Karambunai unit inks agreement with China Central Asia

PETALING JAYA: Karambunai Corp Bhd's wholly-owned subsidiary, Karambunai Resorts Sdn Bhd, has signed a joint venture agreement with China Central Asia Group Co Ltd (CCAG) to develop the RM1bil first phase of the Karambunai Integrated Resort City (KIRC) in Kota Kinabalu.

Karambunai Corp told Bursa Malaysia yesterday that CCAG would inject a seed capital of US$100mil as a revolving fund to develop about 3,000 units of low and medium high rise residential buildings. The fund also covers the development of a commercial beachfront centre on 75 acres owned by Karambunai Resorts.

A subsidiary to be incorporated later by Karambunai Resorts will be entitled to 50% of the net profit while CCAG will take the rest.

KIRC, which will include tourism, health and eco-nature edu-tainment recreation facilities, is to be developed over eight years starting from next year.

By The Star

EPF buys third London property for £148mil

PETALING JAYA: The Employees Provident Fund (EPF) has bought a commercial building in central London from Union Investment for £148mil. It marks the EPF’s third property investment there since announcing an allocation of £1bil for British property purchases, Savills Rahim & Co said.

EPF confirmed the deal.

Union Investment, a Germany-based fund, is one of Europe’s leading asset managers for private and institutional clients.

EPF, in just seven months of unveiling the buy-British plans in August, has spent £485mil of the £1bil allocation.

The central London and international team of London-based property consultancy Savills handled the sale of the 225,000-sq-ft office building, Whitefriars.

The building is located at 65, Fleet Street, London EC4. It is currently used by law firm Freshfields Bruckhaus Deringer as its headquarters until 2021. It has a yield of 5.75%.

EPF’s other two property purchases are One Sheldon Square in Paddington Central, which was bought for £156mil, and 40 Portman Square near Oxford Street which was acquired for £180mil. The two properties have yields of 5.75% and 5.55% respectively.

Notable buildings close to Whitefriars include Goldman Sachs’ campus HQ (Peterborough Court & River Court), Deloitte’s headquarters, Land Securities’ development at New Street Square and the Royal Courts of Justice.

Whitefriars was developed by Kumagai Gumi and completed in November 1989. It provides approximately 232,825 sq ft of net internal air-conditioned office, retail and public house accommodation in two office buildings, as well as 24-car parking spaces.

The space benefits from excellent natural light and the upper floors overlooking central London, River Thames, the London Eye and the Houses of Parliament. In property jargon, it was developed to Grade A specification.

The purchase is part of EPF’s strategy to diversify its portfolio of income-generating assets and to increase its exposure to the property sector.

So far, equities have been its largest contributor, representing 45.45% of the fund’s total gross investment income.

Last year, EPF’s gross investment income reached a historial high of RM24bil, of which RM11bil was earned from equities, and RM103mil from property and miscellaneous income.

On the possibility of buying properties in Australia, a source close to EPF said this “may be in the pipeline in the future. But we are focused on UK right now.”

The prime central London market has been recovering strongly since the first quarter of 2009. Prime yields are currently around 4% in the West End and 5.25% in the City, compared with about 3.5% and 4.25% respectively prior to the crash in 2007.

Said a Savills source: “With greater demand than supply, we anticipate that prime yields may be sustained, if not compress slightly more.

“Demand for assets is being driven largely by overseas investors attracted to the UK due to the high-quality assets, tenants, long leases, landlord bias legal structure and upward only rent reviews, as well as, historically low interest rates, weak pound sterling and strong rental growth projections over the short to medium term.

“In terms of the prime markets outside London, the recovery is slower while the secondary/tertiary markets remain volatile,” the source said.

By The Star

Hilton hotel to 'crown' RM1.5b Puchong project

The fast-growing district of Puchong in Selangor will welcome a Hilton hotel in 2013, which is part of a RM1.5 billion mixed-development project named Millenia City.

The project, located on a 40.5-hectare site, is being developed by privately-held Millenium Land Sdn Bhd, which shares similar directors as Tanco Bhd.

The group yesterday signed an agreement with international hotel chain, Hilton Worldwide, to manage Hilton Garden Inn Hotel that will target the mid-market business and leisure travellers.

Millennia City, which is set to be the commercial heartbeat of Puchong, will comprise M Square, a 380,000 sq ft self-enclosed six-storey shopping mall that is linked to the 255-room Hilton Garden Inn and a 2.1 million sq ft Street Mall comprising 13 blocks of six-storey retail and office units.

The development will start by the third quarter this year and is targeted for completion by 2013. The company also plans to build high-rise apartment, targeting the high income group.

"From our research, we found that Puchong is currently one of the fastest growing districts in Malaysia in terms of growth especially in three key area - population, monthly household income and commercialisation," said executive director Benjamin Tan in Kuala Lumpur.

Also present at the signing ceremony were tourism minister Datuk Seri Ng Yen Yen and Hilton Worldwide senior vice president Middle East and Asia Pacific Andrew Clough.

The primary catchment in Puchong reaches an estimated 420,000 people while its secondary catchment area, some 10 minutes away, reaches some 1.2 million people.

"As such, we believe that the development of Millennia City will be a highly significant project as we foresee it to be a major cornerstone of a modern, trendy and touristy Puchong," said Tan.

By Business Times

Supply of affordable homes in the Klang Valley is scarce

The one area that is often neglected when it comes to affordable housing is supply. Yes, loans are plentiful and there is now a scheme called My First Home Scheme launched where eligible Malaysians would be able to get a full loan for homes costing between RM100,000 and RM220,000.

The problem is that fresh supply of affordable homes in the Klang Valley is scarce and with the median age of Malaysians now just over 24 years of age, it's the time when they will start to wonder about where and how to buy their new house.

The problem is that it might no longer be profitable for property companies to develop huge tracts of land into a township of affordable housing.

The issue is that for property projects in excess of 10 acres in size, developers have to provide low- to medium-cost housing at a ratio of 1:1, meaning that for every expensive house they build they must provide one unit of affordable or low-cost housing up to a maximum price of RM100,000.

As building and land costs rise, developers will be hard pressed to make a profit, if they can, on such affordable homes. Often it's done at a loss and to compensate for that, prices of houses they would sell to the market need to be bumped up or developers build a smaller number of homes in new projects to maximise profits.

Developers building on land less than 10 acres don't have to provide low-cost homes, a loophole that has been thoroughly exploited for maximum profits among developers seeking to build high-rise super expensive apartments and condominiums.

One suggestion that has been raised is that the 1:1 rule be exempt for developers who aim to build affordable homes. In this I mean not only low-cost homes but those in the RM250,000 to RM300,000 price range. That way a developer will be enticed to build homes for the middle-income family and be able to get a decent return.

The Government, or through appointed contractors, needs to get directly involved in providing the supply of such homes. One way is to utilise idle government land to build affordable homes for the middle class and lower income group.

For optimum effect, one way is to align the upcoming mass rapid transit (MRT) lines to areas where such new townships of affordable homes could be built, somewhat replicating the HDB model in Singapore.

By building mass housing schemes serviced by a MRT station nearby, it will solve a number of issues. For one, the availability of a MRT line and a feeder bus service near a purpose-built mass housing scheme would reduce the dependence on private transportation needs in the Klang Valley, whereby giving such new homeowners the luxury of keeping their vehicles at home when they go to work.

The supply of affordable home for the lower income and middle class families need to be addressed and soon, as a prolonged ambivalence towards the issue would make that group of people feel more disenfranchised over house ownership in the country.

Failing which, the situation, if left to market forces, may not be resolved.

Deputy news editor Jagdev Singh Sidhu is saddened by the events taking place in Japan and is amazed by the attitude and behaviour of the people there in times of adversity.

By The Star

A boon for smaller developers

PETALING JAYA: The recently announced “My First Home Scheme” is set to mostly benefit smaller property developers outside the Klang Valley that offer affordable houses priced between RM100,000 and RM250,000, said property analysts.

Among the listed property developers that offer or have plans to build such properties are YNH Property Bhd and Hua Yang Bhd.

On March 8, Prime Minister Datuk Seri Najib Razak launched the scheme under which Malaysians earning RM3,000 or less can acquire houses costing from RM100,000 to RM220,000 with 100% financing from 25 financial institutions and a loan repayment period of up to 30 years.

Ho Wen Yan, Hua Yang’s CEO, is optimistic the scheme will benefit his company as its business is focused on lower- to mid-range properties.

“We are focused on building properties in the price range of RM90,000 to RM400,000, which are mainly in Johor and Perak,” Ho tells The Edge Financial Daily.

He notes that it is very hard to offer a decent property within that price range in the Klang Valley, as land prices are high.

His view is supported by Tan Kam Meng, a property analyst with TA Securities.

“You cannot get those kind of properties (at affordable prices) in the Klang Valley. Thus, it will benefit property developers which have projects in places outside the Klang Valley, such as in Perak and Melaka,” he explains.

According to Tan, Hua Yang will benefit from the scheme as the contribution of affordable properties to the company’s bottom line is generally more than 50%.

Meanwhile, Daniel Chan, YNH’s general manager of corporate affairs, said the scheme would provide more incentives to the prospective buyers of YNH’s Manjung Point Township development in Seri Manjung, Perak. “It will appeal to those serving at the naval base,” he tells The Edge Financial Daily.

“Most of YNH’s single-storey link house developments in Manjung Township cost an average of RM150,000, and the double-storey link houses cost an average of RM200,000, which fall within the price range of the My First Home Scheme,” he said.

Chan said that, with the introduction of the scheme, its Manjung Township would see an increase in interest among prospective buyers. He added that the Manjung area’s appeal had also been boosted by a RM15 billion investment from mining giant Vale (SA) International Ltd for its iron-ore pelletising plant in Teluk Rubiah and Tenaga Nasional Bhd’s RM6 billion investment in the TNB Janamanjung expansion.

“The affordable properties in Manjung Township contribute almost RM30 million out of a gross development value of RM75 million, to the company’s revenue,” said Chan, elaborating on the contribution of the development to the company’s income stream.

“For this year and next, the contribution of Manjung Township to the company’s revenue will increase as we managed to get Jusco to set up a regional mall and the Pantai Healthcare group to set up its hospital there,” he said.

YNH is one of the largest land owners in the Manjung area, with some 1,000 acres.

Another property company that has some properties within the RM100,000 to RM220,000 price range is LBS Bina Bhd, which offers attractively priced homes at its flagship Bandar Saujana Putra township located between Subang Jaya and the Kuala Lumpur International Airport.

The 820-acre project was launched in 2003 and featured attractive prices for landed homes. The prices of subsequent launches have risen due to the housing boom, a scarcity of land in the Klang Valley and improved accessibility after the opening of an interchange to the Elite highway.

However, the company, one of the Klang Valley’s largest builders of affordable homes, is moving up-market.

According to the company’s representative, although LBS is moving towards developing more medium-high-end to high-end properties, it will continue to develop medium-cost houses. He said this is in line with the government’s “Home For Everyone” objective, and is also one of the ways for LBS to fulfil its social responsibilities.

Even though the demand for affordable homes is expected to increase with the announcement of the new scheme, the impact on LBS’ financials may not be significant. The company estimates medium-cost houses will comprise only about 14% of LBS’ total GDV for planned launches this year.

While the “My First Home Scheme” will be welcomed by lower-income earners, banks — wary of a property bubble — have started to reduce their margin of financing for homes or are using more stringent internal valuation guidelines.

There are also other points to ponder.

“While it seems to be a successful campaign, the impact won’t be as much as desired,” an analyst told The Edge Financial Daily, He said that this is because there are still some things that have to be sorted out, especially with the banks which are the financiers.

“Theoretically, it will benefit property companies, as demand for affordable houses will increase. But, practically, it will not be so successful as banks have their own threshold for assessing risks,” he said.

The analyst added that there might not be an increase in the take-up rate among potential buyers earning less than RM3,000 a month.

As a guideline, banks generally allow monthly loan payments to come up to one-third of an applicant’s monthly salary.

If the applicant has other hire purchase or credit card loans to service, he or she still may not be able to afford a house, making the scheme less relevant.

“The government should raise the income threshold to include those earning below RM5,000 per month, especially for those working and living in the Klang Valley”, he said.

According to the Real Estate and Housing Developers Association (Rehda), between RM100,000 and RM220,000, one could own a terraced house in Rawang, Selangor; Kulai and Segamat in Johor; Seremban, Negri Sembilan; Bukit Katil, Melaka and Pengkalan, Perak. For between RM201,000 and RM350,000, buyers could get a terraced housein Klang, Sungai Buloh, Semenyih and Rawang in Selangor; Skudai and Johor Baru in Johor; Cheng, Melaka ; Ipoh, Perak, and Kuantan, Pahang.

The analyst’s view was echoed by Datuk Fateh Iskandar Mohamed Mansor, managing director and CEO of Glomac Bhd.

He told The Edge Financial Daily that the “My First Home Scheme” is a good one. “However, for it to be across the board is unfavourable. This is because it is really hard to find properties below RM220,000 in the big cities, especially for landed properties,” he said.

“The government should raise the threshold to include properties in the range of RM300,000 to RM350,000, and also increase the minimum income requirement to RM5,000 a month as, nowadays, a lot of young couples earn take-home income in that range [RM4,000 to RM5,000]. Thus, it will benefit more people and also more developers,” said Fateh Iskandar,

He said that, even for Glomac’s projects in Sungai Buloh and Rawang, which are considered as cheaper areas in the Klang Valley, prices start from RM300,000.

“It is very hard to find a house for below RM220,000 in the Greater KL area, especially in Kuala Lumpur, Petaling Jaya, Subang Jaya and Damansara,” said Fateh Iskandar. He also said that affordable prices varied in different areas, and the scheme would only be reasonable for properties outside the city centres.

“What is considered affordable in Petaling Jaya may not be affordable to people in Ipoh or Seremban,” he said.

When asked whether bigger property developers will change their strategy (from middle- and high-end projects to lower-end projects), he said that it is very unlikely, as once a fixed cost is incurred, the developer cannot change its game mid-way.

“When you have already incurred a fixed cost such as the purchase of land, you cannot backtrack and change the plan as the cost to acquire land, especially in the Greater KL area, is very high,” he says.

In his capacity as the deputy president of Rehda, Fateh Iskandar suggested that the government should remove the requirement for private developers to allocate 30% of houses as low-cost units (for property projects exceeding five acres).

This is because of concerns that developers are losing their profit margins by building low-cost houses and are cross-subsidising the low-cost units with higher prices for the medium- and high-end houses.

Rehda believes that the country has moved on substantially socially and economically, and that the responsibility of building low-cost homes can be fully taken up by the government.

“Even in China, the government is building almost 10 million low-cost homes to cater to the low-income group,” Fateh Iskandar explained, saying that the Malaysian government should also do the same through the Projek Perumahan Rakyat (PPR) housing scheme.

“By taking away the responsibility of building low-cost houses from private developers, we could work towards building more affordable houses which are priced lower than RM220,000,” he said.

This article appeared in The Edge Financial Daily, March 17, 2011.

By The EDGE Malaysia (by Kamarul Azhar)

S P Setia 1Q net profit up 62% to RM62m

KUALA LUMPUR: S P Setia Bhd's net profit for the first quarter ended Jan 31, 2011 jumped 62% to 62.04 million from RM38.19 million a year ago, on the back of a 43% increase in revenue to RM518.88 million, due mainly from its property development activities in the Klang Valley, Johor Bahru and Penang.

It said on Thursday, March 17 earnings per share were 6.10 sen while net assets per share was RM2.22. The net profit for the period was arrived at after expensing about RM6 million for employee share options launched in May 2009.

S P Setia said the ongoing projects which contributed to the results included Setia Alam and Setia Eco-Park at Shah Alam, Setia Walk at Pusat Bandar Puchong, Setia Sky Residences at Jalan Tun Razak, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru, Setia Pearl Island and Setia Vista in Penang.

Apart from property development, the group’s construction and wood-based manufacturing activities also contributed to the earnings achieved, it said.

S P Setia said its sales for the first quarter of FY2011 totalled RM737 million and were its highest ever sales recorded in a single quarter.

“As at Feb 28, 2011, the group’s sales for the first four months of the financial year totalled RM953 million – another new record and a 25% increase from the corresponding period last year. The group is therefore well on-target to achieve and deliver its FY2011 sales target of RM3 billion,” it said.

On its prospects, the company said the KL EcoCity project (KLEC), with an estimated gross development value of RM6 billion, when launched later this year was expected to further contribute to its strong sales.

“Management is confident that the meticulous planning and preparatory steps taken so far will enable KLEC to fulfil its potential as a showcase development and act as a key catalyst that will transform and enable the group to sustain sales at a high level,” it said.

The company said it would also focus on finalising terms with the government for the land-swap deal involving the exchange of 40.22 acres of land in Bangsar for a modern new integrated health and research complex to be located on 55.33 acres of land in the Group’s flagship Setia Alam development.

S P Setia said that barring unforeseen external shocks, it was optimistic that its prospects remained positive in FY2011.

By The EDGE Malaysia

Millennium unveils RM1.5b Puchong project

The Millennium Group today announced a project with a gross development value of RM1.5 billion, Millennia City, in Puchong.

Millennium Land Sdn Bhd's Executive Director, Bejamin Tan, said the project, expected to be completed in 2013, will be open for sale by the end of this month with a retail price of RM1,700 per square feet.

"Millennia City will open up business opportunities and provide business owners a premium new market location in one of Klang Valley's fastest growing suburbs," Tan told reporters after signing a management agreement with Hilton Worldwide today.

The agreement would see the building of Hilton Garden Inn, the first international hotel brand, in Millennia City.

It is expected to offer upscale yet affordable accommodation to mid-market business and leisure travellers.

Tourism Minister Datuk Seri Dr Ng Yen Yen launched the project and witnessed the signing of the management agreement between Millennium and Hilton Worldwide.

By Bernama

Emkay eyes more green building projects

Emkay Group's purpose-built green building called Bangunan Lestari Kumpulan Emkay (BLKE) in Cyberjaya was opened by Tun Dr Mahathir Mohamad today.

With a special team comprising technical staff, consultants, contractors and suppliers, the group is now eyeing more projects that promote sustainability in the built environment.

From now on, green features would be a major part of Emkay Group’s development planning, chairman Tan Sri Mustapha Kamal told reporters after the former prime minister opened the RM255-million BLKE.

"This year, we are doing projects worth RM2.7 billion in gross development value with a total net built-up area of 5.8 million square metres," he said, adding that by 2020, the group hopes to build another 7.9 square metres worth RM3.9 billion.

BLKE is the first building in Malaysia awarded a Leadership in Energy and Environmental Design (LEED) Gold rating by the US Green Building Council. It has five levels of office space and three levels of sub-basement for car parking.

The building will house Shell Business Centre Sdn Bhd's operations starting June.

Shell Malaysia chairman Anuar Taib said BLKE would store about 2,100 staff, thus Cyberjaya would be Shell's second largest service centre among the six that the oil company has globally.

"Shell's sustainable development principle commits us to improve the environmental performance of our operation, lower our emissions and reduce our use of energy, water and other resources.

"This principle applies to our work place. We are eager to see our first electricity bill which BLKE promises a 50 per cent off," he said.

By Bernama

Add beauty to city planning

BUILD a city where you would like to walk in with a person you’ve just fallen in love with.

That was the advice of Charles Landry, an authority on creative cities, during his recent ‘Creative Cities: Lessons for Penang’ forum in Komtar.

Urging the state to strive for a “humane” city concept, Landry said it was time to reintroduce the word ‘beauty’ into the vocabulary of city planning.

“When thinking about which direction you want to take the state in, liveability should be the overall driving force. Ask yourself if your city or state is an emotionally-satisfying place on the ground,” Landry said.

He said in most cases, city planning took place “in the air,” but what makes sense on paper does not necessarily translate into good ideas on the ground.

“When we look at cities with the highest ‘liveability’ scores, we see places like Vancouver, Melbourne, Bilbao, Zurich, Geneva, Copenhagen, Stockholm and Singapore.

“Aside from being resilient, robust and having a high level of adaptability, these cities are great in terms of ‘walkability’.

“That is what Penang should strive for — creating places that make sense to the people and building areas where people want to be in,” he said.

Saying that market forces alone could not create this type of city, Landry urged the state and local authority to adhere to a new type of thinking in urban development.

“The old paradigm of thinking always emphasised quantity where bigger, higher and longer were considered better. Now, people are looking at questions like ‘what is the right size for what we want to do?’

“To achieve this, I believe a public-private partnership is needed along with a greater involvement (with the community),” he said.

Landry, whose work in creating creative cities has taken him to over 45 countries, also advised the authorities to not be confined by rules and regulations, but instead push the bar on what was acceptable.

“Instead of thinking about what the guidelines allow, we should think about what makes a place liveable and attractive, and shift those guidelines to incorporate those things,” Landry said, adding that issues like aesthetics and beauty should be put into planning guidelines.

“You have to look at each building and ask yourself if it contributes materially and spiritually to the city.

“If you really want to follow your slogan of ‘Penang leads’, raise your expectations to something better and make that standard non-negotiable,” he said.

The ‘Creative Cities: Lessons for Penang’ forum was organised by Think City Sdn Bhd and Khazanah Nasional Bhd.

By The Star

Affordable homes a state priority

The Penang Government will provide incentives to encourage developers to build more low and medium-cost (LMC) houses as well as mid-range units on the island.

State Town and Country Planning and Housing Committee chairman Wong Hon Wai said the government would ensure there was sufficient supply of mid-price range housing to meet people’s needs.

He said there was a gap in mid-range housing in the island’s north- east district, adding that the state Planning Committee had on June 28 last year revised the plot ratio guidelines which provided for the construction of more housing units per acre.

To date, Penang Muncipal Council has approved seven applications under the revised guidelines.

“We need to strike a balance of LMCs, mid-range and high-end property in the state,” he told a recent press conference in conjunction with the three-day Penang International Property 2011 Expo starting this Friday.

Chief Minister Lim Guan Eng is scheduled to open the fair at the Penang International Sports Arena (PISA) the same day. The first 100 visitors will receive door gifts daily.

Event director Ong Ban Seang said the expo would be a good networking platform for the real estate industry along with the talks arranged for the public over the three days.

“The demand for high-end property in Penang exists because of the strong economy which attracted RM12.2billion in capital investments last year,” he said.

Ong added that the buoyant market was sustained by the developers’ innovative property products and the good response of foreign retirees under the Malaysia My Second Home (MM2H).

Raine and Horne senior partner Michael Geh (pic) said the expo would feature two roundtable conferences.

One will be on MM2H and it will have Tourism Malaysia deputy secretary-general Dr Junaidah Lee and MM2H president Jeremy Yeong among the panellists.

The other will be on ‘Salvaging Abandoned Housing Projects’, to be moderated by Dr Goh Ban Lee from Penang’s think tank Social Economic Research Institute.

A delegation from Indonesia will also visit the expo for business networking with local developers.

By The Star

New Age to launch Kota Kinabalu project by June

Boutique developer New Age Portfolio Sdn Bhd, expects to launch its second housing project, the RM350 million Celebrity Residence project, by the middle of this year.

Set up two years ago, the company will launch the project in Kota Kinabalu, Sabah, via its associate, Laser Plus Sdn Bhd.

New Age and Laser Plus have common shareholders, which include Lai Yeng Fock, formerly the executive director for WCT Land Bhd. The rest are private investors.

Lai said New Age will use its internally-generated funds and loans for the development.

He said after the successful sale of its maiden project in Puchong, Selangor, it is geared up financially to launch a new product.

The project in Puchong comprises 50 high-end three-storey semi-dees worth more than RM1.3 million each, or a combined RM77 million. New Age sold the units, which will be built by June, in less than two months last year by word of mouth.

"Our selling point was to extend the defect liability to 36 months and offer a three-year customer care service where buyers can call us during the period for minor repairs to their homes without a fee.

"While it is an extra cost for us, we are going to work on these two areas for all our future projects," Lai said in an interview.

As for Celebrity Residence, it will comprise three 24-storey blocks with 432 luxury condominium units on a 6.25-acre leasehold tract, which the company bought in 2009 for RM13 million.

Lai said the units, with an average build-up of 1,600 sq ft, will be priced from RM600,000 onwards. New Age is targeting expatriates and Sabahans.

By Business Times

PKNS plans to sell its properties

SHAH ALAM: The Selangor State Development Corporation (PKNS) aims to sell 80% of its properties worth RM608mil this year, its Deputy General Manager (Administration and Development) Noraida Mohd Yusof said.

She said the properties included new housing projects being developed in Alam Nusantara, Antara Gapi, Kota Puteri and Kuala Selangor. “Consumers are confident and are realistic about our properties which are strategically located and priced reasonably,” she told Bernama after attending the PKNS 2011 Clients Day celebration at Kompleks PKNS last Saturday. PKNS sold 89.7% of its properties last year worth RM669mil, involving a total of 2,244 residential units. Bernama

She said PKNS would also take advantage of the My First House scheme launched by Prime Minister Datuk Seri Najib Tun Razak last Tuesday.

The scheme, a government initiative with the cooperation of Cagamas Bhd and financial institutions, has been launched to reduce the burden of young people facing the high cost of living and the high prices put on properties in specific locations in Malaysia.

Through the scheme, individuals, especially the younger generation with income of less than RM3,000, would be able to get 100% loan from the selected financial institutions to buy houses priced between RM100,000 and RM220,000, with a repayment period of up to 30 years.

On the programme, Noraida said it was in line with PKNS' efforts to form a new division under its Customer Services Division starting from April.

The focus will be on enhancing the quality of services to customers, she said.

Besides being the place for looking into clients feedback and so on, PKNS would also use the platform to promote its latest products, she said.

Six counters were opened to clients today including the property sales division, land matters, technical and public relations.

By Bernama

Focal Aims looks for more land in the Klang Valley

JOHOR BARU: Focal Aims Holdings Bhd is looking for land in the Klang Valley for future development when its maiden project is completed by 2013.

Group executive director Yee Yok Sen said the company has started negotiations with several land owners to expand its landbank.

He said there would always be demand for houses in the Klang Valley.

“We will either buy land to develop it ourselves or set up a joint venture company between us and the land owner for the project,'' Yee told StarBiz after the company AGM recently.

He said the company was confident of getting potential buyers for its future launches as it has a track record with its project - Saujana O-Lot in the Klang Valley.

The project, which comprised of high-end residential properties on 10.48ha in Mukim Damansara in the Petaling district, is entering the final stage of development.

The 48 units of three-storey semi-detached houses are selling from RM1.5mil under phase one. Thirty units of semi-detached houses and 10 bungalows under phase two are sold out, he said.

Yee said the last phase of the project consisting of 37 units of semi-detached houses and four bungalow, priced from RM2.5mil per unit would be launched in the middle of this year. It has a gross development value (GDV) of RM105mil.

“We have many repeat buyers from our phase one who also purchased the units in phase two,'' he said.

In Johor, the company will focus on offering more high-value residential properties for its Kota Masai township project, as it had received enquiries from buyers for the properties.

He said 566.55ha of the 1,011.71ha township have already been developed.

When it started the township about 15 years ago, the main focus was on offering affordable homes to the low and low-medium income earners. “This segment is growing in the Masai and Pasir Gudang areas and we want to offer them better quality homes in term of living space and designs,'' said Yee.

For the financial year ended Sept 2010, Focal Aims Holdings recorded RM3.96mil net loss on RM63.91mil revenue against RM8.33mil net loss on RM30.95mil revenue registered in FY2009..

By The Star

Putting housing on firmer foundation

Prevailing weaknesses in the sell-then-build system requires changes in the property delivery system to protect buyers

LINGERING problems caused by abandoned housing projects have given rise to calls for developers to adopt a more equitable property delivery system that has built-in features to protect the interest of buyers, particularly from falling victims to abandoned projects.

Abandoned projects result in much grief for the affected buyers and their families as they have to continue servicing their bank loans despite not getting delivery of the property they have bought.

The dissatisfaction over the current sell-then-build system (STB) has led consumer groups such as the National House Buyers Association (HBA) to propose a hybrid version of the build-then-sell system (BTS), or the 10:90 BTS.

There are also calls for a trust fund, similar to the practice in Australia, to safeguard buyers' interest.


Chang Kim Loong says the root of the problem lies with the current STB system

Under the Australian trust fund system, 10% is paid into a trust fund or a lawyer who holds it in trust for the purchaser.

Upon completion of the property, the buyer will apply for a bank loan for the balance amount (the banks generally provide up to 70% financing).

Industry observers say this system ties up a lot of cashflow and could be a reason that property development projects in Australia are generally carried out on a smaller scale.

The push for more sweeping changes in the local property delivery system to better protect buyers is due to prevailing weaknesses in the STB which include higher risks to buyers when they fall victim to abandoned projects.

The scourge of abandoned projects

It is debatable as to what would entail a more equitable system, but at the end of the day it has to promote a stronger foundation for the local property industry and one that benefits all stakeholders.

Real Estate and Housing Developers' Association (Rehda) president Datuk Seri Michael Yam says the STB has proven to be the best system for a developing market like Malaysia and it is unfair to blame the system as the root cause of project failures and poor housing quality.

Yam believes stringent monitoring of ongoing projects and enforcement of the existing Housing Development (Control and Licensing) Act against errant developers would be a more effective method to curtail the incidences of abandoned projects as well as addressing the issue of low quality products.

He says Rehda has always strongly supported heavy penalties to be imposed on irresponsible developers.

“In fact some of the causes of abandonment were by unlicensed developers and fraudulent businessmen who should not be in this industry in the first place. Those who are venturing into the housing development business should be equipped with proper knowledge and trainings undertaken either by the Housing Ministry or Rehda so that they are better informed of their role as a responsible developer,” he points out.

The HBA had for years advocated phasing out STB on the basis that it is unfair to use housebuyers' money to fund project construction costs. It had proposed the 10:90 BTS where house buyers make a 10% downpayment when the sales and purchase (S&P) agreement is signed, and the remaining 90% will only be paid upon delivery of the property.

The BTS, which is supposed to replace the STB system, is said to be a fool-proof system to protect the rights of property buyers from project abandonment.

HBA secretary-general Chang Kim Loong says that as of last December, data from the Housing Ministry shows that 9% of housing projects are classified as either delayed, problematic or abandoned.

He concedes that the root of the problem lies with the current STB system.

Under STB, buyers pay a 10% deposit of the property price upon signing of the S&P agreement and take up a bank loan to pay for the balance sum.

Developers will be allowed to draw down the loan progressively based on the progress of construction work of the property in question.


“With the STB, the cost of financing the property's construction is largely borne by the buyers. On top of that, they have to face the risks of project delays or abandonment,” Chang says.

Developing discipline

He says that by making developers assume the role of a borrower to finance their projects (under the 10:90 BTS), they will be more vigilant and responsible to build good quality products and ensure timely (if not earlier) delivery of projects to save on interest costs.

“Instead of making the buyer take up the responsibility as the loan borrower to finance the project construction, the developer should be responsible for it,” he points out.

Only upon completion and delivery of the property with certificate of fitness to the buyer will the developer be able to collect the balance 90%.

Chang says this will weed out unethical individuals so only the responsible and good ones will remain as developers.

“Without having house buyers' money to fall back on, the 10:90 BTS will encourage industry players to manage their cashflow more effectively, and banks will be more cautious and undertake the due diligence on ascertaining project completion before disbursement of buyer's loan to developers,” he says.

It will ensure only credible developers with their own financing capability will remain in business.

It has been five years since the Government put on trial the BTS and offered a host of incentives to developers to adopt the scheme.

Financing risk

Despite that, the BTS has not taken off the ground and property projects are still mostly sold off the plan today.

Although there have been a few successful BTS projects, developers are generally lukewarm to the scheme because they say banks are not lending their support to developers who adopt the scheme. (See story on developers' views)

They are also worried that buyers who only have to put down 10% for the purchase may decide to walk out of the contract and leave the developer with unsold units.

The much higher financial exposure by developers will inevitably lead to higher cost of the completed project and this will have to be transferred to the buyers.

Yam says financing from banks is the major hindrance for developers to undertake BTS as banks would lay down the conditions of achieving a pre-sale of at least 65%, lock in the construction contract and a director's guarantee before lending.

“It normally takes between six months to three years to achieve a 65% pre-sale. In addition, developers undertaking BTS who get a bank loan will have to borrow at a commercial rate of about 7% to 7.5% per annum.”

Lending curbs need to be raised

Moreover, Bank Negara has set a cap of only a certain percentage of a bank's lending to property development.

“Therefore, Bank Negara's lending guidelines would need to be amended not only to increase the lending percentage, but Bank Negara must also ensure that all banks and financial institutions must commit to finance projects to completion (availability of project financing) along with all the supporting frameworks in place,” Yam adds.

He says BTS is a raw deal for developers as they are obliged to honour the sale from the locked-in price of the initial 10% deposit. Buyers, on the other hand, might just forfeit the 10%, leaving developers in the lurch.

“It would be difficult for developers to undertake a development without certainty that the sold and completed homes will be taken up,” he says.

As for the proposed trust fund, Yam says money in trust fund or held back in any way will starve developers of much-needed cash flow.

“There is no point putting in a trust fund which presumably the developer will use it as security against loan for construction wherein the interest rate payable is around 7%-8% while the amount in trust fund, even if its interest can be allowed to offset, is only earning 2.6%,” he says.

By The Star

Build-then-sell concept gives buyers more protection

Gevanantham Marimuthu (Geva) has been waiting for over a decade to move into his Lembah Beringin home he bought in the late 1990s, 50km from Kuala Lumpur. Today, Geva, alongside some 2,000 others in that area, have not moved into their dream homes because the project has been abandoned. Geva started paying his mortgage in 1998. He stopped in 2006.

“Why should we pay for something we did not own. In fact, I want them to take me to court!”


S.M. Mohamed Idris ... ‘CAP has been advocating for the BTS system

Geva is also the chairman of the Lembah Beringin House Buyer's Association, a group comprising the victims of that project. He is currently living at rented premises.

The project's developer was a subsidiary of Land & General Bhd (L&G), Lembah Beringin Sdn Bhd. L&G was badly hit during the Asian financial crisis in 1997/98 while Lembah Beringin has been under receivership since 2005.

For decades, the sell-then-build (STB) delivery system has managed to deliver homes to meet the housing needs of Malaysia's young and growing population. But along the way, due to unforeseen circumstances, this model of buying houses has met with undesirable outcomes.

Projects have been delayed, stalled or worse still, abandoned. National House Buyers Association (HBA) secretary-general Chang Kim Loong feels that the STB system is the crux of the “abandoned project” problem.


Muhammad ShaÍani Abdullah ... ‘Buying a house is a lifetime commitment to most buyers

“Buyers are exposed to the business risks (and are at the) mercy of developers. Why should the buyers share in the developer's business risk through this progressive payment mode?” he asked.

Chang admits that any housing project can fail, regardless of the type of delivery system, adding

that no amount of legislation can guarantee the success of any housing project.

“Only the Government can institute a system that to a large extend, insulates house buyers from risks and uncertainties,” he says.

Consumers Association of Penang (CAP) president S.M. Mohamed Idris believes that non-enforcement of the Housing Developers Act is the problem .“If projects are detected when they are delayed', or sick', they may not be eventually abandoned'. We have the laws but not the enforcement.

“In a 10:90 BTS model, buyers get to see the actual product. A house is the biggest purchase that a buyer will make. It is not right that he cannot see what he will be committing himself to for the next 30 years.” Mohamed Idris says.

Federation of Malaysian Consumer Associations secretary-general Muhammad Shaani Abdullah says given the failure of respective authorities to improve the current delivery system, it is justifiable to implement the 10:90 build-then-sell (10:90 BTS) system.


Susan Tan believes both the STB and BTS systems should exist to provide buyers a choice.

An absolute BTS system would be too big a paradigm shift for the local players. Six years ago, the House Buyers Association, under the stewardship of Chang, proposed a variant to the STB system, namely the “BTS 10:90” model. Buyers pay a 10% deposit, sign the sales and purchase agreement and pay the rest when the house is completed and occupiable. Chang says the BTS 10:90 concept has become a reality with the amendments to the Housing Development (Control & Licensing) Regulations, 2007 which was implemented on Dec 1, 2007.

“The Government proposed to let the two systems (STB and BTS 10:90) run concurrently and was supposed to review the situation after two years from August 2006, which has long lapsed. Nevertheless, it remains an option,” says Chang.

Perdana ParkCity Sdn Bhd marketing and sales director Susan Tan believes that both systems should co-exist to provide buyers with a choice.

“Generally, property investors will prefer the STB to reduce their commitment and they can quickly flip the property for a gain when it is completed.. Only the seasoned ones with sufficient capital will invest in completed properties and will look at yields instead of capital gains,” she says.

Chang believes that the quality of houses will improve with the proposed “BTS 10:90” system as developers will not risk dispute with buyers over quality, come full payment time.


“With the 10:90, developers have to seriously focus more on building better quality houses and execute greater care and responsibilities to ensure that the houses are constructed in accordance with specification and proper workmanship manner if they harbour hope of their finished product' being saleable upon completion of the house.”

Chang says the risk faced by developers that buyers may refuse to complete the sales when property prices have dropped at the time of hand-over is negated by the forfeiture of the initial 10% paid upon the signing of the SPA, as well as other possible specific performance liabilities.

“Today due to the prevailing system in the housing industry, house buyers are facing serious risks when they make purchases. Indeed, even car buyers have more protection than house buyers.”


M. Gevanantham says the agony was beyond just ‘financial’.

Learning from past mistakes

For Christopher John who bought into abandoned Bandar Golden Valley Golf Resort in Jasin, Malacca, the road towards finding a solution seems endless.

The RM380mil resort township started out as a joint-venture between Yeng Chong Realty Sdn Bhd and MBSB Development Sdn Bhd, a unit of listed Malaysia Building Society Bhd, which is a subsidiary of the Employees Provident Fund.

Construction was to begin in 1999 and the properties handed over to buyers in 2002. That did not happen. Today, the site remains an oil palm estate. In 2009, Christopher and others in the same dilemma met up with the Public Complaints Bureau, Yeng Chong and MBSB for the first time. There are about 200 buyers. There was no solution.

“We are thinking about litigation but that is a long, tedious procedure. We want to settle this amicably. We want our money back at market value and with interest, which we believe is fair,” he says.

“Over the past few months, we've had two purchasers passing on,” he laments, adding that the BTS delivery system is definitely a better alternative when it comes to buying a house.

By The Star

Resorts World Sentosa bullish

Singapore's Resorts World Sentosa expects to attract as many if not more visitors as in 2010 as it adds more attractions.

Last year, the integrated resort operator - which opened Singapore's first casino and Southeast Asia's first Universal Studios a year ago, received 15 million visitors.

"We hit 15 million in the first year of operation ... we expect to hit the same number or more as new developments are coming up," Robin Goh, assistant director of communications, said.

This dispels some views that the resort may attract fewer people once the novelty of the product diminishes.

According to Goh, of the 15 million, 60 per cent were foreigners and 40 per cent locals. Each of them spent an average of S$85 (S$1 = RM203) per person.

Singapore itself received 11.6 million tourists in 2010 and has a target of achieving 17 million tourists by 2015.

Goh said that Resorts World Sentosa's next opening before June 2011 will be the Maritime Xperimental Museum, which takes one through the maritime Silk Route based on Admiral Zheng He journey in 4D.

Following that, in early 2012, Resorts World Sentosa will add Marine Life Park, which is touted as the largest oceanarium in terms of species and gallons of water.

The resort will go on to open its fifth and sixth hotel, Equarius and the Spa Villas, that will bring the total number of rooms on the 49ha resort to 1,800.

The existing four hotels enjoy close to 80 per cent occupancy and an average room rate of S$294 (RM703) per night.

Meanwhile, Goh said the group was pleasantly surprised by the response to its Resorts World Convention Centre (RWCC).

RWCC, the region's largest column free ballroom, which can accommodate 6,500 people, managed to hold over 1,500 events hosting over 415,000 guests last year.

This year, it has received forward bookings for over 500 events until year-end.

Resorts World Sentosa is wholly-owned by Genting Singapore plc. Genting Bhd holds some 51 per cent in Genting Singapore.

In the financial year ended December 31 2010, Genting Singapore made S$2.7 billion (RM8.45 billion) in revenue and an earnings before interest tax and amortisation of S$1.3 billion (RM3.1 billion) .

Genting Singapore's integrated resort is a S$6.6 billion (RM15.8 billion) development with the Universal Studios portion of the bill at US$1 billion (RM3.04 billion).

By Business Times

Stakeholder duty vital for sustainability

It is not easy to fathom what affected buyers of stalled or abandoned housing projects are going through but for many who have put down their life savings for their dream homes, they must have been badly traumatised. If the project failed to be revived or rescued, they would lose their deposit along with their dream of ever owning a home.

Most victims are average Malaysians trying to make ends meet and have saved every sen for the first 10% in downpayment for their own roof over their head.

Buying a house is a big-ticket item and the loan to finance the property will take many years to be repaid. It is time the whole process of owning a house becomes a pleasant experience for house buyers and their families. To ensure that happens, all stakeholders need to work towards a fool-proof housing delivery system that protects house buyers from stalled and abandoned projects.

There are weaknesses in the current housing delivery system that need to be addressed.

As far as legislations are concerned, the Housing and Local Government Ministry is working towards further tightening some “loose ends” in the Housing Development (Control and Licensing) Act. One of the important changes underway is that the deposit required to obtain a developer's licence will be raised from the current RM200,000. The quantum will depend on the project cost.

This will hopefully, weed out wayward individuals from jumping into the bandwagon of property development and ensure only genuine developers with sufficient capital outlay and reputation will remain in the business.

Another important step to safeguard buyers' interest is the need to tweak the schedule of payment in the sales and purchase agreement so that the percentage of progressive payment due to developers will be lower in the initial stages and higher as the project nears completion.

At present, prior to handover time, buyers would have paid up to 95% of the property's price and this gave them little or no bargaining power when there are unfulfilled terms as stipulated in the S&P.

The strict enforcement of the law to bring to book developers who flout the law will ensure those who are serious in discharging their duties will thrive and further lift the property landscape.

Keeping order

Developers need to walk the journey with their buyers right to the last mile and deliver their projects in good order and on time. First and foremost, they should have done all the basic groundwork of having sufficient capital outlay, a good team with the necessary technical capability, proper project planning and concept, and of course, the right location for the project.

Even in the face of difficulties, developers should not shirk their responsibilities and work towards fulfilling all the terms in the S&P contract.

Instead of absconding and not facing up to reality when their projects are faced with problems, they should seek help and be around to ensure things are in order when rescue work gets underway.

Meanwhile developers who have the expertise and know-how should step forward to lend their support as white knights to rescue stalled and abandoned projects.

Such rescue work calls for unique expertise and it will be good if a special consortium comprising the various stakeholders in the industry can be set up to rescue troubled projects.

In fact, most projects would have gone through the due diligence and feasibility studies and certified as financially viable before they can get bridging loans.

But sometimes, the unforeseen happens and most of the time, they are led by bad economic times like a recession or financial crisis.

While legislation can only do so much, the onus also lies with prospective buyers to equip themselves with the necessary information on property matters to make informed decisions.

As pointed out by a veteran developer P.K. Poh: “A buyer who is sufficiently educated in property matters will not only be a good buyer, but also a safe one.”

Deputy news editor Angie Ng hopes to see greater responsibility from all stakeholders in the property market to ensure sustainability.

By The Star

Buying in England and Wales

The last couple of years, British house builders and developers have been making regular visits to Malaysia to promote and sell their properties. Some of them sold off plan, others offered completed projects.

Sales and marketing director Paul Bennett of St James Urban Living says England and Wales has three models when selling residentials. The Scottish system is totally different and not covered here.


St James Urban Living sales and marketing director Paul Bennett

St James Urban Living is part of The Berkeley Group Holdings plc, one of Britain’s largest house builders and in the FTSE 250 top UK companies by market value. It has various brands Berkeley Homes, St George and St Edward and has been marketing properties in Asia for over a decade.

● To buy off plan

When buying “off plan” you pay a Reservation Fee (normally £500-£2,000) to secure your property. At this point, you will be given a date when the developer expects the property to be completed. You have the opportunity to choose your kitchen design, bathroom tiling, accessories and finishes.

You appoint a solicitor to work on your sales contract.

Once the contract is agreed between your solicitor and the developer you can exchange contracts with a 10% deposit payable by the purchaser on exchange of contracts (normally three-four weeks after you reserve) with the remaining 90% being paid in one payment when the property is completed and ready for occupation.

Buying off plan allows you to take advantage of market growth during the construction process.

● Buying a completed unit

The process is the same as above: you pay a reservation fee; 10% when you exchange contracts; the remainder to complete the sale and you will then be handed the keys to your new property.

The main difference being you do not get the early choice of the prime plots and you have to accept the builders pre-selected kitchen and bathroom selections.

● Trust funds

In England and Wales, solicitors have special, secure client accounts specifically for holding funds from mortgage lenders or individuals between exchange and completion. The solicitor transfers the funds to the developer’s bank account.

By The Star

Naza TTDI targets 18 new launches this year

NAZA TTDI Sdn Bhd, the property development arm of Naza Group, plans to launch 18 new projects this year with a combined gross development value (GDV) of RM1.6 billion.

Naza TTDI chairman SM Nasarudin SM Nasimuddin said the launches are part of its long-term plan to become one of Malaysia's top 10 property companies in the next three years.

"We also plan to launch our projects outside of the Klang Valley and make our maiden venture overseas such as in Singapore, Vietnam, Indonesia and China," Nasarudin said at a briefing on its financial performance in 2010 and outlook this year in Shah Alam, Selangor, yesterday.

Group managing director SM Faliq SM Nasimuddin said the new projects are expected to increase Naza TTDI's net profit in 2011 by 22 per cent to RM100 million from RM82 million in 2010.

Group turnover this year is targeted to hit RM1 billion, up 57.5 per cent from RM635 million in 2010.

Faliq added that the company hopes to rake in a net profit of RM267 million and a turnover of RM2.2 billion by 2015.

"In future, we hope to form joint ventures or embark on merger and acquisition plans with companies that have strategic assets and landbanks as part of our expansion plan at home and abroad," said Nasarudin.

He said the company aims to boost its landbank to over 200ha in the next two years from 161ha currently.

The project launches this year will comprise both residential and commercial developments such as TTDI Grove in Kajang, TTDI Alam Impian in Shah Alam, TTDI Dualis in Puchong, as well as a 35-storey tower in Jalan Tun Razak, Kuala Lumpur.

The company has also formed an associate construction company, Naza TTDI Construction, as it feels it is the right time to start diversifying and entering the construction business.

Naza TTDI Construction will complement Naza TTDI's business, offering complete construction services in the fields of building, civil engineering and infrastructure works.

On its RM650 million Matrade International Exhibition Centre, Nasarudin said piling works are ongoing and it will call the media for an update in June.

He added the company has no plans to go for a listing yet but may do so in the future, should the need to raise funds arise, coupled with right stock market conditions.

Established 37 years ago, the Naza Group, which also has operations in automotive, hotels and food, has completed more than 14,000 residential and commercial units, including in Taman Tun Dr Ismail, Petaling Jaya, Section 13 Shah Alam and the Platinum Park in Kuala Lumpur City Centre.

By Business Times

Naza TTDI plans 18 new launches

SHAH ALAM: Property developer Naza TTDI Sdn Bhd plans to launch 18 new property projects with total gross development value (GDV) of RM1.6bil this year.


SM Nasarudin SM Nasimuddin

Chairman SM Nasarudin SM Nasimuddin said the new projects were expected to increase the group's net profit this year by 22% to RM100mil from RM82mil last year.

“Having said this, the group's turnover this year is targeted to hit RM1bil, up 57.5% from RM635mil in 2010,” he said yesterday at Naza TTDI 2010 Performance Review & 2011 Plans event.

SM Nasarudin added that these new launches would comprise both residential and commercial developments such as TTDI Grove in Kajang, TTDI Alam Impian in Shah Alam, TTDI Dualis in Puchong and a 35-storey tower at Jalan Tun Razak.

“This year's launches are in line with our aspirations to be among the top 10 property developers in the country over the next three years,” he said, adding that by 2015, the group was targeting to achieve a net profit of RM267mil and turnover of RM2.22bil.

Meanwhile, group managing director SM Faliq SM Nasimuddin said in addition to the new launches, Naza TTDI had also established an associate construction company, Naza TTDI Construction (NTC).

“This company will complement Naza TTDI's business and offer complete construction services, specialising in the fields of building, civil engineering and infrastructure works,” he said.

SM Faliq also said the group was looking at expanding its land bank locally and regionally over the next few years.

The group currently has an existing land bank of over 161.87ha in Malaysia.

“Apart from that, we are also looking at the potential of penetrating other markets in the region such as Singapore, Vietnam, Indonesia and China with high-impact and high-visibility projects that will provide the necessary profile to propel us into the global property market,” he said.

By The Star