Lifestyle mall will enhance Iskandar Malaysia's appeal

A New lifestyle mall in Iskandar Malaysia is expected to become the largest in the southern region, with the potential to attract RM338 million in annual spending.

With a gross retail space of one million sq ft, the mall, situated at the western development zone of Medini North, will benefit from high accessibility to Johor Baru via the coastal highway, which is slated for completion in 2012.

The mall is 15 minutes away from the Second Link to Singapore, and will be connected to public transport services, including the planned Light Rail Service.

It is next to the Legoland Malaysia theme park and it will start operations at the same time as the theme park.
Iskandar Investment Bhd (IIB), which is overseeing the project, said the new lifestyle mall would turn Medini North into a hive of activity.

"Medini North will come alive in 2012, showcasing to the world Iskandar Malaysia's strong and compelling value proposition," said Arlida Ariff, president and chief executive officer of IIB.

"Iskandar Investment is proud to have solid relationships with our current investors and will continue seeking trusted partners from across the globe to establish Iskandar Malaysia as the ultimate destination for global citizens to live, play and work," she said in a statement.

IIB had showcased the lifestyle mall to potential partners and retailers during the International Council of Shopping Centers Asia Expo in Singapore from October 14-16.

"This first shopping mall in Medini North, will seamlessly connect to the Legoland Malaysia theme park, hotels and commercial developments which will fulfill Iskandar Investment's vision to develop Medini as the definitive lifestyle and leisure zone in Iskandar Malaysia," said Rosenah Hassan, chief executive officer of Iskandar Harta Holdings, a wholly-owned subsidiary of IIB, which is undertaking the lifestyle developments within Medini North.

The design of the mall will incorporate natural open-air landscapes, making it ideal not only for shopping but contemporary art exhibitions, live performances and international festivals.

By Business Times (by Ahmad Fairuz Othman)

Property sector bouncing back

PETALING JAYA: The property sector has seen a strong comeback in the third quarter with renewed buying interest for residential property indicating that the economic downturn is “bottoming”.

Datuk Seri Kong Cho Ha... 'The country’s property and construction sectors had experienced revisions to their ratings outlook.

Housing and Local Government Minister Datuk Seri Kong Cho Ha said the country’s property and construction sectors, which were more severely impacted than other sectors of the economy, had experienced revisions to their ratings outlook.

“Our local property market, especially in the Klang Valley, has shown a recovery over the past few months.”

He said this to reporters after opening the National Property and Housing Summit 2009 here yesterday.

Kong said sales on the upmarket ones in particular had been “very encouraging”.


“That is a good sign of recovery of our economy, and the people are investing again,” he added.

Kong credited the recovery to the implementation of the Government’s stimulus packages.

Currently, there are 148 abandoned projects in the country, some dating back 20 years.Kong said the ministry had successfully revived 12 of these.

Commenting on the upcoming Budget 2010, Kong said the country, like others, had faced an economic crisis in the last two years.

“So, the Government has to be very prudent and plan very carefully,” he said.

By The Star

TA Global to double number of hotels

TA Global Bhd, set to become Malaysia’s fifth biggest listed property group, plans to double the number of hotels it owns in five years, adding to a portfolio that includes the Radisson Plaza in Sydney and the Westin Melbourne.

It wants to build at least two hotels in Kuala Lumpur and make acquisitions in overseas markets from London to Canada, said Alicia Tiah, managing director and co-founder of its parent company, the Malaysian brokerage TA Enterprise Bhd.

“Definitely we want more. We want to develop our own chain. I want to buy hotels in gateway cities like London,” she said in an interview in Kuala Lumpur. “But some are not cheap, some too big, some too small, it takes time to get the right fit. I want people to show me what they have.”

TA Enterprise, whose shares have more than doubled this year, folded all its property assets into TA Global which will be listed on the Kuala Lumpur stock exchange on November 23 to tap a resurgent stock market. The FTSE Bursa Malaysia KLCI Index has gained 44 per cent so far this year.
TA Global, which now owns four hotels, is being spun off into a separate listing to realise its value and help it expand. The group spent about RM756 million (US$225 million) from December to August to buy the Westin Melbourne hotel, the Swissotel Merchant Court hotel in Singapore and the Coast Whistler Hotel in Canada, taking advantage of depressed prices during the global recession.

The acquisitions will triple hotel revenue at TA Global next year, Tiah said, without giving the current figure.

“A lot of hotels were going for below their replacement costs,” she said. “We managed to get great assets at a time when things were so gloomy.”

Good Timing

TA Global will have a market value of RM2.4 billion when it’s listed and will be ranked the fifth largest property group, HWANGDBS Vickers Research Sdn Bhd said in a September 29 report.

“The timing is quite good to list,” Tiah said. “We have accumulated great assets.”

TA Global, which has total assets valued at RM2.4 billion, has lined up more than RM6 billion of property development projects from now till 2012, said Tiah.

The company also owns the 24-story Terasen Centre, an office building in Vancouver, Canada, and Menara TA One, a 34-story office in Kuala Lumpur.

By listing the property unit, TA Enterprise will be “unlocking the hidden value” of its property assets, ECM Libra Capital Sdn Bhd said in a report yesterday.

TA Global will raise RM230 million from the share sale. It also owns offices in Kuala Lumpur and Canada. TA Enterprise will retain a 57 per cent stake after the listing, said Tiah.

“We have a good stream of income, good time, bad time, it will be there,” she said, referring to the hotels. “I love hospitality, you can up the rates,” as opposed to office buildings where rates are fixed by contracts, she said.

By Bloomberg

Penang Turf Club to build bungalows for rental income

The Penang Turf Club plans to build 25 bungalows on its grounds as it seeks to develop rental income to fund operations.

The RM30 million development, will be sited on two separate parcels of prime freehold land totalling 2.25ha, on the fringes of the horse track in Batu Gantung.

The club stands on a plot of land totalling 104ha. It will use internal funds for the development.

"We are projecting a RM1.94 million net annual income from the rental of the new homes," PTC president Datuk Ong Eng Khuan told reporters after an extraordinary general meeting held at the club's premises yesterday.

While the estimated development cost has been tagged at RM30 million, Ong said the projected annual return from rental as a percentage of the development cost stood at 6.43 per cent.

The history of the Penang Turf Club dates back to 1864. Apart from the Singapore Turf Club, this is the oldest club of its kind in Peninsula Malaysia.

The earliest horse racing turf in Penang was on a field along Macalister Road on the island.

Members voted for the project, which will comprise detached and semi-detached homes, which are slated for completion by the end of 2012.

"Since the lots are within an area zoned as 'established housing' and 'low density residential', the height of the proposed houses should not be more than 2 or 3 storeys," said Ong, adding that this is to ensure that the proposed development will be consistent and compatible with existing houses in the surrounding areas.

The club is located next door to the upmarket Jesselton neighbourhood, which serves as one of George Town's more prestigious addresses.

"The maximum density allowable for the area is 6 units per acre," said Ong, "and the development will not interfere with the running of the club."

By Business Times (by Marina Emmanuel)

UK's Weston Homes sees Asia as new growth region

WESTON Homes plc, a UK property developer specialising in the development of high quality residential developments, is targeting Asia including Malaysia as a new growth region to develop properties, says its chief.

Weston Homes operates throughout the South-East of England and London.

Its chairman and chief executive officer Bob Weston said the company plans to develop properties outside the UK.

"Asia, including Malaysia, is an important market to us. We would be delighted to discuss any potential joint venture arrangements with Malaysian developers," he told Business Times in an interview.
Weston Homes was recently in Kuala Lumpur to promote its RM825 million Bridges Wharf project.

The project is one of London's most prestigious River Thames residential development.

It offers a collection of 265 one- and two-bedroom units, with built-ups ranging from 450 sq ft to 2,100 sq ft, including one penthouse built within three glass-fronted, 12-storey apartment towers.

Within one of the apartment towers is a five-star 70 room French boutique hotel called the Von Essen Hotel.

Bridges Wharf features 8,000 sq ft of commercial space and more than 14,500 sq ft of retail space for restaurants and boutique shops.

"We are making our debut into the Malaysian investor market as the (British) pound remains weak. There is also more Malaysian interest shown in the UK and this would be an opportune time for them to own properties in London before prices move (up). We are offering great value for money now," Weston said.

Weston Homes has sold close to 200 apartment units since Bridges Wharf started two years ago. It hopes to sell the remaining lots to Malaysian home buyers.

The company's joint marketing agent for Malaysia is VPC Alliance (KL) Sdn Bhd.

VPC managing director James Wong said it recorded moderate success during the sales exhibition on Bridges Wharf in Kuala Lumpur in October.

"Some deposits were made, but they are strong leads for follow-ups. Many prospective buyers are going to London to view the development before committing," Wong said.

By Business Times (by Sharen Kaur)

Scientex to buy Johline Realty for RM65.3m

SCIENTEX Bhd, a manufacturer and property developer, plans to buy Johline Realty Sdn Bhd for RM65.3 million to tap the growth triangle of Johor Baru.

It told Bursa Malaysia yesterday that the acquisition by its unit Scientex Quatari Sdn Bhd is in line with its expansion plan of current operations from Pasir Gudang and Kulai to Iskandar Malaysia.

The deal, which will be funded with internal funds and borrowings, is due to be completed in three months.

By Business Times

CC&T, China firm in property tie-up

CC&T Ventures Sdn Bhd, a local property company, has signed a pact with a leading construction and development company in China to jointly develop properties in China and Malaysia.

The signing of a strategic collaboration agreement with state-owned Beijing Uni-Construction Co was held in Beijing recently, witnessed by the Malaysian Ambassador to China, Datuk Syed Norulzaman Syed Kamarulzaman.

By Business Times

Mulpha to unveil innovative high-end housing designs

An artist’s impression of the Bangsar Enclave

PETALING JAYA: Malaysian developers have their fair share of successes overseas and one of the most successful players in Australia is Mulpha International Bhd.

Renowned for its A$2bil Sanctuary Cove development on Australia’s Gold Coast, Mulpha is today one of the largest Malaysian developers Down Under with an estimated asset portfolio of A$1bil.

Its wholly-owned subsidiary, Mulpha Australia Ltd, has developed and managed a wide range of property and lifestyle assets, including hotels, a hotel school, integrated residential and commercial developments, car parks, and a winery and vineyard operation.

Its assets include the Hyatt Regency Sanctuary Cove in Queensland, Hilton Melbourne Airport, InterContinental Sydney, The Hotel School Sydney, Norwest Business Park, 99 Macquire Street and Cathedral Street Car Park in Sydney, Bimbadgen Estate in New South Wales’ Hunter Valley, and the award-winning Hayman Great Barrier Reef.

For the six months ended June 30, Mulpha Australia contributed 66.5% to the group’s revenue of RM357.9mil while its Malaysian business’ share was 7.5%. The balance of the revenue came from operations in China, Hong Kong, Singapore and Vietnam. Mulpha is now looking to build a stronger presence in the Klang Valley property market. General manager for property division Ronn Yong said that despite its successes in Australia, the company had not lost sight of its local roots and business interest.

With its vast knowledge in building lifestyle homes, Mulpha is looking to introduce more innovative housing designs in Malaysia.

“We are working towards expanding our presence in the Klang Valley and have lined up a few prime residential projects in Kuala Lumpur’s well sought-after addresses. By leveraging on our expertise as a niche lifestyle developer, we hope to contribute towards changing the local property landscape.

“Malaysians are becoming more lifestyle-conscious and we are confident there is a big market for our range of high-end residences,” Yong told StarBiz.

Mulpha, via property arm Mulpha Land Bhd, is planning a few exclusive project launches in the next one to two years.

Major projects under Mulpha Land include Bangsar Enclave and Raintree Residence in Kuala Lumpur, Taman Desa Aman in Kedah and Bukit Punchor in Nibong Tebal.

The most exclusive project will be Bangsar Enclave, to be unveiled early next year. The gated and guarded luxurious bungalow enclave, located at Jalan Medang Tanduk, will have a gross development value (GDV) of RM75mil.

Located on 1.54 acres, there are only seven three-storey bungalows sharing a common communal linear garden, a courtyard and deck.

Each of the contemporary, minimalist-designed unit, with built-up of 7,525-9,540 sq ft, will have its own private swimming pool, koi pond and lush garden. They are available at an average price of RM10mil.

Yong said another upcoming project would be an eight-bungalow enclave in Jalan Langgak Tunku in Bukit Tunku. The residences will have land area of 15,000 sq ft and built-up of between 8,000 and 15,000 sq ft. The lifestyle homes with indicative price of RM15mil each will be launched by early 2011.

Mulpha is also undertaking the refurbishment of the Raintree Residence opposite the Raintree Club in Jalan Ampang.

The luxurious low-rise residential building, with eight apartments and four penthouses, was purchased by Mulpha in 2002. Presently seven of the units are leased out at a monthly rental of RM4 per sq ft or about RM8,000 a unit.

Yong said if the right buyer came along with the right offer for the building en bloc, “we may consider selling the property.” Otherwise, the residences will be kept for long-term leases.

The group is also an active builder in Johor with its Leisure Farm Resort on 1,765 acres going full swing now.

According to Yong, Leisure Farm is one of the first award-winning double-gated residential resort developments in Iskandar Malaysia with a 36-hole golf course and country club, a recreational club, canal park and organic orchard. It has attracted a lot of foreign interest, especially Singaporeans.

Offerings at the RM2.6bil development include spa villas and chalet hotels along a canal.

“We are in the process of planning resort lifestyle spa hotels in Leisure Farm to support our future retirement villages there. Phase one will include the expansion of the Bale Equestrian Club that will commence in the second quarter of next year while the phase two Spa & Village Hotel will start in 2011. Phase 3, comprising a cluster retirement village, will follow after that,” Yong said.

Also in the pipeline are 332 semi-detached units and bungalows fronting the canal and mangrove reserve in Precinct 7, with a GDV of RM500mil.

Mulpha is planning to build an office building, Menara Mulpha, along Jalan Sultan Ismail in Kuala Lumpur. Construction of the 29-storey Grade A office tower with a gross floor area of 360,000 sq ft will kick off in the second quarter of next year for completion in 2013.

With a GDV of RM450mil, it will be designed by New York architect Kohn Pederson Fox.

By The Star (by Angie Ng)

Australia attractive spot for property investment

AUSTRALIA'S housing shortage provides good opportunity for those seeking to diversify their property investment portfolio overseas.

Frasers Property Australia Pty Ltd managing director and chief executive offficer Dr Stanley S.H. Quek said the high immigration trend in Australia makes the country an attractive spot for property investment. Last year, 430,000 people migrated to Australia.

"The lifestyle, stable economy and political situation make it an interesting country for people to live in. Many students who used to study in Australia also go back to work and settle down there," he told Business Times in an interview.

According to an ANZ Australian Property Outlook report, house prices and rents in Australia will continue to skyrocket on the back of a record shortage of supply.
"By 2010, we project a record housing shortage of nearly 200,000 homes," it said.

Sydney has a population of 4.3 million and is set to grow by 25 per cent to 5.35 million people by 2026.

The city has the highest dwelling of housing undersupply among other capitals, with an estimated lag of two years worth of building.

Over the weekend, Frasers Property Australia, in collaboration with Jalin Realty, had organised "The Sydney Collection" seminar, a preview of its residential properties in Sydney.

It featured three types of apartment buildings and low-rise houses, with prices between A$435,000 and A$2.9 million (RM1.5 million and RM8.9 million) per unit.

The properties include Lumiere Residence, encompassing 456 units of apartments, and a residential property called Trio.

By Business Times (by Zurinna Raja Adam)

'Improve housing approval process'

The government should give incentives for first-time house buyers, review its policy on low-cost housing and improve the approval process, says YTL Land & Development Bhd.

These are some of the property developer's suggestions for the upcoming Budget 2010, which will be presented on Friday.

Currently, there are no incentives for first-time buyers although the industry has lobbied for it since last year.

Fiabci, an international real estate federation, has asked the government for grants of up to RM10,000.

YTL Land executive director Datuk Yeoh Seok Kian also held the view that the government should examine what he termed as unhealthy competition in the high-end residential market.
State firms like the Selangor State Development Corp (PKNS) are building houses priced at more than RM800,000 each.

He argued that PKNS should stick to providing social housing instead of competing with the private sector.

"This will certainly improve the overall well-being of deserving Malaysians faced with financial difficulties. A lot more can be provided for at the end of the day and the responsibility should not only fall on private developers," Yeoh told Business Times.

Under current policy, 30 per cent of a developer's residential project must be low-cost housing.

Yeoh also hopes that the government will improve the approval process for new development projects.

"This is one of the challenges we continue to face. While the government has acknowledged this as an issue with the set-up of the One-Stop Centre (OSC) in 2007, there should be better follow-through to ensure all parties are working towards the same intent," he said.

Yeoh said delays caused by unnecessary red tape and bureaucracy could be reduced with better enforcement and regulation.

"Ongoing reviews of policies can play a major role in helping the property sector stay robust and competitive," he added.

By Business Times (by Sharen Kaur)

The importance of green building effect

Environmental issues and climate change have marched into the mainstream of popular, political and business thinking over the last year worldwide.

As individuals, corporations and governments alike take more cencerted action to help "Mother Earth", governments are often seen as the catalyst in spearheading this initiative by way of legislation. In the UK, for example, the introduction of the Climate Change Act 2008 has mapped out the direction of the government's policy.

But what types of legislation are effective in initiating change, particularly among companies?

PricewaterhouseCoopers in the UK conducted a survey of top UK and international companies to understand businesses' views of the government's use of tax and regulation to manage the environmental impact of business. Some of the more salient observations from the "Saving the planet - can tax and regulation help?" survey were:

* Regulation is seen as being the government's most effective tool to change business behaviour;

* Taxes that tackle specific market failures, such as climate change levy, are viewed as effective in shifting corporate behaviour, while taxes that were either not originally designed to tackle environmental issues, such as fuel duty, or are less explicitly linked to polluting behaviour, such as air passenger duty, are seen as being far less effective in changing corporate behaviour;

* Businesses believe that tax incentives could be an important tool in encouraging a change in their behaviour and want to see the government offer more and better designed incentives.

WHAT CAN GOVERNMENTS DO?

The survey findings clearly indicate that while governments must drive the initiative, they must also bear in mind the preference by businesses for "carrot" incentives over "stick" penalties in changing corporate behaviour. It is important that the incentive framework is not onerous or complex, lest it fails to motivate changes in behaviour. Moreover, the framework must be sufficiently potent to generate a multiplier impact on the change behaviour of the larger community.

One area of focus is the building industry. Buildings alone account for nearly one-third of the energy used globally and, if appropriately incentivised, could create the impact we seek on environmental change behaviours.

GREEN BUILDINGS

In Malaysia, our corporates are embracing green initiatives more keenly and an upshot of this is the proliferation of green buildings. The recent establishment of the Green Building Index (GBI) is a key milestone. Incentives such as higher plot ratio and better land premium rates to promote the development of green buildings are currently being explored.

These are well and good, but if we are to look at the tax incentives for green buildings, we would find that they are scarce and not "potent" enough. Currently, the tax incentives are mainly geared towards spending on energy-efficient assets by way of investment tax allowance.

It should also be noted that green building initiatives do not stop at just the installation of energy-efficient assets. It encompasses the way the building is designed and constructed, site planning, innovation and resources used. The building must be sustainable and can provide energy savings, water savings, a healthier indoor environment, better connectivity to public transport and the adoption of recycling as well as the greenery of the project.

While it is true that, generally, adopting green thinking and technology would be costly and may not be attractive for building owners, especially if the return on investment is too long, injecting the right "carrots" to the right sectors should drive the green initiatives, notwithstanding the high investment or cost of moving towards green technology.

A GREEN THOUGHT?

The government's endorsement of green buildings in a more holistic manner will positively impact the developers, property owners, consumers and suppliers to think and act green.

Granting greener tax incentives which are pegged to the type of building certifications such as the GBI or the likes will impact the entire building supply chain: from building owners and suppliers right up to consumers. Given the size of the property industry, incentives such as investment tax allowance or even industrial building allowances for green-certified buildings will be impactful.

We don't need to look far for examples. Across the causeway, the Singapore government uses both the "stick" approach of requiring green certification for buildings and the "carrot" approach of incentives such as grants to building owners and accelerated tax depreciation for energy-efficient equipment. Australia also provides incentives such as interest-free "Green Loans", grants and rebates to encourage greener living.

In Malaysia, using incentives as a tool to stimulate a change in behaviour will probably be preferred over the "stick" regulations. The introduction of regulations will likely give rise to a host of compliance issues before the community is ready or makes a conscious effort to go green. As a start, the government may want to invest with businesses to change behaviour in protecting Mother Earth.

As the politican and environmentalist Peter Garrett said: "Climate change is such a huge issue that it requires strong, concerted, consistent and enduring action by governments."

Peter Wee is an executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd.

By Business Times (by Peter Wee)

The incomplete look is in

The Malaysian way: Chan explaining the building’s design concept.

The PJ Trade Centre in Damansara Perdana has more occupants now following the launch of Menara Mustapha Kamal by Tun Dr Mahathir Mohamad recently.

The building located along the Damansara-Puchong Highway (LDP) appears “incomplete” due to its modern design characterised by the use of raw, simple materials.

The 2.2ha project consisting of four blocks of office buildings with 20 to 21 storeys each, one two-storey annexe building and about 2,000 car park bays was unveiled to the media in conjunction with the handover of Menara Mustapha Kamal, which occupies Tower A, to Emkay Group recently.

It was the maiden project of developer Tujuan Gemilang Sdn Bhd run by executive chairman Ahmad Khalif Mustapha Kamal and executive director Peter Chan Sai Kong.

Also present at the ceremony was Emkay group chairman Tan Sri Mustapha Kamal Abu Bakar

Chan took the media members on a tour around the project that emphasised on nature with 1,400 trees planted within the compound, as well as being energy saving and environmentally friendly with a strong Malaysian character.

Mustapha said he was excited that the group was moving into its very own building after 26 years.

Menara Mustapha Kamal is accessible by LDP, Penchala Link, New Klang Valley Expressway and PLUS North-South Expressway.

By The Star (story & photo by Yip Yoke Teng)

IGB jumps as foreign interest returns

SHARES in Malaysian property firm IGB Corp jumped by as much as 20 per cent today on foreign buying.

By 4.36pm local time IGB shares were up 19 per cent at RM2.35 a share on volume of 20.18 million shares. The benchmark stock index was up 0.65 per cent.

“Foreigners are looking to buy property stocks in Malaysia.
The country itself is considered a laggard and property stocks are trading at a steep discount,” said a institutional dealer from a Malaysian brokerage.

Market talk that the company is looking to sell its hotel assets may have contributed to the sharp rise in the share price, she said.

By Reuters

Property development division lifts Guocoland Q1 net profit

PETALING JAYA: GuocoLand (M) Bhd’s net profit for the first quarter ended Sept 30 almost doubled to RM6.67mil from RM3.4mil in the previous corresponding quarter, as revenue jumped 133% to RM42.75mil.

The better results were attributed to higher contribution from the “property development division compared with the previous year,” it said in a statement to Bursa Malaysia yesterday.

The company sees a “challenging” year ahead, but expects its performance this year “to be satisfactory.” GuocoLand is a company under the Hong Leong group.

By The Star

Emkay sees 8pc rental yield from building

EMKAY Group is confident of achieving an eight per cent rental yield from its Menara Mustapha Kamal starting next year, its chairman Tan Sri Mustapha Kamal Abdul Abu Bakar said today.

He said the yield was achievable following expectation of a full occupancy rate by middle of next year.

"The group is now in the midst of discussions with potential tenants such as multinational companies (MNCs)," he told reporters at the handing over of Menara Mustapha Kamal to the group by developer Tujuan Gemilang Sdn Bhd.

According to Mustapha Kamal, some of the MNCs were preparing to move in by next year.
"They are now waiting to complete the rental contracts at their existing premises before moving into our building," he said.

Mustapha Kamal said the building's rental offering of RM4 per square feet was considered attractive as other areas in the Klang Valley were offering RM8 per square feet.

The eight per cent yield target was also due to the group's plan to list the building under real estate investment trust (REIT) in the next two to three years, he said.

The building, he added, was purchased from Tujuan Gemilang at RM85 million but the market value was said to be at RM120 million.

Mustapha Kamal said the group was occupying 43,000 sq ft on six levels of the building while the remaining 160,000 sq ft were available for rental.

He said the project, which includes the PJ Trade Centre, started in 2006.

By Bernama

Magna Prima buys land in Selayang

MAGNA Prima Bhd has bought a plot of land in Selayang, Selangor, from Muafakat Kekal Sdn Bhd for RM16.5 million.

Muafakat is being paid with 8.25 million new Magna Prima shares, or at RM2 a share, Magna Prima said in a filing to Bursa Malaysia yesterday.

By Business Times

NZ house prices rise, rate hike seen on horizon

WELLINGTON: New Zealand's housing sector recovered to its best position in a year in September and the central bank said it would end some emergency support measures amid an improving economy, bolstering expectations of interest rate rises early next year, according to Reuters.

The country is slowly emerging from its worst recession in more than 30 years and the return of some strength and normality in both housing and finance markets has analysts looking for a similar change in the Reserve Bank of NZ's rate policy.

"While we do not expect the RBNZ to increase the cash rate until June 2010, we see the risks skewed to an earlier start," ASB Bank economist Jane Turner said on Wednesday, Oct 14.

The central bank said the decision to remove some temporary measures brought in last year to boost liquidity amid the global financial crisis had no implications for its rate policy.

It has said in its past three rate reviews that it expects to keep rates at their current record low 2.5 percent or lower until the latter part of 2010, as it waits for clear signs the economy is back on a solid footing.

Market players have already priced in a full 25 basis point rise in the first quarter since the RBNZ dropped an explicit reference to rates possibly moving lower in its Sept. 10 statement.

Financial markets were unmoved by the real estate data, although the RBNZ's move was seen as a factor in the NZ dollar moving higher to settle around US$0.7390 after resuming local trading around US$0.7340.

A steady stream of data has shown higher retail sales and more confident consumers and businesses. The economy grew 0.1 percent in the three months to June 30 after five consecutive quarters of contraction.

But policy makers around the world are grappling with the question of whether signs of life are due far more to government stimulus measures than a real recovery in demand, which is key to a sustainable global rebound.

The RBNZ bank last month also renewed its warnings about the danger that a return to debt-fueled housing inflation could pose to an economic recovery, echoing concerns in some parts of Asia such as South Korea and Hong Kong.

HOUSING MARKET IMPROVING

The Real Estate Institute of NZ data showed a near 10 percent jump in house sales in September from August, and more than 46 percent on a year ago, while prices were up nearly 1 percent on the month before and 6.1 percent on a year ago.

"We're seeing a slow, but steady, appreciation in sale values, and we're now back to the prices being fetched in the corresponding period in 2007," said Real Estate Institute President Peter McDonald.

However, the still fragile nature of the New Zealand economy was seen in the government's fiscal accounts for the year to June 30, which showed a core deficit of NZ$3.89 billion (US$2.88 billion), a third higher than forecast in May, as the recession savaged the tax take and forced up expenses.

Finance Minister Bill English said the government has accelerated its borrowing to around NZ$10 billion a year for the medium term as it faces a decade of large deficits and high debt.

He also reiterated the oft-voiced worries about the strength of the currency, which could make exports less competitive and impede a broader economic recovery.

"It is quite a concern to us for the nature of the recovery," he told a media briefing on the government's annual accounts.

In relation to financial market liquidity, the measures being changed included dropping a weekly term auction facility that banks used to borrow using a wide range of collateral, changing lending periods, scrapping a weekly bill tender and amending its weekly open market operations.

"The usage of these special facilities has been very low in the last six months," said Deputy Governor Grant Spencer. "This decision has no implications for the stance of monetary policy."

By Reuters

Impiana to invest RM200m in new Malaysian, Thai hotels

Hotelier Impiana Hotels & Resorts will invest some RM200 million over the next three years for new hotels in Malaysia and Thailand.

The hotels will be within the Klang Valley, in Tioman, Pahang, and in Phuket, Thailand.

Chairman Datuk Seri Farouk Abdullah, in a recent interview with Business Times, said it is now building 12 luxury private villas with individual pools, in Kata Noi, Phuket at a cost of RM40 million.

To be ready by end-2009, the Kata Noi hotel is expected to garner between RM3,700 per night for a 1,200 sq ft villa to RM5,500 per night for a 2,500 sq ft suite.
In Malaysia, Impiana group is keen to run a four-star or five-star hotel in Petaling Jaya, Selangor or in Bangsar, Kuala Lumpur and it has budgeted RM100 million for this.

"We are in talks with a few people, but it is still preliminary," he said.

And if it cannot find a suitable property, it will look at building a hotel at one of the two locations it has identified.

He expects to fund the purchase of building with internal funds and borrowings.

"We are working towards raising the funds," he said.

Meanwhile, Farouk said Impiana may also develop up-market villas in Tioman island.

"We are looking at Tioman. We have 10 ha of land there. We are looking at 30 to 40 units of luxury villas," Farouk said, adding that this could cost between RM50 million and RM60 million, excluding land.

Hotels under the group with the Impiana brand are Impiana Resort Cherating, Impiana KLCC Hotel & Spa, Impiana Koh Samui and Impiana Phuket Cabana Resort.

Impiana is also buying the Impiana Casuarina Ipoh, which it has been managing for two years, for RM44 million from Perak Corp Bhd.

The hotel, now rated as a three-star, will undergo a RM5 million makeover to be upgraded to a four-star property and help garner a higher room rate of RM230 and occupancy of 75 per cent.

Meanwhile, Farouk said that is still in talks to buy between 20 per cent and 25 per cent stake in Impiana KLCC from its owners Heritage Lane Sdn Bhd.

By Business Times (by Vasantha Ganesan)

Impiana aims to have 20 hotels under its wings by 2015

MALAYSIAN owned and operated Impiana Hotels & Resorts hopes to have 20 hotels under its ambit by 2015, says its top official.

It plans to either own, manage or do a combination of both for these hotels that could be in Malaysia or abroad.

The group, with a hotel presence in Malaysia and Thailand, hopes to make inroads into the Middle East market by end-2010.

"We hope that in the next two to three years we are able to sign 10 management contracts," chairman Datuk Seri Farouk Abdullah said.
"Businessmen from the Middle East have approached us, we should be there (in the Middle East) next year to manage hotels," he told Business Times.

There are five hotels under the Impiana brand now, and a sixth - Impiana Kota Noi will open in December 2009.

On where else it would like to see the Impiana hotel brand, Farouk said that it would also like to be in Krabi and Bangkok in Thailand.

The group's hotel operation now enjoys a gross operating profit (GOP) of 30 per cent with its hotels in Thailand enjoying between 43 per cent and 45 per cent in GOP.

GOP is gross revenue (from rooms, food and beverage, laundry or business centre) minus the cost of operations.

The five hotels contributed some RM80 million in revenue last year.

Given the current economic environment and the Influenza A (H1N1) flu, Impiana projects that its performance in 2009 will be the same as in 2008.

In 2010, revenue from hotel operations is expected to improve by a tenth.

The Impiana group is part of the KAB Group. Hotel operations and property development each contribute 40 per cent to total group revenue.

By Business Times

Glomac: We'll sell office towers en-bloc if offers meet our price

GLOMAC Bhd says it is willing to sell en-bloc its seven office towers under development to improve its earnings and develop future projects.

The property developer has this year alone sold two office buildings - Wisma Glomac 3 and Block B of Glomac Business Centre - for RM72.6 million

"If we do have offers (for any of the office towers) that meet our price then we will sell," group managing director Datuk FD Iskandar told Business Times recently.

He said Glomac is talking with several parties who are interested in buying the office blocks.
"There is now, suddenly, a demand for office towers outside of Kuala Lumpur's central business district," he added.

He said Glomac is also close to finalising the sale of a 25-storey building at its Glomac Damansara project.

"Hopefully within a month we should be able to make an announcement of a very substantial sale in probably Glomac Damansara first. Its almost a done deal," he said.

A recent Business Times report stated that Glomac intends to sell a 30-storey corporate tower in Glomac Damansara to a government agency for RM200 million.

The upmarket RM800 million Glomac Damansara development in Petaling Jaya also has another 15-storey office tower, including two 25-storey serviced apartment blocks, five- and eight-storey shop offices, nine- and 11-storey office suites and a hybrid retail mall.

Glomac is now marketing the RM75 million 15-storey office tower on an en-bloc basis.

By Business Times (by Rupinder Singh)