YTL Land to push ahead with Pantai Peak launch

YTL Land & Development Bhd, the property arm of YTL Corp Bhd, will push ahead with the launch of the last phase of its Pantai Hillpark development in Kuala Lumpur next year despite the global financial crisis.

Dubbed Pantai Peak, the RM500-million project features a 16-ha gated community, which will be located on YTL Land's final parcel of land in Pantai Hillpark.

It is set to be the latest icon in the area, with 233 units of luxury three-storey hillside semi-detached homes and bungalows with a variety of layouts and design options.

Deputy managing director Datuk Yeoh Seok Kian said each home will be priced from RM2 million.



"It will come with a lap pool and a stunning panoramic view of the Gasing green belt and the entire Petaling Jaya landscape" Yeoh told Business Times in an interview in Kuala Lumpur recently.

The main board-listed developer is optimistic that the property market will improve as banks revise their base lending rate from 6.75 per cent per year to 6.50 per cent per year this month.

This is following Bank Negara Malaysia's recent downward revision of the Overnight Policy Rate by 25 basis points to 3.25 per cent to uplift the country's economic activity.

"It will boost the sector as bank loans will be cheaper for home buyers. While we are more liberal than Singapore, we have to internationalise our properties."

YTL Land, which has locked-in sales of RM100 million from its Sentul East project in Kuala Lumpur, expects its financial performance to remain flat this year due to fewer launches than the previous year.

For the 12 months to June 30 2008, it posted a net profit of RM10.3 million and revenue of RM336.1 million.

"We had lesser launches due to the US-led subprime crises. We hope America will clean up the mess so that there will be a quick chance of recovery. If the prices of petrol and interest rates can remain low, we will be able to recover fast," Yeoh said.

Meanwhile, YTL Land will pace itself with the market for new launches at its on-going 120ha Sentul East and Sentul West project, and 48ha Lake Edge project in Puchong, to ride out the current crisis.

"We will continue to introduce high-end products. Malaysia has not gone through a bubble like that in the US, the UK and Singapore. Prime locations with good product packaging will suffer the least and pick up the fastest," he said.

Yeoh said Malaysian properties are still more competitive than those in Singapore and Hong Kong.

"People with money should buy properties but selectively, to hedge against inflation," he said.

Hot property areas in the Klang Valley remain in Sri Hartamas, Mont' Kiara, Damansara Heights, Bangsar, Sentul, Taman Seputeh and the Kuala Lumpur City Centre area.

By Business Times (by Sharen Kaur)

Ireka laying groundwork for projects in Vietnam

IREKA Corp Bhd, which has over RM500 million worth of construction jobs in hand in Sabah and the Klang Valley, is preparing to work on new projects next year including in Vietnam.

Its associate firm, London-listed Aseana Properties Ltd, is finalising the master layout plan for approval for a 32ha seafront resort and residential development in Kota Kinabalu, Sabah, worth more than US$200 million (RM728 million).

The project will be developed in two phases, which involve building villas, a hotel and resort homes, executive director Lai Voon Hon said.



"We are currently working on the submission of plans and will assess the market conditions before launching this project," he told Business Times.

In Vietnam, Aseana has plans to launch seven property projects in Ho Chi Minh City, Hanoi and Danang worth a combined US$2 billion (RM7.28 billion). It has submitted development plans for most of the projects to the local authorities in Vietnam for approvals.

Lai said it expects to launch by next year Queen's Place and Hi-Tech Healthcare Park, worth a combined US$650 million (RM2.36 billion), in Ho Chi Minh City.

Queen's Place will comprise twin residential towers, offices, serviced apartments and retail space.

Other projects in the pipeline are Wall Street Centre, Nam Khang Resort & Residences and One Saigon.

In addition, Aseana's stake in Nam Long Corp, Vietnam's leading property developer with over 500ha under its belt, will hold water.

Lai said through the partnership, Aseana expects to co-develop at least four property projects in Ho Chi Minh City and in neighbouring provinces.

There is currently a shortage of housing in Ho Chi Minh City and Hanoi, which are attracting Malaysian developers such as WCT Engineering Bhd, SP Setia Bhd and Bina Puri Holdings Bhd to those areas.

Prices of high-end residential condominiums in Ho Chi Minh City remain high at US$1,500 (RM5,460) to US$4,000 (RM14,560) per sq m, while Grade A office rental rates reflect an upward momentum. Demand is growing but there is tight supply.

People's Committee of Long An Province in Ho Chi Minh City vice-chairman Nguyen Thanh Nguyen said Vietnam is opening its doors to foreign investors for infrastructure and building works in the country.

"Foreign direct investments in Vietnam has grown from US$20 billion (RM72.8 billion) last year to US$60 billion (RM218.4 billion) year to-date. Our local and foreign banks are lending. We have a few Malaysian firms looking for investments here now," he told Business Times via email.

By Business Times (by Sharen Kaur)

Pacific Regency looking for small boutique hotels

PACIFIC Regency Hotels & Resorts Sdn Bhd, the hospitality arm of Pan Global Bhd, is looking to expand its hospitality business, particularly into boutique hotels.

The group, which operates the Pacific Regency Hotel Suites on Jalan P. Ramlee, Kuala Lumpur, is keen to own and operate hotels on islands off the east coast of Peninsular Malaysia.

"We set up Pacific Regency Hotels & Resorts earlier this year to manage new and upcoming projects. We are now looking for small boutique hotels on islands in the east coast to buy and manage," its general manager Kenny Teo said in an interview with Business Times.



Teo said that it was keen on taking over existing properties to grow the business faster.

"We are looking at properties with 50 to 60 rooms, which are exclusive," he said.

These properties would be able to offer an average room rate (ARR) of RM1,000 to RM1,500 per night.

Teo said that earliest possible date when this plan may materialise is in 2010.

Meanwhile, Teo has put in place strategies to help its existing 153-suite Pacific Regency ride through a possibly trying times in 2009.

Based on the current scenario, the hotel hopes to be able to increase its ARR by about 20 per cent in 2009. It expects to finish 2008 at an ARR of RM245 per night and an average occupancy of 85 per cent.

"We are not worried about our occupancy (in 2009). We have no reason why it will not fill up ... we are more concerned about the rates," he said, saying that competition would get stiffer in terms of rates if the impact of the worsening economy hits Malaysia further.

Up to 70 per cent of the hotel's business comes from the corporate market, mainly from France, Italy, Australia and the UK.

For next year, the hotel plans to tap into the Scandinavian countries, Spain and Portugal as well as the Asian market including Indonesia and Thailand.

Pacific Regency will also look at locking in more long-term guests. This group now makes up 30 per cent of its room inventory.

Pacific Regency is like a serviced apartment in its set-up of rooms and offers a fully-equipped kitchen. At the same time, it offers the services like in a hotel including laundry, food and beverage outlets and room services.

Teo said that creating awareness of the brand has been a challenge even though the hotel is a homegrown brand and 14 years old.

By Business Times (By Vasantha Ganesan)

Bandar Raya set to clinch tower sale deal with foreign firm

PROPERTY developer Bandar Raya Development Bhd (BRDB) is tipped to sign a deal with a foreign firm to sell a residential tower at its RM2 billion CapSquare integrated development in Kuala Lumpur.

It is understood that the buyer is from the Middle East, who is looking to acquire Six CapSquare.

It is one of two residential towers at the CapSquare development. The other is known as CapSquare Residences, which has been constructed.

The two parties are negotiating on the price, but are expected to conclude a deal by the first quarter of next year, a source told Business Times.
"Based on the estimated purchase price and size of the 36-storey tower (featuring 170 exclusive units), the deal may equate to a value of RM600 to RM700 per sq ft," the source said.

BRDB chief executive officer Datuk Jagan Sabapathy declined to comment, except to say that the company has been talking to people for one of its condominium blocks at CapSquare.

"But we have not finalised any deal yet. We are still in talks on several matters," Jagan said.

CapSquare, located between the city's Golden Triangle and central business districts, is a 6.1ha freehold project with 3.8 million sq ft of space.

It comprises a 300-metre long retail street, two Manhattan-inspired residences, four signature offices, two eight-storey corporate offices, two high-rise office towers including Menara Multi-Purpose, a four-storey mall and an entertainment complex.

The properties are attracting investors due to its appeal and location.

In January, Union Investment Real Estate AG, one of Europe's leading real estate investment management companies, had signed a deal with BRDB to acquire a high-rise office tower (Tower 2) for RM440 million.

Tower 2, which is scheduled for completion by 2010, is a 41-storey Grade A office building with nett lettable area of 600,000 sq ft.

Meanwhile, BRDB is expected to do better this year, thanks to higher property sales and effective cost management.

For the first nine months of its current fiscal year ending December 31 2008, BRDB posted a net profit of RM60.7 million from RM46.5 million last year.

Revenue was RM709.1 million, up from RM513 million, thanks to sales of properties at CapSquare, One Menerung in Bangsar and Troika in Kuala Lumpur.

By Business Times (by Sharen Kaur)

Proposed Act to protect contractors

The CIPAA will help contractors to survive the current difficult economic environment — AFP

There are signs that deteriorating economic conditions have begun to hurt the construction industry despite the Government’s injection of an additional allocation of RM7bil into the economy.

This is indeed worrying for the industry as it continues to deal with eroded profit margins, escalating costs and diminishing of projects.

A main issue affecting the construction industry has always been the problem of delayed as well as non-payment. Partly because of the complexity of construction work and partly because of financing issues, there are bound to be disputes relating to non-payment.

Remedies such as suspension of work and direct payment are difficult to be properly and lawfully exercised unless there are expressed provisions in the contract and the disputes are resolved by an independent third party.

What is needed is an avenue where dispute resolution methods can be quickly effected and are affordable. More importantly, the disputes must be resolved quickly as and when they happen.

Existing dispute resolution mechanisms in the construction industry such as arbitration and litigation are time-consuming and are often expensive.

The arbitration or litigation process normally takes two to five years or longer to be resolved and costs tens or hundreds of thousands of ringgit which will further eat into contractors’ already thin margins.

In fact, arbitration and litigation often take a long time because a detailed meticulous fact-finding process is required since the decisions are final.

Another issue is that most standard terms in construction contracts stipulate that arbitration can only commence after the project is completed or terminated.

This may be due to the fact that prolonged arbitration or litigation during the construction stage can be very disruptive.

As a result, cash flow of contractors will be affected and this will inevitably affect the progress of construction.

Consequently, innocent third-parties, such as the purchasers, are often the victims of delayed or abandoned projects.

The existing related statutory laws such as the Contracts Act 1950, Sale of Goods Act 1957 and Arbitration Act 2005 can be applied generally and are not efficient enough to deal with current problems.

To address the problem, various recommendations were made during a construction industry roundtable in June 2004 which was chaired by the former Works Minister Datuk Seri S. Samy Vellu.

One recommendation was for the creation of a Malaysian Construction Industry Payment and Adjudication Act (CIPAA).

It must be noted that there are already similar acts in Britain, Australia, New Zealand and Singapore. These include:

# Building and Construction Industry Security of Payment Act 2002 (Victoria, Australia)

# Construction Contracts Act 2002 (New Zealand); and

# Building and Construction Industry Security of Payment Act 2004 (Singapore).

All these countries recognise that timely payments are vital to the very survival and continuity of business of the construction industry. Clients are under contractual obligation to pay contractors, within the stipulated period, for services rendered and issuance of certificates of payment.

The construction industry has been waiting for far too long for the Act to be in place as it has been more than four years since CIPAA was mooted. In fact the draft for CIPAA was circulated for comments early last year.

Based on the feedback, certain parties have some strong reservations on the proposed Act. It must be stressed that they are not the main players who are being aggrieved in this regard.

The Act should be seen as vital to protect the interest of the primary players in the construction industry and more so when the contractual bargaining powers of the primary players are often not equal.

It is understood that the proposed CIPAA is now awaiting submission to the Cabinet for approval and directive so that a formal Bill can be presented to Parliament.

MBAM, therefore, urges the Government to facilitate the speedy enactment of CIPAA as the Act will help contractors across the board from G7 to G1 to survive during this difficult period where banks may adopt more prudent lending policies and the overall expected outlook for 2009 does not seem rosy.

The Act would provide some relief if contractors are assured or given some security and remedies in the key issue of payment.

Without any security of payment and quick justice through adjudication, the unpaid party either suffers in silence or is put out of business at the end of the current dispute resolution through arbitration or litigation.

In conclusion, the problems on payments in the construction industry as identified above cannot be effectively resolved contractually thorough provisions in the standard terms of construction contracts.

The most effective solution is, therefore, to enact a separate and specific Act of Parliament to address the problems.

MBAM sincerely hopes that the Government and all parties concerned will work together to get CIPAA enacted in the soonest possible time for the benefit of the industry.

By The Star

Developers: Govt’s cooperation needed to avoid future mishaps

KUALA LUMPUR: The Real Estate and Housing Developers Association (Rehda) Selangor has urged the Government and developers to work together in getting to the bottom of the Bukit Antarabangsa landslide.

“The Government shouldn’t jump the gun in restricting hillside development while developers should cooperate with the authorities and offer a helping hand in search and rescue efforts,” said branch chairman Datuk FD Iskandar Mohamed Mansor.

He was commenting on the Government’s call to review all existing developments near highlands following the landslide on Saturday.

“Various parties have offered explanations for the cause of the landslide.

“But as long as we don’t have a technical report on the incident, let’s not speculate,” Iskandar said.

The association would email its members feedback regarding their hillside projects. But for now, people should offer their sympathy to the landslide victims and not point fingers, he said.

Housing developer Datuk David Kong Hon Kong said issuing a stop-work order on all hillside development was not fair to developers.


Datuk David Kong Hon Kong

“It is fine for local governments to penalise developers who do not comply with regulations.

“But it is unfair to pull the plug on other developers who have already obtained approval from the authorities.

“Imposing a blanket ban on such projects would also reflect negatively on the nation’s construction sector and erode the confidence of investors,” he said in an interview.

“The landslide in Bukit Antarabangsa should not mar the entire sector because other developments such as that in Genting Highlands and Damansara Heights did not encounter major problems.”

He said the Government needed to step up monitoring at construction sites to avoid any mishaps.

The local authorities should also find ways to improve construction work at hillsides instead of closing down such development, Kong added.

By The Star

Asiatic Dev up on talk of mall project

ASIATIC Development Bhd rose the most in a month in Kuala Lumpur trading after it was reported that the property developer is in talks with US mall owner Simon Property Group Inc for a project in south Malaysia.

The stock climbed 6 sen, or 2 per cent, to RM3.06 at mid-day, headed for its biggest advance since November 10.

A weekly reported on December 6 that Asiatic and Simon Property plan to build a RM2 billion (US$551 million) mall on a 50-acre (20 hectares) site in Kulai in Johor.

By Bloomberg

Boustead to boost Islamic REIT, eyes more

MALAYSIAN planter Boustead Holdings will boost the size of the world’s first sharia plantation real estate investment trust to RM805 million (US$221.5 million), the firm said today citing strong demand for palm oil and Islamic banking products.

Boustead’s plan to inject RM189 million of plantation assets into the REIT comes as property and palm oil markets struggle to cope with excess supply and a grim global economic outlook.

Crude palm oil prices have fallen about two-thirds from their peak of RM4,486 set in March and the industry is cautious about prospects for a modest recovery next year.

Rents of Asian properties, which were bolstered by robust demand as firms expanded, are forecast to slide next year as businesses slash costs to survive the deepening economic downturn.
Still Boustead, which is also a financial and property firm backed by the Malaysian armed forces fund, said global demand for palm oil in the food and biofuel industries would underpin the plantations sector.

“We believe that the price of CPO (crude palm oil) will improve towards the first half of next year,” Lodin Wok Kamaruddin, Boustead group managing director, told reporters.

“The present price is probably a factor of excess stocks ... and also the fact that crude oil has come down from a high of US$144 six, seven months back to only about US$40 presently.”

He said crude palm oil prices were expected to reach RM2,000-RM2,200 a tonne in the first half of 2009.

Malaysia’s benchmark February palm oil contract was last traded at RM1,524 at 0718 GMT.

Under the deal announced today, Boustead would sell two plantation estates to the Al-Hadharah REIT, bringing its asset portfolio to 16,420 hectares. Its holding in the REIT would rise to 337 million units or 60.5 per cent, from 53.4 per cent now.

The sale would be paid through cash, the issuance of consideration units and lease of the plantation assets to Boustead Plantations Berhad, a subsidiary of the Boustead group.

Boustead could inject more assets into the Al-Hadharah REIT later, Lodin said, adding that there could be plans for another REIT.

“Of late, there seems to be a strong interest in Islamic products of this nature,” he said. “So we are quite bullish on the prospects and the future of our Islamic plantation REIT.”

Malaysia’s Islamic banking market has boomed in recent years, thanks to an aggressive government push and demand from the country’s mostly Muslim population.

The global Islamic finance industry has weathered the US-led housing credit crisis relatively well, but bankers and regulators expect the sector to be hit as the economic downturn spreads.

The US$1 trillion Islamic finance sector is based on sharia, or Islamic law, and advocates ethical investing and a fair distribution of wealth. Gains must not be made from interest-related investments or activities such as gambling and alcohol.

By Reuters

Dubai awards US$1.3b contract

MELBOURNE: Leighton Holdings Ltd, Australia's largest construction company, said it won a US$1.3 billion (US$1 = RM3.64) contract with its partners to build a new concourse at Dubai Airport.

Dubai's Department of Civil Aviation awarded the contract to the Al Habtoor Leighton Group, Murray & Roberts Holdings Ltd and Takenaka Corp joint venture, Sydney-based Leighton said in an e-mailed statement.

The concourse development, to be completed by April 2011, will include a four-star hotel and a five-star hotel.

By Bloomberg

Work on Johor cybercity to start in Q2 2009

ICT HUB: An artist's impression of Bandar MSC Cyberport

The development of Bandar MSC Cyberport, Johor's first Multimedia Super Corridor (MSC) cybercity, is set to commence in the second quarter of next year.

The cybercity is a RM1.16 billion development within Iskandar Malaysia development corridor operated and managed by MSC Cyberport Sdn Bhd.

Executive director Ramlee Jaafar said so far, memoranda of understanding have been signed with two foreign companies.

"One of them is Sunil Mantri Realty Ltd from India and the other is a Korean company which I cannot reveal at this moment in time," he said.
"Submissions for development will be made in the first quarter of 2009, so we expect network development to begin by the following quarter," he added.

Speaking at a roadshow for the MSC Malaysia-British Telecom Digital Lifestyle Initiative in Johor Baru, Ramlee said despite the economic slowdown, the company will not review the cost of the project.

"We will instead be re-setting our priorities and focusing on important projects," he said.

MSC Cyberport is a 60-hectare information, communication and technology (ICT) city within Iskandar Malaysia.

Its location in Kulai where the Second Link and the North-South Expressway meet is seen as strategic for its function as a global ICT business hub with a world-class living environment for ICT companies within Iskandar Malaysia.

By Business Times (by Anis Ibrahim)

MK Land to focus on affordable homes

PETALING JAYA: MK Land Holdings Bhd’s strategy to turn around the company amid the current economic slowdown will see the property developer focusing on medium-cost and affordable homes, said chief operating officer Lau Shu Chuan.

The turnaround planto be carried out in three phases was expected to be completed in three to five years, depending on the market outlook, he said yesterday after the company AGM.

“We are at phase one now where we are strengthening our cashflow positions and transforming into a more structured and focused entity,” Lau said.

“We are now returning to black with positive first quarter results and will move forward with the turnaround plan.” For the first quarter ended Sept 30, MK Land posted RM4.91mil net profit compared with a net loss of RM8.45mil a year ago.

For the financial year ended June 30, the company posted a net loss of RM60.9mil.

Although the property sector was softening, it would navigate around that by offering a good mix of products, Lau said.

“We build niche property, medium and also affordable houses. In other words, we offer different type of products for different markets. If market is looking for more affordable house, we have the products for them. By this, we are able to position ourselves to take advantage of different market situations,” he said.

From July to November, MK Land sold RM54mil worth of properties including apartments and shop offices, while projects valued at RM23mil ar are being built.

Lau said although the group did sell plots of lands, the main focus would be on selling completed properties, adding that there would be new property launches next year.

However, he declined to offer details on the new property launches.

By The Star

Zerin rules out property slump next year

Malaysia'S property market is expected to be resilient next year due to lower borrowing costs and as demand from foreign buyers remain strong, an industry executive said.

"It will be harder to do deals next year but there won't be a slump. People are still looking for homes to stay and invest in," said Previndran Singhe, chief executive officer of real estate consultancy Zerin Properties.


Previndran: People are still looking for homes to stay and invest in.

There will be a slew of new residential property launches from the second quarter next year and these are high-end products.

Key launches next year include 6 Stonor by Tan & Tan Development; The Pearl@KLCC by Malton Bhd; Platinum Park Residences by Naza TTDI; The Oval by Guocoland (M) Bhd; and Idaman Bintang by TA Properties Sdn Bhd.

Previndran said there is demand from locals, and investors from Europe and the Middle East for completed properties and new products in the Klang Valley.

"We are seeing more genuine buyers from these regions," he said.

Previndran said while the price of new landed and high-rise properties will be relatively similar to current levels, there will be more attractive marketing schemes.

"Developers are not going to lower property prices as construction cost is still volatile. What they will do is offer more goodies," he said.

He also expects a few en bloc deals over the next few months.

"There will also be more sales and leaseback, which will be fed into REITs," Previndran said at a property outlook briefing in Kuala Lumpur yesterday.

Zerin also introduced its new website www.expathomekl.com for expatriates at the briefing.

By Business Times (by Sharen Kaur)

Office space, condos -what’s in for 2009?

This is my inaugural contribution to this series for StarBiz and since we are at the end of the year, I offer some predictions for 2009.

I specifically want to discuss the fate of the market for high-end condominiums and office space in Kuala Lumpur.

All such predictions naturally hinge on a guess when the world’s leading economies will start to heal, and most of them have just gone into recession.

There is a great diversity of opinion on whether we are entering a ‘V’ curve (maybe one year of pain) or a ‘U’ curve (maybe four years.)

Personally, I’ve never experienced a downturn in the market which went away in a year.

If in doubt, I turn to the words of George Soros, who reckons it’s all going to be very bad.

Soros was kind enough to pitch up in KL in 2006 with copies of his remarkably predictive book The Age of Fallibility, which said: “I do not think the current calm is going to last…I believe the global economy has been sustained by a housing boom that took on the characteristics of a bubble…I expect an initial soft landing to turn into a hard one when the slowdown does not end…I expect a worldwide slowdown starting in 2007.”

Those of us who took Soros seriously (I did) sold all their shares in 2007 (well, I was going to, honestly, but you know, things didn’t seem all that bad and there was always a chance that the crisis would blow over).

America’s nemesis arrived after nine years of boom conditions when property prices and credit rose at a far greater rate than real incomes.

Britain, most of Europe and Australia witnessed similar but more restrained booms.

But sadly bubbles are ephemeral things and even champagne goes flat after a while.

Fortunately for us, we had only enjoyed two years of real estate euphoria before the westerly wind blew in. Our markets were only just beginning to pick up.

Had this financial plague reached us in say, 2011 or 2012 then we could well have been caught with our pants down as we were in 1997/98. In this respect, if we were going to suffer a global financial crisis, it came at an opportune time for Malaysia.

Right now, we are fundamentally strong and what has only gone up a little bit will only suffer a limited decline.

Nevertheless we are in for a tough year or longer. There are some highly geared developers who may have to struggle for survival.

There is a growing crisis of confidence and we are peering into a dark pit of irrational pessimism.

Deals are falling over as buyers walk away for fear of a severe market correction.

The condominium market at the top end has been the most speculative of all markets over the past three years.

Projects such as Troika and One KL which launched at a breathtaking RM1,000 per sq ft in 2005 rose in value to RM2,000 or more.

The opportunity to own property close to KLCC has attracted a large community of foreign buyers for whom Malaysia has successfully created a very investor friendly environment.

Sadly, many of these buyers are feeling the squeeze in their own countries and some are in a hurry to cash out.

Those who bought early can afford to sell at RM1,000 per sq ft or less and so, we may see this secondary market leading values down in this sector.

Sentiment is not helped by the number of new properties coming up.

Currently, Kuala Lumpur has some 19,170 luxury condos and serviced apartments (with a value of RM350 per sq ft or more.) New projects under construction or approved could potentially add another 19,299 units.

Even without a global financial crisis, some indigestion was looking inevitable before the market regained equilibrium.



By contrast, the office space market enjoys a totally different set of dynamics. Rentals, yields and capital values are well established.

There is a history of supply and absorption so well documented that it enables regression analysis.

Demand for office space has a set of underlying fundamentals that can be tied back to economic growth and the maturity of the economy.



Best of all, there are no twitchy secondary players prone to panic and flight.

As recently as the second quarter of this year, office rentals were moving up to a realistic level of RM6 to RM8 per sq ft per month after nearly a decade of stagnation.

Capital values had breached RM1,000 per sq ft and were cruising towards a peak which might have been RM1,500 per sq ft. Yields were down to 5% or 6% in anticipation of this growth.

Despite the fact that KL currently has a shortage of ready office space, any growth in value next year is now unlikely.

It is not that we are heading for an oversupply; it is only that tenants are going to “wait and see” before they consider upgrading or expanding.

Perversely, with construction costs falling, now is a good time to start an office development in KL.

The key word of course, is confidence. One has to have faith in the future. We can only hope that the banks will hold strong in their support of the property industry so that predictions of doom do not become self-fulfilling.

Chris Boyd is executive chairman of Regroup Associates Sdn Bhd property consultants. He is a long-time registered valuer in Malaysia.

Boyd feels strongly about the need for heritage conservation in Malaysia and is an active member of Badan Warisan. He keeps meaning to go to the gym but actually prefers cross-country running.

By The Star (by Christopher Boyd)

Tokyo is best Asian city to buy real estate

TOKYO overtook Shanghai as the best Asian city to buy real estate as investors seek less risky investment for 2009, a survey by the Urban Land Institute and PricewaterhouseCoopers LLP showed.

The Japanese capital has the best prospects and lowest risk among the 20 locations covered by the Emerging Trends survey.

Singapore is in second place and Hong Kong is third, according to the ULI, a Washington-based research firm, and PricewaterhouseCoopers, a New York-based accounting firm.

By Bloomberg

Developer to review US$95b Dubai project

DUBAI: Dubai-based developer Meraas said it will review a recently launched US$95 billion (US$1 = RM3.64) property project, as more developers reassess and scale back work due to the global financial crisis.

The government-owned developer said it was reviewing the phasing and rollout of its Jumeirah Gardens project which was launched at a Dubai property exhibition in October.

There would be more clarity and details on the project's masterplan and the product rollout by the beginning of 2009, the statement said.

By Reuters

Residence Hotels expects business to grow 15pc in 2009

OPERATOR of hotels, lounges and cafes, Residence Hotels and Resorts Sdn Bhd (RHR), expects business to grow by between 10 per cent and 15 per cent next year, as it grows its portfolio of properties under management.

RHR, best known as the operator of Best Western Premier Seri Pacific in Kuala Lumpur, will in 2009 add a hotel in Mecca, Saudi Arabia, a club house, a cafe and a convention centre under its management.



Managing director Rohanna Ramli said that she was cautious on RHR's growth projection for next year given the global economic slowdown.

Revenue in 2008 is estimated to grow by a fifth over 2007.

"We have signed a management deal to operate the Fal Al-Saha Hotel in Mecca starting February 15 2009. It is a four-star hotel located 300 metres from the Holy Haram," Rohanna said.

"We will also operate a Club House in Nusajaya and a Cafe in KL Sentral which are both under UEM. We will also be operating a conference centre which will be ready next year," Rohanna said.

The newly refurbished Best Western Premier is expected to contribute to the higher revenue as the hotel raises rates to between RM230 and RM250 a night from RM205 a night this year.

Rohanna was talking to Business Times following a a signing ceremony between the 560-room Best Western Premier and 1,259-room five star Sultan Hotel in Jakarta.

The parties, represented by Sultan Hotel's general manager Jean Wasser, signed a memorandum of understanding to collaborate on cross-selling between both properties.

The partnership will also entail image building, food promotion and exchange of staff.

Meanwhile, Rohanna said that plans to manage a hotel in Mecca has finally materialised after some eight years.

In the first year of operations, Rohanna hopes to achieve an average occupancy of 70 per cent and a gross operating profit (GOP) of 30 per cent.

Hotel occupancy and rates in Mecca fluctuate depending on the Ramadan, Haj or Umrah period.

According to Rohanna, hotel rates are at their peak during the last 10 days of the fasting month.

"The rates are RM30,000 for 10 days or RM1,500 per person per night ... guests are charged for all 10 days whether they stay one night or all 10. If it is triple, room charges go up to RM4,500 a night," she said.

And in the low season, room rates are about RM200 per night per room.

Following the group's move into Mecca, Rohanna hopes to be able to manage a hotel in Medinah in the future.

Locally, RHR is exploring Kota Kinabalu, Sabah and Penang for future hotel management contracts.

It also manages the Residence Resort Paka in Trengganu; Residence Desa Lagoon Resort in Port Dickson; MAS Golden Lounge in KLIA and Langkawi; MAS Academy in Kelana Jaya; Bank Negara Malaysia's Sri Kijang in Langkawi and Lanai Kijang in Kuala Lumpur.

By Business Times (by Vasantha Ganesan)

iProperty launches luxury property magazine

The iProperty.com Group has launched a regional property magazine, iLuxuryasia.com, to provide an integrated marketing platform for Asia’s luxury real estate.

Executive chairman Patrick Grove said in a statement that the magazine is designed to equip buyers with the know-how to confidently purchase real estate and to make informed investment decisions.

Grove said iLuxuryasia.com also features information such as legal and financial tips and country specific guides on buying procedures.

By Bernama

Thousands in Perak to get freehold titles the easy way

IPOH: Perak’s 149,000 people living in 349 planned and 134 new villages on land valued at over RM1.5bil can now apply for their freehold titles.

The villagers can also expect the titles to be issued between two weeks and a month.

Senior executive councillor Datuk Ngeh Koo Ham said the state government has shortened the process of applying for the freehold titles after the Perak Valuation and Property Services Department assessed the value of the areas.

“We want to make it the simplest possible and quickest process. We don’t want to implement it hastily only to be bogged down by problems later,” he told reporters here yesterday.


Ngeh: Process of applying for the freehold titles shortened.

“Now we can do it within a day, but we ask the public to be patient and give us between two weeks and a month to deliver the titles.’’

Ngeh pointed out that the 20 processes for the application earlier on had been simplified to four steps. The shortened process allowed an applicant to obtain the title within the day itself, he added.

Ngeh said the new process could also resolve problems, such as for those who had paid premium for the last 10 years but still had not been issued with a title or cases of missing files after paying premium for the past 30 years.

“The issuing of freehold titles to the 102,000 in planned villages and some 47,000 in new villages could bring in revenue of between RM300mil and RM450mil for the state,’’ said Ngeh.

On whether the issuing of freehold titles to those living in planned and new villages was against the National Land Code, Ngeh said it was not.

“The state consulted a former Court of Appeals judge and a panel of experienced lawyers on the matter before implementing the move,’’ he said.

By The Star (by Hah Foong Lian)

Axis REIT plans expansion

PETALING JAYA: Axis REIT (real estate investment trust) is eyeing more office and industrial properties in the Klang Valley and Johor next year to expand its existing portfolio of 19 properties.

Malaysia’s first listed REIT expects rental rates to hold steady in 2009 due to tight supply, although it also sees a slower growth rate, says Axis REIT Managers Bhd chief executive officer and executive director Stewart LaBrooy.


Stewart LaBrooy

It was a matter of assessing the right time and opportunities before Axis REIT embarked on its expansion plans, he said, without disclosing the number of properties and their locations.

“Axis REIT has grown from five to 19 properties in the portfolio in three short years,” he told StarBiz in an e-mail interview. “We took the decision early on to grow our fund through acquisitions funded by debt and equity.”

According to LaBrooy, Axis REIT has always held the view that cross-border investments carry much higher risks for a property trust, thus it does not plan to acquire overseas properties for now.

On the outlook for rentals, LaBrooy said Malaysia was fortunately not part of a property bubble that had become evident in Singapore, Vietnam and Dubai, and that the domestic market would be stable.

“We foresee the rentals for industrial and office properties in Malaysia holding steady for 2009 due to the tight supply currently,” he said, adding that much of the industrial and office properties coming onstream in 2009 had been pre-leased.

“For industrial properties, we have seen rental growth of 10% upon renewals in 2007 and 2008, whereas in the office sector, rentals have grown by 15% to 20% over the past 12 months,” he said.

Currently, Axis REIT’s monthly rentals range from RM1 per sq ft for industrial space to RM4 per sq ft for top-end commercial space.

However, Axis REIT expects a slower rental growth rate in 2009 due to the current downbeat economic climate.

Nevertheless, LaBrooy expects Malaysian REITs (M-REITs) to offer investors the opportunity to earn 11% to 13% returns.

“Investors who are taking the opportunity now will be buying prime assets at a discount where the real market prices haven’t moved,” he added.

Labrooy acknowledged that M-REITs had taken a beating, in tandem with the selldown in global markets, including Malaysia’s.

“Despite this, M-REITs are still posting positive earnings growth and with their conservative leverage and attractive returns, they still have a compelling investment story,” he said.

Axis REIT posted its best results since its listing in the third quarter, reporting an earnings per unit of 3.85 sen, compared with 3.75 sen in the preceding quarter.

For the nine-month period, it made 11.36 sen per unit, the highest in the industry.

By The Star (by Rachael Kam)

Mulpha lifts stake in Australia developer

MALAYSIA'S property-to-financial company Mulpha International has raised its stake in Australian property developer FKP Property to 22.8 per cent, Mulpha said today.

The Malaysian firm said it acquired another 43 million FKP shares for RM235.8 million (US$64.83 million) from the open market and by buying new shares issued by FKP.

It owned 37.12 million shares in FKP prior to the acquisitions.

The company said it has obtained the approval of the Foreign Investment Review Board of Australia to acquire up to 37 per cent of FKP shares without undertaking a mandatory general offer.
Under Australian securities rules, the trigger point for a mandatory takeover offer is 20 per cent.

By Reuters