AMDB unit buys 60% in UK property firm

KUALA LUMPUR: AMDB Bhd hopes to penetrate the property market in Britain via wholly-owned unit Walleng Enterprise Sdn Bhd, which has subscribed for 60% in Westlink Global Investment Ltd (WLG).

In a filing with Bursa Malaysia yesterday, AMDB said Walleng had subscribed for 60 ordinary shares of £1 each in WLG, representing 60% of the issued and paid-up share capital of WLG at par for £60 cash.

WLG would become an indirect subsidiary of AMDB upon completion of the subscription.

Following the subscription, Walleng has committed to provide shareholders’ advances to WLG of up to £13.5mil (RM80mil).

“Due to the contraction of the global economy, the subscription in WLG represents a timely opportunity for AMDB to enhance shareholders’ long-term value by penetrating and gaining access to the property market in Britain,” it said.

AMDB said due to the financial crisis, property values had dropped significantly and fundamentals showed it was now the right time to invest in the London property market, which offers prime properties in a highly liquid market.

WLG has entered into a sale and purchase agreement with LS Victoria Properties Ltd to purchase a property located in London for £50.5mil.

The property comprises two freehold office buildings known as 40 and 50 Eastbourne Terrace located in Paddington.

“The property provides a net lettable space of 146,000 sq ft of retail and office accommodation which are currently let to a variety of tenants with about 94% occupancy. Based on current rentals from the tenants, the net rental yield on the property is 8.65%,” AMDB said.

In a separate statement, AMDB said wholly-owned subsidiary AMDB Technics Sdn Bhd has entered into a sale and purchase agreement with SGB-SMIT International GmbH to dispose of 35% of equity interest of AM SGB Sdn Bhd for RM31.2mil cash.

AMDB Technics would cease to be a shareholder of AM SGB upon completion of the disposal.

AMDB is expected to record a gain on disposal of about RM9.7mil from the disposal based on the carrying value of RM21.5mil as at Aug 31.

It would utilise RM21.2mil from the proceeds to repay its borrowings, RM10mil as working capital and the balance for expenses for the disposal.

By The Star

China home prices to ease, boding well for economy

BEIJING: Chinese housing prices have surged since March, but they will soon lose momentum and even start to fall around the end of the year, boding well for a more sustained contribution to overall economic growth, according to Reuters.

A burst of lending in the first six months helped fuel a wave of pent-up end-user buying and speculative purchases, driving up prices for some projects in major cities by 20-30 percent and creating concerns about dangerous bubbles.

Speculative transactions are subsiding now; at the same time, a fresh round of property investments will increase supply.

The resulting moderation in prices, far from signalling the next phase of a boom-bust cycle, will probably pave the way for steadier demand from owner-occupiers, providing a valuable prop for an economy adjusting to a slump in exports, analysts say.

"First we see transactions fall, then prices will decline," said Ge Haifeng, deputy head of data research at the Beijing-based China Real Estate Index System, which is affiliated with SouFun.com, China's biggest property website.

Transaction volumes in Beijing, for instance, fell 5.6 percent in August compared with July, the second straight fall after a four-month streak of gains, according to the city's housing management bureau. In the eastern port city of Ningbo, they were down 37 percent.

That has not been by chance.

Worried by the spike in house prices, authorities in Beijing, Shanghai and other major cities attempted to curb speculation by introducing measures in July to make it harder for people to apply for second mortgages.

Such moves will increase the cost of buying a home and push down prices, said Fan Jianjun, a senior researcher at the Development Research Centre, a government think tank.

The drop in new bank lending -- to an average of 383 billion yuan ($56 billion) in July and August compared with a monthly average of over 1.2 trillion yuan in the first half -- will also pull down transactions in the coming months, said Gao Shanwen, chief economist at Essence Securities.

Policy tweaks and slower lending will probably be enough for now, analysts say, allowing Beijing to stop short of declaring a full-fledged campaign to stamp out property speculation similar to one in 2007.

Ge projected that housing prices would drop towards the end of 2009 or early next year, by about 10 percent, much less than a 20-30 percent fall witnessed last year.

Song Li, a senior analyst at Centaline Property Research Center in Shanghai, gave an even bolder forecast: "We expect prices to peak in September."

Andy Rothman with brokerage CLSA in Shanghai disagreed that the recent burst of buying and price increases made the sector vulnerable to a setback. He said the market was growing at a healthy, sustainable pace, driven by fundamental demand.

"In our view, we are in the early stages of a long-running, moderately paced inflation cycle in residential real estate prices in China," Rothman said in a report.

Rothman saw a risk that increasingly tight supply could drive prices up too fast, but figures on housing starts and investment suggest that danger is unlikely to materialise for now.

The recent recovery boosted developers' confidence so much that many are replenishing their land banks. Some, like China Vanke Ltd, Gemdale Corp and Poly Real Estate Group Co, have rushed to raise money for future expansion.

Nationwide, real estate investment rose almost 35 percent in August compared with a year earlier. The growth rate in July was 20 percent and just 1 percent in January and February.

The government also appears determined to avoid supply bottlenecks as more people look to buy their own homes.

The Ministry of Land and Resources said last month it would carry out checks on land that is lying idle, sending a warning to developers to either quicken their CONSTRUCTION [] plans or hand back the plots to the government.

Beijing is unlikely to clamp down any harder in the near term given the importance of a healthy property sector to the overall economy, said Tao Wang and Harrison Hu with UBS in Beijing.

Building houses creates demand for materials and labour as well as for appliances and furnishings, stimulating consumption.

"We think the recent strong momentum in property sales may taper off somewhat in the coming months," they wrote in a report.

"Nevertheless, we think the construction and investment in the property sector will continue their path of recovery. While we expect more piecemeal measures to prevent housing prices from rising too rapidly, we do not expect an overall tightening."

By Reuters

LRT extension a boon to construction sector

PETALING JAYA: Analysts are generally more bullish on the construction sector since last week’s announcement that state transport firm Syarikat Prasarana Negara Bhd has been given the nod to extend the Kelana Jaya and Ampang light rail transit (LRT) lines, estimated to cost RM7bil.

A local analyst said the project would have significant and positive impact on the sector, create spin-offs to boost employment, besides helping to ease traffic congestion.

“The extension of the Kelana Jaya and Ampang LRT lines will also help increase the value of properties along the lines,” he told StarBiz.

He said it was not uncommon for properties within walking distance to the LRT stations to appreciate, but it also depended on the location.

“These properties located near LRT stations are definitely more easy to rent as people can opt for an alternative mode of transportation, to driving.”

He also said the extensions, slated to be completed in three years, would serve the transport needs of those living or working further from the Kuala Lumpur city centre, thereby easing congestion and improving transport efficiency.

At this moment, it is unclear whether Prasarana, a wholly-owned unit of Ministry of Finance Inc, will award the entire project to one company or a consortium of companies.

“Many leading construction companies are definitely eyeing a major slice of the cake,” the analyst said.

An analyst with OSK Research also concurred that the extension lines would help lift property prices, especially for properties near the stations.

He said prequalification tenders for the construction of the extension lines were expected to be called next month and contracts awarded only from early 2010.


“This, we reckon, is very timely as the estimated completion of the extension lines by early next decade will likely coincide with the expected boom in the mass to mid housing market, thus giving many of the townships along these upcoming LRT lines the leverage to ride on the next major upcycle,” he said.

The Kelana Jaya line would extend from the Kelana Jaya station to Subang Jaya and USJ, before ending in Putra Heights.

A total of 13 stations will be located along the 17km Kelana Jaya extension. There will also be an interchange at the existing KTM line located behind Carrefour in Subang Jaya.

The analyst said the extension would serve the densely populated and mature townships such as Subang Jaya and USJ.

“There is a sizeable student population within the enclave and its vicinity as it houses a number of colleges and universities, such as Taylor’s College, INTI College and Metropolitan College,” he said.

The analyst said the Ampang extension line would start from the existing Sri Petaling station, pass through Bandar Kinrara, Bandar Puchong Jaya and Bandar Puteri Puchong before ending in Putra Heights.

The 17.7km Ampang extension will also have 13 stations. Both the Kelana and Ampang extension lines will connect at an interchange in Putra Heights.

The OSK analyst said in contrast to the Kelana Jaya extension line, the Ampang line would pass through many new but fast growing townships in the south-east of the Klang Valley.

Foreign research house Credit Suisse said in its Sept 14 note that the rollout of this RM7bil project was the next major catalyst for upward re-rating of the construction sector in the country.

By The Star (by Danny Yap)

US home loan demand at highest since late May

NEW YORK: US mortgage applications jumped last week to their highest since late May as interest rates tumbled below 5 per cent, data from an industry group showed yesterday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, both purchase and refinance loans, for the week ended September 18 increased 12.8 per cent to 668.5, the highest level since the week ended May 22.

While consumers clamoured for home refinancing loans, their appetite was also robust for applications to buy a home.

By Reuters

Sunway City secures RM600m loan

Property developer Sunway City Bhd has taken a RM600 million loan from four local banks.

Sunway City will use RM240 million to refinance existing commercial papers and medium term notes, RM200 million to refinance existing bank guaranteed bonds, and the remaining RM160 million to partly finance the company’s capital expenditure and working capital

By Business Times

Naza moves aggressively to expand hotel business

The Naza group plans to expand its portfolio to include four- and five-star as well as boutique hotels.

The Naza group, most known for its automotive business, is moving aggressively into the hotel sector and plans to expand its portfolio to include four- and five-star as well as boutique hotels.

Nur Nadia SM Nasimuddin, head of its hotel division, said that each category will be branded differently albeit under the Naza umbrella.

Currently, the division has a hotel each in Penang, Johor Baru and Malacca, opened in the last six years. The Naza hotels are rated three- and four-star, and have around 130 rooms each.

The group also holds the franchise to operate Howard Johnson Torrance and the Crowne Plaza Hotel in San Pedro, Los Angeles, in the US.
Nur Nadia said the hotel division makes less than RM4 million in revenue currently, but expects it to increase to RM6 million next year before growing in double digits.

"We are doing a few things this year to build our portfolio. We are rebranding Naza Hotel as Naza Talyya Hotel at a cost of RM1 million," she said, adding that it targets to launch the new brand by the end of next month.

The group had earlier spent RM18 million to give its properties a facelift. The exercise was completed in March.

"We are spending to improve the properties. As such, the hotel division won't be making much profits in the current year," Nur Nadia told Business Times in an interview.

"We hope to have a few more hotels in our stable in the next three to five years. We will open a fourth Naza Talyya Hotel in the Klang Valley by year-end," she added.

Naza will rope in foreign designers to work on the interior of the hotels in the pipeline, and renowned architects for exterior works.

The group will ensure that the location and room count are feasible before it embarks on a new hotel venture.

Nur Nadia, youngest daughter of the late Naza founder and chairman Tan Sri SM Nasimuddin SM Amin, also said that its boutique hotel concept will be similar to those in the US and Europe.

"There are currently not that many boutique hotels in Malaysia. I am looking at doing something unique and I believe there is room for growth," she said.

By Business Times (by Sharen Kaur)

Naza hotel unit in rebranding exercise

The Naza group, founded by the late Tan Sri SM Nasimuddin SM Amin in 1974, ventured into the hospitality business six years ago when it bought three buildings and converted them into hotels.

The country's biggest privately-held automotive group's hotel unit, known as Naza Hotel, is in the midst of being rebranded as Naza Talyya Hotel.

The hotels in Penang, Johor Baru and Malacca have three- and four-star ratings, with around 130 rooms each.

Head of the hotel division, Nur Nadia SM Nasimuddin, said the group recently spent RM18 million to give the hotels a facelift.
"For new hotels, we are looking to construct them on our own so that we can look into every detail of the development," she told Business Times.

Nur Nadia is the youngest of Nasimuddin's five children, aged 23 to 32, who are all involved in the group's operations.

The older children are SM Faisal, Nur Diana, SM Nasarudin and SM Faliq.

Nur Nadia, who has a degree in management studies, also heads the division's food and beverage business.

By Business Times

Ivory plans RM2b launches in Penang,Selangor

PENANG-BASED Ivory Properties Group plans to launch four properties, with a combined gross development value (GDV) of RM2 billion, within the next four years.

Its executive director Datuk Seri Nazir Ariff Mushir Ariff said that three of the projects will be in Penang, while one will be in Tanjung Malim, Selangor.

On Penang island, Ivory will embark on the RM255 million Island Resort development along the Batu Ferringhi tourist belt, comprising condominium and resort villas.

"We have also received approval from the local authorities for the RM300 million Tanjung Tourist Mall project in Tanjung Tokong," Nazir Ariff told Business Times.
The proposed project includes condominiums perched above a shopping mall, retail outlets and a transportation hub.

"The almost 300,000 sq ft shopping area will be enhanced with a tropical-style interior design, teamed with appealing landscape elements, giant palm trees and water features."

Within close proximity of the mall is the RM400 million The Peak development, located at the foot of Mount Erskine.

The three-phase project on 5.48ha, features condominiums and eight units of a four-storey shop-office.

On the mainland, Ivory's RM88 million Aston Villa project in Bukit Mertajam also features condominiums, landed property and commercial lots.

"This project is targeted to be completed two and a half years from now," Nazir Ariff said.

The RM420 million Ivory Eco Park in Tanjung Malim entails residential and commercial properties.

Ivory, which celebrates its tenth anniversary this year, touts itself as a fully-integrated developer that does not outsource any work on its projects, from planning to managing the completed properties, to control costs, timing and quality.

Having completed projects with a GDV of RM680 million in Penang and with RM480 million of jobs, the company is considering a listing.

"Although we received the nod from the Securities Commission last year to list, we have deferred our plans due to the market situation," Nazir Ariff said.

"We have since upgraded our figures and submitted a revised scheme to the authorities, and are awaiting approval."

By Business Times (by Marina Emmanuel)

Club Med may set up another village here

French-Based Club Mediterranee, which operates the Club Med resort chain, may set up another village in Malaysia if it gets the chance to take over an existing property with a management contract.

Club Med vice-president of marketing and general manager of commercial for Asia-Pacific, Olivier Horps, said having a second resort in Malaysia would help to boost its revenue for Asia-Pacific.

"We may look at Kota Kinabalu, Sabah as a second destination. It could happen soon if there is a proposal from somebody," Horps told Business Times in an interview.

He said currently, a lot of foreigners are travelling to Malaysia and staying at its sole resort here, the Club Med Cherating in Pahang.
Club Med Cherating, which was set up in 1979, is poised for further development, having last been refurbished at a cost of RM30 million in 2004/2005.

The refurbishment had helped increased its occupancy rates from 50 per cent in 2004 to between 60 per cent and 65 per cent.

The resort, which has about 700 beds, looks at the number of beds instead of rooms to gauge its occupancy.

It now sells each room from RM550 per person per night, inclusive of accommodation, three meals, snacking and free flow of alcohol and non-alcohol beverages and entertainment.

"We review our (room) prices each year. The only time we raised room rates by a higher percentage was recently, when we included the two-day/one-night stay package with free-flow of beverages and dining. But it has improved our sales volume," Horps said.

"We will make investments this year to add environment-friendly activities, instead of increasing rooms. We plan to create a new path in the jungle. We have cliffs looking into the sea and may create new activities there," Horps said.

Club Mediterranee, set up in 1950 by Gerard Blitz, has 80 resorts in its global portfolio with Malaysia being the first country in Asia-Pacific to have a Club Med resort.

By Business Times (by Sharen Kaur)

New stamp duty rules ease burden of construction industry

The 2009 amendment on the stamp duty chargeable on service agreement has created heated debates.

Prior to the amendment, duty levied on service agreement with security was RM10. From Jan 1, 2009, all service agreements are chargeable with an ad valorem duty of RM5 for every RM1,000; essentially 0.5% duty on the contract value.

A contract worth RM1bil, for instance, attracts duty of RM5mil. Business associations representing various industries have submitted many appeals to the authorities since the introduction of the amendment. Responding to the appeals, the Ministry of Finance (MOF) announced the following new rules on July 15:

·For a contract awarded by the Government, the first tier of contract agreement between the Government and the main contractor is exempted from duty whilst the second tier of contract between the main contractor and subcontractor is subject to ad valorem of 0.5%. Any subsequent tiers of contract agreement attract RM50 flat duty.

·For a non-government contract, the first tier of contract agreement is levied with ad valorem duty and any subsequent tiers of contract agreement are subject to RM50 flat duty.

The MOF announced further changes on Sept 9 to defer the imposition of ad valorem duty of 0.5% to Jan 1, 2011.

Thus service agreements that are executed during the period from Sept 15, 2009 to Dec 31, 2010 will be subject to a flat duty of RM50.

The changes that limit and defer the application of 0.5% stamp duty to merely one tier of the supply chain are greatly applauded and well received by businesses, particularly the construction industry, which faced the following challenges:


·A Construction Industry Development Board levy of 0.125% is currently imposed on contractors;

·A 5% service tax is applicable on professional services including project management, engineering consultancy, architectural and legal;

·Contractors that tender for new government projects would invariably factor in the stamp duty, passing the additional cost back to the government. As for private sector projects, the rakyat, house buyers for example, would be bearing the cost ultimately. Hence, despite the additional duty revenue collected, the real improvement in the Government’s purchasing power may not be significant while private consumption is certainly curbed which may result in lower demand for construction works;

·Duty has to be paid upon execution of contract agreement, ahead of the contract payments progressively received by the contractors, causing cash flow strain at the initial stages of project, additional financing requirements and higher borrowing cost. The current economic slowdown has trimmed the profit margin of the construction industry to as low as 5% or less;

·Administratively, collecting duty at different rates may be cumbersome as it is anticipated that contractors have to produce documents to support the tier of the supply chain they are engaged in. This defeats the intention of the amendment which is to simplify the duty assessment process as mentioned in the Budget 2009 announcement made on Aug 29, 2008;

·From the legal standpoint, non-stamping would not render an agreement void but in the event of legal dispute, the agreement would not be admissible in court as evidence unless it is eventually stamped with late stamping penalty imposed. It may lead businesses to avoid stamping their agreements promptly, exposing themselves to greater business risks. Some may resort to executing and keeping agreements overseas for purposes of deferring/avoiding stamping as duty is levied on agreements executed outside Malaysia when they are brought into Malaysia. Such undesirable measures would not have been considered previously; and

·The additional duty will inevitably increase the cost of doing business in Malaysia and erodes our competitiveness. The table shows the stamp duty imposed on construction contracts in the region.

The Malaysian construction industry is facing tough challenges during the economic slowdown, including acute cash flow shortage, scarcity of local projects, stiff competition overseas and difficulty in procuring project financing.

A good number of construction companies have done the nation proud by winning sizeable projects overseas, particularly in the Middle East.

Hence, more policies that are business friendly like imposing only nominal duty on service agreements beyond 2010 would certainly be welcomed by all concerned and will help in nurturing more global players.

·Yee Wing Peng is an executive director with Deloitte Malaysia’s tax and an honorary advisor to Master Builders Association Malaysia. The above represents his personal view.

By The Star (by Yee Wing Peng)

More BLand projects in store

A link bungalow at Vasana 25 in Seputeh Heights.

BERJAYA Land Bhd (BLand) is seeing a return of buying interest for its high-end residences and is lining up a number of projects in the Klang Valley for launch in the coming months.

The company’s upcoming launches include the luxury high-end Vasana 25 bungalows and link bungalows at Seputeh Heights in Kuala Lumpur. The project is targeted for launch by December.

It also has some freehold bungalow land at The Peak @ Taman TAR as well as Savanna 2 and Covillea condominiums, both in Bukit Jalil.

Savanna 2 @ Bukit Jalil comprises a block of 4-storey walk-up of 32 condo villas on 1.2 acres with gross development value (GDV) of RM22mil, while Covillea will comprise of two 20-storey blocks of 308 residences with a total GDV of RM150mil.

The projects are targeted for launch by early next year.

Mah Siew Wan... ‘The developments are set to meet the needs of a niche high-end market.’

Senior general manager for properties and marketing, Mah Siew Wan, says the developments are set to meet the needs of a niche high-end market and based on the enquiries received, the company is confident of receiving good take-up for them.

Mah says BLand’s latest high-end bungalow project in Seputeh Heights – Vasana 25 @ Seputeh Heights are targeted at the home up-graders.

Sited on a freehold 4.93-acre land, the project comprises 22 villas and three bungalows. With land area of between 5,000 and 7,000 sq ft and built-up of 5,743 to 7,665 sq ft, the houses are priced from RM5.5mil to RM8mil. They will have a private glass lift and pool each.

Vasana 25 with gross development value of RM150mil will be ready by October next year.

Even before the official launch, 36% of the project have been sold for a total sales value of RM56.5mil.

Every residence in the gated and guarded project has excellent view of Kuala Lumpur city while its glass features allow a lot of natural lighting.

According to Mah, BLand started Seputeh Heights in 1997, offering 103 bungalow lots of between 7,992 and 23,100 sq ft.

Over the past 12 years, 92 bungalow lots have been sold at an average price of RM200 per sq ft. The balance 11 bungalow parcels are now available at RM400 psf.

Seputeh Heights also has four purpose-built bungalows, which were constructed by Berjaya Land and sold for more than RM5mil to RM8.5mil each.

Other BLand projects in the pipeline include a mixed development called 1Petaling Residences, Commerz @ Sg. Besi and the final phase of landed homes in the Berjaya Park township in Shah Alam.

As for commercial projects, they include 114 units of 3 storey shop office with a GDV of RM85.5mil in Berjaya Park, and a 4 storey retail lot development of about 300,000 sq ft in Bukit Jalil.

Locally, BLand still has about 1,000 acres land bank, with potential GDV of RM8bil.

Most of the projects are in Ampang, Bukit Jalil, Shah Alam and Seputeh Heights.

It has ongoing projects worth a GDV of RM802mil comprising Savanna 2 in Bukit Jalil, Berjaya Park in Shah Alam, Taman TAR in Ampang and Kuantan Perdana in Pahang.

Mah says BLand is also looking at tapping into the foreign market with the impending launch of its maiden offshore project in Vietnam.

“We will kick off our first launch of residential components in Bien Hoa mixed development, located in the bustling metropolis of Bien Hoa, Dong Nai Province in Ho Chi Minh City, sometime in October.

“This will be followed by another sales launch in Thach Ban Garden City in Hanoi in the last quarter of the year.”

BLand is also looking at launching its resort type residential and commercial project on 183 acres in Jeju, South Korea, in June next year.

Mah says although most of the company’s earnings are still from its local projects, offshore projects also have the potential to become a bigger contributor in the coming years.

“With all the new developments coming up, we hope to double our sales from RM105.6mil recorded in the last financial year ended April 30,” Mah says.

For the fourth quarter ended April 30 of BLand’s 2008 financial year results, the company posted a net loss of RM53.98mil against a net profit of RM631.7mil in the same quarter of the preceding year due mainly to lower revenue contribution from its gaming, hotel, resorts and property development divisions.

By The Star (By Angie Ng)

SP Setia beats sales target

An Artist's Impression of Setia Sky Residence

KUALA LUMPUR: Property developer SP Setia Bhd has year-to-date posted RM1.25bil property sales, which has surpassed its financial year ending Oct 31 (FY09) target of RM1.1bil.

Analysts said the impressive property sales achieved was due to its attractive 5/95 financing campaign, which began on Jan 31.

An analyst with ECMLibra said after hitting its annual sales target, SP Setia terminated the campaign in July.

“As at Jan 31, sales were at RM102mil. The campaign boosted sales to RM1.25bil at end-July,” he said in a report yesterday.

However, the brokerage expects sales momentum to remain firm until end-FY09 due to conversion of sales bookings.

The analyst said SP Setia’s nine-month ended July 31 results came in within house but was below market expectations, as annualised net profit came in just 1.6% below its estimates, and 11.7% below consensus estimates.

“We upgrade our target price to RM3.36 (from RM2.65) based on price-earnings ratio (P/E) valuation of 19 times after taking into account elevated optimism on the property sector as well as strong sales momentum,” he said.

SP Setia is currently trading at a forward P/E of 26 times, which has exceeded peak valuation seen during past property cycles.

“This is not justified even after taking into account commendable sales achieved,” the analyst noted.

Moreover, he said, the stock was trading at a steep 37% premium to its realisable net asset value estimate of RM3.35.

The brokerage has maintained a “sell” call on SP Setia.

An analyst with OSK Investment Research also has a “sell” call on SP Setia as the stock was trading at a significant premium even to calendar year 2010 fair value.

“Its valuation is lofty in view of the current phase of the property cycle,” he said in a report, adding that the brokerage was less optimistic that SP Setia could repeat its feat (of higher property sales) for the rest of the year.

He said a correction in property stock prices appeared inevitable in the short term as investors, who had bought the story of a robust V-shaped recovery for the property cycle in 2010, were likely to be disappointed soon.

However, the brokerage has upgraded SP Setia’s target price to RM3.47 from RM2.10, based on calendar year 2010 valuations.

By The Star (by Danny Yap)

Do your part to reduce global warming

Global warming caused by a severe degradation of the environment is certainly taking a heavy toll on our planet these days resulting in rising temperature, heat waves and wild peat fires in various parts of the world today.

I remember that not too long ago when it was not a problem at all walking from place to place around the city but these days, unless you’ve prepared an umbrella or some other forms of shade and have judiciously applied protection cream against the harsh ultra violet rays, it is quite easy to be stricken with sun burns if you’re out walking around “unprotected” in the sun.

So it is understandable that more people are opting to drive around instead of walking, which explains why there are more cars on the roads these days.

People are also turning more to their air conditioners to cool themselves.

The increasing reliance on air conditioning and cars will further aggravate the global warming situation as more carbon dioxide is released into the atmosphere.

To help arrest the deteriorating situation, we should all start heeding the calls to “go green” and take up the green cause to do our part for the environment.

It will help if we start off by listing down what are some of the simple tasks that we can do to reduce energy usage and lower our carbon footprint.

Once we become accustomed to these simple measures, we can then gradually adopt more elaborate “green” initiatives.

From simple acts such as planting of more trees, cutting down on electricity and water consumption to rain harvesting, recycling and composting, every initiative will go a long way towards preserving the environment.

Hopefully, in the not too distant future, we can do away with fossil fuel and can turn to more easily renewable energy sources that are either water based, solar or wind powered to operate our vehicles and home appliances.

Every economic sector and citizen has a role to play to help alleviate the environment deterioration and bring down the global temperature.

To reduce the number of vehicles on our roads today, the paramount thing to do is to upgrade, connect and integrate the various modes of public transport in our cities including the light rail transit lines, public buses, monorail system and commuter train. When travelling around different parts of our cities involves merely hopping from one mode of transport to the next, more people will choose public transport and leave their cars at home.

In the manufacturing sector, green manufacturing hubs to produce goods and services in an environmentally responsible and sustainable way should be encouraged.

Besides promoting eco-tourism packages, tourism industry players can also look into collaborating with their counterparts in the airlines and other transportation to opt for green fuel and other initiatives.

The property fraternity has much to contribute to promote a more sustainable environment. Industry players should not just make use of the green theme as a marketing tool to popularise and sell their products.

Developers and building owners need to design and construct green, sustainable buildings that can conserve energy and water, provide a healthier indoor environment, better connectivity to public transport and the adoption of green programmes in their projects.

Projects should be planned with all the actual “green” trappings and adopt building designs and materials that actually care for the environment.

Eco-cities and eco-towns will soon become the rave word if cities and towns are planned to ensure that industries, commercial and residential areas are designed and built to allow them to co-exist harmoniously with the natural environment.

The crusade to promote green buildings that are purposefully designed to cut down their dependence on energy and water consumption, including more natural lighting and cooling features, should be more widely adopted and become a part of the building industry’s corporate responsibility.

Property owners, architects, town planners, developers and the relevant government authorities should work closely together to achieve the common goal of greening Malaysia’s landscape.

More efforts should also be expended to turn our cities into garden cities by setting aside green lungs, planting of more trees, and turning most roof tops of multi-storey buildings into landscaped gardens.

Instead of leaving them merely as tiled roof tops or unoccupied concrete structures, roof tops of buildings should be turned into green oasis with landscaped gardens.

Giving a simple makeover to these roof tops by planting them with leafy trees and plants will reduce the heat-island effect that causes heat to be reflected back into the environment.

Plants have very therapeutic effect on us. The oxygen that they release will certainly promote a more oxygenated and cool environment, and reduce the heavy pollution in the air.

Deputy news editor Angie Ng hopes Malaysians will rally together and take more affirmative actions that will hopefully “cool down” our overheated planet.

By The Star (by Angie Ng)

To boost or not to boost property

We note the concern voiced by P. Gunasegaram over Malaysia’s effort to market its real estate to foreigners, which he opined will pave the way for the country’s “property market to be driven by speculation that can lead to unwelcome volatility as well as steep prices followed by the steep falls.”

Traditionally, the Malaysian real estate market has been locally driven; only 2.5% of total value of properties transacted in 2008 was attributable to foreign investors, a far cry from Singapore’s 30% and Dubai’s 40%.

We expect the situation to remain so in many more years as the bulk of the country’s population is below 35 years, which means the young will continue to feed demand for local real estate market (especially in the residential category).

The Government has been prudent in opening the country’s door to foreign investors through policies to safeguard the interest of locals, especially those who have yet to fulfil their fundamental need of property ownership.

One of the measures includes having a minimum price threshold for properties that foreigners can invest in.

Our real estate market is an “open” one where supply is largely driven by demand.

Beyond the quantum of property units in the market, supply will only be effectively taken up if there is a match between prices the market is willing to pay and that of the vendors.

Like other economies, Malaysia cannot avoid some degree of speculation especially when the market views the situation as a healthy sign of investment worthiness. The so-called “speculators” are still predominantly Malaysians who view property as good and safe investment tools.

Our research shows that foreigners prefer to invest in completed properties. Such penchant will continue to benefit Malaysians who, by far, form the majority of investors in the primary market.

This will open up doors for better wealth creation opportunities for Malaysians. An average foreign resident spends about RM10,000 monthly on retailing, F&B, education, healthcare and others – a direct injection into the local real economy.

An expatriate will also have family and friends visiting, hence the spend attributes to further drive the economy. In marketing terms, they are our ambassadors in their home countries, spreading the experience of Malaysia to family and friends.

Malaysia Property Incorporated CEO, Gerald Lim

P. Gunasegaram replies:

As explained fully in my earlier comment, allowing foreign purchase of residential properties, even if it is at the high end, will still push prices of ALL properties up as Malaysians move down to purchase lower-priced properties as the high-end ones become more expensive.

Many countries stop foreigners from purchasing residential properties because they do not want prices to move up and make it more difficult for locals to buy properties. There is a pressing need to control foreign purchases of all residential properties to protect the quality of life of Malaysians.

When property prices rise, whether it is the secondary or the primary market, everyone has to pay higher prices.

As the reply to my article comes almost two months after it was published, permit me to reprint some extracts of that article:

“One wonders whether foreigners should be allowed to purchase even high-end residential properties. Such moves often price quality properties out of the affordable range of locals.

“Worse, some developers of local properties, especially with foreign links, actually offer the best space to foreigners first, with these not being made available to locals, even if they could pay asking prices!

“Developers, of course, have a vested interest in enlarging the pool of people they can sell to. The greater demand will inevitably raise prices and give them fatter margins. But the cost is that Malaysians will have to pay higher prices for these properties and eventually other properties too.”

By The Star

SP Setia posts RM43m profit on strong sales

An Artist's Impression of Setia Eco Park, one of the property development of Sp Setia's.

Petaling Jaya: SP Setia Bhd posted a net profit of RM42.68mil for the third quarter ended July 31, up 4.45% from the RM40.86mil in the previous corresponding period, mainly to strong sales recorded from its 5/95 home and commercial ownership campaign.

The company told Bursa Malaysia yesterday in notes accompanying its financial results that the effects of the campaign were beginning to be reflected in the group’s financial performance which had helped reverse the negative profit trend in the first and second quarters.

Revenue for the period under review rose 4.8% to RM317.05mil from RM302.4mil previously, while earnings per share were 4.2 sen compared with 4.02 sen.

For the nine-month period, its net profit fell 16.7% to RM114.37mil from RM137.38mil in the previous corresponding quarter, while its revenue declined 2.2% to RM887.46mil from RM907.57mil.

“The group’s profit and revenue were mainly derived from its property development activities carried out in the Klang Valley, Johor Baru and Penang,” the company said.

By The Star

ING expects growth in mortgage portfolio

ING Insurance Bhd anticipates its total mortgage portfolio to grow this year, backed by its latest fixed-rate home loan that offers the lowest rate.

The insurer has had strong demand since it started offering a fixed interest rate of 4.85 per cent with zero entry cost since January this year.

Currently, the mortgage portfolio accounts for less than 10 per cent of ING's RM3 billion asset under management.

Although it is a small portfolio, the mortgage business is a profitable one for ING, which is one of the few insurers in the country that offer home loans.

It has started giving out the fixed interest rate loan since 1985.
ING Insurance's latest programme comprises fixed rate packages for properties priced from RM100,000 to RM5 million.

Speaking at a media briefing in Kuala Lumpur yesterday, chief investment officer Mark Wang said bank's interest rates could rise in the future and borrowers need to know their options.

"We expect the Malaysian economy to regain growth next year, and when that happens there could be an upward movement in terms of interest rates and investors need to be aware now of other alternatives mortgage loans which will allow them to lock in their borrowing cost and without having to worry of any increasing rates in the future," he said.

Chief operating officer Isold Heemstra said fixed interest rate home loan can offer more certainty and peace of mind.

"The interest rate is fixed at a certain rate throughout the life of the loan, which means that you will know exactly how much is going out every month of your home loan repayment.

"This stable interest rate is an ideal alternative for those who seek financial stability and have the desire to plan ahead," he added.

By Business Times (by Rupinder Singh)

ING: It’s time to opt for fixed-rate home loans

PETALING JAYA: It may be time for property investors to consider managing their long-term investment with the stability of fixed-rate home loans, says ING Insurance Bhd chief investment officer Mark Wang.

With the current economic downturn, many institutions, including ING Insurance, were offering highly competitive fixed rates for home loans, he said.

“Fixed-rate mortgage can reduce uncertainty and lock in (one’s) borrowing cost.

“ING Insurance is offering a fixed rate of 4.85% per annum on home loans locked in for 30 years, which is probably one of the most competitive rates for mortgages in the market today and our lowest fixed rate (on mortgages) in over two decades,” he said yesterday.

Wang was speaking at a session on Smart Financing For Property Investment at a media luncheon talk hosted by ING Insurance.

On the benefits of fixed-rate mortgages over floating rates, Wang said it was generally better for homeowners to stick to a fixed-rate mortgage.

“But if an investor had the expertise and was managing a porfolio of properties, then perhaps a floating rate could be advantageous,” he said.

He added that it was also important to take into consideration the floating rate when buying a property.

Wang said with fixed-rate mortgages currently at an all-time low, it might be worthwhile for property investors or homeowners on high floating rates to refinance their properties at a lower fixed rate.

On ING Insurance’s fixed-rate mortgage, he said it currently represented less that 10% of ING’s business.

“We see our fixed-rate mortgage as a value-added offering to our existing clients with insurance coverage, but it is also now extended to the public,” he said.

ING Insurance chief operating officer Isold Heemstra touched on the importance of structuring one’s financial needs according to the different stages of one’s life.

“Only about 5% of the working population do their own financial planning. The rest are likely to seek advice from experts,” he said.

By The Star

BiotechCorp, UEM Land to develop biotech park

MALAYSIAN Biotechnology Corp Sdn Bhd (BiotechCorp) has teamed up with property developer UEM Land Holdings Bhd to jointly set up a biotechnology park in Nusajaya, Johor, with an initial investment of RM550 million.

The two companies signed a joint-venture agreement yesterday to develop the biotech park dubbed "Bio-XCell" at the Southern Industrial and Logistics Clusters (SiLC) in Nusajaya.

BiotechCorp will hold a 60 per cent stake in the joint venture company, while UEM Land will take the rest.

Bio-XCell aims to create a dedicated biotech park with custom-built facilities catering to commercial development, research and development as well as production of industrial and pharmaceutical biotech products.
The RM550 million will pay for the land, as well as primary and secondary infrastructure.

"We will raise the money needed through a combination of internally generated funds and borrowings," BiotechCorp chief executive officer Datuk Iskandar Mizal told reporters after its signing ceremony in Kuala Lumpur.

The event was graced by Deputy Prime Minister Tan Sri Muhyiddin Yassin and Deputy Science, Technology and Innovation Minister Fadillah Yusof.

BiotechCorp has identified and started engagements with several targeted strategic international partners and collaborators to anchor Bio-XCell.

The event did not only mark the start of the joint venture between BiotechCorp and UEM Land, but also saw Holista Biotech Sdn Bhd signed a collaboration agreement with University Sains Malaysia (USM) and University Technology Malaysia (UTM).

Holista recently concluded its reverse takeover (RTO) of an Australian biotech company, Colltech Australia Ltd, which is listed on the Australian stock exchange.

Colltech is in the development and commercialisation of ovine (sheep) collagen.

The collaboration with USM is to conduct research on the development of "halal" collagen and collagen standardisation, expected to turn Malaysia into an important player in the global collagen market.

Holista's tie-up with UTM, meanwhile, is in the launching of an anti-aging cream with "Kacip Fatima". The initiative will be a first in the world.

By Business Times (by Presenna Nambiar)

SATS forms new unit to operate hi-tech park

JOHOR BARU: Senai Airport Terminal Services Sdn Bhd (SATS) has formed a new subsidiary, called Senai Hi-Tech Park Sdn Bhd (SHTP), to oversee the Senai Hi-Tech Park project.

»It is a pre-requisite for companies operating in our park to have R&D elements« SATS CEO, SHAHRULL ALLAM SHAH ABDUL HALIM

SATS deputy chief executive officer Shahrull Allam Shah Abdul Halim said the company has also appointed former Kulim Technology Park Corp Bhd chief executive officer Datuk Ahmad Shukri Tajuddin to helm the subsidiary.

Shahrull said as CEO of SHTP, Ahmad would be responsible for the day-to-day operations of the park.

“We believe that with his vast experience managing Kulim Hi-Tech Park, Ahmad will contribute immensely to Senai Hi-Tech Park,’’ he told StarBiz yesterday.

Shahrull said SHTP would be calling for tenders for earthworks of the project before the end of the year, followed by infrastructure work.

International Trade and Industry Minister Datuk Mustapa Mohamed said recently that the Federal Government had agreed in principle to part finance the infrastructure work for the Senai Hi-Tech Park.

The Government would allocate RM300mil for the infrastructure work while the balance of RM215mil would be borne by the developer.

Senai Hi-Tech Park will be the second high-tech park in Malaysia after Kulim Hi-Tech Park in Kedah.

Shahrull said SHTP had recently started marketing the project to foreign investors in Germany and Singapore and would be going to the United States next month and Japan early next year.

He added that the high-tech park aimed to attract investments in the avionics/aeronautics industry, information and communications technology industry including integrated circuit design and high-tech manufacturing, among others.

Among the companies and investors targeted are those in the pharmaceuticals industry from Austria, Germany and Switzerland; oil and gas and solar energy sectors in the United States; and Japan’s motor vehicle sector.

“It is a pre-requisite for companies operating in our park to have research and development (R&D) elements,” he said, adding that there would be a flagship building known as the knowledge centre where most of the R&D activities would be undertaken.

Senai Hi-Tech Park, spanning 404.68ha, is located next to Senai International Airport and is one of the three components of the multi-billion ringgit Senai Aviation & Airport City project, the other two components being residential and commercial, in addition to an air cargo logistics centre occupying a 404.68ha site.

“Our park will probably be the first integrated high-tech park in the world connected to the airport. Similar parks like the ones in Frankfurt and Dubai are located several kilometres away from the airport,’’ Shahrull said.

SATS subsidiary Enigma Harmoni Sdn Bhd, which is linked to billionaire Tan Sri Syed Mokhtar Al-Bukhary, has received approval from the Kulai Municipal Council for the Senai Aviation & Airport City project.

MMC International Holdings Bhd, a wholly-owned subsidiary of Syed Mokhtar’s MMC Corp Bhd, has stakes in Senai International Airport, Port of Tanjung Pelepas and Johor Port.

Opened in 1974, Senai Airport is managed by SATS, which took over the operations of the airport from Malaysia Airport Holdings Bhd in 2003.

By The Star (by Zazali Musa)

Penang to have 10 new hotels, investments exceed RM1b

GEORGE TOWN: Penang will have 10 new three to five-star hotels which are expected to be built between 2010 and 2014 and the total investment is expected to be more than RM1 billion.

Malaysian Association of Hotels (MAH), Penang chapter chairman Marco G Battistotti said on Sept 18 the new hotels would expand the rooms, in the three to four star hotel category, by 50% from the 9,000 now to 13,000 rooms in 2014.

"Out of the 10 (new hotels), three of them will be completed in 16 weeks, another two hotels will be built next year and five more hotels will be built between 2011 and 2014.

"At least five of them are hotels belong to national or international chains, some of which are already in Penang," Battistotti said at the launch of MAH Penang's website www.discoverpenang.com.my by Chief Minister Lim Guan Eng.

Over the next 16 weeks, the three hotels which would open their doors are the Hard Rock Hotel (opens on Saturday) in Batu Ferringhi, Flamingo Hotel (the former Crown Prince hotel) in Tanjung Bungah and Eastin Hotel in Bayan Bay.

As for the website, it is linked to over 40 MAH Penang members and also 45 Penang related websites. Tourists could book their rooms on online.

"Since Penang wants to attract 10 million tourists in 2014, the additional 50% increase in rooms will be able to accommodate the increase in tourist arrivals, which was 6.3 million last year," he added.

Battistotti said despite the global economic downturn, Penang's beach hotels recorded higher occupancy rate this year compared to 2008 while the city hotels saw a 2% to 3% drop.

Lim said there were also investors who were building boutique hotels in the heritage enclave area which augured well for Penang's tourism efforts.

"Even though they can only build hotels with the maximum five-storey height, they are still coming in to invest and this reflects the dynamism of the tourism industry in Penang," Lim said.

To promote Penang as a brand, there was a need to ensure only quality and reliability was associated with the name "Penang".

"We have the legal moral and moral responsibility to protect our brand name as it belongs to the people of Penang and as the custodian of the people, the state government has every right to protect the branding of Penang.

"We are promoting Penang aggressively and in order to project our image internationally, we have to ensure that it is not misused by some people, who would spoil Penang's image.

"This is why I have been emphasising that we need to control the use of the "Penang" label as there have been instances of some tourism related projects, which had failed and it reflects badly for the tourism industry," he added.

By The EDGE Malaysia (by Regina William)