E&O prepares for RM4bil property launches

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) aims to bolster its working capital position by raising RM500mil to prepare for high-end property launches worth RM4bil, said executive director Eric Chan.

The projects would be launched in the coming months amid the recovery in the economy after a dry spell in terms of new launches in the second half of 2008 and part of 2009, he said.

“We have RM4bil worth of sales to be launched but to do this, we need working capital, especially when it is a condominium. Even if we sell 10%, we still have to construct the rest,” Chan said after the company AGM and EGM yesterday.

The property developer will raise its working capital internally by disposing of stocks and non-strategic landbanks to raise RM300mil.

The remaining RM200mil will be raised via a 1-for-2 rights issue which is expected to be completed by November, according to Chan.

The group plans next month to launch its Seri Tanjung Pinang condominium on Penang island, which has a gross development value (GDV) of RM2bil.

In the Klang Valley, it will this weekend open for sale Phase 2 of its St Mary Residences, or Tower A, which has a GDV of RM750mil.

It has also marked up considerably the price of this phase by 25% to RM1,250 per sq ft.

Chan justified this by saying the new phase would be completely fitted out, unlike the previous phase which only had kitchen fittings.

“Phase 2 will come with lighting, right down to wardrobe and curtain railings. To make it easier for buyers, they do not need to pay for loan documentation, unlike the first phase,” he said.

E&O is also preparing to launch its Jalan Conlay condominium, another project at Jalan Yap Kwan Seng as well as an office tower development which forms part of the St Mary project.

The company aims to sell at least 20% of St Mary Residences Phase 2 to foreigners and is currently on a sales campaign in Singapore, Hong Kong and Guangdong, China.

Chan said the company, like any other property development company, needed two years to realise profit. “A profit in 2008 is due to sales in 2006,” he said, adding that the group would, therefore, have to keep the momentum going.

E&O suffered a net loss of RM31.7mil for its 2009 financial year compared with a net profit of RM128.5mil in the previous year.

Chan said the company had a current gearing of 0.79 which would be reduced to 0.46 with the rights issue. This could be further reduced to 0.16 with RM300mil to be raised via the disposal of stocks and non-strategic landbanks, he added. The property developer has total borrowings of nearly RM900mil.

By The Star

Glomac plans projects worth RM550m

Property developer Glomac Bhd is looking to launch at least three new developments for the financial year ending April 30 2010, with a combined gross development value (GDV) of over RM550 million.

Group managing director Datuk FD Iskandar is optimistic that the local property market will improve by the second half of next year to boost sales.

It plans to launch the second phase of its RM180 million Glomac Cyberjaya project by the middle of next month.

The second phase comprises 24 units of shop offices with a GDV of RM50 million.
Glomac bought 8.1 acres of land in Cyberjaya in 2008 and was the first to offer three-and-half-storey shop offices there.

Also in the pipeline is a commercial project on 1.3 acre freehold land in Mutiara Damansara, Selangor, which has an estimated GDV of RM250 million.

The development, surrounded by the commercial hubs of Ikea, Tesco and The Curve, will encompass retail spaces, office suites and a corporate office.

Glomas will also launch the second phase of the Plaza Kelana Jaya, a land that formerly housed the famous Kelana Seafood Centre.

Iskandar said Glomac aims to launch the fourth phase of the Plaza Kelana Centre with a GDV of some RM250 million.

"The development will be on a 3.2 acre freehold land that includes an office block, a neighbourhood shopping mall and office suites," he told Business Times yesterday.

Also in the plans are the launch of another phase at its Saujana Utama township in Sg Buloh, Selangor, in November.

"In this financial year, we are looking to launch at least three new phases," said Iskandar, adding that two phases have already been launched this year with the first sold out and the second up to 90 per cent sold out.

Iskandar also revealed that Glomac is close to acquiring at least two new landbanks before the year-end.

He said the company is talking to several parties to acquire land namely in the Klang Valley for commercial development.

He said the new land will be small in size, but have a high GDV and fast turnaround of about four to five years.

By Business Times (by Rupinder Singh)

Regular complaints of defects should be a wake-up call, construction industry told

PETALING JAYA: Malaysia has a relatively matured construction industry but the quality of the finished product should not be overlooked, Housing and Local Government Minister Datuk Seri Kong Cho Ha said.

“The recent spate of building failures and regular complaints of defects of completed properties should be a wake-up call for all stakeholders of the construction industry,” he said, adding that improving quality entails enhancing efficiency and productivity.

He said this after officiating The Star’s first “Property Fair Kuala Lumpur - Stylish Living” at Menara Star here yesterday.

“The Star’s effort is a good contribution not just for the property market’s growth, but also for the whole construction industry. It can drive the whole supply chain of the building industry,” Kong said.

Also present at the event were Star Publications (M) Bhd executive deputy chairman Datuk Clement Hii, executive director Ng Beng Lye, group managing director/chief executive officer Datin Linda Ngiam and group chief editor Datuk Seri Wong Chun Wai.

Ngiam said The Star has been holding annual property fairs in Penang over the past seven years.

“The amazing response from both exhibitors and visitors to the property fair explains why it is currently the leading property fair in Penang,” she said in her speech at the event.

“With such growing success each year, it only seems right that we should hold a similar one in Kuala Lumpur. But in saying that, there are more compelling reasons that influenced our decision to start one here,” she added.


The property fair will be held from Nov 27 to 29 at the KL Convention Centre in Halls 4 and 5, from 11am to 8pm. Admission is free.

Visitors will get to view the latest offerings by renowned developers involved in building luxury bungalows and exclusive condominiums.

Representatives from participating financial institutions and the Employees Provident Fund (EPF) will also be around to provide assistance.

Ngiam said there will also be talks and forums conducted by industry experts on topics like property investment, feng shui and home inspirations. The fair will be fully supported by The Star’s print, radio and on- line media.

Meanwhile, Ngiam also officially introduced The Star’s StarProperty portal – www.starproperty.my.

This site features the latest on auction listings, news and reviews of local and international properties and lifestyle articles.

“The site which is barely two months old has over a million hits and over 47,000 property listings,” she said.

By The Star

Ireka to tender for RM2.5b infrastructure jobs in Malaysia

Construction group Ireka Corp Bhd has been pre-qualified to bid for more than RM2.5 billion worth of infrastructure and building construction projects in Malaysia.

Ireka, which has been involved in construction since 1967, has bid for almost half the projects, two of them in a joint venture with foreign parties, its executive director Lai Voon Hon said.

Lai said the group will tender for the remaining jobs by the end of its current fiscal year.

"The results are expected to be known early next year and new projects would contribute significantly to our earnings in 2010 and 2011," he said after the group's shareholders meeting in Kuala Lumpur yesterday.
Lai said in future Ireka wants to focus on high-end residential and commercial development, in addition to infrastructure projects, riding on the lower construction material costs.

The company is eyeing government jobs like road and highway construction, housing, and extension of the light rail transit and Sepang low-cost carrier terminal projects.

In Vietnam, Ireka is exploring infrastructure-related projects.

Meanwhile, Ireka director and group financial controller Monica V.H. Lai said the group is expected to do better in the current financial year ending March 31 2010, given the value of jobs in hand.

By Business Times (by Sharen Kaur)

Ireka to maintain RM5mil dividends

KUALA LUMPUR: Ireka Corp Bhd, whose construction order book currently stands at RM964mil, plans to maintain its quantum of dividends for the next few years, says group financial controller Monica Lai.

Ireka shareholders approved a final net dividend of 4.35 sen for the financial year ended March 31, totalling RM5mil and equivalent to about 82% of the year’s net profits. Ireka will announce the ex-dividend date next week.

“Going forward, Ireka’s earnings will be boosted by lower construction costs as the price of building materials has softened. With a moderate gearing level of 0.45 times, we should be able to take on more borrowings for new projects,” Lai told reporters after the company AGM yesterday.

For its first quarter ended June 30, Ireka posted a net profit of RM3.46mil, making it the third straight quarter of profits after earlier losses caused by the sharp surge in building material costs.

The construction company had also said it had been pre-qualified for over RM2.5bil worth of jobs, mostly related to government infrastructure and private sector residential and housing projects in Malaysia.

Ireka, which in the last 3 years has only been involved in projects from its associate company, property developer Aseana Properties Ltd, is now aggressively seeking work from outside the group.

“For the last three years we have relied on work from Aseana due to market conditions which included a shortage of construction expertise and high material prices such as steel bars. But we are now poised to win work from outside the group, having built up the necessary track record and expertise,” said executive director Lai Voon Hon.

Ireka owns 23% in Aseana Properties, which was listed on the London Stock Exchange (LSE) in 2007 as a closed-end fund investing in high-end properties in Malaysia and Vietnam.

Among its projects are the completed i-Zen brand of luxury properties and the on-going SENI Mont Kiara, the latter making up a significant portion of Ireka’s current order book. SENI Mont Kiara, whose sales slowed due to the softening property market since its launch in 2007, had been 60% sold to-date, said Voon Hon.

Weak sentiment on property stocks has also dampened the stock price of Aseana Properties on the LSE, with its share price hovering around 31 US cents, below its net asset value of 91 cents and its initial public offering price of US$1 per share.

Despite the low price, Ireka has no plans of significantly increasing its holding in Aseana Properties or taking the latter private.

“We listed Aseana as a high-end property investment vehicle focused on Malaysia and Vietnam. Many of our investors will not be looking at selling out now as they know the potential (of Aseana),” he said.

Aseana Properties had around US$67mil in cash as at the end of last year.

By The Star

Genting, Simon Property Group in upscale outlet shopping JV

KUALA LUMPUR: The Genting group is teaming up with New York-listed Simon Property Group to venture into upscale outlet shopping in Malaysia under the Chelsea Premium Outlet Centres concept.

Genting said on Wednesday, Sept 30 that its 54.7%-owned Genting Plantations Bhd's unit Azzon Ltd had signed a joint venture agreement with Simon's Chelsea Malaysia LLC to establish the centres.

Under the JVA, Genting Plantations and Simon will form a 50:50 JV called Genting Chelsea Sdn Bhd to invest and operate Premium Outlet Centres in Malaysia.

The first project is the Johor Premium Outlets, to be built in Kulai, Johor, which is set to be the iconic flagship outlet centre in the Southeast Asian retail market.

Johor Premium Outlets will be located at the intersection of two major highways that serves this region and is expected to attract the local residents as well as international visitors from Southeast Asia.

Expected to open in 2011, the centre aims to synergise with Genting’s existing property operations and the group’s leisure and hospitality footprint in the region.

By The EDGE Malaysia

Sunway wins RM147m commercial project

SUNWAY Construction Sdn Bhd (SunCon), a wholly-owned subsidiary of Sunway, has won a RM147.36 million contract from Putrajaya Holdings Sdn Bhd to build a commercial project in Putrajaya.

Under the deal, SunCon will design, construct and complete a 16-storey three-star hotel and an 11-storey office tower on Plot PZ10, Parcel Z, Precinct 1, Putrajaya.

The proposed project is expected to commence on October 7 2009, with completion in three years.

It is expected to contribute positively to the earnings of the group for the financial year ending December 31 2010 onwards.

By Business Times

Iskandar Investment to award RM2b project

CATALYTIC developer of Iskandar Malaysia, Iskandar Investment Bhd, expects to tender out RM2 billion worth of projects in the next 12 months, president and chief executive officer Arlida Ariff said today.

The tenders comprise RM1 billion worth of infrastructure projects under the Ninth Malaysia Plan and another RM1 billion worth of other infrastructure and construction projects, she said.

"These infrastructure and construction projects will likely take six to 24 months to be completed," she told a media briefing on the sidelines of the Ninth Forbes Global CEO Conference.

This will involve infrastructure in Medini and EduCity as well as residential units for students in Newcastle University Medicine Malaysia.

Iskandar Investment currently owns two per cent of the whole Iskandar region which encompasses 2,200 square kilometres of land.

By Bernama

E&O set to cash in on improved mart

High-end property developer Eastern & Oriental Bhd (E&O) is well-poised to capitalise on the improved market conditions, managing director Datuk Terry Tham says.

"Our strong brand and proven track record has helped with successes achieved at our recent property launches," he said in a statement today.

E&O's new launches since June, namely the St Mary Residences in Kuala Lumpur and Seri Tanjung Pinang's seafront terraces and serviced residences, achieved at least 80 per cent take-up rates within a few weeks, he said.

He said the resounding response to these launches provided the impetus for the company to unveil the second block of St Mary Residences, Tower A, via a soft launch in Singapore and Hong Kong in August and September.
"The official launch of St Mary Residences Tower A is slotted for early nex tmonth and will be followed by the Phase One launch of the Seri Tanjung Pinang Condominiums later in the month," he said.

Tham said that with the stream of property launches lined up for the next 12 months, E&O expected its financial position to continue improving in the next quarter and in the year ahead.

This would be supported by E&O's strengthened internal position, achieved through its pre-emptive balance sheet management strategy and rebounding economic conditions, he added.

E&O registered a net profit of RM5.7 million and revenue of RM73.9 million for the first quarter of the financial year ending March 31, 2010.

Tham also said the RM200 million that the group expected to raise through a one-for-two rights issue (irredeemable convertible secured loan stocks) which is expected to be completed in November, coupled with the disposal of existing inventories and non-strategic assets would ensure that the company would be well-funded to drive the development of its upcoming launches and capitalise on opportunities.

By Bernama

Higher local interest in Malaysian property

Domestic interest in Malaysian property is now higher compared to that from overseas in contrast to a year ago, an analysis by thinkproperty.my showed.

The property website analysed its visitor traffic data over the last three months and compared it with the status last year.

The data is pertinent because in 2008, 82.7 per cent of visitors were from Malaysia, while in 2009, that proportion rose to 85.2 per cent.

Over 80 per cent of the visitors were interested in buying or renting property in Malaysia, Thinkproperty.my said in a statement today.
While there was increased interest from Malaysian property buyers, it was less among those from countries such as Singapore, the United Kingdom, India, Australia, Japan, the United Arab Emirates (UAE) and Pakistan, it said.

Asim Qureshi, the chief executive officer of Think Media Sdn Bhd, the company that owns thinkproperty.my, commented that the data provided mixed signals.

"On one hand, it indicates the confidence of Malaysians in investing in property has increased in contrast to those from overseas.

"This is to be expected because Malaysia’s property market has been stable. The Malaysian experience of seeing property as an investment has also been more positive compared to those of most other countries," he added.

"However, the negative is that we are not seeing as many foreigners interested in Malaysian property," he said.

According to Qureshi, Malaysia is doing a good job of getting the Malaysian story across overseas in marketing itself as the gateway to Asia, the lack of a property gains tax, liberal ownership rules as well as a strong banking sector.

"These are all strong pull factors for the country. However, the weak global economy must be the prime culprit for the lower level of foreign interest this year. There is not much Malaysia can do about it, except wait," he said.

On a positive note, he said, there was some increased interest from China, Vietnam and Thailand, though Hong Kong’s level was unchanged.

"In my view, this should be a hint for both the government which is trying to promote Malaysia’s real estate abroad as well as developers trying to do the same.

"The focus should increasingly be Asia. Asia is leading the world out of recession. Asian investors will likely play an increasingly important role in Malaysia’s property market in future," he highlighted.

Eddie Chen, the head of Marketing of Think Media Sdn Bhd, pointed out that Thinkproperty.my’s absolute visitor figures have risen by 409 per cent from this time last year.

"This is the result of a shift from people searching for property in traditional classifieds to searching online.

"The shift has been dramatic and in my view, it’s merely the tip of the iceberg. We are conservatively expecting traffic to increase at least a further 300 per cent between now and 2010,"

By Bernama

Growing demand for Aussie homes

PETALING JAYA: Australian properties have always attracted a sizeable number of Malaysian investors and the reasons are obvious.

The country’s close proximity to Malaysia, strong economy, political stability and the number of Malaysians studying Down Under make it probably one of the most favoured destinations for many locals – for a long or short stay.

A property analyst from Australia said these factors aside, one of the main reasons for Malaysians (with permanent resident status) buying Australian properties had been the steady property capital appreciation over the past decade or so with impressive double-digit capital growth per annum posted in all states.

He said even with the global economic downturn, the Australian economy remained robust, thanks mainly to the Government’s A$42bil stimulus package.

The analyst said on record, Australia was the only developed country in the world that did not experience a recesssion.

One of the measures taken by the Australian Government was to allocate A$6.4bil for the housing sector to help Australians own their homes.

And this is where many property developers, real estate agents and those related to the construction industry, as well as ordinary Australians and those with permanent residence, have benefited significantly during the economic downturn.

In fact, in recent times, a number of Australian companies have found it lucrative to market their properties in Malaysia.

One such company is Shac live + invest, which had a two-day launch and exhibition of three of its properties in Kuala Lumpur during the weekend.

Deniz Sivasli... ‘The uptake of Australian properties has been phenomenal.’

Shac managing director Deniz Sivasli said the company had conducted several launches and exhibitions here since 2007 and found Malaysian property investors very receptive.

“Property sales here have been very encouraging, which is why we are back again to promote the balance of our unsold units in three of the projects, which are located in prime locations in Melbourne,” he said.

The three projects are the Grantham Melbourne in Brunswick (about 20 unsold units), High Apartments in Prahran (three units) and EDGE Sandringham (18 units).

All the units are fully furnished and are going from A$179,000 to A$369,000 each. Shac’s marketing agent in Malaysia is AP Properties Sdn Bhd.
Sivasli said the uptake of its properties had been phenomenal, especially since the Government’s initiative to increase the grant for first-home owners.

“In Victoria, first-home owners can expect to receive A$32,000 from the Government for the purchase of their first house, provided they meet all the criteria and sign the sale and purchase agreement by Sept 30,” he said.

It is understood that after the date the full grant will not be available.

“We know there are a number of Malaysians with permanent Australian resident status who are eligible for the grant and have not purchased property in Australia,” he noted.

Sivasli said most first-home buyers were either young Australians, retired singles or new migrants/permanent residents, who wanted a place near the city.

On the yield, he said generally Australian properties had a yield of 3.5% to 4.5% per annum, depending on location but, based on track record, the properties sold under Shac had annual yields of around 6.6%.

He also said Australian properties would generally double in value in seven to eight years.

“Shac is able to get better than average yield because our company is a boutique property developer and we build customised properties in selected areas within the city after an in-depth study on the needs of a particular community and its disposable income,” he said.

On the impact of the stronger Australian dollar in recent months (A$1=RM3.01 as at Sept 25), he said it would have an impact on sales but potential first-time home owners should think long term and also factor in the grant.

They needed to deposit only 10% of the purchase price and 80% financing from Australian banks was available, he said.

“We even brought our bankers to the exhibition to make financing easier for our potential customers.”

Ian Chen... ‘Houses and apartments in Victoria are much sought after by Malaysians.’

Jalin Realty International Pte Ltd chief executive officer Ian Chen said Australian properties were much sought after by Malaysian and Singaporean investors.

“We have been marketing Australian prime properties for several years and the market is definitely good,” he said, adding that many Asians, including Malaysians, were familiar with Australia and its lifestyle.

Jalin Realty is a real estate and marketing agent for Australian property developers that offer luxury and top-of-the-range properties to high-end net worth individuals.

Chen said houses and apartments in Victoria, especially in the city of Melbourne and suburbs, were much sought after, especially by Malaysians.

“The auction ratings for homes in Victoria are about highest among all the states,” he said.

On the impact of the strong Australian dollar, he said many of Jalin Realty’s customers were very affluent.

“The cost of the property is not the first priority to most of our customers. Often it is whether they like the property and its location. These factors count a lot more to them.”

Besides properties in Victoria, the company also markets prime properties in the Gold Coast.

Figures from the Housing Industry Association, released on Sept 24, showed new-home sales nationally increased by 11.8% in August – the best monthly result in over 3½ years.

By The Star (by Danny Yap)

Tabung Haji to set up hotel, complex in Terengganu

Lembaga Tabung Haji is setting up a hotel and complex for pilgrims near the international airport in Kuala Terengganu, Terengganu to help strengthen its product offering in the east coast.

"With the current market situation, investing in real estate is one of the areas that we are exploring. We are starting to look at providing infrastructure in the east coast," its chief executive officer, Datuk Ismee Ismail, said.

"We believe there is good potential for hotels in Kuala Terengganu looking at the number of direct flights available to Mecca," he said at the launch of Tabung Haji Uniteller Service in Kuala Lumpur yesterday.

Ismee said Tabung Haji is in the midst of finalising the design and building plans. He added that it would be viable to have a 3 or 4-star hotel with more than 250 rooms.

The hotel would cater to pilgrims in Kelantan and Terengganu performing the Haj annually, and to the public outside the Haj season.
It is estimated that it would cost the pilgrims fund between RM80 million and RM100 million to build the hotel and complex.

Tabung Haji is expected to start construction in the first half of next year.

This is the second hotel and complex for pilgrims that Tabung Haji is planning to develop this year.

Tabung Haji also plans to build a hotel, complex and conference centre at the Kuala Lumpur International Airport in Sepang, to facilitate Haj pilgrims.

The ground breaking ceremony is expected to take place soon and construction would start in the fourth quarter.

People familiar with the matter said the KLIA project is worth around RM150 million.

It was reported that there are plans to relocate the Tabung Haji complex in Kelana Jaya to the KLIA, with the Kelana Jaya complex being turned into a Tabung Haji hotel, specifically for Haj courses.

Tabung Haji currently owns hotel and complex for pilgrims in Kota Kinabalu, Sabah and in Penang.

By Business Times (by Sharen Kaur)

Berjaya Land Q1 profit jumps 76pc

The property developer posts a net profit of RM78.11 million in the first quarter, with sales falling slightly by 1.17 per cent to RM952.63 million

Property developer Berjaya Land Bhd (BLand) said first-quarter net profit jumped 76 per cent from last year, as earning contributions from its gaming business was able to offset the lower profit contribution from the hotel and resorts division.

It registered a net profit of RM78.11 million in the first quarter, compared with RM44.37 million same period last year. Sales declined marginally by 1.17 per cent, to RM952.63 million during the quarter.

"The lower revenue was mainly due to the lower revenue reported by the hotel and resorts division that was adversely affected by the outbreak of A(H1N1) influenza as well as the prevailing global economic crisis.

"The higher profit for the current quarter was mainly attributed to the higher profit contribution from the gaming business arising from lower prize payout and significant net investment related income," said BLand in a Bursa Malaysia filing yesterday.
However, compared against fourth quarter last financial year, sales were lower mainly due to lower sales from its gaming business, while net profit was higher against fourth quarter ended April 30 2009, mainly due to higher profit contribution from its hotel and resort division.

BLand has some 47 per cent stake in number forecast operator Berjaya Sports Toto Bhd.

The company expects the financial performance for its remaining quarters to be "satisfactory".

BLand shares closed unchanged at RM3.78 yesterday.

By Business Times

Sunway gest RM147.36m Putrajaya contract

Sunway Holdings Bhd's wholly-owned subsidiary Sunway Construction Sdn Bhd has accepted the letter of award for a contract worth RM147.36 million from Putrajaya Holdings Sdn Bhd.

The contract is for the proposed design, construction and completion of a 16-storey three-star hotel and one block of 11-storey office tower.

The proposed project is expected to begin on Oct 7, with a construction period involving 36 months, the group said.

It is expected to contribute positively to the group's earnings for the financial year ending Dec 31, 2010, onwards.

By Bernama

‘Dubai house prices will continue to fall’

DUBAI: Dubai’s house prices, which plunged 47 per cent in the 12 months through June, will continue to fall because of “oversupply,” Jones Lang LaSalle said.

The problem “is likely to get worse before it gets better in some sectors and this will continue to place downward pressure on prices and rental levels in the short term,” the Chicago-based real estate company said.

About one-quarter of Dubai’s offices are empty, and average hotel occupancy rates dropped to about 65 per cent, according to Jones Lang LaSalle.

By Bloomberg

Office rentals in KL stabilising

PETALING JAYA: The soft office space rentals and occupancies in Kuala Lumpur are expected to stabilise in the next six months if the economic and business outlook continues to improve, say property consultants.

The city’s office market has not been spared from the effects of the global financial crisis, with easing demand pushing down rental and occupancy rates.

According to Knight Frank Research’s latest Real Estate Highlights report, absorption of office space is generally slow, except for buildings which are for owners’ occupation, including Lot C, KLCC (to be occupied by Petronas) and HSBC Annexe (part of the expansion of the existing HSBC headquarters).

Office occupancies started to decline in the first half of the year due to weaker demand as some companies withheld their expansion plans.

Overall, the average occupancy in Kuala Lumpur in the first half-year was 83% (second half of 2008: 85%), with prime offices in Kuala Lumpur city centre having done better with an average occupancy rate of 97% (second half of 2008: 97%).

Prime offices are still enjoying high occupancies due to the limited new supply of prime office space and the remaining terms of earlier tenancies locked in.

Occupancy for secondary office buildings in Kuala Lumpur city centre has shown an improvement as some companies remain interested in relocating to secondary offices as a cost-saving measure amid the economic slowdown.

The cumulative supply of purpose-built office space in Kuala Lumpur city centre was recorded at 41.3 million sq ft during the first half of this year while the cumulative supply in “decentralised”, or non-prime, areas of Kuala Lumpur stood at 13.5 million sq ft.

During the period, there were no significant investment sales for office property in Kuala Lumpur.

However, several sales were noted in decentralised Kuala Lumpur and Petaling Jaya, which included Wisma Chase Perdana in Damansara Heights, Wisma Dijaya in Damansara Utama and Wisma Glomac 3 in Kelana Jaya.

The report further said that several new office buildings currently under construction in Kuala Lumpur would add some 1.4 million sq ft in new office space in the city by year-end.

The increased supply will translate into more choices for tenants and a more competitive market for property owners.

“Office rentals in Kuala Lumpur will remain one of the lowest in Asia and this is an advantage in attracting foreign companies seeking space for their business expansion in the region,” the report said.

The new supply coming on-stream include GTower, The Icon Jalan Tun Razak and Menara PJD, all located along Jalan Tun Razak.

In decentralised Kuala Lumpur, the incoming supply in the second half include Quill Building 7, MIDA headquarters, and the head office of the Companies Commission of Malaysia.

DTZ Research head of South-East Asia, Chua Chor Hoon, said office property value in Kuala Lumpur had eased about 12% year-on-year but the drop was not as steep as in other regional markets.

“There are not many sellers, so there is no distressed sale. The average capital value is RM790 per sq ft,” he said in a recent report on the Kuala Lumpur office market.

Chua said most of the sales were transacted by local buyers while foreign investors were staying on the sidelines in search of higher yields.

YY Lau Property Solutions chief executive officer Y.Y. Lau said that on the whole, there was an oversupply of office space in the Klang Valley although certain popular locations were facing shortages.

She said most of the space was taken up by existing companies that were either consolidating or expanding their operations.

“To cut operation costs, some tenants have already moved to less expensive locations.

“Office space that may not be of Grade A standard is still registering good demand as long as it is well maintained and the rentals reasonable,” Lau said.

By The Star (by Angie Ng)

The Danna - a 'gift' from Tradewinds to Langkawi

Tradewinds Corp Bhd (TCB), a company controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary, will open its RM170 million luxury accommodation in Langkawi called "The Danna" in July next year.

The Danna, to be positioned in the same league as the existing Tanjung Rhu Resort and The Datai, will be built, owned and operated by TCB, its chief executive officer Shahrul Farez said.

This property will be the group's third hotel on the legendary island after the three-star Mutiara Burau Bay Beach Resort and the five-star Meritus Pelangi Beach Resort & Spa, Langkawi.

Shahrul said TCB's decision to open the property in Langkawi was prompted by the high average room rates (ARRs) that the island garners.
Malaysia is said to have one of the lowest if not the lowest ARRs in the world. Langkawi, how-ever, boasts the highest room rates compared with any other places in Malaysia, even that of Kuala Lumpur.

The Danna is derived from the Sanskrit word, denoting "Gift".

Shahrul said the new hotel, located in Telaga Harbour Park and neighbouring Burau Bay, will have 130 rooms.

In 2007, TCB's 70 per cent owned Tradewinds Hotels & Resorts Sdn Bhd bought Benua Perdana Sdn Bhd, which owned the partially completed hotel.

This property sits on a 11,363 sq m site, which is on a 55-year lease from the Langkawi Development Authority (Lada).

The market value of the property as appraised by Rahim & CO in May 2007 was RM100 million, on a completed basis.

Shahrul declined to reveal the hotel's anticipated occupancy and ARR in the first year of operations.

However, luxury resort Tanjung Rhu Resort last year saw a gross operating profit (GOP) of 52 per cent and raked in RM1,500 per occupied room per night for two, including food and beverage.

GOP is gross revenue (from rooms, food and beverage, laundry or business centre) minus cost of operations (such as wages, electricity and ameni-ties).

Mutiara Burau Bay, meanwhile, enjoys an ARR of RM195 per night. The hotel is owned by Lada and managed by Mutiara-TCB Hotel Management Sdn Bhd, a member of the TCB group.

Meritus Pelangi is owned by TCB, but managed by Singapore Meritus International Hotels Pte Ltd. The property is TCB's best performing hotel in terms of ARR.

By Business Times (by Vasantha Ganesan)

Berjaya Hotels wants to hive off some foreign assets

Hospitality group Berjaya Hotels & Resorts plans to sell off its properties in Seychelles, Sri Lanka, Singapore and London to concentrate on its more profitable markets in Asia-Pacific.

Chief executive officer Joseph Won said the group wants to sell Berjaya Colombo Hotel and Berjaya Singapore Hotel, exiting entirely from Sri Lanka and Singapore, despite the two being in Asia-Pacific, to focus on bigger markets.

Won said if prices are right, it would also dispose of Berjaya Beau Vallon Resort and Berjaya Praslin Resort in Seychelles and Berjaya Eden Park Hotel in London.

He said the group is in discussions with a few parties for its properties in Seychelles and London and hopes to sell them within the next two quarters.

Locally, the group operates Berjaya Langkawi Resort, Berjaya Tioman Resort, Berjaya Redang Resort, Berjaya Georgetown Hotel, Colmar Tropicale and Berjaya Times Square Hotel in Kuala Lumpur.
The properties, including those overseas, are worth a combined RM900 million.

"We have made a strategic decision to be Asia-Pacific focused. We are transforming ourselves in such a way to become one of the biggest hotel groups in the region," Won said in an interview with Business Times.

He added that the plan for Asia-Pacific would be to open up to 20 new hotels and resorts in Japan, South Korea, Vietnam, Maldives and Malaysia over the next six to seven years.

The list would include Berjaya branded properties, which the group would own and operate on its own, and hotels operated by third parties.

Berjaya Hotels & Resorts will use proceeds from the sale of the foreign properties, and its own reserves and existing cash flow to finance the expansion.

In addition to opening more properties, the group will also be looking for management contracts in Asia-Pacific.

"We are getting offers from China and Vietnam to operate their wholly-owned resorts and hotels, under the Berjaya brand. This is something we would be doing on a big scale," Won said.
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The group, in a 70:30 joint venture with a local Vietnamese firm, is currently constructing Berjaya Resorts Phu Quoc Island in Phu Quoc Island for US$45 million (US$1 = RM3.48).

Won said the new resort is targeted for opening in the second or third quarter of next year.

"This is our first property in Vietnam and I wish to do more. I am bullish on the market. We will be expanding there aggressively," Won said.

The group is also looking to open a city hotel in Ho Chi Minh City and a beach resort in Da Nang, within the next four to five years.

Meanwhile, Won said Berjaya Hotels & Resorts may be listed in the future to expedite its expansion and unlock the value of its properties.

"Listing is a possibility that everybody is talking about. My (immediate) aim is to take the group global after we have opened the new properties," he added.

By Business Times (by Sharen Kaur)

Berjaya Hotels expects to rake in RM310m revenue

The hospitality group has 11 properties in Malaysia, Seychelles, Sri Lanka, Singapore and the UK which recorded revenue of RM290 million for the financial year ended April 30 2009.

Hospitality group Berjaya Hotels & Resorts, a unit of Berjaya Land Bhd, expects to rake in RM310 million in revenue for current financial year, driven largely by its properties in Malaysia.

Its chief executive officer (CEO) Joseph Won said the earnings before interest, taxes, depreciation and amortisation (EBITDA) for all its properties in the current year will amount to 33-35 per cent.

The group has 11 Berjaya properties in Malaysia, Seychelles, Sri Lanka, Singapore and the UK, which recorded an average occupancy rate of 66 per cent and revenue of RM290 million for the financial year ended April 30 2009.

Won said the group's properties in Malaysia are recording better room sales with an average room rate (ARR) of RM320 million despite the global economic crisis.
The properties are Berjaya Langkawi Resort, Berjaya Tioman Resort, Berjaya Redang Resort, Berjaya Georgetown Hotel, Colmar Tropicale and Berjaya Times Square Hotel.

"We see more people travelling to our resorts in Redang, Langkawi and Tioman Island, and Berjaya Hills," he said.

In comparison, the ARR for the group's overseas properties is some US$120 million (RM418 million).

"Overall, we did very well in the financial year just-ended despite the global credit crunch. We are lucky to have come out of this crisis unscathed," Won said in an interview.

The group remains cautious even though the economy is recovering.

Won said Berjaya Hotels & Resorts will not take to raising the ARR for its Malaysian properties next year.

The last time the ARR was raised was in 2006, by 10-12 per cent.

Won was appointed CEO of Berjaya Hotels & Resorts in August last year.

By Business Times (by Sharen Kaur)

Traders Hotel to retain lead position among competitors

Three years since its opening, Traders Hotel Kuala Lumpur has emerged tops not only among four-star hotels in the city, but also among a handful of five-star properties.

And it is making sure it holds the top seat this year and the next, says its newly-appointed general manager Richard Cooke.

The hotel, owned by KLCC (Holdings) Sdn Bhd and operated by the Shangri-la Group, is only expecting a marginal decline in both average occupancy and average room rate (ARR) this year compared with 2008.

"We are number one in our competitive set. We expect to retain this position this year," he told Business Times in an interview.
"In the January to August 2009 compared to the corresponding period of 2008, we only experienced a slight decline (in occupancy and ARR)," Cooke said.

The 571-room hotel is positioned for business travellers, as such it was hit by the global economic slowdown. However, its leisure segment has improved and has helped to cushion the decline in the business market.

Business guests, which made up 85 per cent in 2007, now make up about 70-odd per cent. The remaining are leisure travellers.

The hotel enjoyed a bumper year in 2008 and Cooke expects that Traders will bounce back in the second half of 2010 and post similar results as in 2008.

Room rates next year are expected to inch up by 2 per cent to 4 per cent.

Based on a search on accommodation specialist Wotif.com's website, Traders' room rate for November 25 2009, (based on a search on September 10 2009) is RM449, which is far higher than the rates at some five-star properties.

Next year, Cooke has planned changes for the hotel to rejuvenate it so as to retain its lead among its competitors including improving on its service standards.

"We want to create functionality and memories for our guests," he said, adding that the hotel caters predominantly to the Malaysian market, followed by the Middle East, the UK and Singapore. Forty per cent of its guests are repeat guests.

This hotel has one of the leanest number of employee to room ratio of 0.8 and Cooke hopes to maintain it at this level and improve their efficiency at the same time.

By Business Times (by Vasantha Ganesan)