Budget incentives for property sector

This is the last in a series of articles by PricewaterhouseCoopers which appear on Mondays and Wednesdays leading up to Budget 2010

Abolishment of the real property gains tax, reduction in stamp duty for properties in a certain price range, and the construction and property sector gaining most from the stimulus packages announced – these are clear indications of the Government’s focus on this sector to help accelerate economic growth.

The positive multiplier effect from an improved performance in the construction and property sector is tremendous, with the stakeholder chain including the manufacture and supply of building materials; the service industry of contractors, architects, engineers, etc; the developers and even the financial institutions.

This industry is not just about residential and commercial development but also the tourism and industrial economy. It is a holistic economic driver.

Take the tourism industry for example. When tourist arrivals are up, there will also be a boost to hotel and retail consumer demand. With tourism being one of the Government’s top priority growth sectors, there has been a focus on encouraging the development of affordable three-star hotels to attract mass tourists.

However, with the country shifting towards a modern developed economy, we must turn our attention to attracting investments into upmarket, boutique and innovative hotel property development to bring the industry to the next level; tourist arrivals must increase together with the increase in value spending.

Hotel owners should be given additional incentives to bring the investment yield return earlier. It may be worthy to relook at the existing investment tax allowance incentive as well as the availability of duty exemption for materials in hotel property development.

Closely linked to the tourism industry is the availability of retail attractions to complement hotels of similar class, with retail development popularly linked to commercial office space development to provide the consistent retail traffic. Commercial space also remains the top three property interest of Malaysian and foreign investors.

Currently, there are no incentives for the retail sector. Consideration should be given to developing incentives holistically and linking it with initiatives to drive tourism, thus providing further push to the sector. Perhaps tax incentives such as income exemption based on retail investment turnover value or spending on green technology can be given to retail outlets or “green” commercial buildings.

When it comes to landed or high-rise residential properties, crisis or not, there seems to be no lack of demand, with some of these properties being snapped up on launch.

This show of investor confidence bodes well for the real estate sector which has attracted much foreign investment and known to offer a reasonable investment yield.

Hence, we must continue to attract foreign investment into the high-end property development market and leverage our “preferred location” status in this part of the world.

Here, the attraction for foreign investors would not be tax incentives but rather, high quality development with full facilities and in a prime location – the formula to high investment yield. Hence, the Government should continue to deliver on its policies to facilitate a speedy investment process for foreigners.

A final analysis on the property sector is for the Government to consider how it can support the wish of most Malaysians to own their own home. Malaysia has a large middle-income population who strive to own a home and it is this dream which can keep the demand for residential property healthy.

With pockets of initiatives sporadically introduced such as the reduction in interest rates, subsidies given to developers for low-cost housing and even financial institutions’ willingness to reschedule loan repayments, we must ask if more can be done.

Relative to our salary standards, it is becoming more difficult for the middle-income group/family to sustain a home, let alone own one. Suggestions previously put forward such as first home subsidy and deduction for interest expense on loans for home purchases should be reviewed.

Some other thoughts are tax rebates for a certain period of the loan term depending on the value of property purchased, different stamp duty rates for different property prices, unprecedented tax breaks for developers undertaking certain types of projects or development type.

The challenge will be in ensuring that the savings given to developers is passed on.

The property sector plays a crucial role in sustaining and spurring economic growth. There is a compelling need to review and introduce policies that are holistic and integrated, with incentives provided to each player in the property chain and across the portfolio of properties.

● Ng Say Guat is executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd.

By The Star (by Ng Say Guat)

TA Global aims to beef up hotel portfolio

TA Global wants to build at least two hotels in Kuala Lumpur and make acquisitions in overseas markets from London to Canada

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 Datin Alicia Tiah, managing director and co-founder of parent company 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, shares of which have more than doubled this year, folded all its property assets into TA Global, which will be listed on Bursa Malaysia on November 23 to tap a resurgent stock market.

The FTSE Bursa Malaysia KLCI Index has gained 46 per cent so far this year. TA Enterprise closed 0.7 per cent down at RM1.46 yesterday. Shares earlier gained as much as 1.4 per cent.

TA Global, which currently 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 from December last year 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."

TA Global will have a market value of RM2.4 billion when it is 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-storey 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 added.

By Bloomberg

L&G to build condo, residential units

Land and General Bhd (L&G), developer of the 1,200-acre Bandar Sri Damansara, aims to develop the remaining 45 acres of the township next year, its managing director Low Gay Teik said today.

He said the company hoped to get the authorities' approval by end of this year and planned to develop a new condominium and residential units.

Asked on its other landbanks in Johor and Sg.Petani, he said L&G had no plans to develop the land there for now.

"We believe it's not the time to develop yet. We will wait for the right time before developing the land," he told reporters at the company's ground-breaking ceremony for its 8trium mixed property development project in Petaling Jaya today.
L&G is consistently looking at acquiring new land and also at joint venture possibilities, Low said.

"Currently, we are in talks with several parties to acquire new landbanks for new mixed-commercial and residential development in the Klang Valley," he added.

On the 8trium project, he said the project is due for completion by 2012.

With a gross development value (GDV) of RM160 million, 8trium is a mixed commercial development project combining a two-storey retail podium and 260 units of office suites contained in two suite towers.

Since the launch in July, 90 per cent of the Tower 2 has been sold, while the Tower 1, launched 10 days ago has recorded almost 30 per cent sales.

"I believe, based on the current response, we should achieve 90 per cent sales for both towers by middle of next year," he added.
The project is expected to contribute positively to its financial year ending March 31, 2010.

By Bernama

European commercial property deals rise

LONDON: Investment in European commercial properties rose 34 per cent in the third quarter as more deals were completed in the UK and Germany, CB Richard Ellis Group Inc. said.

Investors bought ?17.3 billion euros (?1 = RM5.03) of shops, offices and warehouses in the third quarter, 44 per cent less than in the year-earlier period, according to a report released yesterday by the Los Angeles-based adviser.

European commercial property sales have fallen for more than two years after credit dried up and companies slashed spending on
offices. About ?295 billion of commercial real estate changed hands in 2006, with more than e80 billion spent in the fourth quarter alone, according to data compiled by Cushman and Wakefield.

“Many investors believe the European market is approaching the bottom of the cycle,” said Michael Haddock, head of capital markets research for the Europe, the Middle East and Africa at CB Richard Ellis.

By Bloomberg

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