UEM Land to leverage on Sunrise expertise and S’pore infrastructure

Good linkage: The future development’s proximity to the Marina Bay and future Downtown MRT stations will ensure that it is well served and easily accessible. — AFP

PETALING JAYA: The coming together of Khazanah Nasional Bhd and Temasek Holdings to develop RM30bil worth of real estate projects in Singapore and Iskandar Malaysia will help UEM Land Holdings Bhd make a great leap forward, both financially and in terms of branding, say analysts.

The tie-up also puts into focus why UEM Land launched an RM1.4bil takeover of property developer Sunrise Bhd, which was completed early this year.

“We believe UEM Land will be able to leverage on Sunrise's expertise in lifestyle integrated developments to take on the proposed developments. As such, Sunrise will be taking the lead on behalf of UEM Land in undertaking these development projects,” said an OSK Research report.

UEM is among the top landowners in Iskandar Malaysia, with 1,300 acres of development land in the southern economic corridor. Among the several economic corridors spearheaded by the Government, Iskandar Malaysia remains the most upbeat and vibrant. In many ways, according to analysts, the alliance of the two government investment holding companies is expected to be a win-win proposition for both sides.

As a result of the Khazanah-Temasek joint venture (JV), UEM Land, together with Mapletree Investments Pte Ltd, have been appointed to oversee the marketing and development of four parcels of land at Marina South in Singapore.

UEM Land is the property arm of Khazanah, while Mapletree Investments is one of Temasek's two real estate portfolio companies. The other Temasek property company is CapitaLand group.

The planned mixed-use development on the 2.62ha white site at Marina South would comprise two office towers with ancillary retail and two blocks of residential towers with a combined gross floor area (GFA) of 341,000 sq m, a statement from the Mapletree website said.

Located on adjoining sites behind the Marina Bay Financial Centre in the new financial and business cluster of Downtown Marina Bay, the development will be positioned between the proposed linear park and a major public open space above the Marina Bay MRT station. Its proximity to the Marina Bay and future Downtown MRT stations will ensure that it is well served and easily accessible.

Construction works are expected to commence in June 2012 with completion estimated in mid-2016.

At the same time, UEM Land will work with CapitaLand to oversee the Ophir-Rochor project in Singapore, located between the Kampong Glam Historic District and the Beach Road Conservation Area, in a new growth area envisioned to become a 24/7 mixed-use cluster. Like the Marina South parcels, the Ophir-Rochor parcels also have excellent connectivity.

By virtue of having Khazanah as an ultimate controlling shareholder, UEM Land (as with both Mapletree and CapitaLand in relation to Temasek) will be playing a huge role in this JV.

Sunrise, with its expertise and tangible portfolio of high-rise and high-end condominium in Mont'Kiara, will also have a huge role to play.

Hong Leong Research said: “UEM Land's business model is primarily a two-pronged strategy of developing townships and niche projects townships for stable income, complemented by niche projects to achieve enchanced growth and market branding. The bulk of its land is in Johor.”

With Khazanah's JV, UEM Land's opportunities have now broadened to include Singapore, where real estate is hot.

A UEM source said the success of Iskandar Malaysia is due to its proximity with the city state and its tremendous infrastructure, both economically and physically. Besides being a service and financial hub, it has an integrated transport system and other infrastructures like no other in South-East Asia.

“We are leveraging on Singapore's tremendous connectivity. When we sell Iskandar, potential investors always ask how many flights do we have in Iskandar Malaysia out to London? We ask them in return how many flights do you want?

“The issue is not how many flights our domestic airport in Johor has, but how many flights does Changi Airport have? That is how close geographically we are to Singapore. Multiply that with the whole range of services that Singapore offers and you have the big picture. When we sell Iskandar, we are not just selling Johor; we are selling Johor and Singapore,” said the source.

By The Star

'Sunrise buy a boost for Nusajaya township'

UEM Land Holdings Bhd's acquisition of Sunrise Bhd will further enhance the success of its flagship Nusajaya township, HwangDBS Vickers Research says.

In its Company Focus today, the research house said the recent acquisition would allow UEM Land to leverage on Sunrise's strong brandname and track record in high-end high-density residential and commercial developments.

"Sunrise will provide UEM Land with near-term earnings from more mature Klang Valley area to complement greenfield Nusajaya's long-term growth potential, and diversify its earnings base," it said.

It said UEM Land was currently trading at a 25 per cent discount to its realisable net asset value (RNAV) compared with big-capitalised developers' average of 18 per cent.

This discount should narrow down with improved earnings visibility and lower execution risk following the Sunrise acquisition and the company's possible inclusion in the KLCI FBM-30, it said.

"We applied a conservative 10 per cent discount to RNAV to derive a RM3.45 target price for UEM Land compared with five per cent premium to RNAV for sector leader SP Setia Bhd," HwangDBS said.

By Bernama

E&O in joint venture to develop wellness township in Johor

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) is partnering the state investment arms of Malaysia and Singapore to develop an 84ha mixed development dubbed as a wellness township in Nusajaya, Johor.

E&O'sunit Galaxy Prestige Sdn Bhd has set up an equal joint venture company, known as Nuri Merdu Sdn Bhd, with Pulau Indah Ventures Sdn Bhd.

Pulau Indah is a 50:50 venture between Khazanah Nasional Bhd and Temasek Holdings.

Nuri Merdu will build, amongst others, terrace and semi-detached houses, bungalows, serviced apartments and condominiums, wellness centre(s), and retail and commercial properties, E&O said in a statement yesterday.

The project is E&O's first project in Johor. The land is located 15 minutes from the Tuas Second Link to Singapore.

It is also located in Medini, one of five flagship zones in Iskandar Malaysia. Medini would have office buildings, malls, hotels and residential units.

However, the project is subject to a revised master development plan. "The proposal is in line with E&O Group's continuous effort in sourcing new landbank and property development opportunities to boost and sustain its earnings growth," it said.

By Business Times

E&O and Pulau Indah in JV to build Nusajaya township

KUALA LUMPUR: Eastern & Oriental Bhd (E&O) has entered into a shareholders' agreement with Pulau Indah Ventures Sdn Bhd to develop a wellness township Nusajaya.

Nusajaya is a flagship zone of Iskandar Malaysia.

E&O (via wholly-owned subsidiary Galaxy Prestige Sdn Bhd) and Pulau Indah have agreed to establish a 50:50 joint venture (JV) company named Nuri Merdu Sdn Bhd.

Pulau Indah is a 50:50 JV between Khazanah Nasional Bhd and Temasek Holdings.

This will be E&O's maiden foray into Johor.

The 210-acre freehold land for the proposed development is 15 minutes away from the Tuas Second Link to Singapore, and is owned by Iskandar Investment Bhd, a 60% subsidiary of Khazanah.

By The Star

E&O jumps on township project in Johor

Eastern & Oriental Bhd, a Malaysian property group, rose the most in two weeks after forming a joint venture with Khazanah Nasional Bhd and Temasek Holdings Pte LTd to develop a “wellness” township project in the southern Johor state.

The stock climbed 3.9 per cent to RM1.62 at 9:07 a.m. local time in Kuala Lumpur trading, set for its biggest gain since June 15.

By Bloomberg

The new wave tipping point for Iskandar?

KUALA LUMPUR: It was the most obvious missing piece in the jigsaw puzzle for Iskandar Malaysia.

For about five years, the country's biggest special economic zone was waiting for its closest neighbour to come as an investor. This was only logical since Iskandar is right next door to the island-republic and it was also touted as a cheaper alternative for Singapore companies.

But only Raffles Education Corp Ltd produced Singapore's biggest investment, with plans to build the RM200 million Raffles University Iskandar.

This is set to change. Analysts think the tipping point is the tie-up between Khazanah Nasional Bhd and Temasek Holdings Pte Ltd.

They plan to build RM3 billion worth of properties in Iskandar through their partnership called Pulau Indah Ventures Sdn Bhd.

The project shows the confidence from Singapore, which would lead to more investments from the country and other global investors, said HwangDBS Vickers Research analyst Yee Mei Hui.

"Temasek is very selective with investments. Their interest in Iskandar Malaysia indicates their confidence in the development so we can expect a new wave of investments, boosting land and property prices in the region," she told Business Times.

The two sovereign wealth funds on Monday said they will jointly develop houses, retail space and wellness-related offerings in Iskandar Malaysia.

They will also build hotels, apartments, offices and shops worth RM27 billion in downtown Singapore.

"Iskandar Malaysia may attract major property developers such as CapitaLand and Wing Tai Holdings Ltd," said an analyst with OSK Research.

Three times the size of Singapore, Iskandar Malaysia spans 2,217 sq km and is a mixed-use development planned for completion in 2025.

Launched in 2006, the expected investment of US$110 billion (RM375 billion) is split between an initial start-up of US$13 billion from 2006-2010 and US$97 billion (RM331 billion) from 2011-2025.

Although neighbouring Singapore, the bulk of investments into the region has come from Europe, the Middle East and Japan with focus on manufacturing, property and tourism projects.

The biggest investments are from Acerinox SA of Spain and Japan's Nisshin Steel, which have committed RM5 billion in investments to build a stainless steel plant.

From the Middle East, Mubadala, Millenium, Kuwait Finance House and Aldar have committed US$1.2 billion (RM4.27 billion) to develop properties in Medini in Nusajaya.

Ongoing projects in Medini include the development of Legoland Malaysia by Merlin Entertainment for US$200 million (RM726 million).

The UK's Newcastle University of Medicine is setting up a branch campus for US$100 million (RM363 million) in EduCity.

So far, the Khazanah-Temasek tie-up has produced one quick win.

Yesterday, Eastern & Oriental Bhd announced plans to partner Pulau Indah and develop a wellness township over a 84ha site.

By Business Times

GSB, Projects Start to build commercial lot

GSB Group Bhd today announced that its wholly-owned subsidiary, GSB Summit Development Sdn Bhd had entered into a joint venture agreement with Projects Start Sdn Bhd to develop commercial properties on freehold land in the Kelana Jaya township.

The joint venture project is expected to be completed within four years," the company said in a filing to Bursa Malaysia today.

The proposed joint venture is in line with one of GSB’s principal activities in the business of property development and will enable the company to develop a prime parcel of land in Kelana Jaya.

By Bernama

40 Talam housing projects categorised 'sick'

The National Housing Department has categorised 40 housing projects under Talam Corp Bhd and the Ukay Bistari project by Intelbest Corp Sdn Bhd as "sick projects".

In a statement today, the Housing and Local Government Ministry said the projects had been identified having problems since 2006.

To date, some projects under Talam and Intelbest Corp still failed to be completed although the date for completion in the sale and purchase agreement had passed, it said.

It said that based on reports and investigations carried out, the delay to complete the projects were due to management and financial problems faced by the developers.

"The ministry, through the National Housing Department, will constantly monitor licensed development projects in line with the Housing Development (Control and Licensing) Act 1966," it said.

By Bernama

TSR arm buys land in PD

TSR Capital Bhd’s unit TSR Ocean Park Sdn Bhd has entered into three sale and purchase agreements with Best Reap Sdn Bhd to buy 19.2 ha of land in Port Dickson, Negri Sembilan for RM36.8 million and develop a mixed development project.

In a filing to Bursa Malaysia yesterday, TSR said the proposed acquisition is in line with its expansion plans in Negri Sembilan and to increase its land bank to generate long-term sustainable income.

By Business Times

RM30b Khazanah-Temasek incentive

Kuala Lumpur: Malaysia and Singapore's sovereign wealth funds have teamed up to undertake RM30 billion worth of development projects in Iskandar Malaysia and the island state.

Khazanah Nasional Bhd and its Singapore counterpart, Temasek Holdings (Pte) Ltd, have set up two joint venture companies to undertake the projects.

This is the first joint development investment between the two funds.

Khazanah will own a 60 per cent stake in M+S Pte Ltd that will develop land parcels in Marina South and Ophir-Rochor in Singapore.

The developments there will boast a gross development value (GDV) of RM27 billion with a permitted gross floor area of up to 501,020 square metres (sqm).

The Singapore projects include the development of offices, residential units, hotel as well as retail units.

Another joint venture, Pulau Indah Ventures Sdn Bhd - which is equally owned by Khazanah and Temasek - will develop projects in Iskandar Malaysia, Johor. They will have a GDV of RM3 billion and a permitted gross floor area of up to 1.37 million sqm.

"The development in Iskandar with Temasek will be highly complementary and builds on the momentum of existing and planned projects in Iskandar Malaysia, in which Khazanah has been involved since 2006," Khazanah managing director Tan Sri Azman Mokhtar said in a statement yesterday.

"Both these projects mark our first joint development investment with Temasek, and we look forward to a strong and fruitful partnership in both Singapore and Iskandar Malaysia," Azman added.

Temasek chief executive officer and executive director Ho Ching said: "Both the Khazanah and Temasek teams put in tremendous effort, working very closely together to develop the best ideas possible for our joint projects.

"We were also very fortunate to have the expert and highly professional support of leading real estate companies like UEM Land from Malaysia as well as Mapletree and CapitaLand from Singapore," she added.

UEM Land Holdings Bhd, Khazanah's property arm, will work with Mapletree Investment Pte Ltd, a Temasek portfolio company, to oversee the marketing and development of the project at Marina South.

At the same time, UEM Land will work with Capita-Land Ltd to oversee the Ophir-Rochor project.

So far, two sites in Iskandar Malaysia - one in Medini North and the other at the Heritage Cluster in Medini Central - have been confirmed.

Pulau Indah plans to develop serviced apartments, a corporate training centre, as well as commercial, retail, residential and wellness-related offerings on the sites.

By Business Times

Khazanah and Temasek to develop RM30bil projects in Singapore, Iskandar Malaysia

PETALING JAYA: Khazanah Nasional Bhd has teamed up with Singapore's Temasek Holdings Pte Ltd to develop RM30bil worth of real-estate projects in Singapore and Iskandar Malaysia.

In a statement issued yesterday, both state-owned investment holding companies said they would form two new joint-venture companies M+S Pte Ltd and Pulau Indah Ventures Sdn Bhd for joint-development projects in Singapore and Iskandar Malaysia, respectively.

“We are honoured to be undertaking these exciting developments at these key sites in Singapore and Iskandar Malaysia with our counterparts from Singapore, Temasek Holdings,” Khazanah managing director Tan Sri Azman Mokhtar said in the statement.

“The development in Iskandar with Temasek will be highly complementary and builds on the momentum of existing and planned projects in Iskandar Malaysia, in which Khazanah has been involved since 2006. Both these projects mark our first joint-development investment with Temasek, and we look forward to a strong and fruitful partnership in both Singapore and Iskandar Malaysia.”

Temasek's executive director and CEO Ho Ching in echoing the same sentiment said: “Both the Khazanah and Temasek teams put in tremendous effort, working very closely together to develop the best ideas possible for our joint projects. We were also very fortunate to have the expert and highly professional support of leading real estate companies like UEM Land (Holdings Bhd) from Malaysia as well as Mapletree (Investments Pte Ltd) and CapitaLand from Singapore.

“I am also especially grateful for the guidance, advice and support of very experienced industry leaders who will guide the Singapore developments as key board members of M+S. I look forward to the successful development of the projects both in Johor as well as Singapore.”

M+S, which would be 60:40 owned by Khazanah and Temasek respectively, would develop four land parcels in Marina South and two land parcels in Ophir Rochor. The gross development value of the projects, which would comprise office, residential, hotel and retail components on a permitted gross floor area of up to 501,020 sq m, was estimated to worth around S$11bil (RM27bil).

UEM Land, a real estate company within Khazanah's portfolio, and Mapletree, a Temasek portfolio company, would oversee the marketing and development of the project at Marina South.

The marketing and development of the Ophir Rochor site would be overseen by UEM Land and CapitaLand Ltd, another Temasek portfolio company.

As for the development in Iskandar Malaysia, two new sites one in Medini North and the other at the Heritage Cluster in Medini Central had already been identified for joint commercial development by Pulau Indah, an 50:50 joint venture between Khazanah and Temasek.

Pulau Indah intends to develop serviced apartments, a corporate training centre, and commercial, retail, residential and wellness-related offerings on these sites. Khazanah and Temasek were still in discussions and negotiations with potential partners and operators for the various components to maximise the commercial potential of the location.

Nevertheless, planning and design works for the Iskandar Malaysia projects, estimated at about RM3bil on a permitted gross floor area of up to 1,365,675 sq m, had already commenced since the first quarter.

With the signing of these agreements yesterday, the projects would move towards design and further implementation and delivery of the initial phases over the next five years, the companies said.

By The Star

E&O in maiden foray into Johor

Eastern & Oriental Bhd (E&O) has entered into a shareholders' agreement with Pulau Indah Ventures Sdn Bhd to the development of a township in Iskandar Malaysia.

"We are excited about our maiden foray into Johor.

"With E&O's experience in delivering premier lifestyle properties and the backing of a solid strategic partnership, we are confident of translating the envisioned iconic wellness township concept into a reality for Iskandar Malaysia," said E&O Deputy Managing Director Eric Chan Kok Leong in a statement today.

He said the group would leverage on its expertise from three core businesses to fuel future growth, namely property development, hospitality and lifestyle, and property investment

The 210-acre land for the proposed development is 15 minutes drive from the Tuas Second Link to Singapore, and is in the Heritage Cluster in Medini Central of the Nusajaya flagship zone.

The agreement entered into through E&O's indirect wholly-owned subsidiary, Galaxy Prestige Sdn Bhd, with Pulau Indah will establish a 50/50 joint venture company named Nuri Merdu Sdn Bhd.

By Bernama

KPS' property arm set to be profitable despite loss in first quarter

SHAH ALAM: Kumpulan Perangsang Selangor Bhd (KPS) expects its property division, Kumpulan Hartanah Selangor Bhd, to be profitable again in the current financial year ending Dec 31, 2011 (FY11), boosted by some new and ongoing property launches.

Chairman Raja Idris Raja Kamarudin said the projects were that of a proposed plan to build a resort in Pulau Indah, Klang, a soon-to-be-launched mix-development project in Section 14, Petaling Jaya and a commercial project in Bandar Baru Salak Tinggi, Sepang.

“Our strategies now are to unlock and increase the value of the group's assets and minimise our liabilities. Saying this, we are hoping that our property arm will have a turnaround in FY11,” he told reporters yesterday after the group AGM.

Kumpulan Hartanah Selangor posted a net loss of RM48.05mil in the first quarter ended March 31, 2011 on the back of RM46.7mil revenue against a net profit of RM1.46mil and revenue of RM46.34mil a year ago.

It said the loss was mainly due to higher allowances for impairment on assets in that period.

Raja Idris said KPS would get its shareholders' approval during the next EGM (as an EGM was cancelled yesterday) for the proposed 18-month extension (from June 30, 2011 to Dec 30, 2012) on the expiry date of the put option granted by Kumpulan Darul Ehsan Bhd (KDEB) for KPS' acquisition of a 15% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) from KDEB. Earlier reports said KPS had already decided to exercise its put option pursuant to the acquisition.

KPS said it had considered various reasons to exercise the option. One reason was that its investment in Syabas had not provided any return as there had been no dividend declared since the completion of the acquisition.

KPS had on Sept 24, 2008, entered into a conditional share sale agreement with KDEB to acquire a 15% stake in Syabas for RM200mil cash.

The acquisition was completed on Dec 30, 2008.

By The Star

Mulpha sees stronger revenue with land sale

SUBANG JAYA: Property developer Mulpha Inter-national Bhd (MIB) is in the midst of selling land in Selangor and Malacca to boost revenue this year.

"I think since we are disposing the assets, we should be stronger in terms of re-venue in 2011," MIB chief executive officer Chung Tze Hien said.

The deal to sell a 2ha plot in Section 16, Petaling Jaya, may be concluded as early as the third quarter of 2011 and that for a 23.7ha site in Malacca may be completed by the end of 2012.

The land in Section 16 has a net book value of RM62.7 million while the one in Malacca is worth about RM23 million.

Chung said MIB will continue to focus on developing its existing projects in Malaysia such as the Lei-sure Farm and Enclave Bangsar.

"We are building 290 over units of semi-D and bungalows in Leisure Farm. We have another project, Enclave Bangsar, which should be ready by mid-year for a soft launch," Chung said.

MIB achieved RM794.5 million revenue for the financial year ended December 31 2010, an improvement from RM671.9 million in the preceding year. It staged a turnaround with a profit of RM112.9 million from a loss of RM9.7 million in 2009.

By Business Times

UEM Land raised to 'trading buy'

UEM Land Holdings Bhd rose to an 11-week high in Kuala Lumpur stock trading after Khazanah Nasional Bhd. and Temasek Holdings Pte appointed the Malaysian developer to help oversee S$11 billion (US$8.9 billion) of Singapore property projects.

The stock rose 2.1 per cent to RM2.88 at 11:06 a.m. local time, set for its highest close since April 8. RHB Research Institute Sdn Bhd upgraded UEM Land to “trading buy” from “market perform” with a RM3.35 share estimate, analyst Loong Kok Wen wrote in a report today.

Khazanah and Temasek, Malaysia and Singapore’s sovereign investment companies, will jointly develop hotels, apartments, offices and shops in the city-state, according to a joint statement yesterday. UEM Land, a Kuala Lumpur-based company controlled by Khazanah, will construct parts of the projects along with Temasek units CapitaLand Ltd and Mapletree Investments Pte, they said.

UEM Land is a “blue-chip proxy for improved Malaysia- Singapore relations,” Amir Hamzah, a Kuala Lumpur-based analyst at Credit Suisse Group AG, wrote in a report today. “This is one of the catalysts the market was waiting for.” He has an “outperform” rating on UEM Land with a share estimate of RM3.80.

The property ventures come after Malaysia agreed to move its railway station in Singapore’s central business district to a site close to a bridge connecting the two countries, ending a decades-old dispute over land usage. The two nations, united between 1963 and 1965, had argued over issues including a new bridge linking the two nations and the price Singapore pays for water from Malaysia.

By Bloomberg

YTL’s Grove sold out ahead of July launch

YTL Land & Development Bhd said phase three of its Lake Fields project in Sungai Besi, known as Grove, exceeded expectations when it sold out all the units ahead of its July launch.

Grove comprises 102 units of three-storey semi-detached homes, which sold at an average RM2 million each, it said in a statement.

By Business Times

Europlus to dispose of Talam debt

PETALING JAYA: Kumpulan Europlus Bhd has entered into a sale and purchase agreement with Megabig Properties Sdn Bhd to dispose of 10-year Al-Bai Bithaman Ajil Islamic Debt Securities (BAIDS) issued by Talam Corp Bhd with nominal value of RM52,666,340 for RM17,600,000.

As part of its regularisation plan, Talam had issued 10-year BAIDS of RM134,213,337 nominal value of RM1 each, of which an aggregate of RM52,666,340 of the primary BAIDS were issued to Abrar Discounts Bhd in settlement of liability, Europlus told Bursa Malaysia.

By The Star

Phase 3 of Lake Fields to be launched soon

KUALA LUMPUR: YTL Land & Development Bhd is launching phase three of its Lake Fields project in Sungei Besi soon and expects take-up to be overwhelming.

Called Grove, it comprises 102 units of three-storey semi-detached homes worth about RM220 million, or about RM2 million each.

YTL Land executive director Datuk Yeoh Seok Kian said it has received about 1,500 registrations for Grove, mostly repeat buyers and upgraders from matured neighbourhoods such as Desa Petaling, Taman Desa, Kuchai Lama and OUG.

"We expect Grove to replicate the success of our phase one and phase two launches at Lake Fields," he said.

The first phase, known as Meadows & Glades, launched in 2005, was snapped up overnight. All 514 units of the three-storey homes sold at more than RM380,000 per unit.

The second phase known as Dale sold out in four days. It comprises three-storey semi-detached homes and the prices range from RM638,800 to RM1.33 million.

Yeoh said Dale has not only set a new price standard for Sungei Besi homes but also demonstrated the area's potential as Kuala Lumpur's next property hot spot.

"People still want to live in Kuala Lumpur but there is scarcity of land and pressure on land price, making homes more expensive," Yeoh told Business Times in an interview.

"Sungei Besi holds much potential as the next "new thriving address" in Kuala Lumpur due to its strategic location. It is well connected and is easily accessible via numerous highways and railways, which are reasons why the project has become a success," he said.

Lake Fields, a joint-venture by YTL Land via Syarikat Pembinaan Yeoh Tiong Lay and the Employees Provident Fund, launched in 2005, spans across 74ha. Its centrepiece is a 6ha lake.

Grove features large built-up homes of more than 4,354 sq ft with breezy interiors, floor-to-ceiling windows and stunning view of the lake. Each residence comes with a private pool and a rooftop garden in selected units.

Yeoh said the redevelopment of the Sg Besi Royal Malaysian Air Force (RMAF) air base is another positive factor.

The government is redeveloping the 162ha into an integrated commercial hub and it is expected to be the catalyst for the growth of the southern part of the Klang Valley and would further raise the profile of Sungei Besi significantly.

By Business Times

SPNB sets RM2.8b target by 2016

KUALA LUMPUR: Syarikat Perumahan Negara Bhd (SPNB), a wholly owned unit of the Minister of Finance Inc (MoF Inc), aims to achieve a total development value of RM2.8bil by 2016, if all the affordable housing units it plans to build are completed on schedule.


Kamarul: SPNB will complete 36,095 affordable houses by 2013.

Managing director Datuk Kamarul Rashdan Salleh said SPNB would be able to complete 36,095 affordable houses by 2013, of which 16,423 units have been sold.

He said the number of units to be completed over the next three years would still fall short of the target set under the Ninth Malaysia Plan (2005 to 2010) of completing 70,000 units.

Since venturing into building affordable housing in 2003, SPNB has of May 3 1, only completed 26 projects totalling 14,740 units for a development value of RM196mil.

The projects are located in Kedah, Perak, Pahang, Selangor, Malacca, Negri Sembilan, Johor, Sabah and Sarawak.

Another 21,355 units involving 28 projects are under various stages of construction. Of this, 17 projects comprising 14,575 units will be built in Sabah.

Most of the houses are priced below RM220,000.

Kamarul said funding had always been the main issue when it comes to building affordable housing.

“If there is more government allocation, we will be able to build more houses,” he said, adding that RM200mil had been set aside for SPNB this year.

Kamarul said SPNB would be building 2,500 houses for the poor this year. Most of these units will be constructed in Kelantan, Terengganu and Pahang. Over 30,000 people in various states have applied for the SPNB homes.

Kamarul, who joined SPNB in 2009, said there was also the issue of getting the right parcels of land for development.

So far, all the land for its affordable housing projects were provided by landowners who are SPNB's joint venture partners in the schemes.

“If we opt to build the projects in more centrally located areas, we may need to acquire the land which could pose a funding issue to SPNB,” Kamarul explained.

Given the fund constraint, he said SPNB would need to establish joint ventures with landowners or contractors to undertake the projects.

In the last three to four years, SPNB has awarded contracts worth more than RM1.5bil to contractors to build low- to medium-cost houses, in anticipation of demand for its properties.

The joint venture with the contractors hit a snag when some projects were not completed on schedule and the works were shoddy.

Since 2000, 140 contractors had been blacklisted by SPNB for failing to deliver on their housing projects.

To address the problem, he said SPNB had, from this year, stipulated that contractors would be appointed based on merit to ensure that they deliver on their contract terms.

Kamarul said SPNB's role as the provider of affordable housing would also move up the value chain as it would also focus on housing products that are priced up to RM300,000.

“These higher priced units will complement the efforts of the developers and the various state development agencies in building more such homes in view of the rising demand," he said.

By The Star

Foreign property loans up

PETALING JAYA: Banks, especially those with regional operations, are fighting for a larger share in the financing of foreign properties fuelled by the strength of the local currency and weaker property markets overseas.

The stronger ringgit, according to industry observers, has led investors to scout for cheaper properties in Britain, Australia, Singapore and in the United States to diversify their investment portfolio.

Judging from the rising number of advertisements for the sale of foreign properties in local dailies, industry observers foresee a good prospect for banks' foreign property portfolio and improvement in margins.

RAM Holdings group chief economist Dr Yeah Kim Leng said: “We do see growing interest among selected Malaysian banks to extend loans for foreign property purchases in line with overseas investment opportunities presented to local investors, especially in countries where the property markets have hit the bottom or poised for an upturn.

“Overseas lending opportunities are likely to be selective depending on demand by Malaysian firms and high net worth individuals as well as the strategies, risk appetite and credit assessment capabilities of individual banks.

“We anticipate only selective banks notably, the large ones with regional presence making forays into this area given their size, market and networking advantage.”

As banks apply risk-based pricing, Yeah said they may be able to enhance margins to commensurate with a higher risk level when assessing for overseas properties.


Nor Zahidi Alias

Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias said the appreciation of the ringgit dramatically against the greenback and other currencies such as the sterling pound over the past one year has induced investors to diversify their investments to include purchasing properties overseas.

Although it has somewhat retraced from its highest level of RM2.95 against the US dollar, he said the prospect of the ringgit was still favourable judging by the US Federal Reserves' pledge to maintain its accommodative monetary stance at its last meeting and the positive growth momentum of the Malaysian economy.

As such, Zahidi added investing in properties overseas would likely enhance investors' returns through foreign exchange gains. Another critical factor that had spurred investors to invest in other countries was the significant decline in property prices, he noted.

In the US, for instance, home prices in 20 major cities have fallen 30% from their peak.

According to Case-Shiller/S&P, the producer of the gauge, real housing prices in the US had plunged to levels not seen since the 1890s (when adjusted for inflation) in 11 of the 20 markets surveyed.

The fact that the index has been in negative territory in the past five months since November last year signalled that investors have the opportunity to purchase properties at low prices, he said.

Similarly in Britain, he said although home prices were just 13% off their peak in 2007, they were more affordable compared with three years ago, adding that this was a great opportunity for long-term investments.

Zahidi said stiff competition would also keep driving banks to look for creative ways to improve their bottom lines, as long as they did not breach Bank Negara's guidelines and regulations.

As such, he added it was not surprising that Malaysian banks are seeking alternative avenues to increase their loan gr owth.

The Government at the same time does not discourage its residents from investing abroad as this could help to stabilise the liquidity condition in the financial system given there was no let up in the capital inflows.

This is seen from the rise in the Malaysia's international reserve assets which currently stood at RM402.6bil as of June 15, closer to its previous high of RM410.9bil achieved in June 2008.

In response to a query, Malayan Banking Bhd (Maybank) via the Association of Banks in Malaysia (ABM) in a statement said it currently only offered financing for properties in certain areas of London but has plans to look at Australia.

An international bank operating in Malaysia said it offerred financing for properties in Singapore, Hong Kong, China, Australia and Britain.

For banks that provide financing for overseas properties, the lending could be in local and foreign currency. Whereas, financing in pound is extended to Malaysians for buy-to-let purposes only and entails monthly repayments in that currency, Maybank said.

OCBC Bank (M ) Bhd is now offering a mortgage loan facility to finance the purchase of residential properties in prime sections of central London.

OCBC Bank head of consumer financial services Charles Sik said the introduction of the OCBC Overseas Property Financing facility was timely as customers would be able to take advantage of the ringgit-based loan, hence mitigating the effects of fluctuating foreign exchange risks.


Thoo Mee Ling

Meanwhile, the bank's head of secured lending Thoo Mee Ling said the interest rate offered was comparable to the domestic home loans even though the collateral was in foreign market.

She said OCBC Bank was currently looking at a few more viable markets for foreign property financing.

By The Star