Oversupply of Klang Valley office space

KLANG Valley's office space may be heading towards a state of oversupply. The total existing supply of office space is 94.4 million sq ft; 73.07 million sq ft of this were occupied in 3Q 2011. This leaves 21.33 million sq ft or 22.6% of the total space, within the various office buildings, vacant.

While a 5% to 10% vacancy is normal for most buildings, the aggregate 22.6% across the office market is high. Apart from this, there are 18.59 million sq ft of incoming space (under various stages of construction) and a further 18.74 million sq ft of planned supply.

This is space that has been approved for development, but for which construction has not commenced as yet, as tallied by the National Property Information Centre or NAPIC.

There is also the possibility that the 18.74 million sq ft could balloon substantially if all the office space being contemplated now and in the near future, especially the Economic Transformation Plan (ETP) are taken into account.

Demand-supply dynamics

In the years to come, the challenge for developers of office space is to make extraordinary efforts to adjust supply to conditions in the market when their projects are due to come on-stream and to do as much of pre-letting as possible.

For owners of existing buildings, hang onto to your tenants! For regulators and lenders, watch this with greater interest.

Much hope hinges on the roll out of the ETP and how it will create new office space demand, and of the order required, to balance demand and supply.

Nevertheless, the office market cannot be looked at, solely, through the lens of total numbers. The market exists in various sub-markets, depending on location and product type.

Each segment has its own demand-supply dynamics. Rents drive the market and post-Global Financial Crisis (GFC), rental levels have dropped to about RM7 to RM8 per sq ft per month for average prime space.

At this level, the office market for average prime space for office buildings sold en bloc can sustain at RM700 to RM900 per sq ft based on its historical yield expectation of about 7% to 7.5%, but this figure is not carved in stone.

For the market to slip below this level, it will take a severe economic downturn. In short, office values are bouncing along around the bottom. Post-Asian Financial Crisis, values did dip below the replacement cost (as it was then), for a number of years.

In terms of office space, the Klang Valley, with an existing supply of more than 90 million sq ft, dominates, compared to Penang's 9.43 million sq ft and Johor Baru's 7.7 million sq ft.

Klang Valley's retail segment, comprising modern shopping centres, is relatively stronger than the office market segment because consumer spending has continued unabated.

But there are shadows of looming oversupply even in this segment. If inflation accelerates, or household spending is crimped, will there be consumer support?

But a well-managed retail centre by its inherent higher sophistication (than an office building), has better strength to tide over temporary downturns. Once a shopping centre has clientele loyalty, usually through a prolonged period of astute mall management, it is extremely difficult for new comers to dislodge it.

Real estate investment trusts or REITs have a heightened presence after the listing of Sunway REIT and CMMT are anchored with retail properties. The latest addition, the Pavilion REIT is also essentially a retail REIT.

REITs are generally defensive investments and are ideal for lowering volatility in a portfolio of stock and bond investments.

Role of a REIT

They are also particularly attractive during difficult economic periods such as, since 2008. They are more convenient proxies for physical property. For that reason, special tax benefits are showered on them.

But, as was seen during the last GFC, to perform true to form they should also display all their other attributes, i.e. a high degree of transparency, low borrowings, professional property management and the comfort that comes from a high degree of regulatory oversight.

REITs have also to display their ability as a sector, and as individual REITs, to ameliorate its greatest weakness i.e. its dependency on short term financing due to the requirement for it to distribute almost all its earnings, yearly.

During the days of easy money before the GFC, cheap financing was not a major issue, but it now is.

As a quid pro quo for favourable tax incentives, REITs are obliged to promote retail investors, apart from institutional investors, to participate in the REIT.

This will meet the regulators objective of deepening and broadening the capital market, and set the foundation for sophisticated products in the future such as the establishment of a property derivatives market.

Retail investors would also have tenancies that come with considerable visibility. REIT managers should provide information as this is the key driver of REIT proposition and not hide behind the guise of protectionism against competition.

The residential sector of the market, viewed from the perspective of the country as a whole, is fundamentally sound.

Losing balance

In the Klang Valley, where residential properties are generally 4 to 5 times annual household income, certain hotspots have elevated this ratio in recent years. Household income in the Klang Valley is about RM6,000 a month.

While house prices have increased, household income has not. Set against property prices, rental yield has dropped over the years, slipping below the critical 3% benchmark.

This is a cause for concern as yield should range between 3% and 6% (all risks net return) depending on house type and whether landed or strata.

Over the past six months, with the onset of greater volatility in global markets stemming mainly from the European sovereign debt crisis, sentiment has filtered down to the residential market in Kuala Lumpur.

Coupled with tightening measures by Bank Negara for loans, the market has slowed and demand has become subdued. It is hoped that this has taken some heat out of the speculative end of the market.

Keeping a look out

Going forward, into 2012, the issues that bear watching for the property market in Malaysia, are the continuing European debt crisis and the sluggish US economy and its effects on the global economy and the possible slowing of the Asian behemoths, China and India (which have regional implications).

There is also the possible General Elections in Malaysia (and its ramifications), the possible introduction of the Goods and Services Tax (affecting in particular house prices, developers and service apartments) and the possible unprecedented legislative introduction of a new, single mode of housing delivery by way of the “build then sell” system (humungous down-the-line implications).

There is a possibility of further tweaking of rules for housing loans (to possibly also contain household debt) and other possible monetary and fiscal measures (may be negative or uplifting for the property market) that may be put in place should the global economy weaken further.

Elvin Fernandez is the MD of property consultancy firm Khong & Jaafar Sdn Bhd.

By The Star

Big hypermarket operators keen on MetroCity

Ambitious project: Chong pointing to a map of the MetroCity project, the largest single integrated township development in Kuching City North. The two-phase development on 74ha has a gross development value of RM970mil.

KUCHING: Chong Kia Hoi Realty Group is negotiating with three international brand hypermarket chain operators to operate Sarawak's biggest hypermarket in MetroCity, its flagship integrated new township development in Matang.

CKH Realty Group chairman and managing director Chong Kia Hoi said the three chain operators were the industry's “big names”, having several stores in Peninsular Malaysia, and that they were keen to expand their retail network to Sarawak. He declined to name the operators.

“Hopefully, we can seal the deal in two to three months,” Chong told StarBizWeek.

Tesco, Carrefour and Giant are the major foreign hypermarket and supermarket retail chain operators in Malaysia. Giant has spread its wings to Sarawak, opening two hypermarkets in Kuching, and one each in Sibu and Miri over the past six months.

Chong said an established local supermarket group had also expressed its interest in the proposed hypermarket.

He said the hypermarket would have a built-up area of between 120,000 and 150,000 sq ft, and 800 parking lots.

MetroCity is CKH Realty's most ambitious project and the largest single integrated township development in Kuching City North, where the Sarawak administrative centre is located.

The two-phase development has a gross development value of RM970mil and spans 74ha.

Phase I will be a commercial precinct comprising 314 units of three/four shophouses priced between RM850,000 and RM2.5mil, a commercial hall that will house the hypermarket, two three-storey showrooms, a private medical centre and a 120-room hotel.

It will also feature a fast-food restaurant, a trade service entertainment cineplex centre, a private food court and an integrated bus transit terminal and taxi station.

Phase II will be a residential development with more than 1,000 houses of various types.

Chong said more than 80% of the shophouses had been sold since their launch about three months ago.

“The entire development is expected to take eight to 10 years, and it will be financed with internal funding,” he said.

By The Star

Institutional funds invest in properties overseas to diversify portfolio

The properties in Gold Coast, Australia seem to be more attractive compared with those in Sydney and Melbourne.

INSTITUTIONAL funds including Employees Provident Fund (EPF), Retirement Fund Inc (KWAP), Lembaga Tabung Haji (LTH) and Permodalan Nasional Bhd (PNB) are on the lookout for viable properties overseas to diversify their portfolio and to take advantage of the strong ringgit.

CB Richard Ellis executive director Paul Khong says overseas markets such as the UK's commercial property market offers long-term lease tenure which ensures a fairly stable rental income.

“As such, commercial properties with blue-chip tenants at high rental yields will be ideal for these funds,” he says.

Khong says the offshore diversification will ensure a more balanced portfolio for the funds. He says most of the purchases will be yield driven with different expectations in different countries.

“With the strong ringgit against the pound sterling and the deteriorating condition of the UK property market, more trophy properties are now available for sale. It is a good time to shop around for bargains selectively both big and small properties.

“The funds can expect to look at net returns of 5% to 6% currently for good quality assets in the UK,” he says.

Meanwhile, the strong Australian currency has driven up property prices Down Under.

Khong says Australia is getting pricey due to the exchange rate.

“Sydney and Melbourne are at the higher end of the curve in the residential market cycle but other areas in Brisbane and Gold Coast seem to be more attractive as their markets are at the lower end of the scale (where selective properties are coming in at close to 10% yield for a quick sale),” he adds.

Savills Rahim & Co head of overseas business development Chris Hahn says the markets in the UK and Australia are transparent with fierce competition for institutional-grade investment properties.

“Most investment properties in the UK and Australia are marketed worldwide by exclusive agents and in parallel with this institutional investors also pay for their own advice from agents or fund managers. Sellers of property can be assured that the global market is covered and fair prices are achieved,” Hahn says.

On the need for more public disclosure of the investment activities of the funds, Khong says: “Public funds should have a good level of transparency to ward off any unwanted concerns on any irregularity.”

Khong says the Securities Commission has done a good job in monitoring the actions of the public companies and having an independent authority to monitor transactions involving large amounts of public funds is good as it will encourage good corporate governance.

Hahn concurs, adding that making reports on the funds' performance public allows the people to monitor how these offshore investments are performing.

The EPF, which has allocated £1bil to invest in properties in the UK and other European markets has, to date, invested about half of that in a number of commercial buildings in London.

KWAP which has allocated 4% of its entire fund of RM3.2bil for property investments, has completed its acquisition of the 14-storey ASX building in Sydney, Australia, for A$185mil last December.

In 2010, KWAP bought 737 Bourke Street office building in Melbourne for A$113mil.

Besides Australia, KWAP is also eyeing some properties in London.

According to a Bloomberg report, PNB is in talks with German real estate fund KanAm Grund KAG over the sale of four London office buildings valued at about £1bil.

The German real estate fund is said to be in discussions with other bidders and “a deal could be done in a couple more weeks,” says Michael Birnbaum, a spokesman for the Frankfurt-based KanAm.

The buildings are the European Bank of Reconstruction and Development's head office next to Liverpool Street train station, the UK headquarters of Thomson Reuters in Canary Wharf, Deutsche Bank AG's UK headquarters on London Wall and an office building at 90 High Holborn.

The London assets are part of KanAm's suspended 3.97 billion-euro (US$5.1bil) Grundinvest fund.

Last December, PNB paid £350mil for the Milton & Shire House building in London and the fund says it is looking to add more British assets to its portfolio.

In 2010, PNB bought an upmarket office block in Brisbane, Australia, called Santos Place for more than A$290mil.

LTH plans to invest in syariah-compliant buildings in Australia.

By The Star

When informed decisions go awry

Making investments with money you don't have and with information you should not be privy to is both morally and legally wrong

LAST year, a young entrepreneur turned property investor lost his business outfit. Although his monthly income fluctuated somewhat month-to-month, he was able to get loans from the banks to finance his purchases, which he had incrementally amassed to about 10 over the years.

He was able to have a selection of properties because of the nature of his work which allowed him to source and research the sector and related industries. He was also a quick and adept student of the market and its trends, because like many Malaysians, he was interested in bricks and mortar as an investment instrument. It is uncertain how he will pay for all of them today.

Because of Malaysians' great love for properties, there is the tendency to buy multiple units, each in succession when the previous purchase is not yet fully paid for. While there is nothing wrong with this strategy some of us are more comfortable with properties than with other forms of investment instruments these “assets” can become a financial millstone. Quite a number of Malaysians bought multiple units at one go, sometimes in the same project because they have faith in the developer. Or they buy into the same segment, for example, condominiums.

If one has the means to hold on to these investments over the long term, there may not be an issue. The danger of multiple property purchases and ownership comes during a down cycle.

A couple of years ago when the property prices were steadily moving up, Malaysians' enchantment with the property market resulted in various courses being offered by property experts.

Nearly, if not all of them, were millionaires because of earlier property investments and they were offering courses to teach how one can become rich, like themselves.

However, the scenario then and the scenario today has changed drastically. It may not be possible to use the same strategy they had used. Like any investment, and at any one point in time, there are risks involved. But over and above taking a risk, there is something known as moral hazard. When risks become too high, the action taken by an investor may be hazardous and the probability of failure becomes very high. An action becomes morally hazardous when an investor makes a decision to do something assuming that he has a safety net.

Lately, there was a case where a spouse had bought two luxury condominiums with money that did not belong to him. Because properties at the time enjoyed high returns, he bought multiple units in Malaysia and Singapore. When the case came to light, he stressed that his wife, a public figure, is not involved.

A couple may not be a single entity from the legal standpoint. However, the reality is that the action of one will have a bearing on the other.

This was clearly seen early this week when the chairman of the Swiss National Bank, equivalent to our Bank Negara, resigned. Less than a week ago, he had denied any wrongdoing in a currency scandal that involved his wife.

The Financial Times reported that Philipp Hildebrand's wife had in September 2011 bought US$500,000 before the Swiss National Bank, headed by her husband, imposed a ceiling on the appreciating Swiss francs to halt its rise. Because Swiss francs was appreciating so quickly, the greenback became “cheap” by comparison. The move by the central bank sent the Swiss francs down sharply. She sold the dollars one month later. She bought the US dollar cheap and sold high.

Hildebrand had earlier rejected calls to resign. When he did, he said: “I came to the conclusion that it's not possible for me to deliver a definite proof that my wife requested the currency transation without my knowledge.”

His wife said she failed her husband because she had not considered the perception of a “conflict of interest.”

After his resignation, he asked rhetorically: “Can you live a dollar lifestyle, or a partly dollar lifestyle, like ours, and still be a central bank governor?”

That is an interesting question. It is a question of self examination that comes to each of us, at one point or another, sometimes many times over.

Assistant news editor Thean Lee Cheng ponders: Should the action of a spouse have far reaching consequences on the “innocent” half? Should one profit from one's vocation because of some privileged information?

By The Star

The beauty of having choices

Cranes fill the sky at a high-rise commercial project in KL. The build-then-sell concept is mooted with good intention. However, a more holistic assessment of the concept needs to be undertaken before it is made mandatory. —AFP

RECENTLY, a friend of mine purchased a house from the secondary market after months of careful deliberation. As he shared the joy of his new property purchase, it was heartening to note that many of his friends were also hunting for properties in both the primary and secondary property markets for investment purpose and/or for their children.

We often see two scenarios when it comes to the purchase of a home. Some favour purchasing a property directly from the developer and others, from the secondary market. Both groups, however, have a common agreement that neither option is right nor wrong since personal preference largely influences the acquisition of a property.

In Malaysia, both primary and secondary property markets offer plenty of choices in terms of property types and range of prices.

Properties from the secondary market are often viewed as ready to be occupied and most purchasers of such properties are generally satisfied with their acquisition based on the principle of “what you see is what you get”.

In fact, secondary properties are very popular in our country. According to statistics published by National Property Information Centre (NAPIC), the total residential property transactions in 2010 was 181,024 units, with 151,862 units transacted in the secondary market, and 29,162 units from the primary market. In short, 84% of the units transacted were completed properties from the secondary market.

On the other hand, newly-built properties bought directly from developers offer a different spectrum altogether. Purchasers of such properties generally look for specific locations or specific project features such as newly-developed areas near to commercial lots or recreational facilities, or projects with innovative elements etc. When buying a property directly from a developer, the purchaser expects to get a good deal compared to secondary market which has factored in price appreciation.

Some may perceive primary property market as containing higher risk as they purchase a property off the plan without seeing the real product. They will only realise their hope when the house is completed and handed over to them. As such, purchasers are advised to always consider the reputation and track records of property developers before making their commitment.

Being able to choose a property from the primary and secondary markets clearly facilitates a healthy environment where house buyers can enjoy the best of both worlds.

It was not surprising that the property development industry was jolted with many questions raised on the build-then-sell (BTS) concept when the Government announced last year that the same would be made mandatory by 2015. An immediate question came to mind ... “Are we ready for just one concept when we currently enjoy a choice?”

At present, almost all newly-built properties would fall under the sell-then-build (STB) concept. Purchasers would pay a 10% deposit or 20% initial payment of the purchase price with the remaining 90% or 80%, as the case may be, mostly financed by mortgage loans provided by banks. Servicing interest or instalment would begin immediately after the banks start to disburse the monies to the developers.

BTS on the other hand is a concept that allows house purchasers to pay the initial 10% deposit and not pay a single cent thereafter until the project is completed and the certificate of fitness is issued. In most cases, the construction period may last up to 3 years.

There are two sides of the coin on when to purchase a BTS concept property. Purchasing early provides the buyer a greater selection of units to choose from and more time to shop for good mortgages. Purchasing near the completion stage, on the other hand, provides the buyer the opportunity to have a physical view of the property (design and quality) and its surroundings (infrastructure, marketability etc). However, if the decision is made too late, the buyer may miss the opportunity to purchase a house from developer, and later has to pay higher price for a unit from the secondary market.

So how does BTS fit in today's picture?

Notwithstanding the difference in the duration to occupy the property (i.e. most “second hand” properties are fit for occupation immediately while newly-built properties have to wait for the certificate of fitness), properties in the secondary market are already adopting the BTS concept. Effectively, the purchaser can occupy the property once the remaining 90% payment is secured by the seller.

No doubt, the Government's move on BTS concept is mooted with good intention to protect consumers from suffering losses as a result of abandoned projects. However, a more holistic assessment of the concept needs to be undertaken before it is made mandatory. For instance, understanding and addressing the causes of abandoned projects whether they are due to economic downturn, inflation, fraud or management know-how, etc, are highly necessary.

As it is, there have been efforts to mitigate this problem in the form of stricter regulatory measures such as imposing hefty fines of between RM250,000 and RM500,000 and harsh jail term not exceeding three years for offences relating to housing abandonment by developers. The banks are required to assess the developers before offering bridging or mortgage loans and greater awareness campaigns highlighted by the media.

With a better understanding of BTS and its existence in today's environment as well as the need to holistically assess the concept before it is made mandatory, we need to ask ourselves again “Do we allow the free market to dictate how the industry should be shaped, such as by having both BTS and STB or just adopting the BTS concept solely?”

Something for everyone to ponder at the beginning of the year.

Datuk Alan Tong is the group chairman of Bukit Kiara Properties, he was the FIABCI world president in 2005-2006 and was recently named Property Man of The Year 2010 by FIABCI Malaysia.

By The Star

AEON to open at least five more malls by 2015

KUALA LUMPUR: AEON Co (M) Bhd, the Malaysian operator of the Japan-based Jusco retail supermarket, hypermarket and shopping malls, expects to open another five to eight shopping complexes by 2015.

AEON Asean vice-president and chief executive officer Nagahisa Oyama said currently the company owned and operated 28 shopping malls, with the latest opening in Rawang in December last year.

He said a shopping mall would usually cost some RM200mil, depending on location and arrangement with the developer.

“Sometimes we have to buy the land and build, sometimes the developer will construct it and we just have to run the business.

“These new shopping malls are at the planning stage. Therefore we do not have specific locations for the complexes yet,” he said after a welcoming ceremony for new Aeon staff yesterday.

By The Star

UOA REIT posts higher pre-tax profit

KUALA LUMPUR: UOA Real Estate Investment Trust (UOA REIT) posted a higher pre-tax profit of RM41.87 million for the financial year ended December 31 2011 compared with RM25.08 million in the same period last year.

In a circular to Bursa Malaysia, the company said its revenue jumped to RM79.74 million from RM42.81 million previously.

By Business Times

Mitrajaya unit accepts Putrajaya deal

KUALA LUMPUR: Mitrajaya Holdings Bhd announced that its wholly-owned subsidiary, Pembinaan Mitrajaya Sdn Bhd, has accepted a Letter of Award from Putrajaya Holdings Sdn Bhd.

The award is for the proposed construction and completion of residential and commercial units in Putrajaya for RM20.52 million, Mitrajaya told Bursa Malaysia.

By Business Times

Development in Shah Alam offers all the convenience

Well-designed: Noorazhar showing the model of the D’Kayangan units.

HYPERLINK Marbella homes in D’Kayangan, Shah Alam offers buyers the comfort of living in a low-density residential area.

The project will be developed under phase six of the D’Kayangan township and each unit is 28’ x 80’.

Kumpulan Lebar Daun executive director Noorazhar Mohamed Nurdin said only 102 homes would be built for this phase.

Noorazhar said each unit comes with a built-up area of 3,085sq ft.

He said the development is expected to be completed by August 2013.

“The hyperlink Marbella type A homes are spacious and built without borders,” he said, adding that the type B homes would have a built-up area of 3,368sq ft.

Noorazhar said the strategic location of the project itself was an unique selling point.

It is located at the former site of the Batu Tiga race course, he said, and was easily accessible via the NKVE, Elite Highway, GCE, Kesas, LKSA and KL-Klang Federal Highway.

“It is a gated and guarded community with perimeter wall fencing and a 24-hour security under a conducive environment.

“There are hypermarkets, education centres, shopping malls, sports facilities as well as golf courses near the site,” he said.

Noorazhar added that the development also comes with a scenic lake within walking distance.

He said the homes priced between RM958,888 and RM2.2mil were ideal for investment.

“We are confident that the homes will attract good response from investors and those who seek to upgrade their lifestyle,” he said.

A 3% discount is offered for the hyperlink homes to early birds for limited units only, buyers could enjoy savings of up to RM70,000.

Besides the Marbella, D’Kayangan Residence Semi-D type Alena (40’x 80’/50’ x 90’) and Semi-D Villa type Casa Ariana (60’ x 80’) are also available for sale.

A commercial project consisting of shop office and service apartment are among the other developments expected to be launched at D’ Kayangan this year.

The D’Kayangan township with a land area of 66ha comprises superlink and semi-detached homes, bungalow lots, a recreational and commercial centre.

By The Star

Lee Yan Lian's family’s land in Klang Valley up for sale

PETALING JAYA: Five parcels of freehold land in the Klang Valley owned by the late Tan Sri Lee Yan Lian's family have been put up for sale by tender.

A well-known philantrophist and community leader, Lee was a successful housing developer in the 1960s until his demise in 1983.

He is renowned for developing SEA Park in Petaling Jaya and Taman Tun Dr Ismail (TTDI), which was a joint venture with the Urban Development Authority.

Lee's SEA Housing Corp Sdn Bhd owned the 286ha of rubber estate land which was developed into the highly successful TTDI, an affluent township in Kuala Lumpur.

A property developer, who requested anonymity, said that the Lee family still owned a number of land in the Klang Valley and the five pieces advertised for sale were among the more prime parcels.

“These are among the last sizeable freehold land in the Klang Valley and will be suitable for redevelopment into mixed development projects,” he added.

In the latest sale tender, a 7,239-sq-ft land in the prime location of Jalan Bukit Bintang, Kuala Lumpur has a reserve price of RM50mil. The land is currently occupied by The Malaysia Hotel.

The second piece measuring 276,832 sq ft in 4 miles Old Klang Road (near the Pearl International Hotel) has a reserve price of RM90mil.

The other three parcels are located in Petaling Jaya.

A 265,245-sq-ft plot in Jalan SS23/15 in Taman SEA has a reserve price of RM150mil, and another piece of 82,715 sq ft in Jalan SS2/64, which is currently used as a car park, is going for RM100mil.

A vacant 84,315-sq-ft land made up of seven plots with old bungalows on two plots in Taman Tan Sri Lee Yan Lian in Section 16 has a reserve price of RM25mil.

The tender package can be purchased from Colliers International Property Consultants Sdn Bhd, the property agent appointed for the tender exercise.

A tenderer may purchase the individual property or all five properties. The last date for purchase of the tender package is Jan 16 and the closing date of the tender is at 1pm Jan 30.

By The Star

UOA REIT FY11 pre-tax profit rises to RM41.9m

UOA Real Estate Investment Trust (UOA REIT) posted a higher pre-tax profit of RM41.87 million for the financial year ended Dec 31, 2011 compared with RM25.08 million in the same period last year.

In a circular to Bursa Malaysia, the company said its revenue jumped to RM79.74 million from RM42.81 million previously.

Going forward, the company said it would continue its efforts to further improve the occupancy rates of its property assets and anticipates the high
occupancy rates to sustain barring unforeseen circumstances.

"The manager will continue to adopt an active operating and capital management strategy to enhance the yields and returns of the existing
properties.

"The manager will also continue to seek opportunities to further acquire real estate that meets the objectives of the Trust," it added.

By Bernama

1MDB may sell sukuk to part-finance KLIFD project

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB), a state-owned development company, may sell Islamic bonds to partly fund the construction of an US$8 billion (RM25.2 billion) financial district in Kuala Lumpur.

"We have a RM2 billion bridging loan coming due in 2013 and are looking at all options," chief executive officer Shahrol Halmi said in an interview in Kuala Lumpur yesterday.

"We may sell medium-term syariah-compliant notes if conditions are conducive."

1MDB is jointly developing the so-called Kuala Lumpur International Financial District (KLIFD) with Abu Dhabi's Mubadala Development Corp, said Shahrol.

The initial phase is due to start in the first half of this year at an estimated cost of RM2 billion and 1MDB may also look into setting up an Islamic real-estate fund for financing, he said.

The company, formerly known as Terengganu Investment Authority Bhd, last sold RM5 billion of 30-year syariah-compliant bonds in May 2009.

The debt, which was guaranteed by the Malaysian government, is rated A3 by Moody's Investors Service.

By Bloomberg

UEM Land set to launch RM5.5b property projects

NEW TARGET: Firm expects sales to increase 50 per cent to RM3 billion this year

UEM Land Holdings Bhd is set to launch property projects worth about RM5.5 billion across Malaysia this year.

As such, it anticipates sales to increase to RM3 billion, about 50 per cent more than last year's sales target.

Its managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said the locations for the company's new projects would include Johor, Mont Kiara in Kuala Lumpur, and Bangi and Kajang in Selangor.

"We expect the demand structure for our properties to take a new dimension. We expect a dramatic increase in take-up (of our properties).

"So, we are targeting sales of properties worth RM3 billion this year. Last year's target was at RM2 billion," he told reporters after the signing of a joint-venture agreement with Medini Security services Sdn Bhd, a wholly-owned subsidiary of Iskandar Investment Bhd, here yesterday.

In fact, Wan Abdullah said, the company has managed to achieve last year's sales target of more than RM2 billion. He, however, declined to disclose the exact sales figures.

"At any one time when we launch a project, 85 per cent of the units offered are always taken up. And in the past two years, our sales team had managed to achieve our target.

"So the board decided to raise the target bar for 2012 ," he said.

Under the agreement sealed yesterday, UEM Land and Medini Security have agreed to form a full-fledged security services company to provide enhanced security for Nusajaya, one of the five nodes of Iskandar Malaysia.

Asked on UEM Land's properties in Nusajaya, Wan Abdullah said since 2006, the company has managed to sell some 3,500 units of properties there, noting that sales only picked up over the last few years.

"Sales were slow in the beginning, but over the last few years, they have been increasing dramatically," he said.

By Business Times

UEM Land expects higher sales of RM3bil

PETALING JAYA: UEM Land Holdings Bhd has raised its sales target to RM3bil worth of properties for 2012 compared with RM2bil that it achieved last year.

“We will be launching RM5.5bil worth of properties throughout Malaysia this year, with a sales target of RM3bil,” managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said.

UEM Land had already met its sales target of RM2bil last year.

The company would unveil the actual figure when it announced its financial results for the fourth quarter of 2011, Abdullah said after a signing ceremony to mark the company's collaboration with Medini Security Services Sdn Bhd.

Security assurance: Wan Abdullah (right) exchanging documents with Iskandar Investment president/CEO Datuk Syed Mohamed Syed Ibrahim after signing a joint venture agreement to offer security services in Nusajaya.

UEM Land would form a joint venture (JV) with Medini, a wholly-owned subsidiary of Iskandar Investment Bhd, to provide full-fledged security services in Nusajaya, one of the five nodes of Iskandar Malaysia development in Johor.

The JV would expedite the implementation of the overall safety and security initiatives and control the quality of security services in Nusajaya.

Abdullah said the deal was significant as it would help address the negative perception that many people have towards the safety and security aspects in Johor, and help reassure potential investors besides attracting investments to the state.

To initiate the security effort, UEM Land had deployed 20 auxiliary policemen from Mont Kiara, Kuala Lumpur, to be stationed in Nusajaya.

Abdullah said the JV company was expected to have 160 auxiliary police men deployed in the development by 2015.

He said the JV had allocated RM8mil as capital expenditure for 2012.

Of the amount, RM4mil would be used to procure vehicles and equipment while the remainder for operation expenditure.

He said that the JV company was not a profit centre.

The company, he said, would earn revenue from the security services it provided for various projects in Nusajaya.

By The Star

Belleview plans RM500m property launches this year

GEORGE TOWN: Penang-based property developer Belleview Group will unveil new projects with a development value in excess of RM500 million this year in the northern region.

Its managing director, Datuk Sonny Ho, yesterday said besides two launches on Penang island, the company is also set to launch first condominium project in Alor Star, Kedah.

"We are working with the state authorities to try and change Kedah's landscape and introduce condominium living by bringing in projects similar to the ones we have been doing in Penang for three decades," he told reporters after the official opening of the 1st Avenue mall here yesterday.

1st Avenue is a joint-venture project between Asian Retail Mall II Ltd (a pan-Asian fund managed by the Pramerica Real Estate Investors Asia Pte Ltd), Belleview Group and the Lion group.

Ho said the Amansuri Residences project along Jalan Darul Aman in Alor Star will boast two towers, comprising 22 and 24 levels respectively.

"The project will be sited on a 1.21ha of land and will comprise 277 units, with floor areas ranging from 1,200 to 3,000 sq ft and priced at around RM350 per sq ft," he added.

On Penang island, Belleview will launch its RM200 million Moulmein Rise mixed development project in the Pulau Tikus area by the middle of this year.

"We will offer, among others, commercial, small-office, home-office type units, along with upmarket condominiums in a 27-storey block close to the Pulau Tikus market," Ho said.

Also to be launched are eight bungalow units along Jalan Utama (also known as Western Road). The "W Residence" project, which carries a gross development value of between RM70 million and RM80 million, is expected to be completed by the middle of 2014.

Meanwhile, Pramerica Real Estate Investors Asia chief executive officer Victoria Shigera Sharpe said despite continued chaos in the global economic environment, the year 2011 was a very successful year for Pramerica in the Asia-Pacific region.

The S$3 billion (RM7.3 billion) fund, which is managed by the Singapore-based company, last year consolidated its popular closed-end Asian Retail Mall funds into a private open-end property fund for institutional investors looking to take advantage of opportunities in Asia's growing retail sector.

"What this new fund structure means for our investors, Pramerica and Malaysia is quite significant as the conversion allows us to maintain a more long-term position in the Singapore and Malaysian markets, where we do not have exit assets because of structural reasons, namely the term of our investment funds coming to an end," Sharpe said.

By Business Times

Naza TTDI and Seacera in joint venture?

PETALING JAYA: Naza TTDI Sdn Bhd, the property arm of the Naza group, is likely to join forces with ceramic tile maker Seacera Group Bhd in a 500-acre mixed development project in Ulu Langat, Kajang , sources said.

Both parties met last week to discuss the probability of collaborating, a source said.

“The emergence of Naza TTDI - which launched last year its TTDI Grove mixed development project in the same vicinity and enjoyed a good take-up rate for it, will value-add Seacera because of its (Naza TTDI's) experience in the same land area.

“The collaboration will also be good for Seacera's tile business which will be complementary to the property project and give Seacera additional income,” the source noted.

In terms of benefits to Naza TTDI, the company has said that landbank expansion is its priority and this deal will enable it to gain direct access to more land in the Kajang area, having used up most of its landbank for its 113-acre TTDI Grove project.

No specific details on the joint-venture are available at this point.

StarBiz reported recently that Seacera will this year kick-start a 500-acre mixed development project in Ulu Langat with a gross development value of at least RM2bil that will span over 10 to 15 years.

Of the 500 acres, Seacera owns 113 acres, which it bought from land owner Duta Skyline Sdn Bhd for about RM27mil or RM5.50 per sq foot. The remaining land is currently owned on a 78:22 joint-venture basis with Duta Skyline, with the larger portion owned by Seacera.

Shares in Seacera have surged 47% over the past two weeks, ending at 76.5 sen at yesterday's close.

Recently, some four million shares were crossed to unidentified buyers, suggesting that there could be new major shareholders coming into the company.

It is learnt that corporate personality Datuk Samsudin Abu Hassan, who was one of the major shareholders of the company, has exited the company completely. For the third quarter ended Sept 30, 2011, Seacera made a net profit of RM981,000 on sales of RM24mil.

By The Star

Dijaya sees brisk sales of Tropez Residences apartments

KUALA LUMPUR: Dijaya Corp Bhd, which launched Tropez Residences in Iskandar Malaysia, Johor last month, has sold more than 85% of its Tower A within the first month.

“We are very pleased to receive this strong response from locals and Singaporeans in such a short time. Following the positive response, we have launched our second phase, Tower B,” group chief executive officer Tan Sri Danny Tan said in a statement.

Tropez Residences is a 38-storey bay-front serviced apartment in Tropicana Danga Bay. The latter is a RM3.8bil integrated project spanning 37 acres in Iskandar Malaysia. It offers a comprehensive mix of lifestyle properties, offices and commercial blocks, as well as a hotel and a shopping mall.

Tropez Residences consists of 1,149 units with choices of duplex, 3 or 4-bedroom units and also 1-bedroom studio with built-up areas ranging from 463 to 1,798 sq ft.

The serviced apartment offers comfortable and luxurious living with more than 20 facilities.

There will also be two open air sky lounges in towers A and B with spectacular panoramic view of the development and beyond. Tropez Residences will also be connected to the entire Tropicana Danga Bay development via a level-six walkway.

Dijaya said two show units Type C (1,163 sq ft) and Type D (1,668 sq ft) were ready for viewing.

By next month, the company said, it would unveil two more luxurious show units, Type A (689 sq ft) and Type S1 (463 sq ft), to provide more inspirational ideas on interior decoration.

Tropez Residences is expected to be completed around 2014.

By The Star

New Zealand housing index higher in 2011

WELLINGTON: New Zealand’s housing market finished last year on a firm footing, but the outlook for 2012 is uncertain because of the European debt crisis, government property valuer Quotable Value (QV) said.

QV said that its residential property index was up 2.4% in the year to December, after a 1.7% increase in the year to November and a 1.2% rise in October.

The index was now 3.5% below its peak in late 2007.

Recent data have suggested some stability in the housing market, after a sluggish 2010 because of weak domestic consumption and a slow wage growth.

“Despite national values moving upwards during the year, the property market continued to be characterised by lower than normal sales volumes,” said QV research director Jonno Ingerson.

He said sales numbers in 2011 were more than 20% below the long-term average, but were higher compared with 2008 and 2010 when they were marked by low activities. The average sale price, which is not used to calculate the main index, over the three months to December slipped 3% to NZ$398,411 (US$305,407) compared with a year earlier.

Looking forward to 2012, QV said Auckland, the country’s biggest population and business centre, would prosper further because of a growing population.

“While business and consumer confidence seems to be on the increase, there is still some concern about the financial situation in Europe, and what may happen to the New Zealand economy,” Ingerson said.

Prices in Auckland rose 4.3% on a year ago and are now 1.4% above the previous peak in late 2007.

By Reuters

UEM Land plans to launch RM5.5bil worth of properties

KUALA LUMPUR: UEM Land Holding Bhd, which plans to launch RM5.5 billion worth of properties, aims to record sales of RM3 billion this year.

Managing Director/Chief Executive Officer Datuk Wan Abdullah Wan Ibrahim said the properties were located in Johor, Kuala Lumpur Central Business District, Mont Kiara and Bangi.

UEM Land achieved sales of RM2 billion last year, he told reporters here today after the company inked a joint venture agreement with Medini Securities Services Sdn Bhd to enhance security features in Nusajaya.

Datuk Wan Abdullah Wan Ibrahim

Since the mid-90s, 11,000 units of residential properties were sold in Nusajaya by UEM Land and other developers.

"The company alone sold 3,500 units since 2006.

"We expect the demand structure to continue this year," Wan Abdullah said, adding that the take up rate stood at 85 per cent, currently.

On the joint-venture, he said the company has collaborated to form a full-fledged security service company with Medini Security to provide enhanced security for Nusajaya.

Eight million ringgit has been budgeted this year to implement this initiative as part of the Nusajaya Security Blueprint, he added.

"We are looking into areas of improvement such as the expansion of our CCTV coverage in the vicinity to further add value to the current security features," he said.

By 2015, the joint venture company is expected to have an estimated 160 auxiliary police officers who will be deployed in critical areas.

UEM Land, is the master developer of Nusajaya, the key driver of Iskandar Malaysia, Johor.

By Bernama

Trinity delivers quality and style ahead of schedule

Minister of Housing and Local Government Datuk Seri Chor Chee Heung (left) inaugurating the official key handover ceremony of The Zest Serviced Apartment @ Kinrara 9 and opening of Trinity’s RM7mil access ramp at Bandar Kinrara.

The Trinity Group team shifted into high gear as 2011 drew to a close - and delivered a full schedule ahead of time for the much-awaited launch of The Zest Serviced Apartment @ Kinrara 9. Dreamed up to be the next prime address in Bandar Kinrara 9 offering an integrated location for family, work, business, leisure, and entertainment – The Zest @ Kinrara 9 became an anticipated reality at the official Key Handover Ceremony yesterday.

The company is right ahead of target with the completion of an integrated development that consisted of 20 units of shop offices, 24 units of retail outlets and 720 units of serviced apartments in the Bandar Kinrara 9 township development – with infusions of modern and contemporary architectural design.

"The launch of The Zest @ Kinrara 9 marks our foray as a serious contender and comprehensive player offering a gamut of services in the real estate industry,” says Trinity Group managing director Datuk Neoh Soo Keat.

Trinity Group’s long-standing commitment towards “building communities and enriching lives” is strongly reflected in its developer journey as it grew from strength to strength with each project. Its credo echoes the Malaysian government’s dedication towards ensuring quality and affordable housing to meet the needs of Malaysia’s growing population by matching demand and supply as well as providing efficient public utilities and services as well as a clean and livable environment.

Datuk Neoh adds that Trinity Group wishes to redefine property development by bringing landmark projects that incorporate the best design, quality, technology and timely delivery. “As a forward thinking and customer-driven developer, we will ensure that all our new products offerings will set new benchmarks in terms of quality and value creation for our customers while remaining true to our aim of pursuing business activities in an ecologically-friendly manner.”

Minister of Housing and Local Government Datuk Seri Chor Chee Heung, present to officiate The Zest Point’s Key Handover Ceremony comments that it is imperative for the Government and private sector to work together in order to create a competitive and sustainable housing industry.

“The partnership will benefit the homeowners as well as housing developers. I am pleased to see Trinity Group taking a leadership role in raising the industry bar for private developers and employing the six thrusts in the National Housing Policy (NHP) as its guiding principle to achieving conducive and liveable environments and shared community infrastructure and foundation,” Datuk Seri Chor adds.

Being a resident or business owner in one of the units at The Zest Point means all-year access to amenities. Trinity Group doesn’t take community enhancement lightly; its service-focused vision spanning beyond property development is attested by its series of community projects e.g. a RM7mil access ramp, a RM3mil access road for The Z, and Malaysia’s first air-conditioned bus stop.

The RM7mil access ramp at The Zest @ Kinrara 9 intersecting with the Lebuhraya Bukit Jalil is officially open for the convenience of road users and public

The ramp, linking the opposite side of the road and The Zest @ Kinrara 9 with the Bukit Jalil Expressway to lessen traffic congestion and commuting time, is launched for public usage today by Datuk Seri Chor Chee Heung. Community development, to Trinity Group, is an on-going pursue. “We do not – and will not stop here. In the near future, we will undertake more development and community projects that are aimed to improve and enrich people’s lives”, exclaims by Datuk Neoh. “We are dedicated to provide the best to our customers with better living experiences.”

By The Star