'Malaysia has 1st class infrastructure, 3rd class salaries'

After 50 years of development, we can say that we have one of the world's best infrastructure in terms of roads, airports, ports and even the Multimedia Super Corridor.

We only realise this when we travel overseas or to neighbouring countries or when we get visitors from the United States or Europe.

As visitors leave the Kuala Lumpur International Airport, travel on the highway, visit KLCC or the surrounding shopping complexes, they can immediately access the Internet. They all say we are better than the developed countries.

The government has done a lot in that we have a roof for every head, a desk for every school-going child, a bed for the sick and even jobs for 2.5 million foreign workers.

Lately, the government has been taking strides to improve the salaries of the government servants while businessmen have had to increase the cost of food items at groceries or restaurants.

Whilst we have first-class infrastructure, we still have Third World salaries.

While the economy has grown in the last 50 years - at six to eight per cent annually, salaries have not matched these types of growth. As such, most of the private sector companies still pay Third World salaries.

We cannot afford to measure ourselves against the McDonald's index in terms of how many people can afford to buy McDs. We can't even say we can use the Astro index in terms of how many people can afford an Astro at home, which I believe is less than 10 per cent.

It becomes worse when we say how many per cent of our population can afford to buy computers for their homes.

We can ask for first-class infrastructure but can the population afford to use it?

The key question is: Can the population afford handphones, highway tolls, computers and high taxes on cars?

As such, to keep astride with our economic growth and our super infrastructures, private sector salaries need to be increased.

It is sad that after 50 years, we still don't have a minimum salary structure and we bring in foreign workers whom we are happy to pay below RM600.

On top of this, we have 950,000 Malaysians working overseas, including 150,000 professionals, because the salary scales abroad are better.

Maybe we have to compare not only taxation in other countries, and ask the government to reduce income tax and corporate tax.

The government has done well to increase the salaries of civil servants by 35 per cent.

The private sector complains bitterly that petrol prices have gone up by 100 per cent, steel prices up by 100 per cent and food prices by 50 per cent. However, they try to contain salary increases between six and 10 per cent.

We need to have a minimum wage urgently because even at RM600, who can afford to live in Malaysia?

Just look at cost of rentals for homes and the cost of a loaf of bread for breakfast, lunch and dinner. This is even before we add the cost of transportation, amenities at home and the cost of educating our children.

In the last 50 years, salaries in Singapore have gone up by 7.5 times that of Malaysia.

Fifty years ago, our salaries and currencies were the same. Today, salaries are three times higher and the currency is 2.5 times higher across the Causeway.

Comparatively, the Hong Kong people are earning more than the Singaporeans and the Japanese are earning more than the Hong Kong people.

The government is responsible for first class infrastructure and as well as the hefty 35 per cent increase in government salaries.

Who is responsible for third-class salaries in Malaysia? Who is driving away the more than a million Malaysians who work overseas? Don't we need that human capital at home?

By Bernama

Institutional buyers to drive office property market

PETALING JAYA: The office property market will continue to hold out well with strong interest from local and foreign institutional buyers, industry players said.

Knight Frank Ooi & Zaharin Sdn Bhd managing director Eric Ooi said in the past year, the capital values of Grade A office space had appreciated by between 20% and 30% to RM1,000-RM1,300 per sq ft. Rentals grew by 20% to 30% as well to RM7.50-RM8 per sq ft.

Meanwhile, super prime office space in the Petronas Twin Towers commands rentals of between RM10 and RM12 per sq ft.

According to Ooi, institutional buyers continue to see good upside potential in capital values and rentals of quality office buildings in Kuala Lumpur and this bodes well for the market going forward.

An analyst with a local brokerage said a lot of foreign and local institutional funds wanted to hedge against inflation and were on the lookout for strategic acquisition of prime office buildings with high yield potential.

“Property investment, especially in commercial properties, is still considered the better option for high yield potential compared with investment in the lacklustre equity market,” he said.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said with the recent budget incentive for real estate investment trust (REIT) in the form of lower withholding tax for local and foreign investors, REIT managers would be looking at more ingenious ways to enhance their asset values by making more yield accretive purchases.

The tax rate on REIT dividend received by foreign institutional investors will be slashed to 10% from 20% while for individual investors (both foreign and local), the withholding tax will be reduced to 10% from 15%.

LaBrooy said the office market, which had made substantial gains in capital values and rentals in the past 12 months, continued to offer good upside potential.

“There is no overbuilt situation for Grade A office space in the city centre and the number of transactions at new record prices underscores the positive market sentiment,” he added.

In its latest Real Estate Highlights, Knight Frank Research said the first half of this year saw several transactions on “forward purchase” basis that recorded capital values surpassing RM1,000 per sq ft.

Kuwait Finance House (KFH) entered into an agreement with YNH Property Bhd for the purchase of half of Menara YNH along Jalan Sultan Ismail for RM920mil or about RM1,230 per sq ft.

KFH was also involved in another forward purchase agreement to buy Glomac Tower for RM576.85mil, or RM1,120 per sq ft.

The latest office building in the city to be transacted is Menara Citibank in Jalan Ampang, Kuala Lumpur. The buyer, IOI Corp Bhd, is said to have proposed a price of RM573mil or RM970 per sq ft for the building.

Another building that is believed to be up for sale is Menara Standard Chartered on Jalan Sultan Ismail, which has a price tag of close to RM300mil. The front-runner to bid for the building, which is owned by Government of Singapore Investment Corp Real Estate, is said to be ING Real Estate.

By The Star (by Angie Ng)

IJM Land in talks for more projects in China

From left: IJM Land chairman Datuk Krishnan Tan, IJM Corp Bhd deputy CEO and MD Teh Kean Ming, Datuk Soam Heng Choon and Minister of Housing and Local Government Datuk Seri Ong Ka Chuan at the launch of IJM Land’s new corporate identity

KUALA LUMPUR: IJM Land Bhd is in talks with various parties to venture into mixed property developments in China’s second-tier cities.

Managing director Datuk Soam Heng Choon said these new projects were likely to be commercial and residential developments and they could be done through joint ventures with local partners in China.

“IJM Land is always in talks with parties either locally or abroad for joint property projects.

“We haven’t set any time frame for the new ventures in China,” he told reporters after the launch of IJM Land’s new corporate identity yesterday.

“Our people are there and we will continue to look for new business in China and replicate what we have done in Malaysia, such as niche and township developments,” he added.

IJM Land expects its China ventures to contribute to profits in the next three to four years.

The company now has a presence in Changchun where it is jointly developing a RM500mil mixed property project. Soam said it expected to launch the project next year.

He said China represented its second overseas venture after Singapore and IJM Land also planned to tap other emerging markets like Vietnam.

Soam said the company was also looking at en bloc sales for its upcoming commercial projects in the Klang Valley and elsewhere.

“We are talking to fund managers operating out of Hong Kong and Singapore and these could be European or American funds,” he said.

Asked whether IJM Land was on track to launch 28 projects in the financial year ended March 31, 2009, he said it was reviewing some of the projects and might put some on hold.

He said upcoming projects might have higher selling prices which were adjusted according to the construction costs.

Soam said margins were mainly squeezed for lower-end products and there was still demand in the medium to medium-high market.

The unveiling of IJM Land’s new corporate identity and logo yesterday signalled the completion of the rationalisation exercise involving RB Land Bhd and IJM Properties Sdn Bhd.

It also denoted the company’s emergence as a major player in the Malaysian property scene.

The new entity brings together RB Land’s proficiency in township development and IJM’s expertise in high-rise condominiums, niche developments and commercial buildings.

By The Star

IJM Corp may place out IJM Land shares

SUBANG JAYA: IJM Corporation Bhd may place out IJM Land Bhd shares that it owns to institutional investors, as part of its efforts to unlock liquidity at the group level.

IJM Corp managing director Datuk Krishnan Tan said ideally, the group would want to own a 60% stake in IJM Land, but it would only consider placing out the shares once market conditions had improved.

Speaking to reporters after launching IJM Land’s new corporate identity here yesterday, he said: “At some point, we will have to do a share placement, preferably to institutional investors, as IJM Corp is currently holding more than 75% stake in IJM Land.”

He said IJM Corp preferred to place the shares to institutional investors as IJM Corp itself had many institutional investors on its shareholding list. Topping the list is the Employees Provident Fund (EPF), which owns about 20.5% of IJM Corp.

Nevertheless, Krishnan said IJM Corp was still comfortable with holding the bulk of shares in IJM Land and would not place them out immediately.

IJM Land was a creation from a merger between RB Land Holdings Bhd and IJM Properties Sdn Bhd, which was completed a week ago.

Krishnan said IJM Land would focus on developing its more than 4,046 hectares of landbank in the country, instead of aggressively pursuing overseas markets given that IJM Land was still early in the game.

“We have been lesser known as a property player but with the merger completed and a huge landbank now, IJM will be put to the forefront as a serious developer, just as we are as a construction player,” he said.

Apart from developing its huge landbank in the country, IJM Land has a 50% joint-venture to develop a RM500 million-mixed property development project in Changchun, China.

Its managing director Datuk Soam Heng Choon said IJM Land would eye expansion opportunities in other locations in China, particularly second-tiered cities and said the developer was “always in talks” with local and overseas investors to get more businesses.

“We have various options, and we hope to replicate our success in China as we have experience in developing niche property development projects and townships,” he said, adding that expansion in China would be IJM Land’s direction in the next three to five years.

Soam said IJM Land had not received any overseas contributions to its revenue, but would see revenue streaming in from its development project in China within the next three to four years.

On the local front, he said currently IJM Land’s plates were full, as it had more than 60 on-going projects and planned to launch another 28 new projects in FY09.

He said given the tougher operating environment and higher building materials costs, the developer was constantly reviewing its plans and might hold back some of the projects planned.

“So far, we have not faced any significant costs overruns, but our low-to-medium end housing projects might be affected from increased building costs,” he said.

However, Soam said although margins from its low-to-medium housing products might be squeezed mainly due to rising building costs, they would be mitigated by commendable sales of medium-to-high end and commercial products that gave better margins.

By The EDGE Malaysia (by Yong Yen Nie)

Lehman plans asset sales, posts US$3.93b loss

NEW YORK: Lehman Brothers Holdings Inc said it plans to sell a majority stake in its investment management division and spin off commercial real-estate assets as the struggling US investment bank fights to raise capital.

Wall Street's fourth-largest investment bank also reported a much-larger-than-expected third-quarter loss of US$3.93 billion (US$1 = RM3.46), hurt by US$5.6 billion of net writedowns.

"This is an extraordinary time for our industry and one of the toughest periods in the firm's history," chief executive Richard Fuld said in a statement.

Lehman shares erased early gains that pushed them above US$10. The shares, which fell 45 per cent on Tuesday, were down 49 cents at US$7.30 in pre-market trading as the company failed to announce a deal to sell its asset management business.

"What you are dealing with is a confidence issue," said Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, New Jersey, "There is still an underlying level of uncertainty as to what Lehman's future is."

Lehman said it has reduced exposure to toxic assets, including cutting its residential mortgage exposure by nearly half, and slashed its annual dividend to five cents per share from 68 cents.

Lehman said it intends to sell about 55 per cent of a portion of its investment management unit, including Neuberger Berman asset management and the private equity and wealth management businesses. It said it is in "advanced discussions with a number of potential partners" for such a sale.

The company also said it intends to spin off US$25 billion to US$30 billion of its commercial real-estate assets into a separate, publicly-traded company.

Lehman said its third-quarter net loss applicable to common shareholders was US$4.09 billion, or US$5.92 per share. Net revenue was negative US$2.9 billion, reflecting the write-downs.

Analysts' average forecast was a loss of US$3.43 per share on revenue of US$88 million, according to Reuters Estimates.

Selling the investment management division is designed to boost the company's capital levels; spinning off commercial real-estate assets is meant to reduce the toxic investments that have reduced Lehman's market value by more than US$40 billion since February 2007.

Before yesterday, Lehman had already taken US$7 billion in credit-related writedowns and losses since the start of the global credit crisis.

By Reuters

Singapore group may sell tower to ING

Menara Standard Chartered likely to go for RM300M, sources say



DUTCH insurer ING has emerged as the front-runner to buy the Menara Standard Chartered on Jalan Sultan Ismail for almost RM300 million, sources said.

A decision and an announcement on the winner may be made as soon as next week, a source told Business Times.

It is believed that the Government of Singapore Investment Corp Real Estate (GIC RE) is selling the office building to ING Real Estate Investment Management.

While it could not be determined how much ING would be paying for the property, industry executives estimate it would be around RM900 per sq ft.

"Based on the recent Menara Citibank transaction of RM970 per sq ft, Menara Standard Chartered should go for about RM900 psf," one source said.

It was also reported that the owners were looking for a yield or return on investment of about six per cent.

Based on a nett lettable area of 321,000 sq ft, the building could be sold for around RM285 million.

ING said it could not comment on the matter immediately.

"The purchase of properties is an ongoing investment initiative that ING Malaysia conducts in the markets we operate in of which to date we have an estimated investment assets under management of RM10 billion," said Karen Yoong of ING Insurance Bhd's Branding & Corporate Communications division.

GIC RE did not respond to Business Times' query while calls to Rahim & Co's representative handling the deal went unanswered.

According to GIC RE's website, it bought Menara Shahzan Insas through its affiliate Reco City Sdn Bhd in November 2001 for RM135 million.

Built in the mid-1980s, Menara Shahzan Insas is a 42-storey office tower with a total gross floor area of 46,700 sq m.

The building was later renamed Menara Standard Chartered in July 2004 after Standard Chartered Bank relocated its corporate headquarters there.

The website also said the building required extensive renovation due to its age and condition at the time of acquisition.

Once renovation was completed, GIC RE repositioned Menara Standard Chartered as a premium office building, attracting class "A" office rentals and international tenants.

GIC RE is one of three business units under GIC, one of two of Singapore's investment arms. Temasek is the other arm that is more well-known among investors. Together, they manage Singapore's foreign reserves.

GIC RE's website states that its current assets in Malaysia include holdings in the Sunway Pyramid Mall, Sunway Hotels and Resorts and a stake in the City Square shopping mall in Johor Baru.

By New Straits Times (by Vasantha Ganesan)

YTL may open shopping malls in Singapore, London

SINGAPORE: YTL Corp, Malaysia's biggest builder, may open shopping malls in Singapore and London under its Starhill brand in the next 12 months, managing director Francis Yeoh said.

"London is actually pursuing us to do a Starhill," Yeoh told reporters in Singapore yesterday, referring to the company's luxury Starhill mall in Kuala Lumpur.



A recent decline in commercial rental rates has made the plan more viable, he said.

YTL's fourth-quarter profit dropped 36 per cent as income from its property and power businesses slowed, the company said on August 19. Demand for real estate has eased as Malaysia's economy grew in the second quarter at the slowest pace in a year.

YTL in April paid a record price of RM85 million for property of less than an acre in Kuala Lumpur, the Edge newspaper reported at the time, without saying where it obtained the information.

YTL also in November bought an apartment building in Singapore for a then-record S$435 million (RM1.05 billion), increasing its investment in a city where home prices had climbed to a 10-year high.

Gains in residential property prices have since eased in Singapore, rising 0.4 per cent last quarter, the slowest in four years.

By Bloomberg

YTL keen to launch Starhill brand in Singapore and London

SINGAPORE: After having successfully launched the Starhill brand in Dubai, YTL Corp Bhd wants to expand the concept to Singapore and London.

“We are being pursued by people from London. We also want to do a Starhill in Singapore and it can either be a greenfield or an existing property,” managing director Tan Sri Francis Yeoh said during the “The Luster of Luxury” forum at the Forbes Global CEO conference yesterday.

“Time is now a window for us and I can wait for 12 months to make a capital investment in Singapore,” he said.

YTL owns the Starhill brand concept. It first developed the concept in Kuala Lumpur and last April it launched the Starhill Gallery in Dubai.

Yeoh believes there is a booming market for luxury products and that “luxury should come to a person instead of the person going to luxury.” Malaysia will also be home to the “Forbes Asia Luxury Forum: The Art of Time” for the first time in Kuala Lumpur on Dec 5. It will examine the booming market for luxury timepieces in the region. A half day conference will also be held.

The event is held in conjunction with YTL’s “A Journey Through Time II” which kicks off from Dec 4 to 14 at the Starhill Gallery. It will be Asia’s largest watch and jewellery showcase. “YTL is an ideal partner for Forbes Asia in co-hosting this event given its expanding portfolio of luxury lifestyle resorts, luxury retail outlets such as the Starhill Gallery and other luxury-related projects,” Forbes vice chairman Christopher Forbes said.

By The Star

Next Malaysian property boom seen in 2-5 years

MALAYSIANS expect the country to experience its next property boom in two to five years, according to a survey conducted by property website, thinkproperty.my.

In a statement yesterday, thinkproperty.my said the survey, which received responses from almost 950 participants, showed a surprise strengthening of the people's perception of the Malaysian property market compared to last month, although overall confidence was still low.

“According to a survey, 43 per cent of the participants believe that the next property boom will be in 2-5 years, 20 per cent said within two years, 25 per cent thought it will happen in 5-10 years and 12 per cent more than 10 years,” it said.

Thinkproperty.my chief executive officer Asim Qureshi said the data from the survey were positive for Malaysia's property market.

“People perceive that the medium term for property in Malaysia is strong,” he said.

By Bernama

Cyberjaya office occupancy rate high

CYBERJAYA landowner Cyberview Sdn Bhd says that the average occupancy rate for offices in the MSC status area is at 94 per cent.

The demand for office space is so great that Cyberview will start work on SME Technopreneur Centre III a year ahead of schedule.

Cyberview had planned to start work on the third instalment of offices catered to small and medium enterprises in 2010.

Cyberview was set up by the government in 1996, with the Minister of Finance Inc owning 70 per cent and the remaining stakes held by different government agencies, which include the Multimedia Development Corporation (MDeC).

Between September 2007 and August 2008, the supply of office space in Cyberjaya had increased by another 1.05 million sq ft to 4.22 million sq ft.

Another additional 1.64 million sq ft of office space will be ready by the third quarter of 2009, bringing the total space for businesses in Cyberjaya to 5.86 million sq ft.

Cyberview managing director Redza Rafiq said interest in the intelligent city has also not waned, adding that MDeC is in talks with between five and six multinational corporations (MNCs) to set up base in the area. He did not elaborate.


MORE PROJECTS: MDeC is in talks with five to six multinational corporations to set up base in Cyberjaya, says Redza.

There are 474 companies located in Cyberjaya, 30 of which are MNCs.

Meanwhile, the master developer of Cyberjaya, Setia Haruman Sdn Bhd, is also upbeat about its housing projects in Cyberjaya.

Demand is now shifting to out-of-town buyers from just those working and living in Cyberjaya, said Setia Haruman chief operating officer Lao Chok Keang.

The Emkay group owns 75 per cent of Setia Haruman, which was appointed as master developer of Cyberjaya in 1998.

Setia Haruman has developed some 3,000 houses, of which 250 are high-end developments while the rest are medium-cost housing.

To date, some 750 medium-cost houses and about 200 high-end units have been sold. More medium-cost houses are expected to be built in the area to meet demand for homes within the RM200,000 to RM500,000 bracket.

By New Straits Times (by Presenna Nambiar)

China remains major real estate powerhouse

SINGAPORE: China will remain a major real estate powerhouse even after the Beijing Olympics and despite the backdrop of weaker property prices, according to Hang Lung Properties Ltd.

Chairman Ronnie Chan said the market had been growing very fast in recent years before the slowdown about eight months before the Olympics.

Hence, he said, a long-term players would have to devise ways to overcome the bear market.

“Property is a long gestation industry,’’ Chan said during a session on “Rolling the Dice on Real Estate,’’ at the Forbes Global CEO forum yesterday.

He said the biggest opportunity in China would include the large commercial and retail investments which could still bring in double-digit returns.

On the impact of the US credit crunch, he said there had yet to be a fallout on China and Hong Kong.

“Sooner or later, it (the impact) will reach here but, as long-term players, we are not perturbed.

“China is an opportunity of a lifetime and we are buying land for future projects.’’Hang Lung allocated US$5bil for projects in China and it had already nine projects under way, he said.

Apart from China, Vietnam also provided opportunities, although at a smaller scale, and that property prices had fallen 30% to 40% from their peak in 2007.

“It is like getting into China 10 years ago,’’ said VinaCapital group chief executive officer Don Lam. “For those who missed the first round, it could be time to enter (the Vietnamese market).

“True, there is a liquidity crunch, but for those who plan it right, it may take two to three years,’’ Lam said.

He added that inflation had no follow-through impact in Vietnam where 75% of the population is agriculture based.

VinaCapital is planning its second real estate investment trust of US$500mil, a follow-up from the successful US$800mil earlier.

By The Star

British home prices on downward spiral

LONDON: British house prices kept falling sharply in the three months to August even as the average number of home sales per surveyor hit a new low, a survey showed yesterday.

The Royal Institution of Chartered Surveyors (RICS) said its house price survey balance improved slightly to 81 in August from 83 but still showing a weak picture for the housing market, which is now slumping after a decade-long boom.

”A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery,” said RICS spokesman Jeremy Leaf.

Faced with a global credit crunch, mortgage lenders have tightened up the terms on which they make new loans, demanding as much as 25% of a property’s value as a deposit when before they would look for 5% or even provide as much as 120% of the value themselves.

The result has been a sharp fall in house prices and transactions drying up the effects of which are being felt right across the economy with construction and furniture retail companies particularly hard hit.

RICS said completed sales per surveyor stood at just 12.7, the lowest figure since the question was first included in the survey in 1978. Inventory levels on surveyors’ books also fell back.

As a result, the ratio of sales to the stock of unsold property an indicator of market slack fell to 15.4 from 16.9 in July.

The tentative improvement in sentiment seen in July’s survey have also proven to be short-lived, with a bigger balance of surveyors expecting sales to fall further.

By Reuters

The Pearl @ KLCC sold for RM550m

A KUWAIT Finance House (Malaysia) Bhd-led consortium has bought The Pearl @ KLCC at Jalan Stonor, Kuala Lumpur, for around RM550 million.

The Pearl @ KLCC is a 41-storey luxurious high-end condominium block, offering 175 units ranging from 3,000 sq ft to two 20,000 sq ft penthouses with stunning architectural design.

Each floor is to house six units with private lifts.

The consortium of four or five companies, known as Flora Bliss Development Sdn Bhd, acquired it from project developer Cera-mic Home Tiles (CHT) Sdn Bhd, a firm believed to be closely linked to main board developer Malton Bhd.

The purchase of the property is funded by KFH, the second major asset acquisition in the prime KLCC area financed by the banker.

Last December, KFH financed the purchase of the 40-storey Glomac Tower nearby Petronas Twin Towers by local Bumiputera firm Prestige Scale Sdn Bhd for RM1,160 per sq ft (psf), or RM577 million.

A source told Business Times Flora Bliss was offered a discount for The Pearl @ KLCC, which sold at less than RM1,000 psf.

Market prices for condominiums in the neighbourhood are doing at more than RM1,200 psf, while that of properties closer to the Petronas Twin Towers has soared above RM2,000 psf.
The Pearl @ KLCC will be constructed on 0.72ha of freehold land by China-listed Beijing Urban Constructive Group Ltd, hired by CHT.

Main structural works will commence in November and the building is expected to be ready by the end of 2010. The construction cost is estimated at RM280 million.

CHT has appointed Pintaras Geotechnics Sdn Bhd, a unit of Pintaras Jaya Bhd, for sub-structure foundation works due for completion next month.

It also appointed Malton's wholly-owned unit, Domain Resources Sdn Bhd, as project development manager.

"Flora Bliss may undertake a second sale of the building later or sell units to individual buyers when price escalates," a source said.

By New Straits Times (by Sharen Kaur)

Ascott may float Malaysian assets

The Ascott Group, the hospitality arm of CapitaLand Ltd, may float its assets in Malaysia into Ascott Residence Trust (ART), a real estate investment trust (REIT) listed in Singapore.

It currently owns and/or manages three serviced residences in Malaysia - Ascott Kuala Lumpur; Somerset Seri Bukit Ceylon, Kuala Lumpur; and Somerset Gateway, Kuching, Sarawak.

By end-2010, it will manage and own Somerset Ampang, which is being built for RM112.5 million.

Under its corporate leasing division, it manages 68 apartment units in two properties - Seri Bukit Ceylon Residence, Kuala Lumpur and Marc Service Suites, Kuala Lumpur.

It will manage 151 units of Tiffini by i-Zen in Mont' Kiara, Kuala Lumpur, developed by Ireka Group and due for completion by the first half of 2010.

Ascott International Management (2001) Pte Ltd senior vice president (operations) Alfred Ong said it is experiencing strong and stable performance at the properties.

"They have been performing well with occupancy of 80 to 90 per cent over the last two years and are suitable to be injected into the trust," Ong told Business Times in Singapore recently.

Launched in 2006, ART has a combined portfolio of S$1.5 billion (RM3.6 billion) as at June 30, 2008, comprising 37 serviced residences and rental housing properties across seven countries.

It is the first Pan-Asian serviced residence REIT set up to invest primarily in income-producing real estate like serviced residences and rental housing.

Ong said the group is on constant look-out for more opportunities in Malaysia to grow its presence.

"Our business in Malaysia is strong. Our occupancy and rates for our properties are above market, which gives us reasons to want to size up the locations and the properties," he said.

Ong said the group, which has invested RM193.7 million in Malaysia since 1998, is keen to explore potential in Penang, in Johor's Iskandar Region and in Petaling Jaya, Selangor.

"We are looking for more management contracts to manage residences for owners. We are negotiating for a few contracts in Kuala Lumpur and hope to seal a deal or two by the end of this year," he said.

Ong said the group is also looking for equity participation, which may involve land acquisition. It will work with local joint ventures or farm out building projects, he added.

By New Straits Times (by Sharen Kaur)

Ascott aims to manage more properties in Malaysia

The Ascott Group, the hospitality arm of CapitaLand Ltd, controlled by Singapore's Temasek Holdings, aims to manage more properties in Malaysia.

It now manages 68 apartment units at Seri Bukit Ceylon Residence and Marc Service Suites in Kuala Lumpur.

It will manage 151 units of Tiffani by i-Zen in Mont' Kiara, Kuala Lumpur, developed by Ireka Group, due for completion by the first half of 2010.

"We have been invited by developers who want us to manage their properties under our existing brands and we are looking into it," Ascott International Management (2001) Pte Ltd (AIM) senior vice president (operations) Alfred Ong told Business Times.

The Ascott Group, the largest global serviced residence operator in Asia-Pacific, Europe and the Gulf region, owns and manages 128 operational properties with 33 more coming up, under three brands - Ascott, Somerset and Citadines.

In Malaysia, it owns and/or manages Ascott Kuala Lumpur; Somerset Seri Bukit Ceylon, Kuala Lumpur; Somerset Gateway, Kuching, Sarawak; and Somerset Ampang, Kuala Lumpur, which will open by end-2010.

The brands Ascott and Somerset were introduced in Malaysia in 1998 and 2001 respectively, each aimed at high-end business travellers and expatriate families.

Ong said it is exploring ways to bring in Citadines, a more trendy brand popular in Europe, targeted at young and independent travellers.

In addition, Ong said, there may be "some improvement" in the group's net profit and revenue in its current financial year ending December 31, 2008, driven by higher portfolio gains.

Last year, it achieved a net profit of S$177.3 million (RM427 million) and revenue of S$435.3 million (RM1.1 billion), up by eight per cent and seven per cent respectively over 2006.

Ong said most of its properties offer an average 65 per cent gross operating profit, with some going as high as 80 per cent, he said.

By New Straits Times (by Sharen Kaur)

Malton’s strategy to weather slowdown

MALTON Bhd sees the potential to build up its exposure in the commercial and high-end residential property sector to weather the slowdown in the medium-end residential property market.

“The challenging market conditions, fuelled by rising construction costs and petrol prices, have resulted in a slower take up of property. Developers with ongoing projects have to be ingenious to ride out the tough times,” director of sales and marketing Tracey Lai told StarBiz.

Tracey Lai explaining the development plan for The Grove.

She said while a slowdown has crept into the residential market, there was still room for more commercial projects, especially Grade A offices in Petaling Jaya.

Being an integrated developer helps as Malton’s construction division undertakes most of the company’s construction needs. This act as a buffer against any need for cost renegotiations with contractors or stalling of projects.

“Our target market is very niche and provide some form of cushion against any excessive margin erosion caused by the rising construction costs,” Lai said.

She said in keeping to the company’s market-driven and buyer-centric product policies, its line up of projects would be targeting at the high-end market.

Malton’s strategy is to focus on product differentiation and the right branding for a broad spectrum of upmarket lifestyle products, Lai added.

“We believe high-end property products will continue to enjoy good take up as high net worth investors are quite insulated from the prevailing high food and fuel prices. Many are looking to invest in properties to hedge against rising inflation.

“While there are still uncertainties in the market, we believe an equilibrium will be reached in due course and the market will become buoyant again,” Lai said.

She said despite the prevailing caution among potential buyers, the property market would still be a good investment for investors, given the good rental yields and capital appreciation to be made.

“Developments at popular and prime locations will continue to attract buyers as decent yields could be reaped.

“Compared with many other countries in the region, Malaysia’s real estate products are still very much under priced and even with the full impact of cost increases, prices are relatively lower.

High-end properties in the country are considerably more affordable compared with in other countries,” she added.

Besides the quality workmanship and finishes, initiatives such as Malaysia My Second Home programme have also helped to attract foreigners to the country’s shores.

Liberalising guidelines such as the exemption of real property gains tax and relaxation of foreign ownership restrictions have also fuelled foreign buyers’ confidence in the market.

“There is still room to further raise the attractiveness of local real estate to foreign investors. This will largely depend on the Government’s efforts to ensure a healthy and stable economy and further liberalise foreign ownership guidelines.

“In the current challenging times, there is a need to be market savvy and more buyer specific. We have to work a lot harder to connect with and reach out to the buyers that include South Koreans, Chinese, Middle Easterners and Russians,” Lai said.

Malton has a number of interesting high-end residential and commercial projects that have a total gross development value (GDV) of RM2.1bil.


An artist's impression of a waterscape Villa at The Grove @ SS23 to be developed by Malton in Petaling Jaya.

One of its latest lifestyle offerings is the high-end gated development, The Grove in SS23, Petaling Jaya. The project on a 4.8 acre freehold land comprises only 35 exclusive three-storey bungalows and link bungalows priced from RM3mil to RM3.8mil each.

The Grove, with GDV of RM119mil, is planned for launch in October.

The designer homes, with six plus one en-suite bedrooms with a feature lift, boasts of a tropical garden living experience complete with water features.

The other upmarket residential projects include The Pearl @ KLCC and Amaya Saujana @ Saujana Subang. The Pearl @ KLCC comprises a high-end condominium project along Jalan Stonor and within the KLCC enclave.

The 41-storey block of 177 luxurious condominiums are spacious residences from 3,000 to 20,000 sq ft, including seven duplexes and three penthouses.

The 13-storey residential suite block of Amaya Saujana offers 318 residences priced from RM605,000 to RM918,000.

An artist's impression of the V-Square commercial project.

Malton’s flagship commercial development is V-Square (VSQ) – an integrated commercial project comprising two blocks of corporate tower, a block of corporate business suites, and two blocks of corporate offices, with retail space on the ground floors.

The project on a 2.6-acre plot in Jalan Utara, Petaling Jaya, will have a GDV of RM207mil.

By The Star (by Angie Ng)

Delivery comes first for Serai Saujana

RESORT STYLE LIVING: Hamidon (right) and Yam engrossed in a discussion on the Serai Saujana project.

SERAI Saujana Development (Serai) Sdn Bhd is working on a luxury boutique project in Subang, Selangor, which it may replicate in Kuala Lumpur and Langkawi in two years.

It is developing its flagship Serai Saujana, a luxury RM320 million gated and guarded community on a 4.25ha site within the Saujana enclave.

Serai Saujana comprises two 15-storey blocks of condominium with 163 units dubbed The View, priced from RM500 per sq ft and 42 units of three-storey homes known as The Villa, averaging at RM850 per sq ft.

Chairman and controlling stakeholder Hamidon Abdullah said 65 per cent of the units have been snapped up in the last eight months even before the launch.

"It is true that we are profit-driven, but we believe in our product and will market it to sustain in time. We do not intend to accelerate on the sales. Our philosophy is to deliver first," he told Business Times during a preview of the show unit recently.

Hamidon said the project, which elevates the art of resort living into an exquisite masterpiece backed by style, substance and serenity, has attracted locals and buyers from Korea, the UK, Australia, Sweden and the Middle East.

The other stakeholders of Serai are Saujana Consolidated Bhd with 30 per cent interest and Sunrise Bhd's former managing director Datuk Michael Yam and his brother with 20 per cent share.

Hamidon is confident that Serai Saujana will sell due to its exclusive location, which is adjacent to The Saujana Kuala Lumpur, Saujana Golf and Country Club and two 18-hole golf courses.

The development at the last piece of prime residential freehold site started early this year and is due for completion by mid-2010.

The View, which come in six designs and layouts, has built-up sizes ranging from 1,817 to 3,271 sq ft while the duplex penthouses range from 4,526 to 6,108 sq ft.

The Villas, with resort style living, offer built-ups ranging from 5,200 sq ft to 6,000 sq ft boasting four spectacular designs - stand alone, linked, corner or intermediate units, each with a private elevator, pool and gazebo area.

As for expanding the "Serai Saujana" brand, Hamidon said future projects, which it is in no hurry to launch now, will improve in terms of design, functional space and creation of the environment.

"We want to deliver what we are saying we will deliver first. So the plan now is to focus on the existing development," Hamidon said.

By New Straits Times (by Sharen Kaur)

Pangkor Island Beach Resort sees flat growth

PANGKOR Island Beach Resort expects occupancy and growth in room rates to be flat this year and 2009, as promotional activities and access into the island remain the same.

The four-star resort, owned and operated by IGB Corp Bhd, achieved a 65 per cent occupancy and an average room rate (ARR) of RM210 last year.

"For 2008 and 2009, we expect occupancy to remain at 65 per cent. We should finish this year at an ARR of RM230 and 2009 by about 20 per cent more," general manager Jimmy S. H. Yeo said.

YEO: Introducing various packages to improve performance

Although a 20 per cent increase in ARR translates to RM276 per night, Yeo said this is to mostly account for the increased cost of operation.

Yeo said if the hotel raises rates to help increase revenue, tourists will simply opt for other destinations.

"People are very conscious and sensitive about costs and they have options. Low-cost carriers offer attractive fares to other regional destinations," he said.

The option of filling more rooms to improve revenue is also proving to be tough.

Yeo said that the number of Taiwanese guests, making a major component at the resort, is reduced by 40 per cent this year compared to last year as they chose to travel to different locations.

"As a result, the hotel is now working on introducing various packages to improve its performance," he said in Pangkor recently.

One such package recently introduced is the Fly & Stay Free at Pangkor Island Beach Resort. Flights on the 48-seater Dash 7 air-craft into Pangkor, managed by Berjaya Air, are five times a week except on Tuesdays and Thurs-days.

For example, a return air journey for two persons for a one-night stay is RM1,252 (RM496 per person for flight and RM260 per night based on best online rate) and RM856 nett for one-night twin sharing, including breakfast and free usage of non-motorised land and sea sports.

The package is valid until December 19.

Meanwhile, Yeo, who is also the chairman of MAH (Malaysian Association of Hotel) Chapter in Perak, plans to present a memoran-dum to the authorities to consider helping to improve Pangkor Island, especially in terms of accessibility.

"If the island had a bigger runway to accommodate bigger planes, it will definitely help tourist arrivals into Pangkor," he said.

In fact, the hotel sits on a 40.5ha site, of which less than half has been developed. Yeo said that further development in Pangkor by IGB or other investors is unlikely to take place until and unless access into the island improves.

The 258-room hotel, which opened in 1986, was first managed by Pan Pacific. In 2004, IGB decided that its hotel management subsidiary Cititel Hotel Management will run the resort.

By New Straits Times (by Vasantha Ganesan)

Tradewinds scraps plan for luxury homes at Penang hotel

TRADEWINDS Corp Bhd, a company controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary, has scrapped plans to halve room inventory and build luxury residences at its hotel in Penang.

The Mutiara Beach Resort Penang, which will be rebranded as InterContinental Resort Penang, has been closed for the past 29 months to accommodate a major renovation exercise.

Chairman Tan Sri Megat Najmuddin Megat Khas said that the decision to only have hotel rooms was made recently following a discussion with Syed Mokhtar.

"Tradewinds will now retain the hotel rooms and not have any serviced residences as the cost of building the product will not commensurate with the returns on investment," Megat Najmuddin told Business Times.

Tradewinds had planned to reduce the inventory of the 438-room property to 220 rooms and include 80 units of luxury residences. Cost at the time was estimated at around RM100 milion.
The residences were earmarked to be sold at around RM500 per sq ft and leased back.

Officials of the company had then expected the hotel to reopen at the end of 2008.

However, due to longer-than-anticipated delay in obtaining planning approvals and rising cost of materials, these plans have been abandoned.

Accordingly, the hotel will now only need some structural work and interior design work. Work on this is expected to begin by year-end and be ready for operation in mid-2009.

A sum of RM100 million is expected to be spent on the hotel, given the increase in cost and to convert the property to a luxury standard.

Megat Najmuddin said that Tradewinds was also working on obtaining financing for the project.

On whether the closure of the hotel for over two years is having an impact on group business, he said the hotel was previously only marginally profitable.

Tradewinds Corp's hotel portfolio includes Crowne Plaza Mutiara Kuala Lumpur, Hotel Istana, Hilton Petaling Jaya and Mutiara Johor Baru.

In the six months ended June 30 2008, the hotel division raked in RM159.07 million in revenue, or 70 per cent of the group's revenue of RM227.49 million.

By New Straits Times (by Vasantha Ganesan)

IJM Land: Call us a property supermarket

IJM Land Bhd will rebrand itself this Thursday as a new corporate entity that aims to be a top tier local developer with geographically diversified projects in Malaysia.

The rebranding exercise comes as IJM Land has completed its rationalisation of IJM Properties into the former last Friday.

"With a streamlined and focused business now, we can call ourselves a property supermarket as we have high-end products in KLCC and low-cost products in other townships," IJM Land managing director Datuk Soam Heng Choon told Business Times in an interview.

IJM Land currently sits on an enlarged landbank of 4,253ha with a gross development value (GDV) of RM26 billion, after holding company IJM Corp Bhd combined property units RB Land Holdings Bhd and IJM Properties Sdn Bhd into one entity.

As a softening property market looms ahead, Soam said, IJM Land will focus on its positive markets such as Sandakan and Penang.

"In Sandakan, the market is still bullish as its driven by crude palm oil while in Penang, we are launching new projects like The Light which will propel us into bigger developments there," he said.

The Light development is divided into four phases including residential, commercial and mixed developments plus seafront facilities.

The first residential phase, the Light Linear and Light Point projects, will be launched by year-end. "This project will see a blend of the new and old Penang," said Soam.

For a challenging market like Johor Baru, Soam said, the company will work harder at selling units while tweaking its products to meet the current market needs. "We will focus on the medium to medium high-end markets and slow down on (developing new) mass housing projects under RM250,000," he added.

Soam said, to contend with rising material costs and a softening property market, IJM Land will target housing needs of specific market segments. "We are focusing on the Malaysia My Second Home programme and marketing our Penang Pearl Regency project overseas. We are doing a sales launch overseas targeting Koreans over the next two months and if the response is encouraging, we will then do this for our other products," he said.

On overseas development, its maiden project will be an upmarket residential and retail project in China's automotive city, Changchun, with a GDV of RM500 million.

"We are looking at other second tier cities in China while considering other emerging markets such as Vietnam. However, we have not set a timeframe," Soam said.

By New Straits Times (by Jeeva Arulampalam)