Hektar REIT in talks to buy new assets

Most of the potential acquisitions are located in Peninsular Malaysia, says Hektar Asset Management chairman

Hektar Real Estate Investment Trust (REIT), an investor in shopping malls, says it is in talks to buy new assets and plans to sell more units to fund future purchases.

"We are in the midst of negotiating for new acquisitions, but cannot divulge any more details at this time," Hektar Asset Management Sdn Bhd chairman and chief executive officer Datuk Jaafar Abdul Hamid told Business Times in an interview.

Most of the potential buys are located in Peninsular Malaysia, he said, adding that it was in talks with township developers and other asset managers.

"The typical shopping acquisition is quite significant, starting from RM100 million and above, and will definitely require us to raise equity-financing to place that acquisition in the REIT."
While there was no firm plan yet to place out additional units, Jaafar said he was pleased that the capital markets had rebounded substantially in the past few months.

"Hopefully the timing would be conducive (for us to sell new units) when we close any acquisitions," he said.

Units of Hektar REIT have risen 36 per cent this year to end-November, but still trails the 44 per cent gain in the benchmark FTSE Bursa Malaysia KLCI in that period.

Hektar REIT owns the Subang Parade shopping centre in Subang Jaya, Selangor; Mahkota Parade in Malacca; and Wetex Parade in Muar, Johor. The fund's gearing ratio was 41 per cent as at end-June, quite close to the 50 per cent limit set by the regulator for a REIT.

Although a unit placement exercise will pare down its gearing and raise more cash for potential acquisitions, Jaafar said it was careful not to dilute the dividends received by existing unitholders.

"We believe it is important to deliver steady growth in the form of dividends to our unit-holders. We hope to establish a track record as an asset manager that delivers stable returns. So if we were to do a placement, it would be to acquire productive assets which would support the REIT's income and dividend growth."

While rival Axis REIT has garnered more investor attention after converting into an Islamic REIT, Jaafar said that Hektar had no plans to follow in Axis' footstep.

"We have studied the Islamic REIT model since before our initial public offering and will continue to monitor the feasibility of the model," he said.

"(But) we realised it was not a simple proposition for retail properties because it meant that we would eventually, over time, have to eliminate various types of tenants, such as conventional banks, conventional insurance branches, health clubs, cinema, to name a few.

"This is a challenge, especially for a shopping centre, to remain relevant without these amenities for consumers."

By Business Times (by Chong Pooi Koon)

Penang properties popular among Indonesians

A view from IJM’s Parkview Towers in Bukit Jambul. Some buyers like the area’s greenery.

NORTH Sumatran cities such as Medan and Bandar Acheh provide an alternative market for Penang properties during this global recession period.

Datuk Faudzi Naim Noh ... ‘Landed and high end residential properties will be exhibited at the fair.’

IMT-Gt Joint Business Council Malaysia chairman Datuk Faudzi Naim Noh told StarBizWeek that there is a demand for Penang properties from well-to-do Indonesians because it is common for a small and medium size entrepreneur in these cities to earn a RM20,000 to RM30,000 income per month.

“They could be hawkers, but they have access to a larger market.

“A significant portion of the entrepreneurs are involved in the palm oil and bird nest trade, which are not that badly affected by the global economic crisis.

“Medan, for example, has a population of about four million, of which about 30% earns between RM20,000 and RM30,000 monthly,” Faudzi said.

He was speaking after launching ADA Shared Services Sdn Bhd new office at the RM100mil SunTech Tower in Bayan Baru, also known as Penang Cyber City 1.

Faudzi said some six developers and shared services companies from Penang would show case their products and services at the Penang Fair in Medan 2010 from March 29 next year until April 3.

“Landed and high end residential properties priced from RM500,000 and above will be exhibited at the fair. Properties from Penang generally sell well in Medan, as there are many Medanese who are looking to Penang as an education destination,” he said.

Faudzi added that Medan and Acheh are new markets which Penang-based shared services companies could explore.

“In Medan and Acheh, there are not that many shared services equipped with advanced IT infrastructure, whereas there are such companies in Penang,” he said.

Meanwhile, ADA Shared Services managing director Soo Chee Leong said ADA aims to tap into the market for new multinational corporations and small home offices employing limited staff.

They will be offering their services in the Penang Fair in Medan next year.

By The Star (by David Tan)

Watch your cashflow

Choices to make on a vacant property

PRIOR to 2005, I stayed in a walk-up apartment located on the fourth floor. It was my bachelor pad and of course walking up four-storeys was not a problem. That apartment served me, a care-free single, very well.

All of us go through different life-stages. For me, the impetus for a life-stage change five years ago was to start a family and for my ageing parents to stay with me instead of being on their own. My bachelor pad could no longer serve these “new” needs and I decided to move out. At that time, I had two options:

(1) Sell my apartment and move into a bigger semi-detached house. This option is attractive as it allows me to manage my cashflow better since I would only service one mortgage. However, I have to be mindful of the property cycle. In a best-case scenario, I would make a profit if I were to sell when the property market cycle is up. But timing was not in my favour then and if I were to sell it, I would have made a loss.

(2) Keep the apartment, rent it out and move into a slightly smaller terrace house. For this option, I would be servicing two mortgages concurrently.

It would also mean that I have to manage the risks of not being able to rent out the apartment or have a low rent returns.

But it would provide me with an opportunity to wait till the market improves further before I sell the apartment.

To reduce the mortgage burden, I would not be able to afford the bigger semi-detached house.

Since I was not inclined to sell my apartment at a loss, I eventually chose the second option. As there are also relevant cashflow considerations when investing in a property, the factors I reviewed before making a decision were as follows:

·Cashflow – Rental versus on-going expense. Simply put, this refers to the assessment between inflow and outflow of cash in relation to the property. For first-time investors, you may not be fully aware of the operating expense. Some of these costs are high, since tenants usually do not take good care of the house, its fixtures and appliances.

This means that ongoing repair and replacement costs are higher and more frequent.

Mortgage payment. The bulk of the outflow or expense is the monthly mortgage payment. This is the most obvious cost. In the event that I am not able to find a tenant to rent out my apartment, I must be able to keep up with both mortgage repayments.

Monthly maintenance fee / conservancy fees / sinking fund. Most condominiums have such fees which can cost up to a few hundred dollars a month. This can add up over time.

Fully / Partially furnished. Units that are furnished naturally fetch a better price, but some tenants have difficult demands. Though most of these are one-off expenditure, there can be ad-hoc expenses for repair due to wear and tear.

The same is also true for fixtures and appliances for the apartment. One must be prepared for such contingency expenditures as they do happen from time to time.

·One-Off Costs.

Agent fee. While this is once-off, whenever tenants change, you end up paying another round of agent fee to look for another tenant. It is good to get expatriates given their deeper pockets, but they can terminate their tenancy whenever their employment changes.

You may incur additional agent fees when you have to look for new tenants. It usually requires only a two-month termination notice. If your tenant stays for three years, you would have effectively “saved” on such fees compared to having tenants who stay for one year at a time.

·Risk of an empty house. When times are uncertain and economic growth is weak, the risk of not having a tenant or having a tenant who pays low rent is very real. When this happens, you must have other sources of income to pay for the shortfall.

Otherwise, you may be faced with an unattractive option of selling the property at a low price or worse, creditors might foreclose the property due to defaults on loans.

In my case, I was cautious. I wanted to make sure that even without a tenant for six months, I would have sufficient savings and income to comfortably service my two mortgages.

This will ensure that I would not run into a tight cashflow situation. Perhaps I have the advantage of being in the financial services profession, and I’m able to assess the risks to ensure that I can manage them before I embarked on buying my choice of home and investing in a property.

I cannot emphasise enough the importance of cashflow considerations in managing personal finance.

Besides, banks giving out loans do take into account the client’s ability to service their loans which, in principle, is an assessment of the client’s cashflow position.

So as the idiom goes, cut your coat according to your cloth.

·Tay is senior vice-president and senior head of UOB’s personal financial services division.

By The Star (by TAY HAN CHONG)

Associations urge govt to forestall property gains tax

REAL-ESTATE and Housing Developers Association (Rehda) along with two other associations, have petitioned the government to forestall the implementation of Real Property Gains Tax (RPGT) come January 1 2010.

The RPGT will return next year at a fixed 5 per cent after it was scrapped in 2007, following the 2010 Budget announcement on October 23.

Rehda patron Datuk Eddy Chen told reporters yesterday that three associations, Rehda, the House Buyers Association and Associated Chinese Chamber of Commerce and Industry, sent a memorandum to the government last week, as a last ditch effort to stop the implementation of RPGT next year.

He was speaking at the "Conversation with Industry Leaders - Expectations and Perceptions of 2010 Outlook" forum yesterday, held during the two day 14th Malaysian Capital Market Summit 2009, organised by the Asian Strategy & Leadership Institute.
Chen said inconsistencies in policy making, such as in the case of the RPGT, would drive foreign investors away.

"For example, RPGT was abolished some two years ago, and developments became attractive to foreigners, now that the building is completed, we are slapped with the 5 per cent RPGT," he said.

Rehda is expecting flat overall growth for the real estate sector going forward, as certain segments of the markets flourish, while other suffer.

Chen said, while buyers who are owner-occupiers are doing well, investment type properties are facing problems.

By Business Times (by Presenna Nambiar)

A first of its kind

An artist impression of Viva Home. The mall will feature five levels, 300 tenants and 2,100 car park bays

Most people would have had the very bothersome and cumbersome experience of moving into a new house. There is the furniture to choose, the kitchen cabinets to put up, the grille and lighting to install and the flooring and heating system to consider. The to-do list can be insane!

So it promises to be a relief that a one-stop centre for home products and related services will be set up at the end of 2010 to help homeowners clear all that workload.

Viva Home will be the first of its kind in the country when it opens its doors for business. It will be complemented by a range of food and beverage (F&B), leisure and entertainment outlets as well as a hypermarket.

Located along Jalan Loke Yew, Kuala Lumpur, Viva Home is a redevelopment of an existing building carried out by Viva Mall Sdn Bhd, a company under the Kha Seng Corp Sdn Bhd umbrella, a niche commercial property developer with previous projects such as Central Market and Kenanga Wholesale City in its portfolio.

The mall will feature five levels, 300 tenants and 2,100 car park bays. Refurbishment work has already begun and when completed, Viva Home will offer a net lettable area of 660,000 sq ft for lease.

Typical lot sizes range from 300 to 2,000 sq ft. Mini anchors range up to 15,000 sq ft. Rental rates will range between RM4 to RM20 per sq ft, with some being on a profit sharing basis.

At its launch on Tuesday, a symbolic signing ceremony was held between Viva Home, MBO Cinema, ICT Gadgets (50,000 sq ft) and Old Town Kopitiam (10,000 sq ft).

Viva Home also confirmed that a major hypermarket operator has signed on as an anchor tenant, taking up some 60,000 sq ft. The name will be announced when the required trade licences have been obtained.

The retail mix will be 60% home products while the remaining 40% will be shared by the F&B outlets, information and communications technology outlets, oriental handiworks and the hypermarket.

A further 60,000 sq ft will be dedicated for an exhibition hall, which will be used by home product manufacturers and suppliers. The mall has a take up rate of 50% at the moment.

Says Bernard Bong, managing director of Viva Mall Sdn Bhd: “When completed, we envision that the Viva Home mixed development will rejuvenate the Jalan Loke Yew area. Viva Home is not a neighbourhood mall. It will add identity and create major activity for the Jalan Loke Yew area.”

“We took up this venture after extensive research and market survey. We discovered an opportunity in the home furniture and furnishing sector for a destination which provides a comprehensive home shopping experience.

“We found that when people shop overseas, they buy bags, clothes among other things, but not home products. They don’t buy products which require after sales services. Even for the super rich, they want to buy these things from Malaysia,” says Bong.

Exclusive leasing agent for Viva Home, DTZ regional head of retail, Southeast Asia, Ungku Suseelawati Omar says convenience is a very strong driving force.

“There is no need for you to go all over Kuala Lumpur sourcing and comparing products. You get everything in one place. There are loading bays for bulky purchases, spacious lifts and ample parking to make it a stress free experience,” she says.


Viva Home is giving you the whole range of household needs. Not only can you buy furniture, you can also get your automated gate, flooring and tiles here... MARTIN HAEGER

HL Design Group is the architectural and interior design consultants of the project. Its director, Martin Haeger says Viva Home is not going head on with IKEA or any other home furnishing shops.

“Viva Home is giving you the whole range of household needs. Not only can you buy furniture, you can also get your automated gate, flooring and tiles here. Its totally different from what we have today,” says Haeger.

He adds that the complete refurbishment of the mall includes the planning and redesign of the mall internally and externally, the creation of a mall entrance and retail configuration.

All amenities and parking facilities will be upgraded and improved with some parking bays only for women shoppers. About RM70mil will be spent on refurbishment.

Besides the retail mall, Phase 2 of the mixed development will feature a 260-room boutique business-class hotel above the retail mall.

Construction of Phase 2 is due to begin in six months and will cost about RM80mil.

“If you look at hotels which are located in the vicinity of malls, for instance The Bintang Royale in The Curve, Cititel Hotel and Boulevard Hotel in Mid Valley mall, these hotels have been extremely successful.

“People like to be near the hustle and bustle of it all. They want the convenience of being able to do their shopping just a doorstep away,” says Haeger.

Bong is confident the mall will take off successfully.

“For any project that we undertake, we always prepare for the worse. If the project looks feasible even under such stringent measures, then we say ‘it’s on’,” says Bong.

Haeger adds that property developers have also turned more positive in the last quarter, and have indicated more enthusiasm in launching their products in the near future.

By The Star (by Tee Lin Say)

Johor Premium Outlet to boost tourism, lure investors

The construction of a world-class premium factory outlet, better known as the Johor Premium Outlet, in Iskandar Malaysia will boost tourism and lure more investors into the state.

Harun Johari ... ‘The Johor Premium Outlet is a strategic and catalytic project in Iskandar Malaysia.’

Iskandar Regional Development Authority (Irda) chief executive officer Harun Johari says the project, which was announced by Prime Minister Datuk Seri Najib Tun Razak in New York recently, would definitely attract tourists who are usually keen shoppers. They will help boost revenue, he says.

“The Johor Premium Outlet is a strategic and catalytic project in Iskandar Malaysia and for the overall state of Johor. It will create a new market segment in tourism such as a luxury shopping destination,” he says.

“There will also be substantial economic linkages to the local economy as well. We welcome such investments in Iskandar Malaysia as it will contribute to the gross domestic product,” he says.

The project will also boost job opportunities, and also help small and medium enterprises (SMEs) expand the breath and variety of products and services they offer.

“The project will be a boon to local investors who want to participate in Iskandar Malaysia’s progress,” he says.


Teh Kee Sin ... ‘We feel certain tax incentives offered to foreign companies should be also offered to SMEs as well.’

Meanwhile, South Johor SME Association president Teh Kee Sin says that the Johor Premium Outlet could provide an additional avenue for SMEs traders to do business in Iskandar Malaysia.

“However, we are concern over how they are going to rope in SMEs,” he says. He hopes the Government is serious about roping in SMEs in the premium factory outlet as well as other projects in Iskandar Malaysia.

“We feel certain tax incentives offered to foreign companies should be also offered to SMEs as well,” he says, adding that local SME traders should be given priority.

Teh says SMEs hoped the economic corridor will be a success. “SMEs will be a great asset to Iskandar Malaysia,” he says.

Johor Baru Chinese Chamber of Commerce president Loh Lian Hang feels the project is a winner for retailers, suppliers, consumers, and the local authorities. It is a much needed boost for the current challenging times, he says.

“It will also increase investment in Johor, especially in Iskandar Malaysia,” he says.

The project is a joint venture between Chelsea Premium Outlets and Genting Group and is being development as part of the Iskandar Malaysia project.

Najib, who spoke about the project while he was in New York, had a discussion with representatives from the Chelsea Property Group.

He says the project was on track, with construction expected to take off early next year and scheduled for completion by mid-2011.

Chelsea Premium Outlets is owned by Chelsea Property Group, which is the world’s largest owner, developer and operator of upscale outlet centres in the United States, Japan and South Korea.

By The Star (by Farik Zolkepli)

Sunway Lagoon optimistic about next year

SUNWAY Lagoon Sdn Bhd, the operator of Asia’s premier multi-park destination Sunway Lagoon is expecting a slightly lower net profit this year as a result of the current global economic crisis.

Aaron Soo ... ‘Fortunately for Sunway Lagoon, the product’s brand name is strong.’

Chief executive officer Aaron Soo says the company is more optimistic about next year profit’s projection as the economy is slowly showing signs of recovery.

“We are targeting about RM13mil net profit this year compared to the RM28mil net profit we chalked up last year as visitors and companies took a big hit because of this crisis.

“Companies are cutting their budget or postponing their functions here at the park,” he tells StarBizWeek during an interview just recently.

Soo says Sunway Lagoon is coming out with some exciting plans to launch a new attraction at the park, starting with the opening of Nite Park early this month.

“Since I started working here in December 2005, Sunway Lagoon has introduced several new attractions, from Extreme Park in 2006, Wildlife Park in 2007, Scream Park in 2008 and the latest will be the Nite Park. We plan to open up another new park next year but this will depend on the situation in the next three months,” he says.

He adds that the company’s key strategy now is to focus into two areas, the park operation and event management, to increase the revenue and profit.

“When I started to work here, we had about 400 staffs. Now, our staff strength is about 220 as a result of disposing some unrelated business. This being our food and beverage business and retail stores.

“We are now outsourcing these businesses to other players as we want to be more focus and have more time for other fundamentals such as operations safety, customer service, sales and marketing,” he says.

On the amount of money being put to open up the new park (Nite Park), Soo says the company is investing about RM4mil.

“We have invested RM4mil for Extreme Park, RM6mil for Wildlife Park and RM3mil for Scream Park to keep Sunway Lagoon fresh and appealing,” he says.

He says the company is also focusing on new market segment like international concerts and events, weddings, team building and corporate functions.

“We plan to have more collaboration with professional live show performers, fire divers a la Indiana Jones style and international jet skiing champions,” he says.

Soo also says competition is rising from other new and existing parks but Sunway Lagoon will rise above the competition based on the team’s 17 years of experience in the industry.

“Fortunately for Sunway Lagoon, the product brand’s name is strong. However, we will still face some challenges,” he says.

Soo says Sunway Lagoon is going to tap the Chinese, Indian and Middle Eastern markets.

“The current visitor ratio is 60% domestic and 40% international. We will tap the international markets as we believe there are opportunities for us to increase the international visitors to the park,” he says.

Spreading over 88 acres in Bandar Sunway, Sunway Lagoon is a multi-award winning theme park. It won the Best Tourist Attraction 2007 by Tourism Malaysia and Asia’s Best Attraction Award by the International Association of Amusement Parks and Attraction.

By The Star (by Edy Sarif)

Builders say regulate first, punish later

The government should first regulate the construction industry before imposing penalties on any bad contractors, says Master Builders Association of Malaysia (MBAM).

Currently, it is easy for anyone to be registered as contractor class A to F, unlike in neighbouring countries such as Singapore and Thailand.

"MBAM is supportive of the government's move to make new laws to punish contractors who are proven to have done wrong. But first, the government must regulate (the industry)," its president Ng Kee Leen told Business Times in a telephone interview from London yesterday.

"Right now, it is easy for anyone to become a contractor, be it class A or B or C until F. Only a small number of the 60,000 registered contractors are actually active and genuine.
"The government needs to step up enforcement of existing laws to weed out incompetent contractors to ensure only truly competent professionals take on jobs," he said.

So far, the Works Ministry has terminated 80 contractors for late job completion.

The ministry reportedly said on Tuesday that it had no power to act against the contractor of the suspension bridge which collapsed and took the lives of three school children in Kampar, Perak, on October 26. The bridge, which was built as a contribution by the contractor to the school, did not meet the required engineering codes and specifications.

Works Minister Datuk Shaziman Abu Mansor had said the Construction Industry Development Board (CIDB) can only take action for non-registration against the contractor that built the bridge, but is unable to punish it for the mishap.

Instead, he directed CIDB to lodge a police report, citing negligence on the part of the contractor.

The minister is proposing a new law to make contractors of public projects responsible and be punished for accidents if they were found to be negligent or used sub-standard building materials.

By Business Times (by Ooi Tee Ching)

Mah Sing plans mixed property project in China

It will establish a JV firm to undertake the US$620mil development

PETALING JAYA: Property developer Mah Sing Group Bhd is planning a mixed development project in Wujin, Jiangsu province in China, with an estimated investment cost of US$620mil.

The company, via wholly-owned subsidiary Mah Sing International (HK) Ltd, yesterday signed a letter of intent with the Wujin Government to develop the said project.

In a statement yesterday, Mah Sing said it would establish a joint-venture (JV) company with China-based developer DanLong Realty (Beijing) Co to jointly develop a 87.31-acre site along Wuyi Road, a major thoroughfare in the central area of the Wujin district.

Mah Sing, which would have a 51% stake in the JV company, said the development would comprise “medium- to high-end residential and commercial components.”

The Wujin Government had also given the JV company the opportunity to explore additional land, namely 53.13 acres north of Wujin High-New Zone of Zhangzhou City and 82.37 acres at the north intersection of Wunan Road and Wuyi Road, Wujin District, it said.

»We are confident of creating an outstanding development« TAN SRI LEONG HOY KUM

Mah Sing group managing director-cum-group executive Tan Sri Leong Hoy Kum said in the statement: “We are confident of creating an outstanding development providing unique lifestyle experiences which will transform the way people live, work and play in Wujin.”

In a separate statement, Mah Sing said it had acquired 3.38 acres of freehold land in Penang for a cash consideration of RM38.65mil via its wholly-owned subsidiary, Klassik Tropika Sdn Bhd.

Mah Sing said the land in George Town would be developed into a high-end condominium with an estimated gross development value of RM280mil.

“The acquisition is strategic as it allows the group to tap on the success and spillover demand of Mah Sing’s Residence@Southbay project in Batu Maung,” Mah Sing said.

By The Star

Mah Sing to make maiden China foray in RM2.1b deal

Mah Sing and Danlong Realty (Beijing) will form a 51:49 joint venture to develop an 87-acre site in Wujin into medium-to-high-end residential and commercial properties.

Property developer Mah Sing Group Bhd said it will partner Chinese counterpart Danlong Realty (Beijing) Co Ltd to develop a US$620 million (RM2.1 billion) mixed property development project in Wujin, China.

This will be its maiden property venture in China.

The news, which it announced in a filing to the stock exchange yesterday, helped its shares surge 6.9 per cent to close at RM1.85 yesterday. It was its highest close in about six weeks.

Mah Sing said its wholly-owned unit and Danlong will form a 51:49 joint venture that will invest US$80 million (RM270 million) in proportion to their stakeholdings as registered capital.
Its unit, Mah Sing International (HK) Ltd, and Danlong yesterday signed a letter of intent with the Wujin government to first develop an 87-acre site along Wuyi Road in central Wujin into medium-to-high-end residential and commercial properties.

The land faces the Beijing-Hangzhou Great Canal.

Mah Sing said the Wujin government has also given the joint venture the opportunity to explore two additional plots of land.

"This joint venture paves the way for Mah Sing to establish a long-term strategic relationship to grow our presence in China," Mah Sing's group managing director Tan Sri Leong Hoy Kum said.

By Business Times

Mah Sing plans Penang condo

Property developer Mah Sing Group Bhd plans to develop an upscale condominium worth RM280 million at Pykett Avenue in George Town, Penang.

The group is in the process of buying the 1.37ha prime freehold land from owner Khaw Bian Cheng Sdn Bhd for RM38.7 million, or RM262.19, per sq ft.

At present, there is a dilapidated unoccupied small bungalow on the site.

In a filing to Bursa Malaysia yesterday, Mah Sing said that its wholly-owned unit, Klassik Tropika Development Sdn Bhd, had signed a sale and purchase agreement with Khaw Bian Cheng for the proposed acquisition.

The transaction is expected to be completed in the financial year ending December 31 2010.

Mah Sing said it will be procuring a development order in respect of the proposed development from the relevant authorities for approval.

"Therefore, it is currently too preliminary to ascertain the total development cost and the expected profit to be derived from the proposed development," Mah Sing said.

If approval is granted, construction could start in the second half of next year.

Mah Sing said that no valuation was carried out on the land and was thus unable to disclose its net book value as it was not privy to this information.

The group intends to fund the proposed acquisition and development cost of the land through internally generated funds and/or bank borrowings.

Mah Sing added that the proposed acquisition is strategic as it allows the group to tap the success and spillover demand of its Residence@Southbay project in Batu Maung.

"Residence@Southbay comprises superlink homes and the launched phases are 90 per cent sold. The encouraging take-up reflects Mah Sing's strong branding on Penang island and the group is confident of replicating that success with the new condominium project," it said.

The Pykett Avenue parcel is located near major establishments such as the Chinese Recreation Club and Penang Plaza along Burma Road, and Komtar.

There is ready infrastructure with good accessibility through some major roads, and it is close to amenities and facilities.

According to the National Property Information Centre, the outlook for residential properties in Penang is promising as the residential stock overhang in the state is the lowest of the big three markets, namely Klang Valley, Johor and Penang.

By Business Times

Property demand in Johor Baru improves in H2

JOHOR BARU: The property market here, like in other parts of the country, is regaining momentum after experiencing a slowdown almost a year ago following the global economic recession.

According to Dynasty View Sdn Bhd general manager Wong Kuen Kong, demand for residential property in Johor Baru has improved in the second half year and “with the signs of a global economic recovery, we can expect a better year ahead.”

Wong was speaking to StarBiz at the launch of 58 double-storey Deanna III terrace houses at Taman Seri Austin near here by the Johor Baru City Council corporate and public relations director Abd Rahman Abdullah.

The four-bedroom and three-bathroom houses with a built-up area of 196.39 sq m in a gated and guarded precinct are priced from RM286,800. He said July’s launch of 122 units of Deanna II double-storey terrace houses priced from RM300,048 was already 80% taken up.

Wong Kuen Kong (left) and Abd Rahman Abdullah at the Deanna III showhouse

Wong said demand for houses priced from RM250,000 and below RM300,000 in Johor Baru was relatively good and the company, a unit of United Malayan Land Bhd, planned to launch more of such houses next year.

He said the company would only launch high-end properties comprising bungalows and semi-detached houses in 2011 when the economy was expected to have fully recovered.

“The Johor Baru property market is now becoming more consumer-driven and apart from design and quality finished products, buyers are also looking at location,” said Wong.

He said Taman Seri Austin’s location in the Tebrau growth corridor, one of the current hotspots for property development in Johor Baru, augured well for the company.

The housing scheme on 202.34ha site was launched in 2005 and is now 25% developed with 1,300 units of residential and commercial properties, of which 90% has been sold.

Wong said upon completion within the next eight years, the project would have 5,700 properties and 30,000 residents and generate RM1.2bil in gross development value.

By The Star (by Zazali Musa)

Malaysia Legoland park to open in 2012

A Legoland theme park will open in Malaysia’s south in 2012 at a cost of RM700 million, one year earlier than scheduled, developers said today.

Iskandar Investment Bhd (IIB) president and chief executive officer Arlida Ariff said the theme park covering 26 hectares (62.4 acres) in Johor, which neighbours Singapore, is now slated to open in April 2012.

“The selection of Legoland is very deliberate. The (planned) theme park in Singapore by Universal Studios is for young adults. Our is for families. It will be complementary rather than competition,” she said.

The Malaysian attraction will be the first Legoland in Asia. IIB is an investment holding company linked to the RM17.7 billion Iskandar Development Region (IDR), a major infrastructure project in Johor.
The IDR, launched in November 2006, will be 2.5 times the size of Singapore when completed, including up-market residential homes, a logistics hub, a waterfront city, a medical hub and an educational city.

In 2008 IIB signed an agreement with Merlin Entertainments which operates various attractions globally including Sea Life, Madame Tussauds and Legoland.

Merlin Entertainments will design and operate the theme park of which it will be a 20 per cent shareholder, with a consortium led by IIB owning the remainder.

Arlida said the theme park will offer 40 interactive rides, shows and attractions targeted at families with children aged between two and 12 years.

Legoland Development general manager John Ussher said the main concerns in developing the theme park in a tropical region were the “sun and rain.” Extensive use of shades and trees will be deployed to cool the park and make visitors more comfortable, he said.

Malaysia has long harboured ambitions of turning Johor into a major metropolis to rival gleaming Singapore, which lies across a narrow waterway.

By AFP

REIT managers team up to form association

The managers of 11 Malaysian real estate investment trusts (REITs) have teamed up to set up the Malaysian REIT Managers Association (M-REITMA), allowing players in the sector to work closer with the authorities to grow the industry.

"For the purpose of registration with the Registrar of Societies (ROS), we have proceeded to form a protem committee comprising seed members from Am ARA REIT Managers Sdn Bhd and Axis REIT Managers Bhd when we handed in our application to register the association to the ROS on September 4," said protem committee chairman Steward Labrooy of Axis REIT in a statement.

"Without an official association representing members of the local REIT industry, it soon became apparent to all of us that we were unable to have effective dialogues with the regulators and the Ministry of Finance in order to communicate the issues facing the industry and to propose changes," it added.

The association, currently pending approval from ROS, will comprise AmFirst REIT, AmanahRaya REIT, Atrium REIT, Axis-REIT, Al-Hadharah Boustead REIT, Al-Aqar KPJ REIT, Hektar REIT, Quill Capita Trust, UOA REIT, Tower REIT and Starhill REIT.
The REIT sector is now over four years old, with the first REIT having listed in August 2005. Today, there are 13 listed REITS with a market capitalisation of RM5.4 billion.

By Business Times

'Malaysia will still attract Middle East investments'

MALAYSIA, particularly Johor's Iskandar project, will still be able to attract investments from the Middle East despite the current Dubai debt crisis, experts say.

Arlida Ariff, president and chief executive officer of Iskandar Investment Bhd (IIB), believes that there are still investors from that region looking for long-term prospects here.

Selective companies from Saudi Arabia, Kuwait, Qatar and the city of Abu Dhabi continue to be strong despite what's happening in Dubai, she said.

"There's still a lot of liquidity from the Middle East that was in the past focused on the 'wrong' areas, which will now look for more sensible, long-term prospects. And I think our investment opportunities in Malaysia offer that for the Middle East," she told Business Times yesterday, on the sideline of the second day of the Malaysia-Arab Business Forum in Kuala Lumpur.
Dubai recently triggered a global stock market sell-off when it revealed that its investment companies needed more time to pay off a staggering US$60 billion (RM203.40 billion) debt.

IIB is the catalytic developer of Iskandar Malaysia, a project that has managed to draw some RM50.5 billion in investments since its inception in late 2006. This includes investments from the Middle East such as Mubadala Development Co and Aldar Properties (from Abu Dhabi), Kuwait Finance House and Limitless Holdings (Dubai).

Arlida said she doesn't expect these investments to be affected by debt fallout in Dubai.

"We remain confident that the projects that we have in partnership with our Middle Eastern partners will continue," she said.

She expects to be able to make announcements on some new investments at Iskandar over the next three to six months.

Datuk Richard Fong, chairman of Malaysia Property Inc (MPI), doesn't see the local property market being hurt by the latest developments in Dubai as Middle Eastern investors have generally not been big buyers since the global financial crisis started late last year.

"As far as the Malaysian property (market) is concerned, the biggest foreign purchasers are Singaporeans. The Middle East ranks ninth or 10th, so it doesn't really affect us much," he remarked.

MPI is a government-private entity, tasked with attracting foreign direct investments into the local property market.

Datuk Michael Yeoh, chief executive officer of the Asian Strategy and Leadership Institute, said that the flow of investments from the Middle East into Malaysia "won't be too badly affected" given that oil-rich countries like Qatar and Saudi Arabia are not affected by Dubai's problems.

By Business Times (by Adeline Paul Raj)

Mah Sing to buy land in Penang

Mah Sing Group Bhd has proposed to acquire 1.352 hectares (3.38 acres) of freehold land in Georgetown, Penang, through its subsidiary Klassik Tropika Development Sdn Bhd for RM38.651 million.

The acquisition is part of the group's expansion strategy to acquire choice land bank in the Klang Valley, Kuala Lumpur, Penang and Johor Baru for its projects targeting segments of the medium high-end property market.

"This would allow Mah Sing to capture a larger share of the market via simultaneous launches in matured areas and continue their high take-up rates," the group said in a statement today.

"Furthermore, it is rare a large piece of prime land is available in the heart of Georgetown," it said.
"We will capitalise on the sea view to the northeast and mountain view to the southwest for the proposed development," it added.

Mah Sing said the proposed acquisition is not expected to have any material impact on the group's earnings for the financial year ending Dec 31, 2009, as development of the land is expected to start in the second half of 2010.

The acquisition is expected to be completed in the next financial year.

By Bernama

Mah Sing eyes US$620m China mixed property devt

KUALA LUMPUR: MAH SING GROUP BHD is teaming up with China's Danlong Realty (Beijing) Ltd to undertake a mixed development property project in Jiangsu province, with an estimated investment cost of US$620 million.

The company said on Wednesday, Dec 2 the project would be undertaken on an 87.31 acres site, west of Wuyi road in the Wujin district.

It had signed a letter of intent with Wujin District People’s Government, Changzhou City to undertake the project there.

Both companies would set up a joint venture company to develop the plot of land into a medium to high end residential and commercial properties with an estimated total investment cost of US$620 million.

Mah Sing would subscribe 51% of the registered capital and Danlong would subscribe the remaining 49% of the registered capital in JV company.

Mah Sing shall invest a total of USD80 million in proportion to their stakeholdings as registered capital of the JV company.

The Wujin government had also given the JV company the opportunity to explore additional sites which are Plot 2 with total land area of 53.13 acres in the north of Wujin High-New Zone of Changzhou City and Plot 3, covering 82.37 acres in Minghuang Town, Wujin district.

By The EDGE Malaysia (by Joseph Chin)

Government takes action against errant housing developers

More than 1,000 housing developers and almost 5,000 directors have been blacklisted by the Government for various reasons, including abandoning projects, the Dewan Rakyat was told.

Housing and Local Government Minister Datuk Seri Kong Cho Ha said 1,345 developers and 4,659 directors have been blacklisted.

Besides abandoned projects, he said the offences included being responsible for defective projects, non-compliance with decisions of the Housing Tribunal and failing to pay fines issued by the ministry.

Responding to a question from Datuk Halimah Sadique (BN - Tenggara), Kong said from 1990 to Sept 30, 2009, 148 abandoned projects involving 49,913 units and 31,824 buyers were recorded.

“Of this, 12 projects were revived, completed and issued certificates of fitness; 49 are being revived; while the rest are waiting for new developers,” he said.

Under Budget 2010, Kong said the ministry had allocated RM200mil to revive low and low-medium cost houses.

“Of the 87 yet to be revived, 41 are low and medium-cost projects which can be revived,” he said.

Later at the lobby, Kong said the rest of the abandoned projects were difficult to revive, adding that most were high-cost projects.

“Not every project can be revived. The project has to be viable to the new developer, whom we call the white knight.

“If the white knight incurs losses, he won’t take up the project,” he said.

By The Star

Confusion over Real Property Gains Tax

Property owners and investors are confused over the interpretations of the real property gains tax (RPGT) which will be imposed from Jan 1, 2010.

In the 2010 Budget announcement last October, the government fixed five per cent tax on the gains made from property disposal.

An investor, who wished to remain anonymous, said he had checked with the Inland Revenue Department (LHDN) on the tax.

"They told me for the first two years it will be 30 per cent, similar to the old scale, and for properties over five years it will be five per cent," he said.
Earlier, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had said the RPGT at fixed five per cent would be imposed irrespective of the holding period and the category of the owner.

"The RPGT for the first year is five per cent and is the same for the second, third, fourth and fifth year," he said when clarifying a news report in a local newspaper.

Meanwhile, Malaysian Investors Association president, Datuk Dr PHS Lim, said the LHDN's interpretation of the RPGT would be unfavorable for property investment.

He said it would have a negative impact on the economy which was targeted to grow by five per cent in 2010.

"The rate is too high. Investors will not find the Malaysian property market attractive. The US, Britain, Australia, Dubai and other venues can offer better alternatives to the Malaysian property market," he told Bernama today.

Lim said the government should review the RPGT as the Malaysian and global markets were still weak and fragile.
"We are not totally out of the economic woods yet," he said.

He said the construction industry was always vital to the Malaysian economy as it affected a spectrum of other manufacturing sectors like cement, roof tiles, bricks, steel, timber, wires, paint, sand and others.

"The industry also supports many professionals -– architects, designers, valuers and others.

"We should let the property market flourish and it will be a gain-gain situation if we have more people investing in properties. The high tax rates will drive them away," he said.

Lim said the high tax would also affect ''Malaysia My Second Home'' programme.

Several parties had also voiced concerns over the impact of the RPGT on the property market.

Associations from a broad spectrum of the property industry also planned to submit a joint memorandum of appeal to Ministry of Finance not to reinstate the RPGT from Jan 1, 2010.

Chairman of the construction and property committee of The Associated Chinese Chambers of Commerce and Industry, Datuk Teo Chiang Kok, reportedly said revenue from the RPGT would be insignificant compared to the damages to the country's image and credibility.

He said the proposed flat rate of five percent without regard to the holding period and differentiation between individuals and companies was deemed more punitive than the legislated RPGT rates in earlier Act.

By Bernama

Property sector can expect bumper year ahead

KUALA LUMPUR: Property developers can look forward to a bumper year in 2010 with more purchasers and investors expected to enter the market as economic conditions improve.

Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk Michael Yam said the local property sector may see up to 450,000 potential home buyers for next year.

“Based on average household formation and population growth, there is an average demand for 150,000 units (homes) per year.

“If people have delayed buying in 2008 and this year (because of the financial crisis), you should have around 450,000 people waiting to get into the housing market in 2010,” he told reporters yesterday.

Yam was a panellist at The Time Bomb Returns – Benchmarking Management Cost seminar jointly organised by FIABCI Malaysia and the Malaysian Association for Shopping and Highrise Complex Management (PPK). Given the (high) potential demand for property next year, he said developers could face a serious supply shortage.

“I think there is going to be a shortage next year. At the end of 2007, developers, especially the members of Rehda, were making a conscious decision not to launch because construction cost went up 30%.

“And in 2008, the credit crunch hit and that really delayed the launches,” Yam said, adding that projects in Bukit Kiara, Kenny Hills, U-Thant, Bukit Pantai and Bangsar would “always sell.”

Meanwhile, PPK advisor Richard Chan in his keynote address, The complexity of share issue and maintenance charges, said developers should look into the issue of service charges prudently even before building or selling property.

“You must consider the cost of maintaining buildings today and in three to five years. Once property is old, the only income is derived from service charges. If you cannot collect a sufficient amount, you just cannot maintain the building and that is where the main problem starts. This has become the main complaint of strata owners,” he said.

Chan said service charges could include components such as electricity, water, sewerage, security, housekeeping services, advertising and promotions, servicing and maintenance, fire protection, landscaping and gardening and pest control.

By The Star