TA unveils Canadian hotel

An artist’s impression of Aava Whistler’s lobby area. The hotel will be soft launched in October and officially opened in November in time for the February winter Olympics. The TA group bought the Canadian 194-room property in December 2008.

TA Enterprise Bhd will officially open its Aava Whistler Hotel in Canada, after a C$33mil refurbishment, making this its first hotel on Canadian soil. It has two hotels in Australia, which are also undergoing refurbishment this year at a total cost of about A$4mil.

Tiah... we are on the lookout for other hotel acquisitions over the next two years.

Its group managing director and chief executive officer Datin Alicia Tiah says the company will be on the lookout for other hotel acquisitions over the next two years with a preference for those in the central business districts (CBDs) in large cities, particularly in Hong Kong and Singapore.

Tiah says she ventured into the hotel business in 1997 by default. In retrospect, there are no regrets, she says.

The Radisson Plaza heritage building needed a bit of work but the effort is well worth it.

The global downturn has resulted in a 10% to 15% drop in room rates and occupancy for its Sydney hotel.

Despite that, the Radisson contributed about 15% to the group’s revenue in financial year 2008 and 2009.

TA bought the Sydney hotel for A$115.5mil. Radisson generated sales of RM73mil in 2007, RM82mil in 2008 and is expected to bring in RM77mil in the current financial year which ended on Jan 31.

“I learnt a lot of things from that first project – the operations and management of a hotel business, the long gestation period and the importance of recognising an opportunity when it comes,” Tiah says. Although she likes hotels in CBDs, Tiah remains open to opportunities in different categories of the hospitality industry.

“We purchased the Coast Whistler because I know the place. I go there for my skiing holidays and I am familiar with the area and the hotel business there. Most of them have multiple owners who lease the units back to the operator.

“With Coast Whistler, it was different. It was a little boutique hotel with about 190 rooms and there were no multiple owners,” she says.

Located at the base of world’s renowned Whistler and Blackcomb Mountains in British Columbia, the Coast Whistler is popular with winter sports enthusiastics. Since the purchase, she has renamed it Aava Whistler Hotel. It will be opened in time to tap the winter Olympics in February 2010, using the same strategy as its Radisson Plaza hotel in Sydney.

TA bought the Canadian hotel for C$33mil at the height of the global downturn in December 2008.

TA will also be operating its sole food and beverage outlet, White Spot, a franchised chain fairly similar to TGIF.

“Upon acquisition, the hotel business needs two to three years to be profitable. But because there is always a demand for rooms during the Olympics – in Sydney in 2000 and in British Columbia in 2010 – we are able to tap into that market the first year charging premium rates. We will do well for the first year because of these major events and we’ll just let the second and third years look after themselves,” says Tiah.

In April, the group concluded its Westin Melbourne deal at a cost of A$160mil.

Tiah says the 262-room five-star luxury hotel is a jewel in terms of location. It is sited at the corner of Collin and Swanston streets. Its occupancy in March was 80% with room rates at about A$300 a nite.

By The Star (by Thean Lee Cheng)

TA Enterprise to list property unit by October

The property business, TA Global Bhd, will have a paid-up capital of RM1.5 billion and RM2.4 billion in assets

TA ENTERPRISE Bhd (TAE), a property and financial services firm, is targeting to list its property business on the Main Market sometime during end-September or early October, its top official said.

The property business, known as TA Global Bhd, will be one of Malaysia's largest property firms with RM2.4 billion in assets, managing director and chief executive officer Datin Alicia Tiah said.

It will have an issued and paid-up capital of RM1.5 billion.

"If everything goes well, we can issue the prospectus in one month's time. It all depends on how soon we get approval from the Securities Commission," she told reporters at a briefing yesterday.
The move will essentially see TAE holding all of the group's financial services businesses and TA Global holding the property-related assets.

The reason for doing this is to unlock TAE's value for shareholders, Tiah said.

TAE's board also announced yesterday a first and final dividend of 4.5 per cent less tax for the fiscal year ended January 31 2009.

Holders of its TA Warrants 1999/2009 will be entitled to the dividend if they exercise the warrants into TAE shares before the warrants expire on June 24 this year.

As part of the proposed listing scheme, those who exercise the warrants before the expiry date will become TAE shareholders and also obtain TA Global shares and irredeemable convertible preference shares (ICPS).

TAE is proposing that shareholders get three TA Global shares and three ICPS for every five TAE shares held. This, however, is just an indicative ratio, Tiah said.

If all the warrants are converted, TAE will end up holding 38 per cent of TA Global, allowing it to equity account the business.

Among the properties that TA Global holds are development projects such as Damansara Idaman, Idaman Villa, Seri Suria and Nova Square.

Its property holdings include Menara TA One in Kuala Lumpur, Terasen Centre (Vancouver), Radisson Hotel (Sydney), Aava Whistler hotel (Whistler, Canada) and Westin Hotel (Melbourne).

Once the listing is done, the TAE group - one of the largest landbank owners in the vicinity of the Kuala Lumpur City Centre - may decide to set up retail, office and hospitality property trusts. This may be done with a third party, Tiah said.

On another front, Tiah said that plans for TAE to obtain an investment banking licence had been put on hold.

The group is cash-rich, with more than RM200 million currently.

By Business Times (by Adeline Paul Raj)

Bargain hunting in downturn

The commercial markets are still holding up fairly well, especially on the income-generating assets or investment grade properties in both the retail and office segments.

Regroup Associates Sdn Bhd executive director Paul Khong says, however, that market activities are relatively slower this year and are` expected to continue through the end of the year.

“Most buyers are looking out for good bargains. It is really a buyers’ market now but many are taking a conservative stand on major purchases although they can afford it. They intend to wait a little longer,” he says.

He adds that there are still local buyers who are looking around for deals, and expectation of yields/returns is now slightly higher due to current market conditions.

“Cash is king again,” he says.

DTZ Nawawi Tie Leung Property Consultants Sdn Bhd executive director (research and consulting) Brian Koh says the investment market had made a turn for the worst in the first quarter of this year against the unfolding of the global economic crisis which began in the United States.

“Most institutional funds stayed by the sidelines as the market struggled to find a new price level in the midst of high volatility in the capital market,” he says.

And although Bank Negara is expected to continue to ease monetary policy to boost the economy, Khong does not expect new funding to be easily available or cheap.

“The market has been relatively slow with few or no major transactions. While the number of deals remain the same as in quarter four last year, total investment value for the quarter is only RM113mil compared to RM466mil in the previous quarter,” he says.

Based on the latest report by DTZ, it says that there are two mid-sized office transactions in this quarter with relatively high prices and low yields and both are purchased by the government-link-companies.

Perbadanan Nasional Bhd bought Wisma Glomac 3 while EXIM Bank purchased Menara Bank Industri.

“The transaction prices range from RM469 psf to RM639 psf, and do not seem to be affected by current realities. The net yields are 5% and 5.3% respectively,” it says.

Based on that, the report points out that demand for office space has softened with slow leasing enquiries for office space in the first quarter this year.

Prime office space continued to experience declining rents for the second consecutive quarter, which eased 2.85% quarter-on-quarter to RM6.14 psf per month.

The office market is expected to experience continued pressure on rental rates due to the large stock of incoming supply of new office buildings during the year.

With 4.13 million sq ft expected to be completed this year and 6.55 million sq ft more hitting the market in 2010 and 2011, developers are more likely to defer their planned projects, according to the report.

However, it says that despite slower demand and increasing supply, the occupancy level is still holding up well.

Grade A space in the city centre remains resilient at an average occupancy of 95% compared to 90% in quarter four of 2008.

The report says this is mainly attributed to Kuala Lumpur’s tight supply of prime space, coupled with the fact that Kuala Lumpur has benefited from strong, broad-based demand from a wide spectrum of growth sectors such as oil and gas, Islamic finance and other domestic-driven activities.

Touching on the retail side, Koh says the retail sector continues to see some investment activities, as the sale of basic household necessities is believed to still have room for growth.

“The market saw AEON Co (M) Bhd, the Japanese operator of Jusco stores, entering into a sale and purchase agreement for a piece of land together with a proposed retail centre at Bandar Sri Permaisuri for RM107.2mil.

“This acquisition represented the continued aggressive expansion of Jusco in Malaysia in its attempt to accelerate its retail business to compete with the hypermarkets,” he says.

With price declines and yields becoming more attractive in the major regional financial centres, offshore funds are finding these cities more attractive and are thus bypassing the Malaysian market for the time being.

“While there are some opportunistic funds actively scouting the Malaysian market for distressed assets, to date there has been no fire sale,” he says, adding that with prices in Kuala Lumpur showing no sign of a major decline, potential buyers, especially foreigners, are happy to stay sidelined until better opportunities surface.

“This is expected to be in the second half of the year as the recession bites harder. The market is likely to consolidate slowly in the next two years with new supply and economic factors being the key drivers of values and activities,” Koh says.

By The Star (by EDY SARIF)

Beefing up Malaysia’s quality of life index

Much more can be done to ensure Malaysian cities move up the ranks of the world’s cities and be a beacon to attract high net worth individuals and skilled professionals to set up homes.

In a recent study by Mercer, a global provider of consulting, outsourcing and investment services, Kuala Lumpur ranked 75 in the 2009 quality of living global city rankings based on a categorised point-scoring index covering 215 cities.

Singapore, which ranked 26, was the top scoring Asian city followed by Tokyo at 35.

Singapore’s high quality houses and apartments, and wide range of international and private schools to cater to its expatriate community, have been cited as contributing factors.

As a city that boasts an airport with excellent facilities and connections as well as an efficient and extensive public transport network, the republic scored the highest worldwide for its city infrastructure.

Beijing also moved up three places in the rankings, from 116 to 113, largely due to improvements to public transport facilities following the Olympic Games last August.

Knight Frank’s World Cities Survey placed Kuala Lumpur at 34 out of 40 cities surveyed recently.

Its ranking of the world’s leading cities is to provide an accurate measure of the locations that matter to wealthy individuals choosing first or second homes.

Besides economic success, the ranking for a world city is based on the attractiveness of its built and natural environment, its universities, freedom for think tanks and political activists to discuss and disseminate ideas, freedom of the press, safety and maintenance of public spaces, and facilities for wholesome recreation. Although Malaysia can pride itself for its strengths and assets, it should also work on overcoming its weaknesses and shortcomings, and in the process, raise the quality of life index for the people.

Among its assets include a highly resourceful, talented and educated population who have shown their strength, readiness and resilience in facing the good and bad times including the latest bout of global economic upheavals, well-developed infrastructure facilities, rich natural resources, and strong intellectual development capability.

Compared with many other higher cost countries, Malaysia can also boast of its relatively high standard of living at lower costs, cultural diversity, and racial harmony.

It should also leverage on its strength as one of the most politically stable countries in the region by ensuring both the federal and state governments cooperate and work together to ensure projects and policies are efficiently implemented and executed for the people’s well-being.

Kuala Lumpur and Penang are already the top favourites for the expatriate and international communities as they are home to quite a number of multinational corporations and regional offices.

It will be good for other cities around the country to make use of their comparative advantages to share the popularity spotlight.

There is still much work to be done to beef up the overall quality of life index, including curbing crimes to ensure personal safety and security, and sprucing up the living environment with better quality public projects and facilities and housing schemes.

There is also a need to ensure that more environment-friendly and sustainable projects are built to maintain the natural environment as much as possible.

The quality and designs of projects also need to be beefed up to international standards and promote more Malaysian-themed architecture.

Much has been said about the inadequacies and shortcomings of the public transport system in the various cities including Kuala Lumpur, Petaling Jaya and Penang.

It is high time that the various modes of public transportion, including the light rail transit system, buses and taxis, complement each other so that more city folks will use the facilities. This will only happen if the public transport system is greatly enhanced and is highly complementary.

With so much at stake, it will certainly do much good for Malaysia’s international ranking if the necessary efforts are expended sooner than later.

·Deputy news editor Angie Ng hopes that Malaysians of all creed and from all corners of the country will join hands in every endeavour in the spirit of 1Malaysia.

By The Star (by Angie Ng)

Govt ready to help Sime with Eagle Cove project

The Federal government is ready to help Sime Darby with the development of the RM7.5 billion Eagle Cove project in Pantai Kok in Langkawi, Kedah.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcob said the project is to be developed under four phases encompassing the construction of a hospital, residential area, resort, a convention centre and an international standard commercial complex.

He said the project, to cover over 160 hectares, is expected to take 10 years for development and could make Malaysia a second home for foreigners once fully completed by Sime Darby Property.

"The Federal Government will be discussing with the state government of Kedah if there are areas involving the state government," he told reporters after attending a briefing in Langkawi yesterday on the project by managing director of Sime Darby Property Datuk Tunku Putra Badlishah.

Nor Mohamad said the project is expected to create 3,000 job opportunities for the locals.

By Bernama

MBSB targets 25% growth in retail loans

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) intends to achieve this year’s headline key performance indicators (KPIs) for retail loans growth of 25%, chief executive officer Ahmad Zaini Othman said.

“We also want to maintain, if not improve, operating profits from our core business. In the present economic conditions, our strategy is to stay focused on core activities, be selective, and manage business risks,” he told StarBizWeek in an interview.

Personal financing, for instance, is relatively safe as MBSB’s loans are offered to civil servants.

“The level of NPLs (non-performing loans) in this segment is unlikely to rise given that civil employment is stable and loans repayment is auto-deducted from monthly salary,” Zaini said, adding that NPLs in the segment amounted to less than 1%.

The response to MBSB’s personal financing promotions is overwhelming, with the police force campaign now extended for the second month. “The last 30 days of campaigning has led to a bumper period for us that exceeded expectations,” he said.

The offer includes attractive rates, Takaful protection and holiday packages. MBSB’s target is to achieve RM100mil personal loans a month and RM1.2bil annually.

“At the present pace, personal financing should be able to book RM1.2bil to RM1.5bil annually. In the next two to three years, it will overtake mortgage in forming the bulk of net loans,” he added.

Zaini said the attractive rates were offered, as “we shouldn’t be reaping huge profits at the expense of the civil servants.”

MBSB recently launched its Musharakah Ventures Programme, which is an Islamic partnership model based on profit sharing to be implemented in property, contract and project financings.

The downside risk to Musharakah is mitigated by the high involvement of partners in ensuring the project’s success.

A project management and monitoring team has been established to access property development, projects and contracts that are viable for the Musharakah programme based on viability and the partner’s track record.

“The team comprises individuals from engineering, quality surveyor and technical background with banking exposure. They evaluate operational risks instead of credit risks that banks normally consider,” he said, adding that the minimum value of a project was RM10mil.

The programme is likely to contribute to part of this year’s targeted asset base growth of 15%. “We want to play safe first and tap our existing clients, who are mainly in property development. Government-related projects also have potential given the high certainty of cashflow and payment,” he said.

Contrary to perception, MBSB’s present involvement in financing property development is not the same as in the 1990s, when the group set up a property development subsidiary. The venture failed and it had to be rescued by its shareholder, the Employees Provident Fund.

That failed venture could be due to “relaxation in evaluation of projects and lopsidedness in contract terms,” Zaini said.

“We want to emphasise that we’re not setting up a property development business, as it is not our forte. Instead, we’re capitalising on the expertise of our clients and offering them financing while mitigating the risk by closely monitoring the project’s progress,” he added.

Zaini took office less than three months ago and in the short span of time, has introduced new policies, streamlined guidelines and concised the company’s standard operating procedures.

The business model at branches was changed and the position of regional business representative was created in the five regions nationwide.

“The representatives are responsible for the strategic planning of their respective regions. Given that some 50% of the business is from outside of Selangor and Kuala Lumpur, their role is to initiate and bring in new businesses,” Zaini said.

By The Star (By Yeow Pooi Ling)

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)