Axis REIT to revamp ‘icon’ after losing Nestle as tenant

PETALING JAYA: Axis Real Estate Investment Trust (REIT) will soon lose Nestle (M) Bhd as an anchor tenant in one of its properties but it is in discussions with prospective tenants.

Before it leases out the office space, Axis REIT will renovate the property, long known as Nestle House, in Petaling Jaya to draw new tenants.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said the group would embark on a major refurbishment called “The remaking of an Icon”.

“We will be spending RM7mil to renovate and reposition the building as a 21st century icon. Renovations are targeted to be co-meted by January next year. We expect the building to be ready by 2010,” he told StarBiz.

He said changes to the exterior, interior and mechanical and electrical systems were planned.

To a question, LaBrooy said: “Nestle says that the building is too small to cater for its future needs.”

Nestle is said to be moving out from its headquarters, Nestle House, in October to Surian Tower in Mutiara Damansara.

LaBrooy said Axis REIT purchased Nestle House for its iconic status and location and was one of its best buys for the trust.

“It has one of the best locations in Petaling Jaya and our acquisition price of RM375 per sq ft was a bargain by all counts,” he said, adding that to date, the building had generated a lot of interest in the market.

“We are actively speaking to many potential tenants. The impact to the trust will be a building with better returns in the long term once the makeover is completed,” LaBrooy said.

While he remained unperturbed by Nestle’s moving, he did not disclose if the move would affect the trust.

“Our strength lies in our diverse portfolio of 19 properties as it spreads risk over a much larger base,” he said.

LaBrooy said the company was always looking for high-yielding acquisitions that would benefit the trust. “We have a substantial pipeline of properties in place,” he added.

Axis REIT’s occupancy as at March 31, rose to 95.4%, up from 95.2% as of Dec 31, 2008, with a few vacancies in its office properties.

LaBrooy said the company had positive rent reversions in the first quarter of this year. He said the rates were extremely competitive vis-a-vis the current markets and well below the rates charged in KL.

“As a result, we are getting enquiries from companies wanting to move out of KL to Petaling Jaya to reduce costs or avoid traffic woes,” he added.

For the first quarter ended March 31, Axis REIT posted a net profit of RM10.4mil, up 15.4% from RM9mil in the previous corresponding period. Revenue for the period rose to RM17.3mil from RM14.5mil a year ago.

It reported earnings per share of 4.07 sen versus 3.76 sen a year ago.

By The Star (by Leong Hung Yee)

Scientex maintains focus on affordable housing

KULAI (Johor): Main-board listed Scientex Bhd will continue to focus on the affordable housing segment to expand its property business in Johor.

It will offer a wider range of affordable houses and commercial properties to cater to demand, said Scientex Berhad managing director Lim Peng Jin on May 15.

"Various development plans are in the pipeline and will be executed at the right time. Meanwhile, the housing industry should continue to benefit from the improving domestic economy, low interest rate regime, stable labour market and favourable stock market sentiment," he said in a statement.

The group is launching its double-storey terraced houses called Casuarina Classic in Scientex Kulai on May 17.

Of the 187 units of the Casuarina Classic, 40% had been sold in two weeks of its opening sales date, and 100 units sold within three weeks. The units cost RM89,800 for Bumiputeras and RM92,800 for non-Bumiputeras.

It introduced the 16'x 60' affordable homes earlier at its township development in Pasir Gudang and is now offering the same model of houses in Kulai following the popularity of the homes in Scientex Pasir Gudang.

Covering 1,100 acres, this integrated self-contained township will comprise 12,000 residential and 520 commercial and industrial developments when completed. To date, more than 5,000 residential, 143 commercial and 84 industrial developments have been completed and occupied.

Scientex Kulai is an integrated township being developed in Sedenak, Kulai Jaya over a 250-acre site. Around 4,000 units of residential and commercial properties will be developed on the site in the Secondary Promotion Area of Iskandar Malaysia.

The first phase of Scientex Kulai called the Casuarina was launched in April 2008. Consisting 211 units of double-storey houses, 65% has been sold to date.

Scientex Kulai's upcoming phase, Lavender, will feature a guarded community comprising 94 units of double-storey semi-detached houses which will be launched in June.

"We have consistently delivered our properties to buyers on schedule without compromising on quality," said Lim.

"Looking back at our past projects, we have proven our capability to deliver vacant possession to buyers before completion date whilst maintaining good standards in terms of speed, cost and quality," he added.

Scientex has a market capitalisation of more than RM250 million and about RM600 million in assets. For the year 2008, Scientex’s revenue exceeded RM600 million.

In addition to its property division, Scientex’s manufacturing operations comprise two business units - packaging and polymer. It is the world's largest producer of stretch film, with an annual product capacity exceeding 10 billion metres.

By The EDGE Malaysia

Colliers: Act before property market takes off again

KUALA LUMPUR: The Asia Pacific real estate investment market continues to contract further in the face of global financial turmoil, says Colliers International.

In the quarterly update of the Asia Pacific real estate investment market, it reported total value of investment sales transactions in Greater China fell by 67% and South Asia plunged 84% in 1Q 2009 compared with 3Q 2008.

The value of sales transactions in the region's industrial property market sales saw the most severe contraction, dropping 84% between 3Q 2008 and 1Q 2009.

Colliers said the real estate market environment will continue to be challenging throughout 2009 due to uncertain occupational demand, selective lending by banks and bid-offer spread remaining wide,.

Piers Brunner, Colliers International Asia chief operating officer however expects the market to improve when banks gradually strengthen their capital structure and become more proactive in offering loans to the real estate sector.

"Therefore, the region's real estate investment yields in the coming quarters of 2009 are expected to edge upwards but at a slower pace than in 4Q 2008 and 1Q 2009. Given the projection that economic recovery may be in sight in 2010, it is now the time for investors to identify their targets, take advantage of current price weakness and act before the market takes off again," said Brunner.

Institutions and real estate investment funds, the typical buyer group for sizeable developments, have been sitting on the sidelines, or biding their time for better market entry points over the coming months.

A majority of real estate buyers have held back from entering the market, hindered by the difficulties of obtaining sufficient financing from banks in the private sector.

Simon Loh, Colliers Director of Research & Advisory said: "Despite a general reduction in interest rates in 1Q 2009, risk premiums expanded as investors perceived a rise in liquidity risk and anticipated a further consolidation of the global economy. As such, real estate investment yields softened further by 25-75 basis points (bps) in 1Q 2009."

Despite a strong recovery of local stock market prices, the yield in the overall investment sentiment in Hong Kong remained cautious in 1Q 2009, with the bid-offer spread remaining wide.

As explained by Antonio Wu, Regional Director, Asia Investment Sales, and Head of Hong Kong Investment & Retail Services, the yield spread between real estate investment yields and banks' lending rates continues to expand as investors have factored in a thick risk premium in their bids.

There is, however, a degree of optimism as the availability of bank financing is expected to improve as local banks have become more active in offering financing packages recently.

“With prices coming off 45% from the peak, prime offices in the CBD look attractive to long-term investors. Retail properties in prime locations are also expected to draw investors' attention considering the buoyant retail sales of Hong Kong which is underpinned by visitors, especially those coming from mainland China," says Wu.

Lina Wong, Colliers East and Southwest China managing director, said the relaxation of investment regulations and the lowering of equity ratios for development projects act as positive stimulation to the real estate market in China.

She added Shanghai's residential, CBD office and retail property markets are perceived as opportunities for investment as they are supported by resilient end-users' demand, sustained demand by MNCs and sustained growth of retail sales respectively.

Singapore which is experiencing declining property prices and slower investment activity recorded a total investments sales value of S$242.25 million (US$166 million) in 1Q 2009. The amount is only 1.9% of the $12.69 billion investment sales during the peak period of the market in 3Q 2007.

"Looking ahead, commercial and office buildings in Singapore are worthwhile for investors especially those in the CBD where prices are falling to a realistic level," said Dennis Yeo, Colliers International Singapore managing director.

By The EDGE Malaysia

Dubai property mart seen recovering in 2011

Dubai’s property market will recover in 2011 after a price drop this year, Deyaar Development PJSC’s chief executive officer said.

“2009 will be the year of the downturn,” Markus Giebel, the property company’s CEO, said in an interview at the World Economic Forum’s annual Middle East meeting at the Dead Sea in Jordan. “2010 will be a stabilisation year probably, and in 2011 we believe the recovery will happen.”

Dubai house prices tumbled 41 per cent in the first quarter from December, Colliers International said in an April 28 report.

By Bloomberg

AmResearch keeps 'buy' call on IJM Land

AMRESEARCH Sdn Bhd is maintaining a "buy" rating on IJM Land Bhd, the property arm of IJM Corp Bhd, with a RM2.40 fair value, following good response to the launch of its "Summer Place" condominium project in Penang recently.

The local research firm said it was surprised by the stronger-than-expected market response to the developer's recent soft launch of Summer Place, which had on offer 528 condominium units at RM330 per sq ft. The take-up rate has now reached 75 per cent, within a month of launch.

This has prompted IJM Land to bring forward its maiden debut of "The Light", which is located close to Summer Place, starting with the launch of "The Light Linear" in June, said AmResearch in a report yesterday.

The Light Linear project will offer 328 condominium units with build-up ranging from 1,379 sq ft to 1,520 sq ft and are likely to be priced around RM400 per sq ft.
"Some 1,500 potential buyers have registered with IJM Land to purchase The Light Linear - further underpinning our conviction on demand. The management may also be looking to extend its "My Space" homeownership programme with possibly early birds discount to boost buying interests," said AmResearch.

The second phase of The Light development will be "The Light Point", comprising 88 units of luxurious condominiums with build-up of between 1,800 sq ft to 2,250 sq ft in a 28-storey block. It will be launched in September 2009.

The units will be priced around RM500 per sq ft.

AmResearch said it reaffirms its conviction that IJM Land is an excellent reflation stock play, given that it is still under-researched and under-owned by the investment community.

"Its institutional shareholdings are also low, as such it can leverage on parent IJM's wide following among institutional investors to build a solid shareholding structure, and it has attributes of a large cap blue-chip proxy to the property sector," it added.

By Business Times

Penang residential property market continues to soften

The residential sector is expected to continue to lead the overall property market in Penang this year, despite a contraction in the number of transactions.

The market for residential properties in Penang has softened since the beginning of this year and is likely to continue for the rest of 2009, according to a property analyst.

Henry Butcher Malaysia (Penang) Sdn Bhd vice-president Shawn Ong told Business Times that the residential property sub-sector is set to stay as the most dominant sub-sector this year.

It comprises about 65 per cent of the total property volume, making up half of the total transaction value.

"The residential property sector has always been popular with property investors in Penang and the national All House Price Index shows that Penang's performance is above the national average but slightly below Kuala Lumpur," he said in an interview.

Ong said the residential sector is expected to continue to lead the overall property market in Penang this year, despite a contraction in the number of transactions.

However, an increase in the value of individual transactions was recorded over the same time period.

This could be due to the preference of locals and foreigners to buy more up-market property for investment and/or accommodation purposes.

"On whether this trend will continue or be a one-off phenomenon remains to be seen," he added.

In times of an economic slowdown, rising unemployment and lower disposable income, Ong noted that property will be the last thing on people's mind.

"There is no doubt that the demand for property is weak and in these troubled times, the property sector has lost its appeal."

However, as governments across the globe strategise to drive their stimulus plans, the world's economy is expected to recover and when that takes place, inflation is expected to follow and the best hedge against inflation is property.

"The Penang governments needs to draw upon policies to complement the federal government's various stimulus packages for Penang.

"In view of the current economic crisis, many sectors of the Penang are impacted as the snowball effect from the export-oriented manufacturing sector.

"The Penang real-estate sector is undeniably one of the affected sectors. However, it is during this downturn that we should take stock of the property sector in Penang and plan for the future," Ong said.

By Business Times (by Marina Emmanuel)

Johor poised to become yachting hub of the south

The Marina @ Danga Bay, Puteri Harbour in Nusajaya and Sebana Cove in Kota Tinggi will offer 665 berths once they are fully operational.

JOHOR is set to become a yachting destination of the south with three establishments that offer international class marina facilities for global sailors.

The Marina @ Danga Bay, Puteri Harbour in Nusajaya and Sebana Cove in Kota Tinggi will offer a total of 665 berths once they are fully operational.

Of the three, the Marina @ Danga Bay along Lido Beach has an edge as it is located only 6km from the city centre.

Danga Bay Sdn Bhd chief executive officer Datuk Lim Kang Hoo said the project, to be developed at RM65 million, will have a total of 250 berths once it is completed in July.

At present, about 50 berths are in operation and the first boat berthed at the waterfront early this month.

"Our selling point is our proximity to the city. Sailors who berth in our water could visit the city and various places of interest besides getting their supply of water and other goods," he said.

The Marina @ Danga Bay will feature 30 rooms for lodging, food and beverage outlets, a gymnasium and a spa and an office suite.

Over at Puteri Harbour, the development will split into three phases. The first, which was developed at RM10 million, comprises 76 berths and they are already in operation.

The occupancy rate is about 20 per cent, mainly made up of foreigners.

UEM Land Bhd resident and marina manager Mohd Shah Mohd Shahil said another two phases to be developed at RM32 million in the next four years will consist of 232 berths, including 12 for mega yachts.

"With Iskandar Malaysia being put in place, we see a vast growth potential in the marina industry," he said.

Sebana Cove & Marina Resort's marina executive Hamidon Abd Rahman said the marina, which consists of 107 berths, is the first in Johor and was built 15 years ago with a 70 per cent occupancy rate at present.

"Our customers are long-term guests who are mainly foreigners. Our marina is supported by our resort facilities, making it a wholesome retreat by sailors," he said.

Marina @ Danga Bay and Puteri Harbour, which are located at the west of the Causeway, are near to each other.

However, sailors from the two marinas will have to make a huge turn and bypass Singapore in the south before getting to Sebana Cove, which is located at the other side of the Causeway. The journey takes about three hours during fine weather and up to 48 hours if it is against the wind.

Johor Tourism and Domestic Trade Committee chairman Ho Seong Chang said the three yachting destinations will be a favourite among foreigners once they are fully developed.

"We plan to enhance connectivity from one marina to another. Water taxis are being planned at the Johor Straits to provide the connection for sailors," he said.

By Business Times (by Sim Bak Heng)

Faber expects dip in property revenue

Faber Group, which plans three property launches this year, is exploring the possibility of tying up with banks to offer stimulus packages

FABER Group Bhd, a healthcare support services group, expects revenue contribution from its property division to fall this year as the economic slowdown hits housing demand.

It plans three new launches this year, with a total gross development value (GDV) of RM392 million, given the right market conditions.

One of the projects comprises 31 link-villas and three bungalows on 3.4ha in Taman Desa, Kuala Lumpur. It plans to launch the development, with estimated GDV of RM75 million, by the fourth quarter.

The other two are Phase 1A of a joint venture with the Kuala Lumpur City Council (DBKL) in Taman Desa and Phase Four of its Laman Rimbunan development in Kepong, Selangor.
The Phase 1A project consists of 40 semi-detached houses and six bungalows, with a GDV of RM98 million.

Phase Four of the Kepong project features 150 semi-detached houses and three bungalows, with a GDV of RM219 million.

"Both projects are targeted to be launched by the third quarter of this year, subject to market conditions," Faber Group managing director Adnan Mohammad said.

The group is also exploring the possibility of tying up with banks to offer stimulus packages.

Last year, the property division accounted for 23 per cent of the group's revenue, with the rest contributed by its integrated facilities management (IFM) business for hospitals.

"This year, we expect to see a dip in (contribution from) the property division, but it will be compensated by higher IFM activities, especially with our venture into the United Arab Emirates (UAE) and India," Adnan said after the group's annual general meeting in Kuala Lumpur yesterday.

Faber Group is targeting this year's revenue to increase 12-14 per cent from RM668.5 million last year.

Its overseas contribution is expected to double to 10 per cent this year after it clinched two contracts in the UAE worth RM66 million and another IFM project in India, which will contribute RM18 million revenue.

Faber Group has 17.2ha of undeveloped land with a GDV of RM900 million and unbilled sales of RM752 million.

By Business Times (By Zurinna Raja Adam)

Sime Darby Property rakes in RM600m during parade

SIME Darby Property Bhd saw more than RM600 million worth of properties being sold during the third instalment of its Parade of Homes promotion, which was launched on March 6 2009.

This translates to a sale of over 900 properties in the developer's 10 townships.

The campaign, which covers both residential and commercial units, will end on June 15.

Two of the most popular Sime Darby Property's townships, Bukit Jelutong and Putra Heights in Selangor, have also enjoyed good take up rates for the products launched during the latest Parade of Homes promotion.

By Business Times

PKNS eyes REIT buy

Selangor State Development Corp is said to be negotiating to buy a controlling stake in a listed REIT with total assets worth more than RM600 million

The Selangor State Development Corp (PKNS) plans to take control of a local real estate investment trust (REIT) within the next six to 12 months to grow its business.

It is learnt that the state property arm is eyeing a listed REIT with total assets valued at more than RM600 million.

General manager Othman Omar said PKNS was negotiating to buy a controlling stake. He declined to name the REIT.

"We hope to seal the deal by the end of this year. We want REITs to be one of our tools to grow," he told Business Times in an interview in Petaling Jaya.

PKNS will inject a slew of properties it owns into the REIT to double the size to over RM1 billion, Othman said.

It is targeting Wisma PKNS, Kompleks PKNS, the 500,000 sq ft Shah Alam City Centre mall and the Shah Alam convention centre.

PKNS will include a few shopping malls it is setting up in its new developments in the Klang Valley as well as the 27-storey Menara Worldwide office tower in Jalan Bukit Bintang, owned by its wholly-owned unit, Worldwide Holdings Bhd (WHB).

"We plan to reap the best benefits during this crisis to position ourselves. This is the best time to get skilled workers, cheaper land and assets," Othman said.

PKNS has put in place key performance indicators for all departments as part of efforts to increase its revenue and net profit.

It aims to achieve a record RM1.06 billion revenue this year.

It also wants to double profit margins to 40 per cent by scrapping negotiated tenders and replacing them with open tenders.

"PKNS has a responsibility for making profits, which can be channelled back to the state. We will look at all avenues to grow, but cautiously," Othman said.

PKNS, which has 4,000ha of undeveloped land in the Klang Valley, is looking at tying up with Selangor state arms Kumpulan Hartanah Selangor Bhd, Perbadanan Kemajuan Pertanian Selangor and Permodalan Negeri Selangor Bhd to develop their landbank.

By Business Times (by Sharen Kaur)

MAHB hiring firms to help build budget terminal

MALAYSIA Airports Holdings Bhd (MAHB) is in the midst of hiring consulting and architecture firms to help build the new permanent low-cost carrier terminal (LCCT) at the KL International Airport (KLIA) in Sepang.

Senior general manager of operations Datuk Azmi Murad said construction works should start by year-end.

He, however, did not say if MAHB had started accepting bids for the construction.

Azmi was speaking after the launch of a flight information speech system called "KLIA One Touch" in Sepang yesterday.

MAHB managing director Datuk Seri Bashir Ahmad said last month that the airport operator was confident of completing the new LCCT and a new runway in two-and-a-half years once work starts.

He estimated that the development cost would not exceed RM2 billion.

The new LCCT can handle up to 30 million passengers a year, with the capacity for expansion of up to 45 million passengers.

Azmi said total passenger arrivals at the KLIA and the current LCCT dropped 0.6 per cent to 8.7 million arrivals year-on-year in the first four months of 2009.

During the January-April period, there was a 16 per cent drop in passenger traffic at the KLIA to 4.7 million, but this was offset by a 31 per cent growth at the LCCT.

Nevertheless, Azmi said he is happy because there has been no cancellations arising from the influenza A (H1N1) outbreak.

"People are cautious of travelling. If they need to, the option is to go for a lower cost of travel. That's why there's negative growth at the main terminal. But I don't see any contraction due to the H1N1 outbreak," he added.

Users can now get flight information directly from KLIA One Touch by calling 03-8776 0888.

The 24-hour system is a self-service interactive voice response provided by NuSuara Technologies Sdn Bhd, a subsidiary of the Minister of Finance Inc.

For arrival flights, queries can be made based on either flight number or flight's origin city. For departures, queries can be made based on flight number or flight's destination city.

"KLIA One Touch is capable of handling 30 calls at any one time with two language options available - Bahasa Malaysia and English," NuSuara chief executive officer Datuk Dr Ramly Abbas said.

By Business Times (by Zuraimi Abdullah)

KLCCP posts RM362.5m net profit in 4Q

KUALA LUMPUR: KLCC Property Holdings Bhd posted net profit of RM362.53 million in its fourth quarter ended March 31, 2009, up 37% from RM264.77 million a year ago, boosted by fair value adjustment of the investment properties.

KLCCP said on May 12 revenue was RM211.58 million compared with the RM211.04 million a year ago. Earnings per share was 38.81 sen versus 28.34 sen. It declared tax-exempt dividend of 5.5 sen per share.

For the full year, its net profit rose to RM535.65 million from RM441.57 million. Revenue was RM861.22 million versus RM843.04 million.

“The increase in revenue was mainly contributed by increased rental of office building in particular Dayabumi (higher occupancy and rental revision), increased rental of the retail mall (higher rental) and increase in revenue from the car park operations despite a reduction in revenue from hotel operations.

“Besides the higher revenue, the increase in profit before taxation was also contributed by higher interest income and lower finance cost borne during the year,” it said.

On the 4Q revenue, it said there was a decline by RM7.2 million over 3Q’s RM218.8 million whereas the profit before taxation of RM659.0 million increased by RM533.7 million as compared to the preceding quarter of RM125.3 million.

“The decrease in revenue was mainly attributable to the reduction in revenue from hotel operations which was partially offset against the higher revenue achieved from the retail mall (higher rental) and office building in particular Menara ExxonMobil (rental revision),” it added.

KLCCP said the higher pre-tax profit was mainly due to the surplus from fair value adjustment of the investment properties of RM508.4 million earned in the current quarter.

For the prospects, it expected the current adverse economic conditions affecting demand would continue to impact the group’s hotel and retail businesses for the coming financial year.

However, it expected to benefit from the continuing measures which have been implemented to improve efficiency and mitigate the impact of the prevailing economic circumstances.

By The EDGE Malaysia

Strategies to boost PKNS' performance

The Selangor State Development Corp (PKNS) has put in place key performance indicators (KPI) at all departments in a bid to increase revenue and net profit.

General manager Othman Omar said he has identified several strategies to drive growth at PKNS, Selangor's property arm.

Top of the list is to focus on open bidding for its projects.

Previously, it gave contracts based on negotiated tenders. This was not competitive as profit margins were below 20 per cent, mainly due to claims on additional costs, Othman said.

"Since February we have been practising open and selective tendering and awarding contracts to the lowest bidder, not compromising on quality," Othman said at a news conference in Petaling Jaya yesterday to highlight the KPIs and his first 100 days in office.

Othman said PKNS' austerity drive and recent cost-cutting programmes have reduced its operational spending by RM87 million in the last three months.

"We achieved that by not spending on infrastructure and scaling back on projects. We are targeting RM100 million by end-December," he said.

This year, PKNS aims to make RM1.06 billion in revenue, a record for the group. Last year, its revenue was RM825 million.

"Through our plans, we will make sure we get the margins we are supposed to get. The target is 30 per cent but at the end, it could be 40 per cent," Othman said.

PKNS has set up a division for business development to identify more than RM2 billion worth of projects over the next two years. The projects, comprising a mix of retail developments and townships, will be done jointly with land owners, private developers and state agencies.

"We are talking to a few parties and working out the conceptual designs for the best costs," Othman said.

PKNS' finance department has also been asked to raise RM1 billion by December 2010.

The cash will be used to buy land and assets to build up PKNS' portfolio.

By Business Times (by Sharen Kaur)

Growth of Asian REITs set to rise

ASIA’S real estate investment trust (REIT) market has been growing at an impressive rate, from a mere US$2bil in 2001 to a whopping US$48.23bil in market capitalisation as at December 2008, Asian Public Real Estate Association (APREA) chief executive officer Peter F. Mitchell said.

Peter F. Mitchell

“There is enormous growth potential for the REITs industry in Asia, especially if more funds are channelled to the industry in this region,” he told StarBiz in a exclusive interview recently.

Mitchell said while the growth potential (of REITs in Asia) was good there were several stumbling blocks that were slowing its growth.

“Asia’s REIT industry is still fragmented and poorly represented,” he said, adding that there was a lack of unity and many cross-border issues had to be resolved, compared with Europe and the United States, which have powerful representation.

Moreover, he said, while the REIT industry, like all other asset classes, had been impacted by the current global financial crisis, the biggest problem facing the industry was the unequal allocation of property investment funds.

“A lot of the global fund managers are still biased towards investing in the West, despite returns and growth often being more favoubale in Asia,” he noted.

APREA is a non-profit industry association representing real estate members (listed and unlisted) in Asia Pacific and the organisation was formed mainly to promote and develop the REITs market in Asia to local and foreign investors.

Currently the bulk of global real estate funds are channelled to the Netherlands (where REITs started originally), Australia, Germany, the United States, Britain and France.

In Asia, Japan tops the list as the most favoured destination for global real estate fund managers, with Singapore coming in second.

However, Mitchell said that in recent years Hong Kong, and countries in Southeast Asia like Malaysia, had also attracted sizable foreign funds into the local REIT industry.

“We believe China could be a huge potential for the REIT market to flourish once regulatory and land issues are ironed-out,” he noted.

On the performance of local REITs, Mitchell said REITs were generally defensive in nature and that in recent months (from January) Malaysian REITs had outperfromed the Kuala Lumpur Composite Index and only in April did the equity market perform better than REITs, as global market conditions and sentiment improved.

“In the republic’s case the REIT market is likely to be in an overbought position or saturated point and probably needs some cooling off,” he said.

Overall Malaysian REITs had in the past three to four mont hs performed fairly well, compared with the REITs markets in other Asian countries, out-performing developed markets like Japan, Sinagpore, and even Hong Kong.

Mitchell said there was good upside potential for Malaysia REITs in the mid to longer term.

Some of the local REITs that had performed exceptionally well in the past seven months (October 2008 to April 2009) in terms of percentage change in market capitalisation of individual REITs include Al ’aqar KPJ (22.32%), AL-Hadharah Boustead (18.42%) and Amanah Harta Tanah PNB2 (9.86%).

By The Star (by Danny Yap)

British varsity to make Iskandar leading hub

BRITAIN’S Newcastle University Medicine (NUMed) wants to position Iskandar Malaysia as one of the leading higher educational hubs in the region.

Prof Reginald Jordan answers questions from reporters after announcing the enrolment of the first intake of the university’s students at Danga Bay in Johor. - Bernama

NUMed Malaysia Sdn Bhd chief executive officer Professor Reginald Jordan s aid its first international branch campus in Johor would be the main catalyst to promote the state as the preferred destination for medical studies.

He said N UMed had received an overwhelming response from international an d local students since announcing the opening of its Johor campus five months ago.

“So far, we have received over 200 enquiries to study at our branch campus in Mal aysia, ” Jordan told a press conference last week.

He said the enquiries came from Malaysia and foreign count ries such as Egypt, India, Singapore, Sri Lanka, Europe and the US.

The RM300mil campus on a 5.26ha site in EduCity is currently under construction in Nusajaya, which is one of the five flagship development zones in Iskandar Malaysia, and scheduled for completi on in May 2011.

Jordan said before the Johor campus was ready, the first two NUMed Malaysia cohorts of 40 students each would undertake the first two years of the Bachelor of Medicine and Bachelor of Surgery (MBBS) prog rammes in Newcastle.

He said they would return to Malaysia to complete the third, fourth and fifth years in Johor and, subsequently, from 2011, all five years of the MBBS programme would be established and delivered at the Nusajaya campus.

“Our target is to enroll 185 students yearly from all over the world at NUMed Malaysia by 2013 and, by then, it will have 130 t eaching staff,” said Jordan.

He said by choosing to study at NUMed Malaysia, students would obtain a reputable British medical qualification from an internationally recognised university a t a significantly less costs compared with a five-year medical degree programme in Britain.

Jordan said that about 700 doctors practising in Kuala Lumpur and 7,000 others in the region now were graduates from the university.

The university’s School of Medicine and Surgery was established in the city of Newcastle upon Tyne in 1834 and medicine at the university is currently ranked fourth in the Times Good University Guide 2009.

By The Star (by Zazali Musa)

Sharpening realtors skills

DESPERATE times call for creative measures and as the country’s property sector has softened somewhat, it has become more challenging to close sales as realtors are increasingly rethinking how to do things differently.

For real estate agency Reapfield Properties Sdn Bhd, the current downturn serves as a good opportunity to train its agency force, senior vice-president Gerard Kho said.

From left: Reapfield Properties director Ronnie Fernandez, president David Ong, senior vicepresident Gerard Kho and director Roland Low at the company’s Annual Business Conference on Mar 26, 2009.

“This is the best time to do it because our agents will not be so bogged down with transactions. It is a great opportunity to sharpen our axes and be well prepared when the market picks up,” he said at the company’s recent Annual Business Conference.

Kho said one of Reapfield’s prime focus was to train its agents to better interact with its clients.

“We’re encouraging our agents to learn how to speak to clients in the right way and to portray themselves in the right manner to achieve the optimal customer experience. With the market now, we can’t just be good enough – we have to be excellent in what we do.

“We also need to teach our people to address the present concerns of buyers. If they are not well trained, they would not be able to pass on the message that now is actually a good time to invest in property, given the lower interest rates,” he said.

Kho also said Reapfield would be focusing on developing its relationship with its existing clients.

“In times like this it’s hard to get new customers. It is more important to look back at our old clients. In the last five years we’ve served over 30,000 clients. That’s 30,000 people that we have already and that we can work with right now. We cannot look for new people if we cannot take care of the clients whom we have transacted with,” he said.

Kho also said Reapfield would be incorporating new technological tools to allow its agents to track its exciting clients better.

“We want to lift the industry up to a very high standard so that people will be able to trust us and have the confidence to invest in property and be able to off-load it as well,” he said.

Reapfield currently has about 500 agents and over 30 offices in Malaysia. About 90% of its business is in the secondary market focused within the Klang Valley area.

Reapfield director Roland Low noted that there has been a slowdown in transactions since the last quarter of 2008 and first two months of this year. However, he attributed the slowdown to buyers being more cautious with their spending.

“It is because of the adverse news we’ve been seeing and reading everyday. But having said that the market is still active. We are still seeing a lot of activities in a lot of areas within the residential sector.

“There is a lot of focus on high-end areas like KLCC and Mont Kiara where you hear observers say that transactions have dropped,” Low said, adding that there were still a reasonable number of transactions for properties in prime areas like Bandar Utama, Subang Jaya, Damansara Heights, Bangsar and Taman Tun Dr Ismail.

PPC International Sdn Bhd executive director Thiruselvam Arumugam says the current downturn serves as a good time to ‘touch base’ with its existing and previous clients.

“We take the opportunity to get in touch with our clients now because during good times we hardly have time to do so,” he says, adding that his agents still had lots of work to do despite an economic slowdown.

“We are all still pretty busy. People still have money and are still buying. My office is near Sogo and I always see people with shopping bags,” he laughs.

Thiruselvam also says his agents were always subjected to ‘on-the-job’ training and constantly learning to stay ahead of the competition.

PPC International has offices in Kuala Lumpur, Shah Alam, Penang and Alor Star.

SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng says when there is an economic downturn, everyone just needs to work harder.

“Now would be a good time to focus on our strengths and focus on what we are good at. We need to improve our service quality because we cannot compromise on quality, especially during a downturn.

“Both buyers and sellers will need more assistance and we need to be more patient and help them to close sales.”

Chan says it was also hiring more people and plans to penetrate new markets this year.

“We are very Klang Valley-based and want to explore more outstation transactions,” she says, adding that it had regular training programmes for its people. “Training has always been our forte. We have half an hour training sessions everyday.”

By The Star (by Eugene Mahalingam)

Developers must know what buyers want when they return

WITH competition in the property industry set to intensify again once the economy and demand for property starts to recover in the next few months, developers need to get their act together and look for more ingenuous ways to serve buyers better.

Instead of just going ahead to unload their products in the market, they should do some serious “soul searching” and find out what exactly property buyers are looking for and what they can do to meet those needs.

After a pretty dull market for almost a year since the impact of the global financial crisis hit the country’s shores, injuring the confidence level, there have been very few project launches as developers “rolled up their sleeves” and deferred many of their projects to minimise their financial exposure.

Developers should be commended for this decisive move that prevented a flood in property products at a time when demand has simply evaporated. This has contributed towards stabilising property prices compared with the “free fall” experienced in many markets.

The deferment of projects resulted in a 72% plunge in total new housing launches in the third quarter last year to 4,966 units from 17,975 units in the first quarter of 2008. This has helped address the demand-supply imbalance over time and stabilised prices.

While the mass market is holding out quite well with positive response to the various housing packages from developers, the take-up for high-end property products such as bungalows and luxury condominiums is still soft. By deferring their projects, developers are also able to conserve their cashflow and keep themselves afloat during the unprecedented economic crunch that started in the United States early last year.

With some positive signs that are being widely read as early signals that the global economy may be bottoming out and will be bouncing back soon, industry players must be waiting eagerly to get back into the business of launching and building projects.

The recovery in the local stock market will generate some positive wealth effect. Confidence among the people is also expected to surge again as the effects of the Government’s stimulus packages start to kick in.

Having waited out so patiently for the market to stabilise before they move back with more confidence, developers should make good use of the current lull period to undertake an indepth study and research of the market as much have changed since the crisis.

For the good of property buyers and the developers themselves, industry players have to get to the bottom of things on what really matters for buyers these days and in the coming days, and have in place the right products.

Retraining and upgrading the skills and competency of the staff to think out of the box and come out with product plans that are in sync with the market needs and better still products with the “Wow” effect to safeguard buyers, in terms of their welfare and investment returns, will be a good start.

Whether they are the big-time developers with strong financial backing or the smaller developers undertaking small-scale projects, developers should harness their strength and find every possible ways and means to further add value to buyers.

With newspapers swarming with news on fatal snatch thefts, bold daylight burglaries, car-jacking and other crimes, it is important that developers, town planners and the authorities, including local councils and the police, work closely to ensure our neighbourhoods, streets and homes will be safe and secure again.

There is much to be done to spruce up the living environment and make our residential and working places sanctuaries for personal comfort, safety, growth and development.

The concept of Safe Cities should not be just a marketing tool employed to promote projects but should actually be havens for wholesome family living.

● Deputy news editor Angie Ng believes that by planning holistically and making safety a key focus in all their projects, property industry players can be the first line of defence to weed out crime in neighbourhoods.

By The Star (by Angie Ng)

Valuers laud new guidelines

PROPERTY valuers and industry players are generally positive about the amendments on the asset valuation guidelines by the Securities Commission (SC) as announced yesterday.

However, there are concerns over the minimum requirement on the number of years of post-registration experience set on valuers that may halt the growth of the asset valuation industry.

Valuation firms making submissions for asset valuations for public-listed companies must now have at least one equity owner at head office with a minimum of seven years’ post-registration experience.

The firms must also not be issued with more than two sanctions by the SC and Bursa Malaysia in the past three years.

Association of Valuers and Property Consultants in Private Practice Malaysia president James Wong says: “While we appreciate SC’s requirements for higher standards of valuation submission, we want the commission to consider whether the amendments made will result in discrimination of the smaller firms, emerging firms and sole-proprietorships.

“We request that the minimum post-registration experience for equity owner be reduced from seven years to five years.

“We also recommend that firms which have no prior experience and track record but have external valuation experts to assist be given the opportunity to seek approval from SC to submit the valuation for the commission.”

DTZ Nawawi Tie Leung Property Consultants senior director Adzman Shah Mohd Ariffin says the move is good to ensure certain level of competence within the industry players but this will also restrict young valuers from being able to carry out asset valuations for the SC.

“With the new guidelines, it will not be easy for new and smaller firms to penetrate the market in asset valuation,” he tells StarBizweek. “This might have an impact on the growth and prospects of the profession.”

Ernest Cheong PTL Chartered Surveyors principal Dr Ernest Cheong says the amendments made is a good move to filter those who are under qualified and inexperienced valuers from undertaking assets valuation worth millions of ringgit for the SC.

“It is a good move but I think it is not stringent enough,” he says.

He opines that any valuer found to misbehave or has been issued a warning letter by the SC should be barred from submitting valuation to the commission for a three-year period after receiving its first sanction.

“If they repeat the same offence, the punishment should be doubled to six years instead. They should be barred for life should they be doing it for the third time,” says Cheong.

He says valuers undertaking asset valuation for the SC, which usually involve asset of public-listed companies, should exercise the utmost professionalism and integrity in view of public interest.

“We fully support the amendments made as this would help prevent property valuers from colluding with public-listed companies’ directors from intentionally over-valuing property assets.”

Under the new guidelines, property valuers carrying out valuations must possess minimum requirement of five years post-registration experience compared with three years previously.

Valuation firms are also required to have sufficient internal controls and procedures, including having an established peer review process and head office that oversees all its branches.

CH Williams Talhar & Wong Sdn Bhd managing director Goh Tian Sui says the stringent requirements imposed by the SC will tighten up the quality of reporting work on asset valuation.

“This is a process we have to go through to have a higher standard of reporting in Malaysia,” he says.

By The Star (by Shannen Wong)

Sunrise mulls keeping cash for strategic buys

Property developer Sunrise Bhd may not pay dividends this year to keep cash so that it can snap up strategic land buys.

The company has a policy of paying 35 per cent of its net profit as dividends. However, its board has yet to decide and it will also consult institutional investors first.

"I personally would like a high dividend payout to shareholders, but this year is different," executive chairman Tong Kooi Ong said.

"Sunrise is being offered tremendous opportunities. Cash kept in the company can come in handy," he told reporters after a briefing on the company's performance in Kuala Lumpur yesterday.

The group's current net borrowing is RM346.7 million. This is expected to fall further, thanks to future cash flow of unbilled sales. (Unbilled sales are sales that have yet to be booked in its accounts.)
In the nine months to March 31 2009, the group chalked up new property sales of RM247 million despite economic uncertainties.

"We've recorded property sales every single month during this challenging period, even in the last quarter of 2008 when conditions were weakest," Tong said.

On Sunrise's proposed development in Canada, Tong said it will be on a build-and-sell basis. However, the group has not decided on the timing of the launch.

On the home front, property sentiment has improved, with interest rates falling sharply and borrowing costs at just between 3.2 per cent and 3.5 per cent.

Many developers deferred property launches last year, allowing for existing units to be taken up.

"There are signs of nascent economic recovery," Tong said.

"We expect a property boom towards the end of 2011, based on historical two-year lag after the global economy bottoms out at the end of this year."

In its filing to the stock exchange yesterday, Sunrise said its third quarter net profit jumped 48 per cent to RM30.57 million from a year ago, thanks to positive contributions from its Solaris Dutamas, Mont Kiara Meridian, 10 Mont Kiara and 11 Mont Kiara developments.

It is hopeful of performing better than in the last financial year given its substantial unbilled sales of RM970 million as at end-March this year.

By Business Times (by Ooi Tee Ching)

Bungalow project to help Sunrise lower gearing

KUALA LUMPUR: Sunrise Bhd expects to reduce its net gearing level of 37.5% with proceeds from The Residence @ Mont’Kiara project, which has registered bookings totalling RM88.4mil.

As the bungalow development was already completed, all proceeds would immediately reduce the company’s current net borrowings of RM346.7mil, said executive chairman Tong Kooi Ong.

On new projects, he said Sunrise would time and price future property launches based on prevailing market conditions.

“We will take into consideration what the market demands are when establishing our costs and product mix,” he said at an analysts briefing yesterday.

The high-end segment would take longer to recover from the current economic downturn, Tong said, adding that there would be greater demand for affordable properties.

“We have a range of potential projects that we can scale up or down depending on the market situation,” he said.

Among the developments in the pipeline are its MK 20 and MK 28 projects within the Mont’ Kiara area and its Solaris Towers project off Jalan Sultan Ismail in Kuala Lumpur.

Tong said Sunrise would launch one of these projects by 2010.

On another note, Tong said the company’s directors had yet to decide whether to declare dividends for the financial year ending June 30.

“We are still undecided. While people buy shares because of the dividends, for this year, we feel that would not be the best decision. We feel our shareholders will benefit more if we invest in assets instead.”

Tong hinted that Sunrise was looking to purchase land for development purposes within Kuala Lumpur but outside the Mont’ Kiara area.

Meanwhile, the company’s net profit for the third quarter ended March 31 surged 48% to RM30.57mil from RM20.64mil in the previous corresponding period.

Revenue rose 5.3% to RM165.22mil against RM156.96mil previously.

The rise was attributed to new sales of some of its property projects, primarily 11 @ Mont’ Kiara and 10 @ Mont’ Kiara. For the nine months ended March 31, Sunrise chalked up new property sales amounting to RM247mil.

“As of March, we have unbilled sales totalling RM965mil which will underpin earnings until end-2011,” Tong said.

By The Star