Precursor to property market outlook

Completed houses at Austin Perdana, Johor Bahru. Anti-speculative devices such as the Real Property Gains Tax for real estate are necessary to arrest undue speculation, control property prices and contain emerging property bubbles, timely.

The Global Financial Crisis (GFC) of 2007/2008 is a watershed event that calls into question the robustness of the global financial system. The system itself, to take a long view,is a continuously evolving system.

Crises and events in the past have aided in the evolution of the system and this recent crisis ought to spur even greater evolutionary improvements and that includes down-the-line restructuring of real estate markets (clearly central to any modern economy) and the valuation profession (central to a modern and efficient real estate market).

What caused the crisis? Roberts Samuelson in his book The Great Inflation & Its Aftermath takes a board view, spanning 40 years, as he builds up to the crisis. He focuses on the rise of inflation in the 70s (the oil shocks being symptoms rather than causes) to heights of 13% per annum in the United States and the subsequent taming of it by Paul Volcker (Federal Reserve Chairman) as an important background setting for the subsequent, extraordinarily low interest rates regime (easy money) that enabled the unusual economic conditions, among other parallel frameworks, for the tech bubble to form and burst, in 2000, and then shift into the housing bubble, that also burst, in 2007, and which precipitated the global financial crisis.

Root cause

Joseph Stiglitz in his book Freefall identified that a root cause of the crisis was the stagnant household incomes of the United States and said that house prices began running in parallel with increasing household debt.

Is the crisis over? Yes, by many who point out that the synchronised actions taken by central banks in 2009 averted “a depression greater than the Great Depression”.

No, by many others who feel that the loose monetary and fiscal policy engendered by QE1 (quantitative easing) and QE2 and other measures, may have saved the world from a depression greater than the Great Depression, but the measures are temporary stop gap measures that have not restored underlying aggregate global demand on a more permanent basis and more importantly have not solved many of the ills in the global financial system for it to go forward on a more sound footing.

Standing at this point in time, post a few months of heightened turmoil caused mainly by the Euro Zone debt crisis, and the US credit rating downgrade and anaemic recovery and growth, there are very serious concerns about the global outlook.

The outlook for Asia looks more promising but that too must be viewed with a jaundiced eye as the global economy is more linked that most admit or know and the majority of final demand still emanates from the west.

Real estate plays a complicit role in financial crises.

In the Japanese decades-long economic downturn, it began with the bursting of a highly inflated real estate bubble. Twenty years later house prices have retreated from highs of 18 times household income to a benign six times.

The Asian Financial Crisis of 1986/97 was one which afflicted this region and we in Malaysia have very personal and clear memories as to the role played by real estate in the build up to the crisis and the subsequent bust.

Luckily for us, taking the cue from the formation of the Resolution Trust Corporation in the United States Savings and Loans crisis, we formed Danaharta which acquired bad loans from banks and financial institutions, timely, and restored the banking system and put the economy back on track, quicker.

Real estate's role

As for the GFC itself, there would be few who will not be able to appreciate the complicit role of real estate. As the Federal Reserve cut interest rates after the Tech bubble burst, the final run up to the housing bubble began. By late 2005 and early 2006 there were many who saw that the peak was at hand (those who saw it coming) but who could not stop the process because the bigger system had a life of its own. One must acknowledge that it is not possible for smart people to stand in the way as bubble go on self-sustaining, aggressive build up when “the herd is in a full run”.

When the bubble burst in 2007, fingers initially pointed to the “sub-prime” mortgage market with the suggestion that that was a small part of the housing market in the United States and that it was not a very serious problem.

But the so called sub-prime mortgage crisis rolled on and morphed into a full blown housing crisis which went on to affect the huge edifice of structured securitised products that were built upon the housing market (collateralised debt obligations) and these markets froze, which resulted in a credit crisis, so big, and which reverberated around the world, in a way that suggested a global depression, greater than the Great Depression.

When the tech bubble burst in 2000, the world was not brought to the edge of the financial cliff. But when the housing bubble burst, that was exactly what happened. When asked, the Nobel Prize winning economist, Paul Krugman said that the stock market bubble burst was not as impactful as the subsequent housing bubble burst because it was “widely diffused”.

Seven years later, when the property market bubble burst, the impact was substantial because it was concentrated in the financial sectors and there were large edifices of new financial products built upon it, the tentacles of which were global in reach and the cascading knock-on effects, global in extent.

To prevent or tame the emergences of financial crises, we ought to also better understand the fundamentals that drive property prices and contain emerging property bubbles, timely. Is this possible? Monetary policy by itself it is said is not good enough to control the formation and development of real estate bubbles.

Arresting speculation

In this connection, the Federal Reserve Chairman of the United States, Ben Bernanke himself has said that “Monetary policy is a blunt tool; raising the general level of interest rates to manage a single asset price would undoubtedly have had large side effects on other assets and sectors of the economy.”

We need, instead or additionally, permanent, anti-speculative devices such as the Real Property Gains Tax for real estate so that its rates can be adjusted timely to arrest speculative fervour, as well as administrative devices such as directives that tweak property rules appropriately to derive the desired result.

Many East Asian countries, fearing the flow of speculative funds into their markets from carry trades have tweaked loan-to-value ratios, introduced sellers stamp duties, required banks to stress test based on percentage increases in interest rates as to their mortgage portfolios and so on.

For residential properties the generally recognised key fundamentals that drive house prices are household income levels since residential properties are largely bought for owner-occupation.

In most matured economies, when they are not inhabited by undue speculation, they reflect an average household income to house price ratio that revolves around three times. In many emerging markets, for various reasons, the ratio can be higher and even more than ten times is evident today in some hot spots around the globe.

In Malaysia, the long term ratio is four times. When the ratio moves up it is an indication of a bubble formation in the market and market participants and regulators should stand alerted.

A second fundamental that drives the residential market is rental returns, because apart from owner occupation, houses are also purchased for investment purposes. Net returns from residential property usually occupy a lower value, in the hierarchy of returns.

In Malaysia the residential rental returns are 3% to 6% net depending on whether it is a landed property or a strata property and depending on a number of other factors.

The range itself moves glacially over time depending on risk levels in the general market, and again, in Malaysia, over the past few decades yields have been moving downwards in sympathy with the era of easy money worldwide and its effect on asset returns generally. With the coming to the end of this long period of easy money, post the global financial crisis, the trend should be for the entire spectrum of residential yields, other property yields in general and global asset yields to be moving north.

Valuers, who undertake professional valuations on a day to day basis in the residential market are well placed to upload information on the property market to market participants and other stakeholders in the property market, including regulators, and this upward flow of information into the market helps to stabilise the market and alert all involved when the market is in need of tweaking towards fundamentals.

Rental is fundamental

The fundamentals that bear watching for the office market are rents, but rents are a function of business profitability. Ultimately the profitability of businesses in any city sets the sustainable level of rents for that city and it also explains the different levels of rents that prevail in different cities.

In Kuala Lumpur the long term yield for Grade A office space has been about 7% net. From time to time this yield has compressed to lower numbers, as low as 5%, but over the long term the market seems to return to the equilibrium level of 7% when the exuberance dies.

The fundamentals that drive the retail sector are also rents but rents for this sector are driven in turn by retail turnovers and it is this that bears closer monitoring. Turnovers depend on the multitude of shoppers including tourists.

In Kuala Lumpur the long term rental return on average for the Grade A, downtown shopping centres used to be about 8% but this is, I believe, on a structural transit towards 7% as shopping centres become more mainstream assets. Real Estate Investment Trusts or REITS have helped and are continuing to help in this re-rating.

The fundamentals that drive the hotel industry are usually a combination of sustainable average room rates and average occupancy rates. This business income can be translated to an equivalent yield that usually sits on the higher end of commercial property yield spectrum.

By understanding the workings of the property market through the key driving fundamentals and by the dissemination of that market information to market participants and other stakeholders in the property market, we can prick real estate bubbles. Professional Valuers who operate in the market on a day to day basis, can help enormously in bringing about stability in the market.

The greater use and appreciation of valuations help in diffusing real estate bubbles and bring about financial stability.

Elvin Fernandez believes in the free market and timely nudging by policy makers and key market participants to iron out any, and only where needed, imperfections in the system. To do this, and over time, they need a steady stream of in-depth market knowledge and insight.

By The Star (by Elvin Fernandez)

YTL to start selling luxury homes in Singapore

SINGAPORE: YTL Corp may begin selling its luxury home project in downtown Singapore in the first half of 2012, more than four years after buying the site, as the Malaysian developer expands its holdings in Asia.

The project, converted from an old apartment building on Orchard Boulevard that the company purchased in 2007, will have 78 units targeting wealthy Asian buyers from countries including China, Indonesia and Malaysia, according to Kemmy Tan, the head of YTL's real estate unit in the city-state.

YTL managing director Francis Yeoh has been expanding outside of Malaysia into the real estate markets in countries, including Japan, China and Singapore to take advantage of Asia's growing affluent property investors.

The group also has businesses in utilities and cement.

"Wealthy Asian property buyers have now gained more exposure to more sophisticated life-style and design," said Tan, adding that she estimated buyers would probably be willing to pay a 20 per cent premium compared to regular prices for the design by a renowned architect.

The project will be designed by Antonio Citterio, an Italian architect whose work includes the Bulgari Hotel in Milan and Bali and the Ermenegildo Zegna Group's new Milan headquarters, marking his first residential project in Asia.

YTL bought the original Westwood Apartments building for S$435 million (RM1.06 billion) in 2007, a record at the time for the purchase of an existing apartment through a so-called en- bloc sale. It had since leased out the units.

Tan declined to say how much YTL would sell the units for, which will have areas of between 1,000 and 3,500 sq ft, adding that the average prices of luxury apartments in the area ranged between S$3,800 and S$5,000 a square foot (RM9,300 and RM12,200).

St Regis Residences, a five-minute walk away, was last purchased at S$2,776 (RM6,777) a sq ft in September, while the Marq on Paterson Hill and Orchard Residences, about 1km away, sold homes at more than S$4,000 (RM9,766) a sq ft, government data showed.

The Kuala Lumpur-based company is the biggest shareholder of Starhill Global REIT, a Singapore-based property trust that owns stakes in the city's retail malls such as Ngee Ann City and properties in Tokyo's Roppongi and Daikanyama shopping districts.

By Bloomberg

SP Setia proposes formalisation deal

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), SP Setia Bhd and Tan Sri Liew Kee Sin have proposed to enter into an agreement to formalise the incentives and management rights relating to the management and general conduct of the business of SP Setia group.

In a filing with Bursa Malaysia, SP Setia said Maybank Investment Bank Bhd had submitted an application for the proposed arrangement to the Securities Commission yesterday.

It was previously reported that PNB, the major shareholder of SP Setia, had proposed to take over the property developer.

The national and largest fund manager had acquired 9,139,800 shares in SP Setia in the open market for RM3.88 each. It had also bought 1,059,300 warrants of SP Setia for 89.5 sen each.

By Bernama

KHI upbeat on Asia hospitality sector

Dorsett Regency Kuala Lumpur: KHI has big aggressive plans in Malaysia.

KOSMOPOLITO Hotels International Ltd (KHI), a subsidiary of Hong Kong-listed Far East Consortium International Ltd, is optimistic about its growth prospects in the region.

KHI executive director Winnie Chiu says the hospitality sector in Asia is benefiting from the advent of budget air travel.


Chiu: ‘The budget airlines have actually revolutionised the hospitality sector.’

“The budget airlines have actually revolutionised the hospitality sector. For those that didn't have a budget to travel, they now can. For customers who previously spent 50% on air travel and 50% on hotel stay, they may only need to spend just 20% on their travel expenses,” she tells StarBizWeek in an interview.

To leverage on this, Chiu says KHI will be boosting its brand of “Asia-inspired hospitality” in countries where it is already present.

KHI was set up in January 2007 and is listed on the Hong Kong Stock Exchange. It owns and manages four key hotel brands in different market segments Boutique Series by Kosmopolito, Grand Dorsett, Dorsett Regency Hotels & Resorts, and Silka Hotels, which can be found in Hong Kong, Shanghai, Chengdu, Wuhan, Singapore, Malaysia and London.

KHI senior vice-president of sales and marketing Philip Schaetz says the company has 17 operating hotels in Asia and seven new ones in the pipeline. He says KHI has different strategies to promote its four core hotel brands.

“We have four core brands under our portfolio but they attract a different clientele. The Grand Dorsett, for instance is a five-star hotel that caters to affluent customers while the Dorsett Regency is our four-star product.”

However, Schaetz says KHI prefers to categorise the Dorsett Regency more as a “four-star-plus” offering to attract customers.

“We don't want to position it as a five-star. A lot of hotel chains claim that they are five-star but when you go there, you actually end up being a bit disappointed and ask yourself is this really five-star?' So we want to go through a different route and exceed the consumers' expectations once they arrive.”

Schaetz says that KHI's Silka Hotels are categorised more as three-star-plus hotels so as to differentiate itself from other three-star hotels.

The Silka Hotels are usually located near shopping enclaves, tourist attractions and business districts so that they provide good base for business and leisure travellers.

To promote the Silka brand, Schaetz says the hotel ties up with a number of retailers in the city to provide special promotions to its customers.

“We have a programme called Stay, Shop & Save,' involving Silka hotels and retailers in the city where customers can get a discount when they produce their room key at the retail outlets where they are shopping.

“We have other plans in the pipeline, such as training our concierge to know what the greatest deals in the cities are.”

Schaetz also points out that as the usage of technology is crucial, KHI, through various partners, is implementing a central reservation system in its line of hotels to stay ahead of the competition.

“This will push out our room inventory much faster in the market and let the customer know what the best deals are,” he says.

Chiu says KHI plans to launch its hotel in London between 2014 and 2015.

“We're building it opposite Westfield (a shopping centre in London). It is a good location as it is not very far from the airport.”

Schaetz says the expansion to London was part of its strategy to boost its brand of “Asia-inspired hospitality.”

“We want to bring the Asian experience to the international traveller rather than the Asian traveller.”

Chiu says KHI currently has no plans to expand its presence in other non-Asian countries.

“We're always looking for more opportunities but we have a disciplined strategy when it comes to buying land. In London, we looked for one-and-a-half years before finally deciding to build a hotel there. We want to have a strong footprint there before looking elsewhere.

“The hotel industry is a cyclical business and with 24 hotels, we have good cashflow to strengthen to build the brand further.

Schaetz says KHI's main focus at the moment is Asia “where the opportunities lie.”

“It's where growth and innovation is happening now. Also, Asians are getting richer by the day. It's a fact!”

On the local front, KHI's properties are the Grand Dorsett Subang, Dorsett Regency Kuala Lumpur, Grand Dorsett Labuan, Silka Hotel Johor Bahru, Maytower Hotel & Serviced Residences Kuala Lumpur and Damas Suites & Residences Kuala Lumpur.

KHI vice-chairman Datin Jasmine Abdullah Heng says the company plans to have at least five ongoing projects in Malaysia that it plans to launch within the next 12 to 24 months.

She adds that KHI is also aggressively looking for land to build new properties, primarily in Kota Kinabalu, Penang, Langkawi, Kuantan and Malacca.

Chiu adds that the advent of low-cost travel will be a boost to the hospitality sector in Malaysia.

“We're very bullish about Malaysia and have big aggressive plans for this country,” she says.

By The Star

Hitch in plan to redevelop Crag Hotel on Penang Hill

A DEAL for a developer to redevelop one of the state's oldest landmarks on Penang Hill - Crag Hotel - appears to have stalled, due to an alleged exclusion of surrounding properties in the hotel's vicinity.

Business Times has learnt that although Sri Nisuh Sdn Bhd had been initially promised several bungalows adjacent to the historic hotel when the contract was discussed, the bungalows did not find their way into a draft agreement.

"It was promised that three bungalows adjacent to Crag Hotel would be integrated into a memorandum of understanding between the Penang authorities and developer," a source said.

"However, the said properties were excluded by the State Secretary in the draft agreement."

In May, the state government announced that Amanresorts International Pte Ltd would run the famous Crag Hotel on Penang Hill, which was one of the earliest hilltop homes and later turned into a hotel in 1929.

The hotel has been in a neglected and derelict state since 1977 after the International School of Penang (better known as Uplands School) vacated the premises and moved to George Town.

The project was reported to have been awarded in April to Sri Nisuh Sdn Bhd and the company was said to be investing US$12 million (RM38.04 million) to finance the project, which was to be completed within 30 to 36 months.

Chief Minister Lim Guan Eng was quoted at the end of May as saying that redevelopment project would take off after an agreement was inked between the developer and the state government two weeks after he made the announcement.

He said the Aman Group would be awarded a long-term contract tenure by the state to manage the property.

Three months ago, Amanresorts' Press Office media communications manager Anjali Nihalchand said that the firm would be forwarding its proposal to the state's Chief Minister Incorporated on September 5 for final approval.

When contacted yesterday on the status of the approval sought from the state authorities, Anjali said in an email that there were no current updates as "this is still at its very early stage and we have not got anything further to share at the moment".

State-owned Penang Hill Corp director Datuk Lee Kah Choon did not comment on whether approval had been granted yet to the developer of the proposed project. "This is a state project," he said in a SMS reply, "and you may wish to check with the State Secretary's office."

State Secretary Datuk Fariz Darus did not respond to an email enquiry from Business Times.

By Business Times

Glomac net profit up 50% in Q2

KUALA LUMPUR: Glomac Bhd net profit for the second quarter of its financial year ending April 30, 2012 rose 49.7% to RM23.8mil compared with RM15.88mil posted in the same period a a year ago.

For the first half of its financial year, Glomac achieved revenue of RM262.7mil and pre-tax profit of RM66.6mil.

This translates into an earnings per share of 7.1 sen, an increase from 5.4 sen in the previous corresponding 6-month period.

Group executive chairman Tan Sri F.D. Mansor said: “It was another good set of results. Contributions from ongoing projects such as Glomac Damansara and Glomac Cyberjaya, as well as launches in our townships Bandar Saujana Utama and Saujana Rawang, continued to drive group earnings.

“Glomac Tower was completed ahead of schedule and we formally handed over this new KLCC landmark building last month. We have also launched two projects, Glomac Cyberjaya 2 and B.U.Centro.”

By Bernama

Glomac Q2 profit jumps to RM23.8m

KUALA LUMPUR: Glomac Bhd said its second quarter net profit jumped 50 per cent to RM23.8 million from RM15.9 million in the same period last year.

However, revenue fell to RM134.8 million from RM140.9 million last year.

In a statement to Bursa Malaysia, the company said the decrease was due to completion of two projects, namely Glomac Tower and Glomac Galleria.

Its group executive chairman Tan Sri FD Mansor said the company “has a strong pipeline of strategic projects with a total gross development value of RM2.6 billion for launch beyond this year”.

By Business Times

Mah Sing forms property tie-up

PETALING JAYA: Mah Sing Group Bhd's wholly-owned subsidiary Grand Pavilion Development Sdn Bhd will jointly develop a parcel of prime land with Asie Sdn Bhd and Usaha Nusantara Sdn Bhd.

The 4.08 acres site, situated along Jalan Tun Razak, Kuala Lumpur, forms part of the approximately RM9bil 58-acre riverside urban regeneration project.

By The Star

Karisma Hill has all the comforts of peaceful living

Three levels: A scale model of the 3.42ha Karisma Hill, which is developed to mimic a handfan hence the villas are presented in three tiers or terraces.

If Living in a three-storey bungalow on a hilltop sounds like your ideal home then Karisma Hill in Seri Kembangan may just be what you are looking for.

Situated across the Jusco shopping centre in Bandar Putra Permai, this exclusive development gives house buyers a variety of villas to choose from.

According to Karisma Property Development Holdings Sdn Bhd general manager Sean Foong, the 3.42ha of land is developed to mimic a hand-fan, hence the villas are presented in three tiers or terraces.

“We work our villas around the natural terrain, therefore although the villas of the same type are stretched along the same road its height may differ from its neighbour,” said Foong.

Playing on the letter ‘K’, all five villa types have names beginning with the same letter, starting with the Kendra and Klarissa which have built-up area of approximately 3,948 sq ft to 4,104 sq ft.

Both types have five rooms with six bathrooms and a parking area enough to fit three cars.

Behind Kendra and Klarissa is a row of 18 three-storey courtyard villas named Kimora which comes with six rooms and six bathrooms.

Constructed to be slightly more spacious, Kimora’s built-up area is approximately 4,904 sq ft complete with a courtyard and garden area on its ground floor.

Those who want a little “cooling” down over the weekend can rejoice over their very own pool on the first floor of the unit.

“Residents can enjoy their private dip in the pool without having to drive out of their homes,” said Foong.

Exclusivity can only get better as Foong introduces the last of the three-storey courtyard villas, Kasandra and the four-storey, Kamilia.

Kasandra, which is constructed opposite Kimora, also comes with a pool but has a slightly larger built-up area of 4,931 sq ft.

“What makes Kasandra special is its levelling which can be seen from the parking area itself.

“The parking space for Kassandra is on the first floor of each unit compared with the rest which is built on the ground floor,” said Foong.

The final row of just 11 houses is Kamilia, occupying four levels of space with a built up area of 5,110 sq ft.

Each of the 75 units are designed without a fence or gate to surround it.

“We want our residents to have a better lifestyle by getting to know one another and surrounded by one big fence which is from our main entrance,” said Foong.

Although there isn’t any playground built within the gated development area, Foong said there were pocket parks, private gardens and tropical plants for one to ensure the lush natural ambience in Karisma Hill.

Streets will be filled with flowering trees and shrubs to make one’s cycling and running path friendlier.

Karisma Hill is well connected via the Damansara-Puchong Highway (LDP), Shah Alam Expressway, South Klang Valley Expressway, Maju Expressway, Serdang-Kinrara-Putrajaya Expressway

When completed in December 2015, residents do not have to worry about renovations as the developer is delivering the houses complete with a built-in lift.

“All they need to do is bring their furniture and not worry about renovation or plumbing works,” he said.

For safety measures, the neighbourhood is equipped with CCTVs and alarm system for the comfort of residents.

For details of Karisma Hill, visit their sales gallery at 32, Jalan BPP8/4,Bandar Putra Permai, Seri Kembangan,Selangor or log on to www.karismahill.com.my

By The Star

Amphill bullish on RM200m Rimbun project

The 0.44ha project located within Ampang's embassy row has 56 units of luxury condominiums, each with an average built-up of 4,000 sq ft.

BOUTIQUE developer Amphill Corp Sdn Bhd is unfazed by the global turmoil and bullish that its RM200 million Rimbun project in Kuala Lumpur will attract local and foreign investors.

Amphill CEO and director Poh Pai Kong said the company will sell the units, each priced from RM4 million, or about RM1,100 per sq ft, starting from December 15.

"We don't expect overnight sales, but are quite certain the units will be sold in a few months," Poh said yesterday at the launch of Amphill's website and unveiling of the project by Housing Minister Datuk Seri Chor Chee Heung.

"Rimbun is no ordinary condominium project, but one that provides ample of living space amid lush greenery with focus on sustainability," he added.

The project, which is under construction and slated for completion by mid 2014, was recently accorded the Green Mark (Gold Plus) certification by Singapore's Building and Construction Authority.

Photo Voltaic panels and rain water harvesting will be standard features, besides green label household fittings and appliances and smart home systems to minimise energy and water usage.

Rimbun is the first of many high-end projects that Amphill will unveil over the next few years in the Klang Valley.

The company was founded by Poh, a 35-year veteran in the property industry. He retired as group managing director of Dijaya Corp Bhd and Tropicana Golf & Country Resort Bhd in 2007 and is credited with turning Tropicana into a top brand in the country.

He also set up and led the joint venture with PKNS and developed a neighbouring 160ha land into the popular Sri Selangor Golf Course and Damansara Indah Resort Homes (now Tropicana Indah).

By Business Times

16 themed gardens IOI launches lifestyle homes in 16 Sierra

FOLLOWING the success of its previous launches in 16 Sierra, IOI Properties is offering another opportunity for potential housebuyers to own two or three-storey lifestyle terrace homes with upgraded finishes within a township with 16 inter-connected themed gardens.

Unlike other standard terrace homes, one of the many unique advantages of Lyden is the exceptional design versatility.

For example, the innovative open plan concept allows houseowners to pre-plan the size of their living room, dining room, dry kitchen, or even the outdoor breakfast terrace, according to their requirements.

Another significant feature is the double-volume ceiling in the living, dining or family areas.

Together with the exceptional high ceiling at ground and first floor and also the open-plan concept, spaciousness is taken to another level.

Other exclusive features designed to reflect your discerning lifestyle are large windows for ample natural lighting and ventilation, solar hot water system to reduce power consumption, home alarm system, lightly tinted glass for all windows and sliding doors with powder-coated frames, 8 ft-high main entrance door, and staircase with glass railing and wooden balustrade, three-phase wiring, and air-cond points with piping.

For some of the three-storey corner units, there is a Junior Suite with an en-suite bath and entertainment room that opens to a covered terrace attached with a powder room for outdoor entertaining.

Other corner units will have an outdoor breakfast terrace.

Lyden (two-storey intermediate with four bedrooms) is available in two lot sizes – 22’ x 75’ and 22’ x 80’ with a gross built-up of 2,466 sq ft & 2,668 sq ft respectively.

The corner units are three-storey with five bedrooms and a bigger lot size of 26 ft.

For added security, a single entry/exit point with perimetre fencing is provided, which will be complemented with a proposed guardhouse.

Like every residential precinct in 16 Sierra, Sierra 2 (where Lyden is located in) also has its own themed garden at its doorstep.

Children will enjoy playing and learning with equations, numbers and mathematical forms at the Algebra Garden.

The themed gardens are interconnected by walkways so that residents throughout the township can enjoy exploring different themed gardens.

There is also the Central Park —the largest of all themed gardens. It is designed to accommodate a series of activities for residents’ use and relaxation.

This serves as a gathering place for huge events such as family day.

It is complete with a grand lawn, amphitheatre, children’s play area, ladybirds, frog play structures, exercise station, reflexology path, jogging path, living trellis, tai chi lawn, basketball court, futsal courts and colourful gazebos for residents to spend quality family time for an enhanced lifestyle experience.

Modern township amenities in 16 Sierra include a proposed private school offering both local and international syllabi.

The units are available with a booking fee of RM30,000 and free legal fee on SPA.

For more information, contact 03-8944 9999.

By The Star

YTL may sell Orchard Boulevard project

YTL Corp may begin selling its luxury home project in downtown Singapore in the first half of 2012, more than four years after buying the site, as the Malaysian developer expands its holdings in Asia.

The project, converted from an old apartment building on Orchard Boulevard that the company purchased in 2007, will have 78 units targeting wealthy Asian buyers from countries including China, Indonesia and Malaysia, according to Kemmy Tan, the head of YTL’s real estate unit in the city-state.

YTL Managing Director Francis Yeoh has been expanding outside of Malaysia into the real estate markets in countries including Japan, China and neighboring Singapore to take advantage of Asia’s growing affluent property investors. The group also has businesses in utilities and cement. “Wealthy Asian property buyers have now gained more exposure to more sophisticated life-style and design,” said Tan, adding that she estimates buyers will probably be willing to pay a 20 per cent premium compared to regular prices for the design by a renowned architect. The project will be designed by Antonio Citterio, an Italian architect whose work includes the Bulgari Hotel in Milan and Bali and the Ermenegildo Zegna Group’s new Milan headquarters, marking his first residential project in Asia.

Record Purchase

YTL bought the original Westwood Apartments building for S$435 million (US$339 million) in 2007, a record at the time for the purchase of an existing apartment through a so-called en- bloc sale. It had since leased out the units. Tan declined to say how much YTL will sell the units for, which will have areas of between 1,000 and 3,500 square feet, adding that the average prices of luxury apartments in the area range between S$3,800 and S$5,000 a square foot. St. Regis Residences, a five-minute walk away, was last purchased at S$2,776 a square foot in September, while the Marq on Paterson Hill and Orchard Residences, about 1 kilometer (0.6 mile) away, sold homes at more than S$4,000, government data showed.

The Kuala Lumpur-based company is the biggest shareholder of Starhill Global REIT, a Singapore-based property trust that owns stakes in the city’s retail malls such as Ngee Ann City and properties in Tokyo’s Roppongi and Daikanyama shopping districts.

By Bloomberg

Prime central London properties still in demand

KUALA LUMPUR: Global real estate service provider Savills said that despite a bleak economic outlook in Britain and burgeoning European woes, prime central London property will continue to be in demand and private rental expected to increase.


Barnes: ‘There are grounds for optimism because despite the bleak picture (for Britain’s economy), many people have been excluded from buying, so there is an increase for rental.

“There are grounds for optimism because despite the bleak picture (for Britain's economy), many people have been excluded from buying, so there is an increase for rental,” Savills director for research Yolande Barnes said.

Barnes said this at a talk on “Is London still a World Class City?” in Kuala Lumpur, her third stop in Asia after Hong Kong and Singapore.

She said that over a five-year period between now and 2016, rental growth was expected to be 20% compared with a five-year capital growth of about 6%.

Barnes' comments reflect a similar situation in major American cities. Bloomberg reported earlier this week that rentals are gaining ground in cities that have relatively robust job growth, such as Seattle, or pools of transient workers like in Washington, Los Angeles and Las Vegas as Americans are wary of buying a home or are unable to qualify for a mortgage.

Barnes said in the United Kingdom, lack of financing for both homebuyers and developers had affected the housing stock, the annual supply of which has over the past several years been about 25,000 units. In the 201011 period, the supply of housing stock has dropped.

“The lack of supply has put pressure on rentals so yields are expected to increase,” she said.

In the prime central London property market, the interest is mainly from foreigners, with top buyers from Russia and China.

“London is considered as a safe haven,” she said, adding that studies that compared London with other European cities showed international business people tended to prefer London.

Over a period of 18 months to June this year, overseas buyers spent 6bil in the residential market, the highest since 2007. Of this, a quarter went to newly built properties which were mainly purchased by buyers from the Asia-Pacific region.

By The Star

PKNS to raise RM700mil for some of its projects and increase land-bank

PETALING JAYA: The Selangor State Development Corp (PKNS) plans to raise RM700mil in a sukuk issuance to finance some of its projects and to purchase land.

“We recently announced over RM14bil worth of new mega projects to be implemented over the next two to five years. PKNS needs to gear up more if we were to undertake these mega projects ourselves as their gross development value ranged between RM1bil and RM3bil each,” PKNS general manager Othman Omar told StarBiz.


Othman: ‘To address the issue of insufficient financing for our projects, we are looking forward to more public-private collaborations with local and international partners, especially in building the high-profile projects.’

He said the money raised from the sukuk would allow it to probably carry out two or three projects.

“We have to be more innovative in our implementation strategy. We are evaluating an offer from a foreign investor to buy two of the towers at RM800 psf at our Datum Jelatek proposed mixed development worth about RM900mil in Kuala Lumpur, in exchange for a fixed-price construction contract,” he said.

Furthermore, he said, PKNS had received offers from investors to lease long term or to purchase en bloc its developments, thus reducing its exposure in the event that the property market slows down over the next few years.

“To address the issue of insufficient financing for our projects, we are looking forward to more public-private collaborations with local and international partners, especially in building the high-profile projects,” Othman said, adding that PKNS has zero gearing currently.

PKNS also revised the master plans for its 1,500 acre Selangor Science Park 2 in Cyberjaya and the 6,000 acre Bernam Jaya project in Selangor.

“We have spent RM1.15bil in land acquisition, earth works and infrastructure cost for the last five to 15 years, and it is time to realise part of its value,” he said.

The state development corporation had also seen a recent upgrade of its Ratings Agency Malaysia rating to P1/AA1 from P1/A1, which would translate into lower financing cost for its future developments.

“We are also setting up a special purpose acquisition company in order to retain some of the retail and office components from our projects before we can possibly inject them into a real estate investment trust (REIT).

In 2010, PKNS proposed a venture into the REIT industry with the injection of three properties Menara PKNS, Kompleks PKNS and SACC Mall with a combined value of RM270mil into AmanahRaya REIT (ARREIT) in exchange for new shares and cash, which would make PKNS the second largest shareholder of ARREIT with a 33% stake.

“We are looking forward to injecting more of our existing properties into this REIT and we are lining up potential properties from our more strategically-located redevelopment and urban regeneration projects in the Klang Valley,” he said.

Meanwhile, ARREIT yesterday announced that the two parties had mutually terminated the proposed transaction.

ARREIT told Bursa Malaysia that the conditional deal, which was entered into on Sept 2 last year, was called off in light of potential planned asset enhancements to be carried out by PKNS on the properties, which would affect their market values.

PKNS is projecting to end the year with its pre-tax profit surging to RM480mil from RM206mil in 2010.

“PKNS needs to be profit-driven in order to finance its social obligations. However, the profit is just a means to an end. If PKNS makes more profit, the money does not go to our own pockets but will be contributed back for the benefit of the five million Selangorians,” he said.

He said the more profit PKNS makes would mean that PKNS could contribute to building more low-cost and affordable housing, industrial and science parks to attract foreign direct investments and build more infrastructure developments for the state.

“We need to segregate between our economic and commercial projects and the social projects so as to get the best use of our land and thus optimise the return on these projects,” he said.

By The Star

AmFIRST REIT closes deals in Cyberjaya

PETALING JAYA: Am ARA REIT Managers Sdn Bhd, the manager of AmFIRST Real Estate Investment Trust (AmFIRST REIT), has completed its acquisition of Prima 9 and Prima 10 in Cyberjaya for RM133mil cash.

It told Bursa Malaysia that it was AmFIRST REIT's first investment in Cyberjaya, capitalising on the economic growth and vibrancy of Cyberjaya's commercial office segment. The properties were tenanted by multinationals secured against long leases, it said.

Before the acquisition, AmFIRST REIT had six properties, namely Bangunan AmBank Group, Menara AmBank and AmBank Group Leadership Centre in Kuala Lumpur as well as Menara AmFIRST in Petaling Jaya, Kelana Brem Towers in Kelana Jaya and The Summit Subang USJ in Subang Jaya with total net lettable area (NLA) of 2,311,489 sq ft as at Sept 30.

“The new acquisition will boost the total investment portfolio to eight properties and add a further 211,496 sq ft to the portfolio, representing an increase of 9% of the total NLA,” it said, adding that the acquisition posted remarkable growth in the assets under management of AmFIRST REIT by 13% from RM1.028bil as at Sept 30 to RM1.163bil.

and the gearing ratio would increase to 46.5%.

The group said these two new properties are expected to contribute an additional distributable income of 68 sen per unit on an annual basis.

By The Star

SP Setia proposes formalisation pact

Permodalan Nasional Bhd (PNB), SP Setia Bhd and Tan Sri Liew Kee Sin are proposing to enter into an agreement to formalise the incentives and management rights relating to the management and general conduct of the business of SP Setia group of companies.

In a filing to Bursa Malaysia today, SP Setia said Maybank Investment Bank Bhd had submitted an application for the proposed arrangement to the Securities Commission today.

It was previously reported that PNB, the major shareholder of SP Setia, proposed to take over the property developer.

The national and the largest fund manager had acquired 9,139,800 SP Setia shares in the open market for RM3.88 a share, and it also bought 1,059,300 SP Setia warrants for 89.5 sen each in the open market.

By Bernama

Third shot at UK job for SP Setia

KUALA LUMPUR: SP Setia Bhd may still have a shot at securing the project to redevelop London's Battersea Power Station. Although the developer appeared to have written off its chances last week, another window of opportunity is set to open soon, according to news reports.

The Telegraph reported Irish company Real Estate Opportunities (REO), which has a 54% stake in a vehicle that owns Battersea Power Station, as saying lenders Lloyds Banking Group and Ireland's National Asset Management Agency (NAMA) had applied to have administrators appointed to certain subsidiaries.

Once they had taken control of the sale process after appointing administrators at the end of next week, Lloyds and NAMA planned to run an open-market auction process to off-load the power station, the Financial Times reported.

This will give SP Setia a chance to put in a bid its third for the Battersea Power Station project, and this time it will be contending with other international parties for that site.

When contacted by StarBiz, the developer said: “At this point, we are unable to comment further.”

On Nov 18, SP Setia instructed its investment adviser to submit a 262mil (RM1.3bil) offer to Lloyds and NAMA to buy debt linked to the power station. The offer was rejected on Nov 23.

Last week, the developer submitted a second bid of 324mil to take control of the site and to buy up the bank debt. The Telegraph reported that this was also rejected “on the grounds that they were not satisfied with the conditions attached and also wanted a meaningful' deposit.”

In a Nov 24 announcement to Bursa Malaysia, SP Setia confirmed the rejection by the lenders but added that it believed property development prospects in London were positive.

“Accordingly, the group will continue to look out for and assess other possibilities to invest, via strategic partnerships and land-banking opportunities, in this exciting market,” it added.

Despite the bleak British economy and the overall weak sentiments swirling around in Europe, global real estate service provider Savills said London continued to put in many interested buyers from around the world.

“This is due to the cosmopolitan nature of the city. It is an old city and there is a lot of interest there. Compared to other cities like Frankfurt and Geneva, international businesses continue to view London and its real estate favourably,” said Savills director (research) Yolande Barnes. Barnes was on a speaking engagement in Kuala Lumpur.

She said the Battersea Power Station was part of a larger regeneration project that had been ongoing in London for some time. Located south of River Thames, the larger Battersea area has been promising.

Generally, real estate north of River Thames are viewed more favourably.

“The Battersea Power Station is a controversial site. When it was made available, it was of low value. As Battersea area begin to be regenerated the old buildings done away with and replaced by new ones its appeal began to grow. But that power station is a difficult site to develop because it is a heritage site,” she said.

The power station has four tall structures or towers. Since it is a heritage site, the authorities will probably not allow it to be demolished, although the land around that area may be developed.

“So from the point of cost it is difficult to preserve and for re-use (or redevelopment) it will be expensive for whoever owns it,” she said.

“The Battersea Power Station project is a bit like the Tate Modern gallery. That site was also formerly a power station.” The Tate Modern today houses Britain's national art collection.

By The Star

Glomac posts higher Q2 pre-tax profit

Glomac Bhd's pre-tax profit for the second quarter ended Oct 31, 2011 surged to RM34.278 million from RM32.043 million in the same quarter last year.However, revenue decreased to RM134.834 million from RM140.897 million.

In a filing to Bursa Malaysia today, the company said the fall in revenue was due to completion of two projects namely Glomac Tower and Glomac Galleria.

Nevertheless, Glomac said ongoing projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama contributed stronger revenue as compared to last corresponding period.

In a statement, Group Executive Chairman Tan Sri F.D. Mansor said the company "has a strong pipeline of strategic projects with a total gross development value (GDV) of RM2.6 billion for launch beyond this year".

By Bernama

Analyst: Sime not likey to make any major changes in E&O at the moment

New members: Abdul (left) and Bakke now sit on the board of E&O.

PETALING JAYA: Sime Darby Bhd's move to appoint two of its top executives - president and group chief executive Datuk Mohd Bakke Salleh and group chief operating officer Datuk Abdul Wahab Maskan - to board positions at Eastern & Oriental Bhd (E&O) has elicited both positive and neutral responses from analysts.

E&O told Bursa Malaysia in a filing on Tuesday that it was appointing Bakke and Wahab as non-independent and non-executive directors. It also announced the resignation of non-independent and non-executive director Thomas Teo Liang Huat.

A local bank-backed analyst said it had been expected that Sime Darby would place board members at E&O following its purchase of a 30% stake in the latter in September.

“The board representation will let Sime Darby in on what's going on at E&O and learn from it, as well as work towards possible collaborations, as was previously indicated.”

The analyst added that Sime Darby was not likely to make any major changes in E&O at the moment. “There is no catalyst for that to happen.”

Another analyst said he was neutral on the news, adding: “It (the board appointments) is not surprising, what would be surprising is if they did not take board seats.”

StarBiz had previously reported that Sime Darby would appoint two people to E&O's board after it bought into the Penang-based niche property developer for RM766mil or RM2.30 per share from Tan Sri Wan Azmi Hamzah, Singapore-listed GK Goh Holdings and E&O managing director Datuk Terry Tham.

The acquisition, which sparked discontent among minority shareholders for the 60% premium-to-market price paid to the three parties for their shares, prompted a review by the Securities Commission into whether there was collusion involved in the share sale and if Sime Darby had to make a mandatory general offer for the rest of E&O's shares, but the regulator ruled otherwise.

Sime Darby, now E&O's single largest shareholder, also signed a three-year agreement with the latter to cooperate in three areas - sharing knowledge and expertise, leveraging on each other's core competencies, and jointly exploiting economic opportunities.

While Sime Darby has reiterated that it did not buy into E&O with the intent to merge, Bakke had told StarBiz that he would not rule out a general offer and might make one if it was appropriate.

Previously, the ECM Libra Financial Group Bhd, which currently has a 6.4% stake in E&O according to Bloomberg, had attempted to get two of its representatives - Mahadzir Azizan and Leong Kam Weng - to the latter's board during its AGM but failed to do so after shareholders voted in opposition.

Meanwhile, E&O has posted a 172.1% surge in net profit for its second quarter ended Sept 30 to RM13.8mil from RM5.1mil in the previous corresponding period on the back of 25.5% higher revenue to RM82.6mil from RM65.8mil.

The developer attributed its strong results to higher revenue from the Seri Tanjung Pinang project as well as the hospitality and restaurants division, but said it would adopt a “cautiously optimistic” outlook against the present economic uncertainties.

It added that earnings could be boosted by its property development projects such as the St. Mary Residences in Kuala Lumpur, Quayside Seafront Resort Condominiums at Seri Tanjung Pinang and new launches in Penang.

E&O's first board meeting with Sime Darby's representatives in attendance was held yesterday.

By The Star

SP Setia wins RM437.40mil bid for S’pore project

PETALING JAYA: SP Setia Bhd has won the bid to develop Chestnut Avenue, an 18,700 sq m parcel of land in Singapore, for a total tender sum worth RM437.40mil.

In a filing with Bursa Malaysia yesterday, the company said that its unit, SP Setia International (S) Pte Ltd, had won the bid.

SP Setia said the land tender would be granted a lease term of 99 years and was to be developed into condominium or flats.

The tender sum would be satisfied in cash via a combination of internal funds or bank borrowings and to be completed during the financial year ending Oct 31, 2012.

The land is connected to major arterial roads and expressways such as the Bukit Timah Expressway, Pan Island Expressway and Upper Bukit Timah Road.

“It is also located near the Petir LRT station as well as two future Mass Rapid Transit stations, namely Cashew and Hillview.

“These two stations are part of the future Downtown Line 2 to be completed in 2015 connecting the land to key precincts in the city centre.

“Amenities like Lot One, The Rail Mall and Bukit Timah Plaza are all located close to the land,” it said.

SP Setia said it intended to build an eco-themed development comprising residential apartments with an estimated gross development value of RM1.1bil.

It intended to launch the project in the fourth-quarter of 2012.

“The proposed project is expected to span a development period of three to five years. At this preliminary stage, the total development cost and the expected profits to be derived from the project have yet to be ascertained,” it said.

The tender represented SP Setia's second foray into the Singaporean property market following its acquisition in April this year of a freehold development along Woodsville Close.

By The Star