UDA may sell BB Plaza

UDA Holdings Bhd said yesterday it may ask for RM474 million from MRT Corp Bhd for its Bukit Bintang Plaza (BB Plaza) were it to let go of the property for the construction of an underground MY Rapid Transit (MRT) station.

Chairman Datuk Nur Jazlan Mohamed said the prime property could cost around RM374 million, with a further RM100 million required to compensate BB Plaza retailers who had to leave before their lease expired.

Speaking to Business Times after launching UDA Holdings’ RM13 million IT transformation programme yesterday, Nur Jazlan said construction of the underground station would also affect Bumiputera businesses as at least 60 per cent of the 150-odd retailers at BB plaza, which is owned by UDA and built in the 1970s, are Bumiputeras.

MRT Corp plans to take over the land fronting BB Plaza and the adjacent Yayasan Selangor building next month to start work on the underground station, which is one of 13 stations for the 51km Sungai Buloh-Kajang MRT line.

It will then take over the basements of both buildings to build the station, which means the retailers may have to move out next year.

There are also talks on whether to redevelop BB Plaza or leave the building as it is.

Nur Jazlan said while he supported the building of the station, the redevelopment of BB Plaza would harm the agenda to provide space for Bumiputera retailers in the capital city’s main shopping district.

“If we were to redevelop BB Plaza, the replacement cost will be high and we have to increase rental rates. This will complicate our Bumiputera agenda. It is better to leave the building as it is.”

He said if MRT Corp were to acquire the plaza, the benchmark would be RM374 million for the building.

"BB Plaza is the only prime asset we have left but if we can get RM374 million for the property, based on current market value, then we are willing to let it go.

"This is a national project and if asked by the government to sacrifice the building, we will comply. However, we will also seek compensation for the retailers," he said.

If the asset sale does go through, it won't be the first deal between UDA and MRT Corp. About six months ago, MRT Corp paid UDA RM80 million to acquire UO Superstore and Plaza Warisan in Kuala Lumpur, RM40 million below market price, to build an MRT station at the sites.

By Business Times

UMLand appoints Chia as new CEO

KUALA LUMPUR: United Malayan Land Bhd (UMLand) has appointed Chia Lui Meng as its new group chief executive officer with effect from Monday, succeeding Pee Tong Lim, whose tenure ended in February when he retired.

Chia, who was the CEO of Malton Bhd and adviser to the group managing director of Naza TTDI Sdn Bhd, will be responsible for the strategic direction and overall management and operations of the UMLand group.

By Business Times

RM833mil commercial project in Shah Alam

To be built within two years from now, Magna Prima's mixed development will involve an estimated 180 shop-office units and 1,600 serviced apartments.

Magna Prima Bhd (MPB) is proposing a mixed development project in Shah Alam with a gross development value of RM833 million, with the latest acquisition of 8ha (20 acres) of land worth RM100 million.

Paying about RM115 per square foot, MPB chief executive officer Datuk Rahadian Mahmud said the leasehold commercial land would be an important asset for development while increasing the company’s footprint in Shah Alam.

“We will be funding the purchase with RM70 million cash through internally generated funds and bank borrowings,” said Rahadian in a Press statement,“While the balance RM30 million through the issuance of new shares in Magna Ecocity Sdn Bhd, the wholly-owned subsidiary of MPB through which the land will be purchased.”

One of MPB’s development plans is a mixed development involving an estimated 180 units of two-storey and three-storey, low-rise shop-offices and four blocks of serviced apartments with a total of about 1,600 units.

Development of this project is scheduled to commence within two years.

Rahadian highlighted that the land comes with a wide frontage of almost half a kilometre facing Persiaran Selangor. The property is also visible from the Federal Highway.

Persiaran Selangor forms the main access road for Section 15 and Section 16, two established commercial and industrial hubs in Shah Alam.

The property has direct access to the Federal Highway and easy accessibility to other expressways such as the North Klang Valley Expressway (NKVE), North-South Centre Link, Shah Alam Expressway (Kesas), Leburaya Damansara Puchong (LDP) and the Guthrie Corridor.

The parcel’s proximity to other public amenities such as KTM stations, a private hospital, a hotel, educational institutions and a stadium are expected to fuel its appeal to investors and owner-occupiers alike.

An investment holding company listed on Bursa Malaysia, MPB is involved in property development, construction, trading and property management services.

By The Star

M’sian investment in Aussie properties to grow

Artist impression of the Array project in Melbourne by Mirvac

GEORGE TOWN: Investments from Malaysia in the Australian property market is expected to grow by about 15% this year from RM125mil in 2011.

Property Talk director Steven Cheah said in an interview that for the past two years the investment in Australia had remained flat at about RM125mil per annum.

“This was due to the stronger Australian dollar. But since March, the Australian currency had weakened slightly and so we are anticipating more property investments in Australia.

“We have also been getting a lot more enquiries since March 2012 about investing in properties in Sydney and Melbourne,” he said.

Cheah said every year many Malaysians go to study in Australia, thus creating a severe shortage of property for rental.

“Many parents find that buying property for their children make more economic sense than renting. Once their children completed their education, the property can be rented as rental income or they can sell with good capital income,” he said.

According to Cheah, Melbourne was the top destination for Malaysian property investment funds.

“This is because many Malaysians have relatives who have migrated to Melbourne, where you can find a variety of Malaysian restaurants.

“According to the latest research by Australian Property Monitors, of the major capital cities, Melbourne has been the standout performer for house price growth over the last five years, with prices increasing almost 30% in just 15 months.

“Perth was the worst performing city, with the median house price unchanged in five years, which is largely a hangover from a resource-fuelled boom in prices in the early 2000,” Cheah said.

He added that Sydney and Melbourne were always voted as the top three most livable cities in Asia by ECA International, a research firm with its Asia headquarters in Hong Kong.

On Mirvac's new project in Melbourne, Cheah said the Array project, comprising 169 condominiums was next to the Yarra River.

“The project, introduced in Shanghai recently, received very positive response. Some 35 units were sold in one week,” he said.

The Array condominiums, positioned on the north-facing bank of the Yarra River, with built-up areas from 55 sq m onwards are priced from A$513,000.

“A limited number of three bedroom, deluxe Sky Residence options, priced from A$1.41mil, is also available,” Cheah said.

The project will be exclusively previewed at Hilton Kuala Lumpur on June 9 and June 10.

“Construction work on the Array project has started and is scheduled for completion in end-2014,” Cheah added.

By The Star

Affordable housing in city possible: Rehda

KUALA LUMPUR: Affordable housing in the city for the poor and middle class is possible when the government provide the land for the development, said Real Estate and Housing Developers Association Malaysia (REHDA).

"In terms of rising cost of materials, it's something that we can't control. One thing that is under the government control is land -- whether it is available for low and medium cost housing.

"I'm not sure what the plans are for the Rubber Research Institute land but if they target a certain portion for affordable housing it would be good because land is one of the biggest cost components in property development," said REHDA council member N.K. Tong.

Tong was speaking to reporters here yesterday (5/6) on the upcoming fourth International Conference on World Class Sustainable Cities 2012 (WCSC 2012).

To be held on September 25, the WCSC 2012 will carry the theme "Cities for People". Among issues to be discussed include housing for urban poor, daycare services, preservation of greenery, safety practices and community building activities in the interest of crime prevention, re-landscape of open spaces and a more integrated public transportation.

The WCSC series is being co-organised by REHDA, Kuala Lumpur City Hall, the Malaysian Institute of Planners and the Malaysian Institute of Architects.

In the past three editions, the WCSC series focused on the transformation of Cheongyecheon River in Seoul, South Korea; city transportation solutions Curitiba, Brazil; and the metamorphosis of Kaohsiung, Taiwan; from an industrial polluter to an ecological tourist hub.

By Business Times

Spacious homes of Emerald Gardens

Emerald Gardens will set a new benchmark for upmarket, landed properties.

GuocoLand Malaysia has upped the ante with the latest launch of two and 2½-storey superlinked houses in Emerald Rawang, a township in the Northern Corridor of the Klang Valley.

The new superlinked houses at Emerald Gardens not only feature a contemporary design but are quite spacious. The latest units will be launched in conjunction with the Emerald Gardens Party at the Emerald sales gallery on June 9.

Built with excellent infrastructure, the development enjoys easy accessibility to Kuala Lumpur and the surrounding areas via the North-South Highway, New Klang Valley Expressway and the Guthrie Corridor Expressway.

Located within easy reach of Rawang’s commercial centre, Emerald Rawang is only 20 minutes by car from Jalan Duta and the Damansara toll.

Rawang has all the essential amenities including post office, banks, restaurants, hypermarkets, wet market and KTM Komuter station.

Set within the natural greenery and rolling hills of the 405ha (1,000 acres) township, Emerald Gardens will set a new benchmark for upmarket, landed properties.

Offering a total of 161 new units, the tropical garden concept homes come with an option of three designs with wide frontage.

Besides landscaped features, the two-storey homes of 26ft by 80ft come with a built-up space that starts from 278sq m (2,990sq ft). The 2½-storey homes come with two layout options of 24ft by 80ft and 26 ft by 80ft and the built-up space is from 333sq m (3,585sq ft).

GuocoLand Bhd marketing and sales director Pam Loh said the Emerald Gardens project was designed for today’s discerning consumers and investors, who seek more spacious and versatile homes to meet their lifestyle needs.

“We have redefined the two key features by offering the biggest superlinked homes with carefully planned layouts in Rawang, and which cater to the different needs of home buyers.

“We have received overwhelming response during the pre-launch period. We have sold over 80% of our pre-launch releases. More units will be released on Saturday,” added Loh.

Besides the spacious built-up, other key features include:

• Minimum 5+1 bedroom configuration
• Two master bedrooms for 2½-storey units
• All bedrooms with spacious ensuite bathrooms
• His and hers vanity top, and bathtub for the master bathroom
• Three-phase wiring
• Wide driveway and column-free car porch for side-by-side parking
• Rooftop terrace for natural lighting and better ventilation for 2½-storey units
• Exclusive linear park – landscaped walkway for residents
• Landscaped back lanes
• 24-hour guarded development with perimeter fencing

Visitors to the Emerald Gardens launch party from 9.30am to 9.30pm on June 9 can look forward to fun and activities, apart from viewing the two Emerald Gardens show units. Highlights of the carnival include helicopter rides, biking, “Shanghai jazz” performance and fireworks display.

By The Star

SP Setia clinches most trusted developer award

KUALA LUMPUR: SP Setia Bhd was recognised recently for the second time running as the developer Malaysians trust most in the Reader's Digest Asia Trusted Brands 2012 study.

The company was awarded the Gold Trusted Brand Award in the Property Development category at the gala awards dinner held last month.

Minister of International Trade and Industry Datuk Seri Mustapa Mohamed presented the award to SP Setia director Tan Sri Lee Lam Thye.

The SP Setia brand has grown regionally with the developer's first international foray into Vietnam in 2007 when it joined forces with the country's top state-owned conglomerate Becamex IDC Corp to develop EcoLakes at the MyPhuoc Industrial Park.

In 2010, EcoLakes was named first runner-up in the FIABCI Prix d'Excellence Award for Best Development Master Plan.

Following this success, the group has also launched a mixed development project called Eco Xuan at Lai Thieu in Tuan An District, Binh Doung Province.

By Business Times

BB Plaza compensation projected at RM370m

UDA Holdings Bhd hopes that a fair and commensurate compensation will be offered by MRT Corp Bhd to the affected party and Bumiputera traders if its building, Bukit Bintang Plaza (BB Plaza), has to be demolished.

There is a possibility that the plaza including a part of the Yayasan Selangor building will be demolished to make way for the building of an underground station under the government's mega project, My Rapid Transit.

UDA's Chairman, Datuk Nur Jazlan Mohamed said if the BB Plaza is demolished, the company stood to lose 25 per cent or RM20-RM25 million of its annual revenue comprising rental collections from its lots in the building.

"Nevertheless, what also concerns us is the potential losses to the Bumiputera traders who would be affected throughout the implementation of the MRT project which is estimated to take four to five years," he told reporters after launching the transformation of UDA's information technology system.

Todate, 150 retailers or 60 per cent of the retailers in BB Plaza are Bumiputeras.

"We have also projected that the fair amount of compensation to be paid out for demolishing the building should be in the region of RM370 million," Nur Jazlan said.

He said the plaza would also be its third building to be surrendered to MRT Corp in making way for the MRT.

Other two buildings that have already made way are the UO Superstore and Plaza Warisan.

"We had received RM80 million for those two buildings from MRT Corp even if the property value for the buildings currently stands at RM120 million. This however is a sacrifice made by UDA to ensure that the government's economic develoment plan is successfully carried out."

Nur Jazlan also said that no definite date has been given on when MRT Corp would be taking over the building as it was still under discussion.

Nonetheless, any decision would depend on the Ministry of Finance which is the ultimate owner of UDA, he said.

On the transformation of UDA's information system which is to cost RM13 million, Nur Jazlan said it was part of UDA's efforts to provide more efficient services to its clients.

By Bernama

Magna unit in RM100mil land deal

Shah Alam 20-acre acquisition to be paid by RM70mil cash and share issuance

KUALA LUMPUR: Magna Prima Bhd unit Magna Ecocity Sdn Bhd has proposed to buy 20 acres from PCM Bina Sdn Bhd, located in Section 15, Shah Alam, for RM100mil via cash and share issuance.

Magna Prima signed a conditional sale and purchase agreement with PCM Bina Sdn Bhd yesterday and stated that the RM100mil payment would be satisfied by RM70mil cash and the balance in the form of 1.11 million issuance of new ordinary shares representing a 30% interest in the enlarged share capital in Magna Ecocity or at approximately RM26.92 per Magna Ecocity share.

The cash consideration portion of the proposed land acquisition would be financed through a combination of internally generated funds and bank borrowings, of which the breakdown had yet to be determined, Magna Prima said.

The said land was located at the north-west intersection of Federal Highway, Expressway Lingkaran Tengah (ELITE) Highway and Guthrie Corridor Expressway, it said in a statement to Bursa Malaysia.

“Magna Ecocity will be responsible to undertake the overall construction and completion of the proposed development of the property. Currently the property is vacant,” it said.

Magna Prima is proposing to develop the land into a mixed residential and commercial project, comprising 180 units of 3-storey shop offices and 1,620 residential apartments.

“The gross development value of the proposed development is estimated at RM832.67mil and the total development cost is estimated to be RM624.83mil with an expected gross profit of RM207.84mil. The proposed development is expected to commence in 2013 and is estimated to be completed by 2016,” it said.

The proposed land acquisition is subject to approval and barring any unforeseen circumstances, the proposed acquisition is expected to be completed within the fourth quarter of 2012, it said.

By The Star

Magna Prima buys 8ha site in Shah Alam

KUALA LUMPUR: Magna Prima Bhd, via its wholly-owned unit Magna Ecocity Sdn Bhd, plans to buy a 8ha leasehold land in Shah Alam for RM100 million.

The purchase will be settled via cash (RM70 million) and issuance of 1.11 million Magna Ecocity shares.

By Business Times

Karambunai to dispose land worth RM44.9mil in Sabah

KUALA LUMPUR: Karambunai Corp Bhd is selling several land parcels measuring about 94 acres in Bandar Sierra, Kota Kinabalu for RM44.9mil.

According to the company, it expected to record gain of disposal of RM22.8mil as the net book value of the plots were at RM22.1mil.

Karambunai said it had signed sale and purchase agreements to sell 33.11 and 3.27 acres of leasehold land in Bandar Sierra to Sinkong Construction Sdn Bhd for RM15.86mil and RM498,769 respectively.

The company also said it was selling 27.01 and 29.95 acres of leasehold land in Bandar Sierra to Yu Sin Kong for RM12.94mil and RM15.65mil respectively.

“The proposed disposals of these non-core assets are part of the group's streamlining exercise,” Karambunai said.

The group is primarily involved in resorts operations and development in the Karambunai Peninsular, Kota Kinabalu, Sabah.

The proceeds from the disposals would be used to repay bank borrowing and fund the group's working capital requirement.

Yu is a Malaysian citizen, residing in Kota Kinabalu.

Sinkong Construction Sdn Bhd was incorporated in Malaysia as a private limited principal activity in general civil engineering, building construction and transportation.

By The Star

Pantai Plaza rebranded as Bangsar Trade Centre to house wholesale mall

Close inspection: Ramli (left) and Nong Chik checking out the BTC model after the signing ceremony.

PLANS to revive the mostly vacant Pantai Plaza are expected to commence in August and to be completed in stages.

Located along the Federal Highway, the plaza, renamed as Bangsar Trade Centre (BTC) will have a wholesale centre for food and beverage and hospitality industry.

Malaysia Building Society Bhd (MBSB) signed a RM120mil debt settlement agreement with Twin Pavilion Development Sdn Bhd to revive Pantai Plaza.

The agreement will also settle the debts of the plaza’s previous owner, Atlas Corporation Sdn Bhd.

Twin Pavilion Development chairman Tan Sri Ramli Ngah Talib said plans for the plaza included a corporate office tower, convention and exhibition centre, strata office suites and a hotel.

“We estimate 10,000 visitors daily with the potential to increase this figure exponentially when the surrounding commercial properties such as KL Eco City come into full occupancy,” he said at the signing ceremony, adding that the project has a gross development value of RM850mil.

Ramli added that each component in BTC will support the wholesale centre where manufacturers, suppliers, knowledge and financial providers are brought together.

Twin Pavilion Development chief executive officer Lee Seng Khoon said they would be refurbishing the plaza as well as some construction work.

“The existing podium with a space of 400,000 sq ft will be refurbished to house the wholesale centre where suppliers will be able to connect with buyers,” he said.

Lee added that they would be constructing towers, providing an additional 1mil sq ft of floor space.

“After the project’s completion, we will still be very much involved in this area as we will be retaining a majority of the mall and office space,” he said.

MBSB chairman Tan Sri Abdul Halim Ali who was also present at the event, said the agreement would also see MBSB extending end-financing assistance totalling RM120mil.

“We hope that BTC will become a new landmark that Kuala Lumpur can be proud of,” he added.

Federal Territories and Urban Wellbeing minister Datuk Raja Nong Chik Raja Zainal Abidin had witnessed the signing and launched the project.

He said the continuous urban renewal of the city was a necessity.

“Renewal can provide a city the opportunity to reclaim quality urban spaces.

“However, it does not mean merely putting cosmetic improvements into ageing buildings but to create sustainable urban development through innovation that adds value to the surrounding community,” he said.

By The Star

Programme now offered to properties nationwide with a RM20mil allocation

JOHOR BARU: The 1Malaysia Maintenance Fund (TP 1Malaysia), set up to help residents of private low- and medium-cost flats in Kuala Lumpur, will now be offered to high-rise properties nationwide.

Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin said a RM20mil allocation would be utilised for the programme to go nationwide.

“So far, we have received 43 such projects nationwide with six applications from Johor alone,” he said, adding that since the programme was launched two years ago, 12 projects worth RM5.3mil had been completed in Kuala Lumpur.

The fund is set up to help pay for repairs such as faulty elevators, new coat of paint for exterior walls, roof leaks and rewiring works.

Speaking to reporters after launching a briefing on the programme here yesterday, Raja Nong Chik said his ministry would carry out the maintenance works for private buildings while the Housing and Local Government Ministry would take care of public housing needs.

To qualify, Raja Nong Chik said the management body, committee or even a residents association could submit their requests for the grants.

“The process takes about seven to eight months,” he said. “The purchase price of the property must also be RM80,000 and below,” he said.

Raja Nong Chik said in Kuala Lumpur, about 25% of flat dwellers had failed to pay their monthly maintenance fees of RM60.

State Local Government, Housing, Arts, Culture and Heritage Committee chairman Datuk Ahmad Zahri Jamil said the state government had requested for funds for six projects with four in Johor Baru and one each in Kota Tinggi and Kluang.

He said such programmes helped to spruce up an area and allowed the price of the property to appreciate because of improved surroundings.

By The Star

Magna Prima plans RM832m mixed property project in Shah Alam

KUALA LUMPUR: Magna Prima Bhd's unit is acquiring 20 acres of land in Bandar Shah Alam for RM100mil for a proposed mixed residential and commercial project with a total gross development value (GDV) of RM832mil.

It said on Tuesday that Magna Ecocity Sdn Bhd (MESB) had signed a conditional sale and purchase agreement with PCM Bina Sdn to purchase the land.

MESB would pay RM70mil to PCM and settle the outstanding RM30mil via the issuance of 1.114 million new shares or at about RM26.92 per MESB Share.

Magna Prima said MESB would undertake the overall development of a mixed residential and commercial project, comprising 180 three-storey shop offices and 1,620 residential apartments.

"The gross development value of the proposed development is estimated at RM832.67mil and the total development cost is estimated to be RM624.83mil with an expected gross profit of RM207.84mil. The proposed development is expected to commence in 2013 and is estimated to be completed by 2016," it said.

By The Star

SP Setia named most trusted developer

KUALA LUMPUR: SP Setia has been named for the second time running as the developer Malaysians trust the most in the Reader’s Digest Asia Trusted Brands 2012 study.

In a statement today, the company said it took home the Gold Trusted Brand Award in the Property Development category at the gala awards dinner on May 29.

The SP Setia brand has grown regionally with the developer’s first international foray to Vietnam in 2007 when it joined forces with the country’s top state-owned conglomerate Becamex IDC Corp to develop EcoLakes at the MyPhuoc Industrial Park.

The developer’s regional reach now includes Melbourne, Australia, and Singapore.

The Reader’s Digest Study, now in its 14th year is carried out in eight markets across Asia (China, Malaysia, Hong Kong, India, the Philippines, Singapore, Taiwan, and Thailand) to determine the brands most trusted by consumers in 43 different product and service categories.

The study is based on responses to questionnaires distributed via Reader’s Digest copies as well as telephone interviews of randomly selected, upscale consumers, carried out by Ipsos, one of the world’s leading custom research firms.

By Bernama

Karambunai to record RM22.8m gains from KK land sale

KUALA LUMPUR: Karambunai Corp Bhd is expected to record about RM22.81mil in net gains from the sale of several pieces of land measuring about 94 acres in Bandar Sierra, Kota Kinabalu.

It said on Tuesday the net book value was RM22.15mil while the sale consideration was RM44.96mil.

The properties were acquired in March 1997 with an original investment cost of RM19.83mil, including incidental costs incurred.

Karambunai said it had signed sale and purchase agreements to sell 33.11 acres of leasehold land in Bandar Sierra to Sinkong Construction Sdn Bhd for RM15.86mil and another 3.27 acres of leasehold land for RM498,769.

The company also said it was selling 27.01 acres of leasehold land in Bandar Sierra to Yu Sin Kong for RM12.94mil and another 29.95 acres of leasehold land for RM15.65mil.

"Karambunai said the proposed disposals were part of Karambunai group's streamlining exercise by disposing of non-core assets. KCB Group is primarily involved in resorts operations and development in the Karambunai Peninsular, Kota Kinabalu, Sabah.

The proceeds from the disposals would be used to repay bank borrowing and fund the group's working capital requirement.

By The Star

SP Setia joins Sime Darby in Battersea bid

Sime Darby Bhd said it joined Malaysian developer SP Setia Bhd’s bid for London’s Battersea Power Station, Europe’s largest brick building.

“The consortium is positive that its plan for a mixed sustainable development will be well received,” Kuala Lumpur- based Sime Darby said in an e-mailed statement today.

The derelict 38-acre (15-hectare) site on the south bank of the River Thames was put on sale in February after its owners failed to pay lenders owed more than 500 million pounds ($770 million). At least 10 offers were made to buy the site, including one from Russian billionaire Roman Abramovich’s Chelsea Football Club Ltd., a person familiar with the matter said last month.

SP Setia is one of three remaining bidders for the landmark power station, Chief Executive Officer Liew Kee Sin said May 29. The defunct station, featured on the cover of the 1977 Pink Floyd album “Animals,” is about 2.2 miles (3.5 kilometers) from the Houses of Parliament and has been vacant for almost three decades.

Sime Darby is the country’s largest publicly quoted plantations group, while SP Setia is the Southeast Asian nation’s biggest listed property developer by sales.

The Employees Provident Fund, Malaysia’s biggest pension fund, has been approached to join the bid, though hasn’t made a commitment, Nik Affendi Jaafar, general manager for public relations said by phone today.

Planning permission was granted to Real Estate Opportunities Plc, controlled by Irish developer Treasury Holdings Ltd., last year for a 5.5 billion-pound redevelopment of the station. SP Setia tried to buy the debt related to the power station in November for 262 million pounds and the offer was rejected.

By Bloomberg

Positive on Glomac land buy

GLOMAC has entered into a sale and purchase agreement with Lee Chin Cheng Dengkil Oil Palm Plantations Sdn Bhd, to purchase a piece of agricultural land in Sepang, Selangor, measuring 191.75 acres, for RM66.8mil or RM8 per sq ft (psf).

The purchase will be financed via internally generated funds and borrowings.

Glomac intends to develop a mix residential development on the land.

Given the land size of about 200 acres, we believe this development is likely to replicate its existing townships like Bandar Saujana Utama (1,070 acres) in Sungai Buloh and Saujana Rawang (345 acres). The development will provide affordable housing.

Assuming land efficiency ratio is of 70% and there are 15 units terrace houses per acre as well as an average selling price of RM350,000 per unit, we estimate the township to potentially yield a gross development value (GDV) of RM700mil.

There are no similar land deals transacted within the area recently for comparison.

Referring to iProperty.com, the acquisition price at RM8 psf appeared to be on the high side if we compare it with the current asking prices of RM4 to RM9 psf for agricultural land in Sepang.

Nevertheless, if we compare the total land cost of RM66.8mil against the total estimated GDV of RM700mil, the land cost would account for 9.5% of total estimated GDV, which we deem is fair.

Glomac's balance sheet is healthy and with a net cash of RM31mil as at January, it should provide financial flexibility for the acquisition. Hence, we do not expect the land acquisition to reduce the group's ability to payout dividend in the future.

Given the rising property prices and land scarcity in first-tier locations in the Klang Valley, we expect property demand to be decentralised from first-tier locations to areas like Cyberjaya, Kajang, Puchong and Seri Kembangan.

As such, we are positive on Glomac's move to expand its landbank in Sepang. In 2012, the group has made two land purchases with estimated GDV replenishment of RM1.5bil.

There is no change to our financial year 2012 and 2013 earnings projections. However, we raise our financial year 2014 earnings by 2.9% as we expect the progress billing from this project to begin then.

Given the change in future earnings and cashflow projections, we raise our discounted free cashflow to equity valuation higher to RM1.10 per share from RM1.08 per share previously, based on an unchanged discount rate of 16%.

By The Star

KLCC Prop jumps on Kenanga upgrade

KLCC Property Holdings Bhd, owner of Kuala Lumpur’s Petronas Twin Towers, gained 5.1 per cent to RM4.09.

The stock, which headed for a record close, was upgraded to outperform from market perform at K&N Kenanga Holdings Bhd.

An outperform means the stock’s total return may exceed 10 per cent over 12 months, according to the report.

The share price estimate was raised to RM4.60 from RM3.50, it said.

By Bloomberg

Mutiara Burau Bay Resort to stop ops?

HOTEL DEVELOPMENT: New owners said to be planning four- and five-star resorts on existing site and adjoining plot of land

The three-star Mutiara Burau Bay Resort (MBBR) in Langkawi is said to be closing down, as part of efforts by its new owners to build a new resort in its place.

Business Times has learnt that the 150-room resort, which commands a stunning beachfront, is expected to cease operations by the end of this year.

This is following a reported sale by its old owners the Langkawi Development Authority (LADA) to Langkawi Tradewinds Corp Bhd (TCB), a company controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary.

It is also learnt that two resorts - one four-star and another five-star - will be constructed on the land where MBBR is sited, along with an adjoining plot of land.

LADA chief executive officer Tan Sri Khalid Ramli did not respond to emailed questions from Business Times on this development.

TCB has been operating and managing the resort for LADA.

On March 12, TCB announced that its indirect wholly-owned subsidiary, Benua Mahsuri Sdn Bhd (BMSB), had entered into a lease agreement with LADA for a cash consideration of RM34.7 million.

The lease agreement stated that over 14 hectares of Malay reserved land (also referred to as leasehold land) located in Mukim Padang Matsirat, Langkawi, will be leased out by LADA for 81 years from January 2013 to 2093.

TCB stated on its website that the lease agreement is subject to BMSB obtaining declaration from the relevant state authority and that the leasehold land would be handed over to BMSB on January 1 2013 and the company is set to start constructing a new hotel within three years from the date of the lease agreement.

Without stating the costs involved, TCB stated that construction costs will be in line with acceptable industry standards. The construction of the hotel will be funded from a combination of internally generated funds and external borrowings.

TCB now owns luxury hotel The Danna and adjoining Perdana Quay development where the Telaga Harbour marina is located.

Sources say that the empty plot of land between The Danna and MBBR is likely to see the construction of one of the two new resorts being planned by TCB.

By Business Times