Plans for RM220m housing projects in KK industrial park

KKIP Sdn Bhd (KSB), developer of the Kota Kinabalu Industrial Park (KKIP) in Sabah, will launch four housing projects worth RM220 million within the 1,344.51ha integrated park, its chief said.

From June this year, KSB will offer 750 houses, priced from RM190,000 to RM500,000 each. They include apartments, terraced and semi-detached houses, bungalows and townhouses.

These are the first of a series of houses the company is building at KKIP to facilitate growth, chief executive officer Datuk Chong Hon Len said.

"The Sabah property market is stable. Prices are appreciating in value despite the turmoil. There is demand accelerated by activities at KKIP, and we are optimistic on sales," Chong told Business Times in Kuala Lumpur recently.

KSB, which is owned by the Sabah state Government, was set up in 1994 to manage developments at KKIP, which is a premier growth centre in the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) region.

KKIP encompasses residential, commercial and industrial zones, which could reap in more than RM15 billion in gross development value over the next ten to 15 years, Chong said.

KSB is projecting a population of 50,000 by the end of the development.

For its fiscal year ending December 31 2008, the company has forecast a revenue of RM100 million from land and property sale, which is higher than previous years, Chong said.

KSB is selling 140ha of industrial land.

"We will continue to build and invest, albeit cautiously. There is no good or bad time in an economic cycle. We just have to be careful. The industrial zone is 75 per cent developed, so the focus will be to strengthen the other two zones," Chong said.

Chong said 137 manufacturing firms and 11 training and research institutions have set foot at KKIP. Around 45 factories are under construction.

KKIP is aimed at players in the resource-based industries, which includes forestry, palm oil, cocoa, agricultural, livestock, fisheries, and silica.

It is also for non-resource based industries such as electronics and electrical, metal and plastic, automotive and transportation, and warehousing.

By Business Times (By Sharen Kaur)

Johor property developers to gain from Iskandar Malaysia

JOHOR BARU: Property developers in Johor stand to benefit in the long run from the development of Iskandar Malaysia, said Real Estate and Housing Developers Association (Rehda) Johor branch chairman Lee Kim Chai.

Lee said under the Comprehensive Development Plan (CDP) 2006-2025, Iskandar Malaysia would be transformed into a metropolis of international stature, thereby ensuring the sustainability of the property market in the state, especially in southern Johor.

“The Federal Government is putting in a lot of emphasis and effort on Iskandar to make it successful,” he said in an interview with StarBiz, adding that several projects by both public and private sectors were already taking shape in Iskandar Malaysia, while some others were being implemented.

Under the Ninth Malaysia Plan, the Government allocated some RM6.83bil for infrastructure projects in Iskandar Malaysia including road building, drainage and river cleaning projects.

Iskandar Malaysia also received a RM1.7bil boost under the recent RM60bil mini budget for the development of infrastructure, hotels, theme parks as well as universities.

“Improvement in road connectivity and travel time are the two main factors that will help attract potential house buyers,” Lee said.

He added that the upcoming Malaysia Property Expo for Johor (Mapex 2009–Johor) was the best platform for developers to market their products amid the economic slowdown.

Mapex 2009-Johor will be held from tomorrow till Sunday at the Johor Baru City Square with 31 developers taking part.

“There are over 8,000 residential and commercial properties worth RM2.7bil in the offing and buyers should take advantage to shop around before deciding to sign on the dotted line,” Lee said.

The last property expo in Johor in November managed to record RM100mil in sales and Rehda Johor was hoping to record a similar figure for the upcoming event, he added.

Iskandar Malaysia, launched on Nov 4, 2006, was the first in a series of economic growth corridors started in the country under former prime minister Tun Abdullah Ahmad Badawi.

The other growth corridors are the Northern Corridor Economic Region, East Coast Economic Region, Sabah Development Corridor and Sarawak Corridor of Renewable Energy.

Located in the southern-most part of Johor, Iskandar Malaysia spans over 2,217 sq km covering Johor Baru, Senai-Kulai, Gelang Patah-Pontian and Pasir Gudang-Tanjung Langsat.

By The Star (by Zazali Musa)

Property assets to sustain SunCity

PETALING JAYA: Sunway City Bhd (SunCity) can count on its portfolio of property investment assets to sustain earnings streams and ride out the slowdown in property sales amid the global recession.

About 75% of SunCity’s operating profit of RM175mil for the first two quarters ended Dec 31, 2008 was from its property investment assets and the balance from property development.

SunCity can look forward to total rental income of RM285mil this calendar year, of which 70% will be from Sunway Pyramid Shopping Mall.

“All our property assets, with total net lettable area of 4.5 million sq ft, are fully tenanted and we are thankful the stable rental income has contributed to the resilience of SunCity during the current difficult times,” SunCity chief financial officer Tan Poh Chan told StarBiz yesterday.

During the second quarter, sales of new property units by SunCity dropped to only RM58mil from RM62mil in the first quarter. A year earlier it recorded RM367mil.

The weaker property development is a drag on the group’s overall performance.

Although SunCity’s property investment, leisure, hospitality and healthcare divisions are still performing quite well, poor property take-up and sales in the past few quarters have badly affected the group’s property development earnings.

The postponement of SunCity’s proposed real estate investment trust (REIT), which was earlier planned for the second half of last year, has been a blessing in disguise for the property group as the severe slowdown in property sales and deferment of project launches by its property development division would have severely affected its income streams.

The listing of SunCity REIT was postponed when the local economy and stock market were affected by the deepening impact of the global crisis.

With assets valued at RM3.7bil, the proposed REIT would have been the country’s largest.

Among the assets to be injected into the REIT were the Sunway Pyramid Mall, with 1.7 million sq ft of net lettable space, the 4.8ha Monash University campus, Sunway University College, Sunway Carnival Mall in Penang and Tambun Hypermarket in Ipoh. Other investment-grade properties to be included were the Sunway Resort Hotel & Spa, Sunway Pyramid Hotel and Menara Sunway.

Following the deferment of the SunCity REIT, the company’s management reclassified the assets to be injected into the proposed REIT from “non-current assets held for sale” to fixed assets and investment properties of SunCity.

An analyst with a local brokerage said the earliest listing of the SunCity REIT would be around the first half of next year if the local capital markets had recovered by the end of the year.

“Once the market recovers and the window opens again, it will only take a few months to do the necessary preparation for the listing ,” he said.

By The Star (by Angie Ng)

Brooke Dockyard completes RM100mil Shell project

KUCHING: Brooke Dockyard and Engineering Works Corp (BDEWC) has completed a RM100mil project involving living quarters and helideck for Sarawak Shell Bhd.

The living quarters, under a project awarded on Aug 6, 2007, is scheduled to be installed offshore Bintulu by mid-May and ready for use by end-June.

The new lightweight stressed skin 42-bed quarters will replace the existing 14-bed emergency living quarters, according to the company.

Sarawak Deputy Chief Minister Tan Sri Alfred Jabu graced the living quarters’ load-out ceremony held at Sejingkat, Jalan Bako, yesterday.

BDEWC general manager Zuraimi Sabki said the company secured the project from Sarawak Shell under a collaboration with Sweden’s Emtunga Offshore AB, a well-known lightweight stressed skin living quarters specialist.

Zuraimi said Emtunga started the detailed design in November 2007 and fabrication works began in February last year, and these were then assembled into complete living quarters and helideck by BDEWC from August last year.

“The living quarters project clocked 500,000 man-hours without any lost-time incident,” he said in his speech at the event.

The project is one of three that Sarawak Shell has awarded to BDEWC with an earlier project involving living quarters installed offshore Bintulu in November last year.

Zuraimi, who is also BDEWC chief executive officer, said it had completed 14 offshore modules, seven sub-structures and three living quarters, with almost 60% of them for Sabah Shell and Sarawak Shell in the past 12 years.

“We have set ourselves to be an important regional player, especially in the engineering works of the oil and gas industry. I believe Brooke Dockyard can continue to play an important role as well in Sarawak’s human resource development, particularly in the high-end engineering sector,” he said.

By Bernama

Healthpark to complement Nusajaya development

An artist's impression of the Afiat Healthpark @ Nusajaya complex

JOHOR BARU: Property developer UEM Land Bhd wants to position its Afiat Healthpark @ Nusajaya as a holistic and fully-integrated development with all the components of a world-class healthcare centre, said managing director and chief executive officer Wan Abdullah Wan Ibrahim.

Facilities in the park would cover three distinctive areas, namely modern medicine, traditional and complementary medicine and wellness, he said.

“We also anticipate an increase in public demand for better healthcare services and facilities within Nusajaya in the future,” Wan Abdullah told StarBiz in an interview.

He added that as the master developer of Nusajaya with an area of almost 9,662ha of development-ready freehold land, it was vital for the company to make the area thrive.

UEM Land could not just build houses in Nusajaya without any supporting facilities such as education, business, health and leisure, if it wanted to attract local and foreign investors, he added.

Nusajaya is one of the five flagship development zones in Iskandar Malaysia.

The other zones are JB City Centre, Western Gate Development, Eastern Gate Development and Senai-Skudai.

Located on 27.51ha, Afiat Healthpark @ Nusajaya is a dedicated park with facilities such as private specialist clinics, a private hospital, a health-screening centre/outpatient clinic, dialysis centres and even a traditional chinese medicine (TCM) academy as well as a nursing college.

“We have succeeded in getting modern medicines via Columbia Asia (Sdn Bhd) with its 80-bed hospital scheduled for opening in 2010,’’ Wan Abdullah said.

Last April, Columbia Asia bought 1.09ha in Nusajaya from UEM Land’s subsidiary Nusajaya Medical Park Sdn Bhd to set up the hospital.

UEM Land is currently talking with several operators, including from China and India, to set up TCM facilities at the healthpark.

A public-listed company has also shown interest to set up a retirement village for wealthy senior citizens similar to the one in Florida, United States, according to Wan Abdullah.

“We are not so much looking for medical tourism per say as the role comes under Khazanah or IIB; we only build the facilities and lease them to interested parties or healthcare operators,’’ he said.

By The Star (by Zazali Musa) (Posted on 14/4/2009)

RM70m mall for Wangsa Maju to open in July

Malaysia may appear to have one too many malls and some will question the wisdom of opening another when sales are falling.

But it is probably a good move if the opening fills an obvious void.

Wangsa Walk, a RM70 million mall in Kuala Lumpur that opens in July, expects to satisfy a long-overdue need for residents of Bandar Wangsa Maju in Kuala Lumpur.

Its owners also plan to recoup their investment and start making money in half the time a typical mall takes.

The mall, which is being developed by MSL Properties Sdn Bhd in Wangsa Maju, has managed to fill up almost all its space. It will have a 92 per cent occupancy rate at a time when most retailers have opted to slow expansion.

Wangsa Walk, which takes up 273,243 sq ft, or roughly a quarter of Suria KLCC, will serve about 250,000 people living within a 4km drive.

Richard Chan, director of RCMC Sdn Bhd, the consultants for the project, said the owners were initially worried about the timing of the opening.

"However, of late, we have been signing contracts daily. We have already signed up for 92 per cent occupancy," he said.

MSL Properties general manager Tan Ching Meng is bullish about the development and expects to recoup investment in five and a half years. Its RM70 million investment does not include the cost of land.

The 26-year-old MSL Properties is the main developer of the Wangsa Maju township.

Singapore-listed MCL Land Ltd holds 50 per cent of MSL Properties. Saujana Consolidated Bhd holds 30 per cent, while Landmarks Bhd has the rest.

"We will be happy to make RM13 million in gross revenue in the first year and RM15 million the following year," Tan told Business Times in an interview.

Rental at the mall is tagged at RM8 to RM15 per sq ft including service charge.

Tan is not worried about international names like Carrefour and Jusco, both a stone's throw from Wangsa Walk, as they differ in terms of design, concept and retailers.

In fact, Wangsa Walk does not have a department store.

The mall is "a strong destination built up on things people like to do", Tan said. It has thus removed the box-like feature and accommodated more of a street mall concept.

Wangsa Walk will have a 400m long walkway, an amphitheatre that can seat 100 and space to accommodate a flea market with more than 200 stalls.

"We have an al fresco concept as people nowadays want to see and also be seen. Our concept sees the solid walls crumbling and giving way to visibility," Tan added.

Cold Storage, Celebrity Fitness, TGV Cinema, Popular Bookstore and a 32-lane bowling alley are among the 170 retailers that the mall will house.

The mall on a 5.7ha site has a gross built-up area of 495,117 sq ft. It forms the first phase of an integrated development that will also have offices and serviced residences, slated for beyond 2014.

There is also enough land to expand the mall if demand is strong.

By Business Times (by Vasantha Ganesan)

More properties under receivership this year

PETALING JAYA: Auctioneers are seeing an increasing trend of properties under receivership this year, as more owners are expected to have financial difficulty amid the continuing global financial crisis.

They said the overall supply of auction properties in the last few months had already risen by 10% to 20% compared with normal times.

Property Auction House Sdn Bhd general manager Danny Loh said medium and low-cost houses were hit the hardest.

“The number of (auction) cases for medium-cost apartments costing RM50,000 to RM150,000 has risen by 15%, while for high-end condominiums it is up by 10%. For offices the figure is up by 20%,” he told StarBiz.

He said landed properties had the smallest increase of 5% and they were saleable.

Loh handles about 100 auctioning cases per month in the Klang Valley.

He estimated the number of bidders had also dropped by 30% because banks were more stringent on financing and buyers were careful about buying big-ticket items.

He said about 60% of bidders were investors, while the remaining were buying for their own use. Both categories were equally split during normal times.

Another auctioneer told StarBiz that her company’s auctioning activities had risen from about five cases a month before the economic crisis to between five and 10 cases now.

She said properties under auction were usually priced 20% below the market value.

In the auctioning process, bidders are required to deposit 5% or 10% of the property value. In the first auction, the property price is based on the current market value. Subsequently, the price will be reduced by 10%, and another 10% in the third auction. She said the current trend was that bidders wait for the third auction.

Successful bidders would have 120 days to settle the difference between the deposit and the final price.

J. Thilagamraj Auctioneers Sdn Bhd legal manager Nithiyawathi Subramanium, who saw a 20% jump in properties under receivership over the last two months, said demand for auction properties remained the same.

She said most of the buyers were investors, particularly real estate agencies.

“They buy for investment,” she said, pointing out that agencies would recondition purchased properties for resale or rental.

She observed that more properties in Petaling jaya, Rawang and Shah Alam were coming into the auctioning market.

By The Star (by K.C.Law) (Posted on 14/4/2009)

Govt ramping up construction sector

PETALING JAYA: The construction industry, which saw a dearth of jobs last year, has caught a glimpse of up-coming jobs from the stimulus spending this year.

This will be counter-cyclical in the sense that while the industry shrank last year, it may expand in a year of economic slowdown as the Government ramps up construction to offset negative growth in other sectors.

Analysts sense this impending recovery. CIMB Research last week said IJM Corp Bhd was eyeing nine major contracts worth at least RM9.4bil in total.

Eight are domestic projects. These include the job to build a hospital in Putrajaya, two packages involving the Pahang-Selangor interstate water project, the West Coast Expressway, the new low-cost carrier terminal in Sepang, work related to the Penang Second Bridge project and upcoming contracts to extend the existing two light rail transit (LRT) lines in the Klang Valley.

All these contracts are in various stages of negotiations, and tenders for some of these projects are yet to be called.

Other companies were also reported to be in the running for some of the projects being targeted by IJM. The prospective IJM job list gave some insight into the value of big domestic construction works that are in the pipeline.

Recently, WCT Bhd was reported to be in the process of finalising some RM500mil worth of jobs in Sabah.

There is also talk about a new LRT line being planned to link Kota Damansara and Cheras that is estimated to cost RM30bil.

This project, like some of the other upcoming jobs, should attract fierce bidding from the big contractors when it becomes available.

While the prospect of big projects coming in has fuelled investors’ imagination in the past weeks, an analyst at RHB Research Institute has a more sober view of the sector.

“Generally, we continue to find it difficult to be positive on the sector over the short term,’’ the firm said in report yesterday.

The key reasons for its lack of enthusiasm centred on the argument that the projects planned under the two stimulus packages were mostly small in size.

The lack of availability of funds at the right price also remained a major hurdle for most private financing initiatives to take off.

RHB Research said that as focus shifted to rolling out projects under the two stimulus packages, it “believed certain highly anticipated mega projects” under the Ninth Malaysian Plan might be put on the backburner, or postponed to the 10th Malaysia Plan.

The firm, however, acknowledged increased investors’ appetite for risk, and had assigned higher target prices for construction stocks under its coverage to reflect this.

Fund managers are aware of this mood of recovery. Hence, share prices of the big contractors which have been rising, continued to edge higher yesterday, as they shrugged off concerns that prices of counters like IJM, Gamuda Bhd and Malaysian Resources Corp Bhd (MRCB) might have gone up too fast and too soon.

A key factor in driving up investors’ buying binge in recent weeks was high expectation that the pump-priming agenda of the new administration of Prime Minister Datuk Seri Najib Tun Razak would result in increased big construction job flow in the coming months.

Analysts, however, seem to prefer to wait and see if some of these “highly anticipated” projects materialise first.

“We maintain our ‘neutral’ call (on the construction sector) as there is a lack of re-rating catalysts in sight,’’ ECM Libra Investment Research said in an update. “Key risks going forward include below-trend order book replenishment as well as implementation risks.’’

But investors are already betting that companies like IJM, Gamuda, MRCB and WCT will emerge winners.

IJM’s share price climbed six sen to RM4.70 yesterday – its highest level since mid-September last year. The stock has risen 67% since the start of the year, but is still a long way off its peak of RM8.82 reached in February 2007.

Shares in Gamuda and MRCB advanced yesterday, with both stocks now chalking up year-to-date gains of 29% and 45% respectively. WCT, whose shares were clobbered in January, has also recovered strongly.

By The Star (by Izwan Idris) (Posted on 14/4/2009)

JLand gets offer from JCorp and Damansara Assets

KUALA LUMPUR: Johor Land Bhd (JLand) has received a voluntary takeover offer from Damansara Assets Sdn Bhd and Johor Corp (joint offerors) to acquire the remaining 58.1 million shares of RM1 each in JLand not already owned by them for RM1.55 per share in cash.

In a filing with Bursa Malaysia yesterday, JLand said its board of directors “does not intend to seek an alternative person to make a take-over offer for the offer shares.”

“In accordance with the Malaysian Code on Take-Overs and Mergers, 1998, the board will appoint an independent adviser to advise the independent directors and minority shareholders of JLand in relation to the offer,” it said in a statement.

As of March 31, the joint offerors held 172.9 million JLand shares or about 74.85% stake.

Johor Corp group chief executive Tan Sri Muhammad Ali Hashim directly holds 100,360 shares representing about 0.04% of JLand.

JLand closed five sen higher at RM1.52 yesterday with 375,200 shares changing hands.

By The Star

JCorp, Damansara Assets seek to take Johor Land private

JOHOR Corp Bhd, along with Damansara Assets Sdn Bhd, its joint-offeror, plans to take Johor Land Bhd private for RM90 million cash.

The offerors plan to buy the remaining 58.1 million shares, or 25.15 per cent stake they do not yet own in Johor Land, for RM1.55 a share, representing a 9 per cent premium against yesterday's closing price.

"The joint offerors do not intend to maintain the listing status of Johor Land," Johor Land told Bursa Malaysia yesterday.

As at March 31 2009, Johor Corp, a company with investments in the healthcare, property development and plantation sector, owned 74.85 per cent of the property developer.
Its joint-offeror Damansara Assets - a company that has businesses like quarry operations, property management services, real-estate investment management and cleaning services - does not own any stake in Johor Land.

The proposed privatisation is still pending approval from the Securities Commission and the Ministry of Finance.

Johor Land's earnings almost tripled to RM19.18 million in 2008. However, its share price in 2008 fell by 45 per cent from RM1.28 a share early last year to 70.5 sen a share at the end of 2008.

The company's share price has regained strength this year, more than doubling to RM1.42 share.

Johor Land was listed on the main board of Bursa Malaysia since 1996

By Business Times

142 builders, 479 directors blacklisted

A TOTAL of 142 companies and 479 directors were blacklisted as at March 13 after their housing projects stalled.

Housing and Local Government Minister Secretary-General Datuk Ahmad Kabit said the action was taken while waiting for the companies and directors be charged in court.

"From 2006 to March 31, 537 cases were taken to court for breaking regulations under the Housing Development (Control and Licensing) Act 1966," he said in a statement today.

He said the names of the companies and directors already convicted in court are posted on the ministry's website, www.kpt.gov.my.
Ahmad said that up to February, 156 housing projects by private developers had been categorised as stalled.

The states with the most stalled housing projects were Selangor with 39, Johor 32 and Negri Sembilan 20, he said.

He said that to overcome the problem, the Special Task Force for the Rehabilitation of Stalled Housing Projects comprising senior officers from the relevant government agencies and private sector representatives had been set up.

By BERNAMA

Office rentals in KL to fall by this year

OFFICE rental rates in Kuala Lumpur are expected to drop by 10% to 15% from their peak of about RM8 per sq ft this year amid the economic slowdown.

Although office occupancy rates are still holding up quite well, rental rates are expected to fall from their earlier highs due partly to new office space coming onstream.

DTZ Nawawi Tie Leung executive director Brian Koh said that at least a dozen new office buildings, with a total net lettable area of 4.13 million sq ft, would be completed in KL and other parts of the Klang Valley this year.

Of these, four – Menara Worldwide, G Tower, Fraser KL and The Icon – are located in KL’s golden triangle, while the rest are in central commercial areas and other decentralised areas such as KL Sentral, Bangsar and Petaling Jaya.

Amid uncertainties and fears of a long global economic downturn, occupancy costs are expected to decline in many business districts around the world, led by the contraction in occupier demand.

According to DTZ Research’s 2009 global office occupancy costs survey, covering 114 business districts in 49 countries and territories worldwide, the seismic disruption of the global financial system, which started in mid-2008, has wiped out much of the strong growth recorded by many office markets over the past few years.

The annual survey looks at the main components of occupancy costs in major office markets across the globe and provides a ranking based on total occupancy costs per workstation.

About 78% of the 114 business districts surveyed expect occupancy costs to fall this year, 3% expect a slight increase, and the balance 19% expect costs to remain stable.

Only the Middle East and Africa regions, and central and eastern Europe registered positive annual growth in office occupancy costs of 28% and 11% over the previous year, while other regions witnessed declines in costs.

All business districts surveyed in western, central and eastern Europe, and central and south America expect occupancy costs to fall this year.

In North America, occupancy costs are expected to remain stable in 61% of the business districts surveyed, while a further 39% – comprising mainly the largest business districts at the heart of the financial turmoil – are predicted to experience a significant decline in occupancy costs.

About 76% of the markets surveyed in the Asia-Pacific expect office occupancy costs to fall and 24% see costs remaining stable over the year.

In the Middle East and Africa regions, 30% of the respondents expect some increase in occupancy costs, while the rest expect costs to fall throughout this year.

DTZ said the prospects of an impending supply glut in some markets and the wider adoption of flexible work practices leading to reduced space consumption would help drive down occupancy costs, especially across Europe and the Asia-Pacific region.

Space utilisation standards across most regions are expected to decline as companies focus on space optimisation and cost reduction measures.

Meanwhile, new, better-designed offices with larger floor plates and fewer columns will gradually contribute to greater efficiency in space layout.

In terms of rents and other outgoings per sq ft, Moscow, Hong Kong and London (West End) are the top three most expensive office locations in 2009.

However, due to a higher space utilisation standard per workstation, Tokyo (Central 5 wards) was the world’s most expensive office location on a cost per workstation basis. Its space utilisation per workstation was 144 sq ft compared with Moscow’s 84 sq ft, Hong Kong’s 118 sq ft and West End London’s 118 sq ft.

Tokyo (Central 5 wards) has overtaken London (West End) as the most expensive office location on a cost per workstation basis.

London (West End), which had been the most expensive office market on this basis since 2001 when DTZ first compiled such rankings, was ranked fifth.

By The Star (by Angie Ng)

OSK plans RM150m office tower in KL

OSK Property Holdings Bhd plans to build an office tower in the heart of Kuala Lumpur to capture rising demand for office space in the city centre.

The 40-storey building, which will cost RM150 million, will sit on 0.6ha of prime land, located between Plaza OSK and Ampang Park mall at Jalan Ampang.

Currently, the Royal China Taitong Restaurant is occupying the area, said executive director and chief operating officer Gerard Tan Boon Chuan.

Construction will start after it gets the approvals and when the restaurant's lease expires in 2012.

The tower is expected to be finished by early 2015 and it will be connected to Plaza OSK, which houses Bank of China and RHB Bank, with a sky bridge.

"We expect it to be a full-fledged financial centre," he told Business Times in an interview in Kuala Lumpur recently.

The 23-storey Plaza OSK, built in the early 1980s, and the land, are owned by OSK Holdings Bhd, a financial group with operations in investment banking, wealth management, venture capital and retail services.

Separately, OSK Property is also planning office towers in Kampung Baru.

As it has only 0.15ha in the area, it will partner other land owners for the project, Tan said.

"We are mulling over the best concept and design to build. We were in serious talks with land owners," Tan said.

This year, the company is aiming for RM200 million in property sales from its five existing projects in the Klang Valley, Kedah and Negri Sembilan.

For the year to December 31 2008, it launched RM180 million worth of properties and recorded sales of RM153 million.

To achieve the target, OSK Property will use different strategies for each product and location.

It has also launched a month-long Home Free Plus campaign where buyers pay 5 per cent down payment for a property, with zero per cent interest during construction.

By Business Times (by Sharen Kaur)

OSK Property plans launches this year

OSK Property Holdings Bhd, a property developer, will launch a few projects this year, mostly comprising new phases of existing developments.

It targets to launch phase two of Sutera Damansara, a 40ha gated development in Damansara Damai, Selangor, next month or in June.

There will be 200 terraced houses on offer, worth a combined RM120 million, or about RM500,000 each, executive director and chief operating officer Gerard Tan Boon Chuan said.

OSK Property is confident of sales and is targeting first-time buyers.
The first phase has 149 terraced houses, worth more than RM460,000 each, for sale. Launched five months ago, 110 units have been sold.

Tan told Business Times in an interview that Sutera Damansara has been projected to rake in RM1 billion in gross development value (GDV). Its initial target was RM600 million to RM800 million.

"While raw materials are cheaper, we are adding more features and products," he said.

In total, Sutera Damansara will have 2,000 units of two- and three-storey terraced and two- and three-storey semi-detached houses, medium- and high-rise apartments, and a small tract of commercial centre. The project is being developed over seven years.

In Seremban, OSK Property is launching phase two of Mont Jade, a 22ha gated community built around an Australian concept, next month or in June. It will offer 54 semi-detached homes worth RM26 million.

The final phase, slated for launch by year-end or early next year, will feature more than 100 bungalows and bungalow lots worth RM120 million.

OSK Property is also launching Bangi lakehill villas, an exclusive 4.8ha niche gated development in Bandar Baru Bangi, in the third quarter.

The project will feature 74 units of two- and three-storey semi-detached houses, priced from RM1 million each, or worth around RM80 million in total.

Tan said the company was on the lookout for land in the Klang Valley, instead of Kedah or Negri Sembilan, as profits were higher.

By Business Times (by Sharen Kaur)

Luxury brands set to raise Malaysia's profile

Kuala Lumpur is on the shopping list of luxury brands in the likes of Four Seasons, St Regis and now Raffles - a welcome move for Malaysia to rid itself of the cheap destination tag.

The presence of these regal brands will help raise Malaysia's profile, improve service standards and room rates.

With the exception of possibly Langkawi, Malaysia is touted to have one of the world's lowest hotel room rates.

As market leaders, these prestigious hotels position themselves at a certain level which enables other hotels to follow suit and lift the bar for hotel rates.

"They help push room rates higher, which will be difficult to do without them ... and they help improve yield," Malaysian Association of Hotels (MAH) president Datuk Mohd Ilyas Zainol Abidin told Business Times.

Four Seasons Resort Langkawi's presence on the island, Mohd Ilyas said, helped to set a standard and boost the average room rate (ARR) of hotels there.

IIyas reckons that rates could be hiked by at least a quarter compared with current rates by five-star hotels of around US$120 (RM434) per night.

This provides the opportunity for other hotels to up their rates by between 10 per cent and 15 per cent.

Based on the hotel data from MIHR Consulting Sdn Bhd, Kuala Lumpur's rate leader is Mandarin Oriental, with an ARR of over RM600. Almost all other five-star hotels are below RM500 per night.

It has been a tough journey for Malaysian hoteliers since the 1997 crisis, as it took them seven years to start raising rates to current levels.

Hotels here are adopting a slightly different approach this global crisis, they do not plan to cut rates. Once rates fall, it is hard to raise them.

Instead, rates are maintained by value adding. Perks like breakfast, free Internet service, drop-offs and pick-ups are thrown in.

Mohd Ilyas added that big brands in Malaysia will bring in a new kind of business into the market.

"It positions Malaysia differently," he said.

Service will be at par with the premium they charge and the people employed are of a different caliber, he said.

Developer of Four Seasons Place in Kuala Lumpur Tan Sri Syed Yusof Syed Nasir is looking to net a 30 per cent higher ARR than the city-wide ARR when it opens in 2012.

"Four Seasons is a rate leader, the rate could be about RM800 per night," said Syed Yusof, who is chairman of Venus Assets Sdn Bhd, the hotel developer.

Meanwhile, the 200-room St. Regis Kuala Lumpur, a Starwood Hotels & Resorts brand, is expected to open at KL Sentral in 2014.

The owner, One IFC Sdn Bhd, were quoted as saying that it believes Kuala Lumpur is ready for the luxury brand.

As for Raffles Hotels & Resorts, sources say that its opening could be as early as 2011. And what other high-end hotel brands will Malaysia like to welcome?

Mohd Ilyas would love to see brands like Amanresorts, Banyan Tree and Bvlgari Hotels and Resorts as they cater to niche markets.

By Business Times (by Vasantha Ganesan)

Raffles Hotels to open doors in KL in 2011?

The prestigious Raffles Hotels and Resorts is now in talks for a possible opening at the RM3 billion integrated Pavilion Kuala Lumpur development in Bukit Bintang

MALAYSIA will have a royal treat as the prestigious Raffles Hotels and Resorts - a brand linked to Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud - looks to Malaysia to expand.

The luxury brand hotel may have a presence in Malaysia, at the RM3 billion integrated Pavilion Kuala Lumpur development in Bukit Bintang, as early as 2011, sources say.

Raffles, owned by Toronto-based Fairmont Raffles Hotels International (FRHI), is now in discussions with relevant parties for the possible opening.

FRHI is run by Kingdom Hotels International, a company controlled by the Saudi prince. The former also runs some 91 hotels under the Raffles, Fairmont and Swissotel brands.
When contacted, a Raffles spokesman confirmed talk that it plans to open in Malaysia and possibly in the Bukit Bintang area.

"Discussions have yet to be finalised and it would be premature for us to enter into specifics at this time," he said in an e-mailed response.

The spokesman said Raffles, formed in 1989 to restore, redevelop and manage the world-famous Raffles Hotel, Singapore, has a long-term aim of growing its footprint in urban and resort destinations that are sought after by travellers.

"As such, we consistently explore suitable opportunities in capital cities and prominent leisure markets such as Kuala Lumpur, to further this goal," he added.

Pavilion KL acting chief executive officer Joyce Yap neither denied nor confirmed that it is in talks with Raffles.

"We do have a proposed hotel (within the Pavilion development) and we are definitely interested in a luxury hotel," Yap said.

On the earliest possible date at which its hotel component will be ready, Yap said: "Two years from now."

Located at Bukit Bintang - the popular shopping zone within the Golden Triangle - Pavilion KL has allocated some 250,000 sq ft of space for its hotel component with close to 200 rooms.

Pavilion also houses 2.26 million sq ft of retail, 223,000 sq ft of corporate office and 1.2 million sq ft of residences. It is 51 per cent owned by Urusharta Cemerlang Sdn Bhd and 49 per cent owned by the Qatar Investment Authority.

By Business Times (by Vasantha Ganesan)

Developer optimistic of sales

PKNS Engineering & Construction Bhd (PECB) is cautiously optimistic its serviced apartments in Shah Alam will be fully taken up by year’s end.

General manager Mohd Sufian Hashim said response to the Mutiara Anggerik apartments in Section 15, Shah Alam had been encouraging since they were launched on April 1.

“More than 50 units have been taken up so far. Because of the current downturn, it is actually difficult to say, but we hope to achieve full sales by the year-end or early next year,” he told StarBiz on the sidelines of a media presentation on Mutiara Anggerik on Saturday.

The project’s strategic location and easy access made it appealing to would-be buyers and investors, he said, adding that the company would be offering various incentives and promotions throughout the month to attract more buyers.

Construction of Mutiara Anggerik, a project comprising three 15-storey blocks of 116 units each and which has a gross development value of RM100mil, is expected to be completed in 18 months.

Blocks A (1,493 sq ft), B (1,188 sq ft) and C (1,057 sq ft) have starting prices of RM362,400, RM281,100 and RM250,000 respectively.

Sufian said PECB was targeting the middle to high-end income group for the serviced apartments.

“We are targeting mainly customers from Shah Alam but, because of its strategic location, we also expect customers from Kuala Lumpur and as far as the Port Klang area,” he said.

Sufian said PECB was looking at some strategic locations in the Klang Valley for its next project on completion of Mutiara Anggerik.

By The Star

Building materials sector’s rise depends on strength of economic recovery

The newly formed Cabinet is expected to expedite the roll-out of construction projects under the stimulus packages and the Ninth Malaysia Plan.

IJM Corp Bhd CEO Datuk Krishnan Tan told a news wire service on Friday he was positive the new government would push forward the implementation of the fiscal stimulus packages. There are grounds for optimism in the rising supply of deals coming on stream.

In view of the improved construction sector outlook, IJM intended to focus on its home turf, instead of in the Middle East and India, he added.

Fund managers share his optimism. Their buying support enabled IJM’s share price to gain 54% this year to RM4.64 on Friday, one of the best performing big cap stocks.

That is a partial but significant recovery from IJM’s high of RM8.25 last year.

As fund managers glimpse a light at the end of the smart tunnel, they have been buying up construction stocks, principally the Big Three – Gamuda Bhd, IJM and WCT Bhd.

This interest has also extended to the stocks of companies that manufacture building materials. In particular, fund managers poured into Lafarge Malayan Cement Bhd, the biggest player in the industry, leading it to rise to RM4.40, close to its 52-week high of RM4.76.

The company is highly profitable, earning a net profit of RM119mil in just one quarter (Oct-Dec 2008). That helped Lafarge to rise to a total market value of RM3.7bil. Interestingly, as the biggest cement company, its market value is more than five times that of the biggest steel company, Southern Steel Bhd (RM680mil).

Lafarge commands a valuation premium in the industry, which is common for the biggest player in a sector. Hence, its share price exceeds that of YTL Cement Bhd (RM2.66) which is a sizeable number two in the industry.

The premium of Lafarge is all the more larger as YTL Cement’s earnings estimate is 55 sen a share for its financial year ending June 30 as against Lafarge’s 37 sen for the year ending Dec 31, according to consensus compiled by Bloomberg.

This is not a spot that YTL is used to. Group holding company YTL Corp Bhd is itself near its 52-week high of RM7.60 as the stock closed at RM7.15 on Friday. In contrast, YTL Cement is far from its 52-week high of RM4.80.

While the profitability of cement producers is buoyant, that of steel producers sank into heavy losses, mainly inventory losses, in the Oct-Dec quarter.

It helps the cement producers that their main raw material – limestone – is mined locally at a time of volatile prices for natural resources in the global market.

Eventually, the steel producers will make profits again, but in the meantime, their market values have been bashed down with, sometimes plunging further than, their losses.

In the case of Lion Industries Corp Bhd, the market accords no value to its four steel mills at Bukit Raja, Banting (both in Klang), Pasir Gudang and Labuan.

Lion Industries has a market value of RM540mil and borrowings of about RM1.5bil which are less than the combination of its shares and convertible loan stocks in Parkson Holdings Bhd that are worth over RM1.3bil, its cash of RM600mil and steel inventories of RM440mil.

On paper, investors in Lion Industries are getting its steel mills free. Alternatively viewed, it could repay all its borrowings if it sells its Parkson shares. That can be done with the Lion group’s chief Tan Sri William Cheng maintaining his reins over Parkson in which he holds a major direct stake.

CSC Steel Holdings Bhd is a smaller steel milling company but its parent is the very large China Steel Corp of Taiwan. Although CSC also incurred inventory losses the Oct-Dec quarter, it held net cash of over RM160mil. This too will be a company that will survive to benefit in the recovery cycle that will come sometime in the future.

Malaysia Steel Works Bhd, a unit of the Soon Seng group, is another depressed steel stock which traded at 71 sen or about a third of its net assets. While investors fretted over potential losses, the company has been consistently profitable over the last five years, including the Oct-Dec quarter last year when the rest of the industry was in the red. In that quarter, it earned a net profit of RM5.5mil.

Stainless steel FACB Industries Bhd is the smallest in the industry after its share price fell to 29.5 sen, giving it a market value of just RM25mil, an unlikely figure for a steel company. It suffered a large loss of RM41mil in the Oct-Dec quarter but that was almost entirely due to inventory losses.

Building materials are in a cyclical sector but as the Government’s stimulus spending accelerates, the worst should be over in this industry.

The industry’s step-up to the next stage of its cycle will, of course, depend on the strength of the economic recovery.

By The Star

Emkay: More office space in Cyberjaya

The property developer may start launching new projects from July this year to add 8.2 million sq ft of office space in Cyberjaya over the next five to seven years.

The Emkay Group, a property developer owned by Tan Sri Mustapha Kamal Abu Bakar, is providing more office space at Cyberjaya, Selangor, to capture demand at the fast-growing township.

It is building an 11-storey office tower at its NeoCyber integrated development and two office buildings, known as block C and D, at MKN Embassy Techzone, an information technology park.

Techzone is being developed by MKN Embassy Development Sdn Bhd, a 60:40 venture between Emkay Group and Bangalore's Embassy Group.

The three new buildings will provide 826,000 sq ft of office space in Cyberjaya by early 2010.

"We are targeting for another five million sq ft of office space over the next five years," Mustapha Kamal said at the launch of block D by chief secretary to the government, Tan Sri Mohd Sidek Hassan.

Since it ventured into Cyberjaya in 2006, Emkay has completed block A and B at Techzone, and Bangunan Mustapha Kamal, providing 692,238 sq ft of office space.

Emkay may start launching new projects from July this year to add 8.2 million sq ft of office space in Cyberjaya over the next five to seven years.

The new projects could be worth a combined RM3.2 billion. They include the phase two of Techzone, which will have six purpose-built office blocks and the extension of NeoCyber.

Emkay's investment strategy in Cyberjaya is to lease the buildings first and then sell them.

Last year, it sold block A and B, and Bangunan Mustapha Kamal, to Amanah Raya Bhd, a public trustee company wholly-owned by the Minister of Finance Inc, for RM266 million.

Block A and B have been leased for 10 to 15 years to the Public Service Department and the Malaysian Administrative Modernisation and Management Planning Unit (Mampu).

Bangunan Mustapha Kamal has a long-term tenant in the Education Ministry.

Emkay is in the process of selling block C, which may be leased to Pejabat Pengarah Tanah dan Galian, and block D, where it is finalising a deal to lease it to a government agency.

Business Times learnt that Cyberview Sdn Bhd, a government-owned entity responsible for the development of Cyberjaya, may buy block C and D, which are worth around RM200 million in total.

By Business Times

I-Berhad: Mall tie-up with foreign firm is on

PROPERTY developer I-Berhad says its partnership with a foreign company to develop a shopping mall remains intact, even though the deal was expected to be announced early this year.

"I think the downturn has caused them (the foreign partner) to review certain things. It's still on. The question now is (only) the timing. In fact, earthworks have already begun," chairman Tan Sri Hamad Kama Piah Che Othman said in Shah Alam yesterday.

Singapore's CapitaLand Ltd is widely speculated as the foreign partner. Although I-Berhad has not revealed the identity of the foreign party, CapitaLand on October 23 last year informed its stock exchange that it was in talks with I-Berhad.

I-Berhad did not want to reveal the cost of construction and the gross development value of the shopping mall. However, it said that the mall has one million sq ft of gross lettable area, which would be comparable to the Mid Valley Megamall in Kuala Lumpur.

By Business Times