally ranges between RM800 and RM900 per sq ft. However, there are higher prices than these being achieved in the market like the RM1,100 per sq ft or more in KL Sentral and SP Setia Bhd's KL Eco City.

By The Star